Barclays bad debts charge may rise due to coronavirus
Barclays could be forced to take a £4.5bn charge to cover bad debts in 2020 as a result of the coronavirus pandemic. The bank made a provision of £2.1bn to cover bad debts in Q1, driven by potential losses linked to COVID-19. The lender forecasts a near-8% fall in UK economic growth for the full year. Barclays has seen a 38% slip in pre-tax profits, which hit £913m in Q1. Its core UK bank saw profits slip 66% to £200m, while its Barclaycard consumer lending and credit cards unit saw losses in the latest quarter of £291m and Barclays International, the corporate and investment banking division, saw profits fall 28% to £822m. Chief executive Jes Staley commented: “Despite all the challenges we face as a consequence of COVID-19, I am confident Barclays will emerge from this pandemic well placed to continue to serve our customers and clients, the communities and economies in which we operate, and our shareholders.”
Hampden & Co sees income climb
Private bank Hampden & Co saw income climb 36% to £8.7m in 2019, with client deposits up 53% to £409.4m and client lending increasing by 54% to £203.8m. CEO Graeme Hartop said: "2019 represented the bank's fourth year of trading and it was another strong year, both in terms of financial and operating performance, and delivery to clients.” Chairman Alex Hammond-Chambers added that “notwithstanding the current pandemic and related economic uncertainty ahead” the bank is “in a strong position to continue its upward trajectory."
StanChart profits fall
Standard Chartered has seen first quarter pre-tax profits fall 29% to $1.2bn, with the bank increasing its expected loan losses to $956m due to coronavirus. Andy Halford, the bank’s chief financial officer, said: “The next 12 to 18 months are going to be tough, but then there'll still be the same number of people on the planet consuming stuff and producing stuff.”
RBS provides £1.4bn to small businesses
Figures show that more than 190,000 Royal Bank of Scotland customers have opted to take a three-month mortgage repayment holiday amid the coronavirus pandemic. It is also shown that RBS has granted 7,400 coronavirus business interruption loans, worth £1.4bn.
Deutsche buckles up for surge in soured loans
Deutsche Bank, which has more than tripled reserves for bad loans amid the COVID-19 outbreak, has posted a net loss of €43m during Q1, compared with a profit of €97m last year.
BoJ to reward banks for lending to small businesses
Bank of Japan (BoJ) governor Haruhiko Kuroda says it will create a new scheme to reward financial institutions for lending to small businesses suffering in the wake of the coronavirus pandemic. He said the BoJ is preparing a scheme where it would finance loans that commercial banks extend to small businesses and pay 0.1% interest to commercial banks that boost such lending.
UK car production plunges in March
The Society of Motor Manufacturers and Traders has said that just 78,767 vehicles left factory gates in March, some 47,428 fewer than the same period in the previous year. This marks a decline of 37.6%. Combined, Britain's car industry lost 140 days' of production during the month, with analysis suggesting that if plants stay closed until the middle of next month, it will cost UK carmakers £8.2bn.
Musk urges end to lockdown
Tesla founder Elon Musk has urged an end to lockdown restrictions, calling for ‘freedom’ in the US on Twitter. This comes ahead of the electric car manufacturer’s first quarter results, and after rival carmaker Ford posted a $2bn (£1.6bn) loss for the first quarter, citing the economic impact of the coronavirus pandemic. With $6.3bn in cash at the end of the third quarter, Tesla has said it has enough liquidity to survive the crisis.
Airbus reports Q1 profits down 49%
Airbus has reported that profits halved in the first quarter, falling 49% to €281m (£245.7m), while revenue contracted 15% to €10.6bn. This comes as the firm puts 3,200 UK staff onto the Government’s furlough scheme. The firm is reducing spending by €700m to €1.9bn.
Building sites reopen as economy restarts
Construction industry trade body Build UK has announced that 70% of its members’ sites in England and Wales are open this week, with less than 50% of residential work operational compared to nearly 80% of infrastructure projects. Meanwhile, Persimmon, Redrow, Taylor Wimpey and Mace have all returned to work with social distancing and other safety measures in place.
FCA warned about Blackmore Bond
The Independent reports that the Financial Conduct Authority (FCA) sat on information about an operation in which savers were persuaded to transfer money into risky investments. It is claimed that white-collar crime expert Paul Carlier handed the FCA allegations over Blackmore Bond as far back as March 2017, while other investors made complaints in March 2019. Emails to the FCA seen by the Independent show that Mr Carlier escalated his allegations directly to Andrew Bailey, then head of the FCA and now governor of the Bank of England. Blackmore Bond, which issued high-risk mini-bonds” between 2016 and 2019 to raise money to develop properties, collapsed into administration last week.
