UK banks: banking on low growth

Article Abstract:

Shares in UK banks have tended to outperform the market to 1996, but are down by 5% in comparison to the market for early 1996. Analysts argue that this is linked to a drop in US bond markets, since banks tend to be major investors in government securities. Banks are enjoying favorable operating conditions. Loan growth is modest and there is enough capital to fund growth in dividends, while rationalization is also providing surplus capital. There could be problems if demand for loans rises and banks have to increased costs by borrowing to meet this increased demand.

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Tough times ahead for the banks

Article Abstract:

The UK banking industry is affected by low inflation levels, low interest rates and increasing competition. Corporate borrowers are repaying debt and lending to companies has fallen. This affects banks' margins as they compete for business. Provisions will fall in 1994 though this will be offset by a slump in dealing profits. After provisions have ceased to fall, it will be difficult for banks to increase their profits. Interest rates will have to rise further to make a significant impact on banks' profits.

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Banks wake up to medium net worth clients

Article Abstract:

Offshore private banks face an increasingly competitive market and the amount needed to become a private bank client has been reduced. Levels of service vary with some banks catering to the more cost-conscious. Service levels tend to become increasingly personal the higher the net worth of the client. Citibank tends to focus on wealthier clients, offering exclusive services. Expatriate executives are targets for the offshore private bank market.

Foreign banks

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