IS THE VALUE SURRENDERED BY THE BANKS IN THE LAST THREE MONTHS REPRESENTATIVE OR OVERDONE?

IS THE VALUE SURRENDERED BY THE BANKS IN THE LAST THREE MONTHS REPRESENTATIVE OR OVERDONE?

 

BANK 4/1/16 31/3/16 % loss
RBS 293.5 222p -24.4%
Barclays 219p 150p -31.5%
HSBC 520p 434p -16.5%
Lloyds Banking Group 71.37 68.01p -4.7%
Standard Chartered 541.7p 472p -12.9%
BNP Paribas E51.22 €44.23 -13.6%
Societe Generale E41.40 €32.48 -21.5%
ING E12.20 €10.63 -12.9%
Santander E4.42 €3.87 -12.4%
Deutsche Bank E21.45 €14.95 -30.3%
Commerzbank E9.31 €7.64 -17.9%
Sumitomo Mitsui Y4550 Y3358 -26.2%
JP Morgan  Chase $63.62 $59.62 -6.3%
Bank Of America $16.43 $13.66 -16.8%
Wells Fargo Bank $52.91 $48.36 -8.6%
Goldman $177.14 $156.95 -11.4%
Citigroup $51.13 $41.74 -18.7%
Morgan Stanley $31.48 $25.01 -20.5%
Unicredit E4.98 €3.17 -36.3%
Intesa SaoPaolo E2.98 €2.43 -18.4%

 

When one considers that the main global indices have in many cases recovered their poise after a dire first 6 weeks to the year, it is astonishing to report that the share prices in the UK and the European banking sector are in many cases almost back to pre-9th March 2009 levels (the introduction of QE in the US and the UK after the banking crisis). Since 2009 the regulators have been hard at work implementing much tougher capital requirements to do the same business.  We have also had LIBOR, PPE, money laundering, FX manipulation, excessive derivative charges and some quite frightening levels of lending into the energy sector to contend with.  There has also been what I can only describe as frightening levels of consumer lending and in the case of the UK gargantuan mortgage lending at unrealistic levels of interest rates.

 

These facts have not escaped the notice of fund managers, where there is evidence that portfolios have been lightening up as we head to the end of the first quarter. It is accepted that there could be a shake out at any time.  However though I would not recommend the sector as a ‘buy’ the current levels are not reflective of economic activity. It would come as no surprise to me if there was a healthy buoyant but very temporary rally. Even US banks, with the exception of JPM Morgan which has almost passed muster in the current climate, have suffered ‘The slings and arrows of outrageous fortune!’

 

 

David Buik

Market Commentator

 

D +44 (0)20 7886 2775

Panmure Gordon & Co 
One New Change | London | EC4M 9AF | United Kingdom
www.panmure.com

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