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(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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NatWest Group posted a swing to loss in 2020 and confirmed that it will withdraw from the Republic of Ireland, with the lender in talks with other banks to dispose of assets belonging to its Ulster Bank unit. For the year ended December 31, NatWest posted a swing to pretax loss of GBP351 million from a profit of GBP4.23 billion in 2019. In the fourth quarter alone, NatWest managed a profit, but pretax profit came in 96% lower year-on-year at GBP64 million. Total income - a measure which includes net interest income as well as non-interest income such as fees - was sharply lower in 2020. Total income fell 24% to GBP10.80 billion from GBP14.25 million. In the fourth quarter alone, it was down 43% to GBP2.42 billion. For 2020, the lender posted impairment losses amounting to GBP3.24 billion, up sharply from GBP696 million in 2019. NatWest declared a 3 pence per share dividend for 2020, following peer Barclays, which on Thursday declared a 1p dividend plus a share buyback. UK lenders had cancelled final payouts for 2019 under orders from the Bank of England amid the Covid-19 pandemic.
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Alongside its 2020 earnings, NatWest said it will "begin a phased withdrawal" from the Republic of Ireland, a "multi-year process", while remaining in Northern Ireland. "Following careful and comprehensive deliberation by the NWG board, NWG has concluded that, despite the significant progress that has been made in recent years, Ulster Bank in the Republic of Ireland will not be in a position to achieve an acceptable level of sustainable returns over its planning horizon," NatWest added. NatWest said it will aim to keep job losses and customer disruption at a minimum during the process. It has agreed to sell a EUR4 billion portfolio of performing commercial loans to Dublin-based AIB Group. The sale remains subject to due diligence. NatWest is also in early talks with Permanent TSB Group Holdings and others about their potential interest in buying other Ulster retail and small and medium enterprise assets. "These discussions may or may not result in agreement. Our preference is to continue to focus our discussions with counterparties who can provide customers with full banking services in the Irish market," NatWest said. Dublin-based Permanent TSB noted the announcement and commented on its aim to "grow its position in the retail and SME markets in Ireland and continue to be a force for competition". It confirmed it is in early talks with NatWest.
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Allianz hailed its "strong" final quarter which saw it close off 2020 with record assets under management, though its Property-Casualty insurance arm was hit by Covid-19. In the three months ended December, the Munich-based financial services firm said its revenue inched 0.3% higher to EUR35.6 billion from EUR35.5 billion a year earlier. Quarterly net income was 2.7% lower however, at EUR1.90 billion from EUR1.95 billion. Fourth quarter revenue rose 3.4% in Asset Management and by 2.0% in Life/Health insurance arm. The Property-Casualty insurance unit posted a 2.8% annual revenue fall in the fourth quarter. For the whole of 2020, Allianz posted a 1.3% revenue fall to EUR140.5 billion from EUR142.4 billion in 2019. Net income dropped 14% to EUR7.13 billion from EUR8.30 billion.
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Renault posted an annual loss during a year mired by Covid-19 lockdowns, hurting sales, but the carmaker lauded its second-half turnaround. The automotive market was hit by Covid-19 in 2020. The French carmaker said unit sales plunged 21% to 2.95 million in 2020. Revenue fell 22% to EUR43.47 billion from EUR55.54 billion in 2019. It swung to a net loss of EUR8.05 billion from a profit of EUR19 million. The carmaker did not declare a dividend for 2020. It had initially declared a EUR1.10 dividend for 2019, sharply lower than the EUR3.55 it paid for 2018, but then deferred that payout due to Covid-19. Renault noted a global shortage of electronic chips and said the peak of the shortage will be in the second quarter. Computer chips have been in high demand as automakers shift production to electric vehicles.
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Oil major Eni posted a swing to an annual loss during a year of tumbling oil prices and Covid-19 pain. Eni rounded off the virus-hit 2020 with a 27% annual revenue fall to EUR11.94 billion from EUR16.46 billion in the three months ended December. Its quarterly pretax loss narrowed, however, to EUR269 million from EUR431 million. In the final quarter of 2019, Eni had posted EUR1.84 billion in impairments. This figure was reduced to EUR455 million in the final three months of 2020. For the whole of 2020, Eni swung to a pretax loss of EUR5.95 billion, from a EUR5.75 billion profit. Revenue came in 37% lower at EUR44.95 billion from EUR71.04 billion. It was a "year like no other", Chief Executive Officer Claudio Descalzi commented.
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Segro said record lettings boosted its performance in 2020. The London-based property investment and development company reported a record leasing and asset management performance with GBP77.9 million of new headline rent in 2020, up 18% year-on-year, including GBP41.1 million of new pre-let agreements, up from GBP33.2 million a year ago. The company reported a 10% increase in its portfolio valuation as at the end of 2020 to GBP13.00 billion. Segro said its portfolio benefited from increased customer demand for modern warehouse space. Net asset value per share increased to 809 pence from 697p posted at the end of 2019. Segro said its pretax profit jumped by 62% year-on-year to GBP1.46 billion, thanks to a 2.1% like-for-like net rental income growth, aided by an average 19% uplift on rent reviews and renewals. The company declared a 2020 dividend increase by 6.8% to 22.1 pence a share. Final dividend increased by 5.6% to 15.2 pence.
