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| HSCEI1 | 7,802.09 | 0.00 | -- |
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2026-10-26 14:17:49 UBS said in a research report that British banks are facing pressure from narrowing NIM and potential tax hikes, but are benefiting from accelerating loan growth, regulatory easing and attractive valuations. The broker believes UK domestic banks offer better EPS growth at discounted valuations, and maintained a Neutral rating on HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK). The TP for HSBC HOLDINGS (00005.HK) was cut from HKD170.8 to HKD157, while the TP for STANCHART (02888.HK) was lowered from HKD239.1 to HKD228. UBS noted that investor focus on UK domestic banks has centered on product spreads, particularly deposits, and the impact of potential tax increases. However, related data remains stable, while the impact of higher taxes is manageable and already reflected in share prices. The broker estimated that if the bank surcharge doubles, the earnings impact on Barclays and HSBC HOLDINGS (00005.HK) would be around 1%, while the impact on Lloyds and NatWest would be about 3% to 4%. This could be offset by a widening of loan or deposit spreads by just 2 to 3 bps. Policy stability is viewed as a greater positive catalyst and may emerge after the Budget on Oct 28. UBS said UK domestic banks are trading at forecast P/E ratios of 7.7x and 6.9x for 2027 and 2028, representing discounts of 19% and 20% to the sector, and discounts of 34% and 40% to the FTSE 100 and Stoxx 600 respectively. The broker is optimistic about accelerating corporate credit demand, tailwinds from hedging income and proven cost control execution. It expects near-term bank stock performance to be driven by oil prices, sovereign bond yields and artificial intelligence-related factors. UBS maintained Buy ratings on Barclays, Lloyds, NatWest, Paragon, Shawbrook and Close Brothers, while keeping Neutral ratings on HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK). HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK) have retreated 12% to 13% from their peaks. UBS believes the stocks remain tactically attractive amid improving USD rate outlooks and continued momentum in Asia wealth management and financial markets businesses, though medium- to long-term growth visibility remains more important. The broker cut the TP for HSBC HOLDINGS (00005.HK) to GBX1,501 from GBX1,620 previously, and lowered the TP for STANCHART (02888.HK) to GBX2,188 from GBX2,295, mainly due to lower peer valuation multiples.(ad/j)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |