NatWest reports profit
NatWest posted a £355m profit before tax for the July to September quarter, with this coming despite analysts expecting losses of around £75m. NatWest chief executive Alison Rose said the results demonstrate the “resilience of our underlying business and the strength of our balance sheet” and pointed to the bank’s “sector-leading capital position, strong levels of liquidity and consistent approach to risk”. The bank put by £254m for expected loan losses, with this less than expected as government support kept businesses afloat and eased pressure on and household finances. Despite this, Ms Rose warned: “Challenging times lie ahead, especially as the current government support schemes come to an end and as new COVID-19 related restrictions are introduced.” Responding to reports that some lenders may start charging for current accounts, Ms Rose said NatWest had “no plans to do so at the moment".
Mortgage holiday extended
The Financial Conduct Authority (FCA) will today offer greater details of an extension to the mortgage holiday scheme, with the initiative set to have expired on Saturday but extended due to the national lockdown announced for England. The FCA has already said that those who have yet to apply for a mortgage holiday can request a pause on repayments of up to six months, while those who have already agreed to defer payments can extend it until they reach the six-month limit. The City watchdog is also considering a payments holiday for people struggling with debts on credit cards and personal loans, saying it is “working quickly with industry to determine whether a similar approach should be adopted for consumer credit products.”
Just 4 in 10 current accounts are free
Research by Moneyfacts shows that more than 60% of leading bank accounts have fees or require customers to pay in hundreds of pounds a month. Analysis of the 48 most popular accounts shows that 29 have either a monthly fee of up to £24 or require customers to pay in as much as £1,750 a month. Rachel Springall, a personal finance expert at Moneyfacts, said: "Free banking is more of a myth than people may realise,” adding: “As with any account with benefits and a monthly fee, it is important that consumers take full advantage of what is on offer and weigh up the overall cost of the account."
Pandemic sees business loans jump
Analysis suggests net borrowing by UK companies is expected to be more than five times higher this year than in 2019. With the coronavirus crisis driving firms to take loans as revenues and cashflow took a hit, banks had issued £43.2bn up until August, far exceeding the £8.8bn borrowed in the whole of last year. The report predicts that most businesses will only start repaying this debt and cut borrowing from 2022. The analysis predicts that banks will have to write off 2.5% of loans to consumers next year - up from 1.3% this year.
Fee and interest concern over bailout loans
The Sunday Times’ Sabah Meddings reports that some lenders are charging struggling firms large arrangement fees and high interest rates for bailout loans that are guaranteed by the Treasury. Looking at the costs associated with the Coronavirus Business Interruption Loan Scheme, she reveals that some providers are charging fees of up to 5% of the value of each loan, which can be £5m per business, and interest rates of up to 15%, which are paid by taxpayers in the first year.
Sainsbury’s could sell bank
New Sainsbury’s CEO Simon Roberts is reportedly considering the sale of the supermarket's banking arm and has asked the company's corporate brokers at UBS to advise on options for Sainsbury's Bank. The bank was established in 1997 and the retailer took full control of the business in 2013, buying out Lloyds Bank's 50% stake for £260m.
Nationwide will not end free banking
The Mail on Sunday reports that Nationwide has ruled out charging customers for everyday banking, having assessed a range of options for current accounts - including adding fees. The paper cites sources who suggest HSBC, Barclays, NatWest and Lloyds are considering charges for current accounts.
Lloyds looks to tackle cybercrime
Lloyds Bank is working on a £500m technology project that includes better protection for customers from hackers, with the bank improving its own defences and boosting the two-step authentication for customers logging in.
Zopa to offer credit card
Peer-to-peer lending platform Zopa is launching a credit card that lets borrowers set aside cash as a buffer for emergency spending and charges 34.9% interest, unless the balance is paid off in full each month. The Times says the card mimics features offered by app-based banks such as Monzo and Revolut, where customers can keep track of their spending and set up separate pots for bills and savings.
KKR's earnings rise
KKR says after-tax distributable earnings rose 6% year-on-year in the third quarter, hitting $410.4m. KKR said the value of its private equity portfolio appreciated by 16% during the quarter, while real estate and infrastructure funds rose 6% and 10% respectively. The firm was boosted by growth in management and transaction fees from its capital markets business. JMP Securities analyst Devin Ryan commented: “The capital markets business has been growing over time as this has been an area KKR has invested a lot in, but it can bounce around a bit from quarter-to-quarter and we expect it to moderate”.
Carlyle appoints top Indian banker Puri as senior adviser
Carlyle Group has appointed Aditya Puri as a senior adviser in Asia. Mr Puri last week retired as CEO of HDFC, India's largest private sector bank.
