Much expected from banks

Press, 21 February 1987, Page 26

Much expected from banks

NZPA-Reuter London Britain’s big clearing banks are set to report solid profits for 1986, reflecting a borrowing spree by British consumers, according to share market analysts. They also predicted another strong performance by the banks in 1987, although they said Britons may now be too deeply in debt to maintain the pace of domestic credit growth. Last year saw a 25 per cent rise in mortgage lending and a 15 per cent rise in personal loans.

Share analysts expect that, In coming weeks, three of the four main clearing banks — National Westminster Bank, Midland Bank and Lloyds Bank — will announce that pre-tax profits to 1986 rose between 20 and 30 per cent. Barclays, the fourth of the big banks, is expected to show profits up by nearly 10

per cent. It has been affected by. an erosion of its share of the domestic market, although its sale of its South African associate has helped buoy its public image. With domestic lending growing at a lower pace, analysts expect banks will be looking to give 1987 earnings an extra boost through continued expansion of their securities business as well as by tapping overseas markets, probably through the acquisition of foreign banks. Last year’s so-called “Big Bang" deregulation of British financial markets, which ended fixed trading commissions'and broke* down anticompetitive barriers, has proved a boon for the banks.

The banks have in some cases become major players on the Stock Exchange and in the bond market through brokerage firms they acquired or formed last year.