Retail and Corporate Business Generates Big Profits for Banks
Retail business and corporate business has been the driving force behind some big profit numbers for our biggest banks. Mortgage businesses are also generating bigger returns while bad debt charges are falling.
Despite seeing forecasts of falls in profitability in investment banking up to 40 per cent, Barclays, HSBC and RBS pay combined the first half of the year. Bankers will start setting aside money now and pay out bonuses at the end of the year. Ian Gordon, banks analyst at Exane BNP Paribas is forecasting "fairly chunkey improvements" in profit from the high street operations of Llyod’s, Barclays and RBS. "I guess due to a combination of ongoing asset margin expansion, efficiency gains and moderate improvements in impairments, we’re expecting fairly chunky improvements in the profit before tax contributions from UK retail banking, " said Gordon. Gordon also said, the increase at Lloyd’s compared to others is due to the size of its large mortgage and remortgage portfolio. Lloyd’s is also seeing a fall in impairment charges. Analysts at Barclay’s Capital said, "While investment banking revenues are expected to step down, we expect positive momentum in the retail and commercial banking activities of the core business. In particular, we expect margins progressions to continue as a result of asset re-pricing."