Yahoo Finance What to watch: Commerzbank revenue falls, losses at Co-op Bank, and KPMG fine
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Commerzbank revenue falls
Revenue fell by 2.8% to €2.16bn at German lender Commerzbank (CBK.DE) in the first quarter of the year.
Commerzbank said the decline was due to “exceptional items and valuation effects.” Operating profit fell by 5.6% to €244m and net profit was down by 54.2% to €120m, although this was well ahead of forecasts.
The results cover the quarter in which Commerzbank opened merger talks with German rival Deutsche Bank, which were abandoned after six weeks. Commerzbank did not mention the discussions in its first quarter update or say how much the aborted merger cost it.
“We are addressing the right issues with our strategy,” CEO Martin Zielke said in a statement. “Our growth is enabling us to strengthen our revenue base thereby compensating the effects from low interest rates and margin pressure.”
Losses at The Co-op
The Co-operative Bank has posted a first-quarter loss, but said it remains on the road to recovery from near-collapse.
The lender booked an underlying loss of £5.1m and a pre-tax loss of £28.6m in the first three months of the year, in line with expectations.
Total income increased by 2%, driven by strong deposit margins, which helped offset a weaker performance in mortgages.
Chief executive Andrew Bester said: “We’ve made encouraging progress in the first quarter, reaching some key milestones against a challenging UK retail banking market and uncertain economic backdrop.”
KPMG fined £5m
KPMG has been fined £5m and one of its partners has been severely reprimanded over the audit of the Co-operative Bank in 2009.
The Financial Reporting Council also said a number of the accountancy giant’s audits over the next three years will be subject to an “additional review” by an audit quality team.
KPMG’s fine has been discounted for settlement to £4m and the firm will also pay £500,000 towards the FRC’s costs, following KPMG’s admission of misconduct. The partner in question, Andrew Walker, has been fined £125,000 – discounted for settlement to £100,000 – and severely reprimanded.
The misconduct occurred shortly after the Co-op Bank’s merger with the Britannia Building Society.
The FRC said that KPMG and Walker failed to obtain sufficient appropriate audit evidence, failed to exercise sufficient professional scepticism, and failed to inform Co-op Bank that the disclosure of the expected lives of the notes in the financial statements was not adequate.
ITV ad sales fall
Broadcaster ITV (ITV.L) has reported a 7% drop in ad revenues for the first quarter after being hit by the timing of Easter and amid ongoing Brexit uncertainty.
The group said it now expects total ITV advertising to be down 6% over the first half.
The broadcaster also announced that Britbox, its joint streaming service with the BBC, is set to launch in Britain the second half of this year.
ITV said it was “on track” to have the service up and running before the end of 2019. But it left viewers guessing about the exact launch date.
The new service has been created to help the broadcasters take on Netflix and other streaming rivals, pooling their content online. It is already available in North America.
Goldman’s savings account hits 250,000 customers
Marcus by Goldman Sachs (GS) has signed up more than a quarter of a million customers in the UK in just under eight months.
Des McDaid, the Goldman managing director who heads up Marcus in the UK, told Yahoo Finance UK: “We’ve passed a quarter of a million customers and just over £8bn in deposits or savings, so for us it’s hugely exciting.”
Marcus by Goldman Sachs is an online savings account in the UK that offers a savings rate of 1.5%. It is the investment bank’s first foray into mainstream mass banking.
The brand was launched in the USA in late 2016, before launching in the UK, its first market outside North America, last September. Goldman Sachs said in November that 100,000 people had signed up to Marcus in the UK after little over a month.
Wetherspoon sales rise
JD Wetherspoon (JDW.L), the owner and operator of more than 900 pubs in the UK and Ireland, saw sales rise by 7.6% at the start of the year.
In its statement for the 13-week period up to 28 April 2019, JD Wetherspoon said like-for-like sales increased by 7.6% and total sales increased by 8.4%. The group opened three new pubs and closed seven in the period. “We intend to open two further pubs in the current financial year,” it added.
It also outlined how the group “remains in a sound financial position.”
European markets
European stock markets were higher despite another tough session for Asian markets overnight.
Japan's Nikkei 225 (^N225) closed down by 1.4%, Hong Kong's Hang Seng index (^HSI) was down by 1.1%, and China's benchmark Shanghai Composite (000001.SS) was down by 1.1%.
“Overnight markets in Asia are trading in a sea of red (a bit like Anfield last night),” Deutsche Bank strategists Jim Reid, Craig Nicol, and Quinn Brody wrote in a note to clients this morning. “The South China Morning Post this morning suggested that President Xi vetoed the further concessions demanded by the US negotiators last week and this is not helping sentiment.”
Despite this, Britain's FTSE 100 (^FTSE) was flat, Germany's DAX (^GDAXI) was up by 0.5%, France's CAC 40 (^FCHI) was up by 0.1%, and the Euronext 100 (^N100) was up by 0.1%.
Connor Campbell, a financial analyst at SpreadEx, pointed to better than expected German industrial numbers as the driver for Europe’s outperformance. Industrial production declined by 0.9% in March but this was better than the 2.8% decline that economists had forecast.
What to expect in the US
US stock futures were pointing to a higher open later today in the US. S&P 500 futures (ES=F) were up by 0.2%, Dow Jones Industrial Average futures (YM=F) were up by 0.2%, and Nasdaq futures (NQ=F) were up by 0.2%. The VIX volatility-tracking index (^VIX) was up by 23.3%.
Companies reporting later today in the US include:
