The banking sector will come under close scrutiny next week with most of the major players queuing up to report on their first-half performance.

HSBC will kick off a busy week on Monday with analysts predicting that it will reveal that first-half profits fell to £5.2bn from about £5.8bn last time, as the impact of new accounting standards filtered through the figures.

Although it is expected to report worse bad debt levels among consumers, much underlying growth will come from HSBC's emerging markets operation, according to broker Charles Stanley.

The group said at the time of its full-year results that profits owed more to growth and favourable conditions in the US and China than in the UK.

Royal Bank of Scotland is also expected to have offset static UK retail banking with an improvement in business banking in the UK and US.

Investors will be looking out for comments on bad debt, but should be cheered by news of first-half pre-tax profits rising to about £4.25bn from £3.77bn, according to stockbroker Barclays.

After results from the likes of HBoS and Alliance and Leicester along the way, Barclays will finish off the week with its first-half figures on Friday.

Barclays is likely to impress after announcing in an update in May that it had delivered good profits, with its UK business banking operation performing strongly as a result of good lending momentum.

It said at the time that UK retail banking was broadly flat, with growth in current accounts offset by weaker income from its mortgage business and retail savings.

Analysts expect ICI to reveal a solid performance during its first half, despite high raw material costs and its European business remaining slow in the second quarter.

The Dulux paint company said in an update in May that price rises and savings from its restructuring had contributed to improvements in sales, profits and cashflow, although the outlook for the rest of the year was less certain.

Stockbroker Barclays expects it to post interim pre-tax profits of £118m on Thursday, against £123m last time.

Within its divisions, paints should have performed well, while national starch is expected to have offset raw material cost increases with price rises.

Smith and Nephew should continue to reap the benefits of new product sales when it posts interims on Thursday, with broker Charles Stanley predicting profits to rise to £70m from £58.1m previously.

The medical devices maker recently said new surgical procedures minimising the need for incision during joint replacements helped lift revenues.