Banks warn rates rise boon dimming as HSBC and Virgin prepare to issue results

Chris Dorrell

THE UK’s HIGH street banks have warned the boon from rising interest rates might be coming to an end as customer behaviour and a competitive mortgage market hits margins.

With tightening margins, all eyes will turn to how HSBC performs tomorrow alongside Metro Bank. Virgin Money will report on Wednesday.

Despite concerns in the rest of the market, analysts at Jefferies reckon HSBC might lift its net interest income guide for the year from $34bn to $36bn.

Any upgraded guidance would likely reflect “a promising turnaround in macro conditions in Hong Kong and mainland China and better than feared growth in the UK”, analysts at UBS said.

Virgin Money is hoping to put a poor start to the year behind it when it reports results for the third quarter on Wednesday.

The bank saw its profit fall by a quarter in the six months to March as it set aside funds to cope with bad loans.

Earlier this month, it announced the closure of a number of its physical branches in an attempt to cut costs.

Unlike other high street lenders, Virgin Money failed to see a net interest margin (NIM) expansion over 2022, with it remaining at 189 basis points. It is guiding for a full year NIM of around 190 basis points. infiltrating what should be corporate decision making.

Last week, Natwest, Barclays and Lloyds recorded bumper profits, but investors were dismayed by the more cautious outlook.

Both Natwest and Barclays UK lowered their forecast for the full-year NIM on the back of an increasingly competitive deposit and mortgage market.

All banks reported customers are increasingly shifting deposits into higher yielding savings accounts while many are using savings to pay down debts.

If Coutts want to debank Farage and a host of other customers whose views don’t match up with whatever imagined values the bank has, go for it. Stick it on a poster. Send your customers a purity test, or ask them for their views on the Rwanda plan. It’s a free market. And the marketplace, we suspect, would let Coutts knew what they thought of the plan pretty quickly.

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Consumer Duty comes into force in regulatory shake-up

CHRIS DORRELL

THE CITY watchdog’s flagship new regulation, the Consumer Duty, comes into force today with experts describing it as the most important regulatory change in a decade.

The new principle aims to ensure firms deliver good outcomes for consumers on the quality and price of products and services, and make sure a higher standard of consumer support is provided.

Pinsent Masons financial services regulation lawyer Venetia Jackson, said: “Firms are expected to take pro- active steps to ensure that if there is a risk of consumer harm, it is identified and any remediation is calculated and paid without waiting for customer complaints.”

They will also have to prove to the regulator that their desired outcomes are being met and the FCA has warned that it will take action against non-compliance.

Not everyone has been supportive of the reforms. Research last week showed 70 per cent of financial advisers thought the FCA had been unclear and more than half are now more worried about penalties.