UK Banks still look good value says Credit Suisse, which has upgraded Barclays and Natwest though Lloyds remains its top pick.
The Swiss bank says UK economic and rate outlook is improving, valuations are cheap relative to history with 2022-23 earnings should be ahead of consensus.
It is also likely to have been a very strong quarter in capital markets, something that has not yet been fully reflected in share prices.
The UK banks start to report results from 27 April with HSBC PLC (LONHSBA) first and both its numbers and Barclays should have benefited from strong capital markets.
Consumer banking has not been as buoyant especially in credit card lending, but the market will be looking for signs of recovery while mortgage margins and UK asset quality also offer scope for pleasant surprises while bad debt provision releases might be another boost.
Lloyds remains the bank’s top pick even though it has limited capital market exposure.
“Among the most meaningful risks to our calls are the path of the coronavirus and restrictions in the UK, and Scottish politics and a potential push for a second referendum.”
Shares in Barclays rose 1.34% to 188.2p, Natwest 0.8% to 198.2p and Lloyds 1% to 43.7p.