Banking stocks to explore as BoE raises interest rates to 3.5% - Kalkine Media

December 15, 2022 02:04 PM GMT | By Abhishek Sharma
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  • The Bank of England (BoE) has hiked interest rates to 3.5%.
  • This comes as a blow to mortgage owners as the EMIs will go upward following the latest hike.

Homebuyers in the UK may have to postpone further their plans to purchase their dream home as the days of cheap mortgage deals in the country seems to be over. Interest rates in the UK have been rising for the past year, and the Bank of England (BoE) has continued to trend in its latest announcement.

On Thursday, the central bank hiked the interest rate to 3.5% from 3% earlier. With the latest hike, interest rates in the UK are now the highest since the financial crisis of October 2008. Last month, inflation levels declined, propelling hopes that the BoE may not go for an aggressive hike in interest rates this time.

Lending to small businesses in Q1 2022 has dropped to the lowest since 2014.

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As mortgage rates directly depend on the BoE's interest rates, they are set to go up as well. Mortgage rates have been going through the roof for some time, especially after the mini-budget in September, which turned out to be disastrous for the UK's financial markets and led to PM Liz Truss's downfall.

In the wake of the latest interest rate hikes, let us look at three FTSE 100-listed banking stocks and how they reacted to the development.

HSBC Holdings Plc (LON: HSBA)

HSBC is a multinational lender that offers myriad banking and financial services in countries across the globe. It recently sold its operations in Canada to the Royal Bank of Canada for £8.4 billion. The firm holds a market cap of £99,382.39 million and has an EPS of 0.62 as of 15 December 2022. HSBC's 12-month return presently stands at 12.48%. HSBA shares were down by -1.53% and were trading at GBX 490.10.

Lloyds Banking Group Plc (LON: LLOY)

Lloyds is another prominent lender in the UK and one of the country's largest. The FTSE 100 constituent enjoys a market cap of £31,052.35 million, and its EPS stands in the positive territory at 0.08 as of 15 December. The stock’s 12-month return stands at 0.99%. As of 12:01 am GMT on Thursday, shares of LLOY were down 1.19% at GBX 45.61.

Barclays Plc (LON: BARC)

A banking behemoth in the UK, Barclays provides its customers with numerous banking and financial services. The firm holds a market capitalisation of £25,429.73 million and an EPS of 0.38. The 12-month return stands in the red at -12.17% as of 15 December 2022. BARC shares were down 1.46% at GBX 157.92 as of 12:01 am GMT on Thursday.

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.


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