HSBA, LLOY, BARC: Banking stocks to explore amidst BoE rate hike - Kalkine Media

May 11, 2023 01:23 PM BST | By Manu Shankar
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Highlights

  • The Bank of England (BoE) has once again raised the interest rate to 4.5%, making it the highest since 2008.
  • This is the 12th consecutive time the base rate has spiked in Britain, making it the highest inflation rate among the advanced G7 economies.

Rising inflation and cost-of-living crisis refuse to bide down in the United Kingdom. Amidst the rising food inflation and the inflation still hovering above 10%, the Bank of England (BoE) has again raised the interest rate to 4.5%, making it the highest since 2008. This marks an overall increase of 0.25 basis points from the previous 4.25%.

This is the 12th consecutive time the base rate has spiked in Britain, making it the highest inflation rate among the advanced G7 economies. The latest rise will now affect the borrowing costs and pressure the leading banks to lift the savings rates.

Despite BoE's February forecast that the inflation will ease to 9.2%, the March inflation figures showed it was still at a high of 10.1%.

The market participants will now focus on the expected Monetary Policy Committee meeting, which would clarify how much higher interest rates could still rise. Leading investment bank Goldman Sachs had previously warned that the BoE could be forced to raise interest rates to 5%, by several economists feel that BoE may now stay away from any further rate hikes.

Higher interest rates would now mean Britain's homebuyers would have to delay their purchase plans for some time. Amid this latest rate hike, Kalkine Media explores three FTSE 100-listed banking stocks to see how they react to the news.

Lloyds Banking Group Plc (LON: LLOY)

Lloyds Banking Group Plc is one of the UK's leading financial services groups. The FTSE-100 constituent offers various services such as commercial banking, retail etc. The Lloyds stock, on 11 May, was witnessing a fall by -0.81% and was trading at 45.80. With a market cap of £30,330.07 million, the LLOY share has given its shareholders positive annual returns of 7.57%. On Thursday, Lloyds Banking Group enjoyed an EPS of 0.08, with a P/E ratio of 5.65.

HSBC Holdings Plc (LON: HSBA)

The multinational lender, HSBC Holdings Plc, like Lloyds Banking Group, was witnessing a poor day on the market and was down by -1.45% on 11 May. The FTSE-100 constituent was trading at GBX 592.40 and held a market cap of £ 120,092.35 million. With an EPS of 0.62, the HSBA share price has given its investors a healthy 19.39% return annually and a 14.72% return on a YTD basis.

Barclays Plc (LON: BARC)

One of Britain's banking behemoths, Barclays Plc too, was witnessing a scrappy start to the morning session as it was down by -0.37%. Barclays was trading at GBX 152.66 with a market cap of £23,825.23 million. The 12-month return of Barclays stood at 6.57%, and a negative YTD return of -3.44%.


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