Which of these bargain bank shares would I buy?

UK banking is dominated by the ‘Big Four’ banks. This is Barclays (LSE: BARC), HSBC Holdings (LSE: HSBC), Lloyds Banking Group (LSE: LLOY), and NatWest Group (LSE: NWG). But which bank stocks look like bargains to me right now?

Big Four bank shares

1. Barclays

My wife owns Barclays shares. They are currently trading at 173.28p, valuing Blue Eagle bank at £27.5bn. The stock is up 202.35p over the past 12 months, while it has lost 11.6% over the past year.

Today, I see Barclays shares as an incredible bargain. It trades at a price-to-earnings ratio of 5.8 and yields 17.2%. This is about 10 percentage points above that FTSE 100generate profit.

Additionally, Barclays shares offer a dividend yield of 4.2%, covered 4.1 times by earnings. This is one of the strongest ratios in Footsie, making this payment rock-solid for me. So, if I had the cash, I’d buy more Barclays shares today.

2. HSBC

Based on the current share price of 630.1p, global mega-bank HSBC is worth £125bn. The stock is up 15% in the past year. Further, the Shares hit a 52-week high of 653.8p on Tuesday, following strong full-year results.

However, HSBC shares don’t look cheap to me right now. It trades at a price-to-earnings ratio of 10.2 and yields 9.8%. That is well below the Barclays figure.

Additionally, while HSBC shares offer a dividend yield of 4.3% per annum, this is only covered 2.3 times by earnings. That’s about half of the payout range at Barclays.

In addition, HSBC has heavy exposure to Hong Kong and China, which is of increasing concern as China-US relations deteriorate. Therefore, I currently do not own this stock and have not purchased it.

3. Lloyds

We bought Lloyds shares for our new family portfolio last year. So far, he is the second best player. At the current share price of 52.1p, Lloyds is worth £35.1bn. The stock has lost just 0.2% over the past 12 months.

After Barclays, Lloyds would be the second choice among bank stocks today. The stock trades at a price-to-earnings ratio of 7.2 and yields 13.8%. Quite undemanding, I feel.

Additionally, Lloyds’ dividend yield of 4.6% per annum is covered three times by earnings. And that is why we can increase Lloyds shares after 6th April (new tax year). Lloyds may seem like a value trap, but I like my odds.

4. NatWest

Last is NatWest, formerly Royal Bank of Scotland. At 286.4pa shares, the bank is worth £27.7bn. The stock is up 11.3% for the year.

Again, NatWest shares look cheap, but not as cheap as Barclays or Lloyds. They have a price-to-earnings ratio of 7.9 and a yield of 12.7%. Meanwhile, the dividend yield of 4.8% per year is covered by a healthy 2.6 times earnings.

If I were forced to add some completely new bank shares to the collection, then I would choose NatWest over HSBC.

Finally, bank stocks can be volatile, especially when the UK is in recession. So owning these stocks could be painful over the next 12 months. But I’ll keep mine for long-term dividend income and capital gains!