In the coming week we continue the banking theme, with HSBC, Barclays and LLtaking their turn to impress investors, while some other names closely watched by retail investors also look to land their numbers amid the market’s current high winds, in the form of Rolls-Royce and British Airways owner IAG.
The week is also likely to feature plenty of speculation about rate rises from the Bank of England and Federal Reserve, and plenty of headlines and digital tickertape devoted to the Russia-Ukraine situation, with foreign ministers from Moscow and Washington meeting in the week.
On Monday start with some up-to-date UK economic data, with ‘flash’ manufacturing and services PMI surveys for the first weeks of February.
The BoE's monetary policy committee will be most focussed on further clues the surveys can offer on wage pressures, said ING economist James Smith.
The BoE’s own survey suggested pay rises will be growing faster than they have done in several years, though Smith said there are “still good reasons to think that a wage-price spiral won’t materialise in the UK”.
He and his colleagues are among the many who expect further rate rises in March and May, with Smith one of those who reckons markets are probably overestimating the pace of tightening this year above that.
With the US on holiday on Monday, the PMIs will be released stateside on Tuesday.
TUESDAY
HSBC
Starting this week’s round of bank results is HSBC PLC (LSE:HSBA), after fellow FTSE 100 lenders Standard Chartered and NatWest last week.
Fourth-quarter results on Tuesday from the ‘global bank’ will come with investors mindful that fellow Asia-focused StanChart failed to excite with its numbers a week ago.
UBS has pencilled in US$3,915mln for an underlying profit before tax, up 77% from the final quarter of 2020.
“Within this, we expect net interest income to be down 2% YoY [year-on-year], with lower NIM [net interest margin], and non-interest income to be up 3% YoY for total income flat YoY.
“Costs are expected to be 6% lower YoY, with lower expected UK Bank levy, for pre-provision profit growth of 23%,” it added.
Smith & Nephew
Shares in the FTSE 100 hip and knee replacement maker Smith & Nephew PLC (LSE:SN) have stumbled more than a fifth in the past year, with supply chain issues, higher shipping costs and increased investment all weighing on the bottom line.
COVID has also hit the top line, with joint replacement operations among many surgical procedures to have hit by hospitals focusing on the pandemic.
"That might mean Smith & Nephew could be a surprise beneficiary if, as and when the virus is finally beaten off,” said analysts at AJ Bell.
In December, S&N chief executive Roland Diggelmann outlined a new “strategy for growth”, targeting compound organic revenue growth of 4%-6% a year out to 2024, along with operating margin of 21% by 2024 (with further improvements in return on sales after that).
Said the AJ Bell analysts: “The 2021 results will not be a fair test of those goals but any comment made on the outlook for 2022 will be viewed in the context of the first steps to reaching those targets.”
WEDNESDAY
Barclays
Full-year results from Barclays PLC (LSE:BARC) will be the first on the watch of new chief executive CS “call me Venkat” Venkatakrishnan, who replaced Jes Staley in November after Staley’s connections with convicted sex offender Jeffrey Epstein prompted the City’s regulator to issue Barclays an ultimatum.
“No doubt Barclays will be looking to put its (bad) habit of firing (or losing) chief executives behind it when it reports its 2021 results,” quipped the pundits at AJ Bell.
“Analysts are looking for a 2021 full-year pre-tax profit of £8.1 billion. That compares to 2020’s £3.1 billion and would outstrip the pre-financial crisis peak of £7.1 billion achieved in 2006.
“It also implies a profit for the fourth quarter alone of just under £1.2 billion, the lowest quarter of the year, although that is relatively normal for banks as they tend to clean up and clear out their books in the final three-month period. (Even then it represents a big step up on 2020’s fourth-quarter result of £646 million),” the investment firm added.
The performance of the investment bank – a division dear to the departed Staley’s heart – could come under scrutiny, as growth appears to be slowing.
Ted Baker
Ted Baker will be releasing its year-end update, with investors hoping to see some drastic improvement to suggest a share price that has fallen over 96% since early 2018.
The company, which is currently led by former Debenhams finance chief Rachel Osborne, was starting to show some promise last year, with new clothing ranges building momentum, although the company was still lagging behind on e-commerce sales.
Last month, the company appointed a former Ralph Lauren, Alexander McQueen and Jack Wills executive as chief customer, marketing and digital officer, with Osborne saying the “extensive experience will be invaluable as we continue to progress with the turnaround”.
House broker Liberum said the business “is in much better shape now than any time in the past,” in a note this month, highlighting the new creative team and capital-light business model.
THURSDAY
Lloyds
Lloyds Banking Group PLC (LSE:LLOY), a big retail investor favourite, brings up the rear for the FTSE 100 high street banks.
There have been mixed reactions for the sector so far
is tipped by UBS to report fourth-quarter underlying profit before tax (excluding remediation – whatever that is) of £1,805mln, up 26% year-on-year (YOY).
Net interest income is expected to rise 7% YOY and non-interest income to advance 8%.
The CET1 ratio – a measure of balance sheet strength – is seen rising one percentage point from a year earlier to 17.2%.
The full-year dividend is expected to be 2.07p and not wanting to be left out, the bank is expected to announce a bumper share repurchase programme.
Rolls-Royce
Rolls-Royce Holdings