Banks: different stories for bond and equity investors Bond market - - PowerPoint PPT Presentation

Banks: different stories for bond and equity investors

Source: M&G, Bloomberg. 11th May 2018 *Rebased to 100 at 2nd January 2008

B O N D V I G I L A N T E S

Bond market 100 200 300 400 500 600 700 Spread (bps) US Banks Euro Banks 20 40 60 80 100 120 140 160 Price return rebased to 100* US Banks Euro Banks Equity market

Banks benefitting from higher yields

Source: M&G, Bloomberg. 11th May 2018

B O N D V I G I L A N T E S

0.4% 0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 110 130 150 170 190 210 230 Price index European Banks Equity index 10 year German bund yield

Sector benefits from rising interest rates

Source: M&G, Autonomous Research/Datastream. 11th May 2018 Data as at 18th January 2018.

B O N D V I G I L A N T E S

Net profit uplift from +100bps parallel curve shift

…but it’s not uniform across stocks

0% 10% 20% 30% 40% 50% 60% 70% Average +18%

A bigger bite from the Apple

Source: M&G, Bloomberg. 11th May 2018 *Converted to USD at daily spot exchange rate

B O N D V I G I L A N T E S

Market capitalisation ($Trillion) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 STOXX Europe 600 Banks Price* Apple Inc.