Skip to content

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Outlook 2023 – what’s in store for UK bank shares?​​​​

​​It was a mixed picture for UK banks in 2023, but at least rising interest rates helped to provide a boost. Will 2023’s expected recession hit the sector?​

Source: Bloomberg

​​​A mixed performance for bank shares in 2022

​2022 has not been a great year for equities around the globe, and UK bank shares have not been immune. The sector has struggled to hold its ground despite a sharp rise in global interest rates which has helped to support margins.

​At times, key UK banks like Barclays and Lloyds have been down by 20-30% for the year. While not as extreme as the losses in sectors like big tech, these falls have not been pleasant for investors. While the changing fortunes and darkening outlook for the UK economy have not helped, in general the sector has ebbed and flowed with general risk appetite across the globe.

​There has been a divergence in performance for the year, as the chart below from Google Finance shows:

Source: Google finance

​Lloyds and Barclays have both suffered most this year, and remain in negative territory. By contrast, NatWest and HSBC have actually risen for the year so far, and once dividends are included that return improves further.

​What might help bank shares in 2023?

​Despite the mixed results this year for the sector, there might be reasons for optimism. Q3’s earnings saw the sector beat consensus estimates for profits before bad-loan provisions by around 15%. Rising interest rates lay behind this, driving an improvement in net income figures.

​Further rate rises are expected from the Bank of England and others in 2023, although the pace may slow as a recession becomes more entrenched. Nonetheless higher rates will continue to feed through to higher profit levels, boosting dividends as well.

​2023’s recession fears may be ultimately misplaced, or the downturn may not be as bad as feared. Thus, with the sector trading on relatively undemanding multiples (NatWest and HSBC trade around ten times earnings, while Lloyds’ PE is 7.7 and Barclays’ a lowly 5), there is room for further upside should positive surprises come through on the economic and corporate fronts.

​What are the risks?

​In essence, UK bank shares face the same risk to their outlook as every other UK sector, and indeed most stocks around the globe for 2023.

​A severe recession will prompt further losses in equities that will result in stocks of all kinds breaking below their 2022 lows. A recession means falling economic growth and lower earnings, and for the banks this will be compounded by the inevitable rate cuts that will follow if a recession begins and inflation falls. Before then, of course, they will see their lending activity shrink, and mortgages and loans will turn bad in greater numbers.

​UK banks will not be immune from this, and given the weakness of the UK economy heading into 2023, they may suffer much worse falls than their US brethren.

​Lloyds share price chart

​Lloyds began the year on a high, rallying to a two-year high of 53p, but this did not last, and the shares began a sharp move lower down towards 40p.

​Two visits to this area this year have found buyers, with investors happy to step in around this zone. Gains have stalled however around 47p. Additional gains would target 49.84p, the high from mid-September.

Source: ProRealTime

​NatWest share price chart

​NatWest shares have had a choppy year, but the gloomy macro outlook has not stopped them from rising from their October lows to put them back in positive territory.

​Since October, trendline support has helped underpin gains, with the September high at 275p now in sight once again. Since early March and their lows for the year, the stock has gained over 35%.

​A reversal below 250p would see the price back below its early 2022 highs and also below trendline support, which might point towards an extended bearish move.

Source: ProRealTime

​Barclays share price chart

​It has been a much tougher year for Barclays. Unlike Lloyds and NatWest, the shares remain firmly below their highs for the year, and while they have bounced from support, the outlook still remains bearish.

​Two visits to the 140p area have met with buying, but the summer saw repeated attempts to push on above 175p, all of which ultimately ended in failure.

​A drop back below the 200-day SMA would be a negative development, and might suggest another test of 140p is in the offing.

Source: ProRealTime

​HSBC share price chart

​The share price rallied sharply at the beginning of the year, reaching a peak around 540p.

​It was then knocked back to 440p, and clawed its way back to 540p. However, it was unable to hold these gains and from September the shares dropped to 440p again. While it has since rallied to the 200-day SMA, a failure to push on here could suggest another drop towards 440p again.

Source: ProRealTime

Act on share opportunities today

Go long or short on thousands of international stocks with spread bets and CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Related articles

Live prices on most popular markets

  • Equities
  • Indices
  • Forex
  • Commodities
website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.

" >


Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.