Best business bank account customers boost banks’ profits

New data from High Street is expected next week to reveal that banks are amassing larger profits our out of their best business bank account holders this year as charges for bad debt diminish and larger returns on business mortgages are generated.

Even those banks that received government bailouts such as RBS and Lloyds have been expected to report a return to profitability, even in the wake of massive losses thanks to the global economic downturn.  The portion of Bradford & Bingley that had been subject to nationalisation recently announced their bounce back by reporting that they have turned around a loss of £160m to six month profits of £896m.

Experts now say that while the most performance-driven results of 2009 were in the realm of investment banking, retail and business bank accounts could begin to play a role as major profit generators once more.

While profitability has been expected to fall as much as 40 per cent at the divisions of RBS, Barclays, and HSBC that manage investments, the combined pool of pay and bonuses is forecasted to to be approximately £5b for the first six months of this year.  Bonuses, which are not awarded until the end of the calendar year, have begun to be set aside by banks in anticipation of the year end payout.  In excess of 2,800 banking business executives were paid over £1m in salary and bonuses in 2009, according to official data revealed by the Financial Services Authority.

Lloyds has been predicted to make a particularly large jump in profits; this year’s profits are forecasted to be approximately £1.3bn, up from £360m just last year.

Financial experts have reported that the sizable difference in profits in the case of Lloyds due to its mortgage book size in addition to a reduction in the amount it has had to pay in impairment charges.

Analysts have also indicated that RBS will show retail business improvements as well.

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