Shore Capital favours international banks over domestics as bond yields rise

Shore Capital has reassessed its coverage for the UK banking sector in light of recent developments in the bond and currency markets, highlighting its preference for internationally focused lenders.

Barclays
13 January 2025 10:12:13

Source: Sharecast

The broker reiterated 'buy' ratings for Barclays, HSBC and Standard Chartered, but kept 'hold' recommendations on domestic peers Lloyds and NatWest.

The recent rise in bond yields and scaling back of interest-rate cut expectations in the UK will feed through to higher retail and wholesale borrowing costs, which could be detrimental to credit demand and credit quality, the broker said. However, it said that UK banks' historical cautious approach to underwriting and focus on prime lending should mean that balance sheets are "well protected".

"The market is currently focused on the sharp rise in bond yields (which is not just a UK phenomenon) along with the strengthening of the US dollar versus most other currencies (including sterling)," Shore Capital said in a research note on Monday.

"Overall, we believe the environment currently favours those banks with international exposure relative to the domestically focused names."

For the 'buy'-rated banks, Shore Capital's fair-value estimates indicate 34% potential upside at Barclays (345p), 24% upside at HSBC (990p) and 21% upside at Standard Chartered (1,245p).

Meanwhile, just 15% potential upside is seen at Lloyds (61p) and a lesser 6% at NatWest (395p).

Transferring your account

Transfer your existing ISAs and Share Dealing Accounts and you could save money. In order to transfer, log in to your existing account and complete the online application form. We’ll do the rest for you. It’s free to transfer (we will not charge you). Please check your current provider to see if they have any charges for transferring.

Transfer to us

HSBC Holdings ( HSBA )

Isin: GB0005405286

Exchange: London Stock Exchange

Sell:

876.30 p

Buy:

876.50 p

Change: 0.30 ( 0.03 %)

Date:

21/03/2025 - 14:15

Prices delayed by at least 15 minutes

Compare our accounts

If you're looking to grow your money over the longer term (5+ years), we have a range of investment choices to help.

View our accounts

Bank of Scotland is not responsible for the content and accuracy of the Markets News articles. We may not share the views of the author. Understand the risks, please remember the value of your investment can go down as well as up and you may not get back the full amount you invest. We don't provide advice so if you are in any doubt about buying and selling shares or making your own investment decisions we recommend you seek advice from a suitably qualified Financial Advisor. Past performance is not a guide to future performance.

Important legal information

Bank of Scotland Share Dealing Service is operated by Halifax Share Dealing Limited. Halifax Share Dealing Limited. Registered in England and Wales No. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire HX1 2RG. Authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN under number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.

The information contained within this website is provided by Allfunds Digital, S.L.U. acting through its business division Digital Look Ltd unless otherwise stated. The information is not intended to be advice or a recommendation to buy, sell or hold any of the shares, companies or investment vehicles mentioned, nor is it information meant to be a research recommendation. This is a solution powered by Allfunds Digital, S.L.U. acting through its business division Digital Look Ltd incorporating their prices, data news, charts, fundamentals and investor tools on this site. Terms and conditions apply. Prices and trades are provided by Allfunds Digital, S.L.U. acting through its business division Digital Look Ltd and are delayed by at least 15 minutes.

Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.