UK banks are expected to report increased profits for the first half of the year, despite concerns over bad loans due to the Iran war impacting the cost of living.

UK · 2026-07-24

1. Step 1 · The triggerIran war pushes up energy prices and inflation, keeping BoE rates higher for longer.
2. Step 2 · Knock-onHigher rates widen banks' net interest margins, boosting H1 profits.
3. Step 3 · Knock-onHigher rates also increase bad loan provisions as borrowers face cost-of-living pressure.
4. Step 4 · Reaches youBanks tighten SME lending criteria and raise rates, reducing credit availability for small businesses.

The trigger is reported by the source below. The steps that follow are Branch²’s traced reasoning — how the shock could reach a business like yours, not a prediction.

Source: The Independent Business

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