UK’s biggest banks accused of ‘doing as little as they can get away with’ to reward savers
The UK’s biggest banks are still failing savers, a senior MP has said.
Tory MP Harriett Baldwin, chair of the parliamentary Treasury select committee accused the big four banks of “doing as little as they can get away with” to reward savers.
She said Barclays, Lloyds, NatWest Group and HSBC were not doing enough to pass on higher interest rates to savers.
“The figures published in the past week still show signs that the banks are trying to do as little as they can get away with to reward our constituents for saving,” she said. “We will continue to press for individual and business savers to be rewarded.”
The Conservative MP spoke out after HSBC acknowledged that rising interest rates helped the bank more than double its profits in the last quarter to $7.7bn (£6.4bn).
The London-based, Asia-focused bank, one of the world’s biggest, said the profits, up from $3.2bn during the same period last year, were boosted by a 15 per cent rise in net interest income – the difference between what it charges for loans and mortgages against the amount it pays out to savers – to $9.2bn, as interest rates rose.
Noel Quinn, HSBC chief executive said: “There was good broad-based growth across all businesses and geographies, supported by the interest rate environment.”
The bank, which has been under pressure from major Chinese shareholder Ping An, announced a further $3bn share buy-back scheme to return money to its shareholders, bringing total buy-backs to $7bn (£5.7bn) this year
HSBC has set aside $1.1bn for bad debt provisions including $500m for China’s ailing property market.
Mr Quinn said HSBC believed the Chinese property crisis had reached bottom and was not likely to get much worse but warned the recovery could take some time. “You should not equate the bottom of the market with no further issues”, he told analysts.
HSBC is the latest bank to report that higher borrowing costs had helped it generate more income from mortgages and loans throughout the year.
Barclays said the savings market had become “extremely competitive” and reported a 6 per cent drop in deposits in the UK.
Lloyds, the UK’s biggest mortgage lender, said people were making the most of its own savings deals. It saw some £3.2bn taken out of current account deposits and £3.9bn put into savings over the last quarter.
NatWest saw its shares fall last week after investors were alarmed by a predicted drop in the bank’s net interest margin. NatWest said it was having to make larger payouts to savers who had been shifting cash from current accounts, into fixed-term savings accounts that offer higher interest rates.
“There is no doubt that many of our customers remain concerned about the future and many are changing their behaviour as they adapt to unprecedented changes in the base rate, both in terms of quantum and speed, and as the cost of living and doing business continues to rise,” NatWest’s chief financial officer Katie Murray said.
The Treasury Committee, a group of cross-party MPs who scrutinise the work of the Treasury, earlier this year pressed bank bosses to explain why some of their savings rates were still significantly lower than the Bank of England base rate.
Top rates on savings accounts have been rising since, with smaller specialist banks such as Paragon Bank matching the current 5.25 per cent base rate on its easy-access savings account.