Barclays Plc in the center of attention Thursday as UK banking reporting season begins

Barclays, Unilever and AJ Bell are among the notable names in Thursday’s paper.

() () The share price has nearly doubled over the past twelve months as concerns over bad debt subsided, financial markets exploded and dividends returned.

The next trading update should justify a better view of the bank by investors according to Credit Suisse.

In a snapshot earlier this month, analysts at the Swiss bank said cost clarity at the end of the second quarter, coupled with the earlier-than-expected share buyback, helped sentiment as provisions for Falling bad debts were another boost.

“Transaction data is healthy and indicates further market share gains while asset quality remains strong, although credit card revenues are now unlikely to increase until 2022.”

An early UK rate hike would add to the good vibes for UK banks right now, with Barclays’ net interest margin currently stable, but with so much going on right now, that would be just the icing on the cake. on the cake.

Unilever’s margins on thin ice

Thursday will be a busy day for big caps, with () () dropping a trading update just as its stocks have fallen more than 20% since last year.

According to analysts at AJ Bell, this may be due in part to how investors searched for cyclical companies that could benefit from an economic recovery from the pandemic and show a rapid recovery in profits, such as oils. , banks and miners, rather than “Steady Eddies” like Unilever.

However, last year’s sales growth slowed down considerably, as this year the FTSE 100 group suffers from cost inflation and pressure on margins.

“The perception of late progress fuels speculation that Unilever is ripe for the arrival of an activist investor on the stock register. Daniel Loeb of Third Point sparked a reshuffle at Nestlé, once Mark Schneider was appointed CEO, and Nelson Peltz of Trian has already pushed for change at () (), after winning a seat on the board of directors of the American company, ”commented analysts.

“The ongoing auction of much of its tea business could prevent such discussions, especially as a rumored four-way fight between private equity firms CVC, Carlyle and Advent and a bid Cinven and ADIA’s joint venture could push the sale price up to £ 4 billion.

“The question then is what does Unilever do with the money, and whether it is reinvesting it in faster growing areas such as skin care or returning some of the money to shareholders. According to the classic activists playbook, a shareholder pushing for change might call for a full-fledged split in food operations or seek to crystallize the value of the 62% stake in Hindustan Unilever, whose shares are traded on the stock exchange. from Mumbai in India.

JP Morgan analysts expect the Anglo-Dutch group to warn on margins and see volume risks turning negative, higher costs and lower promotional spending also reaching 2022 results.

AJ Bell catching up

() () provides a year-end trade statement on Thursday, with bigger rival Hargreaves Lansdown giving a hint as to what could come with an update a week earlier.

The Bristol-based market leader reported declining earnings due to capping share trading volumes, but won net new business of £ 1.3 billion and welcomed 23,000 net new clients.

In July, Salford-based AJ Bell said it recorded 6% more users than in the previous quarter and net inflows of £ 1.8 billion which helped bring total assets under administration to 8% to £ 70.4 billion.

Net inflows in the quarter were £ 1.8bn (2020: £ 1.2bn), while total assets under administration increased 8% in the quarter to 70 , £ 4 billion.

Looking ahead, Managing Director Andy Bell said, “The structural growth drivers in our industry remain strong and we are well positioned to continue growth across our platform.”

Thursday October 21:

Finals: () (), Volution PLC

Commercial announcements: AJ Bell PLC (), () (), Barclays PLC (), () (), () (), Relx PLC, () (), () (), St. James’s Place PLC, Unilever PLC (), () ()

AGA: () (), Dechra Pharmaceuticals PLC (), Renishaw PLC (),

Economic data: UK public sector net borrowing

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Nancy Owens

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