UK banks to pass all of rate hikes to some savers, says JPMorgan

BLOOMBERG

British lenders will likely have to pass on all of the Bank of England’s record rate hikes to some savers, a JPMorgan Chase & Co analyst predicted as he warned of intensifying risks to profits in the sector. “With increased political pressure, we believe that deposit pass-through is likely to be closer to 100% on interest-bearing time deposits, with negative implications for deposit migration and loan books,” Raul Sinha wrote in a note to clients. Time deposits are savings that can’t be withdrawn without penalty for a fixed period. Lenders in Britain and elsewhere are expected to compete for deposits by offering savers higher rates of interest. The opposition Labour party’s Lisa Nandy at the weekend called for measures to be introduced to force banks to pass more of the rate hikes on to savers.
JPMorgan’s Sinha downgraded Lloyds Banking Group Plc to underweight from neutral — the first time JPM has recommended selling the stock in more than a decade, according to data compiled by Bloomberg.