Time for the annual bank results bust-up

Powered by Guardian.co.ukThis article titled “Time for the annual bank results bust-up” was written by Sean Farrell, for The Observer on Sunday 21st February 2016 09.59 UTC

Most of Britain’s banks report their annual results this week in probably the most frenzied atmosphere since the financial crisis. Bank shares have plunged as investors have fretted about their financial strength, prompting Deutsche Bank and Credit Suisse to go public with reassuring comments. Britain’s banks have kept quiet and analysts will be as interested in what bosses have to say about their balance sheets as in the profits – and losses – racked up last year.

HSBC kicks things off on Monday after deigning last week to remain in the UK instead of moving back to Hong Kong – though that hasn’t stopped it releasing results at the merciless hour of 4am UK time to accommodate Hong Kong. The bank’s shares, like those of its rival in Asia, Standard Chartered, which reports on Tuesday, have been hit by concerns about emerging-market economies and bad debts.

Lloyds, which reports on Thursday, could take yet another big charge for mis-selling payment protection insurance, while RBS on Friday is likely to serve up its usual combo of bad figures and claims things are getting better. Barclays wraps things up the week after. With results unlikely to be great, executive pay will be in the spotlight as most banks release annual reports with their figures. The thinking seems to be if there’s going to be uproar, best to get it over with.

Hornby has a fence to clear

Ladbrokes reports annual results on Tuesday as its merger with Gala Coral, announced last July, continues to grind its way through a competition inquiry that isn’t expected to end until the middle of this year. Analysts at Numis expect pre-tax profit to have halved to £47.5m but for the chief executive, Jim Mullen, to report progress on a restructuring programme.

A thorny question is the role Andy Hornby will play. He is chief operating officer at Gala Coral and is meant to do the same job after the merger. It’s been an impressive rehabilitation for Hornby, best known as the boss of HBOS when the bank almost collapsed in 2008. But last month, the Financial Conduct Authority threw a spanner in the works by saying it would look again at whether there was a case for action against former HBOS managers. Those under examination could be barred from working in a job requiring FCA authorisation, though that wouldn’t stop Hornby working at a publicly traded bookie. And the FCA might find there’s no case for Hornby to answer.

It’s all a bit uncomfortable. Tuesday will be the first time Ladbrokes has faced questions since the FCA decision. It has so far declined to comment.

At home with profit

After a quiet half-term week, there’s a veritable deluge of company news on the way this week, including results from housebuilders Barratt, Bovis and Persimmon, online property portal Rightmove and Britain’s biggest estate agent, Countrywide.

Life has been tough for estate agents with transaction volumes low and competition fierce, but for housebuilders life couldn’t be much better. Prices are rising and the government’s Help to Buy scheme is putting the properties they build within reach of buyers. Planning restrictions are also loosening. Pay and dividends are up.

Yet there are clouds edging in to this vista. Hedge funds are starting to bet against the most London-centric housebuilder, Berkeley Homes, by taking out short positions on its shares. Berkeley updates the market on trading next month. A figure that has been doing the rounds for a year is also getting new interest: there are 54,000 central London homes expected to go on sale for £1m or more but in 2014 only 3,900 such properties sold.

Barratt, Bovis and Persimmon don’t build luxury London properties but if that market tanks the reverberations will surely be felt. Then again, wise heads have been warning about bubbles for a long time, and things keep rolling along.

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