Banking giants Barclays and HSBC may have managed to repair some of the damage done to the finance sector by announcing bumper half-year profits.
The London Stock Exchange was given a timely boost yesterday when the pair both delivered profits of almost £3 billion.
While HSBC still showed evidence that the downturn was having an effect, with a 51 per cent slump in profits, Barclays became the latest beat-the-recession story with an eight per cent profits rise.
And while each has undoubtedly been helped by government schemes to boost spending, it is notable that the directors of both financial institutions opted against the multi-billion-pound bailouts enjoyed by the likes of Royal Bank of Scotland and Lloyds Banking Group.
After a year of gloomy financial news, many in the sector will be hoping this is a sign of a return to grace.
Barclays, which opted for investment from the Middle East rather than taking cash from the taxpayer, has not been immune to the downturn – charges for loans going bad rose more than £2 billion to £4.6 billion and there were £3.5 billion of losses on investments related to the depressed property market.
But the group has managed to increase income by 37 per cent and show a balance sheet many in the industry would now dream of.
This is evidence that even in troubled financial times it is possible to turn a healthy profit with a common-sense business model.
Bradford and Bingley and Northern Rock were nationalised because their strategies relied too much on risk and not enough on reason.
We have since seen billions of pounds ploughed into Lloyds and Royal Bank of Scotland to get them through tough times, while West Bromwich Building Society came close to a government rescue before managing to agree a refinancing deal with members at the last moment.
But Barclays has already reaped the benefits from its acquisition of the investment banking division of collapsed Lehman Brothers with investment banking gains growing by £1 billion on the back of that deal.
And on this week’s evidence, the company is in place to emerge from the recession with its reputation in tact.
Both Barclays and HSBC will now no doubt pay millions in bonuses to the executives which helped them land their profits rise, and there may be some cynical headlines to follow.
But in the fullness of time, the public is going to be more accepting of bumper pay deals when they don’t come out of their own pockets.