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(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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UK lender Barclays reported a surge in annual profit, aided by the reversal of credit impairments set aside in 2020 to deal with the fallout from the pandemic, and the bank said it plans GBP1.0 billion in share buybacks. Recently appointed Chief Executive CS Venkatakrishnan said: "Barclays demonstrated a clear and sustainable path to growth over the course of 2021, delivering double-digit return on tangible equity across our operating businesses, and returning GBP2.51 billion of excess capital." Barclays pretax profit improved sharply to GBP8.41 billion in 2021 from GBP3.07 billion in 2020, and came in ahead of market consensus of GBP8.11 billion. Helping to boost profits was a GBP653 million credit impairment release, swung dramatically from a GBP4.84 billion charge in 2020. Net interest income slipped to GBP8.07 billion from GBP8.12 billion, but net fee, commission & other income rose to GBP13.87 billion from GBP13.64 billion. The bank's 2021 common equity tier one ratio - a key measure of a bank's financial strength - was 15.1%, unchanged from 2020. Barclays declared a total dividend of 6.0 pence, substantially higher than the 1.0p paid out in 2020. The bank also intends to launch a share buyback worth up to GBP1.0 billion, which is expected to commence in the first quarter of this year.
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Barclays also noted it has frozen millions of pounds in bonus share awards made to former boss Jess Staley, who resigned after the initial findings of an investigation into his role as private banker to disgraced financier and convicted sex offender Jeffrey Epstein. Barclays's annual report revealed it has suspended all of Staley's unvested long-term bonus share awards pending the regulatory probe. It said almost 70% of these share awards granted since he was appointed in 2015 remain unvested. Staley stepped down to contest findings by the UK Financial Conduct Authority and Prudential Regulation Authority over the way he represented his relationship with Epstein to the bank. He still will receive his contractual entitlement to GBP2.4 million in cash and shares the equivalent of 12 months in fixed pay as well as a pension allowance and other undisclosed benefits.
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Rio Tinto reported a sharp rise in annual earnings boosted by higher commodity prices as the Anglo-Australian miner paid out its highest total dividend ever. For 2021, Rio generated sales revenue of USD63.50 billion, up 42% from USD44.61 billion in 2020 as pretax profit doubled to USD30.83 billion from USD15.39 billion. Adjusted underlying earnings surged to USD21.4 billion from USD12.46 billion. Rio Tinto declared total 2021 dividend of 1,040 US cents, up from 557.0 cents in 2020. This also included a 247 cents special payout. Looking ahead, Rio said capital expenditure to be USD8.0 billion in 2022, rising to USD9.0 billion to USD10.0 billion in 2023 and 2024. The miner's production guidance was unchanged from January update.
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Heathrow airport in London bemoaned that it was the only hub airport in Europe to see a reduction in passenger numbers in 2021, due to the UK's tougher coronavirus travel rules. Just 19.4 million people travelled through the west London airport last year. That was down 12% on 2020 and represents the lowest annual total since 1972. The airport blamed its poor performance in comparison with European rivals on the UK's tighter restrictions on international travel. Cost savings of GBP870 million were achieved in the past two years, but the airport's pretax loss still came in at GBP1.79 billion, narrowed only slightly from GBP2.01 billion in 2020, due to high fixed costs and low passenger numbers. Cumulative losses during the pandemic rose to GBP3.8 billion. The airport said it is hopeful for a strong summer rebound, contributing to 45.5 million passengers expected to use the airport this year, but it reported lower-than-expected passenger numbers in January and February. Chief Executive John Holland-Kaye described 2021 as "the worst year in Heathrow's history".
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Stellantis said it was able to make progress against "intense headwinds" to post a record year in 2021. The company was reporting its first annual results after the completion of the merger of France's Peugeot with Italian-American Fiat Chrysler Automobiles in January of last year. On a pro forma basis, net profit grew to EUR13.35 billion from EUR4.79 billion. The pro forma results take into account the merger and presents results for 2021 as if the merger had gone through on January 1, while the comparison 2020 results combine the performance of Peugeot and FCA. Pro forma net revenue increased 14% to EUR152.12 billion from EUR133.88 billion, as pro forma combined shipments rose 3.4% to 6.1 million from 5.9 million. The rise, Stellantis noted, was primarily due to Covid-related temporary production suspensions in 2020.
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MercadoLibre on Tuesday reported a narrowed quarterly loss in a strong end to a year which saw "record results across the board". Shares ended down 5.3% at USD887.86 in New York on Tuesday, but rose 6.4% after-hours. For the fourth quarter of 2021, the Buenos Aires, Argentina-based e-commerce firm registered revenue of USD2.13 billion, up 60% from USD1.33 billion a year before. Of this, net service revenue increased 52% to USD1.78 billion from USD1.17 billion, and net product revenue more than doubled to USD348.0 million from USD161.7 million. The company's quarterly net loss narrowed to USD46.1 million from USD50.6 million. Gross merchandise volume grew to USD8.0 billion, up 21% on a year ago, and successful items sold reached 287.9 million, up 26% year-on-year.
