All three stocks are down by 10% or more over the past 12 months. Barclays and HSBC are both negativeover five years as well, although Lloyds has grown 40% as it pulled back from the abyss.
Like many investors, Ive been scanning the sector for signs of life, and now I may have spotted some.
Barclays troubles have givenchief executive like Antony Jenkins a free hand to carry out drasticsurgery, and he has saved 1.7bn by slicing14,000 jobs and selling Barclays consumer banking businesses in Spain and the United Arab Emirates.
Jenkins hasalso steered Barclays through both European and British banking stress tests, while posting a steady increase in profits. Full-year pre-tax earnings are predicted to top 5.6bn when Barclays reports in early March.
Its share price is up 8% in the past week as sentiment improves, and a string of investment banks now have it as a buy, including Deutsche, Citigroup, Goldman Sachs and SocGen.
Barclays currently yields 2.67%, but that is forecast to hit 4.3% by the end of this year, and 5.4% by December 2016.
Its flatlining share price couldnow spring into life.
It seems a long time since HSBC was known as the good bank, for avoiding the worst in the financial crisis.
Its high exposure to China was alsoonceseen as a good thing, but with Chinese GDP growth falling to a 24-year low of 7.4%, that has turned bad as well.
But trading at 11 times earnings, these concerns are in the price. HSBCis also offering that rare thing in todays banking sector, an attractive yield, of4.8%. The shares have bounced 5% in the last week, as sentiment turns.
HSBC still has a long way to go, but the longest journey starts with a single step, as they say in China.
Lloyds Banking Group
The main focus at Lloyds Banking Group is the recovering UK. Although UK house price growth is slowing, the property shortage suggests there is little chance of an outright crash. Continuing low interest rates should also keep a lid on mortgage arrears and repossessions.
My worry is that given its Lloyds is particularly vulnerable to the rise of UK challenger banks such as Metro, M&S, Tesco, TSB and Virgin Money. If the Competition & Market Authority calls time on free banking, that mayencourage more customers to shop around for a bettercurrent account, and Lloyds could lose business, or be forced to cut margins to keep it.
Of the three, the investment case for Lloyds looks weakest, especially as it still doesnt pay a dividend.
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