UK TOP NEWS SUMMARY: Shell Lifts Dividend And Pledges To Cut Debt

(Alliance News) - The following is a summary of top news stories ...

Alliance News 29 October, 2020 | 11:33AM
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(Alliance News) - The following is a summary of top news stories Thursday.

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COMPANIES

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Royal Dutch Shell announced a new cash allocation framework, which it said will enable the oil company to reduce debt, increase distributions to shareholders and allow for disciplined growth. The Anglo-Dutch firm declared a third-quarter dividend of 16.65 US cents, down 65% from USD0.47 paid out in the third quarter last year. However, it was up 4.0% from the 16.00 cents paid for the second quarter, and Shell confirmed on Thursday it will grow the dividend annually as part of its progressive dividend policy. For the third quarter ended September 30, Shell reported attributable income of USD489 million, down 92% from USD5.88 billion in the third quarter last year. Current cost of supply earnings for the period were USD177 million, down 97% from USD6.08 billion. Revenue for the three months fell 50% to USD44.71 billion from USD86.54 billion a year before. Pretax profit dropped to USD442 million from USD8.37 billion. Total production in the third quarter fell 14% to 3.1 million barrels of oil equivalent per day from 3.6 million barrels a year ago.

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Lloyds Banking Group reported a sharp rise in profit in the third quarter, as the lender did not have any payment protection insurance claims to cover, but noted the "unprecedented" impact of the Covid-19 pandemic. In the three months to September 30, Lloyds' pretax profit surged to GBP1.04 billion from just GBP50 million a year before. Net interest income dropped 16% year on year to GBP2.62 billion from GBP3.13 billion. Net income fell 19% to GBP3.40 billion from GBP4.19 billion. Banking net interest margin worsened to 2.42% from 2.88% a year before. Lloyds operating costs were reduced by 2.6% to GBP1.86 billion from GBP1.91 billion, but the drop in revenue saw its cost-to-income ratio worsen to 56.9% from 47.6%. The lender's impairments in the third quarter totalled GBP301 million, up from GBP371 million a year before, but sharply down from the GBP2.39 billion charge in the second quarter.

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Standard Chartered reported a sharp drop in third quarter profit but believes its ongoing transformation will allow the bank to weather the pandemic in "good shape". In the three months to September 30, the Asia-focused lender recorded pretax profit of USD435 million, down 61% year on year from USD1.11 billion. StanChart booked a USD358 million credit impairment in the third quarter, up from USD280 million the year before, but noted it has fallen from the USD611 million credit charge taken in the second quarter. Operating income dipped 11% to USD3.51 billion from USD3.96 billion, as net interest income declined 16% to USD1.62 billion from USD1.94 billion. The lender's adjusted net interest margin worsened to 1.23% from 1.61% the year before. The bank ended the third quarter with a customer loan book of USD281.38 billion, up from USD269.70 billion the year before. Deposits grew to USD417.52 billion from USD387.86 billion.

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BT Group announced it will withhold its interim dividend after losing a fifth of its profit in the first half, but remains positive going forward, as reflected in the company upping its full-year guidance. The firm posted a pretax profit in the first half to September 30, of GBP1.06 billion, narrowing 20% from GBP1.33 billion a year prior. The company said this was mainly due to a reduced earnings before interest, taxes, depreciation and amortisation. Adjusted Ebitda fell 5.1% to GBP3.72 billion from GBP3.92 billion a year before. Revenue was down 8.3% to GBP10.59 billion from GBP11.47 billion a year before. BT Group said this was primarily due to the impact of Covid-19 with the BT Sport division having suffered particularly from the decline in live sport. BT Group did not declare an interim dividend, compared to the 4.62 pence paid last year. BT raised the lower end of its Ebitda outlook range for the year to GBP7.3 billion, with the revised range now between GBP7.3 billion and GBP7.5 billion.

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WPP said revenue for its third quarter declined year-on-year but showed an improvement on the second quarter. For the three months ended September 20, WPP posted revenue of GBP2.97 billion, down 9.8% from the year prior. On a like-for-like basis, revenue declined 5.5%. This was an improvement on the second quarter during which revenue of GBP2.74 billion was generated, down 19% year-on-year on a reported basis and 18% on a like-for-like basis. By region, revenue in North America fell 13% to GBP1.09 billion, UK revenue was unchanged at GBP426 million and Western Continental Europe revenue was down 4.2% at GBP587 million. Revenue for Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe fell 14% to GBP869 million.

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Smith & Nephew reported a year-on-year decline in revenue for the third quarter of its financial year, but marked a considerable improvement from the 29% decline in the second quarter. For the three months ended September 26, the FTSE 100 medical devices firm posted revenue of USD1.20 billion, down 3.7% from USD1.25 billion the year before. On an underlying basis, revenue fell by 4.2%. For the nine months ended September 26, Smith & Nephew's total revenue was USD3.23 billion, a 13% fall from USD3.73 billion the same period the prior year, reflecting the disruption caused by Covid-19. Looking ahead, the group has continued to withdraw its full-year guidance, on the lack of certainty over the nature and scope of any new restrictions to curb the spread of the virus.

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MARKETS

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London shares were staging a mild rebound following heavy losses incurred on Wednesday on a busy day of company earnings. BT was the best blue-chip performer, up 5.5%. The euro was down against the dollar ahead of the European Central Bank's interest rate decision in the afternoon. US stock market futures were pointed higher with Apple, Amazon, Twitter and Facebook earnings due after the market close in New York.

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FTSE 100: up 0.3% at 5,598.62

FTSE 250: up 0.5% at 17,339.88

AIM ALL-SHARE: up 0.3% at 950.46

GBP: flat at USD1.2990 (USD1.2985)

EUR: down at USD1.1720 (USD1.1756)

GOLD: down at USD1,878.61 per ounce (USD1,883.33)

OIL (Brent): down at USD37.75 a barrel (USD39.12)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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US President Donald Trump and challenger Joe Biden will rally voters just hours apart in the Florida city of Tampa on Thursday, their campaign paths crossing for the first time as the rivals' fight for the White House enters its frenetic final days. Florida is a must-win prize, and polls show the candidates in a dead heat in America's third-largest state, which has sided with the winner in every presidential election since 1964, with one exception. A day prior, Trump was stumping in Arizona, while Biden voted in his home state of Delaware and met with health experts, as he fine-tuned his pandemic response plan, seeking to reassure voters that he would use science to fight the contagion. "I'm not running on a false promise of being able to end this pandemic by flipping a switch," said the 77-year-old former vice president, who has a strong lead in opinion polls. "But what I can promise you is this: We'll start on Day 1 by doing the right thing. We'll let science guide our decisions." Trump, by contrast, is finishing his campaign in an extreme test of endurance, with a final attempt to catch up both in swing states and also states that he won in 2016 but now has to defend.

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The Bank of Japan lowered its economic growth and inflation forecasts for this fiscal year owing to the impact of the coronavirus but left its massive monetary easing policy untouched. It said its forecast for growth was now lower compared with that given in July, "mainly due to a delay in recovery in services demand, but is somewhat higher for fiscal 2021 and more or less unchanged for fiscal 2022". The year-on-year change in prices excluding fresh food "is likely to be negative for the time being", officials said, citing factors including the virus, previous declines in oil prices and a domestic travel subsidy programme. For the year to March 2021, the BoJ expects the economy to shrink 5.5%, against a 4.7% contraction in the July estimate, while prices are seen falling 0.6%, compared with a previously forecast 0.5% decline. For the fiscal year to March 2022, however, it revised up growth and inflation forecasts to 3.6% from 3.3% and 0.4% from 0.3%, respectively. The BoJ kept its negative interest rate of 0.1% on bank deposits, as well as its policy of unlimited purchases of Japanese government bonds, to ensure their 10-year yields remain around zero percent.

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Unemployment in Germany fell more than expected in October, the Federal Employment Agency showed Thursday. The seasonally-adjusted unemployment rate dropped to 6.2% in October from 6.3% in September. The reading beat market forecasts, cited by FXStreet, of 6.3%. The labour market figures come on the back of Germany's latest lockdown announcements. Germany on Wednesday ordered a new round of shutdowns for the cultural and leisure as well as food and drink sectors, in a bid to halt a surge in new coronavirus infections. The tough restrictions to come into force from Monday to the end of the month would limit contact outdoors to people from two households. Chancellor Angela Merkel acknowledged that the measures are "strict and arduous" but she urged a national effort.

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Hurricane Zeta barrelled through the southern US as a Category 2 storm Wednesday, bringing dangerous winds and surging ocean waves as New Orleans residents were left without power. Zeta was "moving rapidly through Mississippi and Alabama with dangerous storm surge, strong gusty winds and heavy rain," according to the National Hurricane Center. The storm had weakened slightly, packing sustained winds of up to 80 miles per hour on Wednesday night.

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