Bank of Scotland results overshadowed by Brexit

Bank of Scotland owner Lloyds will report a sharp rise in annual profits this week but the impact of Brexit uncertainties on current trading will be the main focus of analysts’ attention.

Investors will want to know how the bank is holding up amid growing signs of a weakening in consumer confidence.

Investors will want to know how the group – the UK’s biggest mortgage lender – is holding up amid growing signs of a weakening in consumer confidence.

“The domestic lending space isn’t as rosy as it once was and while unemployment and interest rates remain low – usually good news for lenders – it’s important bad loans and default levels aren’t creeping up,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

City analysts expect the banking giant to see pre-tax profits rise by more than 20 per cent to £6.4 billion when it reports on Wednesday.

Lloyds will also be eager to provide an update on the first year of its £3bn transformation programme.

The high-street bank is in the midst of a three-year strategy to revamp its banking app, digitise processes by 2020, and scale its financial planning and retirement businesses. The increased investment to boost its digital offering is to counter the threat posed by new challenger banks.

Pay details for top bosses are also expected to be released this week. Last year, chief executive Antonio Horta-Osorio’s total package rose 11 per cent to £6.4 million.

Elsewhere in the sector, Barclays is set to reveal a steep fall in annual profits on Thursday as it counts the cost of litigation charges and bad loans. It comes as Barclays faces the threat of activist investor Edward Bramson muscling his way on to the board.