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Bad debts are closing in on Barclays
Rising interest rates pushed Barclays to a profit of £2bn in the past three months, around £200m better than City forecasts.
While this will please long-suffering investors, it could catch the eye of new Prime Minister Rishi Sunak, who is looking to plug a £40bn hole in the public finances.
Banks argue that an extraordinary tax would only restrict what they could lend to businesses and small customers. Critics say the extra profits are just due to higher rates and that the banks should pay.
The bank has set aside £381m to deal with expected bad debts, but says it is not seeing high levels of customer distress so far.
CEO CS Venkatakrishnan said: “We stand ready to support clients and customers facing an uncertain economic environment and higher cost pressures. Whether we help retail customers manage their finances or corporate customers navigate due to the volatility of the markets, we will continue to focus on meeting their needs.”
Santander and Standard Chartered also had strong returns today.
Markets.com’s Neil Wilson said: “Barclays beat expectations thanks to increased revenue from its trading business. Revenue from FICC (fixed income, foreign exchange and commodities) trading operations rose 93%, but there was still almost £1bn from a trading error in the US.Shares don’t see much upside from that – the usual concerns about trading income may be one-off, but investors aren’t confident of seeing any returns either.All and that the report card is good, there is a lot of economic uncertainty and worries about a windfall tax on banks.”
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Heineken shares fall 8% on fears of softening consumer demand
Shares in Heineken fell 8% today, wiping around £3bn off its market value after the Dutch brewer warned it had seen signs of softer consumer demand.
The Amsterdam-based company, which also owns the Tiger, Amstel and Birra Moretti brands, saw beer volume grow 8.9% in the third quarter of 2022 and 1.9% ahead of levels in 2019, while net revenue per hectoliter grew by 11.1% as a result. of rising prices and some consumers switch to premium products.
Heineken CEO Dolf van den Brink said: “We see increasing reasons to be cautious about the macroeconomic outlook, including some signs of softness in consumer demand.”
Despite fears of a fall in demand, Heineken kept its full-year forecast and said it planned to deliver 1.7 billion euros (£1.5 billion) in efficiency savings to try to improve productivity and offset the inflation of input costs.
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Fantasy novels help boost sales at publisher Bloomsbury
Political and economic turmoil has fueled a surge in sales of fantasy novels, according to London-based publisher Bloomsbury, as readers turn to imaginary worlds to escape harsher realities.
The company reported sales of £123m in the six months to August, up 22% amid growing demand for titles such as Sarah J Maas’ bestseller ‘Crescent City: House of Sky and Breath’ .
Bloomsbury boss Nigel Newton said: “I think the most interesting thing is how important escapism is to people – we’ve seen a huge increase in orders for our fantasy novels.
“The daily soup of disaster has been served to us through the cost of living crisis, incompetent politicians and the war in Ukraine – everything you could want to escape and get into a book.”
Shares in Bloomsbury rose 4% to 424p.
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FTSE 100 flat, Reckitt and WPP shares 3% lower
The FTSE 100 index is close to its opening mark (7.67 points to 7,005.81), but shares in WPP and Reckitt Benckiser are down 3% after their latest updates.
WPP reported a 10% rise in third-quarter revenue and “continued strong momentum”, but shares fell 26.2p. up to 743.4 p. as investors also digested signs of advertising weakness after last night’s disappointing update from Google owner Alphabet.
Dettol’s Nurofen Reckitt business grew like-for-like revenue by 7.4% in the third quarter, but that didn’t stop the shares falling 154p to 5812p.
On the riser board, AstraZeneca shares rose 229p to 9982p and Mexico-based silver miner Fresnillo gained 4.4p to 718.6p after a production update.
The FTSE 250 fell 50.04 points to 17,781.59p, led by Bytes Technology, as shares in the software and cloud services business fell 4% or 18.8p. up to 419.2 p. after the semester results.
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Technology sector weakness hits markets, FTSE 100 flat
Futures markets are predicting a 2% drop for the tech-focused Nasdaq when it resumes trading following disappointing numbers from shares of tech bigs Alphabet and Microsoft.
Alphabet’s third-quarter revenue rose 6% to $69.1 billion, but that was more than $1 billion below forecasts as advertisers cut spending more than expected I expected.
Hargreaves Lansdown analyst Sophie Lund-Yates said: “The slowdown in advertising revenue was not a surprise, but the speed of the slowdown was not welcome and the market is still very sensitive to the changing tide.”
With earnings also missing expectations, shares of the Google and YouTube business fell 7% in after-hours trading last night.
Cautious guidance meant Microsoft shares fell to a similar level, even as it reported stronger-than-expected revenue from its cloud-based services.
US markets closed higher ahead of tech sector updates, with investors growing hopeful that the Federal Reserve will slow the pace of interest rate hikes from December.
CMC Markets expects the FTSE 100 to open unchanged at 7013.
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Barclays reports £2bn profit, flat rate of arrears
Barclays profits hit £2bn in the third quarter, taking it to a £5.7bn surplus for the year to date as lenders benefit from rising interest rates interest
The quarterly profit is 6% higher than the previous year.
The potential impact of inflation and rising interest rates saw the bank’s UK division record a credit impairment charge of £129m in the quarter, up from a net release of 306 million pounds the previous year.
It noted that arrears rates in its UK card business remain below historical levels.
Chief executive CS Venkatakrishnan said: “We stand ready to support clients and customers facing an uncertain economic environment and higher cost pressures.”
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Made.com suspends customer orders after rescue efforts fail
Made.com has suspended customer purchases after failing to find a buyer to rescue the beleaguered furniture business.
In a statement, the company said: “In light of the fact that MDL [Made Design] depends on MADE for any additional funding needs and in order to preserve value for its creditors, the MDL board has taken the decision to temporarily suspend new customer orders.
“This decision remains under review and a further announcement will be made if appropriate.”
In recent months, the company has warned it was considering cutting staff and would need £70m in funding to secure its future over the next 18 months.
Yesterday, Made said attempts to find a buyer had been unsuccessful. The company said: “After further discussion, all of these parties have now confirmed to the company that they are unable to meet the required timeline. As a result, these discussions have ended and the company is no longer receiving proposals for financing or possible offers”.