Bargain bank stocks grab investor interest
Analysts say banking stocks are offering historically high dividend yields
Banking stocks are trading at massive discounts and are offering historically high dividend yields, analysts say. The market appeared overly pessimistic about the effect that the downturn in SA would have on banks’ asset quality, said Jaap Meijer, MD of research at Arqaam Capital. "Valuations of most of SA’s banking stocks imply structurally higher bad-loan charges than our [full-year 2017 estimates] or [through-the-cycle] credit-cost estimates." SA’s sovereign credit downgrades, weak economic growth and political uncertainty still weighed on banking shares, with the JSE banks index down 6% in 2017, even as the all-share index is nearly 8% higher. The banks index is 8% weaker since President Jacob Zuma abruptly recalled former finance minister, Pravin Gordhan, from an international investor road show — a move that culminated in Gordhan’s dismissal in a late-night cabinet reshuffle. Emerging markets investment bank Arqaam Capital, however, rates Barclays Africa, Capitec, Nedbank and ...
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