The earnings reports of UK banks will be closely scrutinized this week for any evidence of turmoil related to Donald Trump’s tariff disputes. Global growth uncertainty is expected to negatively affect lenders with significant exposure to China, particularly HSBC.
First-quarter profits only cover the period before Trump’s tariff announcements on April 2nd, but investors will be looking for any cautious language regarding earnings forecasts and increased provisions for loan defaults.
The impact of the tariffs is likely to be more pronounced for banks with operations in the US, China, and the EU, rather than those focused on domestic customers such as NatWest and Lloyds Banking Group. HSBC and Standard Chartered, both heavily invested in Asia, are expected to report declines in profits due to the trade war.
HSBC is expected to report a 38% drop in profits to $7.8 billion, with analysts suggesting that the declines caused by the trade war would overshadow positive factors such as strong fees from wealth management and the benefits of cost-cutting measures. Investors will also be concerned about potential dividend cuts and share buy-backs for many banks given the ongoing economic uncertainties.
Barclays, which has a significant presence in the US, may also face risks. While domestic banks are expected to be relatively insulated from the tariffs, NatWest and Lloyds are expected to increase their provisions for potential defaults.
Investors might still shift their attention to UK banks with strong domestic franchises, potentially benefiting from increased investor interest.
Source: https://www.theguardian.com/business/2025/apr/28/uk-banks-brace-for-first-quarter-reports-after-trump-tariff-turmoil
