44 Thursday April 28 2022 | the times
BusinessMarkets
news in brief
Credit Suisse posts loss
Credit Suisse posted a
CHF273 million (£224 million)
net loss for the first quarter.
David Mathers, the finance chief,
is to leave once a successor is
found as part of a reshuffle that
includes the head of the Asia
Pacific business and its general
counsel. Thomas Gottstein, the
chief executive, is attempting to
move beyond debacles including
heavy losses from the failure of
Archegos last year and the fallout
from the Greensill scandal.
Barclays analysts said the results
were “materially worse than our
expectations”.Pension advice fiasco
The advice industry has defended
itself over the British Steel
pensions misselling scandal. Tim
Fassam, of the Personal
Investment Management and
Financial Advice Association, told
MPs: “While we are clear the
advisers responsible must take
ownership of the advice that they
gave, the problem was made
worse by unclear and seemingly
contradictory priorities in
regulation from the Treasury, the
Financial Conduct Authority and
the Pensions Regulator.”Vimto boss steps down
The grandson of the founder of
Nichols is to step down after
more than 50 years at the soft
drinks maker, the past 15 as
non-executive chairman. John
Nichols, 72, is named after John
Noel Nichols, the inventor of
Vimto. He was appointed
managing director in 1986. The
company is still 34.7 per cent
owned by the family. In a trading
update Nichols said revenue was
up 28.9 per cent year on year to
£39.6 million. The shares fell by
22½p, or 1.6 per cent, to £13.48p.House prices to rise
House prices are likely to
continue rising until the end of
this year, but homeowners have
been told to brace for a 5 per cent
fall in prices across 2023 and- Prices of homes in Britain
have risen by more than 20 per
cent since the beginning of the
pandemic, according to the latest
data from Nationwide. Capital
Economics expects prices to rise
another 5 per cent this year
“given strong transactions and
limited stock”, to 9 per cent above
where they started in 2022.
Commodities
ICIS pricing (London 7.30pm)Crude Oils ($/barrel FOB)
Brent Physical 103.27 +0.49
BFOE(Apr) 105.38 +0.31
BFOE(May) 105.12 +0.34
WTI(Apr) 102.02 +0.32
WTI(May) 100.68 +0.27Products ($/MT)Spot CIF NW Europe (prompt delivery)
Premium Unld 1052.00 1054.00 +1.00
Gasoil EEC 1162.00 1164.00 +40.00
3.5 Fuel Oil 565.00 565.00 +0.00
Naphtha 895.00 897.00 +1.00ICE Futures
Gas Oil
May 1167.50-1166.75 Aug 1001.75-994.00
Jun 1113.25-1112.75 Sep 972.25-968.50
Jul 1049.75-1049.25 Volume: 553426Brent (9.00pm)
Jun 104.36-104.34 Sep 101.69-101.46
July 104.00-103.97 Oct 100.10-99.77
Aug 102.89-102.84 Volume: 1624378LIFFE
Cocoa
May 1737-1732 Jul 1797-1795
Jul 1782-1779 Sep 1802-1768
Sep 1810-1784 Dec 1798-1770
Dec 1808-1806
Mar 1804-1803
May 1802-1770 Volume: 72167RobustaCoffee
May 2199-2005 Jan 2128-2011
Jul 2042-2039 Mar 2052-1995
Sep 2063-2035
Nov 2089-2020 Volume: 12456White Sugar (FOB)
Reuters Mar 509.70-509.30
May 502.00-501.00
Aug 523.00-522.80 Aug 504.20-492.60
Oct 517.90-514.60 Oct 517.90-514.60
Dec 516.70-510.80 Volume: 57925PRICES
Major indices
New York
Dow Jones 33301.93 (+61.75)
Nasdaq Composite 12488.93 (-1.81)
S&P 500 4183.96 (+8.76)
Tokyo
Nikkei 225 26386.63 (-313.48)
Hong Kong
Hang Seng 19946.36 (+11.65)
Amsterdam
AEX Index 696.35 (+0.78)
Sydney
AO 7547.00 (-57.00)
Frankfurt
DAX 13793.94 (+37.54)
Singapore
Straits 3320.67 (-1.38)
Brussels
BEL20 4107.13 (-4.95)
Paris
CAC-40 6445.26 (+30.69)
Zurich
SMI Index 12051.48 (+118.20)
DJ Euro Stoxx 50 3734.64 (+13.28)
