Late surge in PPI charges hurts Lloyds
Lloyds Banking Group has reported a 7% fall in first half pre-tax profits to £2.9bn after a surge in last minute PPI claims, well below the £3.4bn expected. The lender set aside £550m to deal with a jump in compensation claims which have now cost the group a total of £20bn. As a result of the PPI charge, and other one-off items, Lloyds cut its full-year forecast for return on tangible equity to around 12%, from a previous estimate of 14% to 15%. Lloyds reported net income for the period of £8.8bn, which was down 2% on the previous year but in line with analyst forecasts.
Digital bank Atom starts to make money on loans
Atom Bank has started making money on its loans after a “painful” year in the highly competitive mortgage market. CEO Mark Mullen said the group was now generating positive net interest income.
Virgin brings back 15-year fixed rate home loan
Virgin Money has revealed a new 15-year fixed rate mortgage. Borrowers with a 35% deposit can secure a 2.55% rate until 2034.
Private equity group Carlyle to abandon partnership status
The Carlyle Group is to quit its partnership status and strip staff of special voting rights in bid to improve its share price. The move will mean the private equity firm will pay corporate tax on all its performance fee income. Carlyle will have a single class of shares with each having one vote. Separately, Carlyle reported second-quarter net income of $154.1m, or $1.23 a share, versus $69.4m, or 56 cents a share, a year earlier.
Credit Suisse’s second quarter profit soars
Shares in Credit Suisse settled 2.4% higher on Wednesday after the Swiss bank reported second-quarter net profit up 45% to 937m Swiss francs ($946.3m) from 647m francs a year earlier. CEO Tidjane Thiam commented: “These results, delivered in a challenging environment, indicate that our bank has emerged from three years of restructuring with a strong franchise and an efficient platform, allowing us to support our clients and generate growing returns for our shareholders.” The FT’s Lex says the better-than-expected results at both BNP and Credit Suisse show they are adapting to tough conditions.
UBS plans negative interest rate for rich clients
Swiss bank UBS is set to charge 0.75% a year on individual cash balances above SFr2m. Although several EU banks are passing on the cost of negative official rates to corporate depositors, few large players have done so with individual clients.
Sberbank profit rises on lending and lower provisions
Russia’s largest lender beat forecasts to grow net profit 16% year-on-year in the second quarter. Sberbank beat analyst consensus by more than 8% to rise to Rbs250bn ($3.94bn).
US Fed cuts loan rate
The US Federal Reserve lowered interest rates by 25 basis points yesterday, the first cut since 2008. The decision takes the rate to a range of 2%-2.25%; but Wall St was unimpressed, with the Dow falling by more than 1% in early afternoon trading.
Aston Martin suffers £78m first half loss
Aston Martin has revealed a first-half loss of £78.8m, reversing a £20.8m profit in the same period last year. CEO Andy Palmer blamed the poor performance on a “worsening trading environment”. A profit warning last week cut the company’s value in half and shares fell a further 16% on Wednesday to hit a new low of 478p. The company’s market value has fallen by more than £3bn since its IPO when the shares were listed at £19.
British Airways pilot strikes can go ahead
The Court of Appeal has rejected an attempt by British Airways to block pilots from striking over a pay dispute. Pilots voted to strike after rejecting a pay increase of 11.5% over three years, prompting British Airways to take the case to the High Court. Ryanair pilots are in the process of deciding whether to join, but BA pilots will join Heathrow and Gatwick airport staff in striking this summer.
Ryanair prepares for 900 job cuts
Ryanair is planning to cut 900 jobs, with CEO Michael O'Leary warning that the budget airline's expansion plans would be hampered following the grounding of the Boeing 737 Max.
Airbus profits pick up
Airbus unveiled strong Q2 profits after revenues at Europe's largest aircraft maker climbed by more than a fifth. Operating profits rose 72% to €1.98bn. CEO Guillaume Faury also called for European governments to prepare for a hard Brexit as he said it was "obvious" that a "no deal" was likely.
