Brokers Warn: UK Banks Still at Risk of Loan Defaults

Broker AJ Bell said that despite the successful results of stress tests for the UK banking sector, the risk of bank customers defaulting on their loans is still increasing.
“While all is well in the stress test, the outlook is far from rosy and reality is starting to approach the stress test scenario,” wrote Danni Hewson, director of financial analysis.
She noted that while the UK banking sector was well capitalized and resilient, the risk of borrowers not being able to repay their debts remained.
Bank earnings and dividends could be hit if the situation gets worse and the government pressures lenders to provide support measures for customers struggling due to high interest rates, the analyst said.