FTSE slumps as NatWest announces bumper payout
European markets were down on Friday morning as NatWest (NWG.L) announced a share buyback of up to £750m ($1bn) and a 3p dividend.
The bank posted a pre-tax profit of £2.5bn for the six months to June, up from a loss of £770m in the previous year. Its stock was up 1.7% as markets opened in London.
It’s board declared an interim dividend of 3p a share and said it intends to distribute a minimum of £1bn a year from 2021 to 2023 by declaring ordinary and special dividends.
“These results have been driven by good operating performances across the group, underpinned by a robust loan book and a strong capital position,” said CEO Alison Rose.
“NatWest has followed in the footsteps of Barclays ((BA)RC.L) and Lloyds (LLOY.L) earlier this week by reporting a decent set of H1 numbers, as the unlocking of the UK economy boosts confidence, and a lot of the worst-case scenarios failed to play out,” said CMC Market’s chief analyst Michael Hewson.
The FTSE 100 (^FTSE) was down 0.8% higher. Its top fallers included product testing and certification company Intertek Group (ITRK.L), down almost 8%, and British Airways parent IAG (IAG.L), down roughly 3%, both of whom announced their results today.
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Intertek’s interim results showed it was recovering from the depths of “pandemic-induced recessions around the world,” said Steve Clayton, fund manager of the HL Select UK Growth Shares fund, which holds Intertek.
“But expectations for Intertek’s ability to translate any recovery into higher margins were high. So far, the group is lagging a little on the margin front, even though pretty much all parts of the business are now seeing demand bouncing back.”
As for IAG, in the six months to 30 June, it flew 20.8% of 2019 capacity due to COVID restrictions, and its revenue was down 58.2% to €2.2bn (£1.8bn, $2.6bn).
“Long-haul traffic will be last to recover, and IAG’s position within Europe means it’s at the mercy of many of different government restrictions,” said Laura Hoy, equity analyst at Hargreaves Lansdown.
Overnight in Asia markets took a beating amid China’s sweeping moves against the private tuition, tech and property sectors, as rising COVID cases continue to hurt economies.
The Hang Seng (^HSI) was down 1.4%. The SSE Composite (000001.SS) closed 0.4% lower and the Nikkei (^N225) lost 1.8%.
“The longer-term outlook may still depend on whether Beijing can calm investor nerves about subsequent regulatory clampdowns and the growth impact on its domestic firms,” Yeap Jun Rong, market strategist at IG said in a note.
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