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Highlights
- Credit Suisse has cautioned that over the next few years, bad loans worth £47 billion might have to be written off by UK banks.
- In order to cover the loan losses in their latest trading updates, funds worth £1.3 billion have been set aside by the leading UK banks, which include NatWest, Barclays, and Lloyds.
- Chancellor Jeremy Hunt is reportedly planning to cut down a surcharge on the profits generated by UK banks.
Amid the darkening economic prospects, Credit Suisse has cautioned that over the next few years, bad loans worth £47 billion might have to be written off by UK banks. Previously, the worst-case estimates stood at £41 billion for 2023-2025, which experts have hiked at the Swiss lender. Credit Suisse analysts said that for 2023, provisions in a strong recession would stand at 35pc of pre-tax profit generated over the year.
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Nevertheless, Credit Suisse further said that the valuations of UK banks maintained their attractiveness based on a moderate to intense recession and “sticky” interest rates, i.e., rates resistant to change. To cover the loan losses in their latest trading updates, funds worth £1.3 billion have been set aside by the leading UK banks, including NatWest, Barclays, and Lloyds.
On a separate note, Chancellor Jeremy Hunt is reportedly planning to cut down a surcharge on the profits generated by UK banks. The move is expected to protect the banks from corporate tax rate hikes while safeguarding the competitiveness of the country’s financial sector.
Amid these developments, Kalkine Media® explores the performances of the UK’s big four high street banks.
HSBC Holdings plc (LON: HSBA)
The market capitalisation of FTSE100-listed HSBC Holdings plc stood at £94,679.56 million as of 11 November. At around 11:30 AM (GMT) on the same day, HSBA shares were experiencing a hike of 0.24%, or 1.15 points, and were trading at GBX 475.30. The returns given by the banking group on a yearly and YTD (year to date) basis stood at 10.25% and 5.93% on Friday, respectively. Having a turnover (on book) of £17,563,388.93 and an EPS (earnings per share) of 0.62, the bank’s P/E ratio stood at 9.17.
NatWest Group plc (LON: NWG)
The market capitalisation of FTSE 100-listed NatWest Group plc stood at £231,191.35 million as of 11 November. At around 11:30 AM (GMT) on the same day, NWG shares were experiencing a hike of 3.54%, or 8.50 points, and were trading at GBX 248.50. The returns the banking group gave on a yearly and YTD basis stood at 7.39% and 2.44% on Friday, respectively. Having a turnover (on book) of £5,923,043.71 and an EPS of 0.25, the bank’s P/E ratio stood at 9.27.
Lloyds Banking Group plc (LON: LLOY)
The market capitalisation of FTSE 100-listed Lloyds Banking Group plc stood at £29,127.77 million as of 11 November. At around 11:30 AM (GMT) on the same day, LLOY shares were experiencing a hike of 1.10%, or 0.48 points, and were trading at GBX 43.78. The returns the banking group gave on a yearly and YTD basis stood at -11.20% and -8.25% on Friday, respectively. Having a turnover (on book) of £7,030,586.87 and an EPS of 0.08, the bank’s P/E ratio stood at 7.17.
Barclays plc (LON: BARC)
The market capitalisation of FTSE 100-listed Barclays plc stood at £ 24,892.53 million as of 11 November. At around 11:30 AM (GMT) on the same day, LLOY shares were experiencing a hike of 1.30%, or 2.04 points, and were trading at GBX 159.04. The returns the banking group gave on a yearly and YTD basis stood at -17.51% and -14.97% on Friday, respectively. Having a turnover (on book) of £9,625,679.68 and an EPS of 0.38, the bank’s P/E ratio stood at 5.12.
