Bank bonuses top the agenda again

BUMPER profits at US banks will be under the spotlight this week, with retail sales figures and the minutes of the Bank of England's latest interest rate discussions among the UK highlights.

The bank reporting season picks up pace across the Pond, with all eyes on plans for bonus handouts after the sector's remarkable recovery in 2009, just a year after the financial crisis.

Following hot on the heels of JP Morgan Chase's forecast-beating results – which showed profits more than doubling to $11.7 billion (7.2bn) – all the major US players will reveal how they fared in the year after the Lehman Brothers collapse.

They will be braced for a public backlash on bonus plans, with any significant pay-outs to be met with outrage as taxpayers on both sides of the Atlantic are left to pick up the tab for the sector's near-collapse.

US President Barack Obama last week set out plans to claw back $90bn in taxes over ten years as he attacked "obscene" pay-outs and promised to get back "every dime" for the American taxpayer.

Citi, which employs about 9,000 staff in the UK, reports on Tuesday, while Wednesday sees figures from Bank of America Merrill Lynch, which has 12,500 staff in the UK including 5,000 for its MBNA credit-card arm, and Morgan Stanley, employer of some 6,000 UK staff.

Goldman Sachs' results on Thursday will be of particular interest, given its stellar performance so far in 2009.

The bank set aside $16.7bn for the first nine months of 2009 to cover pay and benefits for its 31,700 staff globally, including about 5,500 in London. This is a 46 per cent rise on a year ago.

Back in the UK, retail sales figures from the Office for National Statistics on Friday are likely to be the highlight of a busy week for economic data as markets look for the latest signs of recovery on the high street in pre-Christmas trading.

The signs so far have been encouraging.

Most major retailers have been reporting a much-improved Christmas – albeit against easier trading comparisons with the worst point of the recession last year.

Investec chief economist Philip Shaw – who predicts a 1.1 per cent month-on-month rise in sales volumes for the month – said: "December trading seems to have been good on the figures so far."

Tuesday's inflation data will also be of interest, with the Bank of England's Consumer Prices Index benchmark set to head above its 2 per cent target for the first time since May last year.

No frills airline EasyJet reports on Thursday after some of the most testing weather conditions to hit the sector for years.

Snow and ice have played havoc with UK transport across the board, with airlines battling to keep planes flying.

EasyJet has not been alone in being affected, but the group is expected to have been boosted by the woes at British Airways over the past month, with the pre-Christmas strike threat set to have seen a lot of business pass EasyJet's way.

Analysts at Numis Securities said the airline was unlikely to change guidance since the last update only around six weeks earlier, but was expected to be "upbeat about its revenue performance".