Full-year figures from Barclays and Lloyds Banking Group will see the familiar themes of job losses and bonuses return to the fore, while both will also reveal the impact of yet another year of scandal.
First up is Barclays tomorrow when it will confirm its overall bonus pool for 2013 and likely face questions over plans for more job cuts in its investment bank and potential branch closures.
Barclays boss Antony Jenkins sought to head off criticism when he waived a bonus for 2013 worth up to £2.75m after the bank faced “very significant costs” over a series of scandals and carried out a cash-call on shareholders.
But its overall bonus pot will also be watched closely, given that it added £2bn to its bill for customer mis-selling scandals in 2013 and tapped shareholders for £5.8bn in a rights issue in the autumn.
It paid out £2.17bn in total incentives, including a £1.85bn bonus pot, for 2012 and is reportedly planning to pay out between £2.3bn and £2.4bn for 2013 in a move that would fuel anger.
Given that it has axed at least 1,800 jobs in its investment bank already, this would mean higher average bonuses for each member of staff. Mr Jenkins is set to give an update on his Project Transform programme, launched after he took over from former boss Bob Diamond in the wake of the bank’s £290m Libor rigging fine. It is already reported to be planning to axe several hundred jobs at a senior level in its investment banking business as well as ordering staff to cut out all non-essential overseas travel to slash costs.
The group will also be pressed on branch closures, in spite of its denial of recent reports that up to a quarter of its 1,600 sites in the UK could close.
Mr Jenkins said at last year’s results that at least 3,700 jobs were being cut to reduce costs by £1.7bn and revealed in shareholder meetings last March that the bank was considering using technology and automation to drastically reduce its workforce further. It is also thought that Barclays is mulling ending its £40m annual Premier League sponsorship deal. The drastic reduction in its investment banking business is likely to contribute to a further drop in revenues from the division. Banking analyst Mike Trippitt at Numis Securities is pencilling in a 7% fall to £1.95bn revenues in the fourth quarter against £2.11bn in the previous three months. The costs of the group’s overhaul were shown to have taken their toll on results at the half-year stage, leaving underlying pre-tax profits down 17% to £3.6bn.
Lloyds has left little to be revealed in its annual results due out on Thursday, having already released a shock update revealing an extra £1.8bn in PPI provisions and guided towards a small profit for the year. Its PPI hit took the market by surprise as it sent the overall cost of compensation for the mis-selling scandal at the bank to nearly £10bn. The group has also made a further provision of £130 million relating to the sale of interest rate hedging products to small and medium-sized businesses, bringing the total amount set aside to £530 million.
Despite the provisions for legacy issues, Lloyds still expects to make a small statutory profit for the last year and to better City expectations with an underlying profit of £6.2 billion for 2013.