Next week sees the key banking sector continue to update on how it fared in the last quarter of 2015. We’ve already had US and European majors tell us that things were tough (revenues flat, profits under pressure, regulation a burden) and some potentially overdone sector concerns (Negative interest rates, China slowdown, US recessionary risk, oil market depression, struggling business models, increased regulatory burden, rising bad loans) took shares in certain institutions to their lowest in several years. And now it’s the turn of the UK’s biggest banking names next week to provide their recap and outlook from this side of the pond and the channel. And we wonder whether the message might be a little brighter than that of peers, helping their shares maintain rebounds from multi-year lows, with no harmful negative interest rates being discussed in the UK (yet) and global central banks set to remain in accommodative, whatever it takes policy mode, to keep the ball in the air for markets for the foreseeable.

Whatever happens, we know the UK banks have a historically average results day trading range of around 5% (up and down) which is not to be sniffed at in terms of short term trading opportunities. We look at each of the big four briefly below, and also offer you the chance to view them from a technical standpoint with our recent pre-results report here.

HSBC (Mon 22 Feb) is expected to post a rebound in full year profits growth after 2014 saw it hit by big fines and costly customer redress. Its recent decision to stay London based rather than decamp back to Hong Kong keeps a big name and dividend payer on the UK Index (consensus 7.7% yield) which is positive for the City, however, there is a risk of additional fines and costs related to industry change (cost cutting, regulatory demands) negatively influencing Q4 results, along with its exposure to Asia which has been rocked by a slowing China and now negative interest rates in Japan.

Lloyds (Thurs 25 Feb) now has no exposure to investment banking and thus protected from market volatility. And with a strong UK housing market and a Bank of England unlikely to be in a position raise UK interest rates any time soon, its big mortgage book doesn’t represent too much of a worry. Another £2bn provision for PPI mis-selling, however, risks taking the shine off what should be an otherwise strong set of underlying results with continued profits generation, but the end could soon be in sight for PPI compensation – a 2yr deadline for claims hopefully soon to be imposed. Dividend news will be key.

Royal Bank of Scotland (Fri 26 Feb) is set to post an eight year of losses, with the bigger of the bailed out institutions proving much harder and thus slower to turnaround. It’s a long way from restoring its dividend. And an unscheduled trading statement at end-Jan has already flagged up another £2.5bn hit to cover a range of issues including a setting with US regulators over the sale of mortgage-backed securities and PPI mis-selling in the UK. However with the bad news out in the open, the shares have joined the recent sector rally and so there is potential for any good news to be pounced on by the bulls.

Barclays’ (Tues 1 Mar) first update by its new head of investment baking (brought in from US bank JP Morgan) will be keenly watched with him having already signaled revenues -10% for his division and more job cuts planned. Nonetheless, his arrival can be considered positive for shareholders, potentially signalling renewed focus on its large investment banking operations after a period in which focus shifted – much to regulator’s glee – back to the less lucrative but still respectably profitable UK-focused division, principally retail lending and credit cards.

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Mike van Dulken, Head of Research, 19 Feb 2016