Lloyds and RBS in spotlight as banks issue first-half results

Author: By Simon Evans

Both banks are expected to post significant losses over the period, as personal customers and companies struggle to pay back loans granted during the bull-market years.

Analysts in the City are predicting that the write-downs in the value of assets owned by Britain’s biggest banks, all of which announce results this week, could collectively reach nearly £30bn.

But the spotlight will largely be on RBS and Lloyds, with Nic Clarke, banking analyst at the broker Charles Stanley, saying that the pair’s results were “still likely to look pretty terrible”.

Lloyds Banking Group, which announced the appointment of Citibank’s Sir Win Bischoff as chairman last week, is expected to post miserable losses of as much as £5bn, down from a profit of nearly £3bn made last year before its acquisition of rival HBOS.

Royal Bank of Scotland’s chief executive, Stephen Hester, is expected to say the bank edged back to profitability after posting the biggest loss in UK corporate history last year ? £24bn.

Investors will be keen to gauge the progress of Mr Hester’s plans to sell non-performing assets in the group, which he earmarked earlier in the year.

It is also hoped that both banks will explain details of their likely participation in the government-funded asset protection insurance scheme, expected to be finalised in September.

Barclays and HSBC, which both avoided the need to take government assistance during the banking crisis, issue numbers that will show mixed fortunes.

Profits at Barclays, which recently agreed to sell its BGI fund-management arm for £8.2bn, eliminating concerns about its capital strength, could surge by as much as 30 per cent over the first half, according to more bullish analysts’ predictions.

Interest will, in particular, focus on the performance of Barclays’ investment banking business, led by Bob Diamond. The group has been on a furious hiring spree in the Square Mile over the past few months, supposedly offering some of the most generous salary and bonus packages the City has seen in years.

Results from Europe’s biggest bank, HSBC, which earlier in the year raised £12bn in a giant rights issue, will once again be dominated by the performance of its American subsidiary, which could post a loss of more than $5bn (£3.1bn) over the period.

However, HSBC is still expected to post an overall profit of nearly $5 bn.

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