The bank said its consumer banking and wholesale banking client income are performing particularly well, but have been partly offset by weak own account income.
In a trading update released by the group, the bank said for the group overall, net interest margins have fallen fractionally from the 2009 levels and low liability margins have persisted longer than expected.
The group has continued to manage expenses tightly whilst investing in both businesses to underpin income momentum. However, on a year-on-year basis, cost growth will significantly exceed income growth for the first half of 2010, particularly in wholesale banking, the release said.
This reflects the fact that in the first half of 2009, we held back on investment and at the same time benefited from very strong own account income, whereas in the first half of 2010, whilst own account has weakened, we have continued to invest. Loan impairment trends have been very good in both businesses, the release added.