LONDON (Alliance News) - Stocks in London were higher Friday morning, with investors still celebrating the Bank of England's easing measures, but Royal Bank of Scotland Group shares were missing out after it said it swung to an operating loss in the first half of 2016.
The FTSE 100 index was up 0.6%, or 39.44 points, at 6,779.60. The FTSE 250 was up 0.3% at 17,293.09 and the AIM-All Share up 0.3% at 764.17.
RBS shares were down 5.2%, the worst performer in the FTSE 100. The lender, which is 73%-owned by the UK government, said it made an operating loss of GBP274.0 million in the half to the end of June, swung from a GBP261.0 million profit a year prior.
RBS's loss for the half, attributable to ordinary shareholders after its final dividend access payment, was GBP2.05 billion, compared to a GBP179.0 million loss a year before. This includes the dividend access payment, which amounted to GBP1.19 billion, plus GBP1.31 billion in litigation and conduct costs.
RBS said its adjusted operating profit for the half, which removes one-off costs along with litigation and conduct charges, was GBP1.16 billion, down from GBP2.89 billion a year before. Adjusted operating profit for the bank's Personal & Business Banking, Commercial & Private Banking and Corporate & Institutional Banking franchises fell 15% in the half and the profit was further hit by increased volatility losses.
RBS said its common equity tier 1 ratio was 14.5% at the end of June, still ahead of its 13.0% target. The CET1 ratio is a key measure of bank profitability and the ability of the lender to pay dividends.
At the top end of the large-cap index was Hikma Pharmaceuticals, up 2.8%, recovering some of the ground lost Thursday, when it fell 17%. The drug company late Wednesday said it expects full-year operating profit within its Generics division to be hit by changes in revenue mix, but maintained its guidance on its other two divisions.
In the FTSE 250, Ibstock was up 7.1%, the biggest mid-cap gainer. The clay bricks manufacturer said it has contingency plans in place to enable it to balance production with sales volumes for the remainder of the year as a response to the uncertainty resulting from the UK's vote to leave the European Union.
The building materials company said its key focus under these plans will be the management of stock levels and said capacity will be flexed to balance production with sales levels as necessary. Ibstock said it will manage its cost base in response to the evolution of its markets as visibility improves.
The comments came as Ibstock posted revenue for the six months ended June 30 of GBP210.0 million, up from GBP148.9 million a year earlier. Pretax profit came in at GBP37.9 million from GBP77.0 million a year earlier, including GBP51.8 million in net exceptional benefits a year earlier which did not repeat. Ibstock declared an interim dividend of 2.4 pence per share, having offered no interim dividend a year earlier.
Shares in Esure Group were down 4.7%. The insurer trimmed its interim dividend to 3.0 pence from 4.2p a year earlier and below the 3.5p forecast by DividendMax. Esure said it was cutting the dividend in order to fund growth across its divisions.
Pretax profit for the half-year to the end of June was GBP30.7 million, down 69% from GBP97.6 million a year earlier. The 2015 half-year pretax profit had been flattered by a one-off gain booked on the value of esure's holding in GoCompare. Underlying pretax profit, taking out the one-off effects, was essentially flat in the first half, at GBP45.6 million versus GBP46.5 million a year prior.
In mainland Europe, the CAC 40 index in Paris was 0.7% and the DAX 30 in Frankfurt was 0.2%.
In Asia on Friday, the Japanese Nikkei 225 index ended flat. The Chinese Shanghai Composite dropped 0.2%, while the Hang Seng index in Hong Kong continues up 1.4%.
On Thursday, the BoE's Monetary Policy Committee voted unanimously to cut UK interest rates by 25 basis points to 0.25%.
In addition, the BOE expanded the size of its asset purchase facility programme, with the increase totalling GBP170 billion as a whole. It included the expansion of UK government bonds purchases by GBP60 billion to GBP435 billion, up to GBP10 billion in UK corporate bonds and introduced a Term Funding Scheme, worth "around GBP100 billion", aimed to help reinforce the transmission of the interest rate cut to the real economy.
The highlight in the economic calendar Friday is US nornfarm payrolls, scheduled at 1330 BST. US payrolls are expected to come in at 180,000, down from the 287,000 seen in June, according to FXStreet.com.
Average hourly earnings are expected to grow 0.2% on a monthly basis, compared to a 0.1% rise in June, and 2.6% year-on-year, flat against the June reading. The US unemployment rate is expected to show a fall to 4.8%, compared to the 4.9% seen in June.
Elsewhere, there are UK Halifax house prices at 0830 BST and the US Baker Hughes US oil rig count at 1800 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
Copyright 2016 Alliance News Limited. All Rights Reserved.
Hikma Pharmaceuticals (HIK)
Ibstock (IBST)