OneSavings lifted by loan book growth
Shares in specialist loans group OneSavings Bank leapt over 15% yesterday after it revealed a 10% rise in profit before tax to £99.3m for the first six months of 2020, while its loan book grew 2% to £18.8bn. Underlying losses from impairments stood at £54.4m for the period, which the group said was "predominantly driven by a £42m charge due to the adoption of more severe COVID-19 related macroeconomic scenarios". Andy Golding, CEO, said: "We expect to deliver double digit underlying net loan book growth for the full year, excluding the impact of the structured asset sales in January."
Virgin Money offers new options to first-time buyers
Virgin Money has unveiled four 90% deals fixed for seven or 10 years for first-time buyers. However, none of the deals are available for those purchasing flats, maisonettes or new builds. The best of the four deals is the 90% LTV seven-year fix, with a 2.99% interest rate and £995 fee. Chris Sykes at Private Finance commented: “Virgin's new product for first-time buyers is an interesting one, and indicative of the long-term uncertainty forecast in the housing market.”
Fed shifts approach to inflation and employment
The Federal Reserve has rewritten its monetary policy strategy, changing how it views the trade-off between lower unemployment and higher inflation. The central bank has dropped its practice of pre-emptively lifting interest rates to head off higher inflation, a move the Wall Street Journal says is likely to leave U.S. borrowing costs very low for a long time. The adjustment is designed to address the “reality of a quite difficult macroeconomic context of low interest rates, low inflation, relatively low productivity, slow growth and those kinds of things,” said Fed Chairman Jerome Powell. “We’ve really got to work to find every scrap of leverage in helping stabilise the economy.” The policy shift led to an immediate sell-off in long-dated Treasuries, the FT reports.
Pandemic bites into Israel's Bank Leumi
Israeli Bank Leumi earned 694m shekels ($204m) in the second quarter, compared with 923m a year prior, as the bank increased its loan loss provisions in the wake of the coronavirus pandemic. Net interest income fell to 2.12bn shekels from 2.47bn a year earlier while loan loss expenses rocketed up to 875m shekels from 288m a year earlier.
NYSE given go-ahead for alternative to rival traditional IPOs
The New York Stock Exchange has secured regulatory approval from the Securities and Exchange Commission to let companies raise capital through direct listings.
COVID-19 downs Rolls-Royce
Rolls-Royce swung to a £5.4bn loss in the first-half after taking a battering from the COVID-19 pandemic. In the six months to June 30, revenue fell 26% to £5.8bn resulting in a post-tax loss of £5.4bn and an underlying post-tax loss of £3.3bn. The company said it aimed to sell its Spanish unit ITP Aero and other assets, alongside consolidating its manufacturing facilities into six locations from 11, to raise at least £2bn to boost its balance sheet. Rolls-Royce also said finance boss Stephen Daintith had resigned to move to retail technology firm Ocado.
Finnair in first bond sale by European airline since pandemic began
Finland’s largest airline Finnair sold €200m of so-called hybrid bonds yesterday, offering investors a hefty 10.25% annual coupon.
Platform fees tipped to drop further
The Lang Cat predicts the average market cost of platform fees will drop by just above a basis point per year for the next five years. Figures from the research and consultancy firm show the average cost of holding £500,000 on a platform is currently 0.27% and is expected to fall to about 0.21% by 2025.
Two best-performing funds since pandemic are run by Morgan Stanley
Morgan Stanley has proven itself to be adept at picking stocks during the pandemic, with its Insight Mutual Fund and Institutional Growth Fund both up over 55% since February.
LEISURE & HOSPITALITY
Hospitality firms braced for summer sales slide
UK hospitality firms are bracing for a 41% drop in sales over the summer, according to research by Barclays Corporate Banking, although businesses are optimistic that trade will pick up. An overwhelming 83% of hospitality and leisure bosses, who said they had been “kept afloat” by the Government’s decision to cut VAT for the sector to 5%, believe their businesses will grow at the end of the year and the beginning of 2021.
MEDIA & ENTERTAINMENT
Flutter splutters amid pandemic woes
Betfair and Paddy Power-owner Flutter Entertainment has revealed a 70% fall in profit for the first half of the year. With major sports events cancelled due to the coronavirus pandemic, Flutter’s profit before tax fell from £81m in 2019 to £24m. Revenue increased 49% to £1.52bn, up from £1.02bn last year, and the betting shop chain said adjusted earnings before interest, tax, amortisation and depreciation was £342m, an increase of 59%. Net debt hit £2.9bn from £356m.
WPP reinstates dividend amid heavy losses
Advertising giant WPP is reinstating its dividend payment amid huge first half losses. The marketing group will pay a 10p interim dividend, down from the 22.7p it paid this time last year, despite a £2.45bn loss for the first half of the year. Operating profits fell sharply, from £617m to £382m, though chief executive Mark Read said the firm had won $4bn of new business, including big wins from Intel, HSBC and Unilever.
S4 Capital acquires Brightblue Consulting
Sir Martin Sorrell’s S4 Capital is acquiring data analytics company Brightblue Consulting to merge it with Mightyhive, S4’s data and digital media practice. Brightblue employs mathematicians and econometricians working for clients including Co-op, Royal Mail, Hiscox and LV.
Hays fees fall amid tough jobs market
Recruitment firm Hays has posted an 11% decline in annual net fees on the back of the poor jobs market. Profit before tax fell 49%, from £246.3m to £126.2m, while operating profit dropped 46% to £135m. Operating profit dropped 45% to £135m, while net fees fell 12% to £996.2m and fees for permanent jobs declined 15% to £407.1m.
Pret a Manger axes 2,800 roles from its shops
Pret a Manger has made 2,800 staff redundant after the coronavirus pandemic flushed away “nearly a decade of growth.” CEO Pano Christou added that the coffee and sandwich chain had “managed to protect many jobs” but is “gutted that we've had to lose so many colleagues.”
EFL mulls bank loan to support clubs
The English Football League are considering taking out a commercial loan to help some of their clubs survive the season, according to the Mail. EFL executives have spoken to several commercial lenders about a loan, including hedge fund MSD UK Holdings.
Optimism rises ahead of expected jobs cull
British business confidence in the UK has improved, according to Lloyds Bank’s business barometer, which is up eight points to -14, the biggest monthly increase in three years. Hann-Ju Ho, a Lloyds Bank economist, said, “it is encouraging to see gradual improvements in trading prospects and economic optimism, albeit from a low base.” However, with unemployment expected to rise as the furlough scheme comes to an end, analysts say the bounce-back could prove short-lived. According to Lloyds, only 18% of businesses with staff still on furlough expected to be able to retain all of them.