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Lloyds Bank swings to interim profit, BAE Systems hikes dividend

By Josh White

Date: Thursday 29 Jul 2021

(Sharecast News) - London open

The FTSE 100 is expected to open 15 points higher on Thursday, having closed up 0.29% at 7,016.63 on Wednesday.

Stocks to watch

Lloyds Bank swung to an interim profit before tax of £3.9bn on Thursday as the company released £837m set aside for bad debts amid the Covid pandemic due to an improved UK economic outlook. The profit compares with a £602m loss last year at the height of the crisis. Net income rose 2% to £7.6bn while the net interest margin, the difference between savings and lending rates, fell 9 basis points to 2.5%.

BAE Systems increased its dividend and announced a £500m share buyback as the arms and aerospace company reported a 61% increase in first-half profit. Operating profit for the six months to the end of June rose to £1.3bn from £808m as revenue increased to £9.34bn from £9.18bn. BAE increased its interim dividend by 5% to 9.9p a share and said it would buy back £500m of its shares over the next 12 months.

Inchcape reported a 37% improvement in group revenue on an organic basis for its first half on Thursday, to £3.9bn, with reported growth coming in at 30%, and underlying revenue 3% below 2019, before the Covid-19 pandemic. The FTSE 250 vehicle retailer said its pre-exceptional profit before tax was £143m for the six months ended 30 June, up from £9m year-on-year, supported by gross margin resilience and overhead savings. It recorded a statutory profit before tax of £61m, which the board said largely reflected the loss on the disposal of part of its retail operations in Russia.

Newspaper round-up

HSBC discovered a suspected money laundering network that received $4.2bn (£3bn) worth of payments, it has emerged, raising questions over whether it disclosed the information to US monitors who at the time were ensuring the bank cleaned up its act. Insiders who spoke to journalists as part of a joint investigation by the Guardian and the Bureau of Investigative Journalism, have suggested that HSBC may not have appropriately shared the information with the monitoring team installed by US regulators in 2012 after HSBC allowed drug cartels in Latin America to launder hundreds of millions of dollars through its accounts. - Guardian

The number of cars rolling off UK production lines last month slumped to the lowest June level in almost 70 years, as car manufacturers were hit by shortages of both staff and semiconductors. The Society of Motor Manufacturers and Traders (SMMT) said just over 69,000 cars were produced in UK car plants last month, the lowest June total since 1953, although this excludes June 2020 when factories were slowly getting back up to speed after the first lockdown. - Guardian

The US private equity firm seeking to take over Morrisons was fighting a rearguard action after a second shareholder came out against its £9.5bn bid. Fortress is scrambling to get back on the front foot after top ten investor JO Hambro said that its 254p a share offer was too low. The intervention came a day after Morrsions' biggest shareholder Silchester said it was opposed to the deal. - Telegraph

Facebook shrugged off its feud with Apple to double its profits in the three months ending in June, smashing past Wall Street's expectations. The social media titan increased its profits from $5.2bn (£3.7bn) in the same period in 2020 to $10.4bn this year, while its revenue rose 53pc from $18.7bn to $28.6bn, the biggest year on year rise since at least 2017. - Telegraph

The government is looking into whether the takeover of Vectura, a respiratory drugs business, by Philip Morris International, the tobacco company, raises public interest concerns, the business secretary has confirmed. Kwasi Kwarteng gave the reassurance in response to a letter from Labour shadow ministers that had urged the government to consider blocking the £927 million deal. - The Times

US close

Wall Street stocks turned in a mixed performance on Wednesday as market participants digested earnings from major US firms and the outcome of the Federal Reserve's latest two-day meeting.

At the close, the Dow Jones Industrial Average was down 0.36% at 34,930.93 and the S&P 500 was 0.02% weaker at 4,400.64, while the Nasdaq Composite saw out the session 0.70% stronger at 14,762.58.

The Dow closed 127.59 points lower on Wednesday, extending losses recorded in the previous session as major averages pulled back from record highs to snap a five-day winning streak.

Focus was again on earnings throughout the early part of the day, with Alphabet shares in the green after the Google parent posted a 69% jump in quarterly advertising revenues, while Apple shares were in the red despite beating both top and bottom-line estimates.

Microsoft also traded higher after the bell despite reporting a contraction of revenues in its Windows unit, while McDonald's posted a marked increase in quarterly sales on the back of new menu items.

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