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

Banks: different stories for bond and equity investors Bond market Equity market 700 160 140 600 Price return rebased to 100* 120 500 Spread (bps) 100 400 80 300 60 200 40 100 20 0 0 US Banks Euro Banks US Banks Euro Banks Source: M&G, Bloomberg. 11 th May 2018 *Rebased to 100 at 2 nd January 2008 B O N D V I G I L A N T E S

Banks benefitting from higher yields 1.2% 230 1.0% 210 0.8% 0.6% Price index 190 0.4% 170 0.2% 150 0.0% 130 0.2% 0.4% 110 European Banks Equity index 10 year German bund yield Source: M&G, Bloomberg. 11 th May 2018 B O N D V I G I L A N T E S

Sector benefits from rising interest rates …but it’s not uniform across stocks Net profit uplift from +100bps parallel curve shift 70% 60% 50% 40% 30% Average +18% 20% 10% 0% Source: M&G, Autonomous Research/Datastream. 11 th May 2018 Data as at 18 th January 2018. B O N D V I G I L A N T E S

A bigger bite from the Apple Market capitalisation ($Trillion) 3.0 2.5 2.0 1.5 1.0 0.5 0.0 STOXX Europe 600 Banks Price* Apple Inc. Source: M&G, Bloomberg. 11 th May 2018 *Converted to USD at daily spot exchange rate B O N D V I G I L A N T E S