With UK GDP growing at a faster pace in Q2 than previously thought, things seem to be on the up for the UK economy. Indeed, the UK is one of the fastest growing economies in the developed world and the much-criticised austerity programme seems to be having a positive effect.
Despite this, the Bank of England seems unwilling to raise interest rates. While this will undoubtedly help the wider economy, it does little to aid savers and income seeking investors. So, with this in mind, here are three high-yielding banks that could provide a neat solution to continuing low interest rates.
Santanders (LSE: BNC) (NYSE: SAN.US) 3% interest rate for 123 customers may be fairly well known, althoughthe current yield of 7.6% on its shares is probably less widely known. Of course, dividends per share are set to fall in 2015 as Santander seeks to put itself on a more sustainable financial footing. However, at the current share price, this means the shares will still yield a highly attractive 6.9%.
Allied to this is strong growth potential, with Santander expected to increase earnings by 24% this year and by 21% next year. With shares in the company having a price to earnings growth (PEG) ratio of just 0.6, great value seems to be on offer as well as a high yield.
Having made gains of 6% in the last three months, investors could be forgiven for believing HSBC (LSE: HSBA) (NYSE: HSBC.US) is due a pullback. However, shares in the Asia-focused bank still trade on a price to book (P/B) ratio of just 1.1 and this highlights that they offer superb value for money at current price levels.
In addition, shares in HSBC currently yield a highly impressive 5% and, with dividends per share set to grow by 8.1% next year, they could be yielding as much as 5.4% in 2015. This combination of income potential and value could prove to be in high demand moving forward.
With shares in Standard Chartered (LSE: STAN) having fallen by 4.5% in the last month alone, now could be the perfect time to buy. Thats because they now offer a top notch yield of 4.5%, which could rise to 4.7% next year given the banks strong dividend growth prospects.
Of course, the last few years have been tough for Standard Chartered, with various allegations of wrongdoing and a profit warning earlier this year. However, the next two years look bright for the bank. Thats because it is set to increase earnings by 6% in the current year and by 10% next year. This puts Standard Chartered on a PEG ratio of 1.0, which indicates growth at a very reasonable price.
While Santander, HSBC and Standard Chartered could be well-worth buying right now, they’re not the only banks that could hike your income. That’s why The Motley Fool has written a free and without obligation Guide To The UK Banking Sector.
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Peter Stephens owns shares of HSBC Holdings. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.