UK bank corporate boom set to counter retail gloom

Trading updates from UK banks active in corporate and overseas markets are likely to sound a cheerier note than their rivals over the next three weeks, as life remains tough for domestic retail lending.
Barclays and HSBC could set a positive early tone when they issue updates coming Tuesday and Thursday, respectively, as both have significant corporate and international business.
Analysts said updates across the sector are expected to signal that the second half of 2005 continued first-half trends, with corporate banking profits boosted by more merger and acquisition activity and favourable debt markets.
"I suspect the trends will be pretty similar, and that retail will continue to be disappointing, and corporate will continue to prop up the groups," said Jonathan Pierce, analyst at Credit Suisse First Boston.
Richard Staite, analyst at SG, said in a research note: "We expect bottom-line earnings to be good, with corporate banking and debt capital markets business offsetting ongoing deterioration in UK retail banking.
"However, all the signs are that better debt markets business is already factored into expectations, whilst the questions remain over the long-term sustainability of these earnings." Jitters also persist about the impact a fragile UK economy will have on banks' 2005 results, with most concern now centred on how much unsecured lending has slowed as higher interest rates and utility bills have crimped consumer spending.
But investors may have to wait for full-year results in three months' time for finer details of the performances - the banks will generally only provide broad comments on how they have fared since mid-year in the pre-close period updates.
Optimism that the statements will not contain any nasty shocks has helped shares in the UK bank sector jump 9 percent in the past month, outperforming a 6 percent rise by the broader UK share market.
But the sector is only up 5 percent this year, lagging a 15 percent broad market gain, as a 30 percent surge by Standard Chartered's shares has been in contrast to a 4 percent dip by Royal Bank of Scotland and slim gains elsewhere.