Bank of England: higher interest rates mean UK Businesses are losing more to the banks
Recently published data (January Statistics) from the Bank of England shows the increasing spread (net interest margin) cost for companies.
PNFCs deposits & loans
A PNFC is a private non-financial corporation.
Effective interest rates for: PNFCs on stock outstanding of deposits and loans (Graph 1)
1. The effective rate for sight deposits increased by 0.15% from 1.06% to 1.21% in December
2. The effective rate for time deposits increased by 0.32% from 2.38% to 2.70% in December
3. The effective rate for loans increased by 0.32% from 4.82% to 5.14% in December
Effective interest rates for: PNFCs on new deposits and loans (Graph 2)
1. The effective rate for time deposits increased by 0.26% from 2.66% to 2.92% in December
2. The effective rate for loans increased by 0.55% from 4.33% to 4.88% in December
Table B: Effective interest rates paid/received on PNFC balances by UK MFIs (excluding central bank) Per cent – Not seasonally adjusted
Corporate Benchmarks from Bankhawk show that the return on company and institutional funds in UK banks is not climbing as fast as the increases in the Bank of England rate and market interest rates would suggest. Companies should carry out a review of their banking arrangements to determine if their own net interest margin has slipped. By benchmarking the net interest margin they can easily see the additional value that can be generated. Bankhawk’s experience is that companies can improve profitability without having to make significant changes to their banking relationships.
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