It’s that time of year again, as we prepare for companies’ Q1 earnings season. Amid a politically charged climate, the corporates are ready to take over. With the global economy at a turning point, you can’t afford to miss out!
One of the hottest tickets in town is the UK banking sector. As the lifeblood of the British economy, the financial sector provides a significant proportion of GDP and, subsequently, economic growth. With the most significant economic event in a generation now underway, the results of Barclays, Lloyds, HSBC and the Royal Bank of Scotland will likely act as a key barometer for the UK economy and stock markets during this exciting time.
What events influenced banks over the previous quarter? What future hurdles remain for these institutions? This report will provide you the above information and further in-depth analysis on Britain’s biggest banks.
The Brexit Effect
Despite having only been triggered in March, many UK banks are already exploring the possible impact that Brexit will have. Contingency plans are being put into place to help negate any significant impacts arising from the potential loss of financial access to the European continent. This has become a bigger worry given that the European Central Bank has warned that banks may face a minimum 6 month wait before being granted operating licences. Already, several banks have made the market aware of their intention to move staff from the UK to mainland Europe, including UK-based HSBC and several large US peers. With uncertainty surrounding London’s future hanging in the air, how will UK-based financial institutions deal with the imminent negotiations?
The Federal Reserve’s Balancing Act
A widely expected March interest rate hike by the US central bank was overshadowed by market disappointment that policymakers were not more hawkish in their 2017 outlook. Talk has also moved towards the Fed’s bloated balance sheet, as Chair Yellen et al. look to discard some of the $1 trillion of assets that were accumulated during the height of the financial crisis. Could bank-friendly rate hikes now be put on the back-burner?
Trump ado about nothing?
The US President put forward several banking-friendly policy proposals while on the campaign trail, however further details on personal and corporate tax reform and banking sector deregulation have been scant. A recent pledge to completely replace the Dodd-Frank Act, the vast framework of regulations limiting US banks’ ability to undertake risk, has been met with some scepticism given his failure to meet a similar pledge to repeal and replace Obamacare. Having now gone back on his promise to label China a currency manipulator, will the Donald deliver on banking sector friendly deregulation or will this be another lofty let-down for the President?
For those all-important Q1 reporting dates for the four major UK banks, and a recap of how they performed on the back of their Q4/Full Year results in February, have a look over the page!
