Can Income Investors Trust UK Banks?

Payouts and profits are up but PPI, leadership succession problems and Brexit mean the sector remains a risky bet for investors

James Gard 7 August, 2019 | 1:02PM
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Royal Bank of Scotland

The UK’s largest banks have changed dramatically since the financial crisis: they are better capitalised, very tightly regulated, and are now back to being decent dividend payers.

But the PPI scandal is a sign that the legacy of the financial crisis still lingers over the sector. Lloyds Banking Group (LLOY) admitted that it is braced for a rush of claims ahead of the deadline at the end of this month: the full bill is expected to hit £20 billion for Lloyds, which is more than half of the company’s current market value. While the past is hard to put behind the UK banking sector, Brexit presents a significant future challenge, not least because any recession – and the Bank of England puts this at a one-in-three chance for next year – would dent demand for loans, credit cards and mortgages.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Barclays PLC199.46 GBP0.00Rating
HSBC Holdings PLC432.80 GBP0.00Rating
Jupiter UK Alpha Fund (IRL) L EUR Acc12.81 EUR0.22Rating
Jupiter UK Growth L Acc263.97 GBP-0.46Rating
Lloyds Banking Group PLC49.28 GBP0.00Rating
NatWest Group PLC233.20 GBP0.00Rating

About Author

James Gard  is content editor for