LONDONFRANKFURT, Jan 27 Reuters Rising borrowing costs are giving a longawaited lift to Europe39;s beleaguered banks, but they come with a sting in the tail.

Last year central banks ended a decade of rockbottom interest rates as the U.S. Federal Reserve and then the European Central Bank moved towards tightening.

Two of Europe39;s big corporate and mortgage lenders, Sweden39;s SEB and Spain39;s Sabadell, recently unveiled strong profits for 2022 as that trend helped lending lift earnings.

But while rising rates are good news for bank profits, they herald a slowdown in an economy hit by war and runaway prices that squeeze borrowers and could prick pricing bubbles, most notably in property.

On the one hand, interest rates are going up, which is good and helps banks, said Jerome Legras of Axiom Alternative Investments. But the economic outlook is uncertain, and risk of credit losses high.

Investors will pay close attention to what banks say about the future because they want them to continue making payouts.

Europe39;s top lenders, including Switzerland39;s UBS, Italy39;s UniCredit and Dutch bank ING, will reveal how that trend is affecting them as they outline their 2022 results in the coming days.

Britain, one of the region39;s biggest credit markets where rates have risen the fastest in western Europe, is a bellwether for the market.

British banks have signalled they expect profits to grow in 2023 despite the precarious economy NatWest, one of its biggest retail…