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Goldman positive on StanChart but stays at sell on Barclays and Lloyds

By Alexander Bueso

Date: Thursday 22 Jun 2017

Goldman positive on StanChart but stays at sell on Barclays and Lloyds

(ShareCast News) - Goldman Sachs stuck to a 'buy' recommendation on StanChart and 'sell' on Lloyds and Barclays after adjusting its earnings estimates for the sector to reflect recent market developments and ahead of the release of the Financial Policy Committee's Financial Stability Report on 27 June.


StanChart continued to be the UK-listed lender most exposed to the interest rate cycle in the US, Goldman said.

Furthermore, it enjoyed a "strong" capital position which may allow for the resumption of dividends as soon as with its next set of interims.

Lloyds on the other hand was most at risk from heightened competition in the domestic UK mortgage market.

"We believe that current valuation levels do not reflect future margin headwinds."

Continued capital building at Barclays meanwhile was expected todrive a more muted outlook for dividend and profitability.

Regarding the upcoming release of the FSR, Goldman reminded clients that the FPC had already flagged an increase in lenders' counter-cyclical capital buffers.

Nonetheless, the expected increase from 0.0% to 0.5% was likely to be muted, Goldman said, as the Bank of England was expected to remove overlapping aspects of Pillar 2.

A number of regulatory reviews of the consumer credit market were also then under way, Goldman said, which might lead policymakers to take action on underwriting criteria, capital buffers and sectoral equipment requirements.

Goldman left its target prices for Barclays and Lloyds unchanged at 180.0p and 58.0p, respectively.

Its target on StanChart was raised from 950.0p to 960.0p.

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