IAG suffers €731 loss, looks to claw back profits for 2022

Natasha Doris
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IAG suffers €731 loss, looks to claw back profits for 2022

International Consolidated Airlines Group (IAG) shares were down 7.8% to 132p in early morning trading on Friday after the company reported an operating loss of €731 against a €1 billion loss year-on-year in its Q1 2022 trading update.

The airlines group highlighted a post-tax loss after exceptional items of €787 compared to €1 billion in Q1 2021, and a post-tax loss before exceptional items of €810 million against €1.1 billion the last year.

IAG highlighted that easing government restrictions boosted passenger capacity to 65% of 2019 bookings, representing an increase from 58% in Q4 2021 alongside strong demand for premium leisure bookings.

The group noted the short-term negative impact of Omicron over January and February on the operating result, passenger bookings and cancellations, however IAG reported no impact from the conflict in Ukraine on its business.

The travel company reported cash at €8.1 billion, increased from €241 million in Q1 2021, which the firm attributed to bookings for the rest of FY2022.

IAG noted that committed and undrawn general and aircraft financing facilities grew to €4.1 billion from €4 billion year-on-year, including an additional €200 million loan facility for Aer Lingus from the Ireland Strategic Investment Fund (ISIF), with an overall liquidity of €12.3 million compared to €11.9 billion in Q1 2021.

The group said it aimed to reach 80% of 2019 passenger capacity for Q2 2022, with 85% in Q3 and North Atlantic close to full capacity, and 90% in Q4, which would amount to a full-year capacity of 80% against 2019 levels.

“As a result of the increasing demand, forward bookings remain encouraging. We expect to achieve 80% of 2019 capacity in the second quarter and 85% in the third quarter. North Atlantic capacity will be close to fully restored in the third quarter,” said IAG CEO Luis Gallego.

“Globally the travel industry is facing challenges as a result of the biggest scaling up in operations in history and British Airways is no exception. The welcome removal of UK’s stringent travel restrictions, combined with strong pent-up demand, have contributed to a steep ramp up in capacity.”

“The airline’s focus at the moment is on improving operations and customer experience and enhancing operational resilience.”

IAG reported an expected operating profit from Q2, resulting in positive operating results and net cash flows for the remainder of 2022.

Analysts commented that though there was cause for optimism, the looming cost of living crisis threatened to eat into IAG’s recovering operating margins.

“IAG will take longer to recover than its short-haul focussed friends, but that doesn’t mean it should be discounted,” said Hargreaves Lansdown lead equity analyst Sophie Lund-Yates.

“There’s an argument to say that now the world is largely re-opening, customers could be inclined to splurge on a long-haul trip having been stuck at home for years.”

“The other side of that story though is of course the cost-of-living crisis. Those that often travel first class are likely not going to see much of a change in spending habits, but the situation may well act as a drag on BA’s shorter duration routes.”

4imprint gains on outlook to beat market forecasts

Anshula Kumar
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4imprint gains on outlook to beat market forecasts

4imprint shares lept 11% to 2,710p after reporting an encouraging performance as a result of excellent demand in its Q1 trading update for 2022 earlier today. The group also added that the outlook for 2022 is exceeding analyst expectations.

4imprint said its total order counts in the major North American business were 11% higher from January to April 2022 than in 2019, which is the most recent ‘normal’ year, according to the group.

Overall demand revenue was 27% higher than in 2019, with average order values seeing a rise of 14% for 4imprint.

The rate of new client acquisition has been positive and retention numbers accurately reflect the rising customer base.

Due to our increasing trading momentum, the group is currently on schedule to meet its long-term revenue goal of $1bn in the fiscal year 2022 said 4imprint.

This puts 4imprint’s revenue predictions for the year substantially over the higher end of the analyst forecast range and well above the consensus.

The revenue volume gains mentioned above, the productivity of the reworked marketing portfolio, the fairly stable gross margins, and the operational gearing pertaining to semi-variable and fixed costs in the business have all pushed management’s operating profit expectation for full-year 2022 above the highest analyst forecast in the market.

The Board recognises that only four months have passed and that current geopolitical and broad economic circumstances may have a significant impact on the group’s performance in the remaining months of the year.

The group is especially aware of potential concerns relating to additional COVID variations, supply chain instability, inventory availability, rising product costs, availability and labour costs, the impact of inflation on its customers’ budgets, and the general risk of economic recession.

