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Daily News Roundup: Friday, 30th April 2021

Posted: 30th April 2021

BANKING

NatWest Group reports Q1 profit

NatWest has reported a pre-tax profit of £946m for the first quarter, with this beating analyst forecasts of £536m and up from £620m a year ago. Profit attributable to shareholders, after taxes and other costs, was £620m, up from a loss of £109m in December. Income fell to £2.7bn from £3.2bn a year ago. The bank has released £102m that it no longer needs to cover bad loans, with this less than Lloyds’ £323m and HSBC’s £287m. CEO Alison Rose commented: “We continue to make progress against our strategic targets, growing in key areas, simplifying the bank and accelerating our digital transformation to meet the rapidly evolving needs of our customers.” Ms Rose also revealed that NatWest, formerly known as Royal Bank of Scotland, would move its headquarters out of Scotland after 294 years if the country becomes independent, saying it is simply too big for the Scottish economy to support.

Standard Chartered to trim branches

Standard Chartered will close almost half its branches and plans to reduce office space by a third to cut costs. The bank plans to shrink its network from 776 branches to about 400, having already trimmed the number of branches from 1,068 in the past five years. CFO Andy Halford said: "Those markets that are higher on branch numbers we'll be looking at more closely." The London-based bank makes most of its profits in Asia and also operates in Africa and the Middle East. Its largest retail footprint is in South Korea. Meanwhile, it yesterday reported an 18% increase in first-quarter pre-tax profit to $1.4bn. Income fell by 9% in Q1 to $3.9bn and its net interest margin was 1.22%, down from 1.52% a year ago.

Brexit freedoms let BoE cut red tape

The Bank of England is set to use its newfound Brexit freedoms to scrap red tape, enabling small lenders to grow and compete more successfully. Officials are looking at how they can liberate smaller banks and building societies that operate only in the UK from the burden of regulation designed to control the world's largest financial institutions. The Telegraph says the BoE is “taking inspiration from the US” where there are separate rules for small lenders so they can avoid being weighed down by unnecessary compliance costs – an approach banned within the EU. Victoria Saporta, executive director of prudential policy at the Bank, said it is beginning a post-Brexit “move from ‘rule taker’ to ‘rule maker’” for the City. David Postings, chief executive of UK Finance, commented: “An efficient, innovative and competitive financial services industry is critical to the future growth and prosperity of the UK economy.”

PRIVATE EQUITY

Carlyle sees Q1 profit

Carlyle saw profit of £623m in Q1. The US private equity firm sold £4.6bn worth of companies between January and March. CEO Kewsong Lee said as long as the deal-making environment remained “healthy” and buyers maintained an interest in deals, Carlyle would look to “ramp up” the sale of the businesses it holds.

INTERNATIONAL

Beau reflects on digital cash

Bank of France official Denis Beau has suggested that central bank digital cash could see new types of businesses access ultra-cheap central bank funding, with the role of big banks in settling large transfers reduced. This comes as central banks around the world focus on developing digital cash systems amid the increasing popularity of cryptocurrencies.

Nordea Bank posts profit

Nordea Bank has announced first-quarter net profit of €788m, beating analysts’ forecasts of €632m. Loan loss provisions were down to €52m, while fee and commission income increased to €827m.

China's ICBC in 1.5% Q1 net profit increase

Industrial and Commercial Bank of China (ICBC) has reported a rise in net profit of 1.5% in the first quarter to 85.7bn yuan. This compares with 84.5bn yuan in the year earlier period.

DNB sees bigger-than-expected earnings rise

Norway’s DNB has reported a bigger-than-expected increase in first-quarter earnings to 5.89bn Norwegian crowns, from 4bn crowns a year ago. The results exceeded an average analyst forecast of 4.93bn crowns.

Yandex to acquire Acropol bank

Russian bank Yandex has agreed to acquire mid-sized lender Acropol for $14.8m. This comes as Yandex reported strong first-quarter revenue growth, boosted by the solid performance of its advertising and search operations.

AVIATION

Investors join space race with record funding

Investors are increasingly interested in commercial space ventures, with total venture capital investment increasing by 95% to $8.7bn in the year to the end of March.

Airbus warns crisis ‘not yet over’ despite profit bounce

Airbus has reported higher than expected first-quarter profits of €694m even as it warned of the continuing negative impact of the coronavirus pandemic.

