The Week Ahead: Interims due from Barclays, Lloyds, RBS, Centrica IAG and Greggs

Ross McEwan, chief executive of Royal Bank of Scotland.

Ross McEwan, chief executive of Royal Bank of Scotland. - Credit: AP

Three of Britain’s “big four” banks will continue to be haunted by past misconduct issues when they deliver interim results over the coming week while energy group Centrica will also be back in the spotlight.

Barclays, Lloyds and Royal Bank of Scotland are expected to set aside another £1billion towards compensating customers mis-sold products such as payment protection insurance (PPI), while Lloyds is also set to join the other two banks in agreeing a settlement over the rigging of Libor rates.

Allegations relating to foreign exchange markets have also come to the fore after the Serious Fraud Office confirmed it had launched a criminal inquiry. The issues come with the big four banks, which also include HSBC, facing a full-scale competition probe that could result in a shake-up of the sector and even see them broken up.

Royal Bank of Scotland has already warned there will be “bumps in the road ahead” as significant conduct and litigation issues will hit its profits in the months and years to come.

The message from chief executive Ross McEwan came on Friday after the bank, which is 80% owned by the taxpayer, disclosed a large chunk of its interim results a week early because of better-than-expected trading. The bank nearly doubled pre-tax profits to £2.65bn in the first half of the year, despite taking an extra £250million hit for mis-selling financial products.

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Barclays delivers interim results on Wednesday after an eventful period which has seen it take an axe to its investment arm, slashing an additional 7,000 jobs at the division built up by former boss Bob Diamond. That move came days after the group posted a 5% fall in first quarter profits as earnings from the unit slumped by half.

Analysts at Credit Suisse said the bank’s investment arm was again likely to lag behind this time, forecasting group second quarter group pre-tax profits to come in 2% lower than last year, at £1.76bn.

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Thursday sees an update from Lloyds, which remains 25% owned by the taxpayer after it was rescued during the financial crisis. TSB, which it spun off under European rules on state aid, reports on the same day.

Analysts at Deutsche Bank expect half-year underlying profits up 20% to £3.48bn as Lloyds benefits from strong UK growth, but a series of provisions including £500m for PPI, will hit the bottom line. They have pencilled in underlying second quarter profits of £1.68bn but forecast that after the provisions the bank will report a £98m loss. Credit Suisse expects a £17m underlying pre-tax profit for TSB.

British Gas owner Centrica is expected to reveal a sharp fall in profits when it publishes half-year results on Thursday. It is also set to name a successor to boss Sam Laidlaw after admitting that it was in talks with BP’s Iain Conn, who has announced his intention to leave the oil giant after 29 years. Analysts have pencilled in a 32% fall in adjusted operating profit to £1.08bn with earnings becalmed by a mild winter in Britain but also buffeted by a freeze hitting its business in America.

Centrica has said it will leave UK tariffs unchanged this year despite the squeeze on its bottom line, but it is under pressure to cut them after Ofgem last month called on suppliers to set out how they planned to pass on falling wholesale gas and electricity prices to households. Interim results are expected to show profits from residential energy supply in the UK around 24% lower at £270m while Centrica’s “downstream” customer-facing business in the US is predicted to see a 61% fall to £65m.

British Airways owner International Airlines Group (IAG), which reports interim results on Friday, is under pressure after profit warnings from Germany’s Lufthansa and Air France-KLM caused by competition from Middle Eastern carriers on European and US routes.

The City will want to know whether the same factors mean that IAG, which was formed from the merger of BA and Spain’s Iberia in 2011, is in danger of missing its target for operating profits of 1.8bn euros (£1.4bn) by 2015.

IAG, which flies around 430 aircraft in service and employs more than 60,000 staff, is expected to post a second quarter operating profit of 354m euros (£281m), compared to 245m euros (£192m) a year ago. The company is cutting 1,400 jobs among pilots and ground staff at loss-making Iberia, where it has already axed around 2,500 jobs and reduced salaries in a bid to return the Spanish airline to profit.

Greggs is set to report a decent set of half year figures on Wednesday as the turnaround at the pasty and sausage roll maker plan begins to take hold. The City estimates the bakery chain, which has 1,661 shops in the UK, will post half year results of between £16m and £17m, up from £11.5m last year.

The improvement follows a move by chief executive Roger Whiteside to increase the focus of the business on the food-on-the-go market. The company has admitted it has underperformed this market as convenience stores, coffee shops and fast food operators better met customer demands, particularly in traditional shopping centre locations.

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