A constrained consumer; initiating on CYBG at ‘Neutral’ and upgrading LLOY to ‘Outperform’

  • Sectors : Banks
  • Companies : RBS | Virgin Money UK | Lloyds Banking Group


Ratings and price correct at time of issue

Company Rating Date Previous Rating Date Closing Price
Lloyds Banking Group OUTPERFORM 28/05/19 Neutral 14/02/18 58.5p
RBS NEUTRAL 11/02/19 N/A N/A 217p
Virgin Money UK NEUTRAL 28/05/19 N/A N/A 188p


Retail banking in the UK remains challenging, not helped by an uncertain macro environment. We initiate on CYBG with a ‘Neutral’ rating (price target: 159p). The Virgin Money (VM) acquisition creates significant opportunities from an integration and customer perspective; however, we are less optimistic on the latter than the former due to the challenging sector backdrop. In addition, we upgrade Lloyds Banking Group (LLOY) to ‘Outperform’ (price target: 71p) given that it is less dependent on growth due to its superior capital generation, driving substantial capital returns in the coming years.

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May 28 2019, 06:30 IST/BST