Lloyds, HSBC, Domino’s and other recent news
Lloyds reported flat first-quarter profits that fell short of market expectations amid exceptional costs including charges relating to payment protection insurance (PPI) and an estimated charge for pulling the Standard Life Aberdeen investment mandate.
Impairments also ticked up in the period, reminding investors that the company’s destiny is heavily tied to the UK economy. The company has a lot of exposure to secured and unsecured lending and there is a risk a chaotic Brexit could see bad debts spiral.
If this was a disappointing update, Metro Bank’s was downright disastrous. The number of new customers continued to rise across both personal banking and business banking but ‘a small number of large commercial and partnership customers’ withdrew deposits after the January trading update due to ‘adverse sentiment’.
This resulted in a net reduction in average deposits per branch of £2.9m compared with an increase of £4.7m in the fourth quarter of last year.
At least HSBC (HSBA) did better with its own Q1 performance (3 May), with adjusted pre-tax profit coming in substantially ahead of expectations though the number was flattered by $400m worth of favourable one-off items.
The misery continued for shopping centre landlord Intu Properties (INTU) on 3 May, with a profit warning driving the shares to fresh all-time lows around 90p. Like-for-like net rental income for 2019 is expected to be down by 4% to 6% compared with previous guidance for a decline of 1% to 2%.
Domino’s warned that its international business would not break even as promised in 2019 and Purplebricks said it would exit Australia and scale back ambitions in the US due to various struggles, resulting in the departure of founder and chief executive Michael Bruce.