HSBC, Standard Chartered, Lloyds and NatWest report third-quarter numbers as fears grow of a bank tax rise in the Budget
Britain's biggest banks report third-quarter numbers in the same week as Chancellor John Healey's first Budget, with a possible rise in the bank surcharge hanging over the sector.
The surcharge is an extra levy on bank profits that sits on top of corporation tax, and it currently stands at 3%.
Richard Hunter, head of markets at interactive investor, the investment platform, said it could return to 8%, which could cut bank earnings by about 6%.
The domestic lenders, Lloyds and NatWest, are thought most exposed.
A higher charge could also damage the sector's global competitiveness, since UK corporation tax rates are already among the highest in the world.
Lenders in focus
HSBC reports on Tuesday, Standard Chartered follows on Wednesday, which is Budget day, Lloyds Banking Group reports on Thursday and NatWest on Friday.
UK banks have enjoyed a strong two years, yet the sector remains undervalued against European peers.
Lloyds' half-year figures were solid rather than spectacular, and the bank is leaning on insurance, credit cards and wealth, including its integration of Schroders Personal Wealth, now Lloyds Wealth.
NatWest is the platform's preferred play in the sector, with a dividend yield of 5.5%, the prospect of more share buybacks (where a company repurchases its own stock) and the £2.7 billion Evelyn Partners wealth management deal behind it.
At HSBC, investors will look for signs that trading and dealmaking received another lift, as in the US, and for continued growth in loans and deposits.
HSBC's push into affluent wealth management, especially in Asia, is giving it higher but more varied income, while Standard Chartered's Asian exposure has offset concerns about China's property sector.
Oil and pharma also report
HSBC, Shell and AstraZeneca, the three largest companies in the FTSE 100, are among those reporting in an extremely busy week.
Shell, the oil company, reports on Thursday after completing its $14 billion purchase of Canada's ARC Resources last month, and it has guided to a third-quarter refining margin of $42 per barrel, up from $24 in the second quarter.
BP reports on Friday, with net debt expected at $13.5 billion to $14.5 billion at the end of September, down from $22.3 billion in June, which brings a resumption of buybacks closer.
Shares in Shell and BP have risen by 42% and 41% respectively so far this year.
GSK, the drugmaker, reports on Wednesday, with US pricing rules and tariffs on imported medicines a concern, given that the US supplies half its revenue.
AstraZeneca, valued at £196 billion, reports on Friday, and its shares have found gains harder to come by over the last year, although it has agreed a clinical collaboration worth around £1.5 billion with Summit Therapeutics of the US.
