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Daily News Roundup: Wednesday, 1st August 2018

Posted: 1st August 2018

BANKING

Commitment to help 'mortgage prisoners'

In a move organised by trade body UK Finance, lenders are writing to up to 10,000 homeowners currently paying high interest rates, who took out mortgages before new, stricter rules on affordability were introduced in 2014, with a potential offer to move to a better deal. This follows an interim report into the mortgage market published by the Financial Conduct Authority (FCA), which highlighted the plight of "mortgage prisoners". Jackie Bennett, director of mortgages at UK Finance, said: "Lenders have responded to the FCA's challenge and made a voluntary commitment to help these longstanding customers." A total of 59 lenders, representing 93% of the UK's residential mortgage market, have agreed to the new standards. Under the plans, borrowers will have to meet certain criteria, such as having at least £10,000 outstanding on their mortgage, at least two years left on the loan, and be up to date with repayments. Qualifying homeowners will be contacted by their lender before the end of the year.

Code plan to tackle fraud

An extra level of security in the battle against fraud will see shoppers using a debit or credit card to buy online asked to input a special code. The move will see consumers asked to verify their identity, which is likely to involve a code and the last three digits of CVV number on the back of the card. The Mail reports that banks will offer different ways to secure the code, which will be different for each purchase, with some likely to deliver it by text while others may generate the code within their app or via an automated call.

CYBG appoints non-executives

Clydesdale Bank and Yorkshire Bank owner CYBG has announced the appointment of three non-executive directors as part of its takeover of Virgin Money. Following completion of the takeover offer, Geeta Gopalan and Darren Pope will be appointed as independent non-executive directors, while Amy Stirling will become a non-executive director.

Atom Bank’s pricing promotions drive up losses

Atom Bank saw pre-tax losses increase from £42m to £53m in the year to April, although its loan book grew from £99m to £1.2bn and it increased deposits to £1.4bn.

Bank closures hit 80 a month

A study by consumer group Which? shows that 2,868 high street bank branches have closed in the past three years at a rate of almost 80 a month.

INTERNATIONAL

StanChart reports surge in profits

Standard Chartered has posted a 34% rise in pre-tax profit for the six months to June and issued an interim dividend. However, shares in the Asia-focused bank fell 3.6% on the back of the increasing cost of digitising the lender. Pre-tax profit rose to $2.35bn (£1.79bn) in the first half of the year, from $1.75bn in the same period last year. Meanwhile, its return on equity rose to 6.7%. StanChart's retail banking income climbed 9% on strong performances in its Greater China and North Asia as well as ASEAN and South Asia divisions, mainly in Hong Kong and Singapore. Operating expenses also rose 7% to $5.1bn as the group prioritised investment to improve the business. The lender issued an interim dividend of six cents a share on the back of improved financial performance and strong capital.

Profits jump at Credit Suisse

Credit Suisse said profits increased during the second quarter as it nears the end of its restructuring programme. Net income attributable to shareholders doubled compared to the second quarter of 2017, reaching SFr647m (£498m). Meanwhile, the bank’s adjusted measure of profits before tax rose 88% year-on-year to SFr1.3bn, driven by what the firm described as an “excellent performance” in its wealth management business as well as its Swiss universal bank. Revenues rose by 7% year-on-year during the quarter to SFr5.6bn. However, return on equity was only 6.9% below the first quarter of the year. Costs fell by 2% year-on-year, down to SFr4.5bn, in spite of a 24% increase in expenses in the investment banking and capital markets arm.

AUTOMOTIVE

Trade war hits Jaguar’s China sales

Jaguar Land Rover (JLR) has reported a loss for the first time in three years after sales slowed in China. The company blamed the setback on "multiple challenges" including a "temporary issue" from a change in Chinese import duties. China plans to cut import tariffs for cars and parts for most vehicles to 15% from 25% from 1 July, leading to many consumers delayed purchases, JLR said.

Equity Partners buys Rental

Equity Partners has bought corporate vehicle hire company Rental in a £142m deal.

AVIATION

Lufthansa quashes worries of profit downgrade

Lufthansa has reported €982m in adjusted earnings before interest and taxes in the second quarter, down 3.4% from a year ago but ahead of estimates at €972m.

