Barclays opened the UK bank reporting season this morning. There is finally some respite on loan loss charges, which haven’t gone away altogether but were far lower in the third quarter than in the early months of the pandemic, while strong performance in its markets division continued and performance in its consumer businesses improved.
Barclays took £608m in credit impairment charges in the third quarter — but that was a fraction of the £3.7bn taken in previous quarters this year. Overall the bank reported pre-tax profits of £1.1bn for the quarter, the highest for the year so far and better than analysts had expected. For the first nine months of the year, pre-tax profits of £2.4bn are down more than a quarter on the same period last year.
Barclays’ investment bank has insulated it better than the other UK high street banks. In the three months to the end of September, income in the investment bank was 11 per cent higher than the same quarter last year at £2.9bn, driven by its trading business, though that was down 12 per cent on the second quarter of the year. Both the UK and credit card businesses reported lower profits than last year, but performance in both improved from the previous quarter.
UK retail sales increased for the fifth month in a row during September. They climbed by 1.5 per cent from August, the Office for National Statistics said this morning, meaning they are now 5.5 per cent higher than February’s pre-pandemic level. September’s growth was much faster than analysts expected. Home furnishing stores, online shopping sites and supermarkets have led the revival, but the ONS said most store types had now recovered.
McCarthy & Stone, which builds retirement villages, is recommending a takeover bid from private equity group LoneStar which values the group at around £630m. The offer is a 39 per cent premium to last night’s closing price. The group’s shares have struggled in recent years, and are down by almost half since the start of February.
InterContinental Hotels Group warned of uncertainty about the potential for a short-term recovery, as Europe starts to lock down again. The company behind Crowne Plaza and Holiday Inn said that trading had improved in the third quarter with revenue per available room (the key industry metric) down by around half on last year compared to three quarters in the previous three months and occupancy at 44 per cent rather than 25 per cent.
Also out today is a trading update from the London Stock Exchange Group; its third-quarter total income was up 2 per cent to £600m as growth in its information services and post-trade businesses offset flat revenues in its capital markets unit.
Beyond the Square Mile
Goldman Sachs’ Malaysian subsidiary pleaded guilty to a bribery charge on Thursday as the bank agreed a record $2.9bn global settlement with regulators over the 1MDB money-laundering scandal. The Wall Street bank also said it would claw back up to $175m in pay and bonuses from current and former executives including David Solomon, the bank’s boss, and his predecessor Lloyd Blankfein.
Walmart has sued the US government in an attempt to pre-empt a possible Department of Justice lawsuit over the sale of opioid prescriptions. Walmart, which operates more than 5,000 in-store pharmacies in the US, accused federal authorities of putting its pharmacists in an impossible position when filling opioid prescriptions. The lawsuit names William Barr, the US attorney-general, and Timothy Shea, the acting administrator of the DEA, as defendants.
Gap is considering closing hundreds of stores in Europe in order to focus on reviving its US business. It opened its first European store in the UK in 1987 and expanded to France, Ireland and Italy, reaching its peak at the turn of the millennium. But it has struggled since then in the highly promotional UK clothing market and sales have fallen. Recently it launched a strategic review to improve profitability across the business.
Essential comment before you go
Disinfectant is not an exciting product. The basic formula is little changed and has been around for decades. But hygiene is having a moment, thanks to Covid-19 and the urge to sanitise — and that is good for companies such as P&G and Unilever.
IAG needs trippers and business travellers to start booking summer flights in the first quarter. If the cash doesn’t start coming, it has to find other sources of readies.
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