State-owned Lloyds Banking Group and Royal Bank of Scotland are expected to report a return to profitability for the first half of the year.
Lloyds, 41% backed by the taxpayer, will achieve a profit of around £800m in the six months to June compared with a £4bn loss at the same point in 2009
RBS, 83% government-owned, is forecast to hit a slimmer profit of around £120m after bleeding £1bn last year. RBS is expected to announce the sale of 318 bank branches to Santander for £1.7bn ahead of its interim results.
HSBC, which reports this morning, is on track for a significant leap in profits from $5bn (£3.5bn) to $8.6bn. Barclays is expected to grow its profits from £2.7bn to £3.5bn, despite a slowdown in investment banking revenues, while Standard Chartered is tipped to increase its surplus to £2bn.
But over the weekend chancellor George Osborne issued a warning to all banks in light of their resurgent earnings, saying the government “will not tolerate” a dearth of funding for British businesses.
He said: “The danger is that, particularly next year when there is a huge amount of refinancing required, small and medium-sized businesses suffer from a lack of access to working capital.”
But the British Bankers’ Association said this morning that banks have repeatedly undertaken to lend to firms where the business can support the borrowing and today reaffirm their commitment to supporting the recovery of the economy through business lending.
BBA chief executive 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.
"Banks have made repeated commitments to support business.
“There are funds available to lend to firms with a viable business plan. But the industry's ability to support the economy needs to be considered as the increased capital and cash we are required to hold cannot both be set aside and used to finance lending.
"The industry has set up a taskforce with government to look at how best banks can work to help rebuild the economy. One work stream will particularly address business finance.
“We are writing to the Chancellor to set out the next steps in the process and to reaffirm our commitment to our customers, the taxpayer and the recovery of the UK economy."