London
FTSE 100 7425.61 (+39.42)
FTSE 250 20437.77 (-54.35)
FTSE 350 4151.93 (+16.87)
FTSE Eurotop 100 3362.31 (+29.74)
FTSE All-Shares 4121.70 (+15.94)
FTSE Non Financials 5061.74 (+20.83)
techMARK 100 5863.89 (-71.06)
Bargains n/a
US$ 1.2545 (-0.0037)
Euro 1.1877 (+0.0056)
£:SDR 0.98 (+0.00)
Exchange Index 80.36 (-0.37)
Bank of England official close (4pm)
CPI 117.09 Mar (2015 = 100)
RPI 323.50 Mar (Jan 1987 = 100)
RPIX 290.10 Jun (Jan 1987 = 100)
Morningstar Long Commodity 677.16 (+5.72)
Morningstar Long/Short Commod4703.45 (+27.75)London Financial Futures
Period Open High Low Sett Vol Open Int
Long Gilt Jun 22 119.39 119.72 119.21 119.42 292497 679918
Sep 22 124.10 124.10 124.10 118.88 2 2
3-Mth Sterling Jun 22 99.025 99.045 99.015 99.026 10377 232459
Sep 22 98.885 98.890 98.860 98.866 3885 301735
Dec 22 98.820 98.825 98.790 98.806 7310 347378
Mar 23 98.785 98.795 98.755 98.771 8310 229855
Jun 23
3-Mth Euribor Jun 22 100.29 100.29 100.27 100.28 79370 467950
Sep 22 99.865 99.875 99.825 99.850 84228 513372
Dec 22 99.475 99.500 99.425 99.465 88321 527321
Mar 23 99.070 99.105 99.015 99.065 67469 451183
Jun 23 98.730 98.775 98.670 98.740 72270 406354
3-Mth Euroswiss Jun 22 100.71 100.72 100.70 100.71 925 29152
Sep 22 100.68 100.68 100.67 100.68 710 31355
Dec 22 100.61 100.62 100.59 100.62 488 22748
Mar 23
FTSE100 Jun 22 7333.5 7428.5 7313.5 7407.5 105007 601391
Sep 22 7314.0 7314.0 7314.0 7314.5 6 570
FTSEurofirst 80 Jun 22 5155.0
Sep 22 5143.5© 2022 Tradeweb Markets LLC. All rights reserved.
The Tradeweb FTSE Gilt Closing Prices information contained
herein is proprietary to Tradeweb; may not be copied or
re-distributed; is not warranted to be accurate, complete or timely; and does not constitute
investment advice. Tradeweb is not responsible for any loss or damage that might result
from the use of this information.The fuel cell side of the business is
more mature, and close towards
profitability. Adjusted losses halved
to £4.5 million last year. But its green
hydrogen business, which attempts
to develop the technology to clean-
up industries that have traditionally
been hard to decarbonise, such as
shipping, is in a stage of heavy
investment, raising £179 million last
year to fund the development of the
electrolysis technology.
What that boils down to is no
expectation of a statutory profit
being turned any time soon, which
analysts at Liberum reckon won’t
arrive before 2025. The brokerage
has forecast a loss before taxes and
other charges of £15.7 million thispartners, for which it receives a fee.
It then earns royalties based upon
the volume of product manufactured
by those companies. Those royalties
flow through almost entirely to the
bottom line, which means gross
margins are close to 70 per cent.
Ceres has some big-name
manufacturing partners embedding
its technology into their products:
Bosch, the German technology
group, Weichai, the Chinese engine
manufacturer, and Doosan, the
South Korean heavy equipment
maker. That has helped propel
impressive revenue growth, which
thanks to licence fee income from
the latter last year, was 44 per cent
higher than the year before.R
apidly rising inflation means
investors aren’t in the mood to
back speculative high growth
stories, which explains an almost 60
per cent decline in the shares of Aim
darling Ceres Power since the start
of last year. Not that the fall from
grace means investors will get the
shares on the cheap — the fuel cell
specialist’s enterprise value still
represents an eye-watering multiple
of 29 times forecast sales.
