Proactive Investors - Banking season is nigh and just how much the high street giants have made through their rapid hiking of mortgage rates and less than speedy lifting of savings will be one of the areas of focus.
In the City, Lloyds Banking Group PLC (LON:LLOY), NatWest Group PLC (LON:NWG) and other UK banks are being tipped to pull in billions from what politicians have described as sharp practice.
“They’ve been quick to hike rates on their mortgages sky-high,” Hargreaves Lansdown (LON:HRGV) analyst Sarah Coles commented, “savings rates […] remain disappointing” though.
Average mortgage rates are now more than 6% while rates on non-savings accounts are significantly less.
“[This] means they’re raking in billions from growing net interest margins. The only way to stop them getting away with this is to vote with your feet and move somewhere more rewarding,” Coles said.
But what’s bad for savers and mortgage holders, should be good for investors and City bonuses.
Lloyds and HSBC (LON:HSBA) were both highlighted by analysts at Deutsche Bank (ETR:DBKGn) recently as likely to hike their full-year guidance next week.
Analyst Robert Noble predicts Lloyds management will increase guidance for full-year net interest margin (NIM) and return on tangible equity (ROTE) when the FTSE 100-listed bank reports second-quarter results on 26 July (Wednesday).
HSBC is forecast to increase 2023 net interest income and ROTE guidance with the results.
"Better NII is already reflected in consensus estimates but we still expect upgrades to come from higher non-interest income," the analyst wrote.
At NatWest, boss Alison Rose will probably welcome the chance to speak about the financials rather than penning apologies to Nigel Farage over his closed bank accounts.
Like Lloyds though, its savings rates have been running well behind the level of mortgages so the numbers should be good.
Barclays (LON:BARC) is more geared to the global market than either Lloyds or Natwest and with rival US ‘bulge bracket banks slashing jobs due to an absence of deal activity, how its merchant bank is faring will be key.
It did well in the first quarter and helped profits come in around 23% ahead of City forecasts.
For the full year, Shore Cap forecasts profits of £7.81bn, though the broker says It would not be a surprise if those numbers get nudged higher during the year, which should be confirmed or not next week.