The Week Ahead: Updates due from Barclays, RBS, Lloyds and Merlin

The Smiler ride at Alton Towers in Staffordshire, part of the Merlin Entertainment group.

The Smiler ride at Alton Towers in Staffordshire, part of the Merlin Entertainment group. - Credit: PA

The half-year bank results season gets into full swing this week with figures from Barclays, Royal Bank of Scotland and Lloyds Banking Group, while the owner of Alton Towers will lay bare the impact of last month’s rollercoaster crash that left five people seriously injured.

Barclays will kick off first-half results from the major high street banks on Wednesday following reports it is planning to axe more than 30,000 jobs as it speeds up a cost-cutting strategy after firing chief executive Antony Jenkins.

Chairman John McFarlane, who has taken the helm until a replacement is found, will be looked to for further clarity on cost cutting and his aims for the business.

Mr McFarlane said Mr Jenkins was fired after lacklustre revenue growth left the banking giant’s shares at around the same level they were six years ago.

The group’s interims are expected to show a drop in investment banking revenues, likely to be down 9% to £1.96billion, according to Investec analyst Ian Gordon.

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Morgan Stanley is forecasting group second quarter underlying pre-tax profits to rise 5% to £1.7bn, but this would be a 9% drop on the previous three months.

Shareholders are keen to see Barclays return to its former glory, with speculation that a change at the top will herald a refocus on its investment banking business to drive profits once again.

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Royal Bank of Scotland follows on Thursday amid speculation over the timing of the Government’s first move to sell off shares in the taxpayer-backed group. Chancellor George Osborne has already said he wants to start selling shares in RBS by the end of the year and it is thought this plan could begin as soon as September.

RBS results come after a tough few months for the group in the wake of yet another IT blunder and further fines for the forex rigging affair.

An IT glitch saw around 600,000 banking payments fail to go through, which took the group days to resolve, hitting credits and direct debits and also affecting tax credits and disability living allowance payments.

Half-year results are set to show a bottom-line loss of £300m, according to a number of City analysts. On an underlying basis, Morgan Stanley expects second quarter operating profits to dip to £1.4bn from £1.63bn in the first quarter, which would also be sharply lower than the £2bn adjusted earnings reported a year earlier.

Fellow taxpayer-backed Lloyds Banking Group is due to post yet more hefty provisions for PPI mis-selling when it reports on Friday as the industry struggles to put the scandal behind it.

With PPI compensation across the industry now topping £20bn, Lloyds is expected to add another £1bn to its bill, including its recent record £117m fine by the City watchdog for the way it handled PPI complaints.

But despite a potential second quarter hit from these provisions and other costs such as industry levies, underlying interim profits are still expected to rise to around £4.2bn, up from £3.8bn a year earlier.

Lloyds’ turnaround in recent years has helped the Government sell down its stake to less than 15%, down from 40% after its £20.5bn bailout at the height of the financial crisis.

The latest update is also likely to see further dividend cheer for Lloyds’ three million investors after it made its first shareholder payout since 2008 following full-year results in February.

The bank paid out £535m in dividends, marking a milestone in its recovery, and has already said it intends to pay an interim and final divi in 2015.

Half-year figures from the owner of Alton Towers on Thursday will reveal the impact of last month’s rollercoaster crash that left five people seriously injured and led to a four-day shut down at the theme park.

Brokers at Jefferies estimate the closure at the 500-acre Staffordshire theme park last month cost Merlin Entertainments between £2m and £3m in lost takings following the accident on its Smiler rollercoaster.

June accounts for around 10% of the theme park’s annual revenues, while the key months of July and August make up a combined 35% of sales across the year.

Jefferies experts believe Merlin, which operates 100 attractions in 22 countries including Madame Tussauds, Legoland Parks, and Thorpe Park in the UK, will report a slowdown in like-for-like sales growth after the crash, to 2.4% for the second quarter after a 3.3% rise in the previous 18 weeks.

This is also thought to be as a result of an expected 5% sales drop at its Legoland sites around the world against tough comparatives from a year earlier, when tickets receipts were boosted by the successful Lego Movie.

Jefferies analysts still forecast that Merlin’s interim earnings will rise 5.8% to £127m.

However, management is likely to face questions over whether any of the group’s other UK attractions have seen a fall in visitor numbers as a result of the Alton Towers accident.

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