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Lloyds, Barclays and RBS share prices ahead of Brexit

Brexit continues to hinder the performance of British lenders, with uncertainty stifling investment and squeezing margins on UK mortgage margins.

London Source: Bloomberg

Brexit has softened business confidence and is hindering the performance of British lenders in the process, with Barclays, Lloyds and Royal Bank of Scotland (RBS) all seeing their respective share prices fall by more than 11% over the last 12 months.

Technical analysis from our experts

'A move above 160p would put Barclays' share price above the July and September peaks, providing a more bullish view. A drop below 145p reaffirms the bearish view and brings the August low at 135p into play...'

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No-deal Brexit will hit domestically focused Lloyds hardest

Lloyds has taken strides to become a more domestically focused retail bank, tying its performance more closely to that of the wider UK economy.

In the event of Britain bailing out of the EU without a deal, the UK economy is predicted to suffer greatly in the short term, which would spell disaster for British lenders, with Lloyds likely to feel the impact more acutely than its rivals.

Barclays cuts costs ahead of Brexit

Earlier this year, Barclays recorded an 82% rise in half-year pre-tax profits despite ongoing Brexit uncertainty applying downward pressure on its share price

However, it is worth noting that the surge in profits, reflected the lack of additional charges which significantly hurt earnings during the same period last year, with the bank forced to settle with US authorities over its involvement in selling mortgage-backed securities ahead of the financial crisis.

Barclays and other UK lenders are not only contending with the uncertainty caused by Brexit, but also a competitive mortgage market and the threat of a global economic slowdown.

Consequently, Barclays is focused on cutting costs in second half of this year, with the lender shedding more than 3000 jobs across its operations in its second quarter (Q2) alone.

‘Management focus on cost control remains a priority, and we expect to reduce expenses to below £13.6 billion for 2019,’ Barclays Group CEO Jes Staley said.

Alison Rose to navigate RBS post-Brexit

In September, RBS announced that Alison Rose will take over from Ross McEwan as CEO – making her the first women to lead one of Britain’s top banks.

Rose will take the helm in November, which will see her forced to navigate the bank through a post-Brexit landscape, so long as the 31 October deadline isn’t push back.

Her job will be made all the more difficult by the government still controlling a significant stake in RBS and, depending on the type of Brexit the UK ultimately gets, progress towards privatisation could be hampered.

‘This is an exciting time as we enter a new chapter for this bank,’ Rose said. ‘Our industry is facing a series of challenges; from the ongoing economic and political uncertainty to shifts in the behaviour and expectations of our customers, driven by rapid advances in technology.’

‘It will be my priority to make sure we are ready to meet these challenges and build the best bank for families, businesses and communities,’ she added.

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Trading around Brexit

Find out how Britain’s EU exit continues to affect traders, and discover:

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  • Brexit trading strategies for key assets

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