UK banks set for bumper profits despite mortgage market freeze
The UK’s biggest banks are set to make bumper profits from rocketing interest rates even as they pull mortgage products from the shelves and leave savers with meagre returns on their deposits.
The financial turmoil sparked by Chancellor Kwasi Kwarteng’s “mini” Budget has seen markets betting interest rates in the UK could peak at 5.8 per cent next spring, creating a bonanza for high street lenders who will rake in returns for holding nearly £900bn of deposits at the central bank.
“There’ll be an embarrassment of riches — bank margins will look very wide in the third quarter,” said one senior banker, describing it as “a cha-ching moment”.
Nevertheless, in the short term, banks are “unlikely” to put aside meaningful provisions for bad debts in their third-quarter results next month despite these concerns, said Gary Greenwood, analyst at Shore Capital.
This story originally appeared on: Financial Times - Author:Emma Dunkley
