The Week Ahead: Banks on track as City braces for the day of the rate rise

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The Independent Online

This week's slew of interim results will be dominated by banking's corporate big guns and the Bank of England's Monetary Policy Committee. The MPC meets this week, and a number of economists believe interest rates could rise by 25 basis points to 4.75 per cent, given the strong economic data in recent weeks.

A dominant force in the top 12 companies in the FTSE 100, the banks reporting this week are expected to follow the trend set by their smaller rivals - of strong sales, tight cost control but increased bad debt charges.

HSBC is set to show a healthy rise in interim earnings, particularly in corporate banking. Last week it acquired Panama's Banistmo for $1.77bn (£950m) and may provide further details on this deal. This will be the last results announcement for Stephen Green as chief executive before he becomes chairman. Colleague Michael Geoghegan will take his place.

There will also be management changes at HBOS with chief executive James Crosby leaving tomorrow, which means his replacement, chief operating officer Andy Hornby, will deliver Tuesday's interims. Investors will be looking for confirmation that HBOS is still on track to reap an annual pre-tax profit of £5.2m, up from £4.8m last year.

Royal Bank of Scotland, meanwhile, is expected to have generated a strong performance in its overseas banking operations, although growth in its retail operations may be weaker. RBS, the owner of NatWest, faces civil action from Enron shareholders over NatWest's dealings with the failed energy company. However, it may be that it doesn't comment on speculation about a settlement to avoid overshadowing the results.

Lloyds TSB is expected to reveal a strong improvement on the high street under the guidance of its retail boss, the seasoned US banker Terri Dial. However, it has already flagged a downturn in consumer lending and a rise in bad debt charges.

Barclays is another bank looking to improve retail sales. The company announced the restructuring of its branch network under another US banker, Deanna Oppenheimer, a month ago. Having long struggled to integrate its £5.3bn purchase of the Woolwich building society, the market will be looking for evidence that its retail business is starting to improve. Other businesses, such as its investment arm Barclay Capital, are likely to have performed strongly.

Still with financial services, insurer Standard Life will provide a trading update, with investors keen to see how much new business the freshly listed company is attracting.

In other sectors, the supermarket chain Wm Morrison has long struggled with its £3bn purchase of rival Safeway. After delivering its first full-year loss this year, the company bowed to City pressure and announced it had hired an externally appointed chief executive for the first time, Heineken's Marc Bolland.

Ahead of his joining the firm, however, the City is hopeful that chairman Sir Ken Morrison will announce this week that improvements have already started to filter through. Stronger sales are expected, while profit margins may be growing after an easing of price competition in the industry. Sir Ken may also comment on recent takeover speculation.

Suppliers of supermarket products will also report this week, among them Cadbury Schweppes (see page 6) and Unilever, which will present its second-quarter results. All eyes will be on its sales figures after a disappointing first quarter.

On the subject of toiletries, the Boots/Alliance UniChem merger is expected to complete tomorrow, after being approved by shareholders earlier this month. The merged Alliance Boots will then release the Boots first-quarter update, with sales expected to be up 3.5 per cent, and Alliance's interims, which are also likely to be strong.

Another retailer, the Signet jewellery group, is set to unveil second-quarter results boosted by its US operations. Signet may also comment on the potential break-up of the group or the possible sale of the UK business to its founder Gerald Ratner.

Elsewhere, the purchase of Stanley Leisure's betting shops and online gambling operation is expected to have boosted the interims of high-street bookmaker William Hill, despite disappointing earnings from the World Cup.

On to mining: Rio Tinto's interims are expected to be strong thanks to its iron ore and copper businesses. A bullish outlook and discussion of further buybacks and deals could also be on the cards.

Rival Xstrata, which is moving closer to a takeover of nickel miner Falconbridge, is likely to have benefited from the strong demand for copper and zinc, surging commodity prices and cost savings in the first half.

Anglo American, meanwhile, tipped as a bidder for Inco (a failed Falconbridge suitor) is also likely to report a strong first half. But the focus will be on the group's sell-off of several units as part of a strategy to refocus on its core businesses.

Mittal Steel, which last week confirmed that more than 92 per cent of Arcelor shareholders had taken up its takeover offer, is likely to have been buoyed by strong demand for steel when it reports its interims.

Other sectors reporting include chemicals, aviation and media. ICI may comment on takeover rumours or a possible break-up of the group at its interims, while no-frills carrier Ryanair is likely to report a robust first quarter with higher traffic, as is British Airways. In contrast, publisher Trinity Mirror has warned that its results will be hit by weaker advertising revenues.

CALENDAR

Tomorrow 31

UK RESULTS: (final) Filtronic, ITM Power; (interim) Alliance UniChem, HSBC, Pearson, Royalblue, Ultra Electronics; (1Q) Boots

Tuesday 1

UK RESULTS: (F), PZ Cussons; (I) George Wimpey, HBOS, Jardine Lloyd Thompson, Travis Perkins, XP Power

Wednesday 2

UK RESULTS: (I) 4imprint, Cadbury Schweppes, Cookson, Hanson, Laird, Lloyds TSB, Rotork, Tomkins, Xstrata; (Q3) BOC

Thursday 3

UK RESULTS: (I) Barclays, GKN, Inchcape, Mapeley, Morgan Crucible, Rio Tinto, Senior, Trinity Mirror, Unilever; (Q2) ICI

Friday 4

UK RESULTS: (I) Anglo American, Greggs, Inmarsat, Millennium & Copthorne, RBS; (Q1) British Airways

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