The 'Big Five' banks of the FTSE 100 are preparing for their first-quarter results season, with shareholders keen to gauge how these financial institutions anticipate the year ahead.
HSBC is set to initiate the reporting on Tuesday, with Barclays following suit on Wednesday, then Lloyds on Thursday. The week will conclude with Natwest and Standard Chartered's reports on Friday, as reported by .
While the first-quarter reports from lenders will just avoid the impact of President Donald Trump's latest tariff measures, there is anticipation that the evolving geopolitical scene will be reflected in their forward-looking guidance.
In response to Trump's imposition of levies on all the US' trading partners, the FTSE 350 Bank Index took a significant hit, plunging almost a thousand points during that week.
Russ Mould, investment director at AJ Bell, conveyed to City AM: "This may mean that analysts and investors are more interested in any outlook statements for the second quarter and beyond rather than the results for the first three months of 2025, providing that management teams feel able to provide any guidance."
A key point of interest will be the banks' risk appetite, which serves as an important barometer not only for shareholders but also for gauging broader economic conditions.
Should there be a pullback on risk activities by the lenders, even to safeguard profits, it could trigger concerns about the robustness of the economy.
Peter Rothwell, head of banking at KPMG º£½ÇÊÓƵ, mentioned to City AM: "We expect banks to seek to reassure investors that they are closely monitoring the situation with a view to both managing risk but also capitalising on opportunities for growth."
Mould commented: "If anything, the big lenders may be keenest to offer reassurance about the financial solidity and preparedness for any macroeconomic bumps that come their way, even if it is probably too early in the year for management to change the assumptions that underpins their guidance for 2025."
FTSE banks to follow in Wall Street's footsteps
Despite future considerations, investors will be contemplating changes to net interest after the Bank of England reduced rates from a post-financial crisis high of 5.25 per cent to 4.5 per cent.
Mould suggested that the "relatively slow pace of central bank rate cuts" would favour trends in net interest income. .
He further stated that the growth in loan books would likely outpace deposits.
Following the first quarter earnings of Wall Street's banking giants, which benefited from market volatility, analysts anticipate º£½ÇÊÓƵ lenders to do the same. .
JP Morgan significantly exceeded first-quarter revenue estimates following a 48 per cent surge in equities trading. .
Mould noted: "Investment banking operations will have looked to make hay from the volatility seen across a range of asset classes, and this could help Barclays in particular, even if IPO and M&A activity remain relatively subdued."
In 2024, Barclays investment bank generated £11.85bn in income, making it a crucial part of the lender's operations.
Motor finance ruling on the horizon for Lloyds
For Lloyds, a motor finance ruling is looming. The bank has earmarked a substantial £1.2 billion for potential liabilities related to the car mis-selling scandal.
With a Supreme Court decision expected early this summer about the legality of banks paying commissions to car dealers without explicit customer consent, the financial sector is watching closely.
Mould commented, "Restructuring and conduct costs have been modest of late and there is no reason for that to change, at least until there is more visibility on how the º£½ÇÊÓƵ Supreme Court may decide on the appeal from two lenders regarding the car financing market."
Pending an unfavourable verdict against the lenders, the Financial Conduct Authority (FCA) is poised to unveil an industry-wide compensation scheme within six weeks.
Both Barclays, which has reserved £90 million, and Santander, headquartered in Spain and publishing its results on Wednesday, are embroiled in the scandal with £295 million set aside.
Forecasts suggest hefty cash returns from the 'Big Five' banks by 2025, anticipating in excess of £30 billion shared roughly equally between dividends and share buybacks.
On future capital return strategies, Mould noted, "It will be interesting to see if management teams see fit to recalibrate expectations for buybacks in light of the cloudier macroeconomic outlook."
