Banks to dominate another busy earnings week, including numbers from HSBC PLC and Royal Bank of Scotland Group PLC

Another splurge of blue chips numbers will be the main focus again for the week ahead, although investors will also be keeping a wary eye on the Bank of England’s latest policy meeting – no change is expected to interest rates – and the always important US jobs report .

The blue chip banks reporting season will draw to a close with a trio of results this week .   Holdings PLC () will kick off proceedings with first half results on Monday.

The global bank’s share price performance over the past 12 months has jumped more than 51% as its core operations improve.

“This combined with an attractive dividend yield of 5% means that investors have been rewarded and will be hoping for further good news that will authenticate this rise,” said Graham Spooner, investment research analyst at The Share Centre.

“Updates on the important Asia operations will be worth noting, along with the progress on its strategic objectives and outlook for other regions.”

HSBC is yet to confirm a replacement for chief executive Stuart Gulliver so the market will be looking out for any updates on who will next lead the bank. 

Another key area of focus is what HSBC plans to do after Brexit. Gulliver has already confirmed that HSBC is considering shifting 1,000 jobs from the UK to Paris in the event of a ‘hard’ Brexit, which would see banks lose their passporting rights that allow them to operate without restriction across the European Union.

RBS to deliver final banking numbers

Emerging markets-focused () will also deliver its interim results on Wednesday, but the most interest is likely to be on Friday’s numbers from state-owned lender   Group PLC ().

Restructuring and misconduct costs will be the prime focus of the taxpayer rescued bank’s first half results and investors will be hoping to see some light at the end of the tunnel.

In the first three months of the year, RBS reported its first quarterly profit since the third quarter of 2015 as it cut costs.

 Its so-called “bad bank” has seen risk weighted assets fall to £30.5bnand it has put some of its past misdemeanours behind it with the recent £4.2bn settlement with the US Federal Housing Finance Agency for mis-selling of mortgage securities.

RBS is facing another penalty from the US Department of Justice over the loan mis-selling scandal.

It  has also agreed to pay £835mln as part of its proposal to set up a fund for challenger banks to avoid having to sell its Williams & Glyn division. The European Commission has accepted the plan “in principle” but still requires the approval of the European College of Commissioners.

RBS has already set aside £750mln for the scheme that to help smaller ‘challenger’ banks and will have to stump up a further £50mln, which will be recorded in the first half, plus £35mln in running costs.

Oilers eyed again with Shell results

Psychologically it can be tricky to set PLC () and BP PLC (LON:BP) apart, even though the latter is now quite a lot smaller than the former.

To the casual investor, the two so-called supermajors listed in London basically sit together and are a muchness, so there’s probably a degree of positivity for BP after Shell’s upbeat quarterly results.

Shell revealed on Thursday, June 27, that it has seen dramatic improvement in financial metrics for income, cashflow and earnings. It was the latest encouraging demonstration that the large oil firms are viable, as the market is coming to terms with a ‘lower for longer’ oil price environment.

“In a quarter that saw the oil price fall as low as $45/bl, the first sets of quarterly results for the European Oil sector were reassuring,” Capital analyst Lydia Rainforth said in a note.

“All companies reported 2Q earnings ahead of consensus alongside a reduction in net debt.”

Naturally, BP has its own specific circumstances and has had its own specific problems as it has responded to the Macondo oil spill at the start of the decade.

analyst Alex Brooks, in a recent note, said the BP results are likely to be feature large write-downs in the upstream business, for Angolan exploration assets and another large oil spill payout.

As has become customary for BP results, investors will be interested in progress through the group’s disposal programmes as well as the financial figures.

Next investors hoping for hot weather boost to summer sales

The latest update from high street clothing and homewares retailer () will be anxiously awaited following a disappointing first-quarter performance, with investors hoping that the recent hot weather will have provided a boost to its summer ranges.

