20th Feb 2020 08:13
(Alliance News) - Lloyds Banking Group said Thursday that 2019 profit was hit by a massive payment protection insurance charge, though it still raised its annual dividend.
Net interest income for 2019 amounted to GBP10.18 billion, down from GBP13.40 billion a year ago. Total income, though, nearly doubled to GBP42.36 billion from GBP22.09 billion on net trading income of GBP18.29 billion versus an expense of GBP3.88 billion the year before.
Net of insurance claims, which soared to GBP24.00 billion from just GBP3.47 billion, total income was GBP18.36 billion versus GBP18.63 billion.
Pretax profit was down 26% to GBP4.39 billion from GBP5.96 billion a year ago, hurt by payment protection insurance provisions of GBP2.45 billion in the year, versus just GBP750 million in 2019.
"The PPI provision charge of GBP2,450 million was largely due to the significant increase in PPI information requests leading up to the deadline for submission of claims on 29 August 2019, and also reflects costs relating to complaints received from the Official Receiver as well as administration costs," the lender explained.
Lloyds raised its dividend for the year by 5% to 3.37 pence, and said it will start paying quarterly dividends in 2020, with the first one being paid in June.
"In 2019 the group has continued to make significant strategic progress while delivering solid financial results in a challenging external market. The group's statutory performance was impacted by a substantial PPI charge related to the deadline for claims submission. Underlying performance was resilient, reflecting the health of our customer franchise and the strength of the business model," said Chief Executive Antonio Horta-Osorio.
Lloyds shares were up 2.2% in early trade Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.2% at 7,469.75
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Hang Seng: down 0.2% at 27,612.61
Nikkei 225: closed up 0.3% at 23,479.15
DJIA: closed up 115.84 points, 0.4%, at 29,348.03
S&P 500: closed up 0.5% at 3,386.15
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GBP: down at USD1.2902 (USD1.2947)
EUR: flat at USD1.0790 (USD1.0793)
Gold: up at USD1,606.80 per ounce (USD1,605.82)
Oil (Brent): up at USD59.26 a barrel (USD58.88)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
0930 GMT UK retail sales
1100 GMT UK CBI industrial trends survey
1100 GMT Ireland consumer price index
1600 CET EU FCCI Flash Consumer Confidence Indicator
0830 EST US initial jobless claims
1000 EST US leading indicators
1030 EST US EIA weekly natural gas storage report
1100 EST US EIA weekly petroleum status report
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China announced it will cut interest rates in a bid to boost the economy, as it battles the economic fallout of the new coronavirus outbreak. The reduction in the loan prime rate – one of the preferential rates commercial banks impose on their best customers and which serves as a reference for other lending rates - is the latest measure to help companies struggling through the epidemic. The one-year LPR was lowered to 4.05% from 4.15%, the People's Bank of China said in a statement. The five-year LPR – on which many lenders base their mortgage rates - was also lowered to 4.75% from 4.8%.
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China reported a big drop in new coronavirus cases on Thursday, fuelling hopes the epidemic is nearing its peak, but Japan faced a growing crisis as two passengers from a quarantined cruise ship died. The death toll in China hit 2,118 as 114 more people died, but health officials reported the lowest number of new cases there in nearly a month, including in the hardest-hit province, Hubei. More than 74,000 people have been infected in China and hundreds more in some 25 countries, with Iran reporting two deaths, the first fatalities in the Middle East. In Japan, a man and a woman in their 80s who had been aboard the Diamond Princess have died, local media reported, citing a government source. A World Health Organization official noted the progress in China but warned it had not reached a turning point just yet.
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Ireland's parliament resumes on Thursday for the first time since this month's general election, with no new government in place and the three biggest parties locked in coalition talks. Lawmakers in the Dail, the country's lower chamber, are due to sit from 1200 GMT, with the 160 seats reflecting a new political balance after the February 8 vote. A speaker will be elected before parties make nominations for taoiseach and debate the candidates. Talks have not yet produced a workable scheme for government, meaning all nominees are expected to fall short of the votes required and the Dail will likely adjourn. Fianna Fail is the largest party in the legislature with 38 seats, followed by Sinn Fein on 37 and Fine Gael led by Prime Minister Leo Varadkar on 35.
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German producer price growth picked up in January, beating market expectations, according to data from Destatis. Producer prices were up 0.2% in January on a year before, reversing a 0.2% fall reported for December. Month-on-month, prices were up 0.8%, far stronger than the 0.1% rise recorded a month prior. FXStreet consensus had prices falling 0.4% year-on-year and rising 0.2% month-on-month.
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US Federal Reserve policymakers indicated that the labour market remains "strong" and economic activity has been rising at a "moderate" rate since the committee's last meeting in December, minutes of their January meeting showed. On January 29, the Fed's policy-setting Federal Open Market Committee left the benchmark interest rate in the target range of 1.5% to 1.75%, as expected. The FOMC explained that the current stance of monetary policy is "appropriate" to support the sustained expansion of economic activity and strong labour market conditions. The Fed highlighted that job gains have been solid, on average, in recent months, and the
US unemployment rate has remained low.
