Banks Lloyds and RBS are expected to announce contrasting fortunes this week

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The contrasting recovery fortunes of part-nationalised banks Lloyds and RBS will be examined this week during a busy few days for City updates.

State-backed Lloyds Banking Group will on Thursday deliver its first trading update since the Government reduced its stake in the business to 25 per cent, raising £4.2bn from the sale of more shares last month.

The stock was placed with institutional investors, with a further multi-billion pound shares offering to members of the public expected to take place later in the year.

Analysts at Morgan Stanley expect first quarter results to show growth in core loans and underlying profits up 24 per cent to £1.8bn.

Troubled Royal Bank of Scotland publishes a first quarter update on Friday following annual results earlier this year that showed it had tumbled to an £8.2bn loss. The figures come in the wake of the announcement that the Government had scuppered its hopes of paying bonuses twice the size of salaries.

Keith Bowman, equity analyst at Hargreaves Lansdown, said the group’s transition back to a UK-focused bank is likely to be the main theme.

He said additional provisions for past misdemeanours looked “unlikely though not out of the question”. Last year the group’s balance sheet was crippled by the £4.8bn cost of creating an internal “bad bank”.

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