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Daily News Roundup: Friday, 19th February 2021

Posted: 19th February 2021

BANKING

Barclays to resume annual dividend

Barclays has announced it will resume its annual dividend as the banking group’s profit suffered a less severe hit from the pandemic than expected. The bank announced a dividend of 1p per share, as well as a £700m share buyback, after regulators banned payouts last year following the outbreak of COVID-19. Barclays reported a pre-tax profit of £3.1bn last year, 30% lower than the previous year, but well ahead of analysts’ expectations. Profit for the fourth quarter fell more sharply, dropping from £1.1bn to £0.6bn. Total income for the year was flat at £21.8bn. The bank said it had set aside £4.8bn for bad loans in 2020, more than double the amount of the previous year. However, this was offset by a strong performance in Barclays’ investment bank, which benefited from a surge in trading volumes and volatility early in the year. Income from this division surged 22% to £12.5bn, accounting for more than half the bank’s income. By contrast, its consumer, cards and payments division dropped by more than a fifth to £3.4bn due to lower credit card balances, reduced payment activity and lower margins.

NatWest set for Ireland exit

NatWest is set to pull out of the Republic of Ireland and is expected to confirm today that it will start to withdraw from the country, where it is uses the Ulster Bank brand. NatWest is Ireland's third largest lender, with 88 Ulster Bank branches and 2,800 staff. It accounts for 15% of the mortgage market and has a €20.5bn loanbook.

PRIVATE EQUITY

VC value hits new high in Q4

Refinitiv analysis shows that the value of venture capital raised by British companies reached a quarterly record during Q4. Businesses raised £2.4bn from 137 deals in the closing three months of 2020, an increase on the £1.3bn from 146 deals recorded in Q3. The report shows that £7.5bn of venture capital was raised from 575 deals in 2020, with this a 4% fall in value compared to 2019 and a 1% fall in volume.

INTERNATIONAL

Litigation and writedowns push Credit Suisse to fourth-quarter loss

Credit Suisse has posted a fourth-quarter loss of SFr353m. Write-offs related to underperforming loans and defaults tripled to SFr1.1bn. Net income for 2020 was down 22% year on year to SFr2.7bn, with revenues flat at SFr22.4bn.

ECB squashes Deutsche Bank plans to raise bonus pool by a third

Sources say that while Deutsche Bank had planned to pay bonuses of more than €2bn for 2020 – up from €1.5bn in 2019 – the European Central Bank opposed the mooted increase.

AVIATION

PM urged to detail way out of travel restrictions

Boris Johnson has been urged by the CEOs of BA, Easyjet, Virgin Atlantic, Ryanair and Tui to include plans for the restart of international travel in next week’s roadmap for the easing of lockdown. In a letter to the PM, the bosses warned that without a clear plan, the UK’s economic recovery from the pandemic would be hampered by a lack of global connectivity. It came as new research from the UK’s airport trade body showed the limited impact that the government’s support for the sector has had so far.

City AM

Air France-KLM warns of deeper pain as fresh aid set to finally land

Air France-KLM recorded a €7.1bn net loss in 2020 due to the pandemic. The airline said the first three months of this year will be “challenging” and involve a deeper hit to earnings.

FINANCIAL SERVICES

FCA urged to set end date for Woodford investigation

The Treasury Committee has called on the Financial Conduct Authority (FCA) to set out when it expects to conclude its investigation into the collapse of Neil Woodford’s fund. The City watchdog has been investigating the collapse of the Woodford Equity Income Fund since 2019. With Mr Woodford this week announcing plans to open a new fund, MPs have urged the FCA to outline when it expects its probe to conclude. An FCA spokesperson has said the watchdog will update MPs by May 31. Meanwhile, fund manager and activist Gina Miller has called for the FCA to cede control of the Woodford investigation and appoint an external investigator, saying the watchdog should “hand wherever they have got to in their investigation to an independent judge or QC, and widen the scope to include the FCA”.

Profit down for Moneysupermarket

Moneysupermarket, which also owns the advice website Moneysavingexpert, said profit after tax fell 27% from £94.9m in 2019 to £69.3m last year. Group revenue was down 11% to £344.9m and adjusted earnings per share dropped 28% to 13.1p. The financial services price-comparison platform had cash of £23.6m, down 2%, and announced a dividend per share of 11.71p. Moneysupermarket recorded 11.5m active customers last year, a lower figure than usual due to the significant reduction in the travel insurance market. Revenue in its money division – which provides comparisons on borrowing and banking products – suffered a sharp 27% decline due to a drop in demand for credit products.

