UK banks have little to fear according to US-owned broker KBW, from the current uncertain economic argument, with Lloyds still the best of the bunch.
“Clearly there are questions about the economic outlook and we are not immune to concerns that UK rates may be higher for longer.
“However, in that scenario net interest income will outperform, with credit the main risk."
On that front, iIn recent years, KBW notes that UK banks have survived GDP of minus 10%, interest rates rising 5% and inflation peaking at over 11% with zero credit problems.
Vigilance remains necessary but "in that context it feels inconceivable that the sector has much to fear from UK PMIs still at over 50, economic growth at 1%-ish, unemployment at 4-5% and inflation of 2-2.5%".
Lloyds Banking Group PLC (LSE:LLOY) remains KBW’s key pick with a 65p target.