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Banking Sector (Profitability)

Volume 981: debated on Friday 28 March 1980

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asked the Chancellor of the Exchequer what has been the level of profitability in the banking sector in each of the last 10 financial years; and to what extent it has been influenced by cyclical economic factors and inflation.

Information on the level of profitability in the banking sector by financial year is not available. The table below shows the pre-tax profits of the big four clearing banks for the last 10 calendar years on a historical cost basis.

£ million
1970214
1971278
1972380
1973580
1974449
1975424
1976700
1977854
895
19781094
19791564
There is a break in the series in 1977 as a result of changes in accounting practice—notably the treatment of deferred taxation. The clearing banks' profits will have undoubtedly been influenced by both cyclical economic factors—there is a tendency for bank profits to be high when times are bad for others—and inflation; it is impossible, however, to quantify the precise extent of these influences.