British Banks Set to Increase Profit Expectations
Major British banks such as HSBC and NatWest are preparing to raise their profitability forecasts in line with their European counterparts, according to sources familiar with the matter. These upward revisions in key earnings metrics are expected as the banks prepare to release their full-year results in the coming weeks.
HSBC is predicted to lift its Return on Tangible Equity (ROTE) target above the current guidance of “mid-teens or better.” NatWest, meanwhile, is expected to increase its 2027 ROTE goal from 15% to potentially as high as 17%.
Barclays and Lloyds May Also Follow Suit
Barclays, which previously forecasted a ROTE of 12% or more for 2026, is also expected to revise its targets upward. Analysts suggest that both HSBC and Barclays could increase their profitability expectations by up to 200 basis points when they release updated guidance. HSBC and Barclays are set to report their results on February 10 and February 25, respectively.
Lloyds Banking Group might also join the trend. Analysts at Jefferies believe the bank could aim for a ROTE as high as 18.5% by 2028, compared to its current target of over 15% for this year.
None of the banks mentioned have officially commented on these projections.
European Banks Already Raising Targets
Across continental Europe, banks have already begun adjusting their profitability goals, reflecting optimism that favorable interest rate conditions and strong lending and fee income will persist. This confidence, however, carries risks — especially if economic conditions falter and banks fail to meet heightened expectations.
Peter Rothwell, head of banking at KPMG UK, noted, “UK banks have benefited from earnings resilience lasting longer than initially expected, supported by higher interest rates, robust credit quality and tighter cost control.” These factors have contributed significantly to the current optimism in the banking sector.
Strong Performance in European Banking Stocks
Following years of sluggish performance after the financial crisis, European banking stocks have surged. Since early 2024, the sector has more than doubled in value and is up 60% over the past year — far outpacing the performance of U.S. banks.
Spanish lenders Santander and BBVA have been at the forefront of this rally, managing to increase income while maintaining cost efficiency. Analysts at JPMorgan project BBVA to achieve a ROTE of around 20% in 2025, with that figure climbing to 22% in 2026 and reaching 26% by 2028. Similarly, Santander could target a ROTE of 19–20% by 2028, up from 16.1% as of September.
Deutsche Bank and Investment Banking Momentum
In Germany, Deutsche Bank recently updated its 2028 ROTE target to more than 13%, an increase from its 10% goal for 2025. Analysts expect the bank to confirm it has met its 2025 target and could announce its highest profit since 2007. The performance of investment banks like Deutsche, Barclays, and UBS is also expected to benefit from volatile markets and a spike in corporate dealmaking activity, trends that have already buoyed results on Wall Street.
French Banks Face Profitability Challenges
Not all European lenders are enjoying the same tailwinds. Analysts indicate that Societe Generale, BNP Paribas, and Credit Agricole in France may struggle due to rising operational costs and intensified domestic competition, which could dampen their profitability outlooks.
As the European banking earnings season kicks off, all eyes will be on Lloyds and Deutsche Bank, both of which are scheduled to release their full-year results on the upcoming Thursday. The performance of these institutions will set the tone for what could be a pivotal quarter for the financial sector.
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