Are UK bank stocks set to surprise to the upside?

Following a strong earnings season for US lenders could UK bank stocks surprise to the upside when they report this week?

An elevated view of the London skyline - looking east to west
(Image credit: Karl Hendon)

It's been tough to get excited about banks over the past decade. Near zero interest rates have made it difficult for the sector to increase profitability and return profits to investors. However, following the string of interest rate hikes from the Bank of England over the past 12 months, UK banks are starting to look appealing again. 

Banking isn't supposed to be exciting. Banks essentially take money from depositors and loan this money out to borrowers at a higher interest rate. Since the financial crisis, regulators have discouraged them from speculating and trading in financial markets. While some (notably HSBC and Barclays) still do, most of the UK’s lenders focus on the relatively straightforward business of lending and accepting deposits. 

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