What to watch: Credit Suisse plans stock buyback, Lloyds returns to profit and Shell increases dividends

·5 min read
The Credit Suisse logo is seen at the headquarters in downtown Milan, Italy, March 9, 2016. Credit Suisse Group is under investigation in Italy in connection with a case looking into allegations that the bank helped wealthy clients transfer undeclared funds offshore, Italian judicial sources said on Wednesday.  REUTERS/Stefano Rellandini      TPX IMAGES OF THE DAY           TPX IMAGES OF THE DAY
Credit Suisse intends to use stronger capital to boost returns over the long term Photo: Stefano Relland/Reuters

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world:

Credit Suisse plans stock buyback

Credit Suisse (CS) is planning to target as much as 1.5bn Swiss francs ($1.65bn) of stock repurchases from next year after its third-quarter profit missed analyst estimates.

The company intends to use stronger capital to boost returns over the long term. Net income at the bank fell by 546m francs, compared with expectations of 597m francs. The results were dragged down by the bank’s key international wealth management and Swiss businesses.

The business’s recently combined investment bank and Asia business also contributed to some of the the declines.

The year to date has been an “uncertain one” and “challenges lie ahead” said Thomas Gottstein, CEO of Credit Suisse Group AG in a statement on Thursday.

He added that he and the rest of company stakeholders were “pleased that we are proposing the payout of the second tranche of our 2019 dividend and that we continue to accrue a 5% higher 2020 dividend for our shareholders. Furthermore, we intend to resume our share buyback program in January 2021 with a target repurchase of up to CHF 1.5bn of shares and a minimum of at least CHF 1bn for the full year.”

Lloyds returns to profit

Lloyds Bank (LLOY.L) has returned to profit, recovering from an unexpected loss in the first half of the year.

Lloyds Bank on Thursday said it made a pre-tax profit of £1bn ($1.3bn) in the third quarter on income of £3.4bn. Analysts had forecast a profit of £588m on income of £3.3bn.

The performance marks a return to the black for Lloyds after a first-half loss. Lloyds was pushed into the red by larger-than-expected loss provisions to cover loans going bad due to the COVID-19 pandemic.

The bank set aside another £301m in the third quarter to cover bad loans, but this was significantly below the charge taken in the second quarter and below analysts’ forecasts. It takes the total provisions built up by the bank so far this year to £4.1bn.

Lloyds said loss provisions for the full-year were now likely to be “at the low end” of the £4.5bn to £5.5bn range provided earlier this year.

Shell increases dividends

The energy giant Royal Dutch Shell (RDSB.L) has announced plans to hike payouts to shareholders, despite profits nosediving and mass job cuts as the coronavirus crisis hammers the industry.

Shares in the company leapt more than 4% as it made the announcement on Thursday in its third-quarter results. It follows the company’s first dividend cut since the Second World War in April, when it also announced a cost-cutting drive.

Shell posted adjusted earnings of $955m (£735.4m), an 80% decline on its third quarter a year earlier but still better than expected by analysts.

“Quarterly profits were better than some feared, but when the overall result is an 80% drop in earnings, that’s a funny sort of win,” said Steven Clayton, an HL Select fund manager at Hargreaves Lansdown.

WATCH: Shell plans to cut up to 9,000 jobs

European markets recover as governments struggle to contain COVID-19

Unease continues to spread across Asian markets but European markets showed a modest recovery on Thursday despite COVID-19 containment efforts struggling to reap results. A lack of a US stimulus deal has added further pressure. Global stock markets suffered from a heavy sell-off on Wednesday.

European markets opened higher. The DAX (^GDAXI) was higher by 0.8% in Frankfurt and the CAC 40 (^FCHI) gained by 0.7% in Paris. In Milan, the FTSE MIB (FTSEMIB.MI) tilted higher by 0.9%. The IBEX 35 (^IBEX) went up by 0.5% in Madrid. In London, the FTSE (^FTSE) also rose by 0.3%.

Continental governments are ramping up their COVID-19 measures as cases continue to rise. Germany has introduced a four-week partial lockdown. Restaurants, bars and nightclubs will be closed as well as leisure facilities, including gyms, event venues, cinemas and amusement parks.

France has also reverted to new nationwide restrictions, which will last until 1 December. This includes bars and restaurants being closed, domestic travel and public gatherings being banned.

The European Central Bank is also largely in focus today as it is set to announce its latest monetary policy. Investors are expecting it to continue taking supportive market measures, meaning an increase in its asset purchase program as interest rates are already in negative territory.

Markets will be also be watching for major tech earnings today from Apple (AAPL), Google (GOOG), Amazon (AMZN), and Facebook (FB).

Wall Street markets joined the global sell-off when trading got under way in New York on Wednesday, but futures are pointing up. The S&P 500 (ES=F) was up by 0.9% and Dow Jones index (YM=F) was up by 0.8% and the Nasdaq (NQ=F) was 1% higher.

Stock markets were lower in the Asian trading session. Japan’s Nikkei (^N225) was down by 0.4% and the Hong Kong Hang Seng (^HSI) lost by 0.5%. With respect to mainland Chinese markets, the Shanghai Composite (000001.SS) was higher by 0.1% and the Shenzhen Component (399001.SZ) rallied by 1%.

WATCH: Markets lower as renewed restrictions go into effect

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