Standard Chartered wrapped up FTSE 100 bank Q4 updates in fine form on Friday with a profit beat that sent shares sharply higher.

UK banks have had mixed reactions to updates this week, with the balance of profits, outlook, and shareholder returns driving immediate share price moves.

Standard Chartered shares over 8% at the time of writing on Friday as the company excelled on all three.

STAN’s Q4 underlying profit before tax was $1.1bn, up 74% compared to the same period last year as impairments fell and net interest income rose 6%.

Share buybacks and increased dividends have been a theme across UK banks results over the past week and Standard Chartered did not disappoint.

The group will pay a 27 cent final dividend meaning full year dividends are up 50% on last year. In addition, shareholders will benefit from a fresh $1bn share buyback.

The icing on the cake for Standard Chartered investors was a very positive outlook. The company said it was targeting an operating income increase of 5%-7% from 2024 to 2026 and saw this at the top end of the 5%-7% range in 2024.

“Standard Chartered’s fourth quarter results benefited from lower impairments like many of its peers. Profit before tax beat expectations largely due to a release of impairments back to profit from one of its divisions. Strip that out and underlying performance was a little weaker than expected, but the focus will be on guidance,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“The outlook for 2024 is a smidge lower than analysts had priced in but the medium-term guidance out to 2026 shows promising signs. Volume growth, cost cuts and a benefit from the structural hedge are expected to help deliver a return on tangible equity of 12% in 2026 (10% 2023). If delivered, that should provide a material tailwind to the current valuation.

“The China story remains in focus. Standard took another write-down of its investment in the domestic Chinese bank, Bohai, over the quarter – taking the total to $850mn for the year. The stark performance difference between onshore and offshore business in China highlights the challenging domestic environment.”

Predator Oil & Gas shares sank this week following disappointing results from its onshore Moroccan gas assets, which piles pressure on the company to deliver results in the next testing phase.

Morocco is considered Predator’s foremost project by many, and the formation damage setback during phase 1 of testing was a blow to investors looking forward to production this year. The commencement of phase 1 had already been delayed due to administrative constraints.

Predator Oil & Gas shares are down 42% over the past week.

Near-term success in Morocco has the potential to be a company maker. However, any further delays or setbacks risk eroding the opportunity for long-term shareholder value creation.

In November, Predator said they were in the ‘fortunate’ position to be fully funded to complete works in Trinidad and Morocco after the company raised £7m at 11p by way of an accelerated book build in the middle of last year.

“Given that the Company is well-financed to deliver all of its current near-term firm strategic objectives for its substantially de-risked oil and gas portfolio, any dilution of project equity would need to be a compelling value proposition for shareholders,” the company said in November.

This suggests the funds are readily available for phase 2 of the efforts to establish gas flow in Morocco.

That said, investors should expect delays in any natural resource development programme. In addition, they should be prepared for fluctuating capital requirements.

Executive Chairman Paul Griffiths said this week there was discretionary cash available for the sandjet programme while conceding they need gas to flow as a result of the programme.

The comments would infer there is an awful lot of pressure on the next phase to be successful. There is a sense the company had always seen the phase 2 sandjet programme as the most important phase. Yet, the risks attached to it not being successful were evident this week as PRD shares plunged on phase 1 disappointment.

Predator has not provided details on the potential scenarios if the sandjet programme does not go to plan. It is unclear whether additional funds will be required to pursue another phase in Morocco or extend the sandjet programme beyond that already budgeted.

Last year, Predator alluded to both Trinidad and Morocco being close to production. Trinidad may provide a fallback if Morocco faces further delays and costs spiral. Still, it will be a bitter pill to swallow, especially if additional cash is needed in Morocco before Trinidad starts production.

The FTSE 100 made promising steps forward on Thursday after several upbeat earnings releases by constituent companies helped compound a general wave of optimism sparked by Nvidia’s better-than-expected earnings release last night.

A strong session in Asia also helped boost mood.

There was a lot riding on Nvidia’s earnings release with a global equity market rally relying on the AI boom to support sentiment. The chipmaker delivered, beating estimates and helping Europe to a strong start on Thursday. Nvidia was trading over 10% higher in the US.

“Crisis has been averted after Nvidia smashed expectations with its latest results. Markets were braced for potential disappointment given how its shares were weak in the run-up to the numbers, but a large beat on both earnings and sales has put a new rocket under the stock,” said Russ Mould, investment director at AJ Bell.

“Nvidia last year implied the artificial intelligence boom was a significant moment in tech history and chief executive Jensen Huang now says we are at a tipping point for accelerated computing and generative AI.

“Nvidia’s better than expected results last night could help to keep investor sentiment high and that positivity has spread to other parts of the market.”

The FTSE 100 was 0.3% higher as broad European equity indices broke to fresh record highs on Thursday. Japan’s Nikkei also touched record highs overnight.

“It’s a record-breaking day for stocks and shares after two major indices hit new highs. Japan’s Nikkei 225 and Europe’s Stoxx 600 pushed ahead to new record levels,” said Russ Mould.

Rolls Royce

Rolls Royce was the FTSE 100’s standout performer with a 10% gain after the company said operating profits doubled in 2023. The company also set out positive guidance for the year ahead which, if met, would support the engine maker’s current valuation.

“From burning platform to booming platform. After a year of convincing the market of the merits of his turnaround plan and using colourful words to describe Rolls-Royce’s predicament, 2024 was time for Tufan Erginbilgiç to start delivering. Its latest full-year results represent a good start,” Russ Mould said.

Not only is Roll Royce’s turnaround resulting in higher profits, it opens the doors to the company resuming dividend payments in the coming periods.

“Now profit is on a very different trajectory with the firm set to build on 2023’s success with higher guidance for this year. This is not surprising as we are seeing no let-up in demand in civil aviation as well as defence spending, both areas in which Rolls-Royce has a strong foothold. If this comes to fruition, then it won’t be long before the dividend is back also,” said Adam Vettese, Market Analyst at eToro.

Anglo American gained 4% as underlying EBITDA fell 31% but averted the worst-case scenario in the midst of a slowdown in China.

Lloyds was also among the top risers after reversing early losses following the release of mixed full year results. Underlying profit rose but the company set aside £450m for motor financing provision as the FCA conducts an investigation.

1Spatial shares rose on Thursday after the group announced a contract win that provides commercial validation of 1Spatial’s 1Streetworks software.

1Spatial has signed a 12-month contract with UK Power Networks to use its 1Streetworks software, following a successful trial period. The software aims to revolutionise streetwork planning by fully automating the production of traffic management plans, diversion routing, and asset inventory lists.

1Spatial shares were 9% higher at the time of writing.

1Streetworks was tested by UK Power Networks across 300 roadworks sites in Surrey when connecting small power connections for customers. The software reduced the time spent on labor-intensive streetworks design from hours to minutes, cutting connection times by 25% on average. Crucially, this acceleration was achieved while continuing to meet all safety and accuracy regulations.

The contract comes off the back of rising demand, with 2.5 million low-speed road works currently undertaken each year in the UK, expected to reach 4 million in coming years. The total addressable market for 1Streetworks in the UK is approximately £400 million.

The 12-month deal delivers a minimum of £340,000 SaaS revenue for 1Spatial. With UK Power Networks managing 190,000km of cables supplying 19 million people, investors will be hopeful the potential revenue from the agreement grows if the rollout is successful.

“We are delighted that our innovative 1Streetworks application has delivered such fantastic results for UK Power Networks and its customers,” said Claire Milverton, CEO of 1Spatial.

“This has been a key milestone for the company and a culmination of many years of work and investment. The commercial validation brought by this contract is crucial in driving adoption across the wider industry.”

Rolls Royce shares took off on Thursday as the engine maker confirmed a solid year of progress in 2023 and set out attractive 2024 guidance.

With a 222% gain, Rolls Royce was the FTSE 100’s best-performing stock in 2023 by a country mile. In the 2024 year-to-date, the company has gained another 20% including today’s 8% rise.

Today’s full-year results justify strong gains in Rolls Royce shares and even provide scope for further gains. Underlying operating profit rose to £1.59bn in 2023 from £652m in 2022 and free cash flow surged to £1.29bn.

“What’s not to like in this Rolls-Royce update? Profit has doubled, cash flow is up and costs and net debt have come down. CEO Tufan Erginlilgic seems to have carried out the turnaround of the century, given shares are now trading at a six-year high and are 10 times higher than their Covid low,” said Adam Vettese, Market Analyst at eToro.

The fundamentals support future earnings growth, and there is nothing in this release that derails Rolls Royce’s ascendancy. This doesn’t mean unexpected external events have the potential to upset Rolls Royce’s growth trajectory.

Rolls Royce is being supported in part by a consumer choosing to allocate their discretionary spending to travel during the cost of living crisis and airlines bolstering their fleets to meet demand.

The company said they were targeting £1.7bn-£2.0bn Operating Profit in 2024 and Free Cash Flow of £1.7bn-£1.9bn.

“Heading into the new year, the group continues to benefit from sector-wide tailwinds like a huge backlog of plane orders and pent-up consumer demand for travel, meaning there’s set to be more of the group’s market-leading engines on wings,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Given that a large chunk of its revenue comes from servicing those engines, with business based on how long those engines spend in the air, investors should be pleased to see so-called engine flying hours (EFH) rise to 88% of 2019 levels last year. That figure’s set to soar to new heights this year, with the group expecting EFH to hit 100-110% of 2019 levels.”

Rolls Royce CEO Tufan Erginbilgic’s turnaround strategy must be applauded. He took the controls at Rolls Royce in early 2023 amid geopolitical tensions and economic head-winds, and has set Rolls Royce on a clear path to shareholder returns.

“Our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives. This step-change has been achieved across all our divisions, despite a volatile environment with geopoliticaluncertainty, supply chain challenges and inflationary pressures,” said Rolls Royce CEO Tufan Erginbilgic.

Lloyds shares were weaker in early trade Thursday despite announcing a fresh £2bn share buyback and Q4 profit before tax coming in higher than analyst estimates.

However, early disappointment diminished as a fairly sizeable share buyback provided the desired effect on Lloyds shares on Thursday. Lloyds performed well during the last quarter with Q4 profit before tax coming in at £1.8bn compared to a £1.7bn analyst consensus.

While underlying performance was strong, bad memories of provisions related to wrongdoing dominated the Lloyds share price in early trade Thursday as the company set aside £450m in provisions for a motor financing probe by the FCA.

“Lloyds delivered a decent set of results and a confident medium-term outlook. Striping out the £450mn provision, set aside as a buffer for any incoming charges from the FCA review into motor financing, and profit before tax was a decent beat. That was driven almost entirely by a release of credit impairments back into the profit line with better economic assumptions and a single-name creditor paying back a hefty chunk of debt,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“On the FCA review, the £450mn provision was less than some had feared but there will be question marks around how Lloyds has come to that figure. Lloyds has been honest in saying the outcome of the review is largely unknown. What we do know is that Lloyds is one of the more exposed banks should the FCA deem there was misconduct and customer loss.”

Concerns about future provisions and the potential amount Lloyds will be liable for may be a factor weighing on Lloyd’s share price today. Lloyds shares were down 2% before reversing losses to trade 2% higher at the time of writing.

It is not too long ago that each quarterly update from Lloyds and other UK banks was poured over for how much they were forced to set aside for PPI claims.

After the financial crisis, the PPI saga rocked UK banking valuations and the sector has never fully recovered. The sector trades below the FTSE 100 average PE Ratio and individual banks are valued well beneath book value.

Although today’s £450m provision was less than it could have been, investors will fear further provisions in the coming quarters and this seems to be offsetting any positivity around buybacks or higher profits.

Notwithstanding provisions for motoring financing, Lloyds had a relatively good quarter. Net interest margins met guidance as underlying net interest income rose 5% to £13.8 billion.

There were ten companies that left AIM in January 2024, while SigmaRoc (LON: SRC) was readmitted after its acquisition from CRH. The only new admission was AdvancedAdvT (LON: ADVT), which moved from the standard list.  Four companies were taken over, two chose to leave, three left after a lengthy suspension of trading and one was in financial difficulties.

4 January

Petroneft Resources

Russia-focused oil and gas company Petroneft Resources was trying to sell its oil and gas interests and wind up the company. There was a deal to sell the assets to chief executive Pavel Tetyakov, but the Russian authorities had not approved this by the time of the AIM cancellation. The cash will be used repay loans, settle creditors and pay staff before gaining shareholder approval to wind up the company.  

The company did not find an auditor for its 2022 accounts and trading in the shares was suspended on 4 July. The quotation was cancelled after a six-month suspension period.

The final share price was 0.085p. The issue price on 27 September 2006 was 19.8p, which valued the company at £35m.

5 January

Real Good Food

Food ingredients supplier Real Good Food was in financial difficulties for more than six years following the discovery of problems with past accounts relating to inter-company trading and consolidation. This led to disposals to keep the company afloat. Last November, Rainbow Dust Colours was sold for more than its asset value and there was a strategic review of the remaining Renshaw ingredients business, which was trading poorly.

Trading in the shares was suspended on 29 November 2023. An administrator was appointed at the beginning of December 2023, and the remaining assets sold to British Bakels. Cavendish resigned as nominated adviser.

Real Good Food joined AIM on 29 September 2003 at an issue price of 110p, which valued it at £5.7m. A reverse takeover on 14 May 2004, valued the company at £19.2m and another reverse takeover on 31 August 2005, valued the company at £72.8m.

8 January

Online Blockchain

Beaumont Cornish resigned as nominated adviser to Online Blockchain, and this left one month to find a replacement, which did not happen. Online Blockchain was known as On-Line when it joined AIM on 18 December 1996. The issue price was 100p. Trading in the shares was suspended on 6 December at 15.5p/share. The website is www.onlineblockchain.io.

The move into the blockchain and AI technology sector as an investor and adviser led to a soaring share price, but it has been declining since early 2021. One of the products is Synthia, an AI whole-life assistant. This includes setting up meetings, checking information and creating images.

A stake in ADVFN (LON: AFN) was reduced last November and Online Blockchain retains 3.1 million shares that are equivalent to 6% of the financial information provider. That is worth just over £300,000 at the current ADVFN share price of 12p.

8 January

Tintra

Fintech business Tintra gained shareholder approval for the cancellation of its AIM quotation. Allenby previously resigned as nominated adviser and broker and trading in the shares was suspended at 32.5p.

Management believed that the share price was too low and that made it difficult to rase cash. It says that costs can be reduced by £505,000 by leaving AIM, which is ridiculously high for a company of this size, and it is strange that the management has let them get out of control. That is before any indirect cost.

A Middle East investor may become a partner after the AIM cancellation and there is talk of a Middle East listing.

Trading in the shares had been suspended at the end of July and it subsequently received a bid approach at 150p/share, which was double the market price, but nothing came of that.

JP Jenkins is providing a matched bargain facility, although the minimum bid price is apparently going to be set at 150p/share for the first nine months so there is unlikely to be much trading.

Originally known as Weather Lottery, the company was introduced to AIM on 13 September 2006. After a subsequent 1,000-for-one share consolidation the initial share price was the equivalent of 9000p. The lottery business was not a success and the company tried other activities and was variously known as Boxhill Technologies and St James House.

Tintra won the best performing share award at the 2022 AIM Awards. There was a 310% increase in the 12 months to the end of July 2022, although much of that rise came at the end of the period when a scaling up of the financial technology business was announced.

12 January

Holders Technology

PCB materials and lighting control systems supplier Holders Technology launched a tender offer prior to the cancellation of the AIM quotation and acquired 2.145 million shares at 43p/share, leaving 2.08 million in issue. Management was keen to reduce ongoing costs that outweighed the benefit of being on AIM.

In the year to November 2022, revenues declined from £12.4m to £8.32m and the business swung into loss. There was also an interim loss even though there was a recovery in revenues. At the end of May 2023, NAV was £3.6m (85p/share), including net cash of £1.81m.

Holders Technology transferred from the Main Market on 8 October 2001 when the share price was 52.5p. The final share price was 50.5p.

18 January

Rotala

A bid vehicle backed by its chief executive Simon Dunn offered 63.5p/share in cash for bus operator Rotala, which valued it at £23.5m. There was a lack of liquidity in the shares as well as a lack of institutional investment. Management believed that Rotala would be better suited as a private company.

Revenues reached £85m in the year to November 2022. In February 2023, a £10m tender offer at 55p/share was oversubscribed. Last July, the Bolton bus depot was sold for £30.4m. Prior to that net debt was £45m.

Rotala was floated by Durlacher as a shell on 29 March 2005. The issue price was 4p. A reverse takeover was achieved on 30 August 2005 at 6.5p/share. In all, 20 acquisitions were made in 18 years.

18 January

Unbound Group

Unibound Group was originally Electra Private Equity, which moved from the Main Market to AIM. All the businesses were sold or demerged other than the Hotter Shoes comfort-based footwear manufacturer. There was a direct to consumer model, although it still had some retail stores. Hotter had a large database of customers, but trading conditions were tough.

In 2022, Unbound raised £3.3m at a discounted price of 15p. An open offer could have raised up to £1m more but ended up generating £134,000. This fundraising hit the share price and it did not prove to be sufficient cash.

A proposal from Marwyn Investment Management to inject £10m into the business at a placing price of 10.5p did not go ahead. Cost savings came too late as trading got worse.

On 19 July, trading in the shares was suspended at 0.75p because the accounts were not going to be published in time. The main subsidiary was sold by its administrator to WoolOvers for £6.7m in cash, which will go to the creditors of the subsidiary. Unbound had creditors of £900,000 and it has some investments to offset against this. It is uncertain what might be left for investors.

The company moved to AIM on 1 February 2021 and the introduction price was 54.6p. In July 2023, Richard Bernstein subscribed £65,000 at 1p/share. There is hope that a reverse takeover could still be achieved.

18 January

Velocys

Velocys did not meet the conditions for the $15m strategic investment from Carbon Direct Capital Management that would have enabled it to remain independent and develop its renewable fuel projects. The sustainable fuel developer needed to raise an additional $40m, including $8m it had already raised, and management found it difficult to secure investors.

