Glaxosmithkline Share News (GSK)

LONDON (Alliance News) - Lloyds Banking Group shares have hit a near 15-month high Friday, as it signalled that it now firmly on the path to recovery from the crippling effects of the financial crisis, raising its guidance for 2015 after reporting a strong underlying performance in the first quarter and confirming continued dividend payouts.

Its pretax profit for the first quarter dropped to GBP1.21 billion from GBP1.80 billion as it booked a GBP660 million charge related to the disposal of a stake in TSB Banking Group, but excluding this and other provisions, profit rose to GBP2.18 billion from GBP1.80 billion.

As was the case in the first quarter of 2014, Lloyds did not increase its provision for the mis-selling of payment protection insurance.

The bank improved its guidance for net interest margin in 2015 and said it expects a key measure of the quality of the loans it makes to customers will improve by more than previously expected. The bank's net interest margin, based on underlying figures, increased to 2.65% from the 2.32% recorded at the end of March 2014 and from 2.47% at the end of December that year. Lloyds had previously guided a full-year net interest margin of 2.55% and now expects to exceed that level.

Led by Chief Executive António Horta-Osório, Lloyds has sold off assets, exited international operations and focused on the UK, where he expects the economy to grow this year.

"We continue to see the economy going quite well. We continue to see and expect GDP to grow between 2.5% and 3.0% this year. All of our key segments present a very favourable trend in terms of impairments. I don't think that the election will change these trends any time soon," Horta-Osório told reporters.

Underlying impairment charges for bad or non-performing loans fell to GBP177 million in the first quarter, from GBP431 million a year earlier, helped by low interest rates and better economic conditions in the UK.

Chief Financial Officer George Culmer told reporters he was pleased with the group's improved financial strength, as the key common equity tier one ratio increased to 13.4% from 12.8% and the leverage ratio increased to 5.0% from 4.9% over the course of the first quarter.

"We've talked about having a capital requirement of about 12%. That's the sort of number we've talked about in terms of where we see the requirement. So 13.4% is in excess of that and puts us in a very strong position and gives us significant flexibility," Culmer said

The group's gradual return to full private ownership had been given a boost when the bank resumed dividends at a token 0.75 pence per share for 2014. The taxpayer's stake in the bank has come down to 20.95%, having been as high as 43% after a bailout in the midst of the global financial crisis of 2008-09.

"I am confident that the successful delivery of our strategy through our simple, low risk, customer focused, UK retail and commercial banking business model will enable us to become the best bank for customers and deliver strong and sustainable returns for shareholders. It also remains our intention to pay an interim and a final dividend for 2015," Horta-Osório said.

Insurer Prudential has confirmed that Mike Wells, chief executive of its US-based Jackson National Life Insurance Company since January 2011, will succeed Tidjane Thiam as CEO of the whole group on June 1.

Thiam is departing after about six years as the life insurer's CEO to replace Brady Dougan as the CEO of Swiss bank Credit Suisse AG.

"Following a rigorous succession planning process, we have found a fitting and experienced successor to Tidjane in Mike Wells, who has extensive experience of life insurance and asset management. Under his leadership, Jackson's profit has doubled and its cash remittances increased to a record GBP415 million in 2014. This has all been achieved while continuing to take a disciplined approach to risk management," Prudential Chairman Paul Manduca said in a statement.

Wells' basic salary will be GBP1.1 million and his maximum bonus will be 200% of his salary, with 40% of that amount being deferred into shares. Long-term incentive awards will be 400% of his base salary. Prudential said it will "support" Wells' move to London from the US.

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Markets: The FTSE 100 is trading slightly higher ahead of the long holiday weekend after recovering from a weaker open after a heavy sell-off on Wall Street on Thursday, while the pound is lower against its major counterparts after the UK Markit manufacturing Purchasing Managers' Index came in well short of expectations.

US stock futures point to a higher open on Wall Street. The DJIA is currently set to open up 0.4%, the S&P 500 up 0.3% and the Nasdaq 100 up 0.2%.

