Are Barclays, NatWest and Lloyds still some of the best UK stocks to buy today?

Three years ago, I went hunting for the best British stocks to buy my new Self-Invested Personal Pension. I would simply set up my SIPP, using the income from the three contributors’ estate and company schemes, and have a large sum of money to spend. It was an exciting time.

I’ve picked the real winners, incl The Costain group, Just Group again Company Rolls-Royce Holdingsthey have all gone up about 180% since i bought them.

Inevitably, there have been disappointments. I growled a wind giant Diageo and ‘The King of Coaches’ JD Sports Fashion after their shares ran into alarming profit warnings, only to see the warnings pile up and the shares sink even further. I still think both stocks will recover, but we’re not there yet.

Lloyds shares are flying

I just bought one FTSE 100 bank: Lloyds Banking Group (LSE: LLOY). My only regret now is not buying more of it. And not buying them with other big banks.

At the time, Lloyds looked like a cracking opportunity. It was cheap, with a price-to-earnings (P/E) ratio of about six, while the forward yield was as high as 5%. I thought the market would eventually wake up to the price being offered. In fact, it had happened.

Lloyds’ share price has risen 150% over the past two years and is up 69% over the past 12 months. Barclays, NatWest Group again HSBC Holdings share price sometimes they’ve done even better, and that’s before assignments are factored in.

Banks have finally resolved the financial crisis and have momentum on their side. I have some spare cash sitting in my SIPP and I’m itching to put it to work. Should I buy another bank?

I have always been a contrarian investor. That attitude drew me to banks where no one wanted them, and it paid off. Today, no one can say that this industry is not popular. Ratings are no longer low, and the benefits of easy adoption may be behind us.

FTSE 100 shares and growth

Banks have been rare beneficiaries of high interest rates. They used this to expand their interest margins, the gap between what they charge borrowers and pay savings. With rates expected to drop significantly this year, that may reverse. On the other hand, falling home prices can stimulate the housing market, reduce bad credit and increase the demand for loans.

This is not a monolithic field either. Different banks have different risks. Lloyds is directly exposed to the UK economy, focusing on bread and butter banking for individuals and small businesses. Barclays has a higher risk-reward profile through its investment banking arm and growing footprint in the US and Middle East. HSBC offers exposure to Asia, a huge long-term opportunity, but one that carries risks as China slows.

Despite their strong run, the big banks don’t look very expensive. Lloyds sits at the lower end of the price range at a P/E of around 15, compared to 14 for HSBC, 13.3 for Barclays and 12.5 for NatWest. None are sad, but nothing looks stretched either.

I don’t expect the next few years to be as good as the last two, but from a long-term perspective, the UK’s biggest banks still look worth considering today. Now that I own Lloyds, I’m leaning towards buying Barclays or HSBC. I even ended up having both.