Connect with us

Business

Lloyds profits double to £2bn as it benefits from mortgage boom

Lloyds

Lloyds profits double to £2bn as it benefits from mortgage boom

A booming mortgage market and an economic recovery that made it less likely that Covid-hit borrowers would default on loans helped Lloyds Banking Group double its profits in the three months to September.

The group, which owns Halifax and is the UK’s largest mortgage lender, benefited from an increase in demand for larger homes linked to the pandemic “race for space”, and last-ditch efforts by consumers to take advantage of the stamp duty holiday, which finished last month after reducing at the end of June.

There was a £2.7bn net increase in its home loans in the quarter, bringing mortgage lending to £15.3bn over the nine months to September – the strongest rise in that measure at the bank in more than a decade.

It contributed to a 96% rise in pre-tax profits to £2bn in the third quarter compared with £1bn a year earlier. That beat average analyst estimates of £1.3bn.

The UK’s improving economic outlook, which has been driven in part by the success of the Covid-19 vaccination programme, also meant the bank could release another £84m from a cash pile that had been earmarked for potential loan defaults triggered by the pandemic.

That compares with the £301m it put aside during the same period last year, and the £253m charge expected by City analysts. Lloyds has released £740m in loan loss provisions so far this year.

Commenting on his first set of results since taking over as chief executive, Charlie Nunn said he saw “significant opportunities” for Lloyds to develop and grow, including through “disciplined investment”. It comes as the lender takes a larger interest in wealth management.

“This can be built on the foundation strengths of customer service, distribution, and cost management. As we move into the final quarter of 2021, the board, group executive committee and I are developing the next evolution of our strategy and longer-term priorities,” Nunn added.

The new chief executive is expected to unveil the bank’s new multiyear strategic plan in the new year.

Nunn joined the bank after a nine-year career at the high street rival HSBC, where he last served as the global head of personal banking and wealth management. His appointment completed a top-level shake-up at Lloyds, which replaced its finance chief in 2019 and appointed Robin Budenberg as chairman, replacing Lord Blackwell, in January this year.

Nunn’s predecessor António Horta-Osório, who led the bank for a decade, left at the end of April to join Credit Suisse, where he is now chairman of the Swiss lender.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.

18 − eight =

Business

Ethiopian Airlines Wins Bid For Nigeria Air

The Federal Government has selected the Ethiopian Airlines (ET) Consortium as preferred bidder for Nigeria Air.

Minister of Aviation, Sen. Hadi Sirika disclosed this in a media briefing on Friday in Abuja.

He said ET scored 89 percent out of 100 as regards the technical bid and 15 out 20 as regards financial bid.

Mr Sirika said the Request for Proposal (RFP) under the Public-Private Partnership (PPP) Act, governed by Infrastructure Concession Regulatory Commission(ICRC) regarding the Nigeria Air was now completed.

He said, “After a careful, detailed and ICRC governed selection process, Ethiopian Airlines (ET) Consortium has been selected as preferred bidder, offering an owner consortium of 3 Nigerian investors.

“The Nigerian investors are MRS, SAHCO and the Nigerian Sovereign Fund (46%), FGN owning 5% and ET 49%. The consortium has been subject to a due diligence process.

“The contract will be negotiated between consortium and FGN leading to a Full Business Case (FBC) which will be expected to be approved by the Federal Executive Council (FEC). We expect this process to take 6-8 weeks.”

The minister said the national carrier would be launched with three Boeing 737-800 in a configuration very suitable for the Nigerian market.

Mr Sirika said Nigeria Air will be launched with a shuttle service between Abuja and Lagos to establish a new comfortable, reliable and affordable travel between the two major Nigerian Airports.

“The first aircraft is ready to arrive in Abuja for the further work and NCAA inspection, demo flights and audit as part of the AOC requirements.

“In time, two others will arrive to complete the required three aircraft for a new AOC holder. The interim executive team has prepared, with the support of FAAN.

“The team has arranged for Terminal C at the Abuja Airport and finalised a contract with MMA 2 terminal in Lagos, for the operation of an initial shuttle between Lagos and Abuja,” he said.

The Operations Control Centre (OCC) at the Abuja Airport would act as Headquarters of the airline.

Continue Reading

Business

UK slashes personal, corporate taxes in bid to spur growth

UK slashes personal, corporate taxes in bid to spur growth

Britain’s new government on Friday announced a sweeping plan of tax cuts it said would be funded by borrowing and revenues generated by anticipated growth, as part of contentious moves to combat the cost-of-living crisis and bolster a faltering economy.

But Treasury chief Kwasi Kwarteng offered few details on the cost of the program and its impact on the government’s own targets for reducing deficits and borrowing. The government’s two-pronged approach offers short-term help for homes and businesses struggling with soaring energy costs while betting that lower taxes and reduced red tape will spur economic growth and increase tax revenues in coming years.

“We need a new approach for a new era, focused on growth,” Kwarteng told lawmakers in the House of Commons.

Friday’s statement was billed as a “fiscal event” rather than a budget, because it wasn’t accompanied by an analysis of its cost from the independent Office for Budget Responsibility. Opponents said the government was dodging scrutiny.

The plan was immediately attacked by the opposition Labour Party for favoring the interests of business over working people and failing to provide any analysis about the impact on the government’s fiscal targets.

“It is a budget without figures, a menu without prices,” said Rachel Reeves, Labour’s spokeswoman on Treasury issues. “What has the chancellor got to hide?”

Many economists have expressed concern that the government’s policies will lead to a sharp increase in borrowing, undermining confidence in the British economy. The pound on Friday fell below $1.12 for the first time since March 1985.

The program announced Friday reverses many of the initiatives announced by former Prime Minister Boris Johnson, another Conservative. The center-right party has led Britain for the last 12 years.

For example, Kwarteng annouced that he was reversing a hike in national insurance taxes introduced by Johnson’s government in May to boost spending on health and social care. Kwarteng said the government would maintain expected funding for the National Health Service — but he didn’t say how.

He also said the government would cut the basic rate of income tax to 19% next year, from the current 20%. The top rate will drop to 40% from 45%. He also canceled a planned six percentage point increase in the corporate tax rate, leaving it at 19%.

“This was the biggest tax-cutting event since 1972, it is not very mini,” said Paul Johnson, director of the Institute for Fiscal Studies, an independent think-tank that scrutinizes government spending. “It is half a century since we have seen tax cuts announced on this scale.”

The announcement comes just three weeks after Prime Minister Liz Truss took office. She has said the Conservative government’s core mission is lowering taxes to drive economic growth and declared this week that she was ready to make “unpopular decisions” such as removing a cap on bankers’ bonuses to attract jobs and investment.

The plan runs counter to the view of many Conservatives that governments shouldn’t rack up huge debts that taxpayers will eventually have to pay.

Reeves criticized the government for expecting taxpayers to foot the bill for its initiatives, rather than increasing a tax on the windfall profits of energy producers benefiting from soaring prices for oil and natural gas.

A cost-of-living crisis driven by steeply climbing energy costs and slowing economic growth are the biggest challenges Truss faces.

Inflation stands at 9.9%, near the highest Britain has seen since the 1980s, and is predicted to peak at 11% in October.

The government denied it was gambling the economy on a “dash for growth,” but many economists said it was taking a huge risk by allowing borrowing to balloon while the economy is weak and inflation is high.

The Bank of England said Thursday that the U.K. may already be in recession, defined as two consecutive quarters of economic contraction. It expects gross domestic product to fall by 0.1% in the third quarter, below its August projection of 0.4% growth. That would be a second quarterly decline after official estimates showed output fell by 0.1% in the previous three-month period.

In the past two weeks, the government has announced th at the government would cap gas and electricity bills for households and businesses, amid fears that the poorest won’t be able to afford to heat their homes and companies will go bust this winter. Kwarteng said this initiative would be funded by borrowing.

Kwarteng also announced new “investment zones” across England where the government will offer tax cuts for businesses and help create jobs. He will also give details on how the government aims to accelerate dozens of major new infrastructure projects, including in transportation and energy.

Truss — who is inspired by Margaret Thatcher’s small state, free market economics — has insisted that growing the economy and tax cuts for businesses will benefit everyone in the country.

But critics say Truss’s right-wing instincts are the wrong response to the U.K. economic crisis.

Continue Reading

Business

Boeing to pay $200m over 737 Max crash statements

Boeing to pay $200m over 737 Max crash statements

The US stock market regulator said the aviation giant and its former chief executive Dennis Muilenburg made false statements about safety issues.

Boeing “put profits over people” in an effort to rehabilitate its image, according to the Securities and Exchange Commission (SEC).

The 737 Max was grounded for 20 months after two crashes killed 346 people.

As part of the settlement Mr Muilenburg will also pay a penalty of $1m.

“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets,” SEC chairman Gary Gensler said in a statement.

Boeing and Mr Muilenburg “failed in this most basic obligation,” he added.

The SEC’s statement also said that both Boeing and Mr Muilenburg did not admit or deny the regulator’s findings.

“We will never forget those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made broad and deep changes across our company in response to those accidents,” Boeing said in response to the SEC’s announcement.

“Fundamental changes that have strengthened our safety processes and oversight of safety issues, and have enhanced our culture of safety, quality, and transparency,” the company added.

The SEC said a fund will be established for investors who suffered losses due to the misleading information between 2018 and 2019.

line
Analysis box by Theo Leggett, business correspondent

This settlement is largely symbolic. The 737 Max scandal has already cost Boeing tens of billions – another $200m will barely register.

But it does give the SEC the chance to call out Boeing and its ex-chief executive Dennis Muilenburg for making assurances about the plane’s safety, when they already knew it had a serious problem – thereby misleading investors.

It’s unlikely this will cause Boeing any meaningful harm. Its corporate reputation had already been severely damaged by the affair. The company is now working hard to restore it, and regain public and investor confidence.

For Mr Muilenberg himself, the financial consequences of the settlement won’t be that painful either. He received some $60m in compensation and benefits when he left the company. But the fact that the SEC chose to charge him personally sends out a powerful signal.

There have been criticisms in some quarters that the ex-boss has not been properly held to account for his role in the affair. On this occasion, though, the finger has been pointed squarely in his direction.

line

On 29 October 2018, Lion Air Flight 610 crashed into the Java Sea 13 minutes after taking off from Jakarta’s Soekarno-Hatta International Airport, killing all 189 passengers and crew.

Less than five months later, Ethiopian Airlines Flight 302, another Boeing 737 Max on its way to Kenya, crashed six minutes after leaving Ethiopia’s capital Addis Ababa. All 157 people on board were killed.

The crashes were linked to a flight control system called the “Maneuvering Characteristics Augmentation System” (MCAS) in the Boeing 737 Max.

The SEC said that “after the first crash, Boeing and Mr Muilenburg knew that MCAS posed an ongoing airplane safety issue, but assured the public that the 737 Max was safe to fly.

The crashes have cost Boeing more than $20bn, including payments to families of those killed in the crashes.

In the wake of the incidents, the US Congress passed new legislation reforming how the country’s aviation regulator, the Federal Aviation Administration (FAA), certifies new planes.

A small number of trials are expected to start next year to resolve outstanding claims.

Continue Reading
Advertisement

Trending