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Highlights
- According to the Confederation of British Industry (CBI)/PWC survey of 115 financial services companies’, profitability in the sector continued to increase at 29% in Q3, slower than 39% in Q2.
- The profitability of the financial services companies is expected to grow at a similar pace in Q4 2021.
The financial services companies in the UK reported an improvement in business volumes and profitability in Q3 2021, marking the second consecutive quarter of solid growth. According to the Confederation of British Industry (CBI)/PWC survey of 115 financial services companies conducted in September, profitability is expected to grow at a similar pace in Q4 2021. In Q3, profitability in the financial services sector increased at 29%, slower than 39% in Q2. It is set to grow at 32% in Q4.
However, investment in new technologies was reported as a major issue by about 51% of financial services firms over the 12 months due to inadequate net returns, and 22% of financial services firms reported labour shortages as a key constraint on investment. Here we have explored the investment prospect in 5 financial services stocks - Barclays, HSBC Holdings, Legal & General Group, Prudential, and NatWest Group.
(Data source: EODHD/Others)
Barclays Plc (LON: BARC)
It is a global provider of varied financial services. In August, Barclays inked an agreement with Synchrony Bank to take over its US co-branded and private label credit card accounts and receivables portfolio issued in collaboration with The Gap, Inc.
At the day’s close on Wednesday 13 October 2021, the shares of Barclays last traded at GBX 192.92, down by 2.30%. The market cap of the company is £33,264.54 million. In the last one year, the shares of Barclays returned 88.95% to shareholders.
For six months ended 30 June 2021, Barclays’ profit before tax was £4,979 million compared to £1,272 million in H1 2020. The company announced an interim dividend of 2 pence per share to shareholders.
HSBC Holdings Plc (LON: HSBA)
HSBC Holdings is a leading banking and financial institution. The company’s profit after tax was $8.4 billion in H1 2021 compared to $3.1 billion in H1 2020. The company’s reported revenue declined by 4% year-on-year to $25.6 billion in H1 2021 compared to £26,745 million.
At the day’s close on Wednesday 13 October 2021, the shares of HSBC Holdings last traded at GBX 424.55, down by 1.04%. The market cap of the company is £87,629.97 million. In the last one year, the shares of HSBC Holdings returned 39.11% to shareholders.
HSBC Holdings’ board announced an interim dividend of US$0.07 per ordinary share for H1 2021.
Legal & General Group Plc (LON: LGEN)
Legal & General is a UK-based financial services provider engaged in offering pensions, life insurance, investments and retirement services. Legal & General Assurance Society Limited inked a £760 million buy-in agreement with Sanofi Pension Scheme, thereby securing benefits for 2,900 retirees.
At the day’s close on Wednesday 13 October 2021, the shares of Legal & General Group were at GBX 281.80, down by 0.04%. The market cap of the company is £16,829.64 million. In the last one year, the shares of Legal & General Group returned 46.66% to shareholders.
Legal and General recorded a profit after tax of £1,065 million in H1 2021 compared to £290 million in H1 2020 and return on equity of 22.0% in H1 2021 compared to 6.3% in H1 2020. The company’s board announced an interim dividend of 5.18 pence per share to shareholders representing an increase of 5% compared to 4.93 pence per share in H1 2020.
Prudential Plc (LON: PRU)
Prudential is a provider of asset management and life and health insurance services with a focus on African and Asian markets. Its profit after taxes was $1,571 million in H1 2021 compared to $1,286 million in the same period in 2020.
At the day’s close on Wednesday 13 October 2021, the shares of Prudential were at GBX 1,435.50, down by 1.54%. The market cap of the company is £40,042.43 million. In the last one year, the shares of Prudential returned 26.09% to shareholders.
Prudential announced an interim dividend of US 5.37 cents per ordinary share for H1 2021.
NatWest Group Plc (LON: NWG)
NatWest Group is a retail and commercial banking firm. Recently, the company announced £100 billion target for Climate and Sustainable Funding and Financing (CSFF) initiatives through 2025.
At the day’s close on Wednesday 13 October 2021, the shares of NatWest Group were at GBX 228.30, down by 0.65%. The market cap of the company is £26,270.77 million. In the last one year, the shares of NatWest Group returned 109.64% to shareholders.
NatWest Group’s operating profit before tax was recorded as £2,505 million for H1 2021 compared to a loss before tax of £770 million in H1 2020. The board announced an interim dividend of 3 pence per share for H1 2021.
