LLoyds suspends 2019 share buyback, Essentra buys Spanish packaging company
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The FTSE 100 was expected to open 23 points higher at 7,305.
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Lloyds Bank said it was suspending the rest of its 2019 share buyback after a higher-than-expected spike in payment protection claims ahead of the August deadline led to a increased provision for potential payouts.
The company said it would now make provisions in the range of £1.2bn - £1.8bn in the third quarter in addition to the £650m made at the half year.
“The group now expects capital build in 2019 to be below our ongoing 170 to 200 basis points per annum guidance and for the statutory return on tangible equity to be lower than our 2019 guidance of around 12 per cent, with the final outcome dependent on the actual charge taken,” Lloyds said in a statement.
“In line with its prudent approach, and the uncertainty around the final outcome for PPI, the board has decided to suspend the remainder of the 2019 buyback programme, with £600m of the up to £1.75bn programme expected to be unused at mid-September.”
Essentra said it had bought Nekicesa Packaging from GED Iberian and EBN Vaccaria for an undisclosed sum.
Nekicesa is a converter of folding cartons supplying the Spanish pharmaceutical end-market. Essentra on Monday said the company had been acquired on a cash-free, debt-free basis, funded from existing facilities with the transaction immediately earnings enhancing.
AB Foods left its outlook unchanged as it reported that adjusted earnings will be in line with the previous year after a weaker period for its sugar division offsets strong profit performances from Primark and its grocery division.
Lower EU sugar prices have impacted the UK and Spanish sugar businesses, while a poor crop dealt a blow to Chinese sales volumes.
Newspaper round-up
Britain will plunge into its first recession in a decade should the government quit the European Union without a deal, according to the latest in a string of gloomy forecasts about the UK’s fortunes outside the EU’s free trade area. Eonomists at the accountancy firm KPMG said that the knock-on effects to Britain’s trade and business confidence of a no-deal Brexit would lead to the economy shrinking by 1.5% next year. – Guardian
The government could gain £90bn in extra revenue over 10 years if it taxed income from wealth in the same way it taxes income from work, according to a leading thinktank. The Institute for Public Policy Research said the reduced tax rate on gains from owning shares, property, fine art and wine was “unfair and outdated” and needs radical reform following years of worsening inequality. – Guardian
Britain’s post-Brexit economy will be transformed by a boom in the science, technology and healthcare industries, creating millions of new jobs and generating billions of pounds in output, a major new report has revealed. The economy will undergo a major shift in the next two decades driven by a green revolution, technological change and the ageing population, analysis by BNP Paribas and the Centre for Economics and Business Research (CEBR) found. – Telegraph
Stripping National Grid of its responsibility for keeping the lights on would cause “massive” disruption to the wider energy industry, its boss has claimed. The utility giant is under scrutiny after blackouts on August 9 and Kwasi Kwarteng, the energy minister, said last week the government would look again at whether it should keep its role as Britain’s Electricity System Operator (ESO). – The Times
US close
Wall Street stocks turned in a mixed performance on Friday as investors scoured over the key monthly jobs report amid speculation that something positive might be afoot on the US-China trade front.
At the close, the Dow Jones Industrial Average was up 0.26% at 26,797.46 and the S&P 500 was ahead 0.09% at 2,978.71. The tech-heavy Nasdaq Composite closed out the session 0.17% weaker at 8,103.07.