Lloyds reports £602m first half pre-tax loss
Lloyds Banking Group has set aside a further £2.4bn to cover potential toxic loans, saying total provisions for the year could rise to between £4.5bn and £5.5bn. The bank yesterday posted a pre-tax loss of £602m for the first half of the year, from a £2.9bn profit last year. It reported a £676m loss for Q2, down from a £1.3bn profit in Q2 2019. Lloyds said the increased impairment charge “was primarily due to future potential losses arising from the revised economic outlook for the UK economy as a result of the coronavirus outbreak." Chief executive Antonia Horta-Osario commented: "The outlook has clearly become more challenging since our first-quarter results, with the economic impact of lockdown much larger than expected at that time." He also noted that plans were being made to return staff to offices, commenting: "We would like people to return to the office when possible, subject to that being done in a safe way and also according to government advice."
Monzo's losses hit £114m
Monzo’s losses have risen to £113.8m from £47.1m, with coronavirus disruption hitting the bank. The bank’s revenues rose to £67.2m from £19.7m in the 12-months to February, while the amount spent by customers rose to £10.9bn, from £3.6bn the previous year. It added 2.3m new customers over the year, taking the total to 4.4m, and expects to add at least 1m more this year. Monzo’s annual report reveals that its ability to continue as a going concern “is subject to material uncertainties" in the wake of the COVID-19 pandemic, while CEO TS Anil warned that navigating the pandemic is “painful and difficult” – but added that Monzo has laid the “foundations” for a sustainable business.
Standard Chartered reports decline in profits
Standard Chartered has reported a 33% fall in pre-tax profit for the first half to $1.63bn (£1.26bn), from $2.41bn in the year-earlier period. The bank lifted its provisions for bad debts to £1.2bn, up from £733m previously. Chief executive Bill Winters remarked: “We are feeling the acute impact of the COVID-19 pandemic across our markets and in our business,” while the firm stated that income “is likely to be lower both half-on-half and year-on-year in the second half of 2020.”
Co-op losses climb
The Co-operative Bank saw losses hit £44.6m in the six months to June 30, from £38.5m a year ago, with a £11.2m impairment charge hitting the lender. Despite the increase in losses, CEO Andrew Bester said that with 94% of the bank’s lending secured against property and having a relatively low loan-to-value rating, its “credit risk remains low”. Meanwhile, the bank is applying for a £25m grant from Banking Competition Remedies to expand its business sector.
Think-tank in warning over bank stability
The Institute of Economic Affairs has warned that British banks are in a weaker position today than they were in the run up to the financial crisis, saying the leading lenders are in a “fragile state”. Warning that Bank of England supervision of the financial sector has “turned out to be a disaster, again”, the report describes claims that banks are strong enough to survive a severe financial crisis as “hogwash”. The think-tank’s Kevin Dowd and Dean Buckner say claims that banks are so strongly capitalised after the crisis a decade ago that they could “still emerge in good shape” from an even more challenging event “do not hold water”. They note that banks’ average market capital ratios have fallen from 11.2% before the financial crisis to 2.3% now.
Credit Suisse in 24% profit rise
Credit Suisse has reported a 24% rise in net profit, with net income of 1.16bn Swiss francs surpassing analyst expectations of 838.9m francs for the second quarter. Chief executive Thomas Gottstein stated: “In a continued volatile market environment, we delivered a strong performance. Despite persistent challenges caused by COVID-19, our employees again showed outstanding commitment and dedication.”
Pendragon announces 1,800 job losses
Car dealership Pendragon has announced cost-cutting plans under which 1,800 jobs are risk, with the UK firm predicting savings of £35m annually as a result. Chief executive Bill Berman remarked: “These have been difficult decisions for the board to make and our priority now is to manage the transition to our new operating model. The COVID-19 pandemic is a uniquely challenging situation and we want to protect as many jobs as we can sustainably and the proposed redundancies are, of course, extremely regrettable.”
New Renault chief pledges turnround as carmaker suffers record loss
New Renault chief executive Luca de Meo has revealed plans for a comprehensive turnaround plan in the wake of the firm’s record €7.3bn first half loss.
Airbus scales down large jet production
Airbus is scaling back production of large jets after reporting a €1.9bn first-half loss, with group revenues down by 39% to €18.9bn in the six months to the end of June. Chief executive Guillaume Faury commented: “The impact of the COVID-19 pandemic on our financials is now very visible. We have calibrated the business to face the new market environment.” The firm had €17.5bn of cash on hand half-way through the year, after securing €15bn of new funding at the start of the coronavirus pandemic.
