Barclays (LSE: BARC) and Lloyds (LSE: LLOY) The share price both have their attractive qualities and both seem to be cheap on certain metrics. What’s more, both have significant exposure to the UK economy, which could create drama of their attractive recovery.
However, if I had to buy one of these companies, I think one has a much brighter outlook than the other.
Lloyds share price outlook
Lloyds is a UK bank. It is one of the largest mortgage lenders in the country and one of the four largest banks for consumers. It had some international operations, but these were sold after the financial crisis to raise cash. Today, it’s an hour for the UK economy.
In recent years, the company has also been expanding into various sectors. It has created a resource management department with sector experts Schroeders And has grown its credit card business through acquisitions MBNA Several years ago.
These efforts have helped the group move away from its core business. They have helped the organization raise profit margins as interest rates have remained disappointing.
Since the UK economy is recovering, I think Lloyds share prices should follow. Economic growth will require higher demand for loans and higher spending on credit cards. It should make more revenue for the enterprise.
That said, bank exposure in the UK is also a risk. Without any international diversity, Lloyds relies on the performance of the domestic economy. If it starts to stumble again, it will affect the recovery of the donor.
The presence of Barclays on Wall Street
Although Lloyds is a UK bank, Barclays has a strong international presence.
The group’s decision to acquire a portion of the inactive Lehman Brothers after the financial crisis proved to be a wise one. Last year, companies around the world rushed to collect cash from their investors during the epidemic, earning Barclays windfall profits.
Its capital market division helped finance the struggling corporations, providing much-needed diversification when planning for significant loan losses for the rest of the business.
The main reason for this diversity is why I think there is a better chance than the price of Lloyds shares in Burles. It is less dependent on the UK economy and has more products to offer to customers around the world. In an increasingly globalized world, this is going to be an essential competitive advantage.
Nevertheless, diversity can be a drawback as an advantage. Capital market business requires a lot of investment, and it can lose money for the enterprise. The multi-billion pound loss at the investment bank is not uncommon.
Despite this risk, I will buy Barclays over Lloyds for my portfolio. With the global economy recovering from the epidemic, I think betting on just one market like the UK could be a mistake. Barclays has a worldwide presence, enabling it to reap the benefits of a larger global recovery.
Rupert Hargreaves has no position on any of the shares mentioned. Motley Full UK has recommended Barclays, Lloyds Banking Group and Schroeders (not to vote). The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.