JP Morgan reckons Britain's banks are on the cusp of a lending boom, with corporate borrowing already running at levels not seen since before the financial crisis.
In a note to clients, analysts Sheel Shah and Kian Abouhossein said UK corporate lending was growing at 9% year-on-year, one of the strongest bursts of momentum in years. Lloyds and NatWest are seeing their corporate and investment banking loan books swell at around 20%, a pace last witnessed before the 2008 crash.
The broker expects this to blossom into a multi-year cycle. The core of its argument is that British companies are simply carrying far less debt than they used to. Corporate borrowing stands at 59% of GDP, well below the 80% seen before the financial crisis and a world away from the 103% racked up in the United States.
Nudging that ratio back towards pre-pandemic levels of roughly 70% would unlock some £300 billion of extra borrowing capacity, JP Morgan estimates, translating into a possible 25% jump in corporate loans outstanding.
Feeding the appetite is a fresh wave of investment, artificial intelligence among it, with utilities, pharmaceuticals and industrials showing the keenest hunger to spend.
Margins, meanwhile, are holding up, a sign that banks are keeping their pricing discipline even as volumes climb.
On the strength of all this, the broker lifted its corporate lending growth forecasts across the sector to a compound 8% to 9% a year out to 2028.
Its pick of the bunch is NatWest, which it sees as the most geared to the upswing.
