UK banks are bracing for more claims from customers affected by the mis-selling of payment protection insurance (PPI) as the deadline for making complaints approaches.
The Financial Conduct Authority (FCA) has been urging customers to lodge their claims before the August 29 deadline and expects to see a surge of requests for refunds in the coming week.
Lloyds Banking Group PLC (LON:LLOY) has been the hardest hit by PPI claims, having set aside more than £20bn for compensation payments.
Barclays PLC (LON:BARC) has put aside £9.6bn so far but has said it expects its bill to rise as more customers make complaints before the cut-off date.
Royal Bank of Scotland Group PLC (LON:RBS) has made provisions of £5.3bn for PPI claims, according to its first-half results published earlier this month.
In an FCA survey of 2,000 customers, nearly a fifth of respondents said they will make a last-minute decision on whether to complain about PPI so it is likely banks will need to fork out more cash for refunds.
Brexit uncertainty drags on Hays
Recruitment firm Hays PLC (LON:HAY) saw its UK business hit by Brexit uncertainty in the fourth quarter but it said it was still on track to meet market forecasts for the full year.
The company’s UK division, which accounted for 23% of total gross profit the final quarter, is likely to come under close scrutiny again when it posts its annual results on Thursday.
The prospect of a no-deal Brexit has increased since Boris Johnson took over as prime minister, meaning employers are likely to have become more cautious about hiring staff.
Investors will be looking to Hays for guidance on the outlook and any remarks about the potential impact of a hard Brexit.
Hays expects operating profit for the year to be in line with analysts’ forecasts of about £248.2mln, compared to £243.4mln last year.
Slowing global growth hits Bunzl
First-half results from Bunzl PLC (LON:BNZL) are unlikely to contain too many surprises given that the company has already given investors a taste of what’s to come.
A trading update in June showed underlying organic revenue growth slowed to just 1% in the half-year, from 1.5% in the first quarter, as slower global growth continued to drag on the logistics giant.
For the full calendar year, the board said its expectations “remain unchanged with overall trading consistent with the slowing underlying revenue growth indicated at the time of the first quarter trading statement”.
“For 2019 as a whole, forecasts have dribbled down from £580 to £562 million, on an adjusted basis, since the June trading statement and that implies only modest growth, so that’s our yardstick for the first half,” AJ Bell investment director Russ Mould said.
Half-year profits to jump at Gym Group
Low cost gym operator The Gym Group PLC (LON:GYM) is due to report its half-year results on Thursday.
The company has enjoyed rapid growth in recent years, and showed no sign of slowing in last month’s trading update, when it revealed a 20% jump in membership numbers and a 27% surge in revenue.
Analysts at Peel Hunt reckon that top-line growth will filter down to the bottom line as well and are forecasting pre-tax profits (before accounting changes) of £9mln – a 30% year-on-year rise.
Driving some of the growth of late has been the new premium membership, LIVE IT, so the market will be interested to see if this is still performing well.
New openings have also been behind the surge, and the plan is to open another 15-20 this year, plus a first-of-its-kind ‘small box gym’. An update on how these are coming along will no doubt we welcomed.
Strong start eyed for Loungers
Analysts are looking for Loungers PLC (LON:LGRS) to have delivered further strong like-for-like sales growth in the opening few months of its new financial year when it reports its maiden set of annual results on Wednesday.
Much of last year’s performance is already known after a June update in which the café-cum-bar-cum-restaurant operator revealed that like-for-like sales rose 6.9%, while total revenues were up by more than a quarter.
Instead, investors’ attention will turn to how things have fared so far in the 2020 financial year, which runs until the end of April.
According to Peel Hunt’s calculations, Loungers has hiked food prices by 2.9% and drink prices by 2.1% over summer – bigger raises than usual.
“As this represents just six months, there should be a larger price component to lfl sales in 2020E, with a follow-on benefit to gross margins,” said analysts.
“LFL sales should also benefit from the introduction of the Big Lounge Breakfast, at £11.95 vs £7.65 for a Lounge Breakfast.”
Amigo shares could do with a friend
Guarantor loan provider Amigo Holdings PLC (LON:AMGO) is due up with its half-year numbers on Thursday, and investors will be hoping the stock can rediscover its mojo.
The shares have halved over the past couple of months, not helped by the departure of chief executive Glen Crawford due to illness.
But there have also been wider concerns about the regulatory spotlight and how the current economic uncertainty could affect demand for loans.
The strength of the guarantor lending market has prompted concerns from UK financial regulator the FCA over how the affordability of borrowers was being assessed, although these have batted away by chairman Stephan Wilcke.
Analysts at Shore Capital recently cut their recommendation down to ‘sell’, citing the “increased regulatory spotlight on the guarantor lending sector and a more uncertain macroeconomic environment”.
Oil prices key for Hunting
There will be few surprises from oil services group Hunting PLC (LON:HTG) when it reports its interims on Thursday, with the FTSE 250 firm having previously forecast higher revenues and EBITDA in a trading update in June.
Oil prices, however, have slipped a little since then, so investors will be on the lookout for any commentary on whether the lower price has impacted the activity levels of Hunting’s customers.
Diploma hopes for pick up in seals market
A third-quarter trading update from FTSE 250 technical products group Diploma PLC (LON:DPLM) on Wednesday will likely have some investors on edge to see if the company’s previous warnings of slower activity in the industrial seals market have turned out to be accurate.
The situation may carry extra weight after the group acquired gasket and fluid seal supplier Virginia Sealing Products for £56mln in July.
The group’s new chief executive Johnny Thomson, who started in February, has also raised the prospect of more acquisitions in the second half, so investors will look to see if the CEO is still sniffing around for more purchases.
Travel holds the key for WH Smith
A pre-close trading update on Wednesday from newsagent WH Smith PLC (LON:SMWH) will likely once again see investors focus on the group’s airport business as it continues its shift towards travel retail and away from its declining high street stores.
Nearly one year after the group acquired US airport retailer InMotion for £155mln, investors will be looking to see if things are still moving in the right direction, while tough trading conditions mean sales on the high street are likely to continue their decline alongside more store closures.
Markets await Fed’s preferred measure of inflation and US GDP
In economic data, the second estimate of US gross domestic product for the second quarter and the Federal Reserve’s preferred measure of inflation will be in focus.
The market is expecting a downward revision to second-quarter US economic growth to 1.8% from the initial reading of 2.1%, below President Donald Trump’s 3% target.
Meanwhile, the Fed will be looking to see if the core personal consumption expenditures (PCE) – an underlying gauge of inflation – is on track to meet its 2.0% target after rising 1.6% in June. The headline and the core measures for July are both expected to rise at the same annual rate as the previous month.
Major announcements due:
Monday August 26:
UK BANK HOLIDAY
Tuesday August 27:
Interims: PureTech PLC (LON:PRTC), Jadestone Energy PLC (LON:JSE), Bank of Cyprus Holdings PLC (LON:BOCH), Bunzl PLC (LON:BNZL)
Economic data: US house price index, US consumer confidence
Wednesday August 28:
Finals: Loungers PLC (LON:LGRS)
Interims: Arix Bioscience PLC (LON:ARIX), Headlam PLC (LON:HEAD)
Trading statements: Diploma PLC (LON:DPLM), WH Smith PLC (LON:SMWH)
AGM: Collagen Solutions PLC (LON:COS)
Economic data: UK BRC Shop Price Index, US MBA mortgage applications
Thursday August 29:
Interims: Chesnara PLC (LON:CSN), Churchill China PLC (LON:CHH), James Fisher and Sons PLC (LON:FSJ), Hunting PLC (LON:HTG), Gym Group PLC (LON:GYM)
Trading statements: Amigo Holdings PLC (LON:AMGO)
AGM: Braveheart Investment Group PLC (LON:BRH)
Ex-dividends to clip 0.8 points off FTSE 100: Auto Trader Group PLC (LON:AUTO), InterContinental Hotels PLC (LON:IHG), St James’s Place PLC (LON:STJ)
Economic data: US weekly jobless, US GDP, US pending home sales, US advanced goods trade balance
Friday August 30:
Interims: Grafton Group PLC (LON:GFTU), BBGI PLC (LON:BBGI), Cathay International Ltd (LON:CTI), EMIS PLC (LON:EMIS)
Economic data: UK GFK consumer confidence, Nationwide house price index, UK mortgage approvals, UK consumer credit, US personal consumption expenditure index, University of Michigan consumer confidence