Banks report mixed bag of earnings

After high street heavyweight Barclays kicked off the reporting season yesterday with an impressive set of results, HSBC weighed in with good numbers of its own. Both saw their shares leap as investors gave them thenod.

But it is becoming clear that there is a gulf between the
performance of banks like these which did not receive government bail-outs, and the rest of the industry – such as Northern Rock, which reported today.

Also the figures from Barclays and HSBC have re-ignited the fierce
debate over the level of bonuses which will be paid as a result and whether this is a realistic level of pay in an industry which has received taxpayer money.

So far, the banks which have announced earnings are:

♦ BNP Paribas: The investment banking operations of France’s biggest bank - and its purchase of money manager Fortis - helped it to a €1.6bn net profit in the second quarter.

♦ Northern Rock: While others were making hay, the nationalised bank saw its losses increase from £585.4m in the first half last year, to £724.2m this year. It is struggling with lending targets, mortgage arrears and owes the UK government £10.9bn.

♦ Barclays: A sparkling set of figures, with pre-tax profits for the first half up eight per cent to £2.98bn, driven by a doubling in investment banking profits to £1.05bn. The UK high street banking operation disappointed, however, with profits there halving from £690m to £268m.

♦ HSBC: Its profits hit £2.98bn, or $5bn, in the first half too, however this was half the level of earnings the banking giant achieved in the same period last year. Bad debts forced it to increase write-offs and its US consumer
lending business saw a loss of $2.9bn. However it was also boosted by its investment banking operations which made it $6.3bn in the period.

♦ UBS: The largest Swiss bank reported a loss of 1.4bn Swiss francs, or £790m, in the second quarter, an improvement over the 2bn francs loss it made in the first quarter. Shares in UBS have risen after reports of a settlement with the US tax authorities who requested the bank disclose details of wealthy American clients thought to be evading tax.

♦ Credit Suisse: UBS’s Swiss rival outflanked it with a second quarter profit of 1.571bn Swiss francs, reported in late July. This compared with a full-year loss of 8.2bn francs in 2008. ·