Banks to report pounds 10bn record profits
Sunday 26 January 1997
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.
- 1 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 2 Dog thinks owner is drowning in lake, dives in and tries to pull him out
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
- 5 Narendra Modi: Indian Prime Minister wears suit with pinstripes that spell his name to meet Barack Obama
Asteroid narrowly scrapes past Earth: how to watch the closest space rock for decades as it flies by
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Greece elections: Greek PM Alexis Tsipras takes aim at 'neo-liberal' Europe as country gears up for prolonged austerity battle
Pornhub star Mia Khalifa receives death threats after being ranked the site's top adult actress
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
Leaked documents show Ukip leaders approve NHS privatisation once it becomes more 'acceptable to the electorate'
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...