Investors in the UK’s largest banks have endured a long and cold winter ever since the sector self-immolated in 2008. Despite the prospect of central bank interest rate rises putting the meat back into margins, signs of spring are yet to appear this year.
- High-quality loan book
- Excellent returns on equity
- Solid capital buffers
- Good geographic concentration
- Possible housing market slowdown
- Negligible dividend yield
In fact, recent news that some large fund managers have dumped significant stakes in European banks has cast a cloud over a sector where share prices are struggling to break five times forward earnings, on average. If large multi-country, multi-lateral financial institutions find themselves even less popular with investors than tobacco companies, then perhaps home-grown lenders with less reliance on fickle international trends are the answer to this investing conundrum, which is why OneSavings Bank (OSB) could potentially fit the bill.