Jim Armitage: NIMble-footed banks

Who said banks couldn’t make a profit off low Bank of England interest rates?

Today’s numbers from RBS and Barclays cap off a week of decent earnings from lenders big and small.

How are they doing it? Often in ways that are good for the bank and its shareholders (taxpayers, in RBS’s case), but less so for customers.

The key is in the net interest margin — that’s the difference between what they pay to borrow and what they charge to lend. Across the board, those margins have been steadily rising, particularly among the big boys.

First quarter NIM at RBS in 2015 and 2016 was 2.15%. Today’s came in at 2.24%. Barclays — traditionally a big margin maker — has pushed NIMs up progressively from 3.60% in 2015 to 3.69% now. Across the sector, increases have been particularly sharp in the past couple of quarters.

How have they done it? By lowering rates for savers, of course. Often dramatically.

We want our banks to be strong and stable, naturally.

But with savers already struggling from the Bank of England’s rate cuts, jacking up their margins is not a good look.

Another quarter of NIM increases like this, and consumer watchdogs will start asking questions.