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Daily News Roundup: Friday, 29th April 2022

Posted: 29th April 2022

BANKING

Barclays delays share buyback for second time

Barclays has delayed a £1bn capital return to investors amid the fallout from an error in its structured products business. The bank said that its share buyback had been postponed for a second time while it holds talks with the US Securities and Exchange Commission about filing restated accounts for last year. The chief executive, CS Venkatakrishnan, said the situation was "entirely avoidable" and that he was "deeply disappointed", but added that Barclays had found no evidence to date of deliberate misconduct and was working with regulators. The announcement came as the bank revealed that pre-tax profits for the three months to the end of March fell by 7% to £2.2bn, a much better result than the drop to about £1.3bn that had been forecast by analysts. Barclays was boosted by its corporate and investment banking business, where revenues rose by 10% to £3.9bn. Revenues from fixed-income, currency and commodity trading was up 37%, while equities income climbed by 13%. Net income fell to £1.4bn, from £1.7bn in the same period last year. John Moore, a senior investment manager at Brewin Dolphin, said: “Legal trouble aside, Barclays remains in a good position and has a diversified business compared to its UK banking peers.”

Standard Chartered’s profits climb

Standard Chartered has reported better-than-expected first-quarter profits, with a 6% increase in pre-tax profits to $1.49bn, up from $1.4bn in Q1 2021. The bank's income was up 9% to $4.3bn in the first quarter, while return on tangible equity was up by more than 11%. Chief executive Bill Winters said the performance was “strong despite the volatile macro environment.” He added that the bank is “track to deliver 10% return on tangible equity by 2024, if not earlier.”

Bankers call for reform to boost the City

Senior bankers have urged Britain to speed up post-Brexit reforms and rethink the tax regime in a bid to retain London's position as Europe's leading financial centre. Anna Marie Dunn, JPMorgan's finance chief for Europe, has warned that banks in the UK have to pay more tax than they do in other financial centres, describing this as "anticompetitive" and warning that it could deter lenders from having assets in the country. Meanwhile, Richard Gnodde, Goldman Sachs' European head, has suggested that tax on banks needs a "lot of work". The comments come alongside the publication of a report by think-tanks New Financial and the Atlantic Council which says the UK “should move further and faster in reforming the framework for banking and finance and the wider ecosystem to reboot UK capital markets and improve the competitiveness of the City of London.”

NatWest avoids pay rebellion

NatWest has avoided a shareholder rebellion on executive pay plans that could see boss Alison Rose earn £5.2m in a year. While advisory firm Glass Lewis had expressed concerns about executive pay rises and how performance is measured, only 7% of shareholders voted against a policy that would see a 25% increase in bonuses for CEO Ms Rose and a 43% rise for the bank’s finance chief Katie Murray. Glass Lewis had concerns over the increase in potential executive pay, as well as the decision to replace the long-term incentive plan with a scheme with fewer performance metrics that could make it easier to secure payouts.

PRIVATE EQUITY

KKR to take Hitachi Transport private in $5.2bn deal

KKR is set to snap up Hitachi’s 40% stake in logistics company Hitachi Transport System in a $5.2bn deal.

INTERNATIONAL

Lazard profit and revenue climbs

Investment bank Lazard reported adjusted net income of $115m, or $1.05 per share, for the first quarter, compared with $101m, or 87 cents per share, a year earlier. Lazard, whose business is split between asset management and financial advisory, reported a 5% surge in net revenue to $716.1m for the quarter ended March 31. Its operating revenue rose nearly 8% to $699m.

Nordea’s operating profit rises

Finland's Nordea Bank saw operating profit rise to €1.1bn in Q1 from €1bn a year earlier, beating estimates of €963m. Net fee and commission income rose 5% to €870m, while net interest income rose 8% to €1.3bn.

UAE's biggest lender posts record quarterly profit

First Abu Dhabi Bank, the United Arab Emirates' biggest lender, has reported its highest ever quarterly net profit. The Abu Dhabi-headquartered bank made 5.1bn dirhams in the January-March period, up 107% compared to the 2.5bn dirhams logged in the period a year ago.

