Analysts banking on Lloyds and Barclays to have steamed ahead during 2016, as other UK lenders struggle

Hayley Kirton
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Lloyds is just one of the UK banks releasing results next week (Source: Getty)

Analysts are predicting Lloyds Banking Group and Barclays will race ahead of the pack when the UK's big banks report their earnings this week.

Lloyds, which will report its 2016 full-year figures on Wednesday, is forecast a statutory pre-tax profit of £4.4bn, more than double the £1.6bn it reported in 2015, when its earning potential was hampered by increased payment protection insurance charges.

Meanwhile, Barclays, which is reporting on Thursday, is expected to have turned a profit before tax of just shy of £4bn, more than treble the £1.1bn the lender reported last year.

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On the other hand, Royal Bank of Scotland, which will announce its earnings on Friday, looks on track for its ninth year in a row of losses, with analysts pegging 2016 losses attributable to shareholders at £6.1bn.

The lender has also already revealed it will be booking for this year £3.1bn for increasing its provision for its as yet unsettled fine from the US Department of Justice for mis-selling mortgage-backed securities, £400m towards a pool to compensate small businesses which claim they were mistreated while in its Global Restructuring Group and, as announced over the weekend, a £750m provision for a fund designed to increase competition for small business banking, which it has been told to setup in lieu of meeting its deadline for selling Williams & Glyn.

RBS was told to ditch its interest in Williams & Glyn by the end of this year as part of its £45bn state bailout deal. However, the bank revealed last October it believed it would not be able to stick to the timetable.

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Meanwhile, profits are expected to have dropped for HSBC, which will publish results in the early hours of Tuesday morning. The bank is predicted to report profits before tax of $2.7bn in its fourth quarter. If added to the $10.6bn the bank has already reported for the first nine months of the year, its full-year total will be around $13.3bn, down 29.6 per cent on 2015's $18.9bn.

The forecast is also gloomy for challenger Metro Bank, which is reporting on Wednesday. A note published last week by Panmure Gordon predicted this would not be the year the bank finally turns a full-year profit, while also criticising its branch-based approach for driving up costs.

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