HSBA, NWG, LLOY: Stocks you may choose as BoE raises interest rates to 1%

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HSBA, NWG, LLOY: Stocks you may choose as BoE raises interest rates to 1%

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 HSBA, NWG, LLOY: Stocks you may choose as BoE raises interest rates to 1%
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Highlights

  • BoE’s MPC raised the interest rate to 1% in Thursday’s meeting to counter the impact of rising inflation.
  • Since the start of the pandemic, the rate has increased to 25%, 0.5%, and then 0.75% before today’s hike.
  • In March, the UK inflation levels had hit a 30-year high of 7%.
  • Banking stocks are generally on the radar of investors when interest rates go up as higher interest rates result in a higher net interest margin for banks. 

The trend of interest rate hikes has continued in the meeting held by the monetary policy committee (MPC) today. The MPC of the Bank of England (BoE) has been increasing the interest rates consecutively in its last three meetings, and Thursday’s rate hike has taken the interest rate from the historic low of 0.1% before the pandemic to a 13-year high of 1%.

Since the start of the pandemic, the rate has increased to 0.25%, 0.5%, and then 0.75% before today’s hike. Interest rates haven’t been this high in the UK since early 2009 when the global financial crisis hit the UK economy.

BoE’s MPC raised the interest rates to counter the rising inflation levels

2022 Kalkine Media®

Recently in March, the UK inflation levels had hit a 30-year high of 7%, pushing the BoE to go for further rate hikes to offset the impact of skyrocketing inflation. However, the BoE is trying to stay cautious while considering the impact of the rate hikes on the budgets of the UK households. Fears of a recession have also been looming over the UK lately, and the BoE is going for monetary tightening to prevent this from happening. 

 

Amid the rising inflation and interest rates, UK investors are exploring the investment options offering decent returns. Banking stocks are generally on the radar of investors in this kind of environment as higher interest rates result in a higher net interest margin for banks. Thus, the profitability of banks is boosted by the growing interest rates.

Let’s look at the share price performance of the 3 leading UK banks that investors can keep an eye on.

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NatWest Group plc (LON: NWG)

NatWest Group plc’s shares were down by 1.09% at 12:21 PM (GMT+1) on 5 May 2022, at GBX 217.70. The FTSE 100 bank has provided its shareholders with a return of 10.41% over the last one year as of 5 May 2022. The bank’s current market cap stands at £23,217.76 million.

BoE’s MPC raised the interest rates to counter the rising inflation levels

2022 Kalkine Media®

HSBC Holdings Plc (LON: HSBA)

HSBC Holdings plc’s shares were down by 0.78% at 12:22 PM (GMT+1) on 5 May 2022, at GBX 511.40. The FTSE 100 bank has provided its shareholders with a return of 15.96% over the last one year as of 5 May 2022. The bank’s current market cap stands at £103,722.43 million.

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Lloyds Banking Group Plc (LON: LLOY)

Lloyds Banking Group Plc’s shares were down by 0.52% at 12:24 PM (GMT+1) on 5 May 2022, at GBX 45.42. The FTSE 100 bank has provided its shareholders with a return of 0.72% over the last one year as of 5 May 2022. The bank’s current market cap stands at £31,802.85 million.

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