While the issue of firing the starting gun on formal Brexit negotiations through the triggering of Lisbon Treaty Article 50 is being ruminated on by the House of Lords, some of the companies in line to be most heavily impacted by how Brexit is handled deliver news on how they have fared since the vote so far.
First off the line will be HSBC on Tuesday, followed by Lloyds Banking Group on Wednesday, Barclays on Thursday, while Friday sees RBS, Standard Life and Jupiter put out their numbers.
Royal Bank of Scotland has already shown this week how sensitive markets are to news from the big financials, with its shares leaping nearly 7% due to it confirming it has dropped plans to sell-off its Williams & Glyn subsidiary.
Another example is Lloyds shares jumping 3% just before Christmas when it revealed it had acquired MBNA’s credit card business.
It is not a one way bet however, with big falls just as possible as these kind of large leaps upwards. RBS shares tanked 5% on 30th November after it failed Bank of England stress tests.
It seems fair to expect mixed fortunes this week for the FTSE 100 names reporting, emphasising how volatile and unpredictable UK equities markets are at the moment.
Something else to consider is that the banks carry significant weight in the index so their fortunes can have a big impact on trackers as well as the active funds which have chosen to invest in them.
Senior analyst at Hargreaves Lansdown Laith Khalaf is among those bracing themselves for a lively week.
“Bank results look like they will be a mix of the good, the bad and the ugly this time around,” he said. “Litigation still looms large, particularly for RBS which has a plateful of problems to digest. The bank is heading in the right direction, just very slowly. If RBS is relieved of the obligation to sell off Williams & Glyn, that would remove a major obstacle from the bank returning to some measure of normality, and even potentially paying a dividend, though it’s best not to count those chickens before they’re hatched.”
“Meanwhile low interest rates continue to present a challenge for the core business of banking across the sector,” Khalaf continued. “However both HSBC and Standard Chartered have benefited from currency tailwinds, as has Barclays which is also seeing restructuring starting to finally gain traction. Lloyds still remains in decent shape, though it’s the canary in the coalmine as far as Brexit is concerned, given how thoroughly it is plugged into the grass roots of the UK economy.”
