(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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NatWest said it delivered a strong operating performance in the third quarter, but the UK state-backed bank's shares fell. NatWest's litigation and conduct costs were GBP294 million, which included provisions for an anticipated fine pertaining to breaches of UK money laundering regulations and "other matters". NatWest saw a bump in profit in the recent quarter thanks to the release of impairment provisions. In the three months to September 30, the bank recorded a pretax operating profit of GBP1.07 billion, up sharply from GBP355 million. NatWest made a credit release of GBP242 million versus a GBP254 million provision the year before. The bank's CET1 ratio ended the third quarter at 18.7% compared to 18.2% three months earlier and up from 18.5% at December 31.
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BNP Paribas reported a surge in profit in a "solid" third quarter as it has "rebounded" from the pandemic. The Paris-based bank also launched a EUR900 million share buyback. In the three months to September 30, BNP Paribas recorded pretax income of EUR3.45 billion, up 29% from EUR2.67 billion a year before. Revenue increased 4.7% to EUR11.40 billion from EUR10.89 billion. The lender's cost-to-income ratio improved slightly, lowering to 65.0% versus 65.6% the year before. BNP's CET1 ratio ended the quarter at 13.0%, ten basis points higher from June 30.
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Swiss Re announced nine-month earnings that beat expectations despite high payouts for natural disasters in the third quarter, including floods in Europe and Hurricane Ida. Over the first nine months of this year, the reinsurer, which provides insurance for other insurance firms, posted a net profit of USD1.3 billion compared to a loss of USD691 million during the same period last year. That beat the analyst consensus forecast of USD880 million calculated by Swiss news financial news agency AWP. Stripping out compensation paid out for Covid-19 related claims, net profit rose by 38% from the same period last year to USD2.3 billion.
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German luxury automaker Daimler reported a strong profit boost in the third quarter despite a steep drop in vehicle production due to the global semiconductor shortage. The Mercedes-Benz maker said in a statement its net profit surged 19% year-on-year to EUR2.57 billion euros while earnings before interest and taxes rose four percent to EUR3.61 billion. "We remain on track to meet our full-year targets thanks to a more robust business...despite a challenging environment," CFO Harald Wilhelm said. He said the company had been able to buck the chip crisis plaguing the sector by getting its fixed costs under control and adjusting its pricing scheme. Nevertheless the group said sales and production had slipped markedly, with revenue down to EUR40.1 billion from EUR40.3 billion in the third quarter of 2020.
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Miner Glencore reported lower production of copper, gold and zinc in the third quarter, compared to a year before, down 14%, 30% and 12%, respectively. However, ferrochrome output jumped by 61% annually in the quarter. "The asset base has largely performed in line with our expectations and our full-year production guidance remains unchanged," said Chief Executive Officer Gary Nagle. "Notably, as energy markets have improved, we are recovering from the market-driven production cuts initiated within our Australian coal portfolio in H2 2020. For the company's Marketing arm, which trades commodities, Nagle said Glencore expects full-year adjusted earnings before interest and tax to exceed the top end of the company's USD2.2 billion to USD3.2 billion per annum long-term guidance range. Glencore reported adjusted Ebit of USD3.3 billion for the Marketing arm in 2020, up 41% from 2019.
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Apple on Thursday said a strong fourth quarter "capped off a remarkable fiscal year", but shares tumbled on a revenue miss. Total revenue for the three months to September 25 jumped 29% year-on-year to USD83.36 billion from USD64.70 billion. Net income strengthened 62% to USD20.55 from USD12.67 billion, and diluted earnings per share grew 70% to USD1.24 from USD0.73. While the Cupertino, California-headquartered iPhone maker's quarterly EPS figure was spot-on consensus, the sales figure - while a September quarter record - missed the mark, with analysts having pencilled in nearly USD85 billion. "Our record September quarter results capped off a remarkable fiscal year of strong double-digit growth, during which we set new revenue records in all of our geographic segments and product categories in spite of continued uncertainty in the macro environment," said Chief Financial Officer Luca Maestri.
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Amazon posted chunky third quarter sales growth, but profit fell by more than a third as the e-commerce titan boosted spending. The company put "best for customers over the long term" ahead of short-term profit, Chief Executive Andy Jassy said. Pretax profit in the three months to September 30 fell 37% year-on-year to USD4.32 billion from USD6.81 billion. That was despite total net sales increasing 15% to USD110.81 billion from USD96.15 billion. Sales missed CNN-cited forecasts of USD111.6 billion. Coming in at USD6.23, down by more than half year-on-year, basic earnings per share also missed forecasts. CNN-cited consensus saw basic EPS coming in at USD8.90. Amazon's total operating expenses increased 18% to USD105.96 billion.
