All eyes will be on Britain's big banks this week as they are due to report full-year results for 2023, with expectations of bumper profits despite mounting margin pressure from a likely peak in interest rates.

Barclays will report its full-year results on Tuesday, followed by HSBC next Wednesday. Lloyds Banking Group including Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows round up results on Thursday.

The biggest lenders in the UK have benefited from a jump in net interest income - the difference between what a bank pays out to savers and receives in interest from loans - since 2021 as the Bank of England hiked borrowing costs to help slow inflation.

However, the final quarter of 2023 is expected to show more pressure on banks' NIMs as UK interest rates have likely peaked and lenders come under pressure to offer savers better deals.

Big Four bank Natwest reported earnings on Friday, notching its highest annual profits since before the financial crisis. Operating profit came in at £6.2bn for 2023, up 20 per cent on 2022. Its net interest margin (NIM) surged 19 basis points to 3.04 per cent higher than 2022.

Analyst expect Barclays to be the only Big Four lender not to see a rise in annual profits due to a £825m restructuring charge tied to an overhaul at the bank. Investors are awaiting more details on the restructuring, which involved 5,000 job cuts last year, from a four-and-a-half-hour presentation from chief executive CS Venkatakrishnan after the results.

Meanwhile, HSBC is set to double its annual profits on the back of higher interest rates as it shrugs off concerns about its exposure to China's stagnating economy and stock market.

(c) 2024 City A.M., source Newspaper