FTSE 100: up 0.1% at 6,966.02
FTSE 250: flat at 17,470.37
AIM ALL-SHARE: down 0.1% at 752.38
GBP: down at USD1.5291
EUR: up at USD1.1273
GOLD: down at USD1,181.28 an ounce
OIL (Brent): down at USD66.28 a barrel
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Other Top Corporate News
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Engineering company Smiths Group said it has hired Chris O'Shea as its new finance director, poaching him away from FTSE 250-listed molten flow engineering company Vesuvius. O'Shea will join Smiths Group on September 18. He joins from Vesuvius and formerly held senior positions at BG Group and Royal Dutch Shell. Vesuvius said the process of identifying a successor to O'Shea as chief financial officer is underway.
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GlaxoSmithKline's partner Theravance said the US Food and Drug Administration has approved Breo Ellipta for the treatment of asthma in patients over the age of eighteen. The efficacy and safety of the treatment was studied in a clinical trial with over 12,000 subjects in 23 studies of patients aged twelve and over. Breo is a fixed-dose combination of the inhaled corticosteroid fluticasone furoate and the long-acting beta2-agonist vilanterol, administered using the Ellipta dry powder inhaler. Glaxo licensed the drug, which is already used as a treatment for chronic obstructive pulmonary disease, from Theravance in 2002.
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Virgin Money Holdings said profitability improved in the first quarter as mortgage lending increased. It grew its gross mortgage lending in the first quarter of the year, and said it received a "high number" of applications in the three months. Virgin Money said it it grew mortgage lending by about a third in the three months ended March 31, compared with the corresponding quarter of the prior year, equivalent to a 3.6% share of the market.
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Telecommunications, IT managed services, and data centre services provider Colt Group said it expects to deliver modestly positive cash flows for 2015, as it posted a 1.3% decline in revenue for its first quarter. Colt posted a decline in revenue to EUR394.6 million in the quarter to end-March, down from EUR399.8 million a year before, as a contribution from its acquisition of KVH Co Ltd last December failed to offset a hit from its exit from low-margin carrier voice trading contracts.
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Capital & Counties Properties said it is continuing to make progress on its Covent Garden and Earl's Court projects in London and said it is on track to meet its targets in the former. The property company, which owns assets in London's Covent Garden and Earl's Court areas, said it is on track to meet its estimated rental value target of GBP100 million for its Covent Garden properties by 2017, with good leasing momentum in the business and investment plans for the King's Court and Carriage Hall sites on track.
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Business services company Rentokil Initial said revenue rose in the first quarter, with solid performances in most of its regional operations offsetting continued weakness in parts of Europe. The company, which provides pest control, hygiene services and supplies workwear, said its revenue in the quarter to the end of March was GBP417.8 million, up 1.4% year-on-year.
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Irish paper packaging company Smurfit Kappa Group named a new chief executive designate as it posted a fall in profit in the first quarter due to currency headwinds and an accounting change. Smurfit said it has appointed Tony Smurfit, currently president and chief operating officer of the company, as its chief executive designate. He will take over from current chief Gary McCann on August 31, when McCann will retire from the role. The move comes as the group said its earnings before interest, taxation, depreciation and amortisation in the first quarter to the end of March fell 1% to EUR266 million from EUR269 million.
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AIM Movers
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Pure Wafer shares have shot higher after it received a settlement from its insurers following a fire at its Swansea premises last December, and said it plans to return it to shareholders. It said it expects the payout to be "significantly higher" than the average price of 59.59 pence at which its shares have traded since November 2012, but is unlikely to be more than 125 pence per share. PeerTV is up after it said it is seeing an increasing number of customer enquiries following the deployment of a new assembly line at its Digitek SMY Assemblies business. Kalimantan Gold Corp shares are down after it warned it faces uncertainty as it needs additional financing for its operations and necessary capital expenditure. Begbies Traynor is also down after it said it now expects its full-year results to be below market expectations, as acquisitions have only partly mitigated a hit from the declining UK insolvency market.
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Top Economics And General
