Aggregate UK retail profits before
tax at the country’s traditional big four banking groups – Lloyds,
Barclays, Royal Bank of Scotland (RBS) and HSBC – fell by 57
percent in 2009 to £2.06 billion ($3.07 billion) from £4.88 billion
in 2008.

The country’s largest retail bank, Lloyds,
retained the most profitable UK retail division of the four banks,
despite a 62 percent decline in profits to £975 million.

Retail profits declined even more sharply at
RBS and HSBC – down by 68 percent and 76 percent respectively –
reflecting higher funding costs and reduced margins on savings
products due to the low base rate.

Group losses at Lloyds showed only a slight
improvement, from £6.7 billion in fiscal 2008 to £6.3 billion,
following a 61 percent increase in impairments. Analysts were quick
to note that Lloyds’ loans-to-deposits ratio remained far too high,
(169 percent compared with 177 percent a year ago), with the bank
only expecting to reduce the ratio to 140 percent “over the next
few years”.

One positive was Lloyds’ prediction that it
would achieve £2 billion of cost savings from the integration of
HBOS, rather than the £1.5 billion originally forecast, and
expected to see “high single-digit” revenue growth from its core
businesses within two years.

Lloyds’ total retail lending fell 2 percent in
2009 while its share of the UK mortgage market slipped from 31
percent in 2008 to 24 percent last year.

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Retail highlights included an increase in
current account customers holding their main account with Lloyds
(those paying in more than £1,000 a month) increasing by 4 per
cent. Almost 5 million new savings accounts and 2 million new
current accounts were opened, while its retail net interest margin,
up by 18 basis points to 1.97 percent, was another positive.

RBS reported a 3 percent increase in UK
current account customer numbers to 12.8 million during 2009, while
total savings account customer numbers increased by 1 million.

RBS group losses attributable to shareholders
fell to £3.6 billion from £24.3 billion a year ago. While
impairments rose sharply to £13.9 billion, from £7.4 billion a year
ago, the bank said they may now have peaked.

RBS retail units outside the UK division
represented weak spots. The bank’s US retail arm fell to a loss of
£113 million compared to a profit of £528 million in 2008 while
Ulster Bank posted a loss of £368 million (2008: profit of £218
million).

Profits at RBS’s insurance unit were almost
wiped out, falling by 90 percent to £58 million from £584
million.

At Barclays, the bank’s retail and commercial
unit (GRCB) posted profits down by 42.7 percent from £4.4 billion
in 2008 to £2.5 billion.

The drop in GRCB earnings was most marked
within the bank’s UK retail unit: a 55 percent fall in pre-tax
profits to £612 million in 2009 from £1.37 billion in the previous
year. Total savings account numbers at Barclays UK arm increased by
10 percent to 13.2 million but total current account numbers fell
by 500,000 to 11.2 million.

Elsewhere within the unit:

• Pre-tax profits fell 4 percent at
card unit Barclaycard to £761 million (total customer numbers fell
from 23.5 million at the end of 2008 to 21.2 million following a
purge of dormant accounts);

• GRCB Western Europe pre-tax
profits fell by 48 percent to £130 million;

• GRCB Emerging Markets slipped to a
loss of £254 million (2008: pre-tax profits of £141 million);
and

• The bank’s South African-based
subsidiary Absa posted pre-tax earnings down by 8 percent at £506
million.

The world’s biggest retail bank, HSBC, posted
a $2.06 billion loss for its personal financial services division,
compared with a loss of $10.97 billion in 2008.

Losses at HSBC’s US retail unit fell from
$17.2 billion in 2008 to $5.2 billion but elsewhere, the Latin
America retail arm slipped to a loss of $216 million from a profit
of $668 million in 2008.

Profits at HSBC’s Asia-Pacific unit (excluding
Hong Kong) more than doubled from $211 million to $463 million.

Retail assets constituted 23.4 percent of
group assets compared with 20.9 percent a year ago. <

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