The first-quarter earnings season for the FTSE 100’s biggest banks is upon us, and all eyes are on HSBC, Barclays, and their peers as they prepare to release their reports. This week will see the start of a crucial period for investors, with shareholders eager to see how the major lenders are positioning themselves for the coming months amid shifting geopolitical landscapes and the lingering effects of international tariffs.
The Big Five Banks Set the Stage for 2025
Starting with HSBC on Tuesday, followed by Barclays on Wednesday and Lloyds on Thursday, the FTSE 100’s ‘Big Five’ banks will give their shareholders a glimpse into the state of the financial sector. The week of results will wrap up with reports from Natwest and Standard Chartered on Friday.
While the first-quarter numbers will reflect the impact of the recent market volatility, the larger focus is likely to be on what these banks have to say about the future. With President Trump’s recent tariff onslaught looming large, many analysts and investors are bracing for insights into how banks are factoring the changing geopolitical climate into their forecasts for the remainder of the year.
Tariffs Impact Financial Markets
The FTSE 350 Bank Index experienced a significant drop, shedding nearly a thousand points after President Trump imposed levies on all of the US’s trading partners. These tariffs have added a layer of uncertainty to global markets, and the effect on the financial sector is still being calculated. While the first-quarter reports will likely skirt the immediate impact of these tariffs, the forward-looking statements will be crucial.
Russ Mould, an investment director at AJ Bell, pointed out that analysts and investors are likely to focus more on any guidance for the second quarter and beyond rather than the specifics of the first three months of 2025. Given that geopolitical concerns are in the air, banks will be expected to address these in their outlooks. Any signs of retreat from riskier activities may signal larger concerns about the broader economic environment.
Banks’ Risk Appetite Takes Center Stage
For shareholders, one of the key themes to watch is whether the banks will adjust their risk appetite. A shift away from riskier investments could be seen as a sign of caution, potentially raising alarms about the health of the economy. This could have far-reaching implications for the financial markets as a whole, and shareholders will want reassurance that their investments remain secure despite the uncertain climate.
Peter Rothwell, head of banking at KPMG UK, echoed this sentiment, suggesting that banks will be under pressure to reassure investors that they are closely monitoring the situation. The banks are expected to strike a delicate balance—managing risk while also seeking growth opportunities. Any signs of hesitation could indicate deeper concerns about the financial landscape.
A Wait-and-See Approach?
Despite the growing tension around tariffs and global trade relations, analysts like Russ Mould believe it may be too early in the year for management teams to make any drastic changes to their guidance for 2025. Instead, the banks will likely provide reassurance about their financial solidity and preparedness to weather any economic turbulence that might arise.
The banks’ responses to these challenges will be pivotal for both their shareholders and the broader financial market. If they can effectively navigate the uncertainties brought on by tariffs, geopolitical shifts, and other macroeconomic pressures, they may be able to maintain their growth trajectory and reassure investors that they are still on solid footing.
