BRITAIN’s biggest banks, emerging from an eventful year clouded by mis-selling scandals and controversy over their past misdeeds, will be in the spotlight again next week when Royal Bank of Scotland (RBS), Lloyds and Barclays all reveal their annual figures.
The performance of taxpayer-owned RBS – which reports on Friday – will hinge on whether it is hit by a pending settlement with the US Justice Department over claims it mis-sold risky mortgage-backed securities in the run-up to the 2008 financial crisis.
Further provisions or a final settlement included in its results could push the lender to yet another annual loss – which would mark a full decade in the red.
Consensus figures point to a full year attributable loss of £592 million, with conduct and litigation costs expected to come in at £2.7 billion.
Michael Hewson, chief market analyst at CMC Markets, said: “RBS management have been careful to downplay the prospect that we could see the first annual profit in this particular decade, probably a wise course of action given the bank’s current woes.
“It still hasn’t settled its issues with the US Department of Justice over mortgage-backed securities mis-selling.
He added: “The bank may choose to set aside further provision to help cushion the final settlement into next year’s numbers, with the fine rumoured to be in the region of $10bn (£7.1bn).”
There is more misery for RBS with its controversial restructuring division GRG, which has come under intense scrutiny in recent weeks and could feature in the form of further provisions.
The bank has already set aside £400m for customers who were mistreated by GRG, but there is speculation that this might be far from enough.
RBS could also take an impairment charge following the collapse of Carillion, having been one of the outsourcing and construction firm’s lenders.
Chief executive Ross McEwan is also expected to give an update on the group’s restructuring.
Lloyds Banking Group, meanwhile, reports its results on Wednesday when boss Antonio Horta-Osorio will unveil his three-year strategic plan for the group.
Having steered Lloyds back to private ownership last summer, nearly nine years after being bailed out at the height of the financial crisis, Horta-Osorio is expected to unveil a mammoth investment programme to guide it through the next era.
The figures are set to show another hike in earnings, with analysts at Credit Suisse pencilling in a 37 per cent surge in bottom line pre-tax profits to £5.8bn from £4.2bn in 2016.
Lloyds saw pre-tax profits more than double to £1.95bn in the third quarter and more of the same is expected in the final three months of 2017.
Lloyds is also in the process of paying victims of fraud at the hands of HBOS Reading staff between 2003 and 2007.
Barclays follows with its final annual figures on Thursday as its battles its own legal drama after the Serious Fraud Office (SFO) charged the bank with unlawful financial assistance in connection with a $3bn (£2.2bn) loan given to the state of Qatar. The loan relates to a side deal linked to its emergency fundraising during the financial crisis in 2008.
Despite this, Barclays is set to post a healthy rise in profits to £4.7bn, up from £3.2bn in 2016.
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