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Highlights
- UK inflation level to touch 6% by the spring of 2022.
- Interest rates are being hiked by BoE to counter rising inflation, with a 0.5% rise expected in February.
Inflation in the UK has touched record high levels recently. Breaching the Bank of England’s 2% target with a heavy margin, the inflation level is expected to reach 6% by the spring of 2022. To counter the impact of soaring inflation, BoE is going for an interest rate hike in February. The interest rate is expected to rise by 0.5% next month itself, which may be good news for the financial sector.
The business model of banks gets largely affected by the interest rates as they impact the income of banks. The net interest margin of banks goes up when the interest rates are higher. The margin is basically the difference between the rate paid out by the banks on deposits and the rate charged by them on loans. Therefore, the profitability of banks increases as the interest rates go up.
As per analysts, three interest rate hikes are expected in the UK this year and thus, banking stocks would be on the radar of investors in 2022.
Let’s take a look at 5 UK banking stocks, which may generate higher profits this year.
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Lloyds Banking Group PLC (LON: LLOY)
The market cap of UK’s largest financial services firm Lloyds Banking Group PLC stood at £37,627.77 million and it has provided a return of 46.15% to its shareholders in the last one year as of 21 January 2022. Lloyds Banking Group plc is a constituent of the FTSE100 index, and its shares were trading at GBX 52.45, down by 1.00%, at 8.05 AM (GMT) on 21 January 2022.
HSBC Holdings plc (LON: HSBA)
The market cap of Europe’s second largest banking firm, HSBC Holdings plc, stands at £103,580.95 million and it has provided a return of 23.50% to its shareholders in the last one year as of 21 January 2022. HSBC Holdings plc is a constituent of the FTSE100 index, and its shares were trading at GBX 504.30, down by 1.18%, at 8:10 AM (GMT) on 21 January 2022.
Barclays PLC (LON: BARC)
The market cap of the London-headquartered multinational bank, Barclays PLC, stands at £34,434.68 million and it has provided a return of 37.92% to its shareholders in the last one year as of 21 January 2022. Barclays PLC is a constituent of the FTSE100 index, and its shares were trading at GBX 201.80, down by 1.82%, at 8:10 AM (GMT) on 21 January 2022.
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Natwest Group PLC (LON: NWG)
The market cap of the Scotland-based banking and insurance holding company, Natwest Group PLC, stands at £27,477.02 million and it has provided a return of 54.25% to its shareholders in the last one year as of 20 January 2022. Natwest Group PLC is a constituent of the FTSE100 index, and its shares were trading at GBX 241.40, down by 1.11%, at 8:10 AM (GMT) on 21 January 2022.
Standard Chartered PLC (LON: STAN)
The market cap of the globally operating banking group, Standard Chartered PLC, stands at £15,758.93 million and it has provided a return of 9.25% to its shareholders in the last one year as of 20 January 2022. Standard Chartered PLC is a constituent of the FTSE100 index, and its shares were trading at GBX 513.00, up by 0.23%, at 8:10 AM (GMT) on 21 January 2022.
