UK Banks: June BoE data: In search of signs of tougher trading

Research evidence excerpt

UK Banks: June BoE data: In search of signs of tougher trading

Global Research

29 July 2026ab

UK Banks Equities

United KingdomJune BoE data: In search of signs of tougher

trading Banks

Jason Napier, CFA

Analyst

jason.napier@ubs.com

UK domestic banks: A focus on operating leverage and NIM +44-20-7568 5037

UK 2Q reporting started with Barclays yesterday reporting a PBT beat but with the Sanjena Dadawala

UK division producing 1% less NII than consensus forecasts and with the group income Analyst

beat invested in restructuring plans designed to deliver a profit and ROTE tailwind in sanjena.dadawala@ubs.com

2027. That idea might be relevant in LBG's 2030 strategic plan tomorrow. Its last set of +44-20-7567 0753

targets offered a higher ROTE in exchange for a temporary increase in opex. We might

see a similar planned change in efficiency by group simplification (e.g. Halifax brand

discontinuation), AI investment and hedge-driven operating leverage, narrowing the

~5% current cost/income gap to NatWest. Meanwhile investors are really focussed on

domestic NII. June data shows good volumes though spread conditions are a headwind:

i) Paragon today reported further substitution of more cost-effective wholesale funding

for deposits, and ii) Barclays reported a 4bps QoQ BUK NIM fall on narrower product

spreads (competitive trading in ISA / term deposits, lower mortgage spreads as COVID-

era fixed rate deals refi but with FY NII guidance consistent with a significant

improvement in 2H). All eyes on LBG and NWG tomorrow and Friday.

BoE lending data: Loans up 4.8% YoY, 0.4% MoM; mortgage yields rise further

UK loans rose 0.4% MoM in Jun'26, consumer lending +0.9%, mortgages +0.5% and

corporate lending flat MoM. Overall loan growth was 4.8% YoY and has been ~4.5-5%