Big profit expected in bank results

Britain’s biggest banks are poised to reveal more eye-watering profits as the banking results season gets under way next week.

City analysts have predicted combined profits of around £24 billion from four banking giants – HSBC, Barclays, Lloyds and Standard Chartered – while Royal Bank of Scotland is expected to post a narrowed loss.

The expected haul – up more than 10% on last year – will be seen as a signal that the banking sector is back on track after the global financial crisis.

Barclays kicks the season off on Tuesday a week after Chancellor George Osborne revealed details of a highly anticipated deal between the Government and leading UK banks to curb bonuses and boost small business lending.

But while the City is bound to be keen to see how much Barclays’ new chief executive Bob Diamond pockets for his bonus, the focus is likely to move away from pay packets and on to profits as the season rolls out.

Mr Diamond, who recently told a Treasury Select Committee the period for “remorse and apology” for banks needed to be over, is expected to be awarded a bonus of more than £9 million.

This would dwarf the bonus awarded to Stephen Hester at RBS and Eric Daniels at Lloyds, who have been awarded £2 million and £1.45 million in shares respectively.

Mr Diamond will be delivering his first full-year results after taking on the top role from predecessor John Varley at the beginning of the year.

Barclays is expected to report pre-tax profits of £5.1 billion for 2010, which would mark a decline on the £11.6 billion earned in 2009. Barclays Capital, the investment banking arm formerly headed by Mr Diamond, is “central” to the group’s performance – estimating it contributes towards 60% of the bank’s profits.

But, as reflected in US banking results earlier this year, the sector suffered from weak activity in the final three months of last year.