British Banks' Profits Surprise

European banks are following their American counterparts in reporting better-than-expected earnings, as fees from investment banking and securities trading help offset retail banking losses. On Aug. 3 the two British-based banks that refused to accept government bailouts during the worst of the financial crisis, HSBC (HBC) and Barclays (BCS), reported strong profits, sparking hopes that an economic recovery might finally be under way. Both banks announced first-half pretax profits of $5 billion—an 8% rise for Barclays but a 57% decline for HSBC, Europe's largest bank—compared with a year earlier.

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