Live Markets: Four main takeaways from UK bank results

Victorian Plumbing

15/05/2024 11:06

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    FOUR MAIN TAKEAWAYS FROM UK BANK RESULTS 
    As Q1 reporting season continues, British banks have a "spring in their step" after a strong
set of numbers, according to Matt Britzman, equity analyst at Hargreaves Lansdown.
    A FTSE 350 basket of UK banks  .FTNMX301010  is up 18.5% in 2024 so far, far outstripping
the 8.7% rise in the FTSE 350  .FTLC .
    So what are the positive factors behind all this? Britzman has shared four main takeaways
from UK banks Q1 results so far. 
    Firstly, default levels remain low. 
    "Despite the challenges of rising costs and increasing interest rates, which can make it
harder for people to pay back loans, borrowers have shown impressive resilience over the past
year," writes Britzman.
    Next, higher interest rates for longer could act as a tailwind, and the fact that it looks
like rate cuts won't be coming as quickly as some initially expected could be a boon for banks
    "It’s still too early for banks to revise their income guidance, but if current trends
continue, they may have the confidence to raise guidance in the coming quarters," says Britzman.
    The third positive aspect is the fact that the UK economy is improving, including across
lending volumes, the housing market and wage growth. 
    "Domestic-focused names like Lloyds and NatWest, seen as UK economic bellwethers, look best
placed to benefit from this trend," he says.
    Finally, capital levels are supporting strong shareholder returns, and investors can expect
some hefty dividends and buybacks over the medium term.

    (Lucy Raitano)
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    FOR WEDNESDAY'S OTHER LIVE MARKETS POSTS:
    YOUR BRITISH SHOPPING LIST CLICK HERE
    STELLAR EARNINGS LIFT MOOD IN EUROPE CLICK HERE
    FUTURES SIGNAL RISES IN EUROPE AS TRADERS AWAIT U.S. INFLATION CLICK HERE
    POWER OF POWELL LIFTS STOCKS AHEAD OF US CPI CLICK HERE 

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