The financial projections stated above are based on our present understanding of these variables and the Board of Directors is more confident in the 4imprint’s strategy, business model, and competitive position after the first four months of 2022.

InterContinental notes 61% increase in RevPAR

Anshula Kumar
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InterContinental notes 61% increase in RevPAR

InterContinental Hotels announced a 61% rise in group revenue per available room (RevPAR) in the first quarter, however, noted tighter trading in the Greater China region due to Covid-19 restrictions, in the group’s trading update on Friday.

InterContinental Hotels Group (IHG) reported strong trading circumstances, with travel demand continuing to rise in practically all of its core regions throughout the world in the first quarter.

Revenue per available room, a key metric in the hotel business, increased by 61% in the first quarter, compared to the same period in 2021 for IHG which means the group’s RevPAR has reached 82% of 2019’s level.

The average daily rate for the first quarter, which reflects the average rental revenue collected for an occupied room per day, was up 27% YoY and in line with 2019 said IHG.

The group’s gross system size growth was greater than 4.9% YoY and more than 0.7% YTD.

However, InterContinental’s net system size growth was higher than 3.4% YoY after adjustments for the disposals of Holiday Inn and Crowne Plaza were taken into consideration and more than 0.5% YTD.

The group also signed 16,600 rooms in 120 hotels, which was 15% better than in 2021 and 2020, leading IHG’s global pipeline to grow to 278,000 rooms in the first quarter.

InterContinental signed a new $1.35bn syndicated bank RCF in April and the prior syndicated facility of $1.27bn and the $75m bilateral facility have both been discontinued. The new five-year RCF matures in April 2027.

IHG Regional performance

After a difficult January, IHG reported the Americas and EMEAA areas had sequentially improved trading in February and March.

In comparison to 2021, the Q1 RevPAR increased by 58% in the Americas and occupancy was close to 60%, down 6% from 2019, while the rate was up 1% said IHG.

The spring break holiday period boosted demand, resulting in leisure room income being 10% higher than in 2019 which, when combined with an increase in corporate reservations and the return of more group events, should support future increases in both occupancy and rate.

With 2,200 rooms and 23 hotels opened in the quarter, the gross system size increased by 2.7% YoY and 7,800 rooms were added to the pipeline from 73 hotels, demonstrating a gradual improvement in the agreements pace and exceeding the Q1 signings in 2019 for InterContinental in the Americas.

In comparison to 2021, Q1 RevPAR increased by 122% and occupancy was reaching 50% but the rate was down only 4% for EMEAA.

Previous restrictions, particularly on international travel, were generally lifted over the quarter in all markets leading to a wide range of performance within EMEAA as Q1 RevPAR was down just 7% compared to 2019 in the Middle East and 15% in the UK, followed by 38% lower in Australia, 45% lower in Continental Europe, 58% lower in South East Asia and Korea, and 64% lower in Japan.

With 3,500 rooms from 17 hotels opened in the quarter, gross system size increased by 5.7% YoY and on an adjusted basis, net system size increased by 4.2% in EMEAA. The group also said 2,300 rooms were added to the pipeline from 15 hotels.

However, the tightening of localised travel restrictions following a spike in Covid-19 cases impacted commerce in Greater China in March.

First-quarter RevPAR in Greater China was down 7% compared to 2021 and down 42% from Q1 in 2019.

Occupancy was 36% and the rate was down 17%, however, the Winter Olympics increased Beijing’s performance.

In March, travel restrictions imposed in response to a surge in Covid-19 cases resulted in a 53% drop in RevPAR compared to 2019, with over a third of the estate either shuttered or repurposed said IHG.

Greater China noted a gross system size growth of 11.3% YoY and added 6,600 rooms from 32 hotels to the pipeline.

Keith Barr, CEO of IHG, said, “We’ve seen very positive trading conditions in the first quarter with travel demand continuing to increase in almost all of our key markets around the world.”

“The high level of demand we have seen for leisure travel continues to drive increased rates and occupancy. We also continue to see a return of business and group travel, further supporting RevPAR improvements in many of our key urban markets.”

“As occupancy levels rise and due to the strength of our brands, our hotels are seeing increased pricing power; in March, our hotels in the US achieved leisure rates up by more than 10% on 2019 levels and rate across the whole of the US business was 4% ahead.”

“Trading in Greater China continues to be impacted by restrictions put in place to control rising Covid cases. Our strategic focus on strengthening and expanding our brand portfolio continues to drive growth.”

