FTSE 100 Live: Surprise retail sales growth, NatWest profits surge
Retail sales figures showed a surprise improvement on Friday as the UK economy continues to defy expectations at the start of 2023.
The Office for National Statistics reported growth in volumes of 0.5% in January, which compares with City expectations for a 0.3% decline and the previous month’s 1% fall.
Meanwhile, NatWest said it delivered a strong performance in 2022 after pre-tax profits rose by more than a third to £5.1 billion.
FTSE 100 Live Friday
NatWest profits highest since 2007
Retail sales ahead of forecast in January
Purplebricks launches strategic review
Is it really the time to shower a bank boss with cash?
Friday 17 February 2023 17:04 , Jonathan Prynn
Alison Rose’s pay package of £5.249 million is a 46% pay rise in 2021. It is 119 times the £44,000 paid to the median NatWest employee and 177 times the £30,000 received by those in the lower quartile.
With a cost-of-living crisis still to run its course, perhaps this was a year too soon to let remuneration rip, Jonathan Prynn writes.
FTSE closes just below 8000
Friday 17 February 2023 16:35 , Daniel O'Boyle
The FTSE 100’s streak of record closes came to an end today, as it finished at 7995.81.
The end-of-day figure was down 0.2% from yesterday, after stocks slipped in the morning following declines in the US yesterday evening and underwhelming results from NatWest.
NatWest was the day’s biggest faller, with shares down 6.4%, while other banks and financial services businesses also experiences declines.
Property investment business Sego, on the other hand, was the top riser, with shares up 3.7%.
London ranks 76th in world broadband rankings
Friday 17 February 2023 16:23 , Daniel O'Boyle
The dire state of London’s broadband network has been laid bare in a new report which found the capital ranks a paltry 76th in global download speeds.
London average download speeds currently stand at 79 megabytes per second, according to the Speedtest Global Index, making the capital more than twice as slow as Lyon and Madrid and almost three times as slow as the average rate in New York.
Broadband download speeds are barely faster than London’s mobile speeds, at 67 megabytes per second, in which the city ranks 42nd globally, lagging far behind the biggest cities in Canada, Australia, France and Switzerland.
Prime office rents leap in the West End
Friday 17 February 2023 15:49 , Daniel O'Boyle
Prime West End office rents have jumped 19% over a year to be well ahead of pre-pandemic levels, as businesses hunt for the most desirable space, fresh research shows.
Rents in Mayfair and St James’s for new and high-end offices stood at £140 per square foot in the final quarter of 2022.
That was up from £117.5 a year earlier, and £112.5 for the same period in 2019, just before lockdowns meant more people than ever were working at home.
Now more than ever, people need money in their pockets, not in bank profits
Friday 17 February 2023 15:40 , Andrea de Gottardo
Banks’ huge profits are linked to rising interest rates not being passed on to savers in a meaningful way as they continue to put profits ahead of their customers.
Interest rates have been at incredibly low levels across the board for the past 12 years, and customers have become accustomed to making next to no interest on their balances.
But times have changed, and it’s time banks changed their approach along with them, writes Andrea de Gottardo
US stocks dip further as markets open
Friday 17 February 2023 14:54 , Daniel O'Boyle
Shares in US companies have declined further as trading opened in New York today, after sliding yesterday.
The S&P 500 is down 0.9% to 4055, while the Dow Jones is down 0.5% to 33544. The Nasdaq composite has fallen by more than 1% to 11713 as tech companies in particular struggled.
Among the big fallers were cloud storage busness Dropbox, with shares down more than 8%.
Steel firm Aartee Bright Bar to be rescued by Sanjeev Gupta’s Liberty
Friday 17 February 2023 11:29 , Simon Hunt
Collapsed steel firm Aartee Bright Bar is set to be merged with Liberty Steel Group after steel tycoon Sanjeev Gupta stepped in to take over the business.
GFG Alliance, owned by Mr Gupta and his family, has bought Aartee and filed an application to challenge the administration, it revealed on Friday.
The rescue deal comes after Aartee, the UK’s largest distributor of engineering steel products and a key customer of Mr Gupta’s Liberty Steel, called in administrators Alvarez & Marsal (A&M) earlier this month.
Superdry rises as founder snaps up more shares
Friday 17 February 2023 11:05 , Daniel O'Boyle
Superdry shares are up 3.2% today after co-founder and CEO Julian Dunkerton acquired an additional £402,000 worth of shares.
Earlier this month, Dunkerton denied reports that he planned to take the company private.
