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Highlights
- The Bank of England could raise the interest rates to 4%.
- Currently, the interest rates sit at 3.5%.
- It is anticipated that BoE may further increase the interest rates pushing it to 4.5% in March.
Threadneedle Street will be in the thick of things this week as the Bank of England (BoE) is all set to raise the interest rates for the 10th time in succession. It is anticipated that the Central Bank will raise the interest rates by 0.5 percentage points.
Currently, the interest rate stands at 3.5% - the highest since 2008. The Bank’s monetary policy committee (MPC) has been steadily increasing since December 2021 as the Bank continues to find a delicate balance between controlling the soaring inflation and the risk that its actions exacerbate an economic downturn.
According to a poll by Reuters, the interest is expected to increase further in the next MPC meeting in March. According to the poll, the interest is likely to touch 4.25% in March and may touch 4.5% by mid-year.
Homebuyers, however, may breathe a sigh of relief as the fixed mortgage rates have started to drop in recent weeks. Having said that, they may well be caught in two minds about whether it is the right time to buy a house or not.
But not all is gloomy as the BoE nears to increase the interest rates. An increase in interest rates may result in increasing the savings rates. However, one can’t take this for granted, as banks are not obliged to raise savings rates. At the same time, they also don’t need to pass on the full rate rise but only a fraction of it.
Amid this, Kalkine Media explores three FTSE 100-listed banking stocks and how they are faring on Monday.
Natwest Group (LON:NWG)
NatWest Group Plc is the largest commercial bank operating in the United Kingdom. NWG, which connects over 19 million customers in Britain and Ireland as of 30 January, holds a market cap of £29,838 million and is trading at GBX 305.50. The NWG stock was down by 0.97% as of 8:05 am GMT on Monday. The FTSE 100 constituent enjoyed positive YTD and one-year returns of 15.16% and 16.98%, respectively.
Barclays Plc (LON: BARC)
Barclays Plc is yet another leading bank operating in Britain, offering banking and financial services to its customers. BARC holds a market cap of £ 29,485.71 million and an EPS of 0.38. Just like Natwest Group, BARC shares too were down by 0.90% at GBX 184.10 as of 08:14 am GMT on Monday. Both its YTD and 12-month return stood in the negative zone at -16.21% and -6.44%, respectively.
HSBC Holdings PLC (LON:HSBA)
HSBC Holdings Plc is the second largest Bank in Europe, serving over 40 million customers globally. Its vast network caters to 64 countries and territories across Africa, Europe, Asia, North America, Oceania, and South America. The FTSE 100 constituent wasn’t seeing a fruitful day as it was down by -0.93% as of 30 January. HSBA enjoyed a market cap of £ 119,909.85 million, trading at GBX 594.90 at 08:19 am GMT. HSBA had a positive EPS of 0.62, with both 12-month returns and YTD returns being in a positive zone at 12.40% and 15.14%, respectively.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.