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Thursday Update

DB Live: Lloyds lifted; Shell; BT; Aberdeen hotel liquidation

7pm: BBC social media rules

BBC staff have been ordered to restrict their output on social media under new rules aimed at stamping out personal comments on politics and public policy.

Full story here

4.30pm: FTSE flat

The FTSE 100 closed more or less where it began, just 1.05 points up at 5,581.75.

1pm: Hotel in liquidation

The company behind the 100-bed Hilton Garden Inn in Aberdeen, St Andrew Street Hotel Company, has appointed Blair Nimmo and Geoff Jacobs of KPMG as joint liquidators.

The hotel was struggling because of the downturn in the oil and gas industry. The pandemic has exacerbated oversupply of hotel accommodation.

The hotel closed in March 2020 when Covid-19 lockdown measures were introduced in the UK. The directors were unable to secure new funding and placed the company in liquidation. Thirty-four staff who have been on furlough have been made redundant.

8am: London opens flat

The FTSE 100 was unmoved at the open at 5,583.06, up just 0.26 of a point, as investors paused following yesterday’s rout.

Lloyds Banking Group

7am: Lloyds benefits from homes surge

A surge in lending to homebuyers helped Lloyds Banking Group beat third quarter profit forecasts as it also lowered its provisions for expected bad loans due to the pandemic.

The bank, which owns Bank of Scotland, ScottishWidows and Halifax, reported pre-tax profits of £1 billion for the July-September period, almost double analysts’ expectations of £588 million.

It cashed in on pent-up demand from homebuyers, booking new mortgage lending of £3.5bn, after receiving the biggest surge in quarterly applications since the financial crash in 2008.

The bank noted that bad loans were lower than forecast and set aside a further £301m to cover expected customer loan defaults.

Following the appointment of Robin Budenberg to the board on 1 October, Lord Blackwell has confirmed that he will step down as chairman and resign on 1 January. Mr Budenberg will take over as group chairman and chair of its nomination and governance committee with effect from that date. 

shell

Shell beats forecasts

Oil giant raised its dividend by 4% quarter on quarter to 16.65 cents a share and reported a $177m profit on a current cost of supplies (CCS) basis, compared with a $18.4bn loss in the second quarter.

Adjusted earnings came in at $955m for the three months to the end of September, compared with a net profit of $4.77bn a year earlier, and $638m for the second quarter. Analysts had expected a profit of $594m.

Shell said the fall was due to lower oil prices and production volumes due to the global squeeze on demand.

Chief executive Ben van Beurden said: “Our decisive actions taken earlier in the year have solidified our operational and cash delivery.

“The strength of our performance gives us the confidence to lay out our strategic direction, resume dividend growth and to provide clarity on the cash allocation framework, with clear parameters to increase shareholder distributions.”

BT raises earnings forecast

BT raised the lower limit of its earnings guidance for the year as it reported an 8% drop in revenue to £10.59 billion for the half year and a 5% fall in adjusted earnings to £3.72bn.

This was broadly in line with expectations, driven by the fall in revenue for BT Sports and partly offset by sports rights rebates and savings from the modernisation programme, leading to a 20% decline in reported before tax to £1bn.

It said the performance had given it confidence to raise the lower end of its earnings outlook for the year from £7.2bn to £7.3bn, with the upper end remaining at £7.5bn. It expects at least £7.9bn for the financial year ending in 2023.

The telecoms giant said growth will be driven by the continued recovery from COVID-19, sales of converged and growth products and the saving programme, offsetting legacy product declines.

The modernisation programme delivers £352m gross annualised savings at a cost of £163m.

The fibre rollout reached record levels in the quarter to 30 September, with a run rate of 40,000 premises per week, having passed 3.5m premises to date.

The consumer customer base for fibre jumped 60% compared to last year, with fixed and mobile convergence at 21.4%.

Its 5G-ready customer base now reaches one million people across 112 towns and cities.

Capital expenditure in the period rose 5% to £1.9bn to support fixed and mobile network investment.

Markets

The FTSE 100 index looks set to start fairly flat after big falls in the previous session.

Spread betting firm CMC Markets expects the blue-chip index to open around 5 points higher, after closing 146.19 points, or 2.4% lower on Wednesday at 5,582.82.

Overnight in New York, the Dow Jones Industrials Average plunged 943 points, or 3.4% – its biggest fall since June – while the broader S&P 500 index shed 3.5%, and the tech-laden Nasdaq Composite dropped 3.7%.

The falls by Asian markets were more modest, as the COVID-19 pandemic there is seen more under control, with Hong Kong’s Hang Seng index down 0.6%, and Japan’s Nikkei 225 index off 0.4%.

Today’s agenda

* First Minister Nicola Sturgeon will announce the levels of coronavirus restrictions to be placed on council areas.

* Trade union representatives will meet the Scottish Transport Secretary Michael Matheson this afternoon and will table proposals for defending jobs and the future of Scotland’s aviation sector. 

* Startup Summit (day two)

Today’s top Daily Business headlines

Hospitality groups say ‘lip service’ paid to concerns

Markets fall as lockdowns loom across Europe

Sunak to underpin economy with spending plan

Former ‘palace’ to be rebuilt as apartments

Forty firms win places on growth programme



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