Brexit tail-risks for UK banks are rising, JP Morgan says

Analysts at JP Morgan sounded an upbeat note on shares of UK lenders on Wednesday, even as they warned that Brexit 'tail-risks' were rising.

The most likely scenario was a negotiated withdrawal, the odds of which they put at 60.0%, with the chances of a 'no deal' put at 20.0%.

Nonetheless, the immediate near-term risk was that an agreement might slip into 2019 and negatively impact on lenders' capital return plans at fiscal year 2018, in turn weighing on their valuations over the next six months, they said.

"We see the tail-risk around Brexit intensifying into year end and this is likely to remain as the main concern for investors in the UK, but we think fundamental drivers for the banking sector are resilient with rising capital surpluses."

Over at Citi meanwhile, their analysts were also out with a note on UK lenders.

Following meetings with senior representatives from Barclays, HSBC, Lloyds and RBS, they pointed out growth in First Time Buyer mortgages and that Buy to Let mortgages had begun to stabilise following a sharp decline in 2017.

Citi said it had 'buy' recommendations on HSBC, RBS and StanChart, a 'neutral' on Lloyds and a 'sell' on Barclays.