{"id":943155,"date":"2026-05-07T05:47:19","date_gmt":"2026-05-07T05:47:19","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/943155\/"},"modified":"2026-05-07T05:47:19","modified_gmt":"2026-05-07T05:47:19","slug":"uk-bank-stocks-cheap-despite-strong-earnings-outlook-says-jefferies","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/943155\/","title":{"rendered":"UK bank stocks cheap despite strong earnings outlook, says Jefferies"},"content":{"rendered":"

\"UK UK bank stocks cheap despite strong earnings outlook, says Jefferies Proactive uses images sourced from Shutterstock <\/p>\n

UK bank shares may look undervalued despite a steady stream of earnings upgrades, with investors increasingly focused on political and geopolitical risks, according to Jefferies.<\/p>\n

The broker, which reiterated ‘buy’ ratings stance on five domestically focused FTSE 350 banks, said medium-term earnings forecasts have been raised by around 5%, supported by higher interest rate assumptions and resilient operating performance.<\/p>\n

UK lenders delivered returns on equity of about 16% in the first quarter, with further upside expected as higher reinvestment rates feed through to margins.<\/p>\n

Credit growth remains solid, while impairment risks appear limited even under stress scenarios linked to elevated oil prices. Jefferies noted that official modelling suggests only a modest rise in loan losses.<\/p>\n

However, despite these supportive fundamentals, the sector has de-rated sharply this year, with share prices down around 10%.<\/p>\n

Analysts said the disconnect reflects investor concern over what they describe as \u201cScenario D\u201d \u2013 a combination of geopolitical uncertainty linked to the Iran conflict and the risk of political change in the UK.<\/p>\n

Potential policy shifts, including higher bank taxes, are seen as a key overhang, with uncertainty likely to persist for several months.<\/p>\n

Jefferies said that while the outlook could remain volatile in the near term, strong capital returns and improving profitability continue to underpin the investment case for the sector.<\/p>\n

Barclays PLC (LSE:BARC)<\/a> preferred in the near term, and Lloyds Banking Group PLC (LSE:LLOY)<\/a>\u00a0favoured over a six- to 12-month horizon.<\/p>\n

Target price changes were made as forecasts were tweaked, with Barclays raised 4% to 590p and Lloyds lifted to 125p, while NatWest Group PLC (LSE:NWG)<\/a>\u00a0trimmed 3% to 730p, OSB Group PLC (LSE:OSB)<\/a>\u00a0cut 10% to 700p and Paragon Banking Group PLC (LSE:PAG)<\/a>\u00a0lowered 6% to 1,000p.<\/p>\n","protected":false},"excerpt":{"rendered":"UK bank stocks cheap despite strong earnings outlook, says Jefferies Proactive uses images sourced from Shutterstock UK bank…\n","protected":false},"author":2,"featured_media":943156,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,4],"tags":[748,393,4884,230537,263432,1144,712,16,263433,15,1764],"class_list":{"0":"post-943155","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"category-united-kingdom","9":"tag-britain","10":"tag-england","11":"tag-great-britain","12":"tag-jefferies","13":"tag-jefferies-proactive","14":"tag-northern-ireland","15":"tag-scotland","16":"tag-uk","17":"tag-uk-bank","18":"tag-united-kingdom","19":"tag-wales"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116531722438091683","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/943155","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=943155"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/943155\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/943156"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=943155"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=943155"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=943155"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}