BUSINESS LIVE: Barclays overhaul; IHG’s profits top $1bn; CMA baby formula probe

The FTSE 100 is down 0.1 per cent in early trading. Among the companies with reports and trading updates today are Barclays, IHG, Plus500 and Nightcap. Read the Tuesday 20 February Business Live blog below.

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Barclays targets £2bn in cost savings in three-year overhaul

Barclays is targeting £2billion in cost savings over the next three years amid an overhaul aimed at enhancing its profitability and shareholder rewards.

In its first significant strategy update since 2016, Britain’s second-biggest bank wants to cut its cost-to-income ratio from 63 per cent in 2023 to ‘high 50s in percentage terms’ by 2026.

Will having a driving licence help you get a job?

More than one in six jobs advertised in Britain require applicants to be able to drive, according to new analysis.

Having a driving licence is now seen as a ‘crucial qualification’ when applying for a role, according to the RAC Foundation, which carried out the research.

Holiday Inn owner IHG plots share buybacks and hikes dividend

Intercontinental Hotels Group is plotting bumper shareholder payouts for 2024 after the Holiday Inn owner’s profits exceeded $1billion (£794million) last year.

The FTSE 100-listed group told investors on Tuesday that it expects to return more than $1billion (£794million) to shareholders in 2024 as it kicked off payouts with a fresh $800million share buyback scheme.

London Stock Exchange planning to double boss’s pay to £11m

The owner of London’s stock market is planning to double its chief executive’s pay because of concerns that City bosses are being poached by US rivals.

David Schwimmer, boss of the London Stock Exchange Group (LSEG), looks set to get a multi-million pound pay rise.

Plus500 plots $175m in buybacks

Plus500 has announced shareholder payouts worth $175million in buybacks and dividends after the trading platform beat annual profit expectations on record high customer deposits and a growing global presence.

Israel-based Plus500 operates a trading platform for financial products including shares, exchange-traded funds (ETFs), indices, commodities and currencies across 60 markets in UK, Europe and Asia.

During the year, the company added a share dealing platform, a new line of business offering futures and options, a new retail trading platform in Japan, and more global regulatory licences as trading activity came off pandemic highs and volatility from the Russia-Ukraine war.

The London-listed company reported core profit of $340.5 million for full-year 2023, compared to $453.8 million last year.

This beat analysts’ expectations of $300 million according to a company-supplied consensus.

However, revenue for the year was down 13% at $726.2 million.

Valentine’s Day boost leaves Perfume Shop smelling like roses as sales surge 18% on 2023 levels

Market open: FTSE 100 down 0.1%; FTSE 250 off 0.3%

The FTSE 100 has edged lower as the open, dragged by base metal miners on weaker copper prices, although losses are capped by the gains in Barclays after the British lender unveiled its overhauling plans.

Industrial miners have dropped 2.4 per cent, as copper prices trade lower against a firm dollar, while traders weigh the demand prospects in top consumer China after the Lunar New Year break.

Antofagasta is down 1.6 per cent despite reporting a 5 per cent rise in 2023 profit, with the Chilean miner slashing its full-year dividend and reporting an increase in capital expenditure.

Barclays has jumped 5.4 per cent to the top of the blue-chip FTSE 100 index, after the bank unveiled plans including bumper buybacks, an overhaul of its operations, cost cuts and asset sales to improve performance and lift shares.

Banks have advanced the most among sectors, up 0.6 per cent.

‘Safe to say the pandemic hangover is truly over for Intercontinental Hotels Group’

Adam Vettese, analyst at investment platform eToro:

‘Safe to say the pandemic hangover is truly over for Intercontinental Hotels Group with over $1bn on its way back to shareholders via buybacks.

‘Despite the cost of living crisis, it seems there has been no lull in demand for leisure spending with travel stocks in general having an outstanding 2023. Along with a portfolio of brands consumers can know and trust, this helped IHG shares rocket 68% last year.

‘We expect to see macro conditions begin to ease up, which certainly will not stifle the appetite for leisure spending. In fact, with more disposable cash in consumers’ pockets as inflation continues to ease, it’s quite likely we will see the firm build on its 2023 success.’

‘Barclays UK faces many of the same challenges as the wider market’

Matt Britzman, equity analyst, Hargreaves Lansdown:

‘There’s a shakeup at Barclays. It’ll now report through five distinct operating divisions with accountability as a key focus. Investors will hear more later today when the company dives into details. Fourth quarter performance was a little worse than expected, largely because of higher costs associated with the restructure. There was some concern that this could impact the buyback, but Barclays has put that to bed with a £1bn plan, ahead of expectations.

‘Medium-term guidance was positive and points to around 54% of today’s market cap being returned to investors by 2026. But there may be some who question whether it’s a little optimistic, especially relating to growth expected from the investment bank. Barclays’ huge presence in the investment banking world is an attractive proposition. But conditions are still poor and low activity in the capital markets continues to weigh on performance.

‘Barclays UK faces many of the same challenges as the wider market. It was good to see Barclays follow NatWest and report slowing deposit shifts, one of the reasons net interest margin was able to come in ahead of guidance.

‘The UK consumer continues to stay strong. Credit card users are spending more, but not letting those balances sit for long. Savvy card management means borrowers can avoid hefty interest costs and is one of the reasons default rates are staying low.

‘But weakness is creeping in over the pond. Default rates on US credit cards continue to tick higher and now sit at pre-pandemic levels. These levels aren’t an issue as such, but the trend is something to watch. Any delay to expected US rate cuts would keep the pressure on its card users and could see defaults creep ahead of pre-pandemic levels in the coming quarters.’

Bahrain vies for pole position as Middle East’s most liberal economy

The roar of Formula One car engines will blast out from Bahrain’s 20th Grand Prix in less than a fortnight.

When F1 arrived in 2004, the Gulf country was catapulted into the public consciousness and the event set off a string of copycat attempts to replicate its sporting success.

Aldi fires up price war with fresh round of reductions on fruit and vegetables

Aldi has piled pressure on its rivals with another round of price cuts on fruit and vegetables.

The German discount supermarket yesterday pledged to ‘cut more prices than ever before’ in 2024. Shoppers have switched to the discounters Aldi and Lidl in droves.

IHG reveals shareholder payouts as profits top $1bn

Holiday Inn owner IHG said it expected to return more than $1billion to shareholders in 2024 on Tuesday, after posting better-than-expected annual room revenue and adjusted operating profit that exceeded $1billion for the first time.

Chief Executive Elie Maalouf also laid out his strategy, and said the company is targeting high single-digit growth in fee revenue by increasing revenue per room and the number of hotels annually on average over the medium to long term.

The owner of the Crowne Plaza, Regent and Hualuxe hotel chains raised its final dividend by 10 per cent to 104 cents and launched a new $800million share buyback programme.

‘The travel industry has attractive, long-term drivers of demand, and the strength of our brand portfolio and enterprise platform will continue to boost our RevPAR and system size growth,’ said Maalouf

Competition watchdog launches baby formula probe

Britain’s competition watchdog is set to investigate the country’s infant formula market after prices soared by 25 per cent over the last two years.

The rising cost of baby milk formula has been in the spotlight during Britain’s inflation-driven cost of living crisis, with media reports saying that some struggling parents have watered it down to feed their children.

Nestle and Danone are amongst the companies which supply baby formula in Britain through brands such as SMA Nutrition and Cow & Gate.

The Competition and Markets Authority said it would launch a market study, meaning it has the power to force suppliers to provide information on pricing and other issues, instead of relying on voluntary submissions.

The regulator said it would aim to publish its final report in September 2024, adding that it would consider whether there are problems in the baby formula market and if so what actions should be taken to address these.

CMA chief executive Sarah Cardell said that the cost of infant milk remained at ‘historically high levels’ even after prices fell over the last three months.

‘We’re concerned that parents don’t always have the right information to make informed choices and that suppliers may not have strong incentives to offer infant formula at competitive prices,’ she added.

Bank of England is crushing economy, says former chief economist Andy Haldane

The Bank of England risks ‘crushing’ the economy if it fails to cut interest rates quickly enough, its former chief economist has warned.

Andy Haldane said holding rates too high for too long could prolong the recession – and hammer the cen

tral bank’s credibility in the process.

Barclays boss reveals major overhaul – and bumper payouts for shareholders

Barclays boss CS Venkatakrishnan has revealed a major shake-up of the lender’s operations, which will include cost cutting and asset sales, in efforts to improve the group’s performance and lift its share price.

The lender also posted a 6 per cent fall in annual profit, in line with expectations, as it lined-up bumper buyback schemes for investors.

Barclays will reorganise its business divisions, return £10billion to shareholders between 2024 and 2026, and restructure its payments business, Venkatakrishnan said alongside the bank’s full-year results for 2023.

The lender’s first strategy update in almost a decade marks an inflection point for the CEO known internally as Venkat, as he tries to improve returns after a period of management turmoil, self-inflicted wounds and underwhelming results.

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