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The chiefs of Facebook, Alphabet's Google and Twitter are slated to testify on March 25 at a US congressional hearing on misinformation plaguing online platforms. Mark Zuckerberg, Sundar Pichai and Jack Dorsey will take part in a remote video hearing coordinated jointly by two Congress subcommittees, one devoted to communications and technology and the other to consumer protection and commerce, the political bodies announced on Thursday. The subject of the hearing will be online misinformation and disinformation. "Whether it be falsehoods about the Covid-19 vaccine or debunked claims of election fraud, these online platforms have allowed misinformation to spread, intensifying national crises with real-life, grim consequences for public health and safety," the heads of the committees said in a release.
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Facebook chief Zuckerberg held talks with the Australian government Friday over a law that would force the social media giant to pay for content, as Prime Minister Scott Morrison insisted the country would not bend to "threats" from big tech. From Thursday, Australians could no longer post links to news articles or view the Facebook pages of Australian outlets, which are also barred from sharing their content. Treasurer Josh Frydenberg said he had spoken with Facebook Chief Executive Officer Zuckerberg on Friday, and that negotiations would continue over the weekend. "We talked through their remaining issues and agreed our respective teams would work through them immediately," Frydenberg said on Twitter. Prime Minister Scott Morrison told media in Sydney that Facebook's ban constituted a "threat".
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UK Supreme Court justices have ruled against Uber and said that drivers should be classed as workers. Seven justices ruled on the latest round of a long-running fight between Uber operating companies and drivers on Friday, after a hearing in July. Uber operating companies, who said drivers were contractors not workers, appealed to the Supreme Court after losing three earlier rounds of the fight. Justices dismissed Uber's appeal in a decision the GMB union said was "historic". Lawyers said the ruling will have implications for the gig economy. An employment tribunal ruled in 2016 that Uber drivers were workers, and were entitled to workers' rights. That ruling was upheld by an employment appeal tribunal, and by Court of Appeal judges.
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MARKETS
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Stock markets in Europe were mostly higher Friday, though London's FTSE 100 was held back by a surging pound, which was nearing the USD1.40 mark amid general dollar weakness. Wall Street was called higher as well. In London, NatWest shares were up 1.6%. In Paris, Renault was down 5.5%. In Milan, Eni was down 1.1%. "European markets are attempting to claw back some of their recent losses, with UK markets seeing some dip buying for recently sold names across the travel and services sectors," commented IG Senior Market Analyst Joshua Mahony, adding about sterling: "While UK retail sales, services, and manufacturing PMI surveys all highlight ongoing difficulties in the face of lockdowns and new Brexit conditions, the pound does reflect a feeling that the UK is ahead of where many believed we would be."
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CAC 40: up 0.5% at 5,758.33
DAX 30: up 0.5% at 13,955.52
FTSE 100: up 1.18 points at 6,618.33
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DJIA: called up 0.2%
S&P 500: called up 0.3%
Nasdaq Composite: called up 0.4%
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S&P/ASX 200: closed down 1.3% at 6,793.80
Hang Seng: closed up 0.2% at 30,644.73
Nikkei 225: closed down 0.7% at 30,017.92
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EUR: up at USD1.2135 (USD1.2076)
GBP: up at USD1.3985 (USD1.3955)
USD: down at JPY105.42 (JPY105.72)
GOLD: down at USD1,770.01 per ounce (USD1,776.28)
OIL (Brent): down at USD63.33 a barrel (USD64.49)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The eurozone's struggling service sector contrasted with a resurgent manufacturing economy, which registered further growth in February. IHS Markit's flash eurozone purchasing managers' composite output index climbed to a two-month high of 48.1 points in February. Though still below the 50.0 no-change mark, it topped January's 47.8 tally, suggesting the eurozone's private sector decline is easing. The composite output index is compiled using the performance of both the manufacturing and services economies. In February, the eurozone's manufacturing sector had its best showing in three years. The manufacturing flash PMI rose to 57.7 in February, a 36-month high, from 54.8 in January. Problems mounted for the services sector, however, as Covid-19 restrictions continued to take their toll. The eurozone flash services PMI activity index fell to a three-month low of 44.7 points from January's 45.4 points.
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Business activity in Germany expanded at the fastest pace in two months amid a rally led by the manufacturing sector, estimates from IHS Markit showed. The latest purchasing managers' index data from Europe's largest economy showed a "further divergence" between the manufacturing and services sectors. Manufacturing surged, while the services sector was hit by Covid-19 restrictions. The flash Germany PMI composite output index improved to 51.3 points in February, a two-month high, from 50.8 in January. The flash Germany manufacturing PMI roared to a 36-month high of 60.6 points, from the already decent 57.1 points in January. The services flash PMI dropped to a nine-month low of 45.9 points in February, from January's tally of 46.7, remaining firmly in contraction territory.