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Facebook announced plans to change its name to Meta as the technology and social networking company embarks on a "new chapter", while it continues to grapple with a whistleblower's allegations, as well as the looming threat of regulation. Meta will bring the firm's "apps and technologies under one new company". Meta was introduced by Chief Executive Mark Zuckerberg at Facebook's Connect 2021 conference. "The metaverse will feel like a hybrid of today's online social experiences, sometimes expanded into three dimensions or projected into the physical world," Facebook said. Facebook's corporate structure will not change. How it reports financial results will, however. It will operate two segments, Family of Apps - including its eponymous social media brand and also Instagram and Whatsapp - and Reality Labs.
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Gilead Sciences highlighted demand for Covid-19 treatment Veklury as it posted a quarterly revenue and earnings hike. Revenue for the third quarter of 2021 jumped 13% to USD7.42 billion from USD6.58 billion year-on-year, the firm pointing to increased demand for Veklury. Chair & Chief Executive Daniel O'Day praised the treatment, also known as remdesivir, for making a "significant impact as the Covid-19 pandemic continues to evolve." Gilead said two million patients received the treatment in the quarter. Net income for the quarter surged to USD2.59 billion from just USD353 million a year ago, and earnings per share improved to USD2.05 from USD0.29.
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Starbucks said it rounded off its financial year with record revenue, outlined an aim to return USD20 billion to shareholders over the next three years and earmarked plans to lift the wages of its coffee chain workers. The Seattle, Washington-based firm said revenue in the 14 weeks ended October 3 rose 31% to USD8.15 billion from USD6.20 billion a year earlier. It helped push annual revenue 24% higher to USD29.06 billion, from the USD23.52 billion achieved in the Covid-hit prior year. Quarterly pretax profit surged to USD2.25 billion from USD442.4 million, benefitting from a USD864.5 million disposal gain. Annual pretax profit soared to USD5.36 billion from USD1.16 billion. Starbucks, in a "historic" investment, will give its employees a pay rise, moving its average US hourly barista wage to USD17 per hour. In addition, it committed to forking out USD20 billion in share repurchases and dividends over the next three years.
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MARKETS
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Stock prices were down in Europe on Friday, and Wall Street was called lower, amid growing expectations of interest rate hikes to counter rising inflation and after results from two of the biggest of the US big-tech firms, Apple and Amazon, disappointed. Apple shares were down 3.3% in pre-market trading in New York, while Amazon was down 4.8%. In London, NatWest was the worst large-cap performer, down 4.1%.
"We expect the Bank of England to raise rates by 15 basis points at next week's meeting, but don't think the asset programme will be ended early. Both votes could very well be split," Rabobank commented. Though such a rate hike isn't warranted, in the Dutch bank's view, "it's hard to ignore the hawkish calls". "We have pencilled in another 25 bps increase in February. We see little chance of the Bank of England hiking 120 bps by end 2022, as currently priced in front-end rates."
The US Federal Reserve announces its latest policy decision on Wednesday next week, followed by the BoE on Thursday.
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CAC 40: down 0.3% at 6,782.82
DAX 40: down 0.8% at 15,564.34
FTSE 100: down 0.4% at 7,223.57
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Hang Seng: closed down 0.7% at 25,377.24
Nikkei 225: closed up 0.3% at 28,892.69
S&P/ASX 200: closed down 1.4% at 7,323.70
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DJIA: called down 0.2%
S&P 500: called down 0.5%
Nasdaq Composite: called down 0.9%
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EUR: down at USD1.1648 (USD1.1682)
GBP: down at USD1.3770 (USD1.3808)
USD: up at JPY113.75 (JPY113.29)
Gold: down at USD1,794.00 per ounce (USD1,802.81)
Oil (Brent): up at USD84.38 a barrel (USD83.94)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Annual inflation in the eurozone rose to its highest level in 13 years, while the bloc's economic growth slowed, figures from Eurostat showed. On an annual basis, eurozone's gross domestic product grew 3.7% in the three months to September, slowing sharply from 14% growth in the previous quarter. The print beat the market forecast, cited by FXStreet, of 3.5%. Meanwhile, the eurozone consumer price index rose 4.1% annually in October, accelerating from 3.4% in September. The latest reading showed prices rising faster than market expectations, cited by FXStreet, of 3.7%. Core consumer prices, which strips out food and energy, jumped 2.1% on an annual basis, quickening from 1.9% in September. Both prints were higher than the European Central Bank's inflation target of below, but close to, 2.0% over the medium term. The central bank on Thursday kept monetary policy unchanged.
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Germany's economy grew in the third quarter but fell short of what analysts had expected amid continued supply chain disruptions and material shortages, first official estimates showed. Federal statistics agency Destatis said the German economy expanded 1.8% over the previous quarter, but analysts had expected 2.2% growth - according to FXStreet. On the year before, gross domestic product was up 2.5%, slightly ahead of analysts expectations of 2.4% growth.
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The French economy, Europe's second-biggest, expanded strongly again in the third quarter, powered by a sharp increase in household spending and the reopening of key sectors from coronavirus lockdowns, official data showed. France's gross domestic product expanded by 3.0% in the period from July through September compared with preceding three months, a sharp acceleration from growth of 1.3% in the second quarter, the national statistics agency INSEE calculated. The latest GDP data were "above our expectations," Economy Minister Bruno Le Maire told AFP, saying the numbers was an "exceptional result". The data also beat INSEE's own expectations, which had been pencilling in growth of 2.7% for the third quarter in its previous forecast in September.
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UK mortgage approvals in September fell to the lowest level since July 2020 as the government's stamp duty holiday drew to a close, figures from the Bank of England showed. UK mortgage approvals were 72,600 in September, down from 74,200 in August. However, the latest figure was above market expectations, cited by FXStreet, of 70,950. The UK government's stamp duty holiday ended on September 30, meaning that from October 1 the tax returned to a threshold of GBP125,000 for house buyers in England and Northern Ireland.
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The UK government has condemned "unjustified" French threats and summoned the country's ambassador in London as the dispute over fishing rights escalated. The row over post-Brexit fishing rights has turned increasingly bitter, with a UK boat detained in a French port and threats of further action by the Paris government. Diplomatic efforts to resolve the row have involved the UK's ambassador in Paris, Menna Rawlings, and Cabinet minister George Eustice talking to ministers in the French government. But in a sign of growing concern in Westminster, Brexit minister Lord Frost chaired a meeting to consider the government's response.
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All remaining countries on England's red list for international travel will be removed, Transport Secretary Grant Shapps said. The Cabinet minister announced that the Latin American countries of Colombia, Dominican Republic, Ecuador, Haiti, Panama, Peru and Venezuela will be taken off the list at 4am on November 1. This means arrivals will no longer need to spend 11 nights in a quarantine hotel at a cost of GBP2,285. Shapps wrote on Twitter: "We will keep the red list category in place as a precautionary measure to protect public health and are prepared to add countries and territories back if needed, as the UK's first line of defence." He added that from Monday, the UK government will recognise coronavirus vaccines for arrivals from more than 30 new countries and territories including Peru and Uganda.
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The UK energy regulator might change the way it caps bills for millions of households across Britain as a major spike in gas prices drives suppliers to failure, PA reports. Ofgem has given no details of what adjustments it might make to how the cap is calculated, but will set out its thinking as it launches a consultation next month. Ofgem said in a letter to suppliers on Friday: "The unprecedented rise in energy prices this year has changed the perception of risk and uncertainty in this market. In order to protect the interests of consumers, we must ensure that the regulatory frameworks, including the price cap, fully reflect the costs, risks and uncertainties facing the supply companies we regulate." The consultation on potential changes will end in February, and they could be implemented at the beginning of April, when the price cap is set to change.
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US President Joe Biden on Thursday announced a "historic" blueprint for remaking America's economy, as he sought to pressure dissenters within his own Democratic Party to back the plan after months of tortuous negotiations. Biden is banking his legacy on passing the USD1.75 trillion Build Back Better social welfare package, a compact with the American people for a more equitable and greener society and the jewel in the crown of his domestic agenda. He announced he was sure of support for a revised spending framework just before taking off for a G20 summit in Rome – although whether his efforts galvanized the party's feuding rank-and-file remained to be seen. "I know we have a historic economic framework," Biden said in an address to the nation from the White House, shortly after meeting with Democratic leaders in Congress.
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By Tom Waite; thomaslwaite@alliancenews.com
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