Hold onto your hats; bank reporting season is on us again. While the worst of the financial sector crisis may have passed, bad debts are still sneaking out of the woodwork and annual figures are a long way off their glory years.
Opinion remains divided as to whether the sector has seen the full force of bad debts. Credit rating agency Moody's and the International Monetary Fund (IMF) have both suggested bad debts were not likely to peak until 2010.
However, Lloyds Banking Group last year said it believes its bad debts are now on a downhill slope.
Bank of America/Merrill Lynch analyst Michael Helsby says: "We think bad debts peaked in 2009 and that the funding markets can continue to improve."
In Europe, the picture has vastly improved. Earlier this month, Santander - the Spanish owner of Alliance & Leicester, Bradford & Bingley and Abbey - posted a $12.3 billion profit for 2009 compared with $12.2 billion in 2008.
Meanwhile, Credit Suisse has returned to profit after reporting a record loss in 2008.
The bank made a profit of 6.7 billion Swiss francs (£4 billion) in 2009 - compared with a loss of 8.2 billion Swiss francs in the previous year. Germany's biggest lender DeutscheBank reported net income of $6.9 billion in 2009, from a net loss of $5.4 billion the previous year.
Barclays is first up on Tuesday (16 February) with many analysts expecting a strong performance and a quick recovery after it avoided the government's financial lifelines. Some even suggest that the group may post the biggest profit of any European bank with net income potentially more than doubling to around £9 billion.
Its investment bank arm Barclays Capital is behind the growth following its purchase of the US operations of Lehman Brothers and expansion in Europe and Asia. Profits will also have been buoyed by the sale of Barclays Global Investors to BlackRock in December for a net gain of $9.7 billion last year.
David Buik of BGC Partners says: "Many believe that Barclays will not disappoint us. Their performance since March of last year, when Marcus Agius, the chairman, John Varley and Bob Diamond, Head of Barcap consistently reassured the market that all was well with their balance sheet, will be seen as fantastic."
However, some remain concerned over its exposure to the PIGS group (Portugal, Italy, Greece and Spain) and their budget deficits. Bad debts are forecast to be around £9 billion.
Media reports also suggest that bonuses could also be slashed to their lowest level in 10 years with Barclays Capital potentially paying out just 38% of its revenue to reward staff, down from 44% last year. This could give a bonus pool of £4.5 billion.
Royal Bank of Scotland
Royal Bank of Scotland (RBS) then takes to the floor on 25 February with fur already flying over the predicted size of its bonus pot. The group, which is 84% owned by the taxpayer is forecast to suffer losses of £7 billion as it picks itself up from record losses of £24 billion last year.
Bad debts are continuing to make their presence felt with heavy losses of £14 billion forecast on loans to businesses, property deals and complex derivatives.
However, the group's investment banking arm is powering ahead and the Treasury is poised to sign off its £1.3 billion bonus pool. RBS has lost more than 1,000 of its top performing employees to rivals over the past year with chief executive Stephen Hester saying he wants to pay the minimum he can get away with in the sector.
It is expected to pay about 30% of its investment-banking revenues to staff, compared with 36% at Goldman Sachs and 50% at many other banks.
Lloyds Banking Group
Lloyds Banking Group moves to centre stage on 26 February with all eyes on bad debts and progress update on its efforts to focus on its core operations. Yesterday the group announced it is selling off esure to veteran insurance entrepreneur Peter Wood in a £185 million deal.
Lloyds has been feeling the heat from toxic assets with 80% of its bad debts in its interim results in August coming from merger partner HBOS. Impairment charges hit £13.4 billion and led Lloyds to report a £4 billion loss.
Chief executive Eric Daniels said at the time: "Overall impairments in the second half of 2009 are expected to be significantly lower than the first half with progressive reductions thereafter."
Helsby of Merrill/BoA adds: "The main market concerns surrounding Lloyds remain bad debt and funding, but we think quicker-than-expected progress is being made on both fronts."
The government's share in the bank is set to fall from 43% after it issues 3.1 billion shares next week as part of its £23 billion capital restructuring which it undertook to avoid the government's asset protection scheme.
HSBC rounds off the reporting season on 1 March. Analysts are expecting profits of $7.9 billion.