Lloyds Banking Group shares offer more upside than RBS suggests guidance from WestLB Equity Markets |
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| Strategic Finance | |
| Written by Roberta Murray | |
| Friday, 20 January 2012 | |
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Financial News Roundup: Lloyds Banking Group, Royal Bank of Scotland Group, HSBC Holdings mortgage lending, British debt mountain, record British car exports.
Lloyds Banking Group plc (LON:LLOY) is a Buy with the equity analysis team at brokerage WestLB Equity Market. Sector peer Royal Bank of Scotland Group plc (LON:RBS) is also rated at Buy. However, RBS shares are expected to underperform those at Lloyds Banking Group. With a share price target set at 26.5 RBS shares have a potential upside of just 0.8% from our last quote at 26.29. HSBC Holdings gets ambitious on mortgage lendingHSBC Holdings plc (LON:HSBA) will attempt to grab a larger share of the British mortgage market this year as it prepares to lend at least £15bn to home buyers. HSBC said it expected to help about 150,000 people to buy a house in 2012, including more than 27,000 first-time buyers to whom it intends to make £3bn of new borrowing available. Lending the money is expected to increase HSBC's share of the mortgage market to about 11pc, equivalent to the largest share of the market the bank has ever recorded. In the first half of 2011 the bank lent £6.7bn to home buyers, up 35% on the same period the year before. Britain languishes under massive debt mountainBritain has the highest level of debt among the major economies bar Japan, research has found. Over the past three years combined public and private sector borrowing has risen to more than 500% of national output. The alarming rise since the height of the financial crisis has been fuelled by debt in the financial sector as people seek to borrow their way out of the economic slump, according to consultancy McKinsey. Even at current trends it will take until 2020 for the UK to return to pre-2003 debt levels. Furthermore, UK lenders may have been more patient with homeowners in negative equity, which could be disguising the full extent of the mortgage debt problem, the report said. The 60-page report by McKinsey Global Institute compared major economies since 2008. The study said: 'Overall, the United Kingdom needs to steer a difficult course: reduce government deficits and encourage household debt reduction – without limiting GDP growth.' Record exports for British built carsRecord exports have helped drive a near-6% rise in the number of cars built in the UK last year. Industry figures yesterday revealed that a total of just over 1.3 million vehicles were manufactured in 2011, with 83% destined for overseas markets. Trade unions said the findings provided a “glimmer of hope in gloomy times” but analysts have warned about the potential fallout from the continuing Eurozone crisis and over-capacity in Europe’s car production sector. A breakdown of the data showed exports – mostly for mainland Europe – were up 17% over the year, while production for UK showrooms fell 29%. (…) In contrast, there was a 30% slide in Honda production, an 11.5% reduction in the number of Minis made, 11.4% fewer Jaguars and 6.5% fewer Toyotas. The numbers can be skewed by the launch of, or lack of, new models, The Scotsman reports.
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