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BROKER RATING CHANGES
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HSBC CUTS NATIONAL GRID TO 'HOLD' ('BUY') - TARGET 1075 (970) PENCE
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CITIGROUP RAISES TRAVIS PERKINS TO 'BUY' ('NEUTRAL') - TARGET 1900 (1700) PENCE
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COMPANIES - FTSE 100
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Anglo American reported an earnings improvement in 2019, but gave a mixed production report and warned that continued US and China trade tensions and the coronavirus outbreak present risks going forward. Anglo American posted a 10% revenue rise to USD29.87 billion, with underlying earnings before interest, tax, depreciation and amortisation up 9.2% to USD10.01 billion. It was a notch below consensus which pointed to 2019 revenue of USD30.42 billion. "Average market prices for the group's basket of commodities and products increased by 1%, contributing USD400 million of improvement to underlying Ebitda," Anglo American added. Profit attributable to equity shareholders was a hair lower at USD3.55 billion. Anglo American upped its dividend by 9.0% to 1.09 cents from 1.00 cents per share.
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Smith & Nephew reported an improved rate of underlying revenue growth for 2019. Revenue for 2019 amounted to USD5.14 billion, up 4.8% on the year before. Underlying revenue growth was 4.4%, a significant improvement on the 2% recorded for 2019. Pretax profit was slightly lower at USD743 million versus USD781 million the year before, hampered by increases in selling, general & administrative expenses as well as research & development costs. The medical technology business recorded a trading profit margin of 22.8%. For 2020, Smith & Nephew expects underlying revenue growth around 3.5% to 4.5%, which equates to a range of 4.0% to 5.0% on a reported basis. The trading profit margin for 2020 should be at or "slightly above" that achieved in 2019. Smith & Nephew said it is monitoring the coronavirus outbreak "closely", with its 2020 guidance assuming the situation "normalises" early in the second quarter. China represented 7% of group revenue in 2019.
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COMPANIES - FTSE 250
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Recruitment firm Hays reported a sharp fall in interim profit amid "tough market conditions". Net fees for the six months to December 31 fell 3% to GBP553.1 million, down 2% on a like-for-like basis, while pretax profit slumped 22% to GBP95.6 million. Hays said it saw a slowdown in its largest region, Germany, while strikes in France, Australian bushfires and the UK election also hit its results. Growth in China also slowed "materially". "Overall, we have seen a marginally slower New Year 'return to work' than prior years. We expect near-term macro conditions to remain difficult and are mindful of continuing uncertainties, including the coronavirus. While our focus will be on cost management, we also see growth opportunities, for example in the IT sector globally and in the USA, and we will continue to invest in them," said Chief Executive Alistair Cox. Hays said it is "too early" to quantify the financial impact of the outbreak of coronavirus on its second half.
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COMPANIES - INTERNATIONAL
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UBS Group said it has hired ING Group Chief Executive Ralph Hamers as its own CEO. Hamers will join the Swiss wealth manager UBS at the start of November, replacing long-serving outgoing boss Sergio Ermotti. Hamers joined ING in 1991 and became its CEO in 2013. Hamers will start at UBS as a member of the group's management team at the beginning of September, "to ensure a seamless transition", Ermotti said. ING said Hamers, will step down from his position and leave the bank as of June 30. "The supervisory board has full confidence in ING's strong management team and the continuation of the execution of our strategy," ING said. "Further announcements on the succession process will be made if and when appropriate."
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Thai conglomerate Central Retail launched the country's biggest ever initial public offering Thursday, giving it a market cap of around USD8.1 billion in a punt on a sputtering economy now hampered by the new coronavirus. Most Thais visit a shop each day owned by Central, a family-run empire which has hundreds of malls, electronics, grocery and 24-hour convenience stores across the country. Shares in Central Retail were offered at THB42 on Thursday morning, but made only a modest gain in early trading, with the company eyeing fundraising of just over THB71 billion, about USD2.26 billion. Chief executive Yol Phokasub said Central Retail was "very proud" to become "the country's largest IPO ever".
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Australian flagship carrier Qantas warned it was facing a severe financial impact due to the coronavirus outbreak in China, which has led to decreasing demand for travel across Asia. Qantas said the pandemic could cost the airline up to AUD150 million, about USD99 million, for the financial year, largely due to cutting down flights. The airline has reduced flights temporarily across Asia by 16% until at least the end of May. Routes from Australia to mainland China, Hong Kong and Singapore are affected. Qantas said it was cutting flights, was also sending staff on leave, freezing recruitment, and bringing forward planned maintenance of several aircraft to cope with the immediate virus fallout.
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Thursday's Shareholder Meetings
Tiziana Life Sciences
IntegraFin Holdings
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By Tom Waite; [email protected]
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