Credit Suisse has handed out “outperform” ratings to major UK financial services giants Lloyds Banking Group, Barclays and NatWest Group.
Lloyds’ outlook
Estimates for Lloyds’ net interest income (NII) from interest-bearing products has been nudged up 1-2% from 2022-2024, but that will be offset by lower mortgage volume growth of 2% per annum
Lloyds’ 12-month target price is set at 73p against the curing market price of 41.6p.
NatWest’s outlook
As for NatWest, Credit Suisse’s NII estimates have been bumped up 3%, though earnings per share (EPS) estimates for 2023-2024 were reduced 1-2% “driven by our more
conservative view on costs and a moderation in our capital markets revenues”.
The target 12-month share price of 350p against a current market price of 220.9p remains unchanged.
Barclays’ outlook
Lastly, “we expect market volatility to continue to benefit Barclays’ rates-heavy FICC (Fixed Income Clearing Corporation) franchise, which has gained market share in the previous quarters this year,” said Credit Suisse.
But Credit Cuisse added that “we expect IBD (investment banking division) revenues to be weaker at -56% year on year.
The firm expects positive US dollar income translation to be offset by TBPS and capital headwinds.
As such, Barclays’ 12-month share price of 240p against a current market price of 149.9p remains unchanged.
Risk factors
“Key risks in our view are a weaker economic environment than we expect, as well as competitive pressures in key product markets,” said Credit Suisse of all three banks.
The global investment bank expects a new Bank of England (BoE) base interest rate of 3.5%, “as economists’ consensus is moving more gradually than market expectations,” according to a recent statement.