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Daily News Roundup: Thursday, 26th April 2018

Posted: 26th April 2018

BANKING

Lloyds profits jump 23%

Lloyds Banking Group says it has made a “strong start” to 2018, with profits for the first three months of the year jumping by nearly a quarter. It made pre-tax profits of £1.6bn, 23% higher than the same time last year. The bank, however, booked in another £90m of payment protection insurance (PPI) costs, as the Financial Conduct Authority's August 2019 PPI cut-off looms. Overall bad loans rose to £258m during the first three months of 2018, compared with £127m at the same time last year. Meanwhile, SMEs have called on Lloyds to end its strategy of branch closures. Mike Cherry of the Federation of Small Businesses said: “The public was there for the bank during the financial crash. It's high time that support was returned. When a town loses a branch it hurts vulnerable consumers, footfall and small business revenues.”

TSB continues to have IT issues

TSB has admitted that its internet bank is still operating at only 50% capacity, although its mobile app is now at 90% capacity. The bank has blamed an upgrade to its banking systems over the weekend for the disruption. CEO Paul Pester said: “Our internet banking and mobile app isn’t functioning as well as it should be”. He added that no one would be left out of pocket as a result of the problems. Meanwhile, Nicky Morgan MP, chair of the Treasury Committee, has urged the bank to explain how it intended to compensate the customers who suffered a breach of potentially highly-sensitive personal data. Harry De Quetteville writes in the Telegraph that the problems at TSB show that consumers will never fully accept being slaves to technology, and Ben Marlow adds in the same paper that the fiasco could be fatal to TSB’s future prospects. Meanwhile, FT Money analyses the causes of the problem, detailing how small businesses are affected and compares the incident to previous IT issues at major banks.

Seven main UK banks targeted by co-ordinated cyber attack

The National Crime Agency has revealed that seven of the UK’s biggest banks - Santander, Tesco Bank, Lloyds, HSBC, CYBG, Barclays and RBS - suffered from a cyber-attack last year.

Barclays stake lifted ahead of Staley meeting

Ahead of a meeting with Barclays’ chief executive Jes Staley, Edward Bramson's activist investment fund Sherborne has increased its interest in the lender. The bank is expected to report a first-quarter loss today.

Fall in Metro shares despite record profits

In spite of its posting record quarterly pre-tax profits of £6.4m, shares in Metro Bank fell by over 7% yesterday. Chief executive Craig Donaldson said that a capital hit was the result of the £500m purchase of a mortgage book from private equity firm Cerberus.

Revolut raises $250m with 100m customers goal

Banking app Revolut has completed one of the biggest funding rounds for a fintech start-up, raising $250m (£179m) at a valuation of $1.7bn, in a DST Global-led investment round.

PRIVATE EQUITY

Private equity funds active in market reach all-time high

Private equity is hitting all-time highs, according to the Boston Consulting Group, which says, as of January 2018, 2,296 private equity funds were active in the market.

INTERNATIONAL

Profits leap spurs revamp at Credit Suisse

After reporting a 57% increase in pre-tax profits for the first quarter, Credit Suisse has signalled the start of a "year of acceleration", with its Swiss and Asia-Pacific divisions showing strong performances.

BBVA issues corporate loan using blockchain

BBVA has become the first global bank to issue a corporate loan using blockchain. BBVA said using the technology cut the negotiation time for the loan from “days to hours”.

Handelsbanken warned over lax financial crime controls

The FCA has criticised Swedish bank Handelsbanken for “serious weaknesses” in combating financial crime because of serious failings by senior management.

AUTOMOTIVE

UK car output slumps

The Society of Motor Manufacturing and Traders has revealed that the number of cars made in the UK during March fell by 13.3% as both domestic and overseas demand for vehicles declined. The SMMT said that cars made for the UK fell by 17.7%, while exports dropped by 11.9%. Some carmakers have announced plans to cut jobs and reduce production amid uncertainty over Brexit, as well as higher taxes on diesel vehicles.

