Deutsche Bank downgrades Lloyds and RBS
By Michele Maatouk
Date: Friday 06 Sep 2019
(Sharecast News) - Deutsche Bank downgraded its stance on shares of RBS and Lloyds Banking Group on Friday as it took a look at UK banks.
"Lloyds and RBS are more exposed to mortgage refinancing pressure given the size of their respective standard variable rate (SVR) portfolios, while Barclays and HSBC UK have relatively smaller SVR books," the bank said.
It downgraded its rating on both to 'hold' from 'buy, cutting the price target on Lloyds to 55p from 74p and on RBS to 215p from 290p.
Deutsche said buy-rated Barclays remains its top pick and it prefers the stock over Lloyds, RBS and hold-rated CYBG given its revenue and geographic diversification - lower dependence on the UK - non-GBP earnings, lower structural hedge income and SVR book.
"While the market is more than pricing in the disruptive scenario, valuation multiples are short of the BoE 'disorderly' scenario (updated 5.5% GDP impact). Our analysis suggests that the Barclays' share price is closest to pricing in a more severe disorderly Brexit scenario."
Among UK internationals, DB kept HSBC at 'sell' at Standard Chartered at 'hold', expressing a relative preference for StanChart given its lower exposure to the UK ahead of Brexit and relatively cheaper valuation versus HSBC.
Deutsche cut its price target on Barclays to 175p from 212p. The HSBC price target price was cut to 520p from 540p and the StanChart PT was kept at 630p.
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