City spotlight to fall on high street banks

Lloyds Banking Group is on track to post another healthy rise in profits on Wednesday after a solid first quarter.

Analysts at UBS are pencilling in a 9% rise in underlying pretax profits to £2.3 billion for the three months to March 31 and bottom line profits up 40% at £1.8bn.

But CEO Antonio Horta-Osorio will be looked to for his views on the impact of an expected rise in interest rates – something of a double-edged sword for retail banks.

The Bank of England is expected to increase rates from 0.5% to 0.75% in May, potentially with another hike later this year to bring inflation back to target.

Lloyds figures will also be eyed closely for any further cash set aside for the payment protection insurance (PPI) saga, in particular following Clydesdale and Yorkshire banking group CYBG’s recent move to put by an extra £350 million following a recent surge in claims ahead of the complaints deadline.

But with Lloyds having only just added £600m for the misselling scandal for the previous quarter – taking its overall bill to an eye-watering £18.7bn – it is thought unlikely another hefty hit will be revealed.

Meanwhile, pre-tax profits at Barclays are set to come in broadly flat at £1.63bn when it reports first quarter figures on Thursday.

However, analysts expect it to record a post-tax loss of £500m after factoring in a £1.4bn settlement with the US Department of Justice earlier this year.

The settlement related to the sale of mortgage-backed securities in the lead-up to the financial crisis.

Graham Spooner, investment research analyst at the Share Centre, said: “Results from the group have continued to be a bit of a mixed bag.”

Lloyds Banking Group will report on Wednesday.