What’s ahead? As the UK heads into a cold winter dragged on by a major energy crisis, banks are depending on elevated interest rates to keep them above freezing water.
The historic regime changes, the mini-budget implementation and reversal, and the fallout and recovery of the pound are surely putting pressure on banks as Q4 unfolds.
- The provisions for loan delinquencies hit banks’ profits hard in Q3, but their early preparations for the fallout of the cost of living crisis should cushion the blow if and when consumers begin to default on their loans.
- Many of the banks are expecting a dip in housing prices in the coming months. NatWest predicts a 7% drop in home prices next year. Lloyds also estimates an 8% drop in prices. But both adjusted their net interest margin guidance up for 2023 as they expect interest rates to continue to give them a boost.
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