Week Ahead

Bank profits to take a hit as margins squeezed

RBS HQ
RBS owner NatWest will report figures on Friday (pic: Terry Murden)

Three of Britain’s biggest banks are preparing to announce that tighter interest margins and competition for mortgages have caused a fall in profits in the first quarter.

Despite downward pressure on interest rates banks have been maintaining savings rates as depositors chase better returns. Combined with higher mortgage rates this has squeezed profits.

Analysts expect Lloyds, Britain’s biggest mortgage lender and owner of Bank of Scotland, to say on Wednesday that its net interest margin, the difference between the rate it pays on deposits and charges for loans, slipped below 3% from 3.22% a year earlier.

Pre-tax profits are expected to be down to £1.7 billion from £2.3bn in the corresponding period.

NatWest, trading as Royal Bank of Scotland north of the border, is forecast to post a slide in first-quarter operating pre-tax profits to about £1.2bn, from £1.8bn a year earlier.

Its figures, due next Friday, will be the last before an anticipated retail offering of shares to the public as the government offloads its remaining 29% stake.

Barclays will update investors on its overhaul of the bank after setting out a new strategy for the lender, including its big investment banking division, in February. The group’s pre-tax profits in the three-month period are expected to have fallen to £2.2 billion from £2.6 billion previously.

DIARY

Monday 22 April

  • Rightmove UK house price index

Tuesday 23 April

  • Trading updates from Taylor Wimpey, GB Group and RWS
  • UK government borrowing

Wednesday 24 April

  • Full-year results from Sanderson Design
  • First-half results from Tracsis and AB Dynamics
  • Trading updates from Croda, Bunzl, abdrn, Lloyds, Nichols, PZ Cussons and Breedon

Thursday 25 April

  • Full-year results from Sainsbury’s
  • First-half results from WH Smith
  • Trading statements and quarterly results from AstraZeneca, Barclays, Unilever, WPP, Persimmon, London Stock Exchange, Schroders, Travis Perkins, Inchcape, Ibstock and Drax
  • US Q1 GDP growth

Friday 26 April

  • Full-year results from Petrofac
  • Trading statements and quarterly results from NatWest and Smurfit Kappa
  • GfK UK consumer confidence


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