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Nov 15 2019, 07:00 GMT
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||59.3p|
|Virgin Money UK||UNDERPERFORM||15/11/19||Neutral||28/05/19||143p|
While spreads on new mortgages stabilised during Q3, we do not think this will persist and therefore expect net interest margins (NIMs) to remain under pressure, with few lenders possessing the balance sheet characteristics to grow without a detrimental impact on overall returns. We downgrade Virgin Money UK (VMUK) to ‘Underperform’ (price target: 127p) as we expect it will need to sacrifice lending growth to protect its weaker post payment protection insurance (PPI) capital position. We maintain our preference for Lloyds Banking Group (LLOY) (‘Outperform’, price target: 64p) over RBS (‘Neutral’, price target: 225p).