BANKING
HSBC posts bumper profit rise
HSBC has reported a 28% rise in pre-tax profit in the third quarter of the year, to $5.9bn (£4.6bn), up 28% on the previous year's $4.6bn. Pre-tax profit was $16.6bn for the first nine of months of the year, up 12% on the same period last year, with a 5% rise in revenue year-to-date was driven by Asia. Chief executive John Flint said: “We are doing what we said we would - delivering growth from areas of strength, and investing in the business while keeping a strong grip on costs.” The bank yesterday set aside $71m to cover so-called "expected credit losses to reflect possible impacts of higher trade tariffs and trade restrictions", in its first concrete acknowledgement that the trade war between China and the US could have an impact on its operations.
Banks draw record number of complaints
The FCA registered a record number of complaints about banks and building societies during the first half of 2018. More than 4.1m complaints were made, a 10% rise compared to the previous six months. The surge was largely attributed to a series of IT failings at Barclays and TSB that left millions of customers unable to access their accounts. Another contributor was the rush to claim back mis-sold PPI before the deadline.
Barclays bPay now available free
Barclays is now giving away its bPay wearable contactless payments device, which the bank had previously been selling for £20. According to figures from the UK Card Association, in April alone there were 416m contactless card transactions worth £3.9bn, while Barclays said in February that 1.1m transactions have taken place using bPay, with £6.6m spent since launch, suggesting that interest in the wearable device has been low.
INTERNATIONAL
Standard Chartered China licence
Standard Chartered’s Chinese subsidiary is the first foreign bank in China to receive a domestic fund custody licence, allowing it to service both foreign and domestic asset managers.
Australia banks prepare for no-deal Brexit contingency
Australian banks are applying for banking licences in EU countries to ensure they can continue to operate across the bloc in the event of a no-deal Brexit.
Julius Baer creates intermediary unit
Julius Baer has formed a new division to serve external asset managers, independent financial advisers and other intermediaries. Executive board member Philipp Rickenbacher has been appointed to lead the new unit, with Nicolas de Skowronski replacing him as head of advisory solutions.
AUTOMOTIVE
Plummeting car sales squeeze consumer credit growth
British consumers have reined in their borrowing, particularly on car finance deals amid falling vehicle sales, according to new figures. A weaker demand for loans and advances was also highlighted. The Bank of England said overall consumer credit growth dropped to 7.7% in September, the lowest since June 2015. Net new consumer borrowing excluding mortgages fell to £800m in September, from £1.2bn in August. The Society of Motor Manufacturers and Traders blamed more rigorous emissions testing rules for creating supply problems, resulting in a backlog of deliveries as car manufacturers suffered delays in getting their cars approved.
China tax-cut lifts Europe’s car industry
Automakers were boosted yesterday by reports that the Chinese government is considering cutting vehicle sales tax to 5% to help encourage demand. Car manufacturers were the strongest performing business sector across European stock markets, up 3%. Combined with some strong results in the finance sector European stock markets enjoyed a rebound after last week’s slump.
AVIATION
Weak outlook dragging on Flybe
Despite increasing its winter schedule for next year by 6%, to 2,835, budget airline Flybe has estimated a £29m year-on-year impact from weaker sterling, fuel and carbon prices, revising its full-year guidance to a pre-tax loss of £12m.
CONSTRUCTION
Crossrail contractor causes concerns over debt
Laing O’Rourke, one of the UK’s largest construction companies, has caused alarm after admitting auditors refused to sign off on its books because an important line of funding had suffered delays. The contractor blamed the City, saying Carillion’s collapse had affected "the approach of banks, insurers, regulators and auditors" and left the sector “starved of oxygen”. Vince Cable described the news as "deeply concerning" and indicative of a "serious crisis in the broader construction industry".
FINANCIAL SERVICES
Hammond leaves annual allowance intact
The Chancellor has left the annual allowance for most pension savers intact at £40,000 in his Budget, while the lifetime allowance will rise in line with inflation, from £1,030,000 currently to £1,055,000 in April 2019. However, with the increase in the personal tax allowance to £12,500 brought forward to April 2019, some people will have to earn more before they receive pension tax relief at the 20% basic rate, depending on the scheme their employer uses, and those who find themselves falling out of the 40% bracket when the threshold rises to £50,000 next April will lose out on the higher top-up.
