The week ahead: Lloyds Bank, Barclays, RBS

Investors will be keen to follow this week's news, with the banking sector's third-quarter results season swinging into gear. Look for updates from Lloyds, Barclays and RBS.

Monday 23 October

Trading Statements

Braemar Shipping Services, Essentra

AGM/EGM

City of London Investment Group, Goldplat

Tuesday 24 October

Trading Statements

St James's Place, Gear4music, Whitbread, Bloomsbury Publishing, Anglo American, International Personal Finance, Bunzl, St James's Place

AGM/EGM

Premaitha Health

Wednesday 25 October

Lloyds Banking Group kicks the week into action Wednesday, with analysts at UBS expecting the lender to report third-quarter underlying pre-tax profit of £2.16 billion, 5% above company consensus of £2.05 billion and 13% more than the £1.9 billion it made a year ago. Investec Securities wants £2.1 billion this time.

UBS reckons Lloyds should be able to deliver a stable open mortgage book and increased net interest margin (NIM) for the three months from a combination of deposit repricing, lending mix change and interest rate hedge management. Results will also be assisted by the inclusion of credit card business MBNA for the full quarter.

"Our expectation of rate hikes in November 2017 and May 2018 helps reduce downside risks on NIM and should be immaterial to loan losses," says UBS.

Watch, also, for clarity on its core equity tier 1 (CET1) capital position.

Lloyds currently trades on 1.2 times tangible net asset value (TNAV) for a forecast return on tangible equity (ROTE) of 14.5% and 8.6 times forward earnings. Its yield, meanwhile, approaches 8% at a 13% CET1 payout floor. "Lloyds remains one of the most capital generative banks in Europe," adds the broker.

Both UBS and Investec have 'buy' ratings on Lloyds, with target prices of 85p and 75p respectively.

Trading Statements

Metro Bank, GlaxoSmithKline, Lombard Risk Management, Lloyds Banking Group, Centaur Media, Cobham

AGM/EGM

Photo-Me International, GCP Student Living, Redde

Thursday 26 October

Barclays follows up Thursday, with the debate expected to focus around current and prospective returns within its corporate investment banking (CIB) services division. "Our CIB estimates assume modest income growth and a 3% fall in disclosed costs in 2018," says UBS.

It reckons there's too much bad news in Barclays' current share price of 195p and has a 'buy' rating with 235p target. However, "it's hard to see Q3 results as a catalyst for a revision to this view".

Barclays trades at 0.6 times TNAV for a forecast ROTE of 7% and at 9.2 times forward earnings. With the 3p dividend policy expected to stay intact, "yield upside [is] a more distant prospect".

Trading statements

Telefonica, Vitesse Media, C&C Group, Redefine International, Debenhams, Connect Group, National Express, Kaz Minerals, RELX, Inchcape, Barclays

AGM/EGM

Standard Life UK Smaller Companies Trust, OPG Power Ventures, Mattioli Woods, Imagination Technologies, Argos Resources, Avocet Mining, Alumasc, Mila Resources

Friday 27 October

Royal Bank of Scotland caps off a busy week for banking analysts. Pre-tax profits of £1.1 billion are forecast by UBS, with a strong quarter for capital generation expected, driven by lower risk-weighted assets in the capital resolution division.

The firm has already guided towards a continuation of its shrinking NIM as the interest rate hedge matures. "However, our house view [on rate rises] raises the prospect of a better outlook for margins," UBS explains.

No new information should be forthcoming on legacy litigation costs, but look out for an update on Natwest Markets revenues, which have "been on a tear" in the last few quarters.

RBS trades on 10.9 times forward earnings, 1 times TNAV for a forecast ROTE of 9%. "With target price broadly in line with the current share price, no near term yield and uncertainty around the cost of any DOJ settlement, [we] remain 'neutral'," says UBS, which has a 265p target on the shares.

Trading statements

International Consolidated Airlines, Royal Bank of Scotland, Shire, Berendsen, Elementis, Hastings Group Holdings

AGM/EGM

K3 Capital

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.