Lloyds' first quarter profits fall 95%
Lloyds Banking Group has revealed a 95% fall in profit for the first quarter of 2020, with profit before tax falling to £74m from £1.6bn the year prior on the back of an impairment charge of £1.43bn over anticipated bad loans. Chief executive Antonio Horta-Osorio, who stressed that Lloyds had its own £2bn COVID-19 fund offering new overdrafts or extensions, said the bank had approved 880,000 payment holiday on mortgages, loans, cards and motor finance. Lloyds has approved 3,752 Coronavirus Business Interruption Loans with a value of £500m, taking its share to more than 14% from 12.8% a week ago. It has also agreed £100m of overdraft extensions for businesses. John Moore, senior investment manager at Brewin Dolphin, said: "Of the major banks, Lloyds is most vulnerable to a significant UK downturn, following moves to simplify its business over the past decade.”
Scam victims may be compensated
Victims of bank transfer scams who have been denied refunds may be in line for compensation after the Lending Standards Board (LSB) found banks' refund processes were flawed and ordered them to review old cases. The LSB conducted a review into how banks including Barclays, Lloyds and NatWest were adhering to a code of rules on reimbursements introduced in May 2019 which says blameless victims should be reimbursed by their bank. UK Finance figures show over 120,000 people were tricked into transferring money to fraudsters last year, losing £3,800 each on average. Katy Worobec of UK Finance said: “Any customer who is unhappy with the outcome of a case can of course take their complaint to the Financial Ombudsman Service.”
Emergency coronavirus loans pass £4bn
Analysis shows that the value of emergency coronavirus loans to small businesses rose 46% to £4.1bn last week, although the number of approvals slowed. UK Finance said 8,638 customers secured an 80% Government-backed loan in the seven days to Tuesday compared with 9,000 the week before. Meanwhile, the Treasury is set to consult with banks on the price of 100% Government-backed bounce back loans today. The loans will be free of interest and fees for the first year, with the price set to be under 3%.
Coronavirus-related bad loans eat into Societe Generale
Societe Generale lost €326m (£283m) during the first-quarter, compared to a €686m profit last year, as a result of provisions for bad loans which increased threefold as a response to the coronavirus crisis. Provisions against loan losses increased to €820m in the first quarter, from €264m a year earlier, while revenue fell 16.5% to €5.17bn and underlying net income fell 90.8% to €98m.
Danske Bank cuts outlook as loan impairments jump 10-fold
Danske Bank has cut its profit forecast for 2020 as it recorded a net loss of DKr1.3bn ($190m) in the first quarter against a profit of DKr3bn a year earlier.
Goldman Sachs pay vote draws weakest support since 2016
Goldman Sachs saw just 71% of investors back a pay plan that gives CEO David Solomon a 20% pay rise, the lowest proportion since 2016 and a marked decline on last year’s 91%.
BA sacks 1,100 pilots and may quit Gatwick
British Airways, which has announced that it is letting 12,000 of its 45,000 staff go because of the financial impact of the coronavirus, is to sack 1,130 of its 4,300 pilots on statutory redundancy terms. The airline has also suggested it could leave Gatwick, an airport where it is the second biggest operator. In a memo to staff BA management said of future services from the airport: “There is no certainty as to when or if these services can or will return.” Gatwick is a secondary operation to BA’s main hub services at Heathrow.
Bellway to restart construction
Bellway will next week restart construction work on sites that closed because of the coronavirus outbreak, after developing measures to ensure social distancing ad protect workers on sites. Bellway has qualified to get £300m from the government via the coronavirus aid scheme.
Banks dust off no-deal Brexit plans
With concern that the UK and EU will fail to agree a trade deal by the end of the year, banks are reportedly going back over their no-deal Brexit plans. Catherine McGuinness, political leader of the City of London, said Brexit is “firmly back up the agenda”, with people “very conscious of the very short time to get any deal agreed.” She added: “I don't think anybody is expecting a transition extension at the moment, but the timetable is very tight. We are dusting down our papers on the various solutions to the cliff-edge problems." Miles Celic, chief executive of TheCityUK, said the Government’s position that it will not seek an extension to the transition period had to be taken at "face value", while Rachel Kent, a financial services partner at Hogan Lovells, said: “People are looking at no-deal preparedness again.”
BlackRock hires former McKinsey partner to lead stewardship drive
BlackRock has appointed former McKinsey senior partner Sandy Boss as global head of investment stewardship, putting her in charge of the investment industry’s largest stewardship team. She replaces Barbara Novick.
Revenue jumps for II
Interactive Investor has reported that net review was up 61% in the first quarter. The online investment platform posted net revenue of £31.1m for the first-quarter, up from £19.3m in the same period last year. Profit before tax grew 55 per cent from £5.8m to £9m.
