Major UK banks have revealed the true extent of the coronavirus pandemic on the banking industry as they issue their reports. Leading banks such as NatWest, Barclays and HSBC have all reported loss in income and the need to set aside major figures.
NatWest Group have announced they have set aside another £2.1billion in order to prepare for more customers and firms defaulting on loans thanks to the pandemic and resulting lockdown. The announcement mirrors that made by Barclay’s last week who revealed they had set aside a further £1.6 billion for the same reason.
On Thursday, Lloyds also announced that they were increasing their provisions by another £2.4 billion meaning the bank has now set aside a total of £3.8 billion for bad loans this year.
The money NatWest Group has set aside to cover bad loans means it has reported a loss of £770 million for the first half of 2020, a stark contrast to last year when the bank made a £2.7 billion profit.
They aren’t the only banking giant to report a loss however with HSBC following the global trend of setting aside a financial buffer to cover bad loans and resulting in a 65% pre-tax profit plummet.
After shelving them earlier this year, HSBC revealed that plans to cut 35,000 jobs worldwide would now be accelerated as the bank tries to recoup some of its losses from the first half of a turbulent year.
The Co-Operative Bank followed the trend set by many of its global counterparts by announcing a before tax loss of £44.6 million. However despite declaring a loss the banks financial report for the first half of the year remained resilient. The bank revealed they have seen an increase in customer numbers thanks to an incentivised switching scheme.
Whilst the major UK banks report losses and are forced to increase their financial buffers, the mid-year reports were not all bad news.
NatWest Chief Executive Alison Rose revealed that thanks to the banking groups “strong balance sheet and prudent approach to risk” they are well placed to withstand the implications of the pandemic and well as offer the right support to those customers and businesses who need it.
HSBC meanwhile have revealed they will spend the second half of 2020 looking at what further measures they need to take “in light of the economic situation” and all the major banks seem to be acutely aware of the major part they will play in ensuring the country’s economy can move forward from the pandemic.