Love is in the air — but not for British banks

The evenings are starting to draw out and Valentine’s Day is upon us.

In the City calendar that can only mean one thing — it is that bank reporting time of year.

Things kick off on Friday when NatWest reveals its 2023 numbers, followed by Barclays, HSBC, Lloyds and Standard Chartered. It has been a decent year for the “big five”. 

For once there were no scandals requiring multi-billion-pound writedowns, and bad debt impairments remained at remarkably low levels considering the state of the economy.

Lending margins were kept at healthy levels — until the sudden mortgage price-war scramble at the end of the year — and NatWest is finally generating the sort of profits it should be a decade and a half after the global financial crisis. 

City scribes are pencilling in combined profits of around £51.6 billion, easily the highest on record, although about half is accounted for by one bank, HSBC. 

If the big five UK banks were a country their combined “GDP” would be about the size of Serbia’s. But for all that, Britain’s banks remain as unloved by the stock market as ever. The FTSE All-Share banks index is barely back to where it was in the shattering Spring 2009 aftermath of the banking meltdown and 70% below its 2007 high, according to research from brokers AJ Bell. 

Perhaps those memories of the 2009 trauma have poisoned the value investors place on bank profits to this day, despite major shoring of balance sheets since then. 

NatWest’s most “profitable” year — on paper — was in 2007, just before it almost collapsed in the wake of the Lehman Brothers shock. 

Another anniversary looms. It is almost a year since Silicon Valley Bank fell over, sparking a chain reaction that briefly threatened to go nuclear before some hastily cobbled together rescue deals cooled things down. 

Nevertheless it was a reminder that when things go wrong with banks, they go wrong very badly...and very fast.