The second quarter looked gloomier to the British banks in comparison to rest of its “European peers” in its “quarter earnings” as an accumulative effect of COVID-19 pandemic, Brexit and “low interest rates”. Taking these into consideration, the British banks considered the “worst-case” situation into “their risk models”.
Investors, on the other hand, were expecting “a torrid set of half-year results” while banks such as Barclays, Lloyds, HSBC, Standard Chartered and NatWest Group NWG.L were below “these low expectations”. In a provisional “potential” loss in loans across these banks could go up to “$22 billion” whereby leaving the previous “analyst forecasts” behind and ramping up pressure on selling shares which already took a beating due to the ongoing global pandemic.
On the other hand, BNP Paribas of France and Credit Suisse surpassed analyst forecast and benefitted from “bumper trading volumes” along with “relatively modest provisions”. Nevertheless, “HSBC and Lloyds” experienced “poor results” as both of them saw their shares falling to the “lowest levels in 11 and 8 years respectively”.
All the five banks of the United Kingdom failed to match performance expectation “between 42% and 55% this year compared to a 36% fall in the European banking index SX7P”, informed Reuters. While, the Oliver Wyman’s partner, Patrick Hunt said:
“The UK banks are facing a more significant economic drop than most Europeans as the UK has faced a bigger shock from the COVID-19 pandemic, and that has fed through into provision levels”.
According to forecast, the economy in Britain could shrink as much as “11.5% this year”, and OCED’s June forecast also said that the rest of the euro region could contract by “9.1%”. Furthermore, “relatively higher exposure to unsecured consumer lending” combined with a great fall in the “central bank rates” and a possible “no deal” agreement in Brexit transition are some of the factors that weighs on the country’s economy.
However, the further prolong of lockdown in the northern England in an attempt to curb the spreads of COVID-19 infections is a possible threat to the country’s economy which has just experiences a nascent recovery.
References:
reuters.com
Investors, on the other hand, were expecting “a torrid set of half-year results” while banks such as Barclays, Lloyds, HSBC, Standard Chartered and NatWest Group NWG.L were below “these low expectations”. In a provisional “potential” loss in loans across these banks could go up to “$22 billion” whereby leaving the previous “analyst forecasts” behind and ramping up pressure on selling shares which already took a beating due to the ongoing global pandemic.
On the other hand, BNP Paribas of France and Credit Suisse surpassed analyst forecast and benefitted from “bumper trading volumes” along with “relatively modest provisions”. Nevertheless, “HSBC and Lloyds” experienced “poor results” as both of them saw their shares falling to the “lowest levels in 11 and 8 years respectively”.
All the five banks of the United Kingdom failed to match performance expectation “between 42% and 55% this year compared to a 36% fall in the European banking index SX7P”, informed Reuters. While, the Oliver Wyman’s partner, Patrick Hunt said:
“The UK banks are facing a more significant economic drop than most Europeans as the UK has faced a bigger shock from the COVID-19 pandemic, and that has fed through into provision levels”.
According to forecast, the economy in Britain could shrink as much as “11.5% this year”, and OCED’s June forecast also said that the rest of the euro region could contract by “9.1%”. Furthermore, “relatively higher exposure to unsecured consumer lending” combined with a great fall in the “central bank rates” and a possible “no deal” agreement in Brexit transition are some of the factors that weighs on the country’s economy.
However, the further prolong of lockdown in the northern England in an attempt to curb the spreads of COVID-19 infections is a possible threat to the country’s economy which has just experiences a nascent recovery.
References:
reuters.com
