While high interest rates open up opportunities for banks like NatWest to boost their earnings, they’re squeezing the real estate sector and companies like Segro. The value of the warehouse and logistics investor’s portfolio took a dip in the second half of the year. NatWest’s bumper earnings could be a positive sign for the UK’s retail banks. We’ll have to wait for HSBC and Lloyds to report next week for more on that.
(Bloomberg) — While high interest rates open up opportunities for banks like NatWest to boost their earnings, they’re squeezing the real estate sector and companies like Segro. The value of the warehouse and logistics investor’s portfolio took a dip in the second half of the year. NatWest’s bumper earnings could be a positive sign for the UK’s retail banks. We’ll have to wait for HSBC and Lloyds to report next week for more on that.
Here’s the key business news from London this morning:
In the City
NatWest Group Plc: The British bank announced an £800 million share buyback after higher interest rates boosted its fourth-quarter net income to significantly ahead of analyst estimates.
- Britain’s biggest corporate lender posted an operating profit before tax of £1.43 billion, up from £543 million a year ago
Segro Plc: The warehouse investment company said its portfolio value fell more than £450 million compared to last year as investment yields rose alongside higher interest rates.
- The company says that, as clarity emerges over the path of interest rates, there is a “significant volume” of capital ready to be invested into the industrial and logistics sector as a result of its “attractive fundamentals”
Kingspan Group Plc: The building insulation company experienced a tougher second half of the year after an initial strong start, but still managed to report €1 billion of Ebitda for the first time.
- The company says there will be a “structural drive” towards more sustainable buildings over the longer term, which should support its business
In Westminster
Rishi Sunak headed to Northern Ireland for talks with the region’s parties, as expectation mounts that Britain and the EU will reach a deal on post-Brexit trading arrangements in the coming days.
Foreign Secretary James Cleverly will also have lunch with European Commission Vice President Maros Sefcovic today, people familiar with the matter told Bloomberg, in another indication that both sides are looking to close a deal to resolve long-standing divisions over the Northern Ireland Protocol.
Looking ahead to March 15, Bloomberg Opinion’s Marcus Ashworth lays out what markets need to see from Jeremy Hunt’s budget.
In Case You Missed It
It’s no secret that Wall Street likes to test the rules. Mortgage-backed securities, options pricing, credit risk, SPACs — all have been subject to what’s known as financial engineering. Now, it’s the turn of football.
That’s as Qatari investors are readying a roughly £5 billion opening bid for Manchester United Plc, people with knowledge of the matter told Bloomberg, ahead of what’s expected to be a fierce bidding war for the English football giant.
Wealthy Britons are turning to a little-used corner of the mortgage market to cut their bills after a jump in the cost of borrowing.
Finally, “a perfect storm is brewing that could send British home prices down 40%.” Listen to the latest episode of Merryn Talks Money on Apple Podcasts or Spotify.
Looking Ahead
Next week we’ll have more earnings from the likes of Lloyds Banking Group Plc, WPP Plc and Rolls-Royce Holdings Plc.
For a more considered take on the UK’s economic and financial news, sign up to Money Distilled with John Stepek.
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