Bank of England: companies struggle to get improved interest rates
Updated data (March Statistics) from the Bank of England shows the increasing ‘spread’ (net interest margin) cost for companies. Source: Bank of England March Statistics
PNFCs deposits and loans
A PNFC is a private non-financial corporation.
Effective interest rates for: PNFC’s on stock outstanding of deposits and loans
1. The effective rate for sight deposits increased by 0.42% from 1.21% in December to 1.63% in February.
2. The effective rate for time deposits increased by 0.47% from 2.70% in December to 3.17% in February.
3. The effective rate for loans increased by 0.51% from 5.14% in December to 5.65% in February.
Effective interest rates for: PNFC’s on new deposits and loans
1. The effective rate for time deposits increased by 0.51% from 2.92% in December to 3.43% in February.
2. The effective rate for loans increased by 0.94% from 4.88% in December to 5.82% in February.
Table: Effective Interest Rates paid/received on PNFC balances by UK MFI’s (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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