THE UK's bailed-out banks, Lloyds Banking Group and Royal Bank Scotland, return to the spotlight with first-quarter trading updates.
While the worst may be over for the part-nationalised banks, RBS chief executive Stephen Hester has admitted there is still plenty of hard work ahead.
The uncertain climate was brought home in figures from rival Santander this week, which blamed a 40% drop in first-quarter UK profits on higher regulatory and funding costs, low interest rates and the weak economic environment.
This trend will be highlighted by NatWest owner RBS on Friday, when retail bank profits will be around 3% lower than the previous quarter at £449 million.
However, Mr Hester is expected to report that RBS, which is 82% owned by the taxpayer following its £45.5 billion bailout, has been making progress in scaling back the business, particularly its investment banking arm.
Credit Suisse analyst Carla Antunes da Silva also predicts operating profits at its core operations – or the ongoing bank – will come in at £1.9bn, up 76% on the previous quarter in a positive sign for its recovery hopes.
Lloyds, which is 40% state-owned, is forecast to unveil a pre-tax profit of around £500m for the first three months of 2012, compared to £300m in the same period last year.
The bank's balance sheet and revenues will be hit by its ongoing restructuring, which involves selling off large parts of its international operations, such as its onshore Dubai business to HSBC.
Lloyds chief executive Antonio Horta-Osorio has already 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.
The slowdown in growth at satellite broadcaster BSkyB will continue on Wednesday despite the start of a prestigious Formula 1 motor racing deal.
The group smashed its 10 million customer target at the end of 2010, but the worsening economy has slowed its growth.
The group may update on its plans for a fightback against competition Netflix and YouView through its Now TV internet service, is aimed at the 13 million households which do not subscribe to pay-TV.
Home Retail Group will be under more pressure to shut stores on Wednesday as it reveals details of the dismal sales at Argos that have forced a near 60% slide in annual profits.
The group, which owns Homebase, has seen its share price plunge more than 50% in the last 12 months as it continues to publish weak sales updates.
The City will be looking for any hints at turnaround plans when Home Retail unveils pre-tax profits of £100m.
The high price of oil is expected to help BP report profits of £3.2bn in the first quarter of 2012. However, its profits are expected to be 5% lower than the previous year as a result of falling production after it sold assets to pay for the Deepwater Horizon crisis and a squeeze in margins.
The City expects the group on Tuesday to report profits of $5.08bn (£3.2bn), only slightly higher than the $5bn in the previous quarter and less than the $5.4bn a year ago.
With the supermarket price war escalating in recent months, there have been increasing signs that Morrisons' sales are feeling the pinch.
Morrisons' first-quarter trading update on Thursday is expected to show a marginal rise in like-for-like sales.
Strong online growth has helped Next weather "a perfect storm" in the retail sector, making its shares the second-best performers in the FTSE-100 Index in the past year.
The group's shares, which have risen 32.6% in the past year, are forecast to hold firm as it confirms that profits are on target to rise to between £560m and £610m from £570.3m.
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