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Highlights:
- Deutsche Bank raises share price targets for Lloyds to 83p, NatWest to 460p, and Standard Chartered to 970p.
- Positive outlook for UK banks after tax uncertainties are cleared and interest rates stabilize.
- Lloyds remains Deutsche Bank's preferred UK bank due to its predictable revenue and tangible book value growth.
UK bank shares, particularly Lloyds Banking Group PLC (LSE:LLOY) and NatWest Group PLC (LSE:NWG), have more room to grow following the release of earnings reports and the upcoming UK Budget, according to analysts at Deutsche Bank. The bank raised its share price targets across several FTSE 100 lenders, citing positive medium-term prospects and a favorable outlook once tax uncertainties are addressed.
Deutsche Bank increased Lloyds Banking Group's target price to 83p, up from 64p, with its shares last closing at 62p. NatWest Group’s target price was raised to 460p from 350p, with the stock last trading at 358.7p. Standard Chartered PLC also received a notable upgrade, with its target price lifted to 970p from 825p.
While the increases for Barclays PLC (LSE:BARC) and HSBC Holdings PLC (LSE:HSBA) were more modest, both banks still saw upward revisions. Barclays' target was moved to 320p from 280p, and HSBC’s was raised to 830p from 825p.
Deutsche Bank analyst Robert Noble expressed confidence in the outlook for UK banks, expecting the removal of tax-related uncertainties to provide a boost to share prices. He also pointed to improving money growth trends supported by government debt as a positive factor for the sector.
Noble highlighted that mortgage margin growth is expected to pick up again in the medium term as interest rates stabilize. Among the UK banks, Lloyds remains Deutsche Bank’s top preference due to its more predictable revenue and tangible book value (TBV) growth, with domestic UK banks generally favored over global peers such as HSBC and Standard Chartered.
With the UK's third-quarter earnings reports and the government’s upcoming Budget in focus, Deutsche Bank remains optimistic about the prospects for UK lenders in the near to medium term.
