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May 28 2019, 06:30 IST/BST
Banks
A constrained consumer; initiating on CYBG at ‘Neutral’ and upgrading LLOY to ‘Outperform’
- Sectors : Banks
- Companies : Virgin Money UK | RBS | Lloyds Banking Group
Ratings
Ratings and price correct at time of issue
| Company | Rating | Date | Previous Rating | Date | Closing Price |
|---|---|---|---|---|---|
| Lloyds Banking Group | OUTPERFORM | 28/05/19 | Neutral | 14/02/18 | 58.5p |
| RBS | NEUTRAL | 11/02/19 | N/A | N/A | 217p |
| Virgin Money UK | NEUTRAL | 28/05/19 | N/A | N/A | 188p |
DAVY VIEW
Retail banking in the UK remains challenging, not helped by an uncertain macro environment. We initiate on CYBG with a ‘Neutral’ rating (price target: 159p). The Virgin Money (VM) acquisition creates significant opportunities from an integration and customer perspective; however, we are less optimistic on the latter than the former due to the challenging sector backdrop. In addition, we upgrade Lloyds Banking Group (LLOY) to ‘Outperform’ (price target: 71p) given that it is less dependent on growth due to its superior capital generation, driving substantial capital returns in the coming years.
