How close are bank dividends to making a comeback? British banks suspended their payouts in March after pressure from the Bank of England. HSBC was among the most vocal in expressing its regrets about the move, which hit its large Hong Kong retail shareholder base particularly hard. On Tuesday the bank said that “if circumstances allow” it would “seek to pay a conservative dividend” for 2020.
The bank’s third-quarter results, out on Tuesday, were better than expected, echoing Barclays’ update last Friday. It reported a 36 per cent fall in pre-tax profits to $3.1bn. Analysts had been expecting $2.1bn, according to the lender. Provisions for bad loans were less than half the level expected at $785m, with HSBC now forecasting loan losses for the full year closer to the lower end of its $8bn to £13bn range.
HSBC’s payout will depend on economic conditions in early 2021. But as HSBC acknowledged, it will also be subject to “regulatory consultation”, setting up some potentially difficult conversations with the Bank of England.
BP eked out an underlying profit of $86m in the third quarter of the year on the measure most closely watched by analysts, a significant improvement on the $6.7bn loss it reported in the second quarter, but down from a $2.3bn profit for the same period last year. On a reported basis it still made a loss of $450m. BP took large writedowns and impairment charges in the previous quarter, reflecting the fall in the oil price and lower expected demand, which weren’t repeated in the latest quarter. But where its oil trading division had helped offset those effects in the second quarter, profits from that unit were significantly lower in the third quarter.
Whitbread, which owns Premier Inn, fell to a £725m pre-tax loss in the six months to the end of August, from a £220m profit in the same period last year. Whitbread took £340m in impairment charges linked to Covid-19, writing down the value of goodwill in Germany, where it has been expanding, among other things. It warned that after a further increase in occupancy in September, the market had experienced a slowdown during October.
EasyJet is raising more cash through a sale and leaseback of nine of its planes. The sale will generate just under $400m for the airline, the latest in a series of efforts to secure funds. Carriers have been burning through cash while large numbers of aircraft remain grounded. More here.
Also out on Tuesday are updates from spreadbetter Plus500, wealth manager St James’s Place, and publishing house Bloomsbury.
Beyond the Square Mile
Volkswagen’s boss Herbert Diess reckons the auto industry doesn’t need extra stimulus after all, as the carmaker experienced a stronger than expected bounceback in sales across western Europe and China. Mr Diess lobbied heavily for subsidies in Germany early in the pandemic but now says that, unless there’s a second lockdown or further economic slump, there’s no need for more purchasing incentives.
American insurer AIG unveiled plans to break itself up on Monday, separating its life insurance business from its larger property and casualty arm. The group has spent years fighting activist investors who wanted it to do just that. AIG has outlined succession plans for 73-year-old Brian Duperreault, the chief executive credited with returning the insurer to profitability in recent years. He will become executive chairman, while Peter Zaffino, the 53-year-old head of AIG’s property and casualty unit, will become CEO.
Goldman Sachs has been accused of covering up allegations of sexual misconduct against its most senior litigator and firing a female lawyer for raising concerns about his behaviour in a lawsuit filed in New York on Monday. Marla Crawford, who spent 10 years in the bank’s legal and regulatory proceedings department, is suing the bank, the litigator, and Goldman’s general counsel for unspecified damages. More from US banking editor Laura Noonan here.
Also out on Tuesday are results from Bankia, Mediobanca, Santander and Novartis.
Essential comment before you go
The numbers in Ant Group’s IPO — putting the payments arm of Jack Ma’s Alibaba on track to raise $34.4bn at a valuation of $313bn — are eye-popping. But nonetheless the dual listing in Shanghai and Hong Kong is priced to go. Long-term investors should ask why.
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