STAN, HSBC: Stocks you may buy as BOE proposes new rules for lenders

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STAN, HSBC: Stocks you may buy as BOE proposes new rules for lenders

 STAN, HSBC: Stocks you may buy as BOE proposes new rules for lenders
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Highlights

  • BOE Deputy Governor Sam Woods on Tuesday proposed simplification of the global regulatory system of bank capital buffers to encourage financial institutions to keep lending in times of economic crisis.  
  • The Basel Committee of the global regulators is currently discussing buffer usability.

Bank of England (BOE) Deputy Governor Sam Woods on Tuesday proposed simplification of the global regulatory system of bank capital buffers to encourage financial institutions to keep lending in times of economic crisis.  

The last two years have been challenging for global economies due to various reasons, such as Covid-related lockdowns, supply chain crisis, rising inflation, and war in Ukraine. Financial institutions are cautiously tapping their buffers to keep lending, fearing investors’ displeasure about availing of loans.  

The Bank of England (BOE) is a member of the Basel Committee of global regulators, which is seeking for solutions to make capital buffers more usable after the pandemic caused various challenges. Woods has put forward the idea of “Bufferati”, or a more streamlined system for Basel to consider as it would be starkly different from what they are following now. Periodical stress testing of banks can give a clear picture of their capital levels.

 Financial institutions are cautiously tapping their buffers to keep lending

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The Basel Committee of global regulators is currently discussing buffer usability, the extent to which banks are willing and able to use their capital buffers to keep lending, absorb losses and preserve financial stability during an economic crisis, amid the rising uncertainty. In the UK and Europe, Basel’s latest batch of new rules is already being delayed by two years.

 

Let us look at 3 banking stocks that may get impacted by the development.

  1. HSBC Holdings Plc (LON: HSBA 

One of the leading banking and financial services companies, HSBC Holdings Plc is the second largest bank in Europe with a network across 64 countries in Europe, Asia, Africa, North America, South America, and Oceania. The bank has recently warned that more share buyback was unlikely in 2022 as rising inflationary pressure and slow economic recovery have dented its prospects.  

With a current market cap of £95,360.64 million, HSBC Holdings Plc’s shares were trading at GBX 482.85, up by 1.91% at 8:15 AM (GMT), as of 26 April 2022. The FTSE 100 listed company’s share value appreciated by 14.16% over the last one year as of 26 April 2022, while its year-to-date return stands at 7.56%. 

Also Read: Heathrow raises 2022 passenger forecast. Should you invest in airline stocks?

2. Lloyds Banking Group Plc (LON: LLOY 

The UK-based leading retail and commercial financial services provider operates through various brands in three main divisions that are Retail and Insurance, commercial banking, and wealth. Lloyds Banking Group has recently reported a decrease in statutory profit after tax by 14% to £1,204 million in Q1 2022, from £1,397 million in Q1 2021, indicating higher net income and a limited underlying impairment charge versus a net credit in 2021. Its loan and advances to customers stood at £451.8 billion, up from £443.5 billion a year before.  

 Financial institutions are cautiously tapping their buffers to keep lending

2022 Kalkine Media®

With a current market cap of £32,026.79 million, Lloyds Banking Group Plc’s shares were trading at GBX 47.14, up by 2.74% at 8:15 AM (GMT), as of 26 April 2022. The FTSE 100 listed company’s share value appreciated by 10.01% over the last one year as of 26 April 2022, while its year-to-date return stands at -1.32%. 

Also Read: HSBC Q1 profit slides amid Russia-Ukraine war. Should you hold the stock?

3. Standard Chartered Plc (LON: STAN 

The leading international banking and financial service company, Standard Chartered Plc operates a network of over 1,200 branches and outlets across Asia, Africa, and the Middle East. The bank has recently announced that Adrian De Souza has been appointed as its new group company secretary with effect from 5 May 2022.  

With a current market cap of £14,429.13 million, Standard Chartered Plc’s shares were trading at GBX 487.00, up by 0.95% at 8:15 AM (GMT), as of 26 April 2022. The FTSE 100 listed company’s share value appreciated by 0.33% over the last one year as of 26 April 2022, while its year-to-date return stands at 8.36%.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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