Gloomy UK Financial Confidence a Mixed Bag for Banks: BI Replay

UK households' financial confidence remains frail, albeit with some stabilizing signs, our third semi-annual BI survey on 1,000 UK individuals shows, suggesting cautious financial planning is likely to persist, especially for pensioners and renters. Sticky inflation means BOE's hands are tied, while uncertainty of the government's Autumn Budget may test the housing market resilience. For UK banks the effect is mixed, as a pullback by households may translate into little loan-growth potential beyond inflation this year. Yet a deposit mix shift back toward sight accounts could also accelerate net interest margin recovery in 2H, helped already by structural hedges, while asset quality should remain healthy.