“Julian Dunkerton, founder and chief executive officer of Superdry, notes recent press reports that, while there has been speculation that he is considering taking Superdry private, he said that there were no plans to do this at the moment,” the company said at the time.
Dunkerton owns more than 20% of Superdry.
FTSE 100 under pressure, airlines higher
Friday 17 February 2023 10:11 , Graeme Evans
A record-breaking week for the FTSE 100 index is ending on a downbeat note amid concern that US interest rates will stay high for longer than expected.
London’s top flight, which last night set an all-time best close of 8012, fell 0.4% or 33.91 points to 7978.62 in response to Wall Street’s worst session in a month.
Technology stocks led the US selling yesterday as traders worried that more inflation-fighting rate hikes could tip the country’s economy into recession.
US rates are currently in a range of 4.5%-4.75%, but bets on the eventual peak were up to 5.29% by last night after stronger-than-expected producer price figures and hawkish comments by two Federal Reserve policymakers.
The rate hike expectations triggered a rush to the US dollar, with the pound below $1.20 at its weakest level since early January.
The weak session for the FTSE 100 was compounded by pressure on UK lender NatWest after its 2023 guidance underwhelmed investors. The shares fell 8% and caused Lloyds Banking Group to drop 4% or 2.1p to 50.9p.
On the risers board, British Airways owner IAG made headway in the wake of better-than-expected results from Air France-KLM.
The European airline, which said it had turned the page after two years of heavy losses caused by Covid disruption, posted a fourth quarter operating profit well ahead of forecasts. IAG shares rose by more than a penny to 168p.
Wizz Air and easyJet also improved 2%, but their gains failed to prevent the FTSE 250 index falling 0.4% or 85.81 points to 20,095.64.
Maintel CEO resigns with immediate effect
Friday 17 February 2023 10:09 , Daniel O'Boyle
Ioan MacRae has stepped down as chair of telecommunication services business Maintel with immediate effect.
MacRae became CEO of Maintel - which provides telephone services and other communications solutions to businesses and public sector bodies - in 2019.
Maintel said it will engage a search firm to find a new CEO, chair Carol Thompson will take over MacRae’s duties, becoming executive chair.
Thompson noted that the last few years have been difficult for Maintel, which has seen its share price drop by almost 90% since 2016.
“It has been a challenging few years for the business, with Ioan having led the group through some of the most difficult trading conditions in recent history,” she said. “He has now taken the decision to step back from the business before moving on to his next venture.
“We wish him all the best with his future endeavours.”
Data centre demand helps lift Segro rental incomes
Friday 17 February 2023 10:04 , Simon Hunt
A surge in demand for data centres has helped rental incomes reach record highs for real estate business Segro.
The firm said it had signed a string of new leases with data centres, including at a new multi-storey data centre development in Slough, amid growth in the use of cloud computing.
Segro boss David Sleath said “About 7% of our portfolio is now providing space for data centres, much of which is in Slough which is the biggest datacentre hub in Europe.
“[But] we’ve seen a very steady and growing demand for data centre space across Europe including in Frankfurt, Paris, Milan and Madrid.”
Rental income climbed 18.9% to £522 million in 2022, helped on by a 10% rise in rents in the London area, while pre-tax profits grew 8.4% to £386 million.
However, the value of Segro’s portfolio shrunk almost £500 million, or 11%, to £17.9 billion as soaring interest rates cooled real estate transactions.
“When interest rates and bond yields jump, it’s bound to mean that investors demand a higher yield and want to put their money to work,” Sleath said.
“There was effectively a buyer’s and seller’s strike on transactions so the volume of transactions fell.”
Segro shares climbed 3.7% to 867p.
NatWest profits jump but it is “high anxiety time” admits CEO
Friday 17 February 2023 09:46 , Simon English
NatWest made its highest profits since the financial crash and chief executive Alison Rose also cashed in, with a leap in pay from £3.6 million to £5.2 million.
The 33% jump in profits to £5.1 billion, the best since 2007, is likely to attract attention alongside the rise in executive pay amidst a cost-of-living crisis that is seeing many bank customers squeezed.
NatWest set aside £377 million to deal with future bad debts, but says so far businesses and consumers are coping well with tricky economic conditions.
“People are managing well but they are stressed. It is a high anxiety time,” Rose told the Standard.
While Rose is regarded as a skilled and politically adept CEO her pay may attract attention.
