Britain’s biggest banks are poised to reveal more eye-watering profits as the banking results season gets underway next week.
City analysts have predicted combined profits of around £24 billion from four banking giants – HSBC, Barclays, Lloyds and Standard Chartered – while Royal Bank of Scotland is expected to post a narrowed loss.
The expected haul, up more than 10 per cent on last year, will be seen as a signal that the banking sector is back on track after the global financial crisis.
Barclays kicks the season off on Tuesday a week after Chancellor George Osborne revealed details of a highly anticipated deal between the government and leading UK banks to curb bonuses and boost small business lending.
But while the City is bound to be keen to see how much Barclays’ new chief executive Bob Diamond pockets for his bonus, the focus is likely to move away from pay packets and on to profits as the season rolls out.
Mr Diamond, who recently told a Treasury Select Committee the period for “remorse and apology” for banks needed to be over, is expected to be awarded a bonus of more than £9 million.
This would dwarf the bonus awarded to Stephen Hester at RBS and Eric Daniels at Lloyds, who have been awarded £2 million and £1.45 million in shares respectively.
Mr Diamond will be delivering his first full-year results after taking on the top role from predecessor John Varley at the beginning of the year.
Barclays is expected to report pre-tax profits of £5.1 billion for 2010, which would mark a decline on the £11.6 billion earned in 2009.
Barclays Capital, the investment banking arm formerly headed by Mr Diamond, is “central” to the group’s performance, estimating it contributes towards 60 per cent of the bank’s profits.
Nomura has forecast BarCap’s pre-tax profits to be £4.3 billion, broadly flat on the previous year, and £805 million in UK retail banking, up on the £752 million in 2009.
Over the following two weeks, HSBC is expected to unveil the largest profit for the 2010 financial year, an estimated £13.5 billion, more than double 2009’s £5.16 billion, while Standard Chartered’s profits will be around £4.5 billion, up from £3.8 billion.
The state-backed banks are expected to deliver considerably lower numbers. Lloyds, in which British taxpayers have a 42 per cent stake, is expected to produce a profit of around £1 billion, unchanged from the previous year’s figure.
Meanwhile RBS, in which taxpayers have an 83 per cent shareholding, is expected to unveil a £613 million loss.