Britain's biggest banks are poised to reveal a £10 billion (NZ$21.7 billion) payout in dividends and bonuses, despite fears among investors and experts of a looming financial crisis.
HSBC will launch the banking results season tomorrow by announcing £2.7 billion (NZ$5.8 billion) as a final dividend as well as bonuses to staff of just under £2.5 billion (NZ$5.4 billion).
Lloyds meanwhile will say on Thursday that it is paying up to £2.6 billion (NZ$5.6 billion) in dividends for the year. The bonus pool is likely to come in at about £350 million (NZ$760 million).
Barclays reports next month and is expected to announce a dividend worth just over £1 billion (NZ$2.1 billion) and bonuses of £1.75 billion (NZ$3.8 billion).
Lloyds, still partly owned by the State, could yet be hit by further charges for misselling payment protection insurance. It has committed to paying out excess capital above the core capital it must hold.
That would work out at 3.7p per share, according to analysts at Barclays, if there were no top-ups for PPI payments and other charges, but they added they expected a smaller payout. A £2.6 billion (NZ$5.6 billion) dividend would be a boon to the Chancellor. The Treasury still owns 11 per cent of Lloyds and would net £290 million (NZ$629 million).
Analysts said: "Our base case is that the company pays a total dividend of 2.3p for 2015 although there could be some mix between ordinary and special dividends."
A 2.3p dividend would cost Lloyds £1.6 billion (NZ$3.4 billion) and see the Treasury paid £180 million (NZ$390 million).
Bank dividends will have to be signed off by regulators, but the Bank of England has said it thinks banks now have enough capital.
RBS has said it will not announce a dividend when it reveals an eighth consecutive year of losses on Friday - but it will hand out bonus payments running into hundreds of millions of pounds.
The payouts from all the banks could prove controversial if the air of crisis hanging over the sector deepens. Bank shares across Europe have lost a quarter of their value since the start of the year. RBS closed last week at just 246p and Lloyds at 61p, well below the levels at which the Government bailed out both banks in 2008.
European Central Bank chairman Mario Draghi last week tried to allay fears about banks on the Continent, saying they had more capital now to withstand a downturn.
Analysts at broker Investec expect Lloyds to announce profits of £3.3 billion (NZ$7.1 billion). Barclays will make profits of £2.5 billion (NZ$5.4 billion) and RBS a loss of £2.5 billion (NZ$5.4 billion).
HSBC will say it made £14.7 billion (NZ$31.9 billion) in profits in 2015 when it reports tomorrow, according to Investec.
The bank said last week it would be staying in the UK after threatening to move its headquarters to Hong Kong.
- Daily Mail