London, United Kingdom. Britain’s biggest banks, including HSBC and NatWest, are expected to raise profit targets when they report annual earnings in the coming weeks, according to people close to the matter.
Expected upgrades to profitability guidance
HSBC is expected to lift its return on tangible equity (ROTE) outlook above its current “mid teens or better” guidance, two people told Reuters. NatWest is likely to upgrade its 2027 ROTE guidance from 15% to as much as 17%, the same people said.
Barclays, which said in October it expected an ROTE of 12% or above in 2026, is also expected to lift its targets, a third source familiar with the bank said.
Analysts said they believe Barclays and HSBC could raise their targets by as much as 200 basis points when they set out guidance for coming years. Barclays and HSBC are scheduled to report earnings on February 10 and February 25, respectively.
Drivers and potential constraints
“UK banks have benefited from earnings resilience lasting longer than initially expected, supported by higher interest rates, robust credit quality and tighter cost control,” said Peter Rothwell, head of banking at KPMG UK.
Analysts said the strong run may not be sustainable amid political pressure to support the government’s growth agenda. “While the current UK government has resisted the temptation to further tax the big banks there is a quid pro quo to this, which is an expectation that they grow their loan books faster and provide more support to the economy,” said Gary Greenwood, analyst at Shore Capital. That could mean lower pricing on lending, he added.
Lloyds outlook and reporting calendar
Lloyds Banking Group could also lift its targets this year, with Jefferies analysts saying it could aim for ROTE to rise to as much as 18.5% by 2028, from this year’s goal of more than 15%.
Lloyds and Deutsche Bank report full-year earnings on Thursday, starting the European bank reporting season after strong results on Wall Street.
What do you expect higher profit targets to mean for UK bank lending and pricing?
