Peering through bank reports can test the stamina of even the most dedicated investor - a point borne out by this year's third-quarter results season. The most notable feature was how quickly the sector has gone from weakness to strength in key areas, although regulatory issues continued to dog the big UK players.
The headlines were dominated by Lloyds (LLOY) for both good and bad reasons. The bank was the first to come clean over malpractice linked to payment protection insurance (PPI), and though chief executive António Horta-Osório was initially praised for drawing a line under the scandal, the eventual cost to Lloyds just keeps rising. The third-quarter update included an additional provision for PPI claims of £750m, bringing the total related costs to more than £8bn - or double the original estimate. This was the major reason for the reported quarterly loss of £440m. However, on other measures, the bank's performance is clearly improving in step with the economy. For instance, the loan-to-deposit ratio improved from 121 per cent at the year-end (31 December) to 114 per cent, while the net interest margin - what the bank earns over the cost of its money - looks set to improve to 2.11 per cent for the year.
Barclays' (BARC) chief executive Anthony Jenkins must wish he had Mr Horta-Osório's problems after the bank confirmed that regulators are investigating it in relation to the rigging of foreign exchange rates. Mr Jenkins is minding the shop on his own at the moment after the group's chief compliance officer, Hector Sants, unsurprisingly some might say, took three months off due to stress. The cost of cleaning up the bank's practices meant a 26 per cent fall in pre-tax profits to £1.39bn, though weaker trading at the investment bank also played a role. Meanwhile, there is still an ongoing investigation into payments made to the Qataris after the country's sovereign wealth fund invested in the bank at the height of the financial crisis.
Emerging markets have been looking distinctly shaky this year and Standard Chartered (STAN) has been a regular target for short-sellers since the currencies in its dominant Asian markets took a major dive. That creates problems for Standard Chartered's dollar-reported accounts and operating profit growth has been pinned back to low single digits so far this year, as a result.