Sabadell open to mergers
Banco Sabadell CEO Jaime Guardiola says the bank is open to entering into a consolidation process if a potential transaction creates value for shareholders. This follows reports that Sabadell has held informal talks about possible tie-ups, including with BBVA. Meanwhile, CFO Tomas Varela said Sabadell did not rule out selling its British arm TSB, saying: “We won't disclose our thoughts on whether to sell or not TSB. As we always have said, we always consider the best option in terms of value.”
Bank of America details loan deferrals
Bank of America has revealed that $9.8bn of its consumer loan portfolio is in a deferral program due to the coronavirus pandemic. The deferred loans include $9bn in residential mortgage and home equity loans, $298m in credit card loans and $582m of small business and consumer vehicle loans.
Pension pot withdrawals up 6%
HMRC figures show that 347,000 people withdrew from their pension pots in July, August and September - a 6% rise on the same period last year. Despite the increase in withdrawals, the average amount taken out was £6,700 - a 7% drop on the previous year. Jon Greer of Quilter said the rise suggested more people needed additional cash to see them through the crisis, while Steven Cameron of Aegon warned: “Pensions are designed to provide an income throughout retirement and reducing the amount of income withdrawn during a period of down turn could be important for the longevity of the pension pot.”
Trusts fall from favour for tax planning
HMRC statistics show 151,000 trusts submitted a tax return in 2018/19 compared to 154,500 the year before. This marks the fifth consecutive year-on-year decline.
LEISURE AND HOSPITALITY
Deltic up for sale
Deltic Group, the UK’s largest nightclub owner, has put itself up for sale having been driven to the brink of collapse by the COVID-19 pandemic. More than 10 potential buyers, many of them private equity firms, are said to have expressed interest in Deltic.
Rolls-Royce starts boat engine sale
Rolls-Royce is planning the sale of its Bergen Engines division, a unit which makes large engines used to generate electricity to power ships. Sources say a sale is expected early in 2021, with a price tag of up to £100m.
House prices up 5.8% year-on-year
Figures from Nationwide show house prices have risen at their fastest pace in almost six years, jumping 5.8% year-on-year in October. This marks the highest rate of growth since January 2015. Month-on-month, prices were up 0.8%, with the average house price hitting a new record high of £227,826. Nationwide's chief economist, Robert Gardner, says the outlook remains “highly uncertain”, saying much depends on how the coronavirus pandemic and measures to contain it play out. He also suggested the “efficacy of policy measures implemented to limit the damage to the wider economy” will have an impact. Mr Gardner says activity is “likely to slow” in the coming quarters, “perhaps sharply”, adding that the end of the stamp duty holiday in March 2021 will be a factor.
Sainsbury's to launch Deliveroo partnership
Sainsbury’s is to launch a partnership with Deliveroo, which will allow customers to order from more than 1,000 products, which will be delivered in 20 minutes. The trial will initially take place at a convenience store in Hammersmith, before expanding to a further nine branches across the UK in the coming weeks.
EFL clubs owe £77m in taxes
Figures show that clubs in the English Football League account for around £77m in unpaid taxes. Around £59m of the tax debt is owed by clubs in the Championship, with more than £13m due from those in League One and close to £5m owed by from those in League Two.
Bank of England expected to boost bond buying
Economists expect the Bank of England (BoE) to unveil a £100bn bond buying spree as the country goes into its second national lockdown, with the Bank forecast to boost the economy by expanding its quantitative easing programme. The potential increase in bond purchases will take the Bank’s balance sheet of government and corporate debt to a record £845bn. Talk of additional bond buying comes as fears of a double-dip recession intensify, with concern over the pressure a second lockdown will put on the economy. Capital Economics economist Ruth Gregory has warned that a UK-wide lockdown would “cause GDP to shrink again, perhaps significantly in the fourth quarter”. Analysts at HSBC suggest bond-buying operations are “running out of room”, increasing the likelihood that the BoE could turn to negative interest rates.
Business confidence falls
Analysis by Lloyds Bank shows that British business confidence has fallen for the first time in five months, with the increasing rate of coronavirus infections and subsequent restrictions designed to slow the spread of the virus having an impact. The bank’s business barometer, which polled 1,200 businesses, fell by seven points to -18, with the services sector driving the decline, although confidence among manufacturers and retailers improved slightly. Lloyds Bank economist Hann-Ju Ho noted that as well as concerns over the pandemic, businesses are also worried over a possible no-deal Brexit.