The UK’s biggest banks are set to report record-high profits after a year that saw them benefit from high borrowing costs.
Barclays, HSBC, Lloyds and Standard Chartered will report their financial results for 2023, on Tuesday, Wednesday, Thursday and Friday respectively.
This follows NatWest, which on Friday revealed its biggest yearly profit since 2007, before the global financial crisis.
The five banks collectively are forecast to make combined pre-tax profits of more than £50 billion, which would be a record-high amount and ahead of the pre-financial crisis peak in 2007.
Last year, as interest rates rose to a 15-year high of 5.25 per cent, several high-street banks came under pressure last year to pass the benefit of higher rates on to savers, with mortgage holders facing higher costs.
The difference between the rates charged to mortgage holders and the rates paid to savers is known as the net interest margin (NIM) and these margins – which will drive part of banks’ profits – came under heavy scrutiny last summer.
Harriet Baldwin, chair of the cross-party Treasury Committee, repeatedly called for major banks to do more for customers during the cost-of-living crisis.
HSBC is forecast to report a profit of 34 billion US dollars (£27 billion) and analysts are expecting Lloyds to have made £7.4 billion last year, which would top previous record earnings for the groups.
Barclays is estimated to report a £6.7 billion pre-tax profit, lower than highs earned in 2021.
It is also due to update shareholders on its much-anticipated strategy for reducing costs, which is set to involve restructuring.
NatWest’s pre-tax profits rose 20 per cent to £6.2bn over 2023, the highest profit since just before the global financial crisis in 2007 and higher than experts expected.
Matt Britzman, an equity analyst for Hargreaves Lansdown said outlooks for 2024 may end up being “more important than the results themselves”, and that the “tides look to be turning” for the banking giants after a bumper year.
“As a traditional lender with operations geared toward interest income, net interest margin is key”, he said of Lloyds Banking Group.
“With consumers under pressure, loan default commentary and the value of impairments Lloyds takes will be watched closely.”
He added that the size and scale of restructuring efforts at Barclays will be “the biggest question mark overhanging” the bank.
While investors will be looking for reassurances from HSBC that the global bank has not been impacted by volatility in China’s property market.
