Banks line up to reassure investors as season of turbulence subsides
UK banking bosses are preparing for a grilling this week as investors and analysts assess the fallout from the most turbulent period for the banking sector since the 2008 financial crisis. The tumult ended in the collapse of Silicon Valley Bank and Credit Suisse, and has raised questions over a sector that brought the global economy to its knees just over a decade ago.
Against this backdrop, Britain’s biggest lenders will this week report on their earnings for the first three months of the year. Banking experts will scrutinise the companies’ contingency plans to avoid being dragged into any future crises, and assess their bosses’ confidence in financial regulations that were meant to protect against a wider fallout.
Two high street stalwarts are expected to report healthy earnings, showing they have emerged from the turmoil largely unscathed.
Lloyds and NatWest, which have small investment banking operations and primarily focus on serving retail customers, have been riding high on the surge in interest rates that, coincidentally, contributed to last month’s short-lived banking crisis. Both are expected to report jumps in pre-tax profits of more than 30% for the first quarter, thanks to higher charges on loans and mortgages.
On Friday, NatWest – which is still 41.5% owned by the government – is expected to report a 50% jump in net interest income, which derives from the difference between the amount it paid out to savers and the amount it charged for loans and mortgages, to £3bn for the first quarter. And despite it having put aside £250m for a potential surge in defaults by struggling customers, the RBS owner’s profits are forecast to rise by 33% to £1.6bn, according to analyst estimates.
Lloyds is on track to report a
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