CONSTRUCTION

Taylor Wimpey sees profit climb

Taylor Wimpey’s pre-tax profit surged 46.8% to £301m in the six months to July 1, while revenues dropped 0.4% to £1,7bn and adjusted operating profit was down 1.8%. The housebuilder completed 6,497 homes in the period, slightly down on last year, but has a strong UK order book of 9,241 homes, up from 8,741 in the previous year, with a value of £2.18bn.

FINANCIAL SERVICES

Provident shares surge despite profits slump

Provident Financial saw its shares rise as much as 15% in early trading on Tuesday, to their highest point since March, even though it reported a first-half profit of £34.6m, 53% down on an annual basis. Its home credit business reported an adjusted loss of £23.2m, although they were up 6.1% in its Vanquis Bank credit card arm, to £97.2m, and were also marginally up at vehicle finance unit Moneybarn, at £10.6m. Chief executive Malcolm Le May said the company is “well placed to make good progress” on its targets, continuing “to perform well and in line with our expectations”.

UK finance exports underscore need for good Brexit deal

Britain's exports of financial services to the EU were at a record high last year, underscoring the need for London’s financial services to preserve access to the bloc after Brexit, industry officials have said. "The UK and the EU have a shared interest in maintaining as much of this cross-border flow of financial services as possible," said Stephen Jones, chief executive of UK Finance.

GAM suspends top portfolio manager after internal probe

Shares in GAM fell by a fifth yesterday after the Swiss asset manager suspended one of its top portfolio managers after an internal probe identified flaws with risk management and record keeping procedures.

LEISURE AND HOSPITALITY

Heatwave melts profits at Thomas Cook

This summer's heatwave has hit profits at Thomas Cook, with more people staying at home rather than booking last-minute holidays. While the tour operator has reported an 11% rise in summer bookings, these have slowed down in recent weeks to leave its figures in line with last year's. As a result, the company expects its annual earnings to be at the lower end of market expectations.

MEDIA AND ENTERTAINMENT

Print ad revenue rises for first time in seven years

Print ad revenue for the UK's national news brands rose in the first quarter for the first time in seven years. Total ad industry spend rose 5.9% year on year to top £5.7bn, meaning the sector is now 1.3 percentage points ahead of schedule for the full year. The Advertising Association and WARC's Expenditure Report said growth forecasts were also boosted by Radio spend increasing 12.5%, its largest growth in four years, while internet spend also rose 10.8%.

Exponent acquires Dennis Publishing

Exponent has acquired Dennis Publishing, the owner of current affairs magazine The Week. A bidding war erupted for the company earlier this month when the private equity group’s interest in Dennis, which owns 30 brands, was unveiled. Exponent did not disclose what sum was exchanged for the company, but it is understood the figure comes in at around £150m. Rival bidders included Daily Mail & General Trust and financial publication MoneyWeek.

REAL ESTATE

121k first-timers benefit from duty cut

Official figures show that, since its introduction in November 2017, 121,500 first-time buyers have taken advantage of the Government's cut in stamp duty. The Government said first-time buyers had saved a total of £284m in stamp duty.

RETAIL

Dixons Carphone says data breach affected 10m customers

Dixons Carphone has disclosed that a data breach last year involved 10m customers, up from an original estimate of 1.2m. The hackers accessed personal information, names, addresses and email addresses, but not bank details; although they had access to records of 5.9m payment cards, the overwhelming majority were protected by chip and pin security, and there is no evidence that fraud had resulted from the breach. The retailer said it had put additional security measures in place since it discovered the hack, increased its investment in cyber security and put in place extra controls.

ECONOMY

IHT receipts break £5bn mark for the first time

Rising property prices and a spike in winter deaths helped push up IHT receipts to £5.2bn in 2017/18 - up 8% year on year - according to HMRC figures. IHT receipts have risen 10% on average every year since 2009/10 while the nil-rate band - the threshold above which individuals pay inheritance tax - has remained frozen at £325,000. The latest figures show the number of estates required to pay IHT is also rising, up from 3.9% in 2014/15 to 4.2% in 2015/16. Nearly 25,000 estates were hit with an average IHT bill mounting to nearly £200,000 during 2017/18.

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