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Can Lloyds, Barclays and HSBC follow up NatWest's profit surge

Published 16/02/2024, 13:27
Updated 16/02/2024, 13:27
© Reuters.  Can Lloyds, Barclays and HSBC follow up NatWest's profit surge

Proactive Investors - After Natwest’s bumper profits on Friday it is the turn of Barclays (LON:BARC) (Tuesday) and Lloyds (LON:LLOY) (Thursday) to see if they can repeat the trick while the giant of the big four quartet, Asia-focused HSBC (LON:HSBA), splits the pair on Wednesday.

Lloyds is closest to Natwest (LON:NWG) in structure and the domestic markets it serves, so the good showing from its rival today should bode well.

“Lloyds faired pretty well back at third-quarter results, the only major UK bank to see underlying profit before tax improve from the prior quarter,” notes Hargreaves Lansdown (LON:HRGV).

“As a traditional lender with operations geared toward interest income, net interest margin (NIM) is key,” it adds.

Analysts are looking for 3.01% in the fourth quarter.

Aside from that, it should been plain sailing except now a rock has been thrown in into the pool in the shape of Close Brothers scrapping its dividend yesterday due to the FCA’s car finance probe.

Lloyds, too, is big in this market but according to Jefferies, “Other than the fact that Close Brothers and Lloyds both operate in the car finance market, the two firms cannot be compared,”

Lloyds has experience in operational complexities related to redress schemes [think PPI], Jefferies said, while the scale of any such refunds would have a very different impact of each firm.

The US bank also stuck to a forecast of a £2.5 billion Lloyds share buyback for 2023.

Barclays results will be accompanied by a strategic review of the business

Hargreaves believes there will be a focus on cost reduction rather than material business changes, especially in the UK which sits well above peers on a cost-to-income basis.

“The real question for investors is whether restructuring charges taken over the fourth quarter will impact the expected £890mn buyback – of course, nothing is guaranteed.”

Barclays Investment Bank is forecast to have had another weak quarter but the M&A deal wheels are starting to turn again, which might bode well for later in the year.

HSBC meanwhile will have to deal with the fallout of the Chinese property crash on its Kong Kong-based operations.

Like Barclays, analysts also see a new three-year plan being unveiled with new financial targets, “binding the new CFO and current CEO together in strategic and performance terms”, says UBS.

Read more on Proactive Investors UK

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hsbc failed to beat expectations not every bank is natwest
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