The UK’s largest banks are preparing to hand out a collective £7bn in dividends this year, on the back of earnings hitting their highest level for the sector since 2008.
The £7bn payout would be more than double the £3.3bn handed out in dividends by the UK’s big five in 2020.
The UK’s five largest lenders – Lloyds Banking Group, HSBC, Barclays, NatWest and Standard Chartered – will report pre-tax earnings in the vicinity of £30bn in 2021, according to the Mail on Sunday.
Senior bankers at the five firms are now reportedly in talks with the Bank of England to let them release cash that has been put aside for bad loans before quarterly earnings reports come out in two weeks’ time.
The Office for National Statistics (ONS) said last month that UK unemployment was at 4.6 per cent – far lower than most expectations last year.
Above expected inflation is also set to eventually lead to interest rate hikes from the Bank of England in the coming months, meaning that mortgage repayments to banks will increase.
These two factors are good signs for the banking sector and has led to bullish expectations among some analysts.
One senior banker told the Mail: “We’re all sitting with far too much cash on our balance sheets. Our models throw up a huge number of money to release, but let’s be careful, we’ve got a winter to get through. We’ll definitely make a release of some kind [in October].”