The UK bank stocks have been crashing since the coronavirus pandemic hit Europe in March 2020. After the disease hit the continent, many countries went into an economic lockdown. The coronavirus also brought about a rise in inflation. In response, central banks are raising base interest rates. The BoE has already increased the base interest rate three times, and it does not rule further increases out this year. These factors could help UK bank shares by boosting the amount of deposits that banks will receive, and creating more income through loan repayments.
Investing in UK bank stocks in 2022-2023
Since the Great Recession in 2008, UK bank stocks haven’t been in favor with investors. They’ve been suffering from low interest rates and have struggled to generate revenue. However, since the start of the 21st century, the Bank of England has increased the base interest rate three times and they expected more increases this year. This could boost the prospects of UK bank shares. Let’s inspect three of the UK’s largest banks to understand why they’re positioned to thrive.
Barclays Bank stock isn’t looking too great at the moment. Its share price has already fallen 20% in the first quarter of 2022. The bank has also delayed its share buyback program worth $1 billion. This is one reason it might not be a great time to buy this stock.
Investing in UK bank stocks in 2023
Over the past decade, the UK banking sector has faced a lot of challenges. The financial crisis in 2008 hit the sector hard. The UK government stepped in and bailed out banks including Lloyds Bank, Nat West, and Royal Bank of Scotland. A few years later, the UK voted to leave the EU, which led to four years of uncertainty.
Despite rising interest rates, UK bank stocks have fallen out of favour with investors. The UK hasn’t fully recovered from the Great Recession, and the banks have been operating at record low interest rates, which has affected their ability to generate revenue. However, the Bank of England has increased the base interest rate three times since December 2021, with further increases planned for 2022. This should lead to an increase in the amount of deposits and income generated through loan repayments.
Investing in UK bank stocks in 2022
UK bank stocks have been in a slump since the Great Recession and have yet to fully recover from the impact of the financial crisis. They have been operating on record low interest rates, which negatively affect their ability to generate revenue. But this situation could change if the Bank of England (BoE) starts raising its base interest rates again. This could cause higher deposits and higher income from loan repayments.
However, the company has had a poor start to the year, with its stock down 20% during the first quarter of 2022. This is mainly because the bank had to delay its $1 billion share buyback programme because of US requirements. The company’s shares are priced below book value, which makes it an attractive investment for investors. However, investors should consider the risks involved when investing in UK bank stocks.
Barclays shares plummet after coronavirus pandemic
In early trading, the stock of the financial services giant plummeted. The reason for the downturn is unclear, but I believe one major investor to have sold $1.2 billion worth of shares. Goldman Sachs facilitated the deal. The sale follows Barclays’ disclosure of a compliance error involving overselling structured products in the US, which cost the bank approximately PS450 million.
The share price of Barclays is now 80% below its peak in December, when it hit 192p. Investec analyst Ian Gordon has added to the bearish sentiment. He believes that prolonged restrictions in the UK will damage the banking sector. He also says that the British banking sector may face another round of political resistance after the APPG report is published.
While there are several reasons for the plunge, Barclays shares are mainly falling because of concerns over future impairments and dwindling consumer income. The stock’s recent upswing has been attributed to recent reports on the COVID-19 vaccine, but the stock price is still below its November low of 142p.