Lloyds and RBS results to further highlight differing fortunes

Photo: Joe Giddens/PA Wire

Photo: Joe Giddens/PA Wire - Credit: PA

The contrasting fortunes of taxpayer-backed lenders Lloyds Banking Group and Royal Bank of Scotland (RBS) will return to the fore this week when the pair post quarterly figures, while Barclays also reports following recent scandals.

Photo: Philip Toscano/PA Wire

Photo: Philip Toscano/PA Wire - Credit: PA

Lloyds will post its figures on Thursday as it edges ever-closer to being fully returned to private hands, with the Government stake being cut to below 2% earlier this month and the City expecting the holding to be sold off in its entirety by June.

The lender enjoyed a robust 2016, posting its highest annual profits for a decade, with bottom-line profits more than doubling to £4.24 billion from £1.64 billion in 2015.

Analysts at UBS expect Lloyds to have enjoyed a solid start to the new year, forecasting pre-tax profits to have nearly doubled once again in the first quarter, to £1.21 billion from £654 million a year earlier.

But the vast improvement is largely due to the absence of last year’s hefty £790 million charge from its controversial move to buy back expensive bonds from investors.

Photo: Joe Giddens/PA Wire

Photo: Joe Giddens/PA Wire - Credit: PA

Part-nationalised rival RBS follows with its results on Friday, in the wake of Chancellor Philip Hammond’s stark admission that the Government is prepared to sell its stake at a loss to the public purse.

The Government bought its 72% stake in the bank for £45 billion in 2008, at £5.02 a share, as part of a bailout at the height of the financial crisis.

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But shares in the troubled lender are now trading at less than half that price.

Cost-cutting is therefore expected to remain a key theme at RBS and progress on the seemingly never-ending restructuring to slim down its balance sheet.

Its first-quarter figures may provide some respite to embattled boss Ross McEwan, with most analysts expecting underlying profits to more than double to £942 million, up from £440 million a year earlier.

Rival Barclays also updates on first quarter trading on Friday, with its figures coming after the group has once again fallen foul of UK banking regulations.

The Financial Conduct Authority (FCA) and Prudential Regulation Authority said earlier this month that chief executive Jes Staley will be probed over governance failings that saw him try to identify a whistleblower.