Best JSE Top 40 listed banks in 2022 with broker ratings and price targets
The following article looks at South Africa’s five major commercial banks’ capital gains and dividend offerings year to date, as well as broker ratings and longer-term price targets for these securities.
The five banks covered include
ABSA (ABG)
Capitec Holdings (CPI)
Firstrand (FSR)
Nedbank (NED)
Standard Bank (SBK)
Share price returns for banks year to date
Local banking counters have been amongst the best performing shares of the Jse Top 40 Index in 2022 thus far (as of the 7th of April 2022).
These counters have seen a substantial improvement in earnings as the domestic economy recovers from the pandemic. Gains are also supported by rising interest rates domestically to help improve lending margins.
Nedbank has been the outperforming bank this year having added 28.34% to its share price as well as paying a full-year dividend (ex-dividend 6 April 2022) of 758c (roughly 3.35% yield).
In addition to a 24.27% capital gain, Standard Bank has paid a full year ordinary dividend of 511c (2.9% yield).
Absa has gained 20.75% and will pay a full year ordinary dividend of 475c (around 2.5% yield) with 20th of April being the last day to trade.
FirstRand has gained 20.4% and paid an interim dividend of 157c interim (2.2% yield)
Capitec is up 15.31% for the year and is scheduled to pay a R28 full year dividend (1.2% yield) with the last day to trade the 4th of May.
South African Banking shares – Broker ratings and client views
The below table highlights how major South African Banks (ABSA, Capitec, FirstRand, Nedbank, and Standard Bank) are currently viewed on an institutional (analyst) level.
The table highlights current analyst ratings (as polled by Refinitiv) as of the 7th of April 2022.
| Company | LT Broker Rating | LT Target Price | Share Price | Discount/Premium to Target |
|---|---|---|---|---|
| ABSA Group | Buy |
197.88 |
184.98 |
-6.52% |
| Capitec | Hold |
1984.4 |
2,264.15 |
19.14% |
| FirstRand Ltd | Hold |
71.1 |
73.49 |
3.36% |
| Nedbank Ltd | Buy |
241.97 |
225.30 |
-6.89% |
| Standard Bank | Buy |
176.15 |
174.02 |
-1.21% |
A current consensus of broker ratings and long-term price targets shows FirstRand and Capitec to carry ‘hold’ ratings, although in the near-term prices are trading above what is deemed a long-term fair value.
Nedbank, despite being the outperforming bank this year still carries a ‘buy’ rating and trades at the broadest discount to long term analyst price targets (of the securities covered).
ABSA and Standard Bank also continue to carry ‘buy’ ratings in consensus.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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