There will be no City Bulletin tomorrow. We’ll be back with you on Monday — but it will be my last week with you for a while as I’m heading off on parental leave until next year.
In a bumper morning for results, the two biggest names reporting are Royal Dutch Shell and Lloyds Banking Group.
Shell raised its dividend and set out plans to raise the payout by 4 per cent a year, six months after slashing it for the first time since the second world war. Shell said it would pay a third-quarter dividend of 16.65 cents a share, after cutting it from 47 cents to 16 cents a share back in April. Shell also set a target to reduce net debt from $73.5bn to $65bn, after which it would distribute between 20 and 30 per cent of cash flow from operations to shareholders.
The oil major reported adjusted earnings of $955m in the third quarter, up from $638m in the previous quarter. In the equivalent quarter last year, though, it reported adjusted earnings of $4.8bn. On a statutory basis, the group reported a third-quarter pre-tax profit of $442m up from an excruciating $23.9bn pre-tax loss in the second quarter after the pandemic forced it to take huge writedowns.
Lloyds meanwhile returned to profit in the quarter, handily beating analysts' forecasts. The bank benefited from the revival in the property market, and like other lenders reported far lower provisions for bad loans than in previous quarters.
Third-quarter pre-tax profits of £1bn compared with a £676m loss in the second quarter, and a £50m profit in the third quarter of last year when Lloyds’ results were dragged down by a £1.8bn provision for PPI payouts. Lloyds provided just £301m in the latest quarter for expected defaults, taking the total for the year so far to £4.1bn. It now estimates full-year provisions will be at the lower end of its £4.5bn to £5.5bn range.
BT reported a 20 per cent drop in pre-tax profits for the six months to September after revenues from BT Sport and its business customers dropped due to the pandemic. But the telecoms group also raised the bottom end of its full-year adjusted ebitda guidance by £100m despite the 8 per cent revenue decline. The new range is between £7.3bn and £7.5bn for the year to March 2021, down from £7.9bn in the 2020 fiscal year. BT said it expects to return to that level in the following financial year.
The revenue decline at ad group WPP eased in the third quarter, with like-for-like revenues excluding pass-through costs down 7.6 per cent from the same period last year. All regions showed improving trends compared with the second quarter of the year, WPP said.
Also out on Thursday is an update from FTSE 100 group Smith & Nephew.
Beyond the Square Mile
Tiffany has agreed a price cut to ensure its sale to LVMH goes through, people briefed on the situation told the FT. The US jeweller accepted a slightly lower price of $131.50 a share from the French luxury group, down from the $135 agreed last November, with the feuding sides set to settle competing lawsuits as part of the peace deal. Tiffany will pay its shareholders a dividend of 58 cents a share. The new price values Tiffany’s equity at around $15.8bn rather than $16.6bn. Some analysts questioned why LVMH had bothered kicking up such a fuss for what was ultimately a relatively modest price cut. Full story here.
Standard Chartered reported better than expected underlying pre-tax profits (of $745m), the latest London-listed bank to do so. The Asia-focused lender clocked up loan loss provisions of $353m for the third quarter, compared to analyst estimates of $614m. StanChart joined rival HSBC in saying that it may consider resuming dividend payments given its “strong capital position”.
Juicy details from Masayoshi Son’s emails are contained in legal documents revealed as part of a court battle about WeWork. Mr Son, founder of SoftBank, told the executive he put in charge of SoftBank’s ill-fated investment in the shared office provider to “use whatever excuse” he could find to postpone a payment of up to $3bn to WeWork shareholders, the documents showed. More here.
Also out on Thursday are results from Credit Suisse, VW, which managed to eke out a pre-tax profit, and the world’s largest brewer AB InBev, which has announced it will scrap its interim dividend because of the impact of the pandemic despite better than expected third-quarter figures.
Essential comment before you go
Serious Money With negative rates, is the end of free banking for UK customers finally here, asks Claer Barrett. Logically, a simpler model with transparent charges would be fairer, but it’s one that carries a considerable risk of customer desertion — as HSBC showed this week.
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