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British manufacturing sector growth eased unexpectedly in April, as the intermediate goods sector fell back into contraction, survey figures from Markit Economics showed. The Markit/Chartered Institute of Procurement & Supply Purchasing Mangers' Index, or PMI, fell to 51.9 in April from 54.0 in March, which was revised down from 54.4. Economists had expected the index to rise to 54.6. However, any reading above above 50 indicates expansion in the sector. The PMI remained above neutral 50.0 mark for the twenty-fifth consecutive month in April.
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UK mortgage approvals unexpectedly declined in March, after rising in the previous three months, data from the Bank of England showed. The number of loan approvals for home purchase fell to 61,341 from a six-month high of 61,523 in February. Economists had expected a higher figure of 62,500. In January, mortgage approvals were 60,503. Consumer credit grew by GBP1.2 billion from the previous month to GBP170.2 billion. That exceeded the GBP0.8 billion increase forecast by economists.
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Leaders of the three main UK parties clashed on Thursday night in separate interviews a week ahead of the UK General Election, as the Tories sought on Friday to continue their push to win northern votes by pledging more economic prosperity for the region, while Labour sought to defend its credentials to the City of London. Party leaders clashed during a Question Time grilling of the three main parties. A snap ICM/Guardian poll found Prime Minister David Cameron emerging as the victor, with 44% of viewers saying he performed best on the night. Cameron, Labour lead Ed Miliband and Lib Dem leader Nick Clegg all were subjected to questions from a BBC audience. Miliband was adjudged to have come second, with 38% support, while Clegg had 19%.
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With less than a week to go before the UK General Election, the Conservatives took the lead in the latest Ipsos Mori poll, but the parties continued to switch places in the daily YouGov survey. The latest Ipsos Mori Political Monitor poll saw the Conservatives swing into the lead against the same survey a fortnight ago, with the Tories gaining two points to 35% to overtake Labour, which saw its support plunge five points to 30%. In the daily YouGov/The Sun poll, the two main parties continued the seesaw pattern seen all week as Labour pushed back into the lead on 35% to the Tories 34%.
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Ireland's manufacturing sector growth slowed in April, as new work increased at a slightly weaker pace, survey figures from Markit Economics showed. The seasonally adjusted Investec purchasing managers' index, dropped to 55.8 in April from 56.8 in the previous month. However, any reading above 50 indicates expansion in the sector.
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The latest data from China's National Bureau of Statistics showed that the manufacturing sector in China continued to barely expand in April, with a manufacturing PMI score of 50.1. That beat expectations for 50.0, and was unchanged from the March reading. The bureau also said that its non-manufacturing PMI came in at 53.4 - down from 53.7 but still well into expansion territory.
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A Nepalese woman was rescued on Thursday after being buried under a guest house in Kathmandu since the massive earthquake which hit the country on Saturday, claiming thousands of lives, police and Interior Ministry officials confirmed. Krishna Kumar Khadka, who was in a serious condition, was the second survivor recovered on Thursday, Interior Ministry spokesman Laxmi Dhakal, said. The rescues came as efforts to find more people were hampered in many areas of Nepal due to torrential rain, government officials said. The death toll climbed to 6,155 people, police said. Injuries mounted to 13,402, according to the latest official figures.
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Afternoon Watchlist (all times in BST)

14:45 US Markit Manufacturing PMI
15:00 US Construction Spending
15:00 US ISM Manufacturing PMI
15:00 US Reuters/Michigan Consumer Sentiment Index
18:30 US Total Vehicle Sales
20:45 US FOMC Member Williams speech
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Tuesday's UK Corporate Events

Glencore - Q1 Production Report
HSBC Holdings - Q1 Interim Management Statement
Greene King - Trading Statement
Aberdeen Asset Management - Half Year Results
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Monday's Key Economic Events (all times in BST)

08:45 Italy Markit Manufacturing PMI
08:50 France Markit Manufacturing PMI
08:55 Germany Markit Manufacturing PMI
09:00 EU Markit Manufacturing PMI
09:30 EU Sentix Investor Confidence
14:45 US ISM New York index
15:00 US Factory Orders

Tuesday's Key Economic Events (all times in BST)

07:45 France Budget
10:00 EU European Commission Releases Economic Growth Forecasts
10:00 EU Producer Price Index
13:30 US Trade Balance
13:55 US Redbook index
14:45 US Markit PMI Composite
15:00 US IBD/TIPP Economic Optimism
15:00 US ISM Non-Manufacturing PMI
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