InterContinental Hotels Group shares have fallen 1% to 4,930p after the group noted growth in all regions but explained a slow down in China due to lockdowns.

Beazley gross premiums grow 27%, records $50m Ukraine impact

Natasha Doris
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0
Beazley gross premiums grow 27%, records $50m Ukraine impact

Beazley shares were up 4.7% to 425.8p in early morning trading on Friday after the company announced a written gross premiums increase of 27% to $1.2 billion from $971 million year-on-year in its Q1 2022 trading update.

Beazley attributed its premiums rise to growth across the majority of its sectors, driven by rate increases and expanded market exposure.

The insurance firm reported a 17% boost to premium rates on renewal business against a 16% uptick in Q1 2021, and confirmed that the group’s combined ratio guidance remained at approximately 90% for FY2022.

“The year has started well with gross premiums written increasing by 27% and growth slightly ahead of our expectations across all divisions,” said Beazley CEO Adrian Cox. 

“This is primarily driven by Cyber where rates have doubled in the first three months of 2022.” 

“Whilst the overall rating environment remains positive, the rate change across parts of our business is beginning to moderate.”

However, Beazley highlighted an initial estimate of exposure to Russia’s invasion of Ukraine of around $50 million net of reinsurance, excluding the firm’s aviation sector.

The company also took a $92 million investment loss against a gain of $27 million in Q1 2021.

“The impacts of the war in Ukraine go far beyond those which are financial, and our thoughts are with everyone who is impacted by this terrible conflict,” said Cox.

“We continue to monitor the situation closely and have assessed our potential exposures across our business.”

“To date we have seen a small number of claims with respect to the conflict and we remain confident in our combined ratio guidance of around 90% for the full year.”

Beazley announced investments and cash at $7.7 billion from $6.7 billion year-on-year, alongside a year-to-date investment return loss of 1.2% against a 0.4% return in Q1 2021.

UK Oil & Gas shares leap 25% with production permit

Anshula Kumar
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1
UK Oil & Gas shares leap 25% with production permit

UK Oil & Gas (UKOG), a majority shareholder of Horse Hill Developments and operator of the Horse Hill Oil Project in the Weald Basin in southern England received a production permit from the Environment Agency on Thursday which helped boost the company’s shares by 25% to 0.14p.

UK Oil & Gas stated that the Environment Agency has issued a full production permit to UKOG’s 85.6% owned Horse Hill oil field.

Production and water re-injection activities, waste gas incineration, maintenance and the drilling of additional development wells are all allowed under the production permit.

To date, production at Horse Hill has been governed by prior testing consents that prohibit the reinjection of produced saline formation water.

UKOG may now go on with its plans to turn Horse Hill-2z into a water injector by 2022, eliminating the requirement for costly transportation and disposal of produced saline formation water at third-party sites.

On September 24, 2019, the Environment Agency received the initial application for the production permit, which was submitted 31 months ago.

Following the production permit, a feasibility study for resuming Kimmeridge production as well as new Portland infill drilling locations is underway.

George Frangeskides, Executive Chairman, UK Oil & Gas, commented, “This is welcome news. We look forward to hearing of the Operator’s plans for enhancing productivity and delivering on the inherent, and to date largely untapped, value of the Horse Hill Oil Field.”

Trainline: Outlook exceeds pre-covid era

Anshula Kumar
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0
Trainline: Outlook exceeds pre-covid era

Trainline announced a 222% jump in net ticket sales and 181% growth in revenue due to the ease of Covid-19 restrictions supporting the company which led the ticketing platform’s shares to rise 10% to 309p on Thursday.

Trainline noted a 222% increase in group net ticket sales to £2.5bn in line with the group’s guided range set out in its half-year trading update, despite the impact of Omicron in the fourth quarter.

As net ticket sales recovered over the year, the group’s revenue also recovered to £189m, which was 181% higher than 2021.

The UK Consumer segment contributed 248% to £153m, Trainline Partner Solutions generated £15m and International sales brought in £21m.

Trainline’s gross profit rose by 214% to £153m, noting a 279% increase to £129m in the UK Consumer segment followed by Trainline Partner Solutions contributing £11m and the International segment generating £13m.

Adjusted EBITDA was £39m compared to a loss of £25m in 2021 which lead to a basic loss per share of 2.5p versus 19.1p for Trainline.

The group’s operating free cash flow amounted to £166m as adjusted EBITDA and working capital inflows improved with the recovery in net ticket sales.

Trainline noted a decrease in net debt from £241m to £90 as a result of the recovery in trading leading to a positive operating free cash flow.

The group reported a 39% increase in customers that transact 2+ times a month compared to pre-Covid times and sold over 1m railcards in the UK during FY22.

Trainline launched flexi tickets and piloted digital season tickets which converted 27% more time-checkers to customers in comparison to pre-COVID times.

Since Trenitalia’s launch, tickets sold doubled as high-speed routes liberalise such as Paris-Lyon and the group scaled marketing investments in its International segment which delivered record new app customer acquisitions.

Trainline FY 2023 Guidance

Trainline predicts robust growth in FY2023, with net ticket sales in the range of £3.8-£4.2bn, with the bottom of the range exceeding FY2020, which was the year before COVID.

Revenue in the range of £280-310m, higher than FY2020, and adjusted EBITDA in the range of £70-75m are projected, with increased investment in its international segments, is expected by the group.

Jody Ford, CEO of Trainline said, “Our strong performance and positive outlook for next year reflects our relentless focus on supporting the rail industry’s recovery, making greener rail travel easier and better value for customers.” 

“In the UK, we are constantly innovating our app experience for commuters, including personalised journeys and easy rebooking, while also scaling digital railcards.”

“In Europe we are investing to become the rail app of choice. Customers are increasingly looking to Trainline to find value as choice spreads across markets with the entry of new rail operators.”

Helios Towers shares rise on 23% revenue growth

Natasha Doris
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0
Helios Towers shares rise on 23% revenue growth

Helios Towers shares were up 3.8% to 114.3p in late afternoon trading on Thursday, after the telecommunications company reported a 23% year-on-year revenue growth to $127.5 million compared to $103.6 million for Q1 2022.

The firm reported a 4% increase in revenue from $122.3 million quarter-on-quarter.

The Africa-focused group announced a 20% EBITDA rise to $66.7 million against $55.8 million the previous year, which the company attributed to three acquisitions closed over the last 12 months and organic tenancy growth in established markets.

Helios Towers mentioned that its EBITDA gains were partially offset by corporate SG&A investments which supported the firm’s transformational expansion from five markets to ten.

The company announced a 2% uptick in EBITDA against Q4 2021 from $65.6 million.

However, Helios Towers mentioned an operating profit decrease of $2.7 million to $14.4 million year-on-year, driven by higher depreciation from acquired assets.

The group confirmed a portfolio free cash flow increase of 34% to $49.9 million year-on-year, which Helios attributed to its rise in EBITDA, lower maintenance and corporate capital additions and lower tax payments.

Helios commented that its lower tax payments were partially offset by higher lease payments as a result of the company’s higher site count.

The company reported a 76% increase in cash generated from operations to $52.7 million year-on-year, driven by the gains in EBITDA and working capital movements.

The telecom infrastructure firm highlighted that its business was underpinned by long-term contracted revenues of $4.2 billion against $2.8 billion in Q1 2021, of which 99% was sourced from multinational MMOs, with an average remaining life of 7.4 years compared to 6.6 years the previous year.

Helios Towers reconfirmed its guidance for 2022, with projections of 1,200 to 1,700 organic tenancy additions, 60% of which are set to be new sites, a lease rate per tenant increase between 3-5% to $26,400 since last year, and an adjusted EBITDA margin between 51-53%.

“We have seen strong growth this quarter with revenue up 23% year-on-year, driven by continued organic demand in our established markets in addition to the contributions from our three new markets of Senegal, Madagascar and Malawi,” said Helios Towers CEO Tom Greenwood.

“Our recent platform expansion is progressing well, as we become the most diversified towerco in the region with the doubling of our sites and markets.”

“We have many exciting years ahead as we move to a new phase of our journey and launch our 5 year sustainable business strategy – focused on driving growth, impact, margins and returns.”

Small & Mid-Cap Roundup: Trainline, Virgin Money, Domino’s, UK Oil & Gas

Anshula Kumar
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0
Small & Mid-Cap Roundup: Trainline, Virgin Money, Domino’s, UK Oil & Gas

FTSE 250 gained 1.2% to 20,457 and the AIM was up 0.6% to 1,004 on Thursday as companies including Trainline and UK Oil & Gas supported the indices.

Trainline shares flew 10.5% to 307p after the group reported a pre-tax loss of £15.5m from £106.8m in 2021.

