The Scotsman: HSBC challenges Shell profit record: "HSBC will unveil record profits for a UK bank tomorrow, challenging Shell for the title of Britain’s most profitable company." (ShellNews.net) 27 Feb 05

IAIN DEY

HSBC will unveil record profits for a UK bank tomorrow, challenging Shell for the title of Britain’s most profitable company.

The world’s second largest bank by market capitalisation may even break the £10bn barrier for the first time - an increase of almost 40%. It will also come within touching distance of the record banking profit that Citigroup posted in 2003.

The HSBC figures come as the latest in a line of enormous profits generated by UK banks, including the £8.1bn profit Royal Bank of Scotland reported last week.

HBOS, the Edinburgh-based bank, will show a jump in profits of around 18% to around £4.5bn - but analysts remain concerned about its exposure to interest rate increases.

Lloyds TSB will reveal that Scottish Widows has made its first profit for the group, paying back around £200m in dividends.

After a string of disposals, including its New Zealand business, the group’s headline profits will be sharply down on last year.

But underlying profits will rise from around £3.38bn to £3.42bn.

Prospects for future growth at all three banks will dominate the City’s concerns.

Norrie Morrison, banking analyst at Fox-Pitt Kelton, said: "With HBOS, they’ve already indicated that they are going to be holding less capital on the balance sheet with the £750m share buyback they announced.

"We’ve got a consumer slowdown which means you’ve got to start looking out for bad debts.

"And with interest rates now looking more like they are on the rise, we could do with clarity on their growth plans."

http://business.scotsman.com/banking.cfm?id=219172005