Ceres designs fuel-cell technology
under licence for its commercialEmma Powell Tempus
Buy, sell or hold: today’s best share tipsStill waiting for a rate-rise uplift
T
his isn’t the moment in the
sun that lenders had been
longing for, now that the
worst potential economic
consequences of the
pandemic have been averted and rate
rises are finally materialising. Shares
in Lloyds Banking Group, the UK’s
largest mortgage lender, have been
in purgatory since the middle of last
year, bound from moving higher by
fears of an economic slowdown,
which could cause a rise in bad debts
and choke the housing market.
In the tug-of-war between those
concerns and the benefit of higher
rates, the former is winning out, with
Lloyds shares still trading at a 17 per
cent discount to tangible net assets at
the end of last month.
First-quarter figures should allay
concerns. The lender has increased
guidance for the banking net interest
margin this year to at least 2.7 per
cent, from the 2.6 per cent expected
at the end of last year, and expects
the return on tangible equity to be
about 1 percentage point better too,
at 11 per cent. Aside from making
more money on new loans, Lloyds
also benefits from a large deposit
base, which when the full benefit of a
rising base rate isn’t being fully
passed through to savers, provides a
cheap source of funding.
Impairments for toxic loans are
fairly benign, at £177 million for thefirst quarter, which while worse than
the net release of cash set aside this
time last year, is still below pre-
pandemic norms. The bank’s
inflation expectations are higher
than they were three months ago,
which prompted the lender to set
aside an extra £100 million “overlay”,
cash to account for any nasties that
might cause a deterioration in
repayment levels.Then there is the risk of further
charges to compensate victims of
historic fraud at HBOS Reading. So
far, £790 million has been set aside
and no further provisions were made
during the first quarter, but
management has acknowledged that
“significant uncertainties remain”.
Lloyds is also betting on
unemployment remaining low, and
actually more so than it did at the
end of last year, which, if accurate,
means borrowers should still be able
to meet repayments despite the
higher cost of living. Lloyds’ typically
wealthier customer demographic
stands to be better insulated from
such pressures, reckons the Shore
Capital analyst Gary Greenwood.Heading
Lloyds v FTSE 100Source: RefinitivBanking net interest margin and
return on tangible equity2019
2020
2021
2022*
guidanceReturn on tangible equityBanking net interest margin2019
2020
2021
2022*
guidance2.88%
2.52%
2.54%
2.7%- 8 %
2.3%
13.8%
11%
*2022 guidance has been increasedTotal return over the past year2021 2022-5051015202530%
Lloyds
FTSE 100The risk is that inflation batters
companies so much that they lay-off
more staff and joblessness rises.
The banking group’s high share of
the mortgage market means it is
more exposed to a slowdown in the
housing market. Mortgage rates are
rising, but still historically cheap. The
problem is more around confidence
in wannabe homebuyers being
sapped by higher living costs. The
mortgage market is still intensely
competitive, as banks flush with
deposits seek to put cash to work.
Lloyds’ own cost base remains in
check, with expenses relating to the
day-to-day running of the business
flat and guidance reiterated for a
full-year figure of £8.8 billion, after
taking into account the cash it is
throwing behind new products. The
banking group has a record of
keeping a tighter rein on costs than
peers, keeping the cost to income
ratio in the mid-50s even amid last
year’s rise in remediation costs and
the fall in new lending and interest
rates as the pandemic took hold the
year before. That’s better than ratios
reported by NatWest, in the mid-70s,
and Barclays, north of 60.
Having a handle on costs and the
boost from rising interest rates have
benefited capital generation, which
bodes well for the dividend. That
payment is forecast to rise to 2.31p a
share this year, a potential yield of
5 per cent at the current share price.
That’s good enough for income
investors but the uncertainty around
markets could maintain a iron grip
on the shares in the near-term.ADVICE Hold
WHY Slowing economic
growth could cause the
shares to tread wateryear, rising to £17.7 million by 2024.
The addressable market for Ceres’s
technology is vast, particularly as
issues of energy security are brought
to the fore. The US is a market of
particular interest, stoked by the
arrival of the Biden administration
and renewed interest in clean energy.
However, the turning of the tide
away from growth stocks is a strong
force to swim against.ADVICE Hold
WHY Toppy valuation will
likely prevent the shares
re-rating anytime soonlloyds banking group
Market cap
£32.48 billionDividend yield
4.4 per centceres power
Market cap
£1.34 billionOperating loss
£23.4 million