Lloyds beats profit forecasts on back of rising interest rates
A financial update from Lloyds Banking Group reveals pre-tax profits for the three months to the end of June were in line with the same period last year at just over £2bn, exceeding analyst estimates of £1.6bn. The bank took a £200m charge between April and June as it put aside more money to protect the bank from potential defaults. This is down on the £374m it set aside during the same period last year. Lloyds’ net interest margin rose to 2.87% in the second quarter compared with 2.5% last year and the prospect of more rate rises prompted the bank to improve its profit guidance for the year. But CEO Charlie Nunn said mortgage lending – which grew £2.2bn over the quarter – was likely to slow over the coming months.
BBB pumps £30m into early-stage venture fund
The British Business Bank has invested £30m into a new early-stage venture fund as it looks to fill a funding gap for small firms amid a major investment slowdown this year. The state-backed development bank said it had provided the cornerstone investment for a new £50m pre-seed fund, launched by Concept Ventures, targeting early-stage pre-seed firms. Managing Director of Venture Solutions at the British Business Bank Ken Cooper said the bank's Enterprise Capital Funds were helping lower the “barriers to entry for emerging fund managers” and those “targeting under-served areas of the market”. Concept Ventures is currently courting other investors to the fund and said it was oversubscribed.
HSBC to face investors wanting the bank to split up
HSBC CEO Noel Quinn and chairman Mark Tucker are to hold an informal meeting with investors in Hong Kong next Tuesday following the publication of HSBC’s half-year results. Analysts expect the pair to come under renewed pressure to split the bank into two geographical businesses, one focusing on Western countries and the other on China or Asia Pacific territories. HSBC is also fighting off calls from Chinese insurance giant Ping An to split off the bank’s more profitable Asian operations.
Deutsche Bank posts rise in profits, but warns of challenging next half
Deutsche Bank posted a better-than-expected 51% rise in second-quarter profit on Wednesday on the back of improved investment banking revenues, which were up 11% overall. However, revenue from the investment bank's origination and advisory business declined 63% in the quarter. Revenue for fixed-income and currency trading rose 32%, beating the 31% average across its five main US investment banking rivals. Deutsche confirmed its full-year revenue target of €26bn-€27bn, up from €25.4bn in 2021, but warned that the second half of the year would be “more challenging” than the first.
South Korea probes $3.1bn crypto-linked forex transactions
South Korean regulators are probing $3.1bn worth of “abnormal” forex transactions at two of the country’s biggest commercial banks for possible money laundering linked to crypto investments.
European bank regulator ‘concerned’ about finding staff to oversee crypto
José Manuel Campa, chair of the European Banking Authority, says the regulator's ability to hire specialised staff is a “major concern” with regards to overseeing digital asset markets.
Equity release rises a third to £2.6bn in 2022
Cash tapped from homes via equity release has risen by almost a third compared to this time last year. The value of new equity released from homes rose by 31.7% to £2.56bn in the first half of this year compared to the same period in 2021, according to data from equity release adviser, Key Later Life Finance. The average amount that older homeowners released from their homes was £100,468, more than £5,000 higher than in 2021. Sales of equity release plans were also up by 24.5% this year compared to last year. Key's data revealed a rise in the number of customers using property wealth for discretionary spending, but debt repayment was the major use of the money released.
Provident boosted after FCA drops probe
Provident Financial reported a pre-tax profit of £37.3m in the six months to the end of June from a £44.2m loss a year earlier. Shares slid 8.4%, however, after it posted higher than expected costs of £156.9m. Bradford-based Provident also disclosed that the Financial Conduct Authority has dropped an enforcement investigation into practices at its now-defunct doorstep lending business. Provident, had previously set aside £4.1m to account for the inquiry.
Saudi royal takes 3% stake in Phoenix Group
Alwaleed bin Talal Al Saud has taken a £190m or 3% stake in Phoenix Group, the UK’s largest long-term savings and retirement business. The investment from the Saudi royal comes days after his Kingdom Holding took a 4% stake in insurer and asset manager M&G worth roughly $267m.
M&G veteran to step down as chief investment officer
Jack Daniels, who oversees M&G’s £324bn asset management division, is leaving the company in June next year after more than two decades at the group.
LEISURE & HOSPITALITY
Sales remain steady at Marston's
Marston's has revealed that total like-for-like sales for the 42 weeks to 23 July were down just 2%, despite prices rising by 7 to 8% because of cost pressures. The pub group said it has not recorded significant changes in sales, although its electricity bill is expected to rise by nearly £2m. Marston’s reported that the hot weather had left sales overall 1% lower in the 16 weeks to July 23 compared with the same period in 2019.
MEDIA & ENTERTAINMENT
Facebook parent Meta reports first decline in revenue
Meta, the parent company of Facebook, has reported an annual decline in quarterly revenue for the first time in the company's history. Revenues fell to $28.8bn in the three months ending in June, down from $29bn the previous year. The second quarter saw user numbers rise slightly, up 4% compared to the previous year, but profits slumped as net income fell from $10.3bn to $6.7bn. Meta blamed “weak advertising demand” and said it would cut back on hiring and slash spending plans. The social media company’s share price was down about 3% in after-hours trading. Separately, the US competition regulator is moving to block Meta from acquiring Within, a popular virtual reality fitness start-up, arguing that Meta was attempting to buy market position instead of earning it on the merits.
Unite Group profits buoyed by overseas students
The UK’s biggest listed student landlord company, Unite Group, has reported pre-tax profits of £334m for the first six months of the year, up from £130m in the same period last year. The company was buoyed by students returning to campuses following the lifting of coronavirus restrictions and an influx of students from China and India.
Supply disruption and Brexit stalls growth in exports
A survey by the British Chambers of Commerce has found the proportion of UK companies reporting a rise in their exports has remained flat at 29% for the fifth consecutive quarter. A quarter of exporters recorded a fall in sales in the second quarter while 46% saw no change compared with the start of the year. Manufacturers trading overseas are the worst affected, with only 39% expecting a rise in profits in the next year compared with 48% of service sector exporters. Companies trading within the UK saw more positive results, with 40% having a rise in sales in the period. William Bain, head of trade policy at the BCC, said supply chain disruption, soaring prices, and the impact of Brexit red tape were having a chilling effect on exports. “Recent ONS figures have shown an increase in exports to the EU, driven in part by shortages caused by the war in Ukraine,” he said. “But our data shows there are serious underlying issues - which are hitting smaller manufacturing exporters the hardest.”
Fed raises rates by 0.75 points for second month in a row
The Federal Reserve has raised interest rates by 0.75 percentage points for a second month in a row and vowed to lift borrowing costs even further despite rising concern that the US is already in a recession. The move lifts the target range on the Fed Funds Rate to 2.25% to 2.5% with markets expecting it to climb above 3% by the end of year. Fed chairman Jerome Powell said the rate-setters will likely decide to “slow the pace of increases” but did not rule out “another unusually large” jump in rates at its next meeting if needed.