Broker snap: Credit Suisse warns on banking margins

12th May 2009 10:01

Credit Suisse has upped its price targets on part-nationalised banks Royal Bank of Scotland and Lloyds Banking Group but the increased targets are still below both banks’ current share prices.Royal Bank of Scotland has had its target price increased from 25p to 30p, while Lloyds’ price target is boosted to 65p from 45p, but both stocks have an ‘underperform’ rating.Credit Suisse has also cut Barclays from ‘outperform’ to ‘neutral’.The Swiss bank believes new rules on liquidity, along with other regulatory changes, plus lower interest rates will impede the banks’ progress back towards profitability.‘We think margins are under far more pressure than people realise,’ said Jonathan Pierce, Credit Suisse analyst.Pierce estimates that the three UK banks could see £15bn to £20bn wiped from margins as the tougher conditions force them to compete harder for retail deposits.