Scandal-hit Barclays aims to appease investors

Monday 23 July 2012

A busy week for results will see two of Britain's under-pressure banks post figures, while British Gas owner Centrica will also be in the spotlight.

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Banking giant Barclays, which presents its half-year results on Friday, has endured one of the most turbulent periods in its history after it was fined £290 million by UK and US regulators for manipulating Libor, an interbank lending rate that affects mortgages and loans.

The affair led to the departure of chief executive Bob Diamond, triggered a fierce debate in Westminster over banking ethics and has spawned several closely-watched hearings before the Treasury Select Committee.Marcus Agius, who will resign once a successor for Mr Diamond is found, will present the group's interim results in his temporary role as executive chairman.He will hope the figures, which are forecast to show a 10% rise in underlying profits, to £4.1 billion, will go some way towards appeasing investors, who have seen the share price plunge 20% since the scandal broke. The higher profits, which will be driven by a stronger performance from its investment arm Barclays Capital, could ease concerns held by credit ratings agencies Moody's and Standard & Poor's, which both placed Barclays on negative outlook.Taxpayer-backed Lloyds Banking Group, which unveils its half-year results on Thursday, reached a major milestone when it finally agreed the sale of 632 branches to the Co-operative Group for up to £750m.While the 40% state-owned bank admitted it would make a loss on the sale, some commentators said the deal was a crucial step in Lloyds' recovery.With the so-called Project Verde disposal sealed, subject to regulatory and Government approval, focus will now return to Lloyds' financial performance and turnaround plan.Lloyds may face questions about its involvement in the Libor-fixing scandal.Chief executive Antonio Horta-Osorio has previously warned the bank faces a tough 2012, with income-related targets set to be delayed as a result of the weaker-than expected economic outlook.But despite the difficult climate the bank is set to reveal broadly flat underlying pre-tax profits of £1 billion for the first six months of the year.Profits at Centrica's British Gas residential arm are set to rise by a quarter on Thursday as it benefits from higher prices and the miserable weather.British Gas dropped its standard electricity price by 5% in January but prices were still higher than a year ago after a 16% rise in August when gas bills also went up, by 18%.And the chilly start to the summer is likely to have prompted people to crank up their central heating.The City expects the British Gas residential energy supply arm to report a 26% rise in profits to £352m for the first six months of 2012. The City's forecasts would mean that British Gas made an average pre-tax profit of £3.70 per household per month in the first half-year.When Centrica last updated the market, in May, it warned its energy costs were continuing to rise, with wholesale gas prices 15% higher for the next winter and other costs set to add £50 to the cost of supplying the average household this year.Although wholesale prices are understood to have reduced slightly in recent months they are unlikely to be passed on to consumers this year.

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Scandal-hit Barclays aims to appease investors

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