Her bonus of £2.8 million is the first paid to a Natwest CEO since Stephen Hester in 2010. The board last year, led by chairman Howard Davies, decided it was time to move Rose’s pay in line with the CEOs of Barclays and Lloyds.
She told the Standard: “The financial services sector gets paid very well, I am very privileged to do the job I do.”
Rose’s CFO Katie Murray was paid £3.6 million, up from £1.6 million last time.
Alpine app SkiYodl launches new fundraising round
Friday 17 February 2023 09:24 , Jonathan Prynn
The London travel tech company SkiYodl backed by former F1 boss Eddie Jordan and football pundit Jake Humphrey has launched a crowd fund to raise finance for the next phases of its growth.
The app which allows users to book a range of ski related services on a single “one stop shop” platform, plans to launch into more European resorts and for the first time North American locations
North Sea oil firm reveals levy impact
Friday 17 February 2023 08:59 , Graeme Evans
North Sea oil and gas firm EnQuest today revealed how recent changes to the energy profits levy will impact its drilling plans in the UK.
The Kraken field is the largest asset in EnQuest’s portfolio and delivered production ahead of 2022 expectations in an update published today.
However, EnQuest said the impact of the levy on cash available for investment means it will prioritise quick-payback opportunities at its Magnus field and defer spend on Kraken drilling.
It said: “Changes to the UK Energy Profits Levy will impact cash flow generation and have implications for our capital allocation strategy and our UK production growth ambitions.”
Shares fell 2p to 19.3p today. The company was formed in 2010 through the combination of the UK North Sea assets of Petrofac and Lundin Petroleum.
Tencent abandons plans to develop VR hardware
Friday 17 February 2023 08:56 , Simon Hunt
Tencent is abandoning plans to build its own virtual reality hardware as the Hong Kong-listed tech giant seeks to slash costs amid harsher economic conditions.
The firm hired nearly 300 people after launching a new ”extended reality” unit last year to develop VR-based game controllers, but has u-turned on the project after internal forecasts suggested the devices would not be profitable until at least 2027, according to reports from Reuters.
The move adds further pressure to social media giant Meta, which has sparked investor concern over the billions it has spent on developing its own VR technology.
Meta made $2.2 billion (£1.8 billion) in revenue from its ‘Reality Labs’ VR unit in 2022, at a cost of $15.9 billion, representing an operating margin of -635%, according to its annual report.
NatWest shares slump, FTSE 100 down
Friday 17 February 2023 08:22 , Graeme Evans
NatWest shares have skidded 9% in early dealings, despite a big leap in profits and shareholder returns.
Richard Hunter, head of markets at Interactive Investor, said an element of profit-taking after shares spiked 24% over the last three months may have been a factor.
He added: “NatWest finished its year in fine style, buoyed by an embarrassment of riches which further strengthen its financial position.”
NatWest shares fell 27.35p to 278.25p, while rival Lloyds Banking Group lost 4% or 2.3p to 50.6p.
A weak handover from US markets meant the FTSE 100 index fell 0.5% or 37.7 points to 7974.83. British Airways owner IAG was 1.2p lower at 165.8p, despite the read-across from a better-than-expected fourth quarter profit by Air France-KLM.
Alison Rose Natwest pay jumps as profits soar
Friday 17 February 2023 08:15 , Simon English
NATWEST boss Alison Rose saw her pay jump from £3.6 million to £5.2 million in a year when the bank, still 40% owned by the taxpayer, reported a doubling of profits to £5.5 billion.
While Rose is regarded as a skilled and politically adept CEO of the bank her pay may attract attention. She got bonuses of about £2.8 billion as part of her pay.
She told the Standard: “The financial services sector gets paid every well, I am very privileged to do the job I do.”
NatWest set aside £377 million to deal with future bad bets, but says so far businesses and consumers are coping well with tricky economic conditions.
“People are managing well but they are stressed. It is a high anxiety time,” she said.
Rose’s CFO Katie Murray was paid £3.6 million, up from £1.6 million last time.
NatWest paid more than £2 billion in tax and another £2.2 billion in dividends to the government. Some wonder why the state would sell off its remaining stake rather than keep banking the dividends from owning the shares.
NatWest shares were steady today at 305p, which leaves the business valued at just shy of £30 billion.
New role for ex-Serco boss Soames
Friday 17 February 2023 07:59 , Graeme Evans
Former Serco boss Rupert Soames has been named the new chair of medical technology company Smith & Nephew.
He replaces Roberto Quarta, who has reached the end of his tenure as chair and is due to leave the board later this year.
