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The business week ahead

BY Lousia nesbitt
28/ 2/2005

SOME of the country's biggest banking names will this week add their profits to the multi-billion pound haul already unveiled by the sector. HSBC, Lloyds TSB and HBOS are just a few of the blue-chips featuring in another hectic week.

Banking giant HSBC could challenge Shell for the biggest ever UK corporate profits when it updates the market TODAY.

The country's biggest bank said in December that its third-quarter performance was satisfactory and that all its geographic regions were ahead of the same period last year at the pre-tax level.

Although large corporate demand for credit remains muted, experts believe personal lending has been the main driver of credit growth.

Analysts are expecting the global bank to announce profits of around '9bn for last year, against '7.5bn previously.

This would rival the current UK record of '9.3bn set by Shell earlier this month, although the measures used by the market to judge profitability are different. It is also set to beat the '8.1bn profits announced by rival Royal Bank of Scotland last week.

The next of the big five banks to report will be Halifax and Bank of Scotland group HBOS on Wednesday, which said in December that profits before tax and exceptionals would comfortably exceed hopes.

Analysts were impressed by the bank's better than expected interest margins and that its credit quality performance was as hoped.

The bank also pleased investors with news of a share buyback of up to '750m this year. Stockbroker Charles Stanley is predicting HBOS will post pre-tax profits of '4.6bn, up from '3.98bn.

Insurance giant Prudential is also due to report its annual results on Wednesday after revealing last month that it made record sales in 2004 after achieving strong growth in all its key markets.

Sales of new insurance products reached a record '1.85bn in 2004, a jump of 19 per cent on last year and higher than the '1.7bn forecast by most City analysts.

Lloyds TSB will end the big five banks' reporting season when it reveals pre-tax profits rose to '3.42bn from '3.38bn, according to Charles Stanley.

The bank said in a pre-close trading statement that its retail division had made good progress in boosting lending and that all its units' revenues were growing faster than costs.

However, analysts believe it will have sacrificed some margins to boost loan growth.

They also expect Friday's results to show some evidence of better momentum in insurance products as well as better fortunes in wholesale banking.

William Hill should deliver few surprises when it unveils full year results on Wednesday. After a very strong first half, its retail betting division suffered from a run of unfavourable sporting results.

However, revenue growth from fixed odds betting terminals (FOBTs) has been strong while the growth in online poker has boosted its interactive arm.

Fund manager Gerrard is tipping the group to post pre-tax profits of '222m compared with last year's '171m. Pub chain JD Wetherspoon will round the week off with its interim results, with pre-tax profits expected to come in at between '20.5m to '21.5m, against last year's '27.8m.

The firm saw a rare decline in annual profits last year but said last month that it had seen an improvement in trading but that high overheads and strong price competition continued to cause it problems.

Like-for-like sales at the time of the update moved into positive territory but the progress was offset by pub costs, such as utility bills, wages and repair costs, remaining higher than in previous years.

Stockbroker Charles Stanley said investors would be hoping for a reversal in fortunes on Friday but that the "rather aggressive" stance it had chosen in preparing for a smoking ban may prevent a swift improvement in footfall.