The UK banks’ reporting season was off to a strong start as Barclays beat first quarter expectations. It is all a far cry from 15 years ago when Britain’s banking system was right in the eye of the storm during the Great Financial Crisis.
Today, and not allowing for any complacency, UK banks seem to have more robust balance sheets and are more conservatively run. As a result, they have so far steered clear of the kind of turmoil seen in Europe with Credit Suisse and in the US with the collapse of Silicon Valley Bank and difficulties in the regional banking space.
AJ Bell’s Russ Mould said: “Barclays is doing what a bank should do by benefiting from a higher interest rate environment, boosting its net interest margin by increasing the amount it charges on loans by more than the amount it pays out on deposits.
“At the same time its investment bank, whose place in the group has been the subject of considerable shareholder debate and pressure, is performing decently given a difficult backdrop for that industry.
“For now, impairments are remaining low and the company is not seeing any signs of a looming increase in bad debts. This remains the ticking time bomb under all the banks though, with the market likely to react negatively to any indications the picture has deteriorated.”