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Banks will reveal whether Britons are benefiting from lower interest rates in their first major update since borrowing costs were cut this summer.
Investors will be interested to see whether the July rate cut has been passed on to mortgage and loan customers as Barclays, NatWest and Lloyd’s report third quarter results this week.
Analysts said net interest margin – a measure of the difference between what a bank pays out in deposits and what it generates in loans – has peaked, ending an era of huge bank profits.
This comes after the Bank of England cut the base rate from 5.25 to 5 per cent in July, which should have a knock-on effect for borrowers but also hit lenders’ profits.
Lloyds, which also owns Halifax, is expected to post profits of £1.6bn for the three months to the end of September, up from £1.9bn a year earlier.
Telltale signs: Investors will be interested to see whether the July rate cut has been passed on to mortgage and loan customers as Barclays, NatWest and Lloyd’s report third quarter results.
Barclays is set to announce profits of £2bn, up from £1.9bn and NatWest £1.5bn, up from £1.3bn.
Investors will also look at loan and deposit growth, any asset impairments, litigation costs and cash returns to investors.
Russ Mold, of broker AJ Bell, said: ‘Net interest margins appear to have peaked. That is the key to why analysts believe banks could struggle to substantially increase their profits from now on.”
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