19 February 2024 , 09:12
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The UK's biggest banks are about to announce record-breaking profits after a year of higher borrowing costs.
Barclays, HSBC, Lloyds and Standard Chartered will share their 2023 financial results this week. Last Friday, NatWest reported its highest yearly profit since before the 2007 global financial crisis, which was a fifth more than last year.
The five banks are expected to have made over £50 billion in pre-tax profits, beating the previous record set before the 2007 financial crisis. HSBC is predicted to report a profit of £27 billion, while Lloyds is expected to have made £7.4 billion last year, breaking their previous records.
Barclays is thought to have made a pre-tax profit of £6.7 billion, less than what they earned in 2021. They will also update shareholders on their plans to cut costs, which will likely involve restructuring.
This news follows NatWest's announcement that it is focusing on managing business costs and improving efficiency in response to the challenging UK economy, which fell into a technical recession at the end of last year. Banks made signifiant revenues in 2023 because they charged more for loans and mortgages than the interest they paid out to savers.
Big Four banks made £20billion in 9 months as households battled interest rates
This is called a net interest margin (NIM). But now, banks are being asked to give more to savers and interest rates might go down this year. Matt Britzman from Hargreaves Lansdown thinks that what happens in 2024 could be more important than the results from last year.
All the banks are facing various challenges. There are concerns that more people could default on their mortages and loans if the cost-of-living crisis continues. At HSBC investors will want to know if HSBC has been affected by problems in China's property market.