High Street Banks Cash in with Record Pounds 34bn Profits

Article excerpt

HIGH street banks are set to reveal record profits of more than Pounds 34billion, a rise of about 15 per cent.

The profits have been condemned as "grotesque" by critics who said the banks are still not providing a good enough service to customers.

MPs are also preparing to launch an investigation into whether banks are fuelling poverty by abandoning some of the most deprived areas.

Some Labour backbenchers want Gordon Brown to impose a windfall tax on their profits.

The banks begin reporting their 2005 results on Wednesday when Northern Rock is forecast to reveal profits of about Pounds 500million, up from Pounds 431 million in 2004.

However, most City interest will focus on the "Big Five" national bank groups: Barclays, HBOS, HSBC, Lloyds TSB and Royal Bank of Scotland. Analysts expect all but Lloyds TSB to reveal big surges in profits. HSBC is due to set a new record for a British-based bank on BY JONATHAN PRYNN Consumer Affairs editor 6 March with pre-tax profits of close to Pounds 11.5 billion.

The combined profits - greater than the national output of Croatia - will trigger dozens of huge cash bonuses. Last year, the biggest went to HSBC chairman Sir John Bond, who was paid Pounds 2.406 million in a total package of Pounds 3.649 million.

Bank analyst James Leal of City brokers Teather Greenwood said the strength of the world economy, growth in corporate lending, cost- cutting and a relatively low level of bad debts added up to "the conditions in which banks will do okay". …