Market report

Lloyds profits surge | Rolls-Royce improves

Bank of Scotland

Lloyds Bank has posted another surge in earnings as high interest rates pushed up half-year statutory pre-profits by 23% to £3.8 billion.

The bank whose brands include Bank of Scotland, Halifax and Scottish Widows, revealed a £700m provision for bad loans but declared a 15% rise in the interim dividend to 0.92 pence per share.

The net interest margin – a measure of the difference between what it pays out and receives in interest payments – was 3.14%, against 2.77% a year earlier andhigher than analysts had predicted. 

Charlie Nunn, CEO, said: “We know that rising interest rates, cost of living pressures and an uncertain economic outlook are proving challenging for many people and businesses. Guided by our purpose of Helping Britain Prosper, we remain fully focused on proactively supporting our customers and helping them navigate the current environment.

“The Group delivered a robust financial performance in the first half of 2023 with strong net income and capital generation alongside resilient asset quality.

“We continue to make good progress on delivering our strategic initiatives. Combined with our franchise resilience, this better positions us to support our customers, both today and in the future.”

However, the market was underwhelmed and marked the shares down by 0.75p to 45.25p.

NatWest suffered a fall of 9.5p, or 3.7%, to 241.75p after Dame Alison Rose resigned as its chief executive over leaking details of Nigel Farage’s finances to the BBC.

The FTSE 100 closed down 14.91 points at 7,676.89 as falling banking stocks and miners halted the index’s six-day winning streak.


Rolls-Royce

Shares in engineering group Rolls-Royce climbed 32.25p, or 21.2%, to 185p, its highest level in more than three years, after it reported a significantly improved first-half, surpassing consensus expectations.

The FTSE 100 company upgraded its guidance for the full year, and now expects higher underlying operating profit and free cash flow.

It put the positive momentum down to continued end-market growth, commercial optimisation, and cost efficiencies from its transformation programme, helping mitigate the impact of inflation and supply chain pressures.


Jaguar Land Rover

Jaguar Land Rover has reported its best quarterly profit since 2020 just a week after its owner Tata committed to a £4 billion investment in a battery plant.

JLR, Britain’s biggest car company, posted pre-tax profits of £435 million in the three months to the end of June, compared to a loss of £369m a year earlier.

Revenues were up 57% to £6.9billion with profitability driven by demand for the company’s most expensive models. 

Over the last couple of years, results have suffered from the impact of chip shortages, damaging its ability to deliver vehicles even as demand has remained robust.

It has been working through its order book as those constraints ease, reducing it by 200,000 in the last three months.

JLR said 13% of sales were fully electric or plug-in hybrids, down from 16% in the previous quarter. That was understood to be the result of a supply issue related to plug-in hybrids.



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