Schroders becomes biggest asset manager
Schroders has overtaken Standard Life Aberdeen to become Britain’s biggest asset manager. The firm’s assets under management rose by 5% to a record £525.8bn at the end of June, surpassing the £490bn that Standard Life Aberdeen had on April 30. Schroders saw net inflows of £38.1bn in H1, compared with £1.2bn of net withdrawals a year earlier. Pre-tax profits fell 12% to £280.1m as net income declined 3% to just over £1bn. CEO Peter Harrison said: “We have delivered a robust performance in the first half of 2020, despite the extraordinary period of market volatility and continuing social and economic uncertainty.”
More payouts for LCF victims
The Financial Services Compensation Scheme has paid out another £8.4m investors in failed bond scheme London Capital and Finance (LCF). In the last month it has paid back a further 563 investors whose money had been trapped in the failed investment, meaning a total of 844 investors have now been handed a combined £13.5m.
Coronavirus likely to affect Canadian insurers’ results
Analysts predict double-digit earnings decreases for the four major Canadian life insurers, Manulife Financial, Sun Life Financial, Great-West Lifeco and IA Financial, with declines in underlying earnings per share of between 10% and 14% from the year earlier period estimated.
AstraZeneca bucks industry trend with rise in first-half profits
AstraZeneca has reported a 14% increase in H1 revenue at constant currencies to $12.63bn, with core earnings per share increasing 26% to $2.01 as sales were boosted by new medicines.
LEISURE AND HOSPITALITY
Fuller's finances hit by pandemic
Fuller, Smith and Turner has reported that trading took a £10m hit this year as a result of the coronavirus crisis, with revenue in the year ended March 28 up 3% to £333m and profit before tax at £174.5m. The pub chain’s chief executive Simon Emeny said a decision to sell its brewery business “ensured we were in a strong position, with substantial liquidity headroom, when the coronavirus pandemic struck.”
MEDIA AND ENTERTAINMENT
Huawei now largest smartphone maker
Stronger Chinese consumer spending has seen Huawei overtake Samsung as the world's largest smartphone maker, with 55.8m devices shipped from April to June, a 5% decline from the year earlier period. Ben Stanton, a Canalys analyst, remarked: “If it wasn’t for COVID-19, it wouldn’t have happened. Huawei has taken full advantage of the Chinese economic recovery to reignite its smartphone business.”
Robert Walters profit falls 80%
Recruitment group Robert Walters saw pre-tax profit fall 79% in the first half of the year, with operations “significantly impacted” by the coronavirus pandemic. Profit before tax slipped to £4.3m in the six months to June 30, down from £20.9m in H1 2019. Revenue was down 22% to £496.4m from £634.5m in the same period in 2019.
Home-working shift set to prompt office exodus
Landlords and property agents believe a mass exodus from offices may be on the cards, with the coronavirus lockdown driving a remote working revolution. A survey by the Royal Institution of Chartered Surveyors (Rics) has seen nine in ten agents and landlords say they expect companies to scale back on office space in the next two years, with rents set to decline as firms opt for smaller, cheaper sites. The poll shows that more than half of respondents expect more businesses to base themselves in suburban offices rather than city centres. Rics said office rents are likely to fall by between 4% to 7% in the next 12 months, while the dip in demand could see retail rents decline by up to 14%.
Footfall down despite stores reopening
Despite non-essential stores being allowed to reopen in recent weeks, Office for National Statistics (ONS) research shows that footfall on UK high streets was below 60% of the level seen a year ago in the seven days to July 26. Retail parks were not as hard hit, although visitor numbers are still more than a fifth lower than in 2019. An ONS poll of more than 24,000 businesses also found that 43% of staff in hospitality and leisure firms remain on furlough, with 18% of staff in the sector having returned to work over the past two weeks
Economic revival under way
Guardian analysis suggests that Britain’s economy has begun to repair the damage from the coronavirus lockdown. Its monthly tracker of economic news shows that while the hardest-hit sectors of the economy remain under severe pressure, the easing of lockdown is enabling business activity and retail sales to return to close to pre-pandemic levels. However, Howard Davies, the chairman of NatWest Group, has warned that the recovery could stutter as government support is gradually removed. He said: “We cannot assume the spending recovery we have seen so far will persist into the autumn. There is a risk that the prospect of job losses will dampen spending.” The analysis by the Guardian focused on eight economic indicators, with its findings showing that GDP returned to growth in May, while retail sales climbed by 13.9% in June. However, the report also cites an Office for Budget Responsibility estimate that the unemployment rate, currently at 3.9%, may double before year end, while Resolution Foundation research suggests the average household has seen the biggest hit to its finances since the 1970s.