HSBA, NWG, LLOY: Stocks to eye as Sunak asks banks to fund the oil & gas sector

4 min read | June 26, 2022 06:03 PM AEST | By Rishika Raina

HSBA, NWG, LLOY: Stocks to eye as Sunak asks banks to fund the oil & gas sector — Image source: © Wirestock | Megapixl.com

Highlights

In Thursday’s meeting in Aberdeen, Chancellor Rishi Sunak asked lenders to keep funding the oil and gas sector after the implementation of the windfall tax.

The Oil and gas sector has been opposing the levy as it would dampen their investment into domestic green sources of energy.

In Thursday’s high-level meeting in Aberdeen, Chancellor Rishi Sunak asked the UK’s prominent banks to step up and keep funding the oil and gas sector after recently implementing a windfall tax on it. Oil and gas industry executives have been opposing the levy saying that it would dampen their investment in domestic green sources of energy. As per plans in the past, BP had scheduled to spend a whopping amount of £18 billion on the UK's energy system by the end of 2030. Similarly, Shell had plans to spend £20-25 billion on UK energy over the next 10 years.

The windfall tax was implemented on the oil and gas companies last month, aiming to raise £5 billion, and channelising these funds towards offsetting the soaring household energy bills. However, major oil and gas businesses like BP and Shell have cautioned that the tax could impact investments in renewable energy.
The chancellor has asserted that he is trying to make sure that the energy firms can keep investing in their businesses.

Windfall Tax: Now and Then

Sunak has demanded the lenders make sure that the oil and gas companies have adequate access to capital. He said that the levy wasn’t a permanent solution, and it is anticipated that it would be withdrawn as and when the market bounces back to normalcy, or by the end of 2025.

While the consultations regarding the windfall tax take place, UK investors can keep an eye on banking stocks that might be impacted due to the move. Let’s look at the share price performance of 3 of the UK’s top banks.

HSBC Holdings Plc (LON: HSBA)

HSBC Holdings plc’s shares were trading at GBX 526.40, down by 0.04%, at 8:35 AM (GMT+1) on 24 June 2022. The FTSE 100 bank has provided its shareholders with a return of 24.99% over the last one year as of 24 June 2022, while its year-to-date return stands at 17.26%. The bank’s market cap stands at £105,705.80 million as of 24 June and it is currently offering a dividend yield of 4% a year.

NatWest Group plc (LON: NWG)

NatWest Group plc’s shares were trading at GBX 219.20, up by 0.05%, at 8:39 AM (GMT+1) on 24 June 2022. The FTSE 100 bank has provided its shareholders with a return of 6.88% over the last one year as of 24 June 2022, but its year-to-date return is negative, at -2.95%. The bank’s market cap stands at £22,916.81 million as of 24 June and it is currently offering a dividend yield of 4.8% a year.

Lloyds Banking Group Plc (LON: LLOY)

Lloyds Banking Group Plc’s shares were trading at GBX 42.44, up by 0.30%, at 8:41 AM (GMT+1) on 24 June 2022. The performance of the FTSE 100 bank has deteriorated over the last one year and its return on both one-year and year-to-date basis are negative as of 24 June, at -9.83% and -11.11%, respectively. The bank’s market cap stands at £29,269.27 million and it is currently offering a dividend yield of 4.7%.

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