UK TOP NEWS SUMMARY: NatWest Swings To Profit But Warns Of Challenges

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

Alliance News 30 October, 2020 | 11:24AM
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(Alliance News) - The following is a summary of top news stories Friday.

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COMPANIES

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NatWest rounded off a week of surprisingly good UK bank earnings, swinging 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. Banking net interest margin worsened to 1.65% from 1.97% the year before. NatWest's cost-to-income ratio improved to 74.5% from 92.9% a year before, as operating expenses dropped to GBP1.81 billion from GBP2.70 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, which is up from GBP213 million a year before but down sharply from GBP2.06 billion in the previous quarter.

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Swiss-based miner Glencore delivered a "solid" third-quarter operating performance, following short-term Covid-19 related shutdowns in the second quarter, and it maintained most of its guidance for the full year. Year-to-date copper production was down 8% to 934,700 tonnes from 1.0 million tonnes a year prior. Cobalt production was down 37% to 21,600 tonnes in the year to September 30 from 34,400 tonnes a year before. Zinc production was up 6% year-on-year to 860,100 tonnes in the year to date from 809,200 tonnes. Lead production was down 12% to 194,300 tonnes from 219,800 tonnes a year prior. Nickel production was down 9% to 81,800 tonnes from 89,400 tonnes a year before. Coal production was fell 20% to 83.5 million tonnes from 104.0 million tonnes a year prior. Oil production was down 8% year-on-year to 3.4 million barrels in the year to date from 3.6 million barrels. Full-year production guidance was maintained for all resources except for coal, which was decreased to approximately 109 million tonnes from previously forecast 114 million tonnes.

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International Consolidated Airlines Group said its earnings for the nine months of 2020 were severely hurt by the outbreak of Covid-19 and warned demand for air travel is unlikely to fully recover before 2023. For the nine months to September 30, revenue fell 66% to EUR6.57 billion from EUR19.29 billion last year. IAG swung to an adjusted pretax loss of EUR3.18 billion in the nine-month period from a EUR1.81 billion profit in the same period last year. The company swung to an operating loss of EUR1.30 billion from an operating profit of EUR1.42 billion. IAG, which owns British Airways, earlier in October had said it would cut fourth-quarter capacity to no more than 30% compared to 2019 due to the ongoing uncertain environment. As a result, IAG no longer expects to reach breakeven in terms of net cash flows from operating activities during the final quarter. For the first nine months of 2020, passenger numbers fell 70% to 26,977 and available seat kilometres were down 64% at 91.4 million.

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AstraZeneca announced an agreement to sell commercial rights to prescription medicines Atacand and Atacand Plus in 70 countries to German pharmaceutical firm Cheplapharm Arzneimittel for USD400 million. Atacand is a prescription medicine approved for the treatment of heart failure and hypertension, while Atacand Plus has been approved for just hypertension. AstraZeneca will continue to manufacture and supply both medicines and also commercialise the medicine during a three-year transition period. Cheplapharm will pay AstraZeneca USD250 million on the deal's completion, and the remainder in the first half of 2021. Astra said it will recognise the consideration in its accounts for the fourth quarter of 2020 under 'other operating income', but said the sale doesn't affect its annual financial guidance.

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MARKETS

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London shares were lower amid fears over rising coronavirus cases and uncertainty surrounding next week's US presidential election. The euro was up against the dollar after positive economy growth figures from the continent. US stock market futures were pointed lower after broadly upbeat earnings from country's tech giants late Thursday failed to impress investors.

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FTSE 100: down 0.4% at 5.559.62

FTSE 250: down 0.2% at 17,137.57

AIM ALL-SHARE: down 0.2% at 947.74

GBP: up at USD1.2970 (USD1.2902)

EUR: firm at USD1.1675 (USD1.1661)

GOLD: up at USD1,876.25 per ounce (USD1,869.88)

OIL (Brent): up at USD38.08 a barrel (USD37.56)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Annual growth in UK house prices reached a five-year high in October, mortgage lender Nationwide said. Annual house price growth was 5.8% in October, the fastest pace since January 2015 and accelerating from 5.0% in September, according to the Nationwide house price index. The average price of a house in the UK is now GBP227,826, up from GBP226,129 in September, without seasonal adjustments. The average price was GBP215,368 in October 2019. The average price has climbed steadily since a post-lockdown low of GBP216,403 in June. Prices rose 0.8% month-on-month in October after seasonal adjustments, following a 0.9% rise in September.

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The eurozone economy grew in the third quarter of 2020 but remained in deflation for the third consecutive month, the latest figures from Eurostat showed. On a quarterly basis, the eurozone economy grew by 12.7% in the three months to September, recovering from a record slump of 11.8% in the second quarter. The reading beat market forecasts, cited by FXStreet, for growth of 9.4%. Annually, eurozone gross domestic product shrank by 4.3% in the third quarter, easing from a record decline of 14.8% in the second quarter. However, the figure beat expectations for a 7.0% drop in activity. Data from Eurostat also showed consumer prices in the euro area are expected to drop 0.3% on an annual basis in October, an unchanged pace of deflation from September.

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The German economy grew in the third quarter of 2020 as the country enjoyed a period of relief from virus restrictions, official data showed Friday. Federal statistics agency Destatis said the German economy grew 8.2% in the third quarter versus the previous quarter. Versus the same quarter a year before, Germany's gross domestic product shrunk by 4.1%. Germany's GDP dropped 9.8% in the second quarter versus the first quarter. Overall, the German government expects the economy to shrink by 5.5% in 2020, Economy Minister Peter Altmaier said Friday. When compared with the fourth quarter of 2019 - the quarter before the global coronavirus pandemic - the price, seasonally and calendar-adjusted GDP was 4.2% lower in the third quarter of 2020. Separately, Destatis also reported retail sales in September slipped 2.2% from August. Versus September 2019, retail sales grew 6.5%.

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Donald Trump and Joe Biden duelled Thursday over the crucial state of Florida, painting radically different visions of the US as big new GDP figures showed an improving economy even as Covid-19 infections reached record highs. With Trump touting an early end to the health crisis, while warning of rampaging "socialists," and Biden slamming the US president as irresponsible and vowing to heal America's "soul," voters face a dramatic choice in five days. Trump, 74, held another raucous rally in Tampa, telling the cheering crowd that coronavirus lockdowns under Biden would banish normal life. "They will allow you nothing," the Republican said. "We're never going to lock down again...We're open for business," he said, telling supporters that his own recent bout with Covid-19 proved that it can be beaten. "You know, the bottom line is you get better," he said. But the pandemic, which has already taken 228,000 American lives, has shown its resilience and is undergoing a long-predicted second wave. On Thursday more than 91,000 new US infections were recorded, according to a Johns Hopkins University tally, the highest 24-hour total since the pandemic began.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
NatWest Group PLC 153.45 GBX 1.25

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