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Improving economy boosts RBS but HSBC remains most attractive for investors

30th September 2014 Print

As Royal Bank of Scotland updates the market Graham Spooner, investment research analyst at The Share Centre, explains what it means for investors.

“Royal Bank of Scotland has announced the recovering economy and strong performance in its Irish operations have significantly lowered its losses for bad debt, freeing up £800m of money it had set aside. This positive news from the troubled bank saw the shares up amongst the top risers in early morning trading. Royal Bank of Scotland now expects to outperform its previous guidance for the year. 

“However, uncertainties remain and we continue to recommend the bank as a ‘sell’. Whilst we are cautious on the sector as a whole, for investors looking for exposure to the banks we believe HSBC presents the best buying opportunity. Management continues to make progress with its long term recovery plans and the slimming down of the balance sheet, and there are improving trends in margins, costs and bad debt charges. However, the bank is not out of the woods yet and we would recommend investors seek opportunities elsewhere in the market.”