Sumary of So sorry Mary Poppins – it IS worth investing in Mr Banks!:
- Opportunity: If you’re fond of dividends and not too much investment excitement, bank shares could be just the spoonful of sugar your portfolio needsFor shareholders, there was a double whammy.
- First off the starting block was Virgin Money, the rebranded Clydesdale Yorkshire Bank Group.
- No dividend update was forthcoming, but Shailesh Raikundlia, an analyst at investment bank Liberum, described Virgin Money’s results as ‘better than consensus expectations’ and the trading update as ‘strong’.
- A day later, Lloyds Banking Group reported half year profits of £3.9billion and an interim dividend of 0.67 pence a share.
- Darius McDermott is managing director of investment specialist Chelsea Financial Services.
- McDermott points out that companies such as ‘buy now, pay later’ group Klarna and foreign exchange service Wise, are also eating into some of the most profitable services banks provide.
- Despite these words of warning, McDermott is bullish about bank dividends, which he believes ‘should return to pre-pandemic levels’.
- Chris Beauchamp, chief market analyst at financial trading platform IG Group, says that a strong UK recovery should also benefit banks, supporting a ‘continued rise in consumer lending and mortgage activity, vital elements in particular for Lloyds and NatWest’.