Investors advised to hold on Barclays and HSBC

Banking giants HSBC and Barclays today reported the strongest underlying profits of the UK banks so far this year as the gap widens from their part-nationalised counter parts.

Nick Raynor, investment adviser at The Share Centre comments on the results and how investors have reacted within the banking sector: "Barclays Plc reported a pre-tax profit of £4.54billion for the calendar year to the end of September. The banking group's investment banking arm, Barclays Capital, put in a poorer than forecasted performance with sales and profits at the retail banking arm dropping substantially.

"HSBC has announced better than expected strong underlying profit over the last nine months in difficult markets. However, its third-quarter figures were lower than a year earlier. Understandably, both banks are being impacted by tightening in credit market spreads.

"HSBC has proven to be something of a safe harbour for investors, as, like Barclays, it avoided government support. Given the ongoing volatility within the sector we continue to list both Barclays and HSBC as a hold for low-to-medium risk investors. However, investors with a bigger appetite for risk, looking to buy within the sector could consider buying Barclays.

"For our customers, RBS, Lloyds and Barclays were the most bought and sold stocks in the past week as short term speculative investors were attracted to the situation. We would suggest Lloyds and RBS for high-risk traders only due to the extreme volatility in the share price.