Banks to report pounds 10bn record profits

Britain's seven top high-street banks will report record profits of more than pounds 10bn for 1996 - and spark more complaints that small businesses, in particular, are still getting a raw deal.

City broker Salomon Brothers expects Barclays to lead the sector and return more than pounds 650m to investors in share buybacks this year and another pounds 550m next year.

National Westminster is also expected to spend at least pounds 300m on buybacks in 1997, making banks a prime political target.

They have gone a long way towards calming customers' anger in the last 12 months, not least by giving advance notice of changes in charges.

However, small businesses still consider them too expensive, too cautious on backing new ideas and poor at keeping relationships.

"There's no case at all for complacency. The banks are still too short term. The average manager stays just two years - hardly the way to build up relationships," said Alison Causfield, business economist at the Institute of Directors.

"There's too much emphasis on security, and overcharging keeps on coming up again and again," she added.

Lloyds TSB kicks off the annual reporting season on Valentine's Day, followed in rapid succession by Barclays, NatWest, Abbey National and HSBC-owned Midland Bank.

Together with the main two clearers north of the border, Royal Bank of Scotland and Bank of Scotland, the main banks will turn in pre-tax profits of pounds 10.4bn for 1996 - up nearly 20 per cent from pounds 8.7bn last year.

"This should certainly be a record year for the UK sector," said John Leonard, banking analyst at Salomon.

Flotation of the Halifax, Woolwich and Alliance & Leicester building societies - worth pounds 20bn in all - will spur competition in the second half, in particular for savers' deposits.

But, according to brokers' latest estimates, profits from the top seven will set a new record in 1997 - nearly pounds 12bn - following economic growth, resurgence in the housing market and further pruning of branches and staff.

The City is ruling out a windfall tax, however, by either Labour or the Conservatives, talk of which resurfaced after sparkling interim results from the banks before last year's Budget.

But with those figures rolling around, observers expect small business to be a key political battleground.

"There is likely to be political pressure to provide better value for money," said Mark Thomas, banking analyst at brokers Collins Stewart.

"The small business sector is the most profitable for the banks, so on that basis you can say they're overcharged more than others."

This weekend, the 95,000-strong Federation of Small Businesses said that just 20 per cent of new start-ups were gaining the backing of banks against 50 per cent normally.

A spokesman said entrepreneurs had become shy after bad experiences with high charges in the recession, while banks had become more risk averse in their drive for profits.

Start your day with The Independent, sign up for daily news emails
Sport
sportWWE latest including Sting vs Triple H, Brock Lesnar vs Roman Reigns and The Undertaker vs Bray Wyatt
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing