Sensing a bargain, a quarter of a million people signed up on the government’s website for next year’s £2bn sale of shares in Lloyds Banking Group in just a week. Another 120,000 have registered with investment group Hargreaves Lansdown. After all, the 5% discount on offer from the government is not to be sniffed at, nor is the promise of a one-for-10 bonus share if investors hold on for a year.
This week potential investors will have a chance to catch up with just how Lloyds is performing.
Over the past five years the bank has racked up cumulative losses of £4.2bn, according to Investec, but the third-quarter statement on Wednesday should show improvement. Investec is forecasting a 3% rise in underlying profit since the previous quarter to £2.3bn. There could, however, be more provisions for mis-sold payment protection insurance, but the end of that saga may well be in sight at last.
Shore Capital said: “In the eyes of most investors we speak to, [Lloyds is] seen as relatively defensive with an attractive prospective dividend yield, albeit not for couple of years’ time.”
Also reporting this week is RBS – as well as Barclays, where investors await news of the potential appointment of Jes Staley as its new chief exec. The sector was also helped last week by news that the competition watchdog ruled out breaking up the big banks.
BT playing a long game
BT’s near-£900m investment in Uefa Champions League football may well pay off in the long term, but more immediately it is failing to trouble the scoreboard.
Rival Sky last week reported increased customer numbers despite losing out to BT for the European football rights. And this week’s second-quarter results could see BT’s worst earnings growth in eight quarters, according to Deutsche Bank, “as BT wears the costs of new football content without seeing the full immediate benefit”.
But Deutsche added: “We nevertheless expect a hike in TV customer additions in the second quarter whilst broadband net adds remain more stable. BT is running hard on cost control to limit the impact of Uefa so we expect a reiteration rather than any change to full-year guidance.”
BT has other issues to resolve, including growing competition as the likes of Virgin Media continue to expand, a regulatory decision on BT’s proposed acquisition of EE and the outcome of calls for BT to be split up, with Openreach, the division that operates BT’s network, spun off into a separate company.
On their mettle
With one in six steel jobs in Britain under threat, MPs will be grilling representatives of the industry as well as government this week over the crisis hitting the sector.
Cheap Chinese steel, high energy costs and the strong pound have dealt heavy blows to UK producers. The latest came just as Chinese premier Xi Jinping was arriving for a state visit – when Tata Steel announced 1,200 job cuts in Scunthorpe and Scotland, partly blamed on “a flood of cheap imports, particularly from China”.
The Tata announcement followed news of steel products company Caparo Industries going into administration – hitting 1,700 workers – and the closure of the SSI plant in Redcar, with the loss of 2,200 jobs.
Among those appearing before the business select committee on Tuesday are Tor Farquhar, human resources director at Tata Steel Europe, Gareth Stace of trade association UK Steel, and Anna Soubry, minister for small business, industry and enterprise.
The chair of the committee, Iain Wright, said: “We will be pressing the government to explain what action it is taking now to help the steel industry through this crisis, and its plans to support the industry as part of a competitive and dynamic manufacturing sector in the long term.”