Concern as care homes become pandemic epicentre
David Abbott looks at concerns – and a lack of clarity – over coronavirus-related deaths in care homes, with some operators suggesting the facilities are now the coronavirus epicentre. Mr Abbott says data on fatalities has been disputed in some quarters, with fears that “discrepancies over data methodologies have stymied clarity, awareness and action.” He argues that the sector is ill-equipped to handle the scale of the unfolding crisis, highlighting that provision of personal protective equipment and testing has not met demand. Mr Abbott highlights that the crisis in care homes is not exclusive to the UK, with governments in the US, Italy, Spain, France and Canada having launched inquiries into coronavirus preparedness and response in care homes.
Astrazeneca partners with Oxford Uni in search for vaccine
Astrazeneca has partnered with Oxford University to manufacture its potential coronavirus vaccine, one of 70 treatments worldwide that is under development to counter the disease. Astrazeneca CEO Pascal Soriot said that the developers will have established whether the vaccine works by June or July.
LEISURE AND HOSPITALITY
C&C scraps dividend and cuts pay
C&C Group, which is behind Magners cider and Tennent's lager, has scrapped its dividend payout and cut salaries. It has brought down the average salary by 20% across its 2,900-strong workforce, of whom 2,000 have been furloughed. Executive pay will fall by between 30% and 40% for an initial three months. The drinks group said that having opted to use Government support initiatives during the COVID-19 pandemic, it was "neither appropriate nor prudent" to pay a final dividend.
MEDIA AND ENTERTAINMENT
Digital newspaper VAT scrapped
A pledge to remove value added tax from the sale of digital newspapers will be brought forward by the Government amid concerns the sector is struggling to survive the coronavirus pandemic. Chancellor Rishi Sunak said in his Budget that VAT would be cut to zero on sales of digital versions of newspapers and e-books from December 1, but the move will now take effect today.
Twitter sees rise in revenue
Twitter reported revenue of $808m (£646m) in Q1, up 3% on the same period in 2019. The increase came despite a slowdown in advertising caused by the coronavirus crisis, with ad sales 27% lower in the last three weeks of March than the year before.
Sainsbury’s defers dividend and cancels bonuses
Sainsbury’s has blamed the uncertainty around the trajectory of the coronavirus pandemic for deferring a decision on its dividend until later in the financial year. Based on a scenario where the lockdown ends by June, Sainsbury’s expects underlying pre-tax profit to be at a similar level to the £586m it earned in the year to March 7th. Sales were broadly flat at £32.5bn, with annual same-stores sales down 0.6%. For the seven weeks to April 25th, grocery sales rose 12%, with general merchandise revenue, including Argos, up 3%.
Government bailout bill at £100bn
The Office for Budget Responsibility says the Government’s bill for subsidies and tax breaks for businesses hit by the COVID-19 outbreak already stands at £103.6bn. Measures included in the figure include £39bn for the furlough scheme which covers a proportion of wages for those unable to work due to the lockdown, but the Coronavirus Interruption Loan Scheme and £750m fund for start-ups are excluded as it remains unclear how many firms will default. The analysis shows that of the £103.6bn, £10bn is for the self-employed income support scheme; £15bn is for small business grants; and £13bn covers a business rates package.
Eurozone economy shrinks at record rate
Figures show that the Eurozone has been dealt a heavy blow by the COVID-19 outbreak as the economy shrank at the sharpest pace on record in Q1, with an estimate of GDP between January and March showing a contraction of 3.8%. Figures show that France saw GDP dip 5.8% - the biggest quarterly slip since it was first recorded in 1949, while Spain saw a 5.1% contraction and Italy's economy shrank by 4.7%. European Central Bank president Christine Lagarde said that a sharp downturn in eurozone economic activity in April "suggests that the impact is likely to be even more severe in the second quarter," adding a warning that economic growth could fall between 5% and 12% this year.
Coronavirus and Europe’s solidarity
Mark Fry says the eurozone economy is experiencing the “fastest and deepest extreme economic contraction since the Second World War” on the back of the coronavirus outbreak and while EU leaders last week announced a pan-European fiscal response to the economic disruption, European leaders “are far from united” over the mechanics of the recovery fund. On the divide between nations in the bloc, he notes that the more severely impacted nations will need to reopen economies very gradually while those which were relatively less impacted will be able to reopen at a faster pace. This, Mr Fry highlights, “suggests the EU is at the beginning of a two, or a three-speed, asymmetric economic recovery”, warning that there is “palpable concern” that divisions “along familiar North-South lines” could be deepened.