Trainline reported an increase in revenue from £67.1m to £188.5m as significantly higher net ticket sales signalled a recovery for the rail industry from the pandemic.

Puretech shares gained 7.3% to 180p after the group approved a share buyback of up to $50m.

Morgan Advanced Materials increased 7.4% to 293p after the industrial products manufacturer reported an 11% sales growth in Q1 on an organic constant-currency basis compared to 2021.

The group said its Molten Metal Systems business grew the strongest, with sales growth of 16% YoY on the same basis, and its performance in line with executive guidance.

Playtech shares were trading up 1.5% to 522p after the group reported an “excellent” start to the year, as adjusted EBITDA came in at €100m in the first quarter.

Helios Towers shares rose 4% to 114p after the Africa-focused mobile phone tower developer posted revenue of $127.5m, a 23% increase YoY from $103.6m.

Helios said the increase in revenue was driven by acquisitions in Senegal, Madagascar and Malwai, as well as strong organic tenancy growth across the company.

IMI shares were trading up 4.3% to 1,407p after the engineering firm reported a 9% increase in revenue to £421m due to order book growth.

Derwent London shares gained 3.7% to 3,009p following the group’s announcement of its plan to acquire City Road Island EC1 for £239m, and said that its rent collection levels in the first quarter were in line with pre-pandemic levels again in its Q1 business update.

Virgin Money shares tumbled 7.6% to 163p despite the group reinstating its interim payout, and posted a sharp rise in pretax profit from £72m to £315m.

Hiscox shares plummeted 7.2% to 887p after the specialist insurer battled high inflation and interest rate rises, resulting in a quarterly loss in its investment return.

Hiscox Retail premiums climbed to $670.8m from $663.9m, as it continued “to progress with positive momentum”.

Domino’s Pizza Group shares dropped 5% to 316p despite reporting an order growth in the first quarter due to recovery of collections, which grew 45%.

Vast Resources shares tanked 20% to 1.6p, as shares rebounded from gains made on Tuesday.

Petro Matad shares were trading down 13% at 3.6p after the Mongolia-focused exploration firm said the recent increase in Covid-19 related lockdowns and travel restrictions in China continued to affect Mongolia, alongside the fact that no Chinese oil rigs are currently operating in the region.

UK Oil & Gas shares soared 42% to 0.16p after the company stated that the UK Environment Agency had granted its 86% owned Horse Hill oil field a full production permit which enabled production and water re-injection operations, incineration of waste gas, maintenance and the drilling of further development wells.

i-nexus shares were trading up 18% to 5.6p following the software company’s announced appointment of Drew Whibley to the board as chief financial officer, effective from August 1.

Petard shares rose 15.6% to 13p following the group’s swing to a pretax profit of £502,000 from a loss of £1.2m, as revenue increased 4.6% to £13.6m from £13m in 2021.

Open Orphan shares gained 5.6% to 14p following the company’s announcement that hVIVO, Open Orphan’s subsidiary, signed a contract for a new study with an existing Big Pharma client to act as a vaccination site for a Phase II field study of the client’s respiratory syncytial virus (RSV) vaccine candidate.

FTSE 100 gains despite BoE interest rate hikes

Natasha Doris
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0
FTSE 100 gains despite BoE interest rate hikes

The FTSE 100 was up 1.5% to 7,610.8 in early afternoon trading on Thursday, as the market enjoyed a rally despite the Bank of England’s decision to hike interest rates to 1%.

The gains in the market could be linked to the Federal Reserve’s 0.5% interest rates hike, which came 0.25% below the expected 0.75% jump, giving investors cause for celebration with a wide slate of sectors gaining across the FTSE 100.

“The reason why the market jumped was down to previous fears that the central bank would be even more aggressive with rate rises to curb inflation,” said AJ Bell investment director Russ Mould.

“There was a lot of chatter about whether the Fed would have been bold enough to deliver three quarters of a percentage point rise. Federal Reserve chair Jay Powell gave the answer the market was looking for – no, that is not ‘actively’ being considered.”

“Investors breathed a sigh of relief and hence share prices went up.”

A slate of positive results from companies including Shell and Next boosted the market, as Next defied inflation fears of high street decline with a 285% surge in retail growth, and Shell profits tripled to $9.1 billion on the back of skyrocketing oil prices.

Endeavour Mining shares surged 9.1% to 21,190p after the firm reported climbing revenue on the back of an 8.5% year-on-year increase in gold prices and increased levels of production.