Back at the start of May, Next reduced the upper end of its full-year profit and sales guidance after reporting a drop in first-quarter sales which was towards the bottom-end of its range of expectations.

In its trading update for the thirteen weeks to Saturday 29 April, Next said its full price sales were down -3.0%, while total sales, including markdown sales, were -2.5% lower.

The retailer then reduced the upper end of its group full-year pre-tax profit forecast to £740mln, down from £780mln previously, with the lower end maintained at £680mln.

Last month downgraded its stance on Next to ‘underperform’ as prices remain soft across Europe despite it being almost a year since the pound dropped post Brexit.

The Swiss broker’s analysts said its “price survey would seem to suggest that Next has cut entry level pricing during Spring and Summer, possibly in response to the very poor 1Q sales.”

They concluded: “With earnings, margins and cash conversion continuing to fall we regard Next as a value trap.”

Takeover chatter alighted on British Gas-owner

First-half results from British Gas-owner Centrica PLC (LON:CAN) will be even more interesting than usual after media reports at the start of July suggested that the firm could be a takeover target.

Among the prospective bidders was said to be a consortium of Kuwait, Singapore and Canada infrastructure-focused buyers and their advisors, according to Zak Mir on the Wallstreetwires website.

Another potential bidder was sees as a strategic buyer with its advisors. The reports said any takeover bid for Centrica was expected to fetch up to 300p per share.

Worries about Centrica’s profits being hit by a proposed energy cap were soothed in June after the Theresa’s May’s new minority government watered down its plans to knock £100mln off bills for 17 million households to instead protect just 2.2 million “vulnerable” customers on the poorest-value tariffs.

A number of brokers upgraded their ratings for the utilities group in the wake of the price cap climb-down, but British Gas remains in the cross-hairs of the regulator amid customer service factors as well as cost issues.

Deal cost-savings key for Shire

A little over a year on from its US$32bn takeover of US rival Baxalta and () is expected to provide an update on the costs savings from the deal following the completion of a review of the former’s manufacturing operations.

RBC Capital Markets expects a further streamlining of the enlarged business will result in improved profit margins. The City and Wall Street are also expecting updated guidance on revenues, the Canadian investment bank added.

A red flag comes in the form of Lialda, a drug for ulcerative colitis, which is now subject to cheap, copycat competition.

Consensus second-quarter earnings are seen at around US$3.7bn, giving underlying earnings (EBITDA) of US$1.56bn. EPS is forecast to be around the US$3.60 per share mark.

Significant events expected:

Monday July 31

Interims: (), Coats PLC (), Group PLC (LON:FDM), HSBC PLC (), Hutchison China Meditech Ltd (), Limited (), PLC (), PLC (), PLC (), XP Power Limited ()

Finals: OPG Power Ventures PLC ()

Tuesday August 1

Interims: BP PLC (Q2) (LON:BP); BBA Aviation PLC (LOON:BBA), Centrica PLC (), Insurance Group PLC (), (), PLC (), PLC (), (), Group PLC (), (), PLC (), PLC (), PLC (), (), Rolls-Royce Holdings PLC (), (), PLC ()

Trading update: ()

Wednesday August 2

Interims: PLC (), PLC (), PLC (), PLC (), (), PLC (), PLC (), Smurfitt Kappa Group PLC (Q2) (), (), Standard Chartered PLC (), PLC (), () 

Trading updates: PLC ()

Thursday August 3

Trading updates: Next PLC (), PLC ()

Interims: Aviva PLC (), (), esure Group PLC (), PLC (), (), (), Group PLC (), PLC (), Shire PLC (Q2), ), PLC (), PLC ()

Economics: Bank of England interest rate decision

Friday August 4

Interims: Kennedy Wilson Europe Real Estate PLC (LON:KWE), PLC () Royal Bank of Scotland PLC (), PLC ()

Trading updates: S&U PLC ()

Economics: US July non-farm payrolls, average earnings

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