FINANCIAL SERVICES

Investments and lending lead FCA action on promotions

Analysis shows that 72% of interventions on promotions by the Financial Conduct Authority (FCA) related to retail investments and lending in Q1. In the three months to March 31, the FCA reviewed 379 promotions. Of these, just under a third were amended or withdrawn, with around 76% involving website or social media promotions. The FCA received 7,234 reports about potential unauthorised business in the first three months of the year. From these, it issued 762 alerts about unauthorised firms and individuals, with more than 11% related to clone scams. Of the 762 alerts, around 36% were from consumers, 18% from the regulator’s monitoring and 17% from different areas of the FCA. A further 15% came from firms and 14% from other regulators.

HEALTHCARE

Vaccine makers see off push to share Covid know-how

Three of the world's biggest Covid vaccine makers have seen off attempts to make them share the know-how to make their jabs. A group of investors put proposals to the annual shareholders meetings of Pfizer, Johnson & Johnson and Moderna but were voted down. They argued sharing this intellectual property would speed up the rollout of vaccines by boosting manufacturing.

LEISURE & HOSPITALITY

A third of Flutter shareholders question pay plan

Flutter, the owner of Paddy Power and Betfair, has been hit by a shareholder revolt, with a third of investors who voted opposing executive pay after chief executive Peter Jackson was handed a 26% rise in his basic pay to £1.17m. This was more than double the scale of last year’s rebellion when 15% voted against the remuneration report. Flutter said the increase was needed so pay was comparable with US rivals but acknowledged the rise was “materially higher” than the average across the rest of its UK workforce. Advisory service ISS said: “The magnitude of the increase is not considered justified.”

Whitbread resumed dividend following strong recovery

Premier Inn owner Whitbread has announced it will resume dividends after UK accommodation sales surpassed pre-pandemic levels last year. The company, which also owns Beefeater and Bar+Block, reported pre-tax profits of £58.2m for the year ending March 3, compared to a loss of £1bn in the previous year. It added that profits at its UK business could return to pre-pandemic levels this year, despite pressure from rising inflation.

REAL ESTATE

Foreign buyers leave amid crackdown on investments

The Telegraph reports that secretive home buyers are exiting Britain's priciest property markets in the wake of a crackdown on covert money, with the Government’s overseas entities register looking to stop criminals using the British property market to launder money. Properties worth more than £500,000 held in corporate structures for personal use are taxed via an annual tax on enveloped dwellings (Ated). In the 2020/21 financial year, Ated tax receipts fell by 13% to £111m and have fallen by nearly two fifths since the tax year ending April 2017. Since the 2016/17 tax year, the Treasury’s tax take from pricey properties in corporate structures has fallen by 37% as investors sold up or restructured their assets. The paper notes that while Ated receipts do not exclusively represent properties owned by overseas buyers , the properties liable for Ated are heavily concentrated in the areas where foreign investors are most active.

RETAIL

BRC: Vacancy rates fall for second time since 2018

Data from the British Retail Consortium shows that the number of empty shops has fallen from 14.4% in the first quarter of 2021 to 14.1% for the first three months of this year - the second decline since 2018. The figures come as retailers have been boosted by the easing of coronavirus restrictions. However, the BRC said that vacancy rates remain well above pre-pandemic levels of around 12%. There was also a regional disparity in vacancy rates, with 11.1% for Greater London, compared to 18.8% for North East England. High street vacancy rates were broadly in line with the national average, while retail parks saw the biggest improvement.

ECONOMY

FTSE bosses flag inflation fears

The bosses of several leading companies have voiced concern over rising prices and the possibility of inflation hitting double figures. George Weston, the boss of Primark owner Associated British Foods, said: “We are dealing with really substantial inflation in all our businesses. It is different from 2008 inflation, I think we are back in the 70s.” Unilever chief executive Alan Jope described the inflationary environment as “challenging,” while Premier Inn owner Whitbread said it expects the hotel industry to see costs rise by as much as 9% this year. Sainsbury's chief executive Simon Roberts said the chain is looking to keep prices down as it is aware “just how much everyone is feeling the impact of inflation.” He added: “We can see the early signs of customers being a bit more cautious, watching every penny, every pound.” Barclays boss CS Venkatakrishnan said customers including small business and corporate clients “are facing far harder conditions this year as a result of inflation, supply chain issues and higher energy costs.” Consultancy Capital Economics estimates that inflation is likely to peak at 10% in October.

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