AstraZeneca reports increase in sales
AstraZeneca has reported an increase in sales and profits during the first quarter, with sales up 16% to $6.4bn (£5.2bn). Chief executive Pascal Soriot said of the firm’s investment in cancer treatments: “Our focus ensured another quarter of strong growth across every therapy area and region,” while sales of oncology drugs were up to $2.5bn and new medicines increased 49% to nearly $3bn.
LEISURE AND HOSPITALITY
Wetherspoons plans to reopen June
Wetherspoons is planning to reopen its pubs "in or around" June, the firm has announced. Wetherspoons chairman Tim Martin and chief executive John Hutson will be taking 50% pay cuts, while other board members will also slash their salaries. The pub chain said it is also considering taking out a Government-backed loan of up to £50m.
Blackstone makes new investment in coronavirus-hit casinos
Blackstone has taken a 10% stake in Melbourne-based Crown Resorts for A$551m ($360m), as it moves to take advantage of cheap valuations in the wake of the coronavirus pandemic.
MEDIA AND ENTERTAINMENT
Odeon in Universal row
Adam Aron, the boss of cinema chain AMC, which owns Odeon Cinemas, has said no Universal Pictures films will be screened at its theatres after NBC Universal boss Jeff Shell said his firm may release movies in theatres and online when cinemas reopen following the end of the coronavirus crisis. Mr Aron said the move “presumes that Universal in fact can have its cake and eat it too.” Universal responded by reiterating its plans for future releases to take place across multiple platforms.
Spotify announces 31% year on year growth in monthly users
Streaming service Spotify has reported an increase in first quarter user numbers, with a 31% year on year growth in monthly active users to 286m. Total revenue at the firm was up 22% over the period to €1.8bn (£1.6bn).
BBC announces likely income drop of £125m
The BBC has predicted that income will fall by £125m in 2020, with the coronavirus pandemic resulting in fewer people paying the licence fee and revenue from its commercial arm falling significantly. Outgoing director general Tony Hall said negotiations over pay rises would be deferred until later this year, as recruitment freezes are put in place and major capital projects are reviewed.
Flexibility needed in commercial rental market
Commercial property rents are expected to drop steeply as demand for space drops, the Royal Institution of Chartered Surveyors (Rics) has said. Market sentiment has deteriorated across all sectors amid the COVID-19 pandemic, according to the quarterly survey by Rics. Shop rents for non-prime stores are expected to fall by 12% over the next year, while secondary office rents could fall by 4%. Rents for warehouses may not change. The body is urging the Government to re-examine commercial property use classes to aid flexibility going forward, as being able to easily turn restaurants into shops or shops into offices, for example, will help landlords whose rents are collapsing.
Boxing chiefs outline plans to resume fights
The British Boxing Board of Control is considering hosting fights in TV studios and hotels. General secretary Robert Smith said: "We are well aware we have to get boxing going by July, and we'll find a way to do it behind closed doors if needs be - but under Government guidelines.”
M&A nears 35 year low
Research from Refinitiv shows that UK M&A activity has fallen to its lowest monthly level in almost 35 years due to the COVID-19 pandemic. Deal value totalled £409.1m in April – its lowest since September 1985. April’s figures mark a 99% decline on March and a 92% fall compared to April 2019. Transaction volume was down 84% month-on-month and 87% year-on-year. Deals involving a European target totalled £4.9bn during April, with this a dip of 91% on March and the lowest monthly total since August 1992. Globally, M&A is down 72% on March, with the £55.7bn of deals announced during April the lowest monthly total since September 2002. Cornelia Andersson, head of M&A and capital raising at Refinitiv, said: “It’s been an April bereft of showers for the rainmakers as coronavirus continues to take its toll on global markets – with the UK being hit severely.”
Pandemic ‘no ordinary economic crisis’
With measures designed to slow the spread of COVID-19, Mark Fry says the economic toll of business shutdowns is becoming clearer. He cites Gertjan Vlieghe, a member of the Bank of England’s interest-rate setting committee, who last week warned that economic contraction looks “faster and deeper than anything we have seen in the past century, or possibly several centuries”. Mr Fry warns that social distancing and business closures have delivered “a far more severe collapse in business activity than the market had anticipated”, adding that it is likely the economy is already in a recession. He says that the coronavirus outbreak is “no ordinary economic crisis” and far more complex than a “simple supply shock caused by an unavoidable temporary contraction”.