Big Four banks bag extra £6.5bn from past interest rate hikes amid profiteering concerns
The UK’s four biggest banks have made an extra £6.5bn this year off the back of previous interest rate hikes, according to new analysis, as customers and Parliament slam lenders for not offering better deals.
HSBC, Natwest, Barclays and Lloyds generated around £48.5bn in net interest income in the first nine months of 2023, up from £42bn in the same period last year, LBC has found.
A bank’s net interest margin is a key indicator of profitability that measures the difference between what banks pay out and receive in interest.
The Bank of England’s interest rate hikes have driven bumper profits in the past year, but analysts predict that higher-for-longer rates will erode banks’ margins.
Deposits at the Big Four fell by £78bn in the year to June, with lenders now being forced to offer better deals to customers as the industry competes for business in a tough market.
Conservative MP and chair of the Treasury Committee Harriett Baldwin slammed banks earlier this week for “doing as little as they can get away with” to help savers.
“Saving and mortgage rates aren’t directly linked and therefore move at different times and by different amounts. Savings rates have increased a lot recently and the market is highly competitive,” a spokesperson for banking trade body UK Finance told City PM
“Banks are commercial organisations and seek to offer the best possible value to customers while also making a profit. This allows them to invest in their business for the benefit of customers and deliver shareholders, including pension funds, a return on their investment.
“In terms of financial results, the net interest margins being reported are returning to more normal levels as we come out of the very low interest rate environment we experienced until the end of 2022.”