Lloyds Banking Group today warned an additional provision in relation to motor finance mis-selling compensation may be material.
The update came a day after its shares surged on relief that Tuesday’s FCA consultation paper pointed to an overall industry redress cost of £11 billion.
HSBC also weighed on FTSE 100 index, while JP Morgan boss Jamie Dimon has warned of the risk of a serious stock market correction.
FTSE 100 Live Thursday
- Lloyds motor finance warning
- HSBC pauses buybacks
- Top banker issues market warning
Market update: Lloyds and HSBC fall in weaker FTSE 100, Volution up 4%
10:27 , Graeme EvansWeaker HSBC and Lloyds Banking Group shares today knocked the FTSE 100 index from its record as the London market failed to match tech momentum elsewhere.
HSBC’s decision to pause buybacks for the next three quarters in order to buy the rest of Hang Seng Bank left its shares at the bottom of the FTSE 100.
The bank, which returned $9.5 billion to shareholders in the first half of 2025 and has cut its share count by 13% since the start of 2023, fell 6% or 66p to 1000p.
Lloyds gave up yesterday’s gains after it dashed hopes that Tuesday’s FCA consultation paper on motor finance redress would mark the end of its provisions.
The bank, which has so far set aside £1.15 billion, said its initial review of the watchdog’s proposals pointed to an additional provision “which may be material”.
Bloomberg Intelligence said the update was a surprise given that the FCA's £8.2 billion industry-wide redress estimate was better than previous guidance.
Senior analyst Tomasz Noetzel said the City’s earlier upper-end scenario for an additional £850 million now appeared the most likely outcome. He added: “Even at that level, the charge shouldn't disrupt shareholder distribution plans.”
Lloyds shares surrendered yesterday’s 4% rise with a reverse of 3% or 2.3p to 84.1p.
Ex-dividend Tesco, Barratt Redrow and WPP also featured on the fallers board as FTSE 100 index retreated from Wednesday's record with a decline of 0.5% or 44.60 points to 9504.27.
The performance compared with a tech-fuelled bounce for the Nikkei 225, which closed 1.8% higher, and by the Nasdaq Composite last night.
Wall Street’s run of record highs has fuelled warnings from the Bank of England and JP Morgan boss Jamie Dimon over a serious stock market correction.
Old economy stocks featured on the FTSE 100 risers board as a more favourable view of the mining sector by Deutsche Bank helped Anglo American to rise 67p to 2967p and Rio Tinto by 52p to 5099p.
British Airways owner IAG also continued its strong run, lifting 2% or 8.3p to 408.3p.
The FTSE 250 index outperformed London’s top flight with a rise of 20.10 points to 22,061.93.
Ventilation products business Volution led the mid-cap benchmark after its 20% dividend hike and 18.7% rise in annual profits to £83.9 million helped shares to improve 4% or 28p to 677p.
Meanwhile, National Express owner Mobico got a much-needed lift after its Alsa subsidiary secured a major contract win in Saudi Arabia. Shares rose 1.3p to 29p.
Rail passenger demand boosts SSP revenues
09:36 , Graeme EvansUpper Crust and Millie’s Cookies owner SSP today said revenues lifted by 8% to £3.7 billion in the year to the end of September.
The worldwide group runs food outlets at travel locations such as airports and train stations, with other brands including Cafe Ritazza and Camden Food Co.
It said UK and Ireland sales rose by 7% in the July to September period compared with a year earlier, with particular strength across its shops in train stations.
SSP also announced a £100 million share buyback scheme amid “confidence” in its prospects going into the new financial year.
Chief executive Patrick Coveney said: “We have delivered a resilient Q4 performance against an unsettled macro-economic and softer demand environment in some of our key travel markets.”
Shares fell 1.5p to 165.2p.
JP Morgan boss sounds warning over market correction
08:53 , Graeme EvansJP Morgan chief executive Jamie Dimon has warned he is “far more worried than others” about a serious market correction, which he said could come in the next six months to two years.
His comments came as the Bank of England’s financial policy committee warned that the risk of a sharp market correction has increased.
It said that share valuations “appear stretched, particularly for technology companies focused on artificial intelligence.”
Dimon made his comments during a visit to Bournemouth, where he announced an investment of about £350 million in JP Morgan's campus there.
He told the BBC: “The way I look at it is AI is real, AI in total will pay off.
“Just like cars in total paid off, and TVs in total paid off, but most people involved in them didn't do well.
He added some of the money being invested in AI would "probably be lost".
AI-focused tech stocks are concentrated in the US markets but Bank officials fear stock markets across the globe could also be caught up in any severe downturn.
HSBC unveils Hang Seng Bank deal, shares fall on buyback pause
08:42 , Graeme EvansHSBC shares have fallen 6% after it unveiled plans to take Hong Kong-listed Hang Seng Bank private in a deal valuing the subsidiary at £28 billion.
HSBC, which already owns around 63% of Hang Seng, is set to pay around £10.2 billion for the remaining shares at a 30% premium on Wednesday’s price.
It will keep the Hang Seng brand and branch network following the proposed deal. Hang Seng was founded in 1933 and is one of the largest domestic banks in Hong Kong.
It was bought by HSBC in 1965, but the subsidiary has struggled in recent years after being hit hard by Hong Kong’s property slump.
HSBC shares fell 65.6p to 1000.4p after it said it would not buy back any shares for the next three quarters in order to boost cash reserves needed for the deal.
FTSE 100 dips from record high, Lloyds shares fall
08:10 , Graeme EvansLloyds Banking Group shares have fallen 3% after the lender warned an additional provision in relation to motor finance compensation may be material.
The update came a day after its shares surged 4% on relief that Tuesday’s FCA consultation paper pointed to an overall industry cost of £11 billion.
The FTSE 100 index, which yesterday closed at a record high, dipped 0.4% or 34.22 points to 9514.65. Lloyds shares fell 1.9p to 84.5p.
HSBC slid 7% or 70.1p to 995.9p after it said it will pause share buy backs for the next three quarters so that it can buy out the rest of Hong Kong-listed business Hang Seng Bank.
Burberry shares rose 23p to 1288p after Deutsche Bank upgraded the luxury goods group to a Buy recommendation with 1500p target price.
Mining stocks fared well as Anglo American lifted 2% or 67p to 2967p and Rio Tinto cheered 91p to 5138p.
Water price review rejects majority of claims
07:44 , Graeme EvansAn independent review has told five water companies that their requests for significant bill increases on top of those allowed by Ofwat are largely unjustified.
Anglian Water, Northumbrian Water, South East Water, Southern Water and Wessex Water argued that Ofwat's price determination left them unable to meet the regulatory requirements set out for them.
The UK Competition and Markets Authority has provisionally decided to allow 21% - an additional £556 million in revenue - of the total £2.7 billion the five firms requested.
This extra funding is expected to result in an average increase of 3% in bills for customers of the disputing companies, which is in addition to the 24% increase as part of Ofwat's original determination.
Inquiry chair Kirstin Baker said: “We understand the real pressure on household budgets and have worked to keep increases to a minimum, while still ensuring there is funding to deliver essential improvements at reasonable cost."
Home buyer demand weakens amid Budget uncertainty - RICS
07:28 , Graeme EvansHome buyer demand has weakened for the third month in a row, according to the Royal Institution of Chartered Surveyors (RICS).
A net balance of 19% of property professionals saw new buyer inquiries falling rather than rising in September.
Sales activity softened, with a net balance of 16% of property professionals seeing a fall in agreed transactions, which was slightly less negative than a balance of 24% reporting a fall in sales in August.
Surveyors cited concerns over the upcoming November Budget, reporting growing caution among buyers and sellers, with affordability and sentiment acting as key constraints, RICS said.
Lloyds braced for “material” upgrade to motor finance provision
07:14 , Graeme EvansLloyds Banking Group today warned its provision for motor finance redress may be subject to a “material” upward revision.
The update follows Tuesday’s FCA consultation paper, which pointed to an overall industry cost of £11 billion.
The group, which has so far set aside £1,15 billion, said: “Uncertainties remain outstanding on the interpretation and implementation of the proposals but based on our initial analysis and the characteristics of the proposed scheme, an additional provision is likely to be required which may be material.
“This remains subject to ongoing analysis and review of the proposals. The group will continue to update the market as and when appropriate.”
Lloyds shares yesterday rose 4% as the FCA’s base case figure of £11 billion compared with previous guidance of between £9 billion and £18 billion. This included the £2.8 billion cost of running the compensation scheme.
FTSE 100 seen falling from record, Nikkei 225 up 1.5%
07:13 , Graeme EvansThe FTSE 100 is set for a weaker session after closing last night at a record 9548.87.
Yesterday’s rise of 0.7% or 65.29 points was driven by the strength of financial stocks and gains in the mining sector after gold’s rise above $4000 an ounce.
The top flight set a new intra-day best level of 9577.08 but is expected to fall by about 0.5% at today’s opening bell.
The weakness follows a robust session on Wall Street, with the Dow Jones Industrial Average broadly flat and the S&P 500 index up 0.6%.
In Asia, Japan’s Nikkei 225 has lifted 1.5% after Softbank shares surged 11% on the back of AI investment plans.
The gold price stands at $4037 an ounce and Brent Crude at $65.99 a barrel.
