UK-based banking giants HSBC Holdings (GB:HSBA) and Lloyds Banking (GB:LLOY) are the last ones to wind up the earnings season for the first quarter. Both banks will release their Q1 2023 results in the next week. Prior to the release of the financial results, analysts have a positive outlook on the stock, as indicated by their Moderate Buy ratings.
These announcements will follow the Q1 results from Barclays (GB:BARC) and Standard Chartered (GB:STAN) posted this week. Both banks recorded higher-than-anticipated net profits, driven by an increase in net interest income.
The TipRanks Earnings Calendar for the UK market compiles a list of stocks that have upcoming earnings. This tool furnishes an inventory of companies, along with their latest earnings data, and can be sorted based on various criteria such as sector, market capitalization, analyst rating, and so on.
Let’s have a look at the details.
Lloyds Banking Group PLC
Lloyds Bank, with a strong focus on the UK markets, is the biggest financial institution in the country and caters to approximately 25 million customers.
Lloyds will not be releasing its financial results; instead, the bank will issue its interim statement for Q1 on May 3rd. The bank will disclose its half-yearly earnings for 2023 in July.
Given its significant mortgage portfolio, Lloyds is expected to benefit substantially from the increase in interest rates during the quarter. Analysts expect Lloyds to post a pre-tax profit of £2 billion, which shows a growth of 26% from the last year. The majority of this growth can be attributed to net interest income, which is expected to increase by 22% on a year-over-year basis. Lloyds anticipates impairment costs of £356 million, up from £177 million last year.
Is Lloyds Bank a Good Stock to Buy?
Ahead of the earnings announcements, analysts have reconfirmed their Buy ratings on the stock and continue to have a positive outlook.
On TipRanks, LLOY stock currently holds a Moderate Buy rating based on seven Buy recommendations. The average target price is 67.6p, indicating an upside potential of 38.4%.
HSBC Holdings PLC
HSBC is a multinational banking and financial services company with its headquarters based in the UK. The bank has a global presence in over 60 countries.
HSBC will release its first-quarter earnings for 2023 on May 2. According to TipRanks consensus, the EPS forecast is 0.2p. The EPS for the same quarter last year was 0.14p.
Compared to Lloyds, HSBC has a higher exposure to investment banking activities. Given the challenging environment for investment banking in the first quarter, the bank is expected to report lower advisory fees.
The bank has been in the news for quite some time now due to its ongoing battle with its shareholder, Ping An. Before the bank’s results next week, the Chinese insurer is expressing its frustrations publicly. The focus will be on how the upcoming results impact the shareholder movement to separate the bank’s Asian and European operations.
Is HSBC a Buy or Hold?
According to TipRanks, HSBA stock has a Moderate Buy rating, which is derived from eight Buy and five Hold recommendations. The average price prediction is 746.18p, which shows a growth of almost 30% from the current price level.
Conclusion
Analysts believe the UK banks will echo the same storyline as their Wall Street counterparts as a result of the higher interest rate environment. However, investors will keep a close watch on the flow of deposits in and out of each bank, following the chaos that happened in the global banking sector in March.
