Berenberg warns investors should be underweight Britain's big banks, including Barclays, Lloyds and Royal Bank of Scotland (RBS)

Lauren Fedor
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Berenberg gave HSBC a "buy" rating despite putting the entire UK banking sector on "underweight" (Source: Getty)

Analysts at Berenberg have said investors should be wary of Britain’s big banks, amid expectations that mortgage profitability will fall below 10 per cent.

“We think interest rates will remain at low levels and, as a result, expect mortgage margins to fall by six basis points per year,” Berenberg’s banks team said in a note to clients earlier today. “In our view, expected mortgage growth of one to two per cent will not offset this, leading to lower earnings.”

Berenberg said preferred the Asia-facing HSBC and Standard Chartered, but slapped an “underweight” rating on the wider UK banking sector.

Tumbling share prices have wiped billions off British banks’ values since the start of the year.

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