Buxton: Reports show potential earnings power of banks

Schroders' Richard Buxton remains bullish on the long-term earnings potential in the banking sector after the UK's big-four reported strong profits last week.

Buxton, the group's head of UK equities and manager of the £1.86bn Schroder UK Alpha Plus fund, says the H1 results season has been overwhelmingly positive so far for UK companies, particularly the banks. Last week, HSBC reported a £7bn pre-tax profit, with Barclays posting £3.95bn. Partly-nationalised banks Lloyds and RBS also recorded strong results, with pre-tax profits of £1.6bn and £1.14bn respectively. However, Buxton says the share prices have not responded to the profits in a number of cases. "The evidence is in Barclays and Standard Chartered; their share prices were hit a...