Soames led the turnaround of the outsourcing business Serco during eight years in charge between 2014 and 2022. He was boss of support services firm Aggreko before that.
He will join the Smith & Nephew as a non-executive director in April and take on the role of chair from 15 September.
FTSE 100 progress stalled by rate rise fears
Friday 17 February 2023 07:41 , Graeme Evans
Heavy selling on US markets means London’s FTSE 100 index is set to retreat back below the 8000 threshold today.
The S&P 500 dropped 1.4% and the tech-focused Nasdaq Composite fell 1.8% after stronger-than-expected producer prices fuelled expectations about the need for further interest rate hikes in the US economy.
The Fed funds rate currently stands in a range of 4.5%-4.75%, but futures markets are now pricing in a peak of 5.29% in the summer.
The latest surge also followed comments from one Federal Reserve policymaker who said the case for hiking rates by 0.5%, rather than the 0.25% agreed earlier this month, had been compelling.
CMC Markets expects the FTSE 100 index to open 20 points lower at 7,992.
Segro posts profits boost but property portfolio declines
Friday 17 February 2023 07:36 , Simon Hunt
Commercial property business Segro has posted a jump in profits despite a decline in the value of its portfolio.
The London-based business saw pre-tax profits climb 8.4% to £386 million in 2022, with rental income up 18.9% to £522 million. But the value of its portfolio dropped 11% to £17.9 billion.
Segro said the decline was “primarily driven by market-wide yield expansion in the second half, partly offset by estimated rental value growth of 10.9 per cent, portfolio asset management successes and development profits.”
PurpleBricks puts up ‘for sale’ sign after profit warning
Friday 17 February 2023 07:25 , Daniel O'Boyle
Online estate agent PurpleBricks could be sold as the business launched a strategic review this morning.
The PurpleBricks board said that while the brand had value because of its name recognition, it may be more likely to reach its potential “under an alternative ownership structure”.
“We recognise that our upside potential is not currently reflected in our market valuation, which is why the entire board has therefore concluded that a strategic review is now in the best interests of all shareholders,” CEO Helena Marston said.
The board added that no offers have been received yet, and the business is not currently in talks with any specific buyers.
PurpleBricks also announced a profit warning today, after it said its new strategy to focus on the most profitable regions of the country proved more expensive than expected.
NatWest profits jump, reveals £800m buyback
Friday 17 February 2023 07:20 , Graeme Evans
State-backed lender NatWest today revealed an operating profit before tax of £5.1 billion, up by more than a third after total income surged to above £13 billion.
It declared a final dividend of 10p a share and said it plans to buy back shares worth £800 million in the first half of 2023, ahead of some expectations in the City. This will take total distributions for the year to £5.1 billion, or 53p a share.
The net interest margin of 2.85% was 0.55 basis points higher than in 2021, with the fourth quarter figure up 0.21 basis points to 3.20% compared with the third quarter.
The bank has revealed a net impairment charge for the year of £337 million, but it said the performance of its loan book remains strong with credit conditions benign and levels of default low.
Net lending increased by £7.3 billion to £366.3 billion during 2022, primarily reflecting £14.4 billion of growth in retail banking mortgages.
It has forecast income for this year of around £14.8 billion and a full year net interest margin of 3.20%, based on a Bank of England base rate of 4% through the remainder of 2023.
Friday 17 February 2023 07:11 , Jonathan Prynn
UK retail sales bounced back in January in a partial recovery from a big slump in December. Sales were up a better than expected 0.5%, according to the Office for National Statistics, compared with a fall on 1.2% in the previous month. The recovery was driven by January promotions with non-food stores seeing a 0.6% rise but supermarkets and other food stores down again, by 0.5% as consumers reining in their shopping in the face of rapidly rising grocery prices.
Recap: Yesterday’s top stories
Friday 17 February 2023 06:49 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday.
Record profits at the parent company of British Gas, Centrica, will add to pressure for a windfall tax on the energy sector and highlight the controversy over the company’s use of pre-paid meters for vulnerable customers.
The FTSE 100 finished the day at 8012.53, a sixth consecutive end-of-day record and the first time it closed above 8000. However, slow afternoon trading amid higher-than-expected US producer price inflation send the FTSE below 8000, before a late rally took it back over the milestone.
Standard Chartered, the Asian focussed City bank, unveiled a new $1bn share buyback as profits jump 15% to $4.8bn. CEO Bill Winters sees pay rise from £4.7 million to £5.3 billion for the year, while CFO Andy Halford also did well, up by £400,000 to £3.4 million.