The Week Ahead: Figures due from HSBC, RSA, Standard Life, Direct Line, Aviva and L&G

The head office of HSBC at Canary Wharf, London.
Photo: Sang Tan/AP

The head office of HSBC at Canary Wharf, London. Photo: Sang Tan/AP - Credit: AP

The future of HSBC as a UK-based bank will come into renewed focus when it reports half-year results this week while Standard Life and More Than owner RSA are among a clutch of major insurers publishing their latest figures.

HSBC reports first half results tomorrow, with the City anxious to discover whether new tax arrangements for the banking industry announced by the Chancellor will be enough to keep it from moving out of the UK.

George Osborne introduced a new 8% bank surcharge on lenders’ profits during his summer Budget early in July, largely replacing the existing bank levy by 2020. Meanwhile, from 2021 the levy, which will be set much lower than its current rate, will only apply to UK rather than group balance sheets.

The levy in its earlier form had been seen as a key reason why HSBC, Europe’s biggest bank, said in April that it was considering relocation away from London and possibly back to Hong Kong where it originated. A large part of its business is focused on Asia.

Brokers at Investec estimate the changes announced by Mr Osborne will slash the lender’s bank levy charges of around 1.5billion US dollars (£964million) this year by 80% by 2021.

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They said: “This could be HSBC’s final set of numbers before its potential ‘escape’ from the UK is resolved. For the sake of its shareholders, we certainly hope so.”

The analyst expects the bank to turn in half-year profits up 17% at 6.5bn US dollars (£4.2bn), driven by a strong performance in Hong Kong.

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However, HSBC is concerned about its underperformance in Europe and other parts of the world, and last month unveiled its keenly-awaited strategy update, confirming plans to axe up to 25,000 jobs worldwide including as many as 8,000 in the UK, amid plans to sell off operations in Turkey and Brazil.

HSBC is also relocating the head office of its UK retail bank from London to Birmingham by 2019 amid new ring-fencing rules separating this part of the group from its investment arm. It has also said it is to rename the UK retail business, prompting speculation over a return of the Midland brand to the high street more than 20 years after HSBC took over the Midland in 1992.

More Than owner RSA Insurance reports half-year results on Thursday as it weighs up its next move after European giant Zurich Insurance said it was considering an offer for the firm, reportedly likely to be worth £5.6bn.

RSA is one of a clutch of firms in the sector reporting this week as the industry digests the impact of a variety of issues from rising motor insurance premiums to annuity reform.

Zurich last week confirmed speculation that it was weighing up an offer for the group.RSA said it had not held talks with Zurich and advised shareholders to take no action, but analysts will want to gauge if management are open to a deal.

Turning to its half-year profits brokers at Numis expect “a significant improvement” jumping more than three times to £218m compared to a year ago, largely due to lower weather losses.

Elsewhere in the sector, Standard Life chief executive David Nish will present his last set of half-year results on Tuesday following last month’s surprise decision to step down on August 5. He will be replaced by the firm’s chief investments officer Keith Skeoch.

Brokers at Pamure Gordon forecast the Edinburgh-based firm to post a 6% rise in operating profit to £291m compared to a year ago, following a series of disposals and sales.

Direct Line insurance also reports on Tuesday with analysts at Numis expecting the firm to boost it half-year operating profit by 9% compared to a year ago to £258m, due to lower weather losses and improvements in its home insurance division.

Direct Line, which also owns Churchill, said in May it had cut total costs by 10.1% to £220.7mn in the first three months of its year and was on track to reduce costs in absolute terms in 2015.

Aviva, which in April sealed the industry’s biggest merger since 2000 with the £6.5bn tie-up with Friends Life, reports half-year results on Thursday.

The City will want a progress report on the newly-created financial services business which will have a combined headcount of just over 31,500.

Aviva has already revealed that it expects to cut 1,500 jobs, almost 5% of its workforce, as part of its plans to make £225 million of annual savings from the deal by the end of 2017.

Legal & General reports half-year results on Wednesday. Latest headlines affecting the insurance sector have included a year-on-year rise of 5.5% in motor insurance premiums in the second quarter after years of decline, although claims inflation, due to more frequent claims with higher damages, rose between 3% and 5%.

The industry landscape has also been shifted by the removal of the requirement to purchase annuities, introduced in April. This has caused a higher proportion of customers to defer the decision to convert their pension savings into retirement income.

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