...April 30, 2024 LONDON (S&P Global Ratings) April 30, 2024--Slowing deposit migration and shifting global interest rate expectations gave U.K. banks another opportunity to squeeze out good profitability in the first quarter of 2024. Normalizing asset quality from a low base and muted lending growth were not enough to derail another positive three months for the sector. Furthermore, a slower pace of interest rate cuts in the second half look set to provide a fresh boost to medium-term income forecasts. With an unweighted average return on tangible equity (RoTE) of 13% for the quarter (including an adjusted RoTE of 16.4% for HSBC, which excludes notable items), U.K. banks' solid earnings afford them significant financial flexibility, which is a support to ratings. Net interest margins (NIMs) remained the story of the quarter as deposit migration to higher-rate products, sluggish lending growth, and competitive markets (notably in prime U.K. mortgages) served as a brake on net interest income...
