(Alliance News) - Lloyds Bankings on Thursday followed peer Barclays in announcing a big improvement to second-quarter results, while also restoring its payout and announcing an acquisition to accelerate its push into wealth management.
Lloyds said it swung to a GBP3.91 billion pretax profit in the first half of 2021, from a GBP602 million loss a year earlier.
The lender's net income rose 2.0% to GBP7.56 billion from GBP7.41 billion. Net interest margin was 2.5%, which it guided for the rest of 2021 as well.
Lloyds was boosted by an impairment credit of GBP656 million in the first half, following a GBP3.82 billion hit a year earlier.
It resumed interim dividends by declaring a 0.67 pence per share payout, having not made on in the first half of 2020. The dividend is 18% higher than its 0.57p payout for the second half of 2020.
"During the first six months of 2021, the group has delivered a solid financial performance with continued business momentum, bolstered by an improved macroeconomic outlook for the UK," interim CEO William Chalmers said.
In addition, Lloyds announced plans to acquire investment and retirement platform Embark Group for GBP390 million.
"Embark enhances the group's capabilities to address the attractive mass market and self-directed Wealth segment, completing its Wealth proposition. Embark will also enable the group to re-platform its pensions and retirement proposition, delivering a market-leading platform for intermediaries and significantly strengthening its offering in Retirement, an important growth market," Lloyds said.
Embark, which will become part of Scottish Widows, brings GBP35 billion in assets under administration for 410,000 consumer clients. It has seven UK offices - in London, Bolton, Dundee, Edinburgh, Leeds, Leicester and Swindon - and includes the brands Advance, Horizon, Stocktrade, Vested and The Adviser Centre.
The purchase will have a 30 basis points impact on Lloyds' group CET1 ratio, which sat at 16.7% at the end of the first half.
"Our acquisition of Embark will not only help us serve all of a customer's financial needs in one place, but also sit alongside our existing partnerships which meet the more complex financial planning and investment requirements of mass-affluent and high net-worth customers through Schroders Personal Wealth and Cazenove Capital," explained Antonio Lorenzo, chief executive of Scottish Widows & group director of Insurance & Wealth.
Lloyds shares up 1.4% early Thursday in London, outperforming the wider FTSE 100 index.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 7,043.64
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Hang Seng: up 3.0% at 26,230.04
Nikkei 225: closed up 0.7% at 27,782.42
DJIA: closed down 127.59 points, 0.4%, at 34,930.93
S&P 500: closed down 0.82 of a point at 4,400.64
Nasdaq Composite: closed up 0.7% at 14,762.58
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EUR: up at USD1.1852 (USD1.1807)
GBP: up at USD1.3929 (USD1.3881)
USD: down at JPY109.83 (JPY110.09)
Gold: up at USD1,819.05 per ounce (USD1,800.47)
Oil (Brent): up at USD75.16 a barrel (USD74.62)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
0955 CEST Germany labour market statistics
1100 CEST EU business & consumer surveys
1400 CEST Germany provisional CPI
0930 BST UK monetary & financial statistics
0830 EDT US advance estimate GDP
0830 EDT US unemployment insurance weekly claims report
1030 EDT US EIA weekly natural gas storage report
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A shallow 8.2 magnitude earthquake struck off the Alaskan peninsula late Wednesday, the US Geological Survey said, prompting a tsunami warning. The earthquake hit 56 miles southeast of the town of Perryville, the USGS said, with a tsunami warning in effect for south Alaska and the Alaskan peninsula. The US government issued a tsunami warning for Alaska's southeast.
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BROKER RATING CHANGES
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BARCLAYS CUTS UDG HEALTHCARE TO 'EQUAL WEIGHT' (OVERWEIGHT) - TARGET 1,080 (975) PENCE
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HSBC CUTS WIZZ AIR TO 'REDUCE' (HOLD) - PRICE TARGET 4,100 (4,500) PENCE
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HSBC CUTS PENNON TO 'REDUCE' (HOLD)
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COMPANIES - FTSE 100
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Oil major Royal Dutch Shell said it is "stepping up" shareholder returns. Shell said it has rebased its second quarter dividend to 24 US cents, up 38% quarter-on-quarter. For the second quarter of last year, it had declared a 16 cents payout. In addition, Shell is targeting USD2 billion in buybacks which it aims to complete by the end of 2021.Chief Executive Ben van Beurden said: "We are stepping up our shareholder distributions today, increasing dividends and starting share buybacks, while we continue to invest for the future of energy." He added: "Total shareholder distributions for 2021 are expected to be around the middle of the 20-30% range of [cash flow from operations] from the previous four quarters. Our progressive dividend policy to grow dividends per share by 4% annually, subject to board approval, remains unchanged." Shell said it saw "another quarter of operational and financial delivery". It swung to a USD3.43 billion profit attributable to shareholders, from a USD18.13 billion loss a year earlier. Shell posted pretax profit of USD4.13 billion, swinging from a USD23.91 billion loss a year prior. Second quarter total revenue, so including joint-ventures, surged 90% to USD61.76 billion from USD32.49 billion.
