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Summary
- UK banks seem to be eventually coming out of the panic-stricken situation.
- Barclays has reported a 1 per cent rise in the total income in the year ended 31 December 2020.
- The Board of Lloyds has declared a dividend of 0.57 pence per share in the FY 2020.
Like several other sectors, the banking sector has also been under tremendous pressure since the Covid-19 pandemic hit the world. The year 2020 has been a challenging one for the UK banks, with the elevated unemployment resulting in a wave of loan defaults. Other reasons for the banks performing poorly are the record fall in interest rates and setting aside of billions to cover expected loan losses.
However, the UK banking sector can be seen making a fresh start with the beginning of the new year and tend to do better with time, coming out of the turbulent times. Some of the banking groups like Lloyds have also resumed their dividend payments.
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Let’s turn our lenses towards the three LSE-listed banking stocks and glance at their performance:
Barclays Group PLC (LON: BARC)
The British investment bank, which has been in existence since 1690, is involved in providing services such as corporate banking, investment management, personal banking, and wealth management.
Despite the health crisis affecting businesses worldwide, the FTSE 100 lender has expanded its investment banking under CEO James E Staley, demonstrating resilience and strength. In the full year results published by the banking institution for the year ended 31 December 2020, the group’s total income increased to £21.8 billion (2019: £21.6 billion). Though profit before tax recorded a decline of 30 per cent YoY to was £3.1 billion in 2020, though the Group remained profitable in all the four quarters.
The bank has delivered a whopping yearly return of around 76 per cent on price, with the market cap standing at £31,356.60 million. Shares of BARC last quoted GBX 180.44 on 15 March, down 0.18 per cent from the previous day’s close of GBX 180.60.
NatWest Group PLC (LON:NWG)
Headquartered in Edinburgh, NatWest Group is a banking and insurance holding company which operates across various regions of Asia, Europe, and North America. Previously known as the Royal Bank of Scotland, NatWest Group is well known for providing corporate finance, insurance, personal and business banking, and private banking.
The Group witnessed an increase in lending across the retail and commercial businesses by £20.9 billion in 2020. There was also a surge of 230 basis points YoY in the CET1 ratio, recording 18.5 per cent.
The bank has delivered a double-digit yearly return of around 45 per cent on price, with the market cap standing at £23,124.31 million. Shares of NWG last quoted at GBX 188.45 on 15 March, down 1.15 per cent from the previous day’s close of GBX 190.65.
Lloyd’s Banking Group PLC (LON: LLOY)
Established in 2009 through the acquisition of HBOS by Lloyds TSB, Lloyds Banking Group is a well-placed British financial services group that is engaged in serving people, businesses and communities with activities such as commercial banking, life, pensions and insurance, retail banking, wealth management across UK.
Low interest rates and lower levels of unsecured lending have resulted in a 16 per cent decrease YoY in the net income to £14.4 billion, and 13 per cent decline YoY in the net interest income to £10.8 billion for the fiscal year 2020. However, the full-year result of Lloyd’s published last month was another source of optimism for the investors, as the lender resumed dividend payment by paying a total of £404 million at 0.57 pence per share to its shareholders.
Also Read: Lloyds bank resumes dividend payments despite a large plunge in profits
The bank has delivered a staggering yearly return of around 8 per cent on price, with the market cap standing at £29,201.08 million. Shares of LLOY last quoted at GBX 41.10 on 15 March, down 0.27 per cent from the previous day’s close of GBX 41.21.