Mondi shares gained 6.9% on the back of strong Q1 2022 results, with a 63% rise in pre-tax underlying earnings to €574 million compared to €353 million the previous year.

Shell shares gained 4.1% following the energy giant’s massive profits boost despite its Russian operations exit, as the company tripled its profits for Q1 2022 to $9.1 billion against $3.2 billion the last year.

The oil and gas company attributed its profits to soaring oil prices, with Brent crude exceeding $120 per barrel in March this year and currently at $110 per barrel on the back of scarcity fears due to Russia’s war in Ukraine.

Anglo American shares rose 4% to 36,500p after the mining company announced the appointment of Tim Livesey as a non-executive director of the firm.

Hikma shares plummeted 8.2% on the back of an announced delay to its Jazz Pharmaceuticals generic version of Xyrem, the company’s treatment for narcolepsy, causing a downgraded revision of its generics business guidance.

Bank of England hikes interest rates to 1%

Natasha Doris
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1
Bank of England hikes interest rates to 1%

The Bank of England announced a 0.25% hike in interest rates to 1%, the highest rate in 13 years.

The Bank of England’s nine rate-setters voted six against three to raise interest rates to the projected 1% expected by the market, as a result of 30-year high rates of inflation sweeping the UK.

The three opposing rate setters pushed for a greater increase to 1.25% in a bid to curb the skyrocketing inflation, which is expected to soar to 10% in Q4 2022.

Households Suffering

Analyst pointed out that the bitter rates jump would cause the most damage to households already struggling with rising inflation, the Covid-19 pandemic and rising energy prices.

“The move by the Bank’s rate-setters to increase rates lumps even more pain on households struggling with the cost of living crisis,” said AJ Bell head of personal finance Laura Suter.

“With inflation at 7% and expected to hit double digits in October, when the energy price cap rises again, it might have seemed like the Bank’s hand was forced.”

“The global nature of the drivers of inflation means that this increase to 1% is very unlikely to beat inflation into a hasty retreat, but what it is certain to do is pile more misery on people already having to rely on debt just to pay their bills.”

Inflation is set to hit a 9% rate across April in light of the 54% energy price cap rise, with the rate predicted to peak in October as energy bills climb higher on the back of increased energy bills.

“We expect inflation to rise further to around 10% this year,” said the Bank of England in a statement.

“Prices are likely to rise faster than income for many people. That means that people will be able to buy less with their money.”

“The UK economy has been recovering from the effects of Covid, but we expect the increased cost of living to lead to slower growth overall.”

BoE Fighting Inflation

The Bank said it aimed to curb inflation back to its 2% goal, and added that it expected to fall back within its ideal rate in around two years.

“[We] do have tools to make sure inflation comes back down to our 2% target. The main tool we use to bring inflation down is to increase interest rates,” said the Bank.

“We raised the UK’s most important interest rate (Bank Rate) from 0.1% to 0.25% in December 2021, to 0.5% in February 2022, and then again to 0.75% in March. This month we have raised Bank Rate to 1%.”

“We expect inflation to fall back next year and be close to our target in around two years.”

Recession Concerns

The looming prospect of a recession weighed on the announcement, with the Bank of England forecasting a potential GDP fall of close to 1% in Q4 2022 on the back of the rising energy price cap in October.

The institution reported a revised estimate to UK growth in 2023, anticipating a 0.25% contraction as opposed to its previous projection of 1.25% growth.

The outlook for 2024 appeared similarly grim, with a mere 0.25% growth predicted against its former 1% growth forecast.

Unemployment is also expected to hit 5.5% by 2025, as the UK suffers the second-largest hit to real household disposal income since 1964.

Further Interest Rate Hikes

The Bank of England confirmed that interest rates could continue to climb as high as 2.5% within a year, with many predicting that the Bank will hike rates to 1.25% at the next decision in June.

“Last time rates were at 1% they only sat there for less than a month, before being cut again to 0.5%. Anyone with borrowing will fear that the same will be true this time around, and that the Bank will increase rates again to 1.25% at the next meeting in June,” said Suter.

“That seems almost inevitable, with the Bank now predicting that rates will hit around 2.5% by this time next year.”

“This fourth increase in a row by the bank means that in the space of less than five months we’ve seen rates leap from 0.1% to 1%. And that means anyone with debt has seen a significant increase in their costs.”

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