Thursday 23 April 2026 10:31 am
FTSE 100 banks are set to report a combined pre-tax profit of nearly £16bn for the first quarter of 2026, but the results will be overshadowed by growing economic tensions and rising provisions for sour loans. Barclays will kick off the earnings season on Tuesday, followed by Lloyds on Wednesday, Standard Chartered on Thursday, and Natwest on Friday. HSBC, Europe's largest lender, will report the following week on 5 May.
The expected £16bn haul is marginally ahead of the £15.2bn recorded in the first quarter of 2025, but below the near £17bn in 2024 and £18bn in 2023, which were boosted by high interest rates. Analysts will focus on recent market volatility and its impact on the outlook for 2026. The interest rate path is expected to be more favourable than three months ago, following the US and Israel's war with Iran, which has sent inflationary ripples through the global economy.
"Net interest income is expected to hold up well, thanks to an almost total halt in interest rate cuts around the world," said Russ Mould, investment director at AJ Bell. However, higher impairment charges could limit profit growth. Provisions for bad loans are expected to reach £2.6bn across the five banks, the highest first-quarter charge since the start of the Covid-19 pandemic in 2020.
In the first quarter of 2022, HSBC recorded an impairment charge of $642m (£476m), leading to a 25% drop in profit. Lloyds also saw profit fall to £1.6bn from £1.9bn in 2021 after setting aside £117m for bad loans, following Russia's invasion of Ukraine. "It would be no surprise to see banks cite geopolitical uncertainty and the absence of expected central bank interest rate cuts if loan impairment rates do go up," Mould added.
On a positive note, investment banking arms are expected to report a surge in activity, mirroring trends on Wall Street. US banks posted a combined $47.4bn in pre-tax profit in the first quarter, with Goldman Sachs' stock division generating $5.3bn in revenue, surpassing its previous record. Barclays, with its large market division, is best positioned to benefit. Jefferies analysis shows Barclays' income from high-speed market volatility trading is 3.5 times larger than its traditional investment banking income. The division is forecast to generate £3.9bn in net income, in line with last year.
Barclays transformed its investment banking business in 2008 by acquiring Lehman Brothers' North American operations. CEO CS Venkatakrishnan aims to reduce reliance on investment banking by growing retail and wealth management. City analysts will scrutinise first-quarter results for signs of progress in this strategy.