Toscafund takes Plurimi stake
Tosca Private Investments Fund (TPIF), an arm of Toscafund Asset Management, has taken a hefty minority stake in London-based independent wealth manager Plurimi Wealth, to target private equity opportunities in the European financial services sector. Plurimi has $3bn in assets under management.
Crypto regulation could hit UK fintech
A joint report by the British Business Federation Authority, law firm Baker Botts, venture capital fund Novum Insights and cryptocurrency exchange TodaQ, claims that "inappropriate legislation" could damage the UK's fintech standing and force cryptocurrency exchanges out of the country. Neil Foster, corporate technology partner at Baker Botts, said: “With sophisticated classification we should work out what could be a regulated activity. If you crowbar everything into the Regulated Activities Order you are making everything into an investment bank.”
UK P2P lender looks into selling the loans on its platform
In the wake of legal issues and spiralling numbers of late payments, property lender Lendy has discussed with debt investors the possibility of re-selling its loanbook at a discount on its platform.
Financial firms and their regulator must improve
An editorial in the Independent claims that financial institutions are willing to take hits from regulators, and to their balance sheets from the ensuing fines, rather than invest in properly looking after consumers. A culture change requires more than just tough talk from the Financial Conduct Authority, the paper suggests, adding: "It's not just banks and insurers that need to raise their game".
LEISURE & HOSPITALITY
Duty freeze an ‘early Christmas present’
The Chancellor has announced a freeze on alcohol duty which amounts to a saving of 2p on a pint of beer and 1p on a pint of cider – although strong, low-cost white cider has been excluded from the duty freeze. Brigid Simmonds, chief executive of the British Beer & Pub Association, described the freeze as an “early Christmas present” that will save brewers, pubs and pub-goers £110m. She added that it would “secure upwards of 3,000 jobs that would have been lost had beer duty gone up.” Tax on wine will go up in February, adding 7p to a bottle of still wine and 9p on sparkling. The Wine and Spirits Trade Association said the decision is “grossly unfair, unjustified and counter-productive”.
REAL ESTATE
Global luxury slump echoed in London
The world’s most luxurious houses have fallen to their lowest annual growth levels for almost six years, according to new analysis, climbing just 2.7% in the last 12 months. London’s luxury values dropped 2.9% in the last year.
RETAIL
Budget delivers boost for the high street
Philip Hammond has cut business rates by a third for retailers with a rateable value of £51,000 or less. The Chancellor said 90% of independent shops, pubs, restaurants and cafes will benefit, saving up to £8,000 a year. The Chancellor also unveiled a £675m Future High Streets Fund, which he said will allow councils to rejuvenate high streets by facilitating redevelopment that sees under-used retail and commercial areas turned into residential space. Mr Hammond also revealed a new digital services tax of 2% on UK sales by profitable companies that generate at least £500m a year in global revenues. The tax is forecast to raise over £400m a year from large tech firms such as Amazon when it comes into effect in 2020.
PROFESSIONAL SERVICES
Gordon Dadds agrees Ince merger
Gordon Dadds chief executive Adrian Biles is to lead the UK’s largest listed law firm, Ince Gordon Dadds, after Gordon Dadds agreed a merger with Ince. The firm will have a combined revenue of over £110m, with 100 partners and offices in nine countries. Five UK practices have launched IPOs since 2015, following City firm Gateley.
ECONOMY
Hammond: Austerity ‘finally coming to an end’
The Chancellor has declared that austerity was “finally coming to an end” as he unveiled his last budget before Brexit. Boosted by better-than-expected tax revenues, Philip Hammond announced a £100bn package of public spending over the next five years as part of the largest giveaway Budget since 2010. Key Budget announcements include: Confirmation of an extra £20.5bn a year in funding for the NHS by 2023; a rise in the personal allowance to £12,500 and the higher rate threshold to £50,000 in April 2019; and the abolition of Stamp Duty for all first-time buyers of shared ownership properties valued up to £500,000.
OTHER
Special 50p coin to mark Brexit
A commemorative 50p coin, featuring the phrase "Friendship with all nations", will be issued to mark the UK's departure from the European Union next year. A 50p coin was struck when the UK joined the European Economic Community in 1973 and when the UK held the presidency of the EU in 1998.