AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- Bank of England (BOE) Monetary policy policymaker Catherine Mann said interest rates are expected to rise a little bit further in May to combat the risk of high inflation persisting into 2023.
- In March, the UK inflation hit a 30-year high of 7%, and the war in Ukraine increased the concern over the further hike in inflationary pressure.
The Bank of England (BOE) has hinted that interest rates are expected to rise a little bit further in May to combat the risk of high inflation persisting into 2023. On Thursday, Bank of England (BOE) Monetary policy policymaker Catherine Mann discussed the impact of rising inflation and uncertainty around the economy, hinting about a quicker pace of tightening for monetary policy.
The policymaker said that the UK economy is in some ways suffering from stagflation, a combination of high inflation and slow economic growth and to avoid the uncontrollable situation interest rate need to be increased further.
© 2022 Kalkine Media®
Some economists are expecting the UK economy to shrink in the second quarter and possibly fall into recession following a further squeeze in households and businesses finances in a wake of geopolitical tension between Russia and Ukraine that is likely to create more challenges such as a supply chain crisis, rise in food, energy and fuel prices and demand for higher wages, pushing inflation even higher.
In February, the BOE’s Monetary Policy Committee raised the interest rate by 25 basis points to 0.5%, and again in March, the committee raised the interest rate further by 25 basis points to 0.75%.
RELATED READ: Should you invest in Rio Tinto (LON:RIO) shares now?
In March, the UK inflation hit a 30-year high of 7% and the war in Ukraine increased the concern over the further increase in inflationary pressure. The BOE’s monetary policy committee will meet on 5 May to decide whether to further tighten policy without adding to the risk of a recession.
Let us look at 3 banking stocks that may get benefit from the rise in interest rate.
- Lloyds Banking Group Plc (LON: LLOY)
UK-based financial services group Lloyds Banking Group Plc operates through three main divisions that include Retail and Insurance, Commercial Banking, and Wealth. The banking group reported statutory profit before tax of £6,902 million in FY2021, up from £1,226 million in FY2022 and statutory profit after tax stood at £5,885 million, up from £1,387 in FY2020.
With a market cap of £32,769.60 million, the FTSE 100 listed company’s share value appreciated by 12.60% over the last one year as of 22 April 2022, while its year-to-date return stands at -2.02%. Lloyds Banking Group Plc’s shares were trading at GBX 46.88, down by 0.11% at 8:05 AM (GMT), as of 22 April 2022.
RELATED READ: Greencoat UK Wind, Renewable Infrastructure: Should you buy these stocks now?
- HSBC Holdings Plc (LON: HSBA)
UK-based multinational investment bank and financial services holding company HSBC Holdings Plc is the second largest bank in Europe with operations in 64 countries across the world. The company has recently announced the appointment of Geraldine Buckingham as an independent non-executive Director with effect from 1 May 2022.
With a market cap of £108,049.23 million, the FTSE 100 listed company’s share value appreciated by 27.47% over the last one year as of 22 April 2022, while its year-to-date return stands at 18.29%. HSBC Holdings Plc’s shares were trading at GBX 530.70, up by 1.16% at 8:05 AM (GMT), as of 22 April 2022.
- OSB Group Plc (LON: OSB)
UK-based specialist lending and retail savings company OSB Group Plc operates in various segments of the lending market through independent financial advisors and specialist brokers. The company has recently announced an increase in underlying profit before tax by 51% to £522.2 million in FY2021, from £346.2 million in FY2020 and its statutory profit before tax increased by 78% to £464.6 million, from £346.2 million in FY2020.
With a market cap of £2,668.65 million, the FTSE 250 listed company’s share value appreciated by 29.34% over the last one year as of 22 April 2022, while its year-to-date return stands at 6.13%. OSB Group Plc’s shares were trading at GBX 588.50, down by 1.34% at 8:05 AM (GMT), as of 22 April 2022.
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.