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MARKETS
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Stock markets were rising, while oil and safe-haven assets were giving back recent gains, after the sanctions imposed on Russia for its incursion into Ukraine were meeker than expected. "The escalation in the Russia-Ukraine conflict will hit the eurozone economy mainly via higher energy prices giving another spur to inflation, which will affect real incomes," commented Oxford Economics. "For most European countries trade links are relatively minor, so with a few exceptions present only a low threat to the outlook. Similarly, financial links are also limited, with only three European banks having a noteworthy presence in Russia and will not represent a systemic risk to the banking system."
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CAC 40: up 1.3% at 6,875.04
DAX 40: up 0.9% at 14,830.24
FTSE 100: up 0.4% at 7,527.17
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Hang Seng: closed up 0.6% at 23,660.28
Financial markets in Japan shut for Emperor's Birthday.
S&P/ASX 200: closed up 0.6% at 7,205.70
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DJIA: called up 0.6%
S&P 500: called up 0.8%
Nasdaq Composite: called up 1.1%
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EUR: up at USD1.1353 (USD1.1344)
GBP: up at USD1.3604 (USD1.3595)
USD: up at JPY115.06 (JPY114.94)
Gold: down at USD1,893.33 per ounce (USD1,900.36)
Oil (Brent): down at USD96.11 a barrel (USD96.70)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Ukraine's security council approved plans to declare a state of national emergency, in response to the growing threat of a Russian invasion. The measure, which must be formally approved by parliament, requires stepped-up document and vehicle checks, among other measures, the council's secretary Oleksiy Danilov said. Danilov said he would deliver a report to Ukraine's parliament later on Wednesday, with lawmakers expected to approve the added security measures this week. They would apply to all parts of Ukraine except for its two Russian-backed eastern separatist regions, where a deadly insurgency that has claimed more than 14,000 lives broke out in 2014. Ukraine also mobilised its military reserve and urged its citizens to leave Russian territory.
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Russian President Vladimir Putin said the country's interests were non-negotiable, as Moscow massed more than 150,000 troops on the borders with Ukraine and the West punished Russia with new sanctions. In a video address to mark the Defender of the Fatherland Day, a public holiday in the country, Putin congratulated the Russian military and praised the battle-readiness of the army after he signalled plans to send troops to Ukraine. "Our country is always open for direct and honest dialogue, for the search for diplomatic solutions to the most complex problems," Putin said. But he added: "The interests of Russia, the security of our citizens, are non-negotiable for us." Putin spoke after parliament's upper house, the Federation Council, on Tuesday evening gave him unanimous approval to deploy "peacekeepers" to two breakaway Ukrainian regions now recognised by Moscow as independent, and potentially into other parts of Ukraine.
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Putin is highly likely to launch a full-scale invasion of Ukraine and attack Kyiv, the UK foreign minister said Wednesday. "We think it's highly likely that he will follow through on his plan for a full-scale invasion of Ukraine", Liz Truss told Sky News.
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US President Joe Biden on Tuesday announced the "first tranche" of sanctions against Russia, including steps to starve the country of financing, saying Moscow had started an invasion of Ukraine. And Biden threatened tougher steps if Russia "continues its aggression." "We're implementing sanctions on Russia's sovereign debt. That means we've cut off Russia's government from Western financing," Biden said. "It can no longer raise money from the West and cannot trade in its new debt on our markets or European markets either." The measures also target VEB, Russia's state development bank, and members of the country's "elites," the US leader said. "They share the corrupt gains of the Kremlin policies, and should share in the pain as well." The announcement came after the EU unveiled its own sanctions in a coordinated Western effort to pressure Putin.
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US Secretary of State Antony Blinken said he had cancelled a planned meeting with Russian Foreign minister Sergei Lavrov later this week, as Russia had started an invasion of Ukraine. "Now that we see the invasion is beginning and Russia has made clear its wholesale rejection of diplomacy, it does not make sense to go forward with that meeting at this time," Blinken said.
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The US announced its opposition to Canada's proposed tax on the largest tech firms, warning it "would examine all options" should Ottawa go ahead with the levy. The US Trade Representative said Canada should instead work towards implementing a global taxation agreement that Organisation for Economic Co-operation & Development countries announced last year to defuse the global tech tax row. "As Canada is fully aware, the US has serious concerns about measures that single out American firms for taxation while effectively excluding national firms engaged in similar lines of business," USTR said. It called for Ottawa to "focus efforts on engaging constructively" with the OECD negotiations, "instead of pursuing a counterproductive unilateral measure that risks encouraging other countries to follow suit." Should Canada go ahead with the tax, "USTR would examine all options, including under our trade agreements and domestic statutes."
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The eurozone's annual inflation rate remained at record levels in January, according to Eurostat. On an annual basis, the consumer price index rose by 5.1% in January, ticking up slightly from a 5.0% rise in December. The latest reading, which confirmed preliminary estimates, set a record for the third month in a row. The inflation rate remains well above the ECB's target of 2.0% amid a power crisis on the continent which has sent the cost of natural gas, coal and electricity sharply higher. On a monthly basis, CPI rose 0.3% in January, slowing slightly from 0.4% increase in December.
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The business climate in France rebounded significantly in February after two months of decline linked to restrictions over the Omicron Covid variant, the national statistics agency INSEE said. The composite indicator for the major sectors of the economy rose by five points to 112, far above the long-term average, as well as the 105 points seen before the pandemic, INSEE said. The improvement comes largely from the service industry.
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By Tom Waite; thomaslwaite@alliancenews.com
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