Disappointment looms in the banking sector, says Panmure Gordon analyst Sandy Chen, confirming his sell ratings on Barclays, Lloyds, RBS, HSBC and Standard Chartered. Chen admits, 'remaining a seller of the UK banks has been a terrible call since mid-March'. With the exception of Lloyds, all the UK banks should book strong H1 2009 results, fuelled by trading income, debt swaps and disposal gains. However, he says, 'This four-month market rally assumes a V-shaped macro recovery, which we do not think will materialise. Instead, we think that consumer demand will remain weak, private companies will find themselves crowded out by government bailouts and borrowing, and banks will not regain pre-crisis levels of profitability. In brief, disappointment looms.'
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