Investing in UK bank stocks may not be that risky

The prognosis for the UK banking sector has clearly become gloomier of late. 

This week marks the beginning of the half-year results season and the key talking points among market participants are slowing loan growth, declining net interest margins, and gradually deteriorating asset quality. This article considers the specific factors underpinning investors’ expectations and explores why it does not necessarily follow that one should altogether avoid investing in UK banks at this juncture.

Banks are leveraged exposures to the economies in which they operate and it is therefore important to consider the implications of the macroeconomic backdrop.