Higher costs eat into Taylor Wimpey profits
Housebuilder Taylor Wimpey has posted a 9.4% fall in profits for the first half of the year, to £299.8m from £331m in 2018, due to higher costs. Though revenue rose slightly, from £1.72bn to £1.73bn, its build cost per unit increased to £152.500 from £143.700 in the first half of 2019. “There continues to be pressure on labour and materials, reflecting wider industry trends,” the company said in its half-year results announcement.
Inflows fall at SJP
Wealth manager St. James’s Place is nearing £110bn in assets under management. Results for the six months ended 30 June show assets reached £109.3bn, up from £96.6bn from a year previously. Net inflows for the period were down, however, coming in at £4.4bn compared with £5.2bn in 2018. Operating profits, as measured on an EEV basis, still exceeded £465m, but were lower than the £489.6m in 2018.
No-deal Brexit: how prepared are the EU and UK?
Financial services is one of the few areas where regulators have cooperated on risk, the FT says, due to the prospect of mass disruption after a no-deal Brexit.
LEISURE & HOSPITALITY
Gambling Commission fines GVC over safeguarding failures
Ladbrokes Coral owner GVC has been fined £5.9m by the Gambling Commission, after it found the bookmaker failed to put in place measures to prevent customers coming to harm - and stop money laundering - between 2014 and 2017. GVC has been ordered to tighten up on such concerns, while investigations into the actions of personal management licence holders continues.
BAE Systems’ earnings jump after streamlining operations
BAE Systems said on Wednesday that operational improvements in its first half drove a 9% rise in core earnings to £999m. BAE Systems said improvements in its maritime and combat vehicle operations helped drive a rise in first-half earnings, however, uncertainty persists over the company's £5bn Typhoon sale to Saudi Arabia.
MEDIA & ENTERTAINMENT
Spotify growing below expectations
Spotify’s growth underwhelmed the market, sending its share price down slightly, despite turning in a 30% annual rise in premium subscribers - to 108m. Overall, total revenue rose 31% year-on-year to €1.7bn (£1.6bn).
DWF boosted by Brexit and expansion
Law firm DWF has posted a 15% rise in revenue to £274.4m in the 12 months to April, driven by aggressive international expansion and a boost from “Brexit uncertainty”, which has increased the number of “contract disputes, insurance claims and fraud”.
Bubble of retail property refinancing demand predicted
Intu Properties is looking to sell interests in its Spanish shopping centres as part of plans to reduce its debt. Shares fell 30% after Intu reported widening losses, scrapped its dividend and warned that rent from shops would fall this year and next.
House prices in ‘Brexit limbo'
UK house price growth fell to 0.3% annually in July, remaining below 1% for the eighth consecutive month, according to Nationwide’s latest data, leaving the average UK house price at £217,663.
Chancellor turbo-charges no-deal planning with £2.1bn boost
Sajid Javid is set to release an extra £2.1bn from the Treasury to dramatically accelerate the Government’s preparations for a no-deal Brexit. Mr Javid said it was “vital” to spend the money on planning to be sure that the UK can leave the EU on the 31st October, with or without a deal. An immediate cash boost of £1.1bn will be directed at critical areas like border operations, medicines and transport, and a further £1bn made available for use by local authorities and devolved governments in the months to come.
Carney issues warning to companies on climate change
Bank of England Governor Mark Carney has warned that companies that fail to prepare for climate change "will go bankrupt without question". Mr Carney also said the UK's central bank has been asked by the Government to "stress test" the economy for its preparedness for climate change.
Cryptocurrencies 'have no intrinsic value', FCA warns
The Financial Conduct Authority (FCA) has warned investors in cryptocurrencies like Bitcoin to “ensure they understand and can bear the risks involved with assets that have no intrinsic value”. The City regulator stressed that the majority of cryptocurrency investing is unregulated and would not be covered by the Financial Services Compensation Scheme, which pays out if certain types of investment collapse.