CORRECT: LONDON MARKET: Barclays sets share buyback; ITV eyes payouts

(Correcting to add Barclays group first-half earnings figures and to clarify that the initially ...

Alliance News 28 July, 2021 | 8:11AM
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(Correcting to add Barclays group first-half earnings figures and to clarify that the initially reported Barclays figures were for the Barclays UK unit alone.)

(Alliance News) - London's blue-chip FTSE 100 index was lower early on Wednesday, as traders digest a deluge of UK company updates, ahead of a crucial day in the US, headed up by the latest US Federal Reserve interest rate decision.

In local corporate news, Barclays said earnings soared in the first half of 2021, and the bank announced a further GBP500 million share buyback. Wealth manager St James's Place said funds under management climbed, while broadcaster ITV said it is "emerging from the worst effects of the pandemic" and earmarked plans to resume dividend.

The FTSE 100 index was down 14.13 points, or 0.2%, at 6,981.95 early Wednesday.

Barclays said its group pretax profit in the six months to June 30 soared to GBP4.98 billion from GBP1.27 billion a year earlier. Net operating income jumped 53% to GBP12.06 billion from GBP7.88 billion.

Barclays benefited from a GBP742 million credit impairment release, compared to a charge of GBP3.74 billion a year earlier.

In subsidiary Barclays UK, total income rose 0.9% to GBP3.20 billion from GBP3.17 billion a year earlier. Net operating income soared 73% to GBP3.64 billion from GBP2.11 billion, helped by a GBP443 million credit impairment release. This contrasted with a GBP1.06 billion impairment charge for Barclays UK a year earlier.

Chief Executive James Staley labelled it a "strong first half".

"We are starting to see the resurgence of activity across our businesses, with group income up on the same period last year when excluding the impact of FX movements. Our [Corporate & Investment Bank] business is well-positioned to benefit from continued growth in debt and equity capital markets, with Global Markets and Investment Banking fees income up 36% since 2019, and our strong retail businesses are poised to support and benefit from a consumer recovery," Staley added.

Barclays declared a 2.0 pence per share payout, having not paid one a year earlier. In addition, it plans to kick off a GBP500 million buyback in the third quarter. This is on top of the GBP700 million share repurchase programme it completed in April.

"Our profitability, strong capital position and balance sheet have enabled us to increase capital distributions to shareholders," CEO Staley added.

St James's Place said its funds under management climbed 11% to a record GBP143.77 billion on June 30 from GBP129.34 billion at the end of last year. Annually, it was up 24%.

Gross inflows jumped 27% year-on-year to GBP9.19 billion from GBP7.26 billion. What's more, the FTSE 100 wealth manager swung to a pretax profit of GBP482.6 million from a GBP71.9 million loss a year earlier.

St James's Place declared an 11.55p per share first half payout, in line with its plan for interim dividends to amount to 30% of the prior year's total dividend. It did not make a payout in the first half of 2020.

CEO Andrew Croft commented: "Although there remains inherent uncertainty in the operating environment as the UK and the world at large continues to navigate the pandemic, the results we have announced today show we have made an encouraging start against our 2025 ambitions."

The company eyes GBP200 billion in funds under management by 2025.

ITV posted a sharp profit hike in the six months to June 30. Pretax profit soared to GBP133 million from just GBP15 million a year before. Revenue came in 27% higher at GBP1.55 billion from GBP1.22 billion.

"Our H1 results demonstrate that ITV is emerging from the worst effects of the pandemic. We've continued to implement our key strategic priorities and have further strengthened the business," CEO Carolyn McCall said.

Like the first half of 2020, ITV decided against declaring a payout. However, it announced plans to resume dividends with a 3.3p final payout for 2021.

McCall added: "We intend to re-commence a progressive dividend policy based on a notional [annual] dividend of 5p per share which we expect to grow over time."

ITV said it is on track to deliver GBP30 million in permanent cost savings this year.

The pound was quoted at USD1.3879 on Wednesday morning in London, down from USD1.3882 late Tuesday. The euro stood at USD1.1805, down from USD1.1834. Against the yen, the dollar rose to JPY109.86 from JPY109.66.

In the main event on Wednesday, the US Federal Reserve releases its latest interest rate decision at 1900 BST.

"It is one of the interim meetings without updated projections (including Fed dots). We do not expect the Fed to send any new policy signals. We expect the Fed to repeat that high inflation is mostly transitory and that the labour market recovery has further to go still," analysts at Dankse Bank commented.

In China, the Shanghai Composite closed down 0.6%, while the Hang Seng index in Hong Kong was up 1.2%, rebounding from recent share declines. The Nikkei 225 in Tokyo ended 1.4% lower and the S&P/ASX 200 closed down 0.7%.

OANDA analyst Jeffrey Halley added: "Most of Asia has contented itself to slavishly follow the US pre-FOMC risk reduction path.

"Along with the rest of Asia, China markets will now be on hold for the FOMC tonight. If they stay on message and remain dovish, Asian equities, including China, could see a further recovery into the end of the week."

Alongside the Fed decision, Wednesday's economic calendar has Irish retail sales at 1100 BST and US goods trade figures at 1330 BST.

Gold advanced slightly to USD1,804.63 an ounce early Wednesday, from USD1,802.67 at the London equity market close on Tuesday. Brent oil was quoted at USD74.82 a barrel, up from USD74.58.

By Eric Cunha;

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Barclays PLC 182.72 GBX 0.01
St James's Place PLC 1,613.50 GBX -1.28 -
ITV PLC 108.55 GBX -1.32 -

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