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PPI and Libor scandals hang over interim results from three of the 'big four' funders

THREE of Britain's "big four" banks will continue to be haunted by past misconduct issues when they deliver interim results over the coming week.

FIGURES DUE: Royal Bank of Scotland has already released its half-year results. Barclays and Lloyds will give their updates this week.
FIGURES DUE: Royal Bank of Scotland has already released its half-year results. Barclays and Lloyds will give their updates this week.

Barclays, Lloyds and Royal Bank of Scotland are expected to set aside another £1 billion towards compensating customers mis-sold products such as payment protection insurance (PPI), while Lloyds is also set to join the other two banks in agreeing a settlement over the rigging of Libor rates.

Allegations relating to foreign exchange markets have also come to the fore after the Serious Fraud Office confirmed it had launched a criminal inquiry.

The issues come with the big four banks - which also include HSBC - facing a full-scale competition probe that could result in a shake-up of the sector and even see them broken up.

RBS has already warned there will be "bumps in the road ahead" as significant conduct and litigation issues will hit its profits in the months and years to come.

The message from chief executive Ross McEwan came on Friday after the bank, which is 80 per cent-owned by the taxpayer, disclosed a large chunk of its interim results a week early because of better-than-expected trading.

The bank nearly doubled pre-tax profits to £2.65bn in the first half of the year, despite taking an extra £250 million hit for mis-selling financial products.

Mr McEwan said the results showed the underlying strength of the business.

Barclays delivers interim results on Wednesday after an eventful period which has seen it take an axe to its investment arm, slashing an additional 7,000 jobs at the division built up by former boss Bob Diamond.

That move came days after the group posted a 5 per cent fall in first-quarter profits as earnings from the unit slumped by half.

Analysts at Credit Suisse said the bank's investment arm was again likely to lag behind this time, forecasting group second-quarter group pre-tax profits to come in 2 per cent lower than last year at £1.76bn.

Thursday sees an update from Lloyds, which remains 25 per cent-owned by the taxpayer after it was rescued during the financial crisis. TSB, which it spun off under European rules on state aid, reports on the same day.

Analysts at Deutsche Bank expect half-year underlying profits up 20 per cent to £3.48bn as Lloyds benefits from strong UK growth, but a series of provisions including £500m set aside for PPI, will hit the bottom line.

They have pencilled in underlying second-quarter profits of £1.68bn but forecast that after the provisions the bank will report a £98 million loss. Credit Suisse expects a £17m underlying pre-tax profit for TSB.

British Gas owner Centrica is expected to reveal a sharp fall in profits when it publishes half-year results on Thursday.

It is also set to name a successor to boss Sam Laidlaw after admitting that it was in talks with BP's Iain Conn, who has announced his intention to leave the oil giant after 29 years' service.

Analysts have pencilled in a 32 per cent fall in adjusted operating profit to £1.08bn, with earnings becalmed by a mild winter in Britain but also buffeted by a freeze hitting its business in America.

Centrica has said it will leave UK tariffs unchanged this year despite the squeeze on its bottom line.

But it is under pressure to cut them after Ofgem last month called on suppliers to set out how they planned to pass on falling wholesale gas and electricity prices to households.

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