Both Barclays (LSE: BARC)(NYSE: BCS.US) and Standard Chartered (LSE: STAN) issued results last week, and both were mixed. At Barclays, pre-tax profit was up 12% on the previous year, but provisions for PPI insurance claims and foreign exchange litigation costs were up.
Standard Chartered, meanwhile, saw profits fall 25% and bad debts rise by 32%, but the dividend was maintained — after the previous week’s board shake-up, many were expecting the mooted 5.8% yield to be pared.
Barclays ahead
Prior to these results, the City’s tipsters were putting out a much more bullish outlook for Barclays than for Standard Chartered and for the FTSE 100’s other China-focused bank, HSBC Holdings (LSE: HSBA)(NYSE: HSBC.US). Those are unlikely to be changed much, so how do they compare?
Opinion is split over Standard Chartered, with only eight out of 27 pundits suggesting we should Buy the shares. Seven think we should Sell and 12 are Neutral. The hesitation surely reflects a few uncertainties — what will the new board do, will the dividend be cut, and what’s going to happen in South Korea?
At HSBC things are similar, with 10 out of 28 in the Buy camp and seven on Sell, and 11 Neutral. Not knowing what will happen to HSBC’s generous dividends should the feared Chinese slowdown come to pass must be hurting sentiment.
Rampant bulls
By contrast, the City is ebullient over Barclays, and out of 25 forecasting there are no Sells and only five Neutral — and 20 urging us to Buy! But what about price targets?
There’s a recent average of 996p out there for Standard Chartered, and that’s 2% below the current share price. The only surprise is that, with 2015 and 2016 forecasts steadily downgraded over the past year, there aren’t more bears out there.
HSBC is in a better state, with an average target of 664p — 14% above the shares’ 584p price. But the real winner is again Barclays. As I write, Barclays shares are trading at 261p, compared to a recent average price target that’s 16% higher at 304p!
Which should you buy?
Have the pundits got it right? They seem to be giving mixed signals about Standard Chartered and HSBC, but that might be partly due to HSBC’s higher P/E rating — though both are pessimistically low, with Standard Chartered on 9.1 and HSBC on 10.4.
But I reckon they’re spot on with Barclays. There’s very strong growth expected, with far less exposure to the East — and forecast P/E multiples as low as 9.8 for 2015, falling to 8.4 for 2016.