Many of Britain's banks are reaping bumper profits thanks to an economic recovery and, in some cases, overseas expansion as banks look increasingly beyond their own borders for merger opportunities.
British banks are benefiting from "accelerating economic growth in developed countries, principally the UK but also the US," said Martin Cross, a banking analyst at stockbroker Teather and Greenwood.
Cost control and overseas acquisitions, particularly in the case of HSBC and the Royal Bank of Scotland, had also been a driver of earnings, he added.
HSBC, the biggest British-based bank, reported a 53-percent leap in half-year pre-tax profit on Monday to 9.37 billion dollars (7.79 billion euros) - the biggest ever interim profit made by a European company.
A day later Royal Bank of Scotland, Britain's second largest bank, posted a 17-percent jump in interim pre-tax profits, while number-three bank Barclays is expected to follow suit on Thursday when it reports quarterly results.
In many cases banks are being helped by a decline in provisions for bad and doubtful debts, which analysts see as a good barometer of the overall economic climate.
During the economic slowdown banks were forced to set aside more provisions in case customers were unable to repay their borrowings.
But as the economic climate warms, banks have been able to unlock some of the provisions, though worries remain about the risks posed by soaring house prices and households' indebtedness in Britain.
British consumer debt has rocketed past the one trillion pound mark for the first time ever, official figures showed last week.
With much of the debt secured on property, Britain's home-loan specialists, many of which converted from building societies, or mutuals, into banks in the 1980s and 1990s, are also cashing in.
"The more domestically orientated mortgage banks have certainly grown in the last couple of years on the back of very strong consumer lending, both the secured and the unsecured type," said Cross.
The growth has attracted the attention of foreign players such as Spain's Santander Central Hispano, which last month agreed to buy Abbey National, the British home-loan specialist, in a deal valued at 8.9 billion pounds.
There has been speculation that other US and European banks could be planning counter-bids.
On Monday HBOS, which was formed by the merger of home-loan specialist Halifax and Bank of Scotland three years ago, said it was considering making an offer for Abbey.
Such a bid would come under close scrutiny by the British competition authorities, which blocked a take-over approach for Abbey by number-four bank Lloyds TSB three years ago.
The move was seen as heralding an end to major domestic acquisitions by the "big four" British banks.
Increasingly banks are looking at possible cross-border deals in Europe and even the United States, though analysts say such deals remain complicated in light of differing tax and regulatory systems.
Royal Bank of Scotland's chief executive, Fred Goodwin, said this week he no longer believed that cross-border mergers in Europe were "off the agenda".
"I do think the climate in Europe has changed. It's feasible now that one (cross-border deal) might happen in the near future. I think if one happens, there will be more happening reasonably soon afterwards," he told reporters.
Jeremy Batstone, head of research at stockbrokers Charles Stanley, agreed that more merger activity was on the cards.
"We will see further consolidation," he said, but added that the smaller home-loan specialists in Britain might not be big enough to attract the big players.
"I would be interested to see more cross-border mergers in the sector and one shouldn't rule that out," Batstone added.
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