Velocys needed more cash before the end of 2023. A consortium including Lightrock, Carbon Direct, GenZero and Kibo Investments bid 0.25p/share, which valued Velocys at £4.1m.

The bidders have pledged to invest £31.5m in the business. There is a significant market opportunity in sustainable aircraft fuel. Velocys has Fischer-Tropsch reactor technology suitable for this area.

Velocys started out as Oxford Catalysts, a spin-off from IP Group. It joined AIM on 26 April 2006 at an issue price of 174p. There was a reverse takeover on 20 November 2008 with a share issue at 125p.

26 January

Hotel Chocolat

Hotel Chocolat recommended a 375p/share bid from Mars, nearly treble the previous market price. That valued the chocolate company at £534m. The share price had not been that high for 18 months.

Mars is keen to help Hotel Chocolat expand into new regions. The track record of international expansion by the company has been mixed and it will help to have the backing of a larger company with greater resources.

Shareholders could accept an alternative offer of one rollover share in the bid vehicle for each share. The value of these shares will be dependent on the performance of the business, and this would be taking a risk.

Trading was strong during Covid lockdowns as online revenues soared. However, revenues subsequently declined, and the company fell into loss.

Hotel Chocolat joined AIM on 10 May 2016 at a placing price of 148p. The company was founded in 1993 and has 131 stores in the UK and 21 stores in Japan, as well as its own cacao farm in St Lucia.

30 January

DX (Group)

Freight and parcel delivery company DX agreed a 47.5p/share bid from HIG European Capital Partners, which valued the freight and parcels company at £315m, after the payment of a final dividend of 1p/share. Net cash was £37.6m and the business is cash generative.

DX, which was previously private equity-backed, joined AIM on 27 February 2014 at 100p/share. The business ran into problems and the share price slumped. An attempt to merge with the distribution division of John Menzies fell through because of shareholder disapproval. Gatemore Capital Management took a significant stake and put in a new management team that turned DX around.  

Profit was steadily improving, but there were problems with corporate governance that led to a nine-month suspension of trading in the shares and the subsequent departure of most of the management team, excluding the finance director, that had put the improvement in place. Despite this, the performance did not appear to be significantly affected and profit continues to grow as does the cash pile.

The FTSE 100 was trading in the red on Wednesday as investors reacted to HSBC results and braced for Nvidia results, which will be released after the US close.

The FTSE 100 was trading down 0.75% at the time of writing.

Stock-specific considerations were driving trade on Wednesday. HSBC weighed on the FTSE100 index after profits fell in Q4 due to impairment charges, and the company issued mixed guidance for the year ahead.

“If there was an award for simple and clean results then HSBC would get the booby prize. There’s a lot to unpack here, with the fourth quarter alone impacted by two major impairments: a $3bn write-down in the value of BoCom (Chinese bank) and a $2bn write-down from the sale of its French operation. Backing out a lot of the mess, it looks like performance was a little worse than expected with higher operating costs more than offsetting slightly better impairments,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

As the FTSE 100’s third-largest constituent by market cap, the 9% drop in HSBC shares erased many points from the FTSE 100 on Wednesday.

Rio Tinto & Glencore

Miners were under pressure on Wednesday after Rio Tinto and Glencore issued disappointing results following a year of depressed commodity prices. Glencore slashed its dividend while Rio Tinto increased the final dividend, but the full-year dividend will still be lower than last year’s.

Profits were falling across the two miners, and cash generation was lower due to a slowdown in China and falling demand for natural resources.

Nvidia

Nvidia’s results after the US close tonight could prove to be the most explosive event of the day.

Whether they hold Nvidia or not, investors will be preparing for the chipmaker’s results tonight for evidence of sustained momentum in AI that has dominated markets over the past year.

“While equities have run out of steam in recent days, Nvidia’s results could be make or break time for markets,” said Danni Hewson, head of financial analysis at AJ Bell.

“Elevated expectations mean the chip specialist has no room for error. It needs to smash it out of the park and show that the AI boom still has momentum.

“Last time round it spooked investors with a warning about a slowdown in Asian sales linked to export restrictions. While that factor should have already been priced in by the market, there is still a chance some investors will have forgotten about the headwinds and get spooked by any weakness in that part of its results. Supply issues could also be a pinch-point for the business if the AI boom has intensified, although there have been suggestions by investment bank analysts that lead times are shortening.”

If Nvidia doesn’t satisfy investors’ expectations this evening, European stocks could open deep in the red tomorrow.