FINANCIAL SERVICES

Aviva tops complaints list

Aviva has topped the Financial Conduct Authority’s (FCA) complaints list, with the firm seeing the most upheld cases on both pensions and investments. Data covering July to December 2020 shows that Aviva Life Services had 8,438 upheld complaints relating to decumulation and pensions, as well as 2,299 upheld complaints relating to investments. This was the highest of the nearly 230 firms covered by the report. Aviva Life Services had 12,695 open complaints relating to pensions and 3,383 on investments out of a total of 21,276 open complaints in the second half of 2020. Prudential came in second with regards to pensions with 6,045 upheld complaints, while Scottish Widows was third with 3,590 upheld complaints. For investments, Barclays came in second with 2,028 upheld complaints, while Prudential accounted for 1,627. Sipp providers Curtis Banks and James Hay had 249 and 181 complaints in relation to pensions respectively, while St. James’s Place had a total of 431 upheld complaints against pensions and 341 in relation to investments. More than 3,000 firms submitted complaints data to the FCA for the second half of 2020, with the City watchdog saying that these firms received 2.19m complaints in the second half of 2020, 26% lower than in H2 2019. Current accounts drew the most complaints, accounting for 23%, while PPI was the focus of 12% of all complaints in H2 2020. Other complaints focused on credit cards (11%), other general insurance products (11%) and motor and transport insurance (9%).

FCA to target high-risk investment promotions

The Financial Conduct Authority is seeking views on how to tackle the issue of high-risk investment promotions, with the City watchdog concerned consumers are investing in inappropriate, high-risk investments that are unsuitable for most people. It is looking at promotions of high-risk investments and changes it can make to rules to make consumers safer. Sheldon Mills, executive director of consumers and competition at the FCA, said: “We are concerned that too often consumers are investing in high-risk investments they don’t understand and can lead to significant and unexpected losses.” Interactive Investor CEO Richard Wilson welcomed the FCA’s consultation and called for regulatory perimeters to be tightened.

HEALTHCARE

BC Partners seeks to offload Pharmathen

Private equity firm BC Partners is to sell Greek drugmaker Pharmathen, which focuses on developing, manufacturing and out-licensing complex generic drugs, with the firm hiring investment bank Jefferies to handle the transaction.

LEISURE AND HOSPITALITY

City Pub Group ups stake in chains

City Pub Group has increased its stake in hospitality chains Barts Pub and the Mosaic Pub and Dining Group. Clive Watson, executive chairman of the City Pub Group, said: “These two corporate transactions demonstrate that the company can provide liquidity for shareholders in EIS companies on a staged basis, with the aim of significantly increasing the size of our portfolio over the next two to three years. We will continue to look at selective, high quality single pub acquisitions as well as larger estates.”

MANUFACTURING

Super deduction to boost investment

William Schomberg in the Mail looks at the "super deduction" which allows firms to cut their tax bill by up to 25p for every £1 they invest, a tax break Chancellor Rishi Sunak has described as the "the biggest business tax cut in modern British history". Reflecting on whether this will drive investment, he cites Confederation of British Industry analysis showing that manufacturers’ plans to buy new plant and machinery were the strongest since 1997 in March.

REAL ESTATE

HMRC: Property transactions hit new high

UK property transactions were at their highest level since records began in 2005 in March, according to HMRC. The report says more than 180,000 property sales were recorded in the UK last month, more than double the number seen in March 2020, with average house prices up more than 8% over the year.

RETAIL

Unilever plans €3bn share buyback after buoyant quarter

Unilever is to buy back €3bn of shares after the consumer goods group reported bumper sales growth for the first quarter. Revenue in the three months to the end of March fell 0.9% to €12.3bn, due in large part to an 8% negative currency-related impact. Underlying sales rose 5.7%, with this driven by a 9.8% increase at its foods and refreshment division.

ECONOMY

UK’s net worth climbs in 2020

Data from the Office for National Statistics (ONS) shows that the UK’s net worth grew by 4.4% in 2020, despite the economic impact of the coronavirus pandemic. The UK’s net worth was estimated at £10.5trn in 2020, an average of £158,000 per person, with the total lifted by an increase in savings and growth in pensions. Household net worth grew by £900bn, with the 9.1% increase taking the total to nearly £1trn. The rise in household wealth came despite a 9.8% slide for the economy in 2020, the steepest slump since 1709. ONS deputy chief economist Richard Heys said: “Despite the pandemic and recession, the net worth of the UK rose strongly in 2020, led by households. The total value of our households benefited from rising house prices, with stamp duty changes probably a key factor.”

OTHER

8 in 10 businesses trading - ONS

The number of workers on furlough has fallen as lockdown restrictions are eased and more businesses increase activity, Office for National Statistics (ONS) figures show. The proportion of the workforce on furlough dropped from 17% to 13% during April, with the report also showing that 83% of businesses were now trading, a rise of six percentage points since late March. The ONS data shows that the volume of online job adverts was at 103% of its average February 2020 level on April 23. This marks an increase of four percentage points from the previous week and the first time it had exceeded its February 2020 average since March 6 last year. The data also shows an increase in business collapses, with 5,676 voluntary dissolution applications in the week to 23 April, a 7% increase on the previous week’s 5,325 and a 14% rise on the 4,977 recorded in the equivalent week of 2019.

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