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The UK private sector's downturn was not as bad as anticipated in February amid confidence in the country's mass-vaccination rollout. IHS Markit said the February data indicated only a fractional decline in UK private sector output, which contrasted with the sharp reduction seen at the start of the national lockdown in January. The IHS Markit/CIPS UK services purchasing managers' index jumped to 49.7 points in February, up from 39.5 in January. Still, the latest reading was well above market expectations, cited by FXStreet, of 41.0 points and was the highest in four months. UK manufacturing PMI increased to 54.9 points in February, up slightly from 54.1 in January, beating market forecasts of 53.2. The UK composite PMI score rose to 49.8 points in February, up sharply from 41.2 in January and well above market consensus of 42.2.
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UK retail sales plunged in January as tighter nationwide coronavirus restrictions closed non-essential shops, the latest figures from the Office for National Statistics showed. On an annual basis, UK retail sales fell 5.9% in January having posted growth of 3.1% in December. The print missed market consensus, cited by FXStreet, for just a 1.3% drop. Retail sales plunged 8.2% month-on-month in January having risen 0.4% in December. The latest reading market missed consensus, cited by FXStreet, of negative 2.5%. "The latest national lockdown led to a sharp monthly fall in January's retail sales, with April 2020 the only month on record to see a bigger slump," said Jonathan Athow, deputy national statistician for Economic Statistics at the ONS.
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UK public sector net borrowing, excluding public sector banks, was estimated to have been GBP8.8 billion in January, down from GBP26.1 billion in December. This is the highest January borrowing since monthly records began in 1993, and the first January deficit since 2011, the ONS said. The lofty figure comes as UK Chancellor Rishi Sunak prepares to deliver his second government budget statement in early March.
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Japan's private sector showed a marginal improvement in February, but remained in decline, early figures from au Jibun Bank showed. Flash estimates showed that Japan's composite output index edged upwards to 47.6 index points in February, up from the final figure of 47.1 points from January, but still below the 50.0 neutral mark. The flash manufacturing output index rose to 51.3 points in February from the final figure of 49.2 in January, as both output and new orders expanded at the fastest rates seen since December 2018. Meanwhile, the flash Japan services business activity index dipped to 45.8 points in February from 47.1 points in January, with the fastest decline in new business activity in nine months.
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Consumer prices in Japan stayed in deflationary territory on an annual basis in January, according to figures released by the Statistics Bureau. Consumer prices fell 0.6% annually in January, though deflation slowed from 1.2% in December. Monthly, consumer prices were 0.6% higher in January. Excluding fresh food, annual deflation slowed to 0.6%, from 1.0% in December. The January figure topped expectations of a 0.7% decline. Excluding fresh food and energy, consumer prices rose 0.1% yearly in January.
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US President Joe Biden will pledge USD4 billion in US aid to the Covax global Covid-19 vaccination program during his virtual meeting with other G7 leaders on Friday, White House officials said. An initial USD2 billion will be released "by the end of this month," with the rest coming over the next two years, said a senior White House official, who asked not to be identified, on Thursday. Covax is a global project to procure and distribute coronavirus vaccines for at least the most vulnerable 20% in every country, allowing poorer nations to catch up with the rush by dozens of wealthy countries to vaccinate. "The US is really excited to be making our first contribution to Covax," the White House official said. "We do think it is vital to take a role in beating the pandemic globally."
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Italian Prime Minister Mario Draghi on Thursday secured final parliamentary approval for his government of national unity, allowing him to focus on his country's unprecedented health and economic crisis. The lower house, the Chamber of Deputies, backed the former European Central Bank chief and his mixed cabinet team of technocrats and politicians with 535 votes in favour, 56 against and five abstentions. Given that nearly all parties have lined up behind the new executive, the near-unanimous result was not a surprise. On Wednesday, Draghi overwhelmingly won a first vote of confidence in the Senate, the upper chamber, by a 262-40 margin, with two abstentions. Italy's new leader is taking over at a particularly difficult time, as the coronavirus pandemic has killed almost 100,000 people and sent the eurozone's third-largest economy plunging by a record 8.9% last year.
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Growth in Australia's private sector economy slowed in February, according to IHS Markit estimates. The composite output index fell to 54.4 points in February, a four-month low, from January's 55.9 points. The services business activity index came in at 54.1 points, also a four-month low, from January's 55.6 points. The manufacturing PMI slipped to a two-month low of 56.6 points in February, from 57.2 in January. More promisingly, Markit noted job creation was at a 28-month high.
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Retail sales in Australia grew at a slower pace than expected in January, estimates showed. According to the Australian Bureau of Statistics, sales rose 0.6% monthly in January, though a greater rise of 2% was expected by the market. On an annual basis, retail sales jumped 11% in January. In December, retail sales had fallen 4.1% monthly and rose 9.6% yearly.
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