The best JSE listed banks in 2022

The following looks at South Africa’s top retail banks to see how they compare in terms of broker ratings, total returns, and fundamental valuations.

The five banks on the Johannesburg Stock Exchange(JSE):

1. Absa (ABG)

2. Capitec (CPI)

3. FirstRand (FSR)

4. Nedbank (NED)

5. Standard Bank (SBK)

ABG, CPI, FSR, NED and SBK shares – Total Returns

The above graph highlights South African Banks (Absa, Capitec, FirstRand, Nedbank and Standard Bank) total returns over a one month, three month and year to date look back period.

The total return values include share price gains / losses and dividends paid as of the 27^th of October 2022.

Absa is the best performing bank in 2022 thus far, having yielded a 41% return over the period.

Nedbank and Standard Bank are the second-best performing banks having returned 35.5% and 31.65% respectively year to date.

Capitec has been the underperforming bank providing a negative return over a three month and year to date time frame. The company has however seen some resurgence over the last month to recover roughly near twenty percent.

Over the last month all five banks have performed well, although it is Standard Bank which has returned the most for investors.

ABG, CPI, FSR, NED and SBK shares – Peer Valuations

Within the locally listed banking sector, while the Absa Group Limited has yielded best total return in 2022 the group continues to trade on the best historical price to earnings (P/E) multiple of 8.37 and second best forward looking multiple, after Nedbank.

Nedbank whilst trading on the most attractive forward multiple also boasts the highest historical dividend yield at current prices.

Capitec carries the most expensive multiples whilst offering the lowest yield amongst its peers. The share has historically been priced for growth which has not materialized quite to the levels anticipated in recent times.

ABG, CPI, FSR, NED and SBK shares – Broker ratings and price targets

The above table highlights consensus analyst ratings and long-term price targets (as polled by Refintiv) as of the 27^th of October 2022. Added to this, we have looked at the most recent share price data relative to the mean of each companies’ long term price target to determine how much of a discount or premium these stocks trade to these levels currently.

Absa, FirstRand, Nedbank, and Standard Bank all currently carry consensus buy ratings, while Capitec is the only banking counter with a consensus ‘hold’ rating at present.

Nedbank and FirstRand trade at the deepest discounts to what is deemed a longer-term fair value.

In summary:

• Absa Group has provided the best total return for investors for the year to date

• Capitec has yielded a negative return for investors year to date

• Over the last month it is Standard Bank which has been the standout performer

• Absa, FirstRand, Nedbank and Standard Bank all currently carry consensus ‘buy’ ratings

• Capitec is currently viewed as a ‘hold’

How to trade top bank stocks in South Africa

If you want to trade any of the top 4 bank stocks we have discussed today, you can utilise IG’s CFD trading platform to speculate on the share price movements of the underlying asset – to buy (long) or sell (short) following these simple steps:

1. Create a CFD Trading Account or log in to your existing account

2. Enter the company name or ticker in the search bar and select it

3. Choose your position size

4. Click on ‘buy’ or ‘sell’ in the deal ticket

5. Confirm the trade