Britain's 'big five' banks prepare to deliver record-breaking total profits

Bank shares languish well below pre financial crisis levels despite the profits revival

NatWest Group will kick off the bank reporting season

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Jonathan Prynn, Business Editor @JonPrynn13 February 2024

Britain’s five biggest quoted banks are on course to deliver record combined profits when they reveal their financial results for 2023 over the coming days.

Analysts forecasts suggest NatWest, Barclays, HSBC, Lloyds and Standard Chartered will announce total pre-tax profits of £51.6 billion in this reporting season, more than the GDP of an economy the size of Serbia. That is well above the previous high water mark of £35.8 billion immediately before the finacial crisis.

HSBC, the biggest of the quintet, and Lloyds are expected to have made record profits, while the other three are forecast to have made strong profits slightly below the highs.

NatWest, which kicks off the reporting season on Friday, is on course for £6 billion profit, the highest since the financial crash. But that isstill well below the £9.9 billion reached in 2007 when the over zealous expansion drive of the bank then known at RBS drove it to the brink of disaster.

Long memories of thre near death experience experienced by the banking sector in 2008 and 2009 mean that their share prices remain well down on pre-financial crisis levels. The FTSE All-Share banks index is currently languishes 70% below its all-time high of early 2007.

Russ Mould, investment director at brokers AJ Bell said: “In aggregate, 2023 was a good year for the banks. There were no major scandals to force compensation payments. Net interest margins rose, at least in the early stages of the year, after a series of interest rate increases from central banks. The long-feared recession failed to arrive, so there was no major increase in bad loans provision. And the lenders continued to focus on costs.

“However, analysts do seem to think that 2023 may be as good as it gets, because aggregate pre-tax profits are seen as coming in flat-to-down in 2024 and 2025. They also believe that the Big Five’s total profits in the fourth quarter of 2023 will be less than the sum earned in the final three months of 2022, at £7.7 billion in total versus £9.1 billion.”