The week ahead: HSBC leads the charge of the banks

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The Independent Online

Fat bonuses and long lunches will be at the forefront of City workers' minds, but there will be no time for daydreams or hangovers as the reporting season continues in a busy week for banking.

HSBC, the UK's biggest company by market value, is expected to report on Tuesday, with good growth boosted by Household International, the US consumer finance group it bought last year. The market will be intrigued about the prospects for Hong Kong, which accounts for more than a quarter of profits. Hugh Pye of BNP Paribas said: "There is potential for a cyclical upturn in Hong Kong, which will lead to strong volume growth. And as the property market picks up, there will be less negative equity, so provisions for bad debts won't need to be so high."

Hong Kong is also important for Standard Chartered, which gives an update on Thursday. The Asian bank is likely to have benefited from a return of confidence in the region, after the Sars virus weakened economic activity.

Expect good progress at Royal Bank of Scotland, the owner of NatWest. Investors will be interested in the acquisition plans of RBS, which has bought several companies this year, including Churchill Insurance for £1.1bn in June. The word is that the search is on for a US bank to boost the presence it already has through Citizens, its operation in New England.

The market will be hoping for more of the same at Alliance & Leicester, which is aiming to increase earnings per share by over 10 per cent. Investors have been impressed by the mortgage lender's sales growth, cost cutting and share buybacks, but they will be wondering if this improvement can continue in 2004.

Growth at Bradford & Bingley is likely be modest. The City continues to worry about its exposure to buy-to-let properties - where the market is thought to have peaked - and the uninspiring outlook for sales of savings products.

Kingfisher, Europe's biggest DIY firm, should report a decent profit rise as a result of cost savings. Sales slowed during the hot summer, and the question is whether the weakness was a one-off or the start of a longer downturn.

An update from Trinity Mirror, the newspaper publisher, is likely to be mixed, with progress in its regional papers offset by weakness in its national titles. Once again, investors will be asking how it plans to increase sales in its core tabloids, the Daily Mirror and Sunday Mirror.

Stagecoach, the bus and rail operator, is likely to show a recovery in profits, helped by South West Trains, the London commuter franchise.

Center Parcs, the holiday camp operator, is likely to make its stock market debut on Thursday after an investment firm backed by Collins Stewart, the stockbroker, bought it for £285m last week.

Investors eagerly await the results of the quarterly FTSE review, which is expected after the market closes on Wednesday. The probable result of the reshuffle is the promotion of British Airways and Hays, the recruitment company, to the FTSE 100. Out will go Mitchells & Butlers, the pubs and restaurant chain, and Provident Financial, the consumer finance group.

On Thursday, residents and businesses across the UK will find out if their water bills are going up next year. United Utilities and Northumbrian Water asked for permission to raise prices and Ofwat, the regulator, gave provisional approval. This week, it announces its final decision.

On the Continent, the board of Euronext, owner of the French, Dutch and Belgian stock exchanges as well as London's Liffe, the futures market, meets to decide the thorny issue of succession. At the time of Euronext's creation in 2000, chief executive Jean-Francois Theodore promised to step down after four years, making way for Dutchman George Moeller. It is understood, however, that the Frenchman is not willing to go yet. Three options will be discussed: Mr Theodore stays, Mr Moeller steps up or another candidate altogether takes over. Should that be the case, Hugh Freedberg, the respected ex-chief executive of Liffe, is in the frame.

The economic focus will be the decision on US interest rates by the Federal Reserve. Investors expect them to be left unchanged at 1 per cent, but the Fed's statement will be the key. Phillip Shaw of Investec said: "There are two important things to look out for in the statement. The first is confirmation that risks to inflation remain on the downside. The second is reassurance that monetary policy will remain accommodating for the foreseeable future."

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