Singapore makes pitch as Asia bond hub with Euroclear tie-up

SGX, which operates Singapore’s securities exchange, has announced it plans to launch a structure to make it easier for investors to buy bonds issued in the Asian city-state using assets held at Euroclear in Belgium.

MANUFACTURING

Airbus sees €1.1bn loss

Aircraft maker Airbus has reported a loss of more than €1bn after deliveries of its aircraft fell by a third due to the pandemic. Airbus delivered 566 commercial aircraft in 2020, down from 863 the year before, and expects to deliver the same number in 2021. Revenues slipped 27% to €49.9bn, with this leading to a net loss of €1.13bn for 2020. CEO Guillaume Faury said the sector faces pressure and uncertainty in the year ahead amid a “volatile environment” driven by the coronavirus crisis.

PROFESSIONAL SERVICES

Hays to award special dividends

Hays is planning to award special dividends to shareholders after the recruiter identified £150m of surplus capital. Alistair Cox, CEO of Hays, said: “With recovery in fees and our profits accelerating in Q2, this provides us with confidence to resume paying core dividends at our full-year results in August.”

REAL ESTATE

Demand for London rental properties plummets

Research by Spareroom has revealed that demand for London rental properties has plummeted across all areas of the capital, with central neighbourhoods suffering the sharpest drop. The West End recorded the biggest drop in demand of 43%, followed by neighbourhoods in the east of the city centre, when tenant demand has fallen 39%. West London suffered a drop in demand of 26% – the third largest decline – according to the research. Demand was stronger in south east and east London – which are popular with young professionals. However, figures still declined 15% and 19% respectively.

Grainger appoints CFO

Grainger has appointed Robert Hudson as CFO and executive director. Mr Hudson currently heads finance and operations at St. Modwen Properties, where he became interim CEO in April last year.

RETAIL

Online sales soar for Asda

Asda has revealed that online sales increased 76% in the fourth quarter compare to 2019 levels. Combined net sales for Asda’s website and its George clothing brand jumped in the final quarter of last year after the grocer upped its delivery capacity by 90% to 850,000 between March and December to cope with a surge in demand. Like-for-like sales excluding fuel rose 5.1% during the quarter and by 6.9% in the eight weeks to December 24, as customers splashed out on Christmas treats. The supermarket chain said demand for premium lines increased significantly, with December sales up 30% year-on-year.

Nestlé’s sales rise on pet care and vitamins boom in pandemic

Nestlé, the world’s largest food company, enjoyed a rise in sales last year as a pet care boom and vitamin purchases by health-conscious consumers strengthened in the pandemic. On an organic basis, sales rose 3.6% in 2020, ahead of Nestlé’s own guidance of “around 3%”. Net profit fell 3% to SFr12.2bn, beating expectations for SFr11.97bn. Reported sales, which includes the effects of acquisitions and divestitures, dropped 7.9% to SFr84.3bn last year, due to factors including the sale of its Yinlu business in China.

Moonpig loves Valentine’s Day trading

Moonpig has said it expected to double revenues this year as it enjoyed its “strongest ever” trading week ahead of Valentine’s Day. The online greeting card platform said revenue for the financial year ending April 31 is expected to be double the £173m posted in the previous year after bumper sales during the coronavirus pandemic.

ECONOMY

Starmer outlines economic policy

Labour leader Sir Keir Starmer has outlined the party’s economic policy direction, saying that under his leadership “Labour’s priority will always be financial responsibility” and arguing that “a fair society will lead to a more prosperous economy”. Saying that Labour must build “a strong partnership with businesses” if it is to deliver a more just and equal society, he added that “for too long the party saw business as “something just to be tolerated or taxed”. Mr Starmer also proposed a “British recovery bond”, a saving scheme with a competitive interest rate that would help people invest in the UK’s post-pandemic future. The Labour leader also said he would end the public sector pay freeze, extend business rate and VAT relief, and boost the furlough scheme. Labour, he added, would create 100,000 start-ups in the next five years.

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