AVIATION

AMP takes stake in Luton Airport to boost retail offering

Australian investor AMP Capital, which already owns Leeds Bradford Airport, has taken a 49% stake in Luton Airport from French private-equity group Ardian for £350m. Luton is currently undergoing renovations to increase its capacity and double its retail space.

CONSTRUCTION

Persimmon posts bumper first quarter revenues

Persimmon sold 9,048 new homes this year, up from 8,928 over the same period last year, while average selling prices rose from £229,500 in 2017 to £236,500 in the first quarter of this year. Forward sales revenue for the UK housebuilder was up 8% to £2.76bn and Persimmon said it had opened 65 of the 100 new sites it had planned for the first half of the year and was building on all sites that have planning consent. At its AGM on Wednesday, almost half of voting shareholders refused to approve a pay report which had awarded boss Jeff Fairburn a £110m bonus.

Countrywide profits plummet 10%

Housebuilder Countrywide saw income drop 10% from £162m in the first three months of 2017 to £145m in the same period this year. In a statement, the company said the drop in income “reflects the significantly lower entry pipeline in UK and London sales coming into 2018. Despite the downturn in profits, the company insisted it was “encouraged” by the early progress it had seen on both sales and lettings, with both markers improving compared to the last quarter of 2017.

FINANCIAL SERVICES

UK insurers more risk averse

UK insurers have boosted their appetite for risk, according to a survey by Goldman Sachs, with those planning to increase investment risk 17% above the number cutting back. Neil Moge, head of European insurance portfolio management, noted that UK insurance clients were becoming keener on dollar investments to cover liabilities in pounds, over the dearth of sterling-denominated assets in the market.

Dealmakers to split £100m from Nex sale

Bankers, lawyers and advisers are to split £100m-plus in fees from the sale of trading firm Nex to CME.

Strengthening of Big Tech regulation demanded by finance chiefs

Several City figures have said Facebook and other technology groups ought to be subject to a similar system of oversight as that which applies to the financial sector.

HEALTHCARE

Takeda strikes deal to buy Shire for £46bn

Takeda Pharmaceutical has confirmed a preliminary agreement to buy Shire for around £46bn, valuing the London-listed Irish drugmaker at about £49 per share.

LEISURE AND HOSPITALITY

Whitbread to spin off Costa chain

Whitbread is to split off Costa, the UK's biggest coffee chain, as a separate firm. Following pressure from activist investors Elliott Advisors and Sachem Head, who together control around 10% of shares, the demerger will be "pursued as fast as practical and appropriate" to optimise value for shareholders.

MEDIA AND ENTERTAINMENT

Facebook sales soar ‘despite challenges’

Facebook has reported that its revenues rose 49% to $11.9bn in the first three months of the year, compared to $8bn previously. CEO Mark Zuckerberg said: “Despite facing important challenges, our community and business are off to a strong start in 2018.” He added that the firm is “taking a broader review of our responsibility”. Facebook said that its monthly active users in the first quarter rose to 2.2bn, up 13% from a year earlier.

Comcast’s higher offer entices Sky

Following Comcast formally making a £22bn all-cash offer, Sky withdrew its recommendation for 21st Century Fox's £18.5bn takeover bid. Sky is also terminating a co-operation agreement entered into with Fox in 2016.

RETAIL

Creditors owed almost £150m after Maplins collapse

Maplin is understood to owe creditors close to £150m have collapsed owing creditors nearly £150m, with private equity owner Rutland Partners due most of this. It is believed unlikely that all of the electronic goods chain’s creditors will see a substantial return.

ECONOMY

Productivity levels at weakest since 1700s

Staff at the Bank of England have said that Britain’s productivity growth has fallen to levels not seen since the 18th century. Ten-year average productivity growth has stood at -0.23% since 2007, contrasting with -0.1% in the 1700s, 0.7% in the 1800s and 1.4% in the 1900s.

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