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Miner Anglo American also set out plans to return USD2 billion to investors. It will buyback USD1 billion, and it declared a special payout of USD0.80 per share, equal to USD1 billion. Finance Director Stephen Pearce explained: "As a result of our prudent approach to capital allocation, including our commitment to our established base dividend policy of returning 40% of underlying earnings to our shareholders, our balance sheet is in a strong position." The buyback will kick off immediately and end "no later" than February 14. In addition, Anglo lifted its regular half-year payout to USD1.71 per share, from USD0.28 a year earlier. Anglo noted that including the buyback and special dividend, its interim payout is USD3.31 per share. In the six months to June 30, Anglo American's revenue more than doubled to USD21.78 billion from USD10.19 billion. Pretax profit surged to USD10.70 billion from USD1.56 billion. CEO Mark Cutifani said: "The first six months of 2021 have seen strong demand and prices for many of our products as economies begin to recoup lost ground, spurred by stimulus measures across the major economies."
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AstraZeneca said its Covid vaccine generated USD1.2 billion in sales in the first half of the year. The group added in its interim results statement that it shipped about 319 million doses worldwide during the period, which included USD572 million of sales in Europe and USD455 million in emerging markets. Overall first half revenue was USD15.54 billion, up 23% from a year before. Pretax profit rose 25% to USD2.37 billion. Astra declared an unchanged first interim dividend of USD0.90 per shares. It expects revenue to increase by a low-twenties percentage in the full year.
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Brewer and distiller Diageo reported an 81% rise in annual pretax profit to GBP3.71 billion from GBP2.04 billion the year before. Net sales in the financial year that ended June 30 were GBP12.73 billion, up 8% from GBP11.75 billion and up 16% on an organic basis. Volumes rose by 10%, or 11% organically, while Diageo's operating margin improved dramatically to 29.3% from 18.2%. Diageo declared a 72.55 pence total dividend, up 4% from 69.88p in financial 2020.
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COMPANIES - GLOBAL
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Airbus said it bounced back strongly into profit in the first half of the year as aircraft deliveries rose, leading the company to revise its performance forecasts upwards. Airbus posted a net profit of EUR2.2 billion for the first six months of 2021, compared to a loss of EUR1.9 billion last year as the airline industry was walloped by the Covid-19 pandemic. Airbus said it delivered 297 aircraft between January and June against 196 last year. As clients pay most of the cost of the aircraft upon delivery, revenues jumped 30% to EUR24.6 billion. The European plane manufacturer now expects to deliver 600 planes this year, instead of the previously estimated 566, the number delivered in 2020.
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Swiss food and drink company Nestle raised its full-year organic sales growth guidance after reporting higher year-on-year sales and profit in the first half. In the six months ended June 30, Nestle's underlying trade operating profit grew to CHF7.25 billion, around USD7.98 billion, up 1.3% from CHF7.16 billion in the same period a year prior, with an underlying profit margin of 17.4%. Sales also grew modestly in the first half, rising 1.5% to CHF41.76 billion from CHF41.15 billion the year before. Organic growth reached 8.1%, the company said, with real internal growth of 6.8% and pricing up 1.3%. The nutrition firm updated its full-year outlook for 2021, predicting full-year organic sales growth between 5% and 6%.
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Anheuser-Busch InBev reported a strong performance in the second quarter of the year, with annual earnings possibly seen growing in the double-digit range. AB InBev is a Leuven, Belgium-based drink and brewing company which owns brands such as Corona and Budweiser. Underlying profit attributable to equity holders surged 45% to USD2.61 billion in the second quarter to end-June from USD1.80 billion a year prior. Revenue rose 21% to USD25.83 billion from USD21.30 billion.
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Robinhood has said its mission is to "democratize finance for all", and that stretches to its plan for the company's debut on public markets Thursday. The online investment platform, which is expected to begin trading under the ticker symbol "HOOD" on the Nasdaq, has set aside up to 35% of the shares under its initial public offering for sale to its users. On Wednesday, the company said it raised USD1.9 billion in an initial public offering priced at USD38 per share, at the low end of the range in its prospectus and giving a USD32 billion valuation. Robinhood, whose commission-free stock trading model has been copied by some rivals, had USD81 billion in assets under its custody at the end of March, up from USD14.2 billion at the end of 2019.
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Thursday's Shareholder Meetings
Amiad Water Systems Ltd - AGM
Aminex PLC - AGM
B&M European Value Retail SA - AGM
CMC Markets PLC - AGM
De La Rue PLC - AGM
discoverIE Group PLC - AGM
Dr Martens PLC - AGM
GB Group PLC - AGM
Intermediate Capital Group PLC - AGM
Johnson Matthey PLC - AGM
Ovoca Bio PLC - AGM
Palace Capital PLC - AGM
Playtech PLC - GM re Finalto sale
Powerhouse Energy Group PLC - AGM
Tate & Lyle PLC - AGM
Volex PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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