(Alliance News) - Royal Bank of Scotland Group is to become NatWest Group, the UK state-backed lender said Friday, as it reported profit and net interest income for 2019 that beat expectations.
The bank did not offer any further details about the name change for the group, only that it will happen "later this year". Already its investment bank is called NatWest Markets.
RBS also expects 2020 to "challenge" its ability to generate income, with its own economic forecasts predicting a UK base rate cut in the short term.
In 2019, operating pretax profit increased 26% to GBP4.23 billion from GBP3.36 billion in 2018. Operating pretax profit, according to company-compiled consensus, was forecast at GBP3.77 billion
The bank's attributable profit for 2019 came in at GBP3.13 billion, compared to consensus of GBP2.52 billion. In 2017, when RBS reported its second profit in a decade, the figure was GBP1.62 million.
Net interest income for 2019 was down 7.0% year on year at GBP8.05 billion from GBP8.66 billion, but outperformed against GBP8.02 billion consensus.
Total income was GBP14.25 billion, compared to 2018's GBP13.40 billion and the market expectation of GBP13.66 billion.
The bank declared a final ordinary dividend of 3 pence and announced a 5p special dividend, taking its total 2019 distribution to 22.0p. The lender paid out a 12p special dividend at the interim stage stage, financed by the sale of its stake in Saudi Alawwal Bank.
RBS shares were down 3.5% in early trade Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 7,430.53
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Hang Seng: up 0.3% at 27,806.52
Nikkei 225: closed down 0.6% at 23,687.59
DJIA: closed down 128.11 points, 0.4%, at 29,423.31
S&P 500: closed down 0.2% at 3,373.94
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GBP: flat at USD1.3051 (USD1.3045)
EUR: soft at USD1.0838 (USD1.0850)
Gold: flat at USD1,574.70 per ounce (USD1,574.60)
Oil (Brent): flat at USD56.44 a barrel (USD56.30)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
1100 GMT Ireland goods exports and imports
1100 CET EU flash estimate gross domestic product
1100 CET EU flash estimate employment EU and euro area
1100 CET EU foreign trade
0830 EST US import & export price indices
0830 EST US advance monthly sales for retail & food services
0915 EST US industrial production & capacity utilization
1000 EST US University of Michigan survey of consumers
1000 EST US manufacturing & trade: inventories & sales
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Boris Johnson will chair the first meeting of his new-look Cabinet after a dramatic reshuffle which saw Sajid Javid quit as chancellor. Several senior heads rolled as the UK prime minister recast his top ministerial team on Thursday – with Javid ordered to fire his closest aides and replace them with advisers chosen by Number 10. The former chancellor chose to quit instead and was replaced by his former deputy at the Treasury, Rishi Sunak, in the biggest shock of Johnson's shake-up. Javid accused the PM of setting conditions "any self-respecting minister" would reject – seen as a thinly veiled swipe at his successor. And he told Johnson in his resignation letter that he believed it was "important as leaders to have trusted teams that reflect the character and integrity that you would wish to be associated with". The bombshell – less than a month before the Budget – follows tensions between the ex-chancellor and the PM's chief adviser Dominic Cummings.
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The death toll from China's virus epidemic neared 1,400 on Friday, as the US complained of a "lack of transparency" from Beijing over its handling of a crisis that has fuelled global panic. Nearly 64,000 people are now recorded as having been made ill by the virus in China, with the last two days showing a steep rise after a change in diagnostic methods. The National Health Commission disclosed a statistical error, however, saying it removed 108 deaths in Hubei that had been double-counted, but the nationwide toll still rose to 1,380 on Friday. The deepening crisis in China has caused fears of more global contagion, with Vietnam locking down villages after finding new cases and Japan becoming the third place outside the mainland on Thursday to report a death. More than two-dozen countries have now reported hundreds of cases among them.
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The German economy stuttered at the end of 2019, data from Destatis showed. German gross domestic product was flat quarter-on-quarter, while rising 0.3% on a year ago. Market consensus, according to FXStreet, had pencilled in a 0.1% quarter-on-quarter rise, and a 0.2% annual one. After a "dynamic start" in the first quarter, with growth up 0.5% sequentially, and a decline in the second quarter of 0.2%, there had been a slight recovery in the third quarter of the year, Destatis said, but GDP failed to rise in the final three months of the year.
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BROKER RATING CHANGES
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BERENBERG CUTS RELX TO 'HOLD' ('BUY') - TARGET 2100 (2120) PENCE
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COMPANIES - FTSE 100
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Drugmaker AstraZeneca reported a year of "strong" revenue growth amid the launch of new medicines - with sales of new medicines advancing by 59% in 2019 to USD9.91 billion - and said it expects these trends to continue in 2020. Pretax profit fell to USD1.55 billion in 2019 from USD1.99 billion a year earlier, despite revenue rising to USD24.38 billion from USD22.09 billion. Astra's profit was hurt by increased research & development costs and selling, general and administrative expenses. More positively, Astra said sales in Emerging Markets jumped by 18% to USD8.17 billion, with sales growth in China up 29%. US sales increased by 13% in the year to USD7.75 billion and Japan sales increased by 27% to USD2.55 billion. "Driven by a strong team, 2020 is anticipated to be another year of progress for AstraZeneca. We are becoming a better-balanced business, both regionally and through our medicines. This transition is a further step towards improving operating leverage and cash generation," said Chief Executive Pascal Soriot.
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Property investment company SEGRO named 2019 as a "successful" year amid "excellent" financial and operational results. The company's EPRA net asset value increased by 8.9% to 708 pence as at December 31 from 650p reported at the end of 2018. Adjusted pretax profit, meanwhile, grew by 11%, thanks to a record year of development completions, high customer-retention rates, like-for-like rental growth, and a low vacancy rate, SEGRO highlighted. Reported pretax profit declined, however, to GBP902.0 million from GBP1.10 billion year-on-year amid lower property gains. Like-for-like net rental income growth improved by 4.7% over the year, with average 18% uplift on rent reviews and renewals. As a result, revenue jumped to GBP432.5 million from GBP369.0 million a year ago. SEGRO upped its full-year dividend by 10% to 20.7p, having previously paid 18.8p a share.
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COMPANIES - FTSE 250
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Airtel Africa said its Malawi unit has completed the initial public offering on the local stock exchange, which was fully subscribed and raised MK27.92 billion, about USD37.5 million. Earlier in December, the mobile operator said Airtel Malawi will carry out an initial public offering on the Malawi Stock Exchange, but did not say what use would be made of the funds raised. The price has been set at MK12.69 per share and 2.20 billion shares were issued, representing 20% of shares outstanding. The company itself is relatively new to the London market, having floated in June in 2019. It is a subsidiary of India's Bharti Airtel, operating in 14 countries across Africa. It placed shares in its initial public offering at 80 pence per share.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Alfa Financial Software said it has secured a global partnership agreement with Accenture to market and work together on software implementation projects worldwide. "Partnership is a fundamental part of our growth strategy, and working with a partner like Accenture will help us accelerate our efforts to deliver Alfa to customers who want to become digital leaders," said Chief Executive Andrew Denton.
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COMPANIES - INTERNATIONAL
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Groupe Renault said it managed to meet its revised targets amid a "troubled" year which saw net income slump and the car maker slash its dividend. Revenue fell 3.3% to EUR55.54 billion in 2019, down 2.7% at constant exchange rates. Sales reached 3.8 million units, down 3.4% on 2018. Operating income fell 29% to EUR2.11 billion from EUR2.99 billion, while net income plummeted to EUR19 million from EUR3.45 billion in 2018. The group's operating margin slipped to 4.8% from 6.3% in 2018. "Beyond the fall in the group operating income, this decline came mainly from lower associated companies' contribution, down EUR1,730 million and a charge of deferred tax in France for EUR753 million," the French car maker explained. Of the associated companies' contribution, Nissan's fell sharply to EUR242 million from EUR1.51 billion a year ago. Despite the "troubled year", Renault managed to meet its revised guidance, said Clotilde Delbos, acting chief executive. Renault in January said it has appointed Luca de Meo, a former top-ranking Volkswagen director, as its new chief executive, effective July 1. The company said it will pay a EUR1.10 dividend for 2019, sharply lower than the EUR3.55 it paid for 2018.
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Liberty Global reported a full-year earnings fall, despite revenue growth in UK-based Virgin Media, its largest unit. The US telecommunications firm also said it will launch a USD1 billion buy back scheme. Revenue in 2019 slipped 0.6% to USD11.54 billion and in the fourth quarter it was 0.5% lower year-on-year at USD2.98 billion. Operating income fell 11% to USD745.5 million, despite rising 12% in the fourth quarter to USD282.5 million. Chief Executive Officer Mike Fries: "2019 was a transformational year on many fronts. In July, we sold our operations in Germany, Hungary, Romania and the Czech Republic to Vodafone for over USD21 billion. We are now geographically concentrated in five attractive Western European markets, while enjoying substantial financial firepower with over USD11 billion of total liquidity."
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Friday's Shareholder Meetings
no events scheduled
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By Tom Waite; thomaslwaite@alliancenews.com
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