LONDON MARKET OPEN: NatWest Joins UK Peers In Posting Positive Results

(Alliance News) - Stock prices in London opened lower on Friday as concerns over rising ...

Alliance News 30 October, 2020 | 8:52AM
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(Alliance News) - Stock prices in London opened lower on Friday as concerns over rising coronavirus cases persist, while NatWest Group rounded off a week of surprisingly good UK bank earnings.

In London, the FTSE 100 index was down 2.79 points, or 0.1%, at 5,578.96. The FTSE 250 was down 39.16 points, or 0.2%, at 17,138.52. The AIM All-Share was 0.3% lower at 946.23.

The Cboe UK 100 was down 0.7% at 550.68. The Cboe 250 was down 0.6% at 14,348.56. The Cboe Small Companies was flat at 9,432.09.

In Paris the CAC 40 was down 1.0%, while the DAX 30 in Frankfurt was down 0.8%.

On the London Stock Exchange, NatWest Group was the best blue-chip performer, up 4.1% after the state-backed lender swung to a profit in the third quarter, while saying credit provisions for the year will be at the lower end of a range previously guided.

For the quarter ended September 30, net interest income was down to GBP1.93 billion from GBP2.01 billion last year, and total income fell to GBP2.42 billion from GBP2.90 billion.

The lender, formerly known as Royal Bank of Scotland Group, swung to an operating profit of GBP355 million in the third quarter following a loss of GBP8 million in the same period last year. Attributable profit was GBP61 million, improved from a GBP315 million loss last year.

NatWest booked a further GBP254 million provision for expected bad loans.

Looking ahead, NatWest said its full-year impairment charge is likely to be at the lower end of the GBP3.5 billion to GBP4.5 billion range following the limited level of defaults across lending portfolios and associated expected credit losses stage migration within the third quarter. It also expects risk-weighted assets to be below the previously guided range of GBP185 billion to GBP195 billion at the end of 2020.

"There were some encouraging signs in results from Barclays and Lloyd earlier this week, and NatWest's update strikes a similar tone. The bank is well capitalised; delivered a profit before tax in the third quarter, comfortably ahead of analysts' expectations; and expects impairment charges to be at the lower end of guidance, all of which marks an improvement on three months ago," said Brewin Dolphin's Donald Brown.

UK peers Barclays and Lloyds were up 0.2% and 0.8% respectively. The FTSE 350 Banks sector index is up 2.5% this week.

Royal Dutch Shell 'A' and 'B' shares were up 0.8% and 0.7% respectively after Barclays raised the oil major to Equal Weight from Underweight. On Thursday, Shell announced a new cash allocation framework which it said will enable it to reduce debt, increase distributions to shareholders, and allow for disciplined growth.

At the other end of the large caps, Glencore was down 1.5% after the miner said production across most of its commodities declined in the year to date, while it cut its guidance for coal production amid extended worker strikes at Cerrejon in Colombia.

So far in 2020, copper production was down 8% to 934,700 tonnes, coal production was down 20% to 83.5 million tonnes, and oil production was down 8% to 3.4 million barrels.

Annual coal output was is expected around 114 million tonnes from previous guidance for 109 million tonnes.

The Japanese Nikkei 225 index closed down 1.5% on Friday. In China, the Shanghai Composite ended down 1.5%, while the Hang Seng index in Hong Kong finished down 2.0%.

The pound was quoted at USD1.2921 early Friday, up from USD1.2902 at the London equities close Thursday.

The euro was quoted at USD1.1682 early Friday, up from USD1.1661 late Thursday in London. Against the yen, the dollar was trading at JPY104.28, down from JPY104.64.

Brent oil was trading at USD38.04 a barrel Friday morning, up from USD37.56 a barrel at the London equities close Thursday. Gold was quoted at USD1,869.30 an ounce, flat from USD1,869.88.

In the economic calendar for Friday, there are eurozone GDP and unemployment readings at 1000 GMT and US personal consumption expenditures at 1230 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Glencore PLC 270.80 GBX -2.06
Barclays PLC 143.06 GBX -1.20
Lloyds Banking Group PLC 34.77 GBX -1.54
Royal Dutch Shell PLC B 1,359.60 GBX -1.25
NatWest Group PLC 155.50 GBX -1.14
Royal Dutch Shell PLC Class A 1,420.00 GBX -1.17

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