The Bank of England's decision to slow the pace at which it unwinds its bond holdings should support deposit growth across the UK banking system, according to JP Morgan.
The bank held its main interest rate at 3.75% but surprised markets on quantitative tightening, the process of reversing the money-printing carried out after the financial crisis and the pandemic.
It said it would reduce its stock of gilts held for monetary policy purposes, currently £488 billion, to zero over time.
Crucially, it will do so more slowly, running down about £46 billion a year to 2034, against £70 billion previously, with fewer active sales and more bonds simply left to mature.
JP Morgan said a gentler wind-down means the market has to absorb less government debt, easing a headwind to deposits held within the banking system.
The broker sees particular benefit for corporate deposits, which it recently forecast would grow at 3% to 4% a year to 2028, alongside faster growth in corporate lending.
It described corporate deposits as an underappreciated source of funding that helps anchor customer relationships.
Such balances are also cheaper for banks, since companies keep a larger share of their money in accounts paying no interest.
JP Morgan singled out NatWest for its strength in corporate banking.
The note argued that the Bank's decision gives further reason to think UK bank shares can rerate from 7.3 times forecast 2028 earnings towards the European sector average of 9.6 times.
