Why I’m Still Bullish On HSBC Holdings plc, Barclays PLC And Royal Bank Of Scotland Group plc After Forex Fines

Despite sentiment being hit by the forex probe, HSBC Holdings plc (LON: HSBA), Barclays PLC (LON: BARC) and Royal Bank of Scotland Group plc (LON: RBS) could have bright futures

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today’s news that five global banks, including HSBC (LSE: HSBA) (NYSE: HSBC.US) and RBS (LSE: RBS), have been fined by US and UK regulators for apparent wrongdoing regarding the foreign exchange market is perhaps not a great surprise. After all, both banks made provisions for a fine in their most recent results and, as a result, their share prices are down less than 1% today.

Meanwhile, with the investigation continuing into Barclays’ (LSE: BARC) (NYSE: BCS.US) actions (it is not one of the five banks fined today – the others are UBS, JP Morgan Chase and Citibank), its shares are down just 2% in a weak wider market.

Weak Sentiment

Indeed, the decision by the UK’s Financial Conduct Authority and US regulator, the Commodity Futures Trading Commission, to fine five global banks over £2 billion is yet another blow for the UK banking sector. It is just one of a number of investigations that have found apparent wrongdoing at major banks, with PPI claims still ongoing and investigations into various other matters yet to reach their conclusion. So, it’s of little surprise that investors are getting somewhat used to banks being required to pay out vast sums on what feels like a regular basis.

Should you invest £1,000 in Barclays right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barclays made the list?

See the 6 stocks

Profitability

However, such investigations and large fines are unlikely to last in perpetuity. And, despite them, banks such as HSBC, Barclays and RBS are set to report encouraging levels of profitability in the current year. For example, HSBC’s bottom line is due to rise by 3% in the current year and by a further 7% next year, while Barclays is forecast to report growth in net profit of 23% this year and 28% next year. Meanwhile, RBS is set to return to profitability for the first time since the credit crunch began, with pre-tax profits of £4.3 billion pencilled in for the full year.

Valuation

Despite their encouraging overall performance, HSBC, Barclays and RBS are priced to sell. In fact, shares in all three banks appear to offer excellent value for money, with them having relatively low price to earnings (P/E) ratios, for example. HSBC trades on a P/E ratio of just 11.6 (versus 14.1 for the FTSE 100), while Barclays and RBS have even lower P/E ratios of 11.1 and 10.5 respectively. Therefore, there seems to be significant scope for an upward rerating to the shares of all three banks over the medium term.

Looking Ahead

Certainly, more investigations and fines are likely to hit sentiment in the shares of HSBC, Barclays and RBS. However, investors seem to be pricing in further challenges in this regard, with their valuations being hugely appealing at the present time. Therefore, while there could be more lumps and bumps ahead for all three banks, they seem to offer a highly attractive risk/reward profile and, as such, seem to represent compelling investment opportunities. 

Should you buy Barclays now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of Barclays, HSBC Holdings, and Royal Bank of Scotland Group. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Here’s the Tesco share price forecast for the next 12 months!

Tesco's valuation has dropped to multi-year lows after recent share price weakness. Is now the time to consider buying the…

Read more »

Illustration of flames over a black background
Investing Articles

Just released: March’s higher-risk, high-reward stock recommendation [PREMIUM PICKS]

Fire ideas will tend to be more adventurous and are designed for investors who can stomach a bit more volatility.

Read more »

Investing Articles

I asked ChatGPT for the best FTSE 100 investment trust to buy… here’s what it said

There aren't many FTSE 100-listed investment trusts and according to ChatGPT there’s only one winner. Dr James Fox explores.

Read more »

Investing Articles

How much should investors put in an ISA to achieve the average UK wage in passive income?

Millions of Britons use the Stocks and Shares ISA as a vehicle to build wealth, but a successful investor can…

Read more »

Investing Articles

2 cheap FTSE dividend stocks to consider buying for an ISA

The deadline for using up the Stocks and Shares ISA allowance is almost upon us. Paul Summers has spotted two…

Read more »

Investing Articles

£20k in a Stocks and Shares ISA? Here’s how an investor could target £1,342 in passive income each month

Christopher Ruane explains how a long-term approach to investing a Stocks and Shares ISA could generate a four-figure monthly income.

Read more »

Shot of an young Indian businesswoman sitting alone in the office at night and using a digital tablet
Investing Articles

Millions are missing out on ISA account benefits! Here’s what I’m doing now

Swathes of people are missing the chance to supercharge their returns with a Stocks and Shares or Lifetime ISA account.…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

Here’s my plan to survive and thrive in a stock market correction

A falling stock market can be an opportunity, but investors need a plan. Stephen Wright shares his strategy for taking…

Read more »