BANKING
Standard Chartered reports biggest profit since 2014
Standard Chartered has reported its largest quarterly profit in nearly a decade on the back of rising interest rates. The bank saw an underlying profit before tax of £1.4bn in the first three months of the year, a 21% year-on-year increase. This marks the quarterly profit since early 2014. Its net interest income – the difference between what it earns from loans and pays for savings – was up by nearly a fifth to £1.6bn in Q1. Standard Chartered said that while the first quarter of 2023 “was characterised by a period of significant uncertainty for the banking industry,” than bank had “successfully navigated this period delivering a strong operating performance whilst maintaining its robust liquidity and capital metrics.” Bill Winters, Standard Chartered’s group chief executive, said: “We remain optimistic about our continued strong performance and now expect 2023 income to grow around 10%, the top end of our range.”
Rochford set to chair Atom
Former Virgin Money finance chief Lee Rochford has reportedly been picked as the next chairman of Atom Bank. This comes as Atom continues to work with advisers to raise up to £150m in capital in what is expected to be its final share sale before a long-awaited stock market listing.
Ping An to tighten screws on HSBC in push for structural reform
Chinese insurer Ping An, which has an 8% stake in HSBC, is set to support resolutions urging the bank to commit to a regular review of its structure.
INTERNATIONAL
First Republic shares plunge
Bosses at First Republic have reportedly approached regulators with a plan to raise fresh capital after a slump in its share price reignited concerns about the health of the US banking system. The bank’s share price dropped as much as 36% in early trading on Wednesday, having fallen by more than half the previous day. First Republic revealed earlier this week that it had suffered $100bn of customer withdrawals in Q1, sparking concerns about its financial health.
Deutsche Bank overhauls board
Deutsche Bank has announced the departure of Christiana Riley, who oversaw its US operations. Stefan Simon, who currently oversees legal and compliance, will take on the Americas portfolio as Ms Riley leaves for Santander. Deutsche has also announced that Claudio de Sanctis, who has overseen wealth management, will join the board to oversee the retail bank. CFO James von Moltke, who was last year promoted to co-deputy CEO, will take on oversight of asset management, which includes the DWS fund management business.
FINANCIAL SERVICES
Crypto promotions to be treated ‘on par with high-risk investments’
Sarah Pritchard, the Financial Conduct Authority’s (FCA) executive director of markets, says that as crypto has become more widespread, there is a need for “an open debate about risk, mitigation and the limits of regulation.” She added: “While we have been relentless about warning that consumers need to be prepared to lose all their money if buying … we have always been open to innovation.” Ms Pritchard said that while the FCA’s current remit over crypto is limited to making sure that crypto firms that operate here comply with anti-money laundering and counter-terrorism legislation … Only when the government legislates will we have more powers to regulate crypto.” Noting that new rules will be published after legislation delivering regulation of financial promotions is put forward, she said firms “should start preparing for this now: we expect crypto promotions to be treated on a par with other high-risk investments and failure to comply will be a criminal offence.”
UK venture capital investment slips to pre-pandemic levels
Venture capital investment in the UK fell back to pre-pandemic levels in Q1, with investors deterred by a slump in start-up valuations and volatile markets. Research shows that £2.9bn was invested into UK firms in the opening three months of the year, the lowest amount raised in the opening quarter of a year since 2020. This compares to the £8.2bn raised in the first quarter of 2021 and the £12.3bn raised in Q1 2022.
Jupiter boss quits after three years
Jupiter Fund Management’s non-executive chair Nichola Pease is stepping down with immediate effect after three years in the role, citing personal reasons. David Cruickshank, a non-executive director and chairman of the audit and risk committee, has stepped up to succeed Ms Pease. Karl Sternberg will temporarily head the audit and risk committee, while senior independent director Roger Yates joins the committee. The shake-up in board responsibilities comes a day after Jupiter disclosed that investors pulled a net £900m from the business in Q1.
AIG investors urged to oppose chief’s $50m pay award
Proxy advisers Glass Lewis and ISS have urged AIG shareholders to vote against chief executive Peter Zaffino’s $50m pay award, warning that it is excessive and not sufficiently tied to performance.
HEALTHCARE
End of the road for Covid turnover, GSK says
GSK has signalled about a sharp decrease in its Covid drug sales with the subsidence of the pandemic. The London-based business posted a 15% drop in operating profits to £2.1bn and an 8% fall in turnover in the first three months of 2023 to just under £7bn. However, excluding Covid-19 solutions, turnover increased by 10%, led by sales of its shingles vaccine Shingrix, meningitis vaccines and its treatments for HIV.
MEDIA & ENTERTAINMENT
CMA blocks Microsoft’s takeover of Activision Blizzard
Microsoft's $68.7bn deal to buy video game developer Activision Blizzard has been blocked in the UK by the Competition and Markets Authority (CMA). The competition watchdog said it was concerned the deal would mean reduced innovation and less choice for gamers. Martin Coleman, who chaired an independent panel that investigated the proposal for the CMA, said that while Microsoft had submitted plans to address the CMA's concerns, they were not effective and "would have replaced competition with ineffective regulation." An Activision spokesperson said the CMA’s report “contradicts the ambitions of the UK to become an attractive country to build technology businesses," adding that the firm will “work aggressively with Microsoft to reverse this on appeal.” Brad Smith, vice chairman and president of Microsoft, said the CMA's decision “rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK.”
Universal Music CEO criticised over $100m pay package
Universal Music chief executive Lucian Grainge is under pressure over his $100m pay deal, with two top-25 shareholders saying it was too generous. Shareholder advisory services ISS and Glass Lewis have told investors they should reject the pay package. Glass Lewis said it has “severe reservations” about the pay package, adding that Universal “has failed to implement a remuneration strategy that adequately aligns executive pay with performance.” ISS has described bonuses at the record label as “excessive.”
REAL ESTATE
Persimmon: First-time buyers struggling to afford new homes
Persimmon has warned that sales of new homes to first-time buyers are struggling as higher interest rates make mortgages less affordable. The housebuilder said people looking to get on the housing ladder were facing “stretched affordability” and less choice on home loans. It warned that rising mortgage rates have led to higher loan-to-value ratios for first-time buyers, “particularly in regions with higher house prices.” Separate analysis by Rightmove has found that asking prices for the types of property popular with first-time buyers had reached record levels, even as higher mortgage rates have made these homes less affordable.
RETAIL
Food price inflation slows
Food inflation eased in April, with grocery prices 17.3% higher than a year ago compared to the 17.5% year-on-year increase recorded in March. Data shows that supermarket own label sales were up 13.5% compared to a year ago, with sales of the cheapest value lines up by 46%. Sue Davies, head of food policy at consumer group Which?, said: “These figures highlight the ongoing struggle people all around the UK are facing when buying food at the moment.”
ECONOMY
City economist: Rate hikes would hit Chancellor’s tax cut options
City economist Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, says the Bank of England could squeeze Chancellor Jeremy Hunt’s room to cut taxes if it keeps hiking interest rates. He said that Bank officials would increase Britain’s debt interest bill by around £8bn if they lift official borrowing costs to 5%, in line with market expectations. Mr Tombs said that if the Office for Budget Responsibility (OBR) were to “recast the numbers today… [it] would increase its forecast for debt interest payments” in the current fiscal year. The OBR last month said it thought the Chancellor and Prime Minister Rishi Sunak would oversee a £94bn debt interest bill this year. Mr Tombs also said the OBR’s GDP growth expectations are “too upbeat.” While the OBR thinks the economy will shrink 0.2% this year and then rebound to 1.8% growth in 2024, Mr Tombs thinks GDP will be about 1.5% lower than the OBR expects in five years’ time.
OTHER
Workers deliver zero productivity growth
Office for National Statistics (ONS) data shows that output per hours worked in the three months to December 2022 was no different compared to the same period in 2021, meaning there was no improvement in the amount of goods and services workers produce per hour. Construction staff notched the biggest gains, adding 0.7 percentage points to the total, while City workers in the financial services sector contributed to a 0.3 percentage point contraction to the overall productivity figures. Productivity growth is gauged by measuring changes in gross value added and hours worked in the UK economy. The ONS found that the former improved by 0.5% over the last year while the latter increased by 0.6%.