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Daily News Roundup: Friday, 2nd February 2024

Posted: 2nd February 2024

BANKING

Nationwide raises mortgage prices

Nationwide, the country's largest building society, has announced that it will raise mortgage rates by up to 0.3% on selected products. This decision came on the same day that the Bank of England decided to hold its base rate. Laith Khalaf, head of investment analysis at AJ Bell, said: “Mortgage rates have been dropping back in recent months, providing some much needed respite to beleaguered homeowners. This latest decision from the Bank of England might firm up mortgage pricing a bit, but it's unlikely to have a huge effect.”

TSB to cut jobs and branches this year

TSB will be implementing cost-saving measures, including job losses and branch closures, the boss of parent company Sabadell said on Thursday. Cesar Gonzalez-Bueno revealed the plans when questioned about a £29m provision made by TSB for restructuring costs this year. TSB reported a 30% increase in pre-tax profits to £237.2m, aided by higher interest rates, but expressed concerns about the impact of inflationary pressures on its bottom line.

Barclays looks to offload UK payments unit

Barclays is targeting buyout groups to buy a majority stake in its UK merchant payments business after talks with specialist payments providers about a deal stalled after a selloff in the European payments sector last autumn. The business could be valued at over £2bn based on estimated earnings.

PRIVATE EQUITY

CVC and Cinven take interest in Audiotonix

At least two private equity firms, CVC Capital Partners and Cinven, are preparing to bid for Audiotonix, the British-based manufacturer of equipment used by bands such as Coldplay and U2. The company, which makes professional audio consoles, is expected to be valued at between £1.5bn and £2bn. Audiotonix has a 30% market share across roughly 90 countries and its brands include DiGiCo, Allen & Heath, and Solid State Logic. The sale process is being initiated by Ardian, the French buyout firm that owns a stake in Audiotonix.

KKR raises record $6.4bn for Asia fund in infrastructure rush

KKR has raised $6.4bn for its latest Asian infrastructure fund giving the New York-listed private equity group a total of $13bn in AUM in its Asian infrastructure business.

INTERNATIONAL

Deutsche Bank to cut 3,500 jobs

Deutsche Bank is set to cut 3,500 jobs worldwide in an attempt to save €1.6bn. The bank reported a 14% drop in profits, with net profits falling to €4.9bn in 2023. The German bank said that while it had made progress on a €2.5bn (£2.1bn) cost-cutting programme that it first announced in 2022, it still needed to save €1.6bn of that total. CEO Christian Sewing praised the firm's performance in an "uncertain environment" and highlighted the pre-tax profit of almost €5.7bn, the highest in 16 years.  

BNP Paribas misses earnings expectations

French bank BNP Paribas missed quarterly earnings expectations and pushed back its 2025 profit target due to one-off losses and declining sales. Fourth-quarter net income fell by 50% to €1.07bn, below analyst estimates. The bank plans to increase its full-year cash dividend by 18% and spend €1.05bn on share buybacks. BNP Paribas also reported a 2.6% decline in revenue at its investment bank and reduced its 2025 target for return on tangible equity slightly.

ING sees lower total income in 2024

ING Groep, the largest Dutch bank, reported better-than-expected fourth-quarter profit of €1.56bn, up 43.1% from the previous year. However, the bank's net interest income of €3.88bn fell short of analysts' estimates. ING forecasts lower total income for 2024 but remains confident in delivering a sustained return on equity of 12%.

Sabadell's net profit more than doubles in Q4

Spain's Sabadell has reported that net profit more than doubled to €304m in Q4 2022, driven by higher lending income. However, this was down 35% from the third quarter due one-off charges and lower borrowing rates in the final quarter. For the whole of 2023, the bank's net profit rose 55% to a record €1.33bn thanks to lower provisions.

Lazard reports 3% drop in Q4 profit

Lazard reported a 3% drop in fourth-quarter profit, with higher expenses offsetting gains in its financial advisory business. The company's assets under management rose to $247bn from $216bn. The company reported an adjusted profit of $65m, or 66 cents per share, in the fourth quarter, compared with $67m, or 69 cents per share, the previous year.

CONSTRUCTION

UK construction sector outlook improves

Confidence in Britain's construction sector has risen slightly, thanks to expectations of interest rate cuts. The Royal Institution of Chartered Surveyors (RICS) reported a more positive outlook for the year ahead, with its headline workloads measure increasing from 6% to 12%. While activity in the sector declined in the three months to December, the decline was less severe than in the previous three months. RICS noted a "clear divergence" between home-building, which contracted further, and infrastructure activity, which continued to grow. Despite lower mortgage rates, the housing market has been slow to recover from previous interest rate increases, RICS said.

FINANCIAL SERVICES

Labour vows to get more women into boardrooms

Labour has pledged to bring more women, including women of colour, into City boardrooms. Labour's financial services plan, authored by shadow City minister Tulip Siddiq and unveiled on Thursday, promises to streamline regulations and cut out "outdated and prescriptive rules" at the Financial Conduct Authority. Ms Siddiq stressed the importance of encouraging more women into the City, stating that ignoring their talents hinders the growth of the financial services sector. The party's proposals include steps to improve diversity and inclusion in financial services and address the gender pay gap.

MANUFACTURING

UK manufacturing continues to struggle

The UK's manufacturing sector continues to decline as supply chain difficulties persist. The S&P Global/CIPS UK manufacturing PMI survey shows a slight reduction in the rate of decline, but the sector remains below the contraction threshold. Manufacturers are adopting a cost-cautious approach, leading to cutbacks in purchasing and stock holdings. Rob Dobson, director at S&P Global Market Intelligence, notes the widespread decline across all sub-industries. The 11th consecutive month of manufacturing production decline is attributed to weaker levels of new work and supply chain delays. Disruption in the Red Sea route to the Suez Canal has caused longer lead times, resulting in increased costs and slowed production.

MEDIA & ENTERTAINMENT

BBC and other studios probed over fee fixing

Leading studios, including BBC Studios and ITV Studios, are being investigated by the Competition and Markets Authority (CMA) over concerns of suspected anti-competitive behaviour. The CMA is examining whether companies have collaborated to set fixed rates for workers in the TV industry, potentially cutting back on labour costs. The CMA has the power to impose fines if any misconduct is proven. Bectu, the union for freelance workers, is calling for collectively agreed rates of pay to prevent speculation and ensure fair compensation.

Meta shares jump as investors cheer dividend and $50bn buyback

Shares in Meta jumped 14% on Thursday after the group announced bumper fourth-quarter results, its first-ever dividend and an additional $50bn in share buybacks.

ECONOMY

Bank of England keeps interest rates at 5.25%

In a widely expected move, the Bank of England has kept interest rates at 5.25%, despite weak economic growth and a steady decline in inflation. The Bank's Governor, Andrew Bailey, acknowledged the “good news” on inflation over the past few months but stated that more evidence of inflation falling to the 2% target is needed before lowering rates. Although services inflation and wage growth had come in below the Bank’s forecasts, key indicators of inflation persistence remain elevated, the Bank said. It suggested falling energy prices would help inflation touch 2% in the second quarter of this year, it would then pick up again in the second half. Money markets are now betting on the Bank's first monetary easing since 2020 being carried out in June, having earlier projected that rate cuts would begin in May.

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