Sign in Subscribe
Banks (Finance)

UK-Listed Banks: Goldman Sachs Review Identifies Sector Trends

Strategic Insights

— 1 min read

Goldman Sachs has evaluated the fall-out from the quarterly earnings season in the UK-listed banking sector, identifying a trend of downward earnings but not as severe as expected. The review highlights a sharp decline in clean pre-tax profits across Europe, at 55%, which is 20% above the investment bank's estimates. The widespread cancellation of dividends is a key theme, with investors showing reluctance to incorporate a return to normal dividends into their investment thesis. Banking analysts are largely divided in their views on the sector, with varying recommendations for HSBC, Standard Chartered, Barclays, NatWest, and others.

Key Takeaways:

  • Goldman Sachs identifies HSBC and Standard Chartered as the only two UK-listed banks on its +buy' list, following a review of the sector.
  • The overall trend in the UK-listed banking sector is "down, but not as much as expected" according to Goldman Sachs.
  • Clean pre-tax profits across Europe declined by 55%, which is 20% above Goldman Sachs' estimates.
  • The cancellation of dividends has been widespread, with investors showing reluctance to incorporate a return to normal dividends into their investment thesis.
  • Banking analysts are largely divided in their views, with some recommending HSBC, Standard Chartered, Barclays, and NatWest, while others take more cautious stances.
  • HSBC and Standard Chartered shares were up 1.1% and flat respectively on Wednesday, following the review.

Statistics:

  • 55% decline in clean pre-tax profits across Europe, 20% above Goldman Sachs' estimates.
  • 1.1% increase in HSBC shares and flat performance in Standard Chartered shares on Wednesday.
  • Goldman Sachs identifies HSBC and Standard Chartered as the only two UK-listed banks on its +buy' list.

Sources:

  • Goldman Sachs +buy review of the UK-listed banking sector.
  • Articles on Lloyds, NatWest, and other banks bracing for +second wave' of PPI claims.
  • Goldman Sachs note to clients on the trend in the UK-listed banking sector.

Read more