Absa Group Ltd., the South African bank controlled by Barclays Plc, rose to the highest since 2007 after UBS AG said the lender was its top pick from the country’s four largest banks and raised the price target on the stock.
The shares climbed 1.8 percent to close at 147.50 rand in Johannesburg, the highest since April 2007. UBS raised its price target for the bank to 170 rand from 160 rand.
Absa should increase non-interest revenue 12.1 percent for the 12 months through December 2011, driven by fee and income commission growth, UBS wrote in a report to clients dated yesterday. The bank could increase its payouts to shareholders, with a special dividend expected in the second half of fiscal 2012, according to the report. UBS maintained its “buy” recommendation on the stock.
“Absa looks relatively cheap considering that a special dividend is possible,” Stephan Potgieter, a Johannesburg-based analyst at UBS, said in the report. “Standard Bank remains our least preferred stock given continued headwinds in its international operations and a valuation which looks full.”
The price target for Standard Bank Group Ltd., South Africa’s biggest lender, was raised to 100 rand from 95 rand, with a “sell” recommendation. Standard Bank rose 0.6 percent to 101 rand today.
FirstRand Ltd. was raised to 24.80 rand from 24 rand, with a “buy” rating and Nedbank Group Ltd. was raised to 155 rand from 142 rand, rated at “neutral.”
FirstRand climbed 2 percent to 21.77 rand, a record high, and Nedbank advanced 2.4 percent to 151.10 rand, its highest since April.