Banking shares are on the up after three of Britain’s biggest banks look set to announce soaring profits.
Lloyds Banking Group, RBS and HSBC have all performed better than expected in 2010 so far, pushing profits up.
HSBC alone reported a £7 billion profit in just 6 months and Barclays is forecast to report first-half profit up 17 per cent at £3.5billion.
But it is the taxpayer backed banks, Lloyds and RBS, that will interest investors as they are expected to report a recovery this week after losing billions over the past two years.
Lloyds Banking Group is expected to bounce back from a £4billion loss to an £800million headline gain for the first half of the year and RBS is heading for a more modest profit of £120million.
The news of the big banks’ expected profits had a positive effect on the markets today lifting the FTSE 100 up by 2 per cent.
The turnaround in fortunes for the banks has been further boosted by Chancellor George Osborne’s announcement that banks must lend more money to businesses.
Speaking to the BBC Osborne said the Government “would not tolerate banks piling the pressure” onto small firms, adding that it was their “obligation” to lift lending.
Chief Executive of the British Bankers Association, Angela Knight said: "Banks are well aware of their responsibility to society and our commitment to support the economy by lending to individuals and firms. The return of profitability to the banking sector is a positive sign and indicates that the sector is helping the UK economy move out of recession.”
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