UK bank sector results preview: Q3 2025

Higher-for-longer interest rates and strong Asia wealth flows have bolstered expectations ahead of this month’s results by lenders including NatWest Group (LSE:NWG), Barclays (LSE:BARC) and Standard Chartered (LSE:STAN).

Bank of America’s preview of the sector’s third-quarter reporting season forecasts a solid outcome for both domestic and Asian-facing banks.

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Barclays reports on Wednesday 22 October before Lloyds Banking Group (LSE:LLOY) the following day and NatWest on 24 October. HSBC Holdings (LSE:HSBA) presents its figures the following week on Tuesday 28 October, with Standard Chartered on 30 October.

BofA said: “We expect underlying trends to remain broadly supportive. 

“We think non-net interest income may have more potential to surprise positively, with the investment bank operating environment constructive in the quarter, and Asia Wealth inflows remaining strong, which bodes better for Barclays, HSBC and Standard Chartered.”

The bank revised its price objectives for the sector by 3-10% as its estimates rolled forward to include 2027. This left Barclays at 450p, Lloyds at 93p, NatWest at 610p, HSBC at 1,120p and Standard Chartered at 1,330p.

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The note was published prior to this morning’s announcement by Lloyds that it expects an additional provision in relation to motor finance redress, “which may be material”.

It was also written before the decision of HSBC to suspend its $3 billion (£2.5 billion) a quarter buyback programme so that it can focus on acquiring the rest of Hang Seng Bank.

The developments left HSBC 55.2p lower to 1010.8p and Lloyds down by 2.2p to 84.2p.

BofA described the operating environment for domestic UK banks as constructive, with product margins still attractive.

The structural hedge roll, which protects against interest rate volatility, also continues to bolster net interest income at a time when the Bank of England is taking longer than previously thought to cut borrowing costs.

In terms of fee income, Barclays and to a lesser extent NatWest should benefit from this year’s momentum in financial markets activity.

Barclays’ Markets revenue rose 26% year on year in second-quarter results, with Investment Bank income overall up 9% in the 12 months up to that point.

The outlook for tax rises at the Autumn Budget, including the possibility of an increased contribution from the banking sector, will be a major area of uncertainty.

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BofA added: “In particular, there will likely be questions around growth prospects in the context of a stagnant economy.

Barclays is seen posting a broadly flat third-quarter underlying profit of £2.2 billion, with NatWest 11% higher at £1.86 billion.

Prior to the motor finance update, the bank said it expected Lloyds to post a 3% year-on-year rise in underlying profit to £1.9 billion in the third quarter. This included a £62 million provision for remediation, compared to the City’s £360 million estimate.

For HSBC and Standard Chartered, revenues from Asia wealth management have been an important growth engine. This is expected to continue after a strong quarter for Hong Kong Stock Exchange turnover.

The bank said it expects loan growth in the region to remain relatively muted, but that strong deposit inflows should support net interest income.

In addition, the HIBOR inter-bank lending rate has recovered from near zero levels to above 3% in August, which should benefit net interest income. HSBC previously guided to an approximate $100 million headwind per month if HIBOR stayed at about 1%.