LONDON BRIEFING: Barclays profit soars on credit impairment release

(Alliance News) - Barclays on Wednesday announced a new share buyback programme, after a release ...

Alliance News 28 July, 2021 | 8:19AM
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(Alliance News) - Barclays on Wednesday announced a new share buyback programme, after a release of credit impairment provisions resulted in a big improvement in half-year results for the UK lender.

Barclays said pretax profit in the six months to June 30 more than tripled 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.

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.

Barclays shares were up 4.0% early Wednesday.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: down 0.1% at 6,991.14

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Hang Seng: up 1.0% at 25,342.47

Nikkei 225: closed down 1.4% at 27,581.66

DJIA: closed down 85.79 points, or 0.2%, at 35,058.52

S&P 500: closed down 0.5% at 4,401.46

Nasdaq Composite: closed down 1.2% at 14,660.58

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EUR: down at USD1.1805 (USD1.1834)

GBP: down at USD1.3872 (USD1.3882)

USD: up at JPY109.89 (JPY109.66)

Gold: up at USD1,804.39 per ounce (USD1,802.67)

Oil (Brent): up at USD74.80 a barrel (USD74.58)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Wednesday's Key Economic Events still to come

1100 BST Ireland retail sales index

0830 EDT US advance economic indicators report

1030 EDT US EIA weekly petroleum status report

1400 EDT US Fed interest rate decision

1430 EDT US press conference with Fed Chair Powell

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House prices have fallen by 0.5% in July as the end of full stamp duty relief took some of the heat out of Britain's booming property market. Nationwide Building Society said the average house price in July stood at GBP244,229, down from GBP245,432 in June. The month-on-month drop came after a rise of 0.7% in June and marked the first such fall since March. Annual house price growth cooled to 11% from 13% the previous month, which had been the strongest rise for 17 years as homebuyers rushed to beat the tapering of stamp duty in England from June 30. Robert Gardner, Nationwide's chief economist, said: "The modest fall-back in July was unsurprising given the significant gains recorded in recent months."

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BROKER RATING CHANGES

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HSBC RAISES INTERTEK TO 'BUY' ('HOLD') - TARGET 6,440 (5,800) PENCE

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HSBC RAISES DUNELM GROUP TO 'HOLD' ('REDUCE') - TARGET 1250 (1090) PENCE

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PEEL HUNT RAISES VIRGIN MONEY TO 'BUY' ('ADD') - TARGET 264 (241) PENCE

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GOLDMAN SACHS RAISES RENISHAW TO 'BUY' (NEUTRAL) - PRICE TARGET 6,340 PENCE

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BERENBERG CUTS SABRE INSURANCE TO 'SELL' ('HOLD') - TARGET 224 (257) PENCE

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COMPANIES - FTSE 100

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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.

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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.

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Anglo American said its diamond business, De Beers Group, saw continued "good" demand for rough diamonds, driven by a strong market for diamond jewellery in the US and China. Rough diamond sales value for the provisional sixth sales cycle, which covers the period between July 12 to July 27, rose 6.9% to USD510 million from USD477 million in the fifth sales cycle. In the 2020 sixth sales cycle, De Beers recorded USD116 million in rough diamond sales. De Beers Chief Executive Bruce Cleaver said the sixth sales cycle of the year had seen the continuation of good demand for rough diamonds, driven by strong demand for diamond jewellery in the key US and China consumer markets. "With the ongoing strength in consumer sales of diamond jewellery, the outlook remains positive for the second half of the year, subject to the risks that the pandemic continues to present across the globe," Cleaver said.

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COMPANIES - FTSE 250

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Luxury car maker Aston Martin Lagonda Global Holdings narrowed its pretax loss to GBP90.7 million in the first half of 2021 from GBP227.4 million a year before, as revenue more than tripled to GBP498.8 million from GBP146.0 million. Aston Martin said total wholesale volume in the recent six months was 2,901 vehicles, up from just 895 a year ago, and it said it expects 6,000 wholesales in the full year, with an adjusted earnings before interest, tax, depreciation and amortisation margin in the mid-teens percent. "Building on the success of DBX, our first SUV, we have since delivered two more new vehicles and with more exciting product launches to come we are well positioned for growth," commented Executive Chair Lawrence Stroll.

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COMPANIES - GLOBAL

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Banco Santander swung to profit in the first half of 2021, thanks to improved lending volumes, it said. The Madrid-based lender reported pretax profit of EUR6.91 billion in the first half of 2021. This compares to a pretax loss of EUR6.41 billion in the same period last year, when the bank made a non-cash adjustment to the valuation of goodwill. Santander said its strong performance was driven by good volume growth, with loans increasing 2% and deposits 4%. Total income in the first six months of 2021 grew by 1.9% year-on-year to EUR22.70 billion, with growth in all regions and countries, except Mexico. Net fee income rose 1% year-on-year to EUR5.17 billion.

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Deutsche Bank said earnings grew in the first half of 2021 despite a revenue slip in the second quarter. The Frankfurt-based lender said pretax profit for the three months ended June 30 totalled EUR1.2 billion versus just EUR158 million in the second quarter of 2020. Provision for credit losses were EUR75 million in the quarter, chopped from EUR761 million in the second quarter of 2020. Total non-interest expenses, meanwhile, were slimmed to EUR5.0 billion from EUR5.4 billion year-on-year. The improvement in pretax profit came despite a negative impact of EUR226 million from the ruling by the German Federal Court of Justice in April 2021 requiring active customer consent for pricing changes on current accounts. Deutsche Bank reported net revenue of EUR6.2 billion for the second quarter of 2021, down 1% year-on-year.

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Wednesday's Shareholder Meetings

Alien Metals Ltd - AGM

Aquila Services Group PLC - AGM

Card Factory PLC - AGM

Chariot Ltd - AGM

JPMorgan Japan Small Cap Growth & Income PLC - AGM

Reabold Resources PLC - AGM

Staffline Group PLC - AGM

Ted Baker PLC - AGM

Telit Communications PLC - GM re acquisition by Trieste Acquisitions

TP Group PLC - AGM

Triad Group PLC - AGM

Trifast PLC - AGM

Triple Point Income VCT PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Dunelm Group PLC 1,465.00 GBX 1.52 -
Sabre Insurance Group PLC 227.50 GBX 3.88 -
Barclays PLC 182.72 GBX 0.01
Renishaw PLC 5,435.00 GBX -1.18 -
Intertek Group PLC 5,334.00 GBX -1.08
Virgin Money UK PLC 195.10 GBX 1.11
Aston Martin Lagonda Global Holdings PLC Ordinary Shares 1,900.00 GBX 0.18 -

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