- FTSE 100 edges higher, down 7 points at 7,685
- NatWest chief executive Alison Rose resigns
- Rolls-Royce motors ahead after raising guidance
8.55am: FTSE little changed as investors digest deluge of earnings
It’s a busy, busy day for earnings and updates. Away from the banks and Rolls-Royce for a moment and it has been a good day, so far, for British American Tobacco PLC (LSE:BATS).
Shares rose 3.1% after the London-based maker of cigarettes and vaping products saw its pretax profit rise sharply by 73% to £5.30bn for the six months that ended June 30 from £3.06bn a year before.
Revenue though was up just 3.7% to £13.34bn from £12.87bn, driven by New Categories, which made "good progress" towards the £5bn target by 2025.
But new boss Tadeu Marroco has warned investors not to expect “linear growth” in its new products division, even though it is on track to turn a profit next year.
The update dragged Imperial Brands Group 1.6% higher.
Heading the other was Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) which fell 1.9% after it held guidance amidst a backdrop of challenging market conditions and uncertainty.
Revenue grew to £7.4bn in the first six months of the year, an 8.1% increase compared to the same period 12 months ago and 6% growth on a like-for-like basis.
In the second quarter, revenue was also up by 1.9% to £3.5bn, with like-for-like growth up 4.1%, the company said in a statement.
Meanwhile, the FTSE 100 is see-sawing around opening levels, now down 7 points at 7,685.
8.37am: Farage calls for new interim board at NatWest
The crisis at NatWest shows no signs of easing despite the resignation of chief executive Alison Rose.
Nigel Farage has called for a “cultural change” in banking as he called for the NatWest chair to step down and for the lender’s “lead investors . . . to put in place very quickly a new interim board”.
The former Brexit party leader told Sky News on Wednesday the changes would be justified after taxpayers bailed “these people out after their greed and stupidity back in 2008” .
Speaking on his employer GB News, Farage said: the government “needs to appoint a new temporary board to take control of this bank, and then what we need to do is, starting very early in the autumn, is to put in place legislation that says banks cannot and must not discriminate against customers.”
On Sky, Farage said Rose’s decision to step down was “a start” but Sir Howard Davies, the NatWest chairman, should “absolutely” resign.
He added that he believed Peter Flavel’s position as the chief executive of Coutts bank was no longer “tenable”.
The City minister Andrew Griffith said it was “right” that Rose had stepped down following weeks of controversy over Coutts’ decision to “de-bank” Mr Farage because of his political views.
Shares are 3.1% lower while the FTSE 100 has pushed into the green, up 5 points at 7,697.
8.14am: FTSE flat and NatWest falls as Rose quits
The FTSE 100 made a muted start on Wednesday with banks NatWest Group PLC (LSE:NWG) and Lloyds Banking Group PLC (LSE:LLOY) grabbing the headlines for different reasons while Rolls-Royce Holdings PLC (LSE:RR.) soared after raising guidance.
NatWest shares fell 3% after announcing the departure of its chief executive Dame Alison Rose after a row with former UKIP leader Nigel Farage.
Rose had admitted to a “serious error of judgment” in briefing a BBC journalist about the closure of Nigel Farage’s bank account.
Howard Davies, chairman of NatWest said the decision had been agreed “by mutual consent.”
Speaking to his employer GB News Farage said the government, being a “shareholder in this bank, along with other major investors, needs to appoint a new temporary board to take control of this bank.”
Elsewhere, Lloyds Banking Group PLC (LSE:LLOY) was also on the back foot, down 4%, despite raising guidance for the full-year and delivering a 23% rise in first-half profits.
Despite the growth, the £3.87bn figure was slightly below the £4bn average of analyst forecasts compiled by the bank.
Zoe Gillespie at RBC Brewin Dolphin, said: “Lloyds has narrowly missed analyst expectations with its results, but the bank remains in a very strong position.”
“Although it has highlighted potential headwinds, Lloyds has also increased its guidance for the year, buoyed by an improving net interest margin, relatively limited impairment costs, and good asset quality,” she added.
The profit jump is likely to reignite the row over whether banks are doing enough to reward savers.
Away from the banks and Rolls-Royce Holdings PLC (LSE:RR.) was a star performer with shares soaring 16% in early exchanges.
The FTSE 100-listed engineer has bumped up full-year guidance after reporting a strong first half on the back of a successful start to its transformation plan.
Operating profit came in between £660mln and £680mln during the first half, the FTSE 100 defence firm said in a statement, which was over double consensus expectations.
The company now anticipates full-year underlying operating profit of up to £1.4bn, up by approximately £400mln, alongside free cash flow of around £1.0bn – a £200mln hike.
Analysts at Shore Capital called the update “very encouraging.”
“We expect to upgrade our EBIT forecasts by c20-40% in the current year,” the broker said and suspects more modest upgrades will be encouraged by the firm further ahead.
7.52am: Rolls-Royce hikes guidance after transformation starts well
Another big name reporting today is Rolls-Royce Holdings PLC (LSE:RR.) which has bumped up full-year guidance after reporting a strong first half on the back of a successful start to its transformation plan.
Operating profit came in between £660mln and £680mln during the first half, the FTSE 100 defence firm said in a statement, which was over double consensus expectations.
“Despite a challenging external environment, notably supply chain constraints, we are starting to see the early impact of our transformation in all our divisions,” boss Tufan Erginbilgic said.
The company now anticipates full-year underlying operating profit of up to £1.4bn, up by approximately £400mln, alongside free cash flow of around £1.0bn – a £200mln hike.
7.47am: Lloyds raises guidance after strong first-half
Away from NatWest and industry rival Lloyds Banking Group PLC (LSE:LLOY) has raised its outlook for 2023 and boosted the dividend after delivering strong growth in first-half profits.
In the six months to June 30, the UK’s biggest mortgage lender reported pre-tax profit of £3.87bn, up 23% from £3.15bn a year ago, but slightly below the £4bn average of analyst forecasts compiled by the bank.
The strong growth helped the lender lift the dividend by 15% to 0.92p from 0.80p.
Underlying net interest income rose 14% to £7.00 billion from £6.14bn, with a net interest margin (NIM) of 3.18% up from 2.77% the year prior.
Lloyds said NIM was 3.14% in the second quarter, down 8 basis points compared to the first, given expected headwinds from mortgage and deposit pricing.
For 2023, the bank expects this to fall more slowly than previously forecast, easing to 3.10% this year instead of 3.05% while it predicts return on equity to be greater than 14% compared to 13% it had guided.
7.15am: NatWest boss Alison Rose resigns after Nigel Farage spat
NatWest Group PLC (LSE:NWG)’s chief executive Alison Rose has resigned after admitting to a “serious error of judgment” in briefing a BBC journalist about the closure of Nigel Farage’s bank account.
Howard Davies, chairman of NatWest said the decision had been agreed “by mutual consent.”
“It is a sad moment. She has dedicated all her working life so far to NatWest and will leave many colleagues who respect and admire her,” he added.
Paul Thwaite, the current CEO of the Commercial and Institutional business, will take over from Rose for an initial 12 months before a successor is appointed.
Rose has been under mounting pressure since Farage, the former leader of the UK Independence party, produced evidence that NatWest’s private banking business Coutts had decided to close his account partly because his political views went against its values.
She admitted this week that she had given a BBC reporter the impression that Coutts took the decision for solely commercial reasons.
The broadcaster apologised to Farage on Tuesday for an inaccurate report about why his account was closed.
Rose was appointed as Group Chief Executive in 2019, having worked at the bank for more than 30 years.
7.00am: NatWest boss quits, FTSE 100 seen lower
The FTSE 100 is expected to open lower as investors await a bumper crop of UK earnings while the US Federal Reserve makes its latest rate call after the market close.
BAT, GSK, Lloyds, Rio Tinto, Reckitt, Fresnillo are just some of the names updating investors on Wednesday, the busiest day so far of the UK reporting season.
Spread betting companies are calling London’s blue-chip index down by around 20 points after closing up 13.21 points at 7,691.80 on Tuesday.
Alongside Lloyds Banking Group, another bank in focus is NatWest Group PLC (LSE:NWG) after its boss Dame Alison Rose resigned after she admitted to a "serious error of judgment" in discussing Nigel Farage's relationship with private bank Coutts, owned by NatWest Group, with a BBC journalist.
Rose will leave the bank, whose biggest shareholder has been the UK government since a taxpayer bailout in the 2008 financial crisis, with immediate effect, NatWest said. She has worked there for more than 30 years and became chief executive in 2019.
In the US, markets advanced ahead of the US rate call where a 25 basis point rise is all but nailed on.
Results after the closing bell from Microsoft and Alphabet were mixed. Microsoft shares fell although revenue and earnings beat expectations, the company reported a decelerating demand for its cloud computing services to 26% from 27%.
But Alphabet rose after results topped expectations driven by strong advertising.