Except translation, this story has not been edited by achinews staff and is published from a syndicated feed.
The Bank’s nine-member Monetary Policy Committee will announce on Thursday whether they have decided to cut the benchmark rate from its current 5.25%, where it has sat since August last year. Home owners and businesses are hoping for a reduction and although economists remain fairly evenly split on whether it will happen this time, there is no doubt that the direction will be downwards in the coming months.
READ MORE: Lloyds looks to cut costs and increase income as profits fall to £3.3bn
In anticipation of this, fixed mortgage rates have been falling recently, which is one of the reasons why Lloyds, the owner of the Bank of Scotland, reported a fall in earnings during the first half of this year despite borrowing costs remaining high .
Lloyds chief executive Charlie Nunn was upbeat on Thursday as he went through the numbers behind a headline 14% drop in pre-tax profit to £3.3 billion in the first six months of this year. Net interest income – the amount it generates from loans less what it pays out on savings – was down by a tenth compared to the same period a year earlier.
Lloyds, which also owns Halifax and Scottish Widows, is the UK’s biggest mortgage lender and was one of several banks to book record profits in 2023. It was widely predicted that Lloyds and others would fail to meet that high bar in the current year, and indeed that was the case.
That said, the results were better than some analysts had predicted. Mr Nunn described the performance as “solid”, adding that the group remains on track to achieve its “target results” in 2024.
It was a similar story on Friday morning as Royal Bank of Scotland owner NatWest smashed City expectations for the first half and raised its profit guidance for the full year.
Profits and income were down but better than expected as the group led to increased customer activity amid an improving economic outlook. Furthermore, NatWest expects conditions to improve further in the second half.
READ MORE: Bank boss wishes every Friday could be like this
This gave it the confidence to raise its income guidance to £14bn for the full year, against a range of £13bn to £13.5bn previously.
Undeterred by the looming prospect of interest rate cuts, NatWest also unveiled a £2.5bn acquisition of the UK’s leading residential mortgage lender Metro Bank, adding 10,000 customer accounts to its retail operation. Furthermore, chief executive Paul Thwaite left the door open to further such deals.
Katie Murray, NatWest’s chief financial officer, said the group assumed interest rates would start to fall sometime in the next three months, falling to 4.75% by the end of this year. It is predicted that there will be five more interest rate cuts next year, raising the base rate to 3.5% by the end of 2025.
(Except translation, this story has not been edited by achinews staff and is published from a syndicated feed.)
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