Barclays PLC (ADR) (BCS) vs Lloyds Banking Group PLC (ADR) (LYG) vs Royal Bank of Scotland Group plc (ADR) (RBS)

While RBS appears to be more vulnerable to asset writedowns than its rivals, how future asset sales will actually play out is anybody’s guess.

Earnings
The banks have made provisions of billions of pounds for a litany of past vices, including the mis-selling of payment protection insurance and interest rate hedging products. Again, it’s anybody’s guess how those issues will pan out.

Put the uncertainty of the adequacy of provisions together with un-provisioned contingent liabilities and ongoing business restructuring, and it’s nigh on impossible to predict future statutory bottom-line profits, even a year ahead.

How long it will take statutory earnings to come into line with underlying earnings — and where underlying earnings will be in each bank’s case when they do — can only be speculation.

Dividends
There is at least some clarity on dividends. Lloyds Banking Group PLC (ADR) (NYSE:LYG) and Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) (LSE:RBS) aren’t currently paying them, for a start! They’d like to, and probably will, within the next year or two — but these look sure to be token dividends initially, giving a negligible income.

Barclays PLC (ADR) (NYSE:BCS) is at least delivering dividends now, at a forward yield of 2.3%. Furthermore, the bank has given concrete guidance on its plans: “From 2014, accelerate our progressive dividend policy, targeting a payout ratio of 30% over time” — which compares with a ratio of less than 20% for the most recent dividend.

Clarity
As you can see, trying to value the banks is a murky business. Going by the simple fundamental value numbers at the start of this article appears to me to be at least as likely to prove successful as trying to find light in the darker depths of the accounts.

The article Barclays vs Lloyds Banking vs Royal Bank of Scotland originally appeared on Fool.com.

G. A. Chester does not own shares in any of the companies mentioned in this article.

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