New Northern England lockdown could exacerbate inter-regional inequality

Jamie Gordon
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New Northern England lockdown could exacerbate inter-regional inequality
On Thursday evening, Health Secretary Matt Hancock announced that renewed lockdown measures would be implemented in Northern England, including the Greater Manchester, East Lancashire and West Yorkshire regions. These recently reimposed restrictions ban separate households from meeting each-other at their homes, and follows resurgences in COVID-19 cases in each of the respective areas. The reminder that this announcement presents – also following the rise in cases in Spain – is the prospect of a second, if partial, reimposition of lockdown measures across regions of the UK.

What does lockdown mean for businesses in Northern England?

In a survey of small businesses conducted by IW Capital, a second lockdown was the number one concern for SMEs, with 47% of respondents citing this as the worst case scenario, ahead of cashflow issues (44%) and debt (20%). The effect of quarantining, however, are felt most acutely by SMEs in Northern England. While London was initially hardest hit, it is expected that activity in the English capital will recover far more quickly than in other cities such as Manchester and Bradford. London is not only the most tech-enabled and ‘business-ready’ city in the UK, but garners the most political attention and investment from overseas businesses. With the loss of EU funding set to most adversely effect non-London regions going forwards, the renewed lockdown measures in Northern England will do little but increase existing disparities, unless the government focuses financial support on areas outside of its Golden Goose.

IW Capital reported that since the beginning of lockdown, SMEs have borrowed over £12 billion in government-backed loans, with the company’s statement finding that, “This support network demonstrates the vital importance of this sector”. Currently, SMEs employ in excess of 16 million people in the UK, and provide 52% of private sector turnover. Going Forwards, IW Capital states that more generous allowances for growth finance are needed – perhaps focusing such initiatives on regions such as Northern England would provide a much-needed boost.

IW Capital invests in the North

Speaking on the company’s commitment to invest in Northern England in spite of the prospect of renewed lockdown measures, IW Capital CEO and Founder, Luke Davis, comments:

“This period has been incredibly difficult for businesses up and down the country but it does seem to have impacted businesses in the regions harder than many in the capital. One of the key points in economic recovery in the next year or so is to allow every region of the UK to come roaring back with confidence and the right support in place.”

“As private finance providers, we have a responsibility to try and bridge this gap. There are fantastic businesses in the North of England with a huge amount of growth potential that may be slipping through the net as lockdown measures ramp up. This is why we are actively looking to invest in these regions and are seeking to employ investment directors specifically for the regions.”

“IW Capital has already started to encourage development in regions outside of London, and has invested in Impact Recycling – a company revolutionising the plastic recycling process based in Newcastle – and Billian – an innovative road-mending firm founded in Sheffield.

Octopus Renewables continues buy-ups with £53m spend on 14 solar assets

Jamie Gordon
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Octopus Renewables continues buy-ups with £53m spend on 14 solar assets
On Friday Octopus Renewables Infrastructure Trust (LON:ORIT) announced that it had signed a Share Purchase Agreement acquire a 100% interest in a portfolio of operational French solar assets. The deal means Octopus Renewables will add 14 solar PV assets to its portfolio, with a combined capacity of 119.5MW. The acquisition cost the company £53.4 million, with the assets located across France, in; Var, Bouches-du-Rhône, Gironde, Alpes de Haute Provence and Saône et Loire. All of the solar facilities began their operating lives between 2013 and 2015, and at the time of the sale have 12.7 years remaining on their Feed-in-Tariff contracts, as well as 27.3 years remaining on their life expectancies. The company said that the portfolio, which has €99m of existing project finance from Hamburg Commercial Bank, is being acquired from a Samsung Securities-backed renewable fund and another minority investor. It added that as part of the agreement, it will receive ‘all economic benefit of all cash flows’ from the portfolio dating back to January 1 2020.

Today’s news follows a previous but fairly recent acquisition made by Octopus Renewables, of the Ljungbyholm Wind Farm in Sweden. The previous acquisition took place in March, costing £59 million for 12 wind farms, with a total capacity of 48MW.

Octopus Renewables comments on its solar power push

Speaking on today’s agreement, company Chairman Phil Austin stated:

“I am delighted to announce the acquisition of this portfolio of subsidised French solar farms, expected to produce enough electricity to power the equivalent of 48,000 French homes annually. With this acquisition we have now committed c.75% of the funds raised at IPO and have opened up a third market for ORIT, marking a further step towards building a diversified portfolio of renewable energy assets. It is particularly pleasing that the Octopus Renewables team have been able to continue originating and transacting on high quality deal flow throughout the COVID crisis.”

Company Investment Director, Chris Gaydon, added:

“As one of the UK and Europe’s leading investors in renewables, Octopus Renewables has long considered the French market as having favourable conditions for growth and investment. Octopus Renewables already has a strong presence in France and so were delighted to be able to secure this acquisition for ORIT. It builds on our ambition to accelerate the clean energy transition and create a legacy for the next generation to mitigate the effects of climate change.”

Investor insights

Despite the seemingly positive news, Octopus Renewables shares dipped 1.31% or 1.50p, to 113.00p on Friday 31/07/20 13:27 BST. This is fairly consistent with its trend for the year so far, with the price moving between 100.00p and 115.00p, with the exception of its freakish dip in mid-March.

BT shares slide with half-year profits contracting 13%

Jamie Gordon
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BT shares slide with half-year profits contracting 13%
Multinational telecommunications company BT (LON:BT.A) saw its share price dip on Friday, after posting an unsurprising but hardly uplifting set of half year financial fundamentals. While being praised by Ofcom for its provision of services during the lockdown period, BT listed the pandemic as a key contributor to negative impacts on its financial results. This was reflected in both its revenues and adjusted EBITDA, both down 7% year-on-year. Its revenues fell from £5.53 billion to £5.25 billion, while its adjusted EBITDA contracted from £1.96 billion to £1.81 billion. This led to a fall in the company’s profits before tax, which were down 13%, from £642 million, to £561 million. Similarly, the company’s net debt grew by £352 million, from £17.81 billion, to £18.16 billion. Operationally, the company said that it had re-opened the majority of its stores, and that repair activity and the roll-out of FTTP had resumed.

BT response

Commenting on the results, Chief Executive, Philip Jansen, stated:

“Openreach resumed provisioning and repair activity in customer premises, we re-opened the majority of our retail stores, and we saw the restart of the Premier League on BT Sport. Enterprise has today launched the BT Small Business Support Scheme, which will boost cash flow, connectivity and confidence among this critical segment of the economy over the coming months.”

“Throughout this crisis we remain focussed on delivering against our strategic goals to deliver long-term value for shareholders. We reached an important milestone with 3m FTTP premises now passed, welcomed Ofcom’s consultation on our rural FTTP build proposal, and have now deployed 5G to 100 towns and cities. Together with continued improvements in customer experience and our modernisation programme, we are positively positioned for the future.”

“Although uncertainties remain, we are now able to provide an outlook for this financial year. Despite our strong operational performance in the first three months of the year, it is clear that Covid-19 will continue to impact our business as the full economic consequences unfold. Beyond this year and based on current expectations, we expect to return the business to sustainable adjusted EBITDA growth, driven in part by the recovery from Covid-19.”

Investor insights

Following the news, BT shares dipped 3.51% or 3.78p, to 104.07p per share 31/07/20 12:41 BST. This is below its current consensus target price of 153.13p per share, and far off of its February highs exceeding 162.00p per share. The company’s p/e ratio is 4.59, its dividend yield stands at 4.43%.

IAG launches €2.75bn capital raise as COVID-19 safety net

UK Investor Magazine
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IAG launches €2.75bn capital raise as COVID-19 safety net
IAG, the owner of British Airways, has launched a €2.75bn rights issue in an effort to ensure the airline group emerges from the coronavirus in a strong financial position. The announcement came alongside the release of the airline’s half year report that confirmed a sharp drop in the number of passengers during the coronavirus lockdown. The IAG share price (LON:IAG) sank on the news, with shares down over 9% at midday on Friday. IAG’s revenue for the six months to 30th June fell 55% to €5.3bn as most aircraft remained grounded in the second quarter. The significant drop in revenue meant that IAG’s profit was obliterated in the period as a profit of €806m in 2019 swung to a €3.8bn loss. IAG also provided insight as to when they think the industry will recovers suggesting the airlines profitability may take sometime to bounce back. “We continue to expect that it will take until at least 2023 for passenger demand to recover to 2019 levels. Each airline has taken actions to adjust their business and reduce their cost base to reflect forecast demand in their markets not just to get through this crisis but to ensure they remain competitive in a structurally changed industry,” said Willie Walsh, CEO of IAG. To help maintain IAG’s competitiveness, the airline has launched a rights issue to increase cash totalling €2.75bn. IAG’s largest shareholder, Qatar Airways, has already given the capital raise their blessing. Qatar Airways owns 25.1% of IAG. “Our industry is facing an unprecedented crisis and the outlook remains uncertain. However, we strongly believe that now is the time to look to the future and strengthen IAG’s financial and strategic position,” said Willie Walsh, CEO of IAG. “While we have had to make tough decisions on both people and costs, these actions are the right ones to protect as many jobs and serve as many customers as feasible and put IAG in the strongest position possible. The industry will recover from this crisis, though we do not expect this to be before 2023, and there will be opportunities for IAG to capitalise on its strength and leadership positions.”

Shell shareholders feel the pinch with earnings per share diving 310%

Jamie Gordon
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Shell shareholders feel the pinch with earnings per share diving 310%
Following a torrid half-year that hit oil prices hardest, oil and gas extraction and production company Shell (LON:RDSA) saw its share price dip slightly on what was likely an already priced-in set of woeful half-year trading results. The company reported that income attributable to shareholders had flipped from an $8.99 billion profit for H1 2019, to a loss of $18.16 billion loss for H1 2020. According to its results, this turnaround represents a negative 302% shift year-on-year. Similarly, the company’s CCS (not taking into account the changes to oil prices) earnings attributable to shareholders dived 288% on-year, from an $8.32 billion profit to a $15.62 billion loss. It added that its adjusted earnings had fallen 60% from $8.76 billion to $3.49 billion year-on-year, while its cash flow from operating activities fell 11% and its ROACE on a net income basis flipped from 8.4% to negative 2.9%. If you’re looking for anything to celebrate, the company’s expenses narrowed on-year, during the half-year period. Its cash capital expenditure fell slightly from $10.94 billion to $8.59 billion, while its underlying operating expenses fell 12%, from $18.34 billion, to $16.11 billion. Though, these drops in expenditure were likely a result of reduced production activity and staff costs due to the pandemic. The situation was equally bleak for Shell shareholders, with basic EPS falling 310% and turning from a $1.11 income to a $2.33 loss per share. Similarly, dividends dropped 66%, from $0.94 to $0.32. Between the half-year end 2019 and 2020, the company’s gearing widened from 27.6% to 32.7%.

Shell looks ahead

Speaking on macro conditions and its expectations looking forwards, the company’s statement read: “As a result of COVID-19, there continues to be significant uncertainty in the macroeconomic conditions with an expected negative impact on demand for oil, gas and related products. Furthermore, recent global developments and uncertainty in oil supply have caused further volatility in commodity markets. The third quarter 2020 outlook provides ranges for operational and financial metrics based on current expectations, but these are subject to change in the light of current evolving market conditions. Due to demand or regulatory requirements and/or constraints in infrastructure, Shell may need to take measures to curtail or reduce oil and/or gas production, LNG liquefaction as well as utilisation of refining and chemicals plants and similarly sales volumes could be impacted. Such measures will likely have a variety of impacts on our operational and financial metrics.”

Investor insights

Following the news, Shell shares dipped 2.53% or 31.00p, to 1,195.80p per share 30/07/20 13:20 BST. This price is down over 52% year-on-year for the same day. The company’s p/e ratio stands at 8.08.

Lloyds share price ravaged by COVID-19 costs as profit wiped out

UK Investor Magazine
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Lloyds share price ravaged by COVID-19 costs as profit wiped out
The Lloyds share price (LON:LLOY) sank on Thursday as the bank released their first half report that highlighted the scale of COVID-19 related costs. Lloyds profit before tax was completely wiped out as the bank’s profit for the period swung from a £2.9bn in the half year in 2019, to a pre tax loss of £602m in the six months to 30th June. Lloyds managed to produced a net profit of £19m only after the impact of a £621m tax credit. Lloyds shares fell over 8% in early morning trade on Thursday. The further provision of £2.4bn in the latest quarter means Lloyds has set aside a total of £3.8bn to deal with the impact of coronavirus. Increased provisions for bad debts, coupled with income falling 16% to £7.4bn, were the main drivers behind the destruction of profit at Lloyds. Lloyds drop in income was in contrast to Barclays who reported an increase in revenue, largely driven by higher investment banking income. Lloyds Bank has a greater focus on retail and business banking such as mortgages, credit cards and loans which saw reduced activity during the coronavirus lockdown. However, the introduction of government schemes such as the Bounce Back Loan helped Lloyds maintain a relatively steady loan book as mortgage activity fell sharply. “The impact of the coronavirus pandemic in the first half of 2020 has been profound on the way we live our lives and on the global economy. We remain fully focused on helping our customers and the UK economy recover, in collaboration with Government and our regulators,” said António Horta-Osório, CEO of Lloyds. “I want to express my sincere gratitude to all my colleagues across the Group for their dedication and persistence which have allowed us to deliver vital banking services to our customers effectively throughout the pandemic.” “Although the outlook is uncertain, the Group’s financial strength and business model allow us to help Britain recover and play our part in returning our country to prosperity. Our customer focused strategic plan remains fully aligned with the Group’s long term strategic objectives, the position of our franchise and the interests of shareholders.”

Lloyds share price

Lloyds shares fell sharply on the news taking the Lloyds share price to the lowest level since 2012. Lloyds is also now the worst performing UK bank in 2020 with shares down 58%. NatWest Group comes in a close second trading 55% lower on the year.  

Nest to inject £5.5bn into climate-friendly projects, decarbonise portfolio

Bronte Carvalho
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Nest to inject £5.5bn into climate-friendly projects, decarbonise portfolio
Nest (National Employment Savings Trust), the UK’s largest pension scheme boasting a total of 9 million members, has pledged to pump £5.5 billion – almost half of its entire portfolio – into ‘climate aware’ investments, and aims to reach net zero carbon emissions across all of its stakes by 2050 by divesting from polluting projects. The government-backed scheme – overseen by the Department for Work and Pensions – intends to ban all investments in companies involved in oil and coal mining as well as arctic drilling. The move has been hailed by climate activists as a significant step in the right direction, as pressure mounts on the industry to make more climate conscious investments. Nest’s pledge involves immediately divesting from companies involved in fossil fuel extraction and production, with the promise to complete the process entirely by 2025. Its £5.5 billion investment is predicted to reduce Nest’s carbon footprint at a rate equivalent to taking 200,000 cars off the road, or heating 50,000 homes using renewable energy sources. Alongside its commitment to greener investment strategies, Nest has announced that it will ‘actively pressure’ companies to align with the 2016 Paris Agreement’s goals – notably, keeping global temperatures no more than 1.5C above pre-industrial levels – and has promised to divest from those that fail to make adequate changes by 2030. The move appears at odds with comments made by UK Pensions Minister, Guy Opperman, who criticised divestment as ‘counter productive’ in an opinion piece penned for The Telegraph earlier this month. He advised that oil and gas companies should refrain from divesting in fossil fuel projects, stating that they could use their leverage to ‘nudge, cajole or vote firms towards lower-carbon business practices’. Following a fierce backlash from prominent divestment campaigners – including Green party MP Caroline Lucas and climate scientist Kevin Anderson from the Tyndall Centre for Climate Change Research – Opperman backtracked somewhat and clarified that divestment ‘should be part of a strategic approach to managing pension schemes’ exposure to risk, rather than something to be used by default’. However, the Pensions Minister maintained his initial stance that divestment would be counterproductive, stating that ‘forcing pension schemes to divest and sell their assets to others would be self-defeating’. Chief Investment Officer at Nest, Mark Fawcett, said that today’s announcement sent a ‘strong and clear message’ that the scheme is committed to taking climate concerns seriously, and that he has a duty to ensure that funds being pumped into retirement funds are used to protect the world that employees eventually retire into. “Just like coronavirus, climate change poses serious risks to both our savers and their investments. It has the potential to cause catastrophic damage and completely disrupt our way of life. No-one wants to save throughout their life to retire into a world devastated by climate change. “We believe our new policy sets out a clear vision of where we’re heading. We’ll now work on taking the necessary steps to become net-zero, using our close partnerships with fund managers to amplify our impact and coordinate activities towards meeting the Paris Agreement goals. “Not only is this the right thing to do, it’s also what our savers want and expect from us. How can we offer them the prospect of a better retirement if we ignore the world they’ll be retiring into?” Nest’s pledge follows a June report alleging that the UK government is considering ending financial support for fossil fuel projects overseas, as part of its wider aim to tackle climate change and align with the goals of the Paris Agreement. It emerged last month that £3.5 billion of public funds had so far been spent on polluting projects since the UK signed its commitment to the climate pact in 2016. Some responses to Nest’s announcement are listed below:

First financial education textbook to hit additional 700 schools across the UK

Jamie Gordon
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First financial education textbook to hit additional 700 schools across the UK
On Wednesday, youth money management charity, Young Money, announced the launch of the first ever financial education textbook to hit secondary schools in Scotland, Wales and Northern Ireland, following a previous launch in England, supported by Money Saving Expert, Martin Lewis. Some 45,000 textbooks will be sent out over the next 14 months, to state schools across the three countries, with Scotland receiving 21,500, Wales 12,500 and Northern Ireland 12,000. The aim is to have around 75 free textbooks in every secondary school of each country, with both the text and accompanying teacher’s guide also being made available digitally.

Today’s news follows the previous successful launch of the same textbook, called ‘Your Money Matters’, with 340,000 copies sent to state schools across England. This initial roll-out was funded in-part by a £325,000 personal donation from Martin Lewis, whose money aided in the development and distribution of the resource and teacher’s guide.

What is it and is it actually helpful?

The initial directive of the textbook was to educate 15 and 16 year-olds on financial literacy and money management, though it has been used in more broad subject areas and across a wider range of age groups. It contains facts, information and interactive activities for students to apply and test their comprehension. Young Money listed a broad outline of its contents as: 1. Savings – ways to save, interest, money and mental health 2. Making the most of your money – budgeting, keeping track of your budget, ways to pay, value for money, spending 3. Borrowing – debt, APR, borrowing products, unmanageable debt 4. After school, the world of work – student finance, apprenticeships, earnings, tax, pensions, benefits 5. Risk and reward – investments, gambling, insurance 6. Security and fraud – identify theft, online fraud, money mules These themes will remain broadly consistent, though the organisation has said that feedback – from focus groups with teachers and government officials – is being taken into account, to amend the textbook to fit the respective curriculum of each country.

As far as initial reception is concerned, some 89% of teachers said that ‘Your Money Matters’ would improve the quality of financial education in schools, while 88% said the book would increase their confidence to deliver financial education.

One Subject Head at a Community School said:

“Excellent resource! Much needed for youngsters. We are very grateful to have received the textbooks and received excellent feedback from students. One student told me that our Financial Capability lessons changed the way her parents look at finances and motivated them to change the way they deal with money as a family.”

Why is financial education needed?

Fewer than three in ten 14-17 year-olds plan ahead for spending on the things they need and more than one in ten 16-17 year-olds have no bank account at all. Books such as these are much-needed to educate teenagers on the realities of financial planning and the importance of money management. Rather than learning as they go, making mistakes and missing financial opportunities, this book might help state school children make more prudent financial decisions from a younger age, and, importantly, have some understanding of the fairly inaccessible world of financial jargon. Commenting on the positive news, and why it’s so important, Martin Lewis said:

“The pandemic has shown the lack of personal financial resilience and preparedness of the UK as a whole. Not all of that can be fixed by improving financial education, but a chunk of it can. Of course, we need to educate people of all ages, yet young people are professionals at learning, so if you want to break the cycle of debt and bad decisions, they’re the best place to start.”

“I was one of those at the forefront of the campaign to get financial education on the national curriculum in 2014, and we celebrated then thinking the job was done. We were wrong. Schools have struggled with resources and there’s been little teacher training. Something else was needed to make it easy for schools and teachers. So even though I questioned whether it’s right that a private individual should fund a textbook, no one else would do it, so I put pragmatics over politics and did it in 2018.”

“I’m delighted that now we’ve proved the success of that book in England. The Money and Pensions Service has agreed to team up to provide this much-needed resource for the rest of the UK’s nations – adding a rightful sense of officialdom to the whole project.”

Taylor Wimpey shares fall with performance hit by pandemic wrecking ball

Jamie Gordon
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1
Taylor Wimpey shares fall with performance hit by pandemic wrecking ball
FTSE 100 housebuilder Taylor Wimpey (LON:TW) published a bleak set of first half fundamentals on Wednesday, illustrating what the company described as the ‘significant impact’ of the pandemic on its production activity. With home completions diving year-on-year from 6,541 to 2,771 during the half year period, the company simply lacked the firepower to replicate the previous year’s sales. Revenues dropped from £1.73 billion to £0.75 billion year-on-year, which, along with unforeseen costs, saw the company swing from a £312 million operating profit in H1 2019, to a £16.1 million operating loss during the same period in 2020. The company’s statement added that its PBT had swung from positive £299.8 million, to negative £29.8 million, and its operating margin flipped frm 18.0%, to negative 2.1%. Taylor Wimpey shareholders looked to be equally hampered by the financial rut, with adjusted basic EPS for the half-year turning from 7.4p to negative 0.7p for the half year 2020. The company said that the pandemic had forced it to shut most of its production sites during the second quarter, which greatly hampered its cashflow. Further, the losses listed above include £39.2 million in costs directly related to the impacts of COVID. For a glimmer of hope, the company announced there was strong sales momentum and customer interest towards the end of the period, with its order book volumes up 15% year-on-year at June 28. It added that its NHS care worker discount scheme had been well-received, with over 1,200 homes reserved. Also, Taylor Wimpey stated that all of its employees had returned from furlough, and that it has returned all furlough subsidies to the government.

Taylor Wimpey response

Company Chief Executive, Pete Redfern, commented on how pleased he was with the firm’s financial resilience during the challenging period, and stated:

“Our performance for the first half of 2020 has been impacted by the closing of our sites and sales centres but we have now reopened all sites successfully and safely and have returned to a sustainable level of sales and build. We are delighted that our NHS and care workers discount scheme has been taken up by over 1,200 households to date.”

“Looking ahead, balance sheet strength, a long order book and our high quality and growing landbank gives us confidence in our ability to navigate the challenges and emerge stronger from the pandemic. While uncertainties remain, we are confident in the underlying fundamentals of the housing market.”

Investor insights

Following the news, Taylor Wimpey shares dropped 7.78% or 10.35p, to 122.60p per share. This is far below brokers’ consensus target price of 164.00p a share, and represents an almost 30% drop from its price a year ago. The company’s p/e ratio is 6.55, its dividend yield stands at 3.13%.  

Barclays share price sinks as coronavirus provisions hit profit, despite revenue increase

UK Investor Magazine
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2
Barclays share price sinks as coronavirus provisions hit profit, despite revenue increase
Shares in Barclays (LON:BARC) fell on Wednesday as the bank released their half year reported which highlighted continued pressure from coronavirus on the bank’s profitability. Barclays set aside a further £1.6bn in the most recent quarter meaning total impairment charges for the half year were £3.7bn. This hit profit for the quarter which came in at just £1.3bn, down from £3bn in the same period a year ago. The reduction in profit was recorded despite an 8% increase in revenue to £11.6bn. Barclays shares fell on the news, trading over 4% down at 107p in morning trade on Wednesday. However, the underlying performance of Barclay’s business appeared to show some strength as pre-provision profits of £5bn in the half year were ahead of the £4bn recorded in the same period a year ago. “Credit impairment charges increased to £3.7bn in the first half due to the forecast impact of COVID-19. However, our improved pre-impairment performance ensured that we still delivered £1.3bn profit before tax for the first half of 2020, post impairment.” “In the quarter Group total income decreased 4% year-on-year to £5.3bn, with total costs down 6% to £3.3bn. Following our £1.6bn quarterly credit impairment charge, profit before tax was £359m, and Group RoTE was 0.7%, with EPS of 0.5p,” Jes Staley, Barclays CEO, summarised in a statement. There was strength in the banks trading division which saw revenues increase nearly 50%. Higher market volatility in equities and fixed income in the midst the coronavirus crisis were central to the increase in revenue from investment activity. Barclays overal Corporate and Investment Banking (CIB) revenue was up 31% to £6.9bn in the half year. Barclays also revealed there involvement in the government’s support for British business through the Bounce Back Loan Scheme and CBILS. “Since late March, we have helped to deliver around £22bn of vitally important COVID-19 government support measures to UK businesses to help fund them, including 250k government backed Bounce Back Loans totalling c.£7.7bn, c.£2.5bn under the CBILS programmes and c.£11.7bn of commercial paper issuance,” said James Staley, Barclays CEO. “To help consumers with their short-term household finances more than 600k payment holidays1 have been provided along with other fee waivers and support measures. We have also already distributed £45m of our £100m Community Aid Package to COVID-19 related charities in the UK, US and India to help rebuild communities.” “Our CIB is taking a leading role helping clients to access capital markets to raise equity and debt, underwriting c.£620bn of new issuance in the quarter. In the equity capital markets, where we are a UK leader and broker to 40 of the FTSE 100 and FTSE 250 companies, we supported UK companies to raise £4.0bn as they navigate this crisis.” The Barclays CEO continued to highlight the diversified nature of the business that produced £5bn in profit, before the impact of coronavirus provisions. “The reason that we have been able to support the economy as extensively as we have and remain financially resilient is because of our diversified universal banking model. Our strength in diversification has delivered pre-provision profits of £5.0bn and, even after impairment, we remain profitable. Income increased 8% to £11.6bn for the half, with total costs down 4% to £6.6bn resulting in positive jaws of 12%, and an improved cost to income ratio of 57% versus prior year.” “In our CIB, income increased 31% to £6.9bn driven by strong performance in our Markets business, particularly in FICC (up 83%) and Equities (up 26%), and an 8% increase in Banking fees income through continued momentum in both debt and equity capital markets.” “Our consumer business income decreased by 11% in Barclays UK and 21% in CC&P as a result of the lower interest rate environment, fewer interest earning balances, reduced payments activity and action to provide support for customers.” “Our CET1 ratio stands at 14.2% which underscores the strength of our balance sheet. Although we will remain well capitalised and ahead of our minimum requirements, we may experience stronger capital headwinds in the second half of the year. The Board will decide on future dividends and capital returns at the year-end 2020.” “While the remainder of 2020 will be challenging, our diversified model means we can remain financially resilient and continue to support our customers and clients.”

Barclays share price

With today’s drop adding to a rather dismal 2020 for Barclays share price, investors are now looking at an overall fall of 39% for Barclays share year-to-date.
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