PracticeConsultingUK banks face IAS earnings pinch

UK banks face IAS earnings pinch

Banks face big hits under International Accounting Standards to one of the financial indicators most scrutinised by shareholders, according to new research.

Link: IAS special report

A study by Merrill Lynch suggested that if 2003 results were compiled under IAS, adjusted earnings per share might fall at 17 European banks, including five of the UK’s biggest banks.

Royal Bank of Scotland and Lloyds TSB could see falls of 6.9%, HSBC 4.1%, HSBOS 3.8% and Barclays 3.2%, The Financial Times reported.

By contrast some banks could see adjusted EPS grow under the new accounting standards, with Abbey National in line for a spectacular 41% boost to the indicator.

John-Paul Crutchley, an analyst at Merrill Lynch, was quoted as saying the findings were based on assumptions and came with a ‘health warning’. He suggested that IAS would lead to greater earnings volatility.

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