Citi remains 'overweight' UK banks; HSBC and Barclays 'top picks'
Citi said on Tuesday that it remains 'overweight' UK banks, with
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"UK domestic banks appear to be back in favour, with investors stepping in ahead of an expected trough in NIMs, which should differentiate them to eurozone peers," Citi said.
"While we do not expect this to occur until 2Q24, we should see further evidence that the decline in NIMs is slowing with 1Q24 results, which should support a continued re-rating."
In contrast, HSBC is the only large European bank to de-rate year-to-date, which Citi attributed to a complicated set of 4Q23 results.
"We expect the 1Q24 results to be much cleaner, which combined with strong non-NII growth and clearer outlook communication, could drive consensus earnings upgrades."
Cit said Standard Chartered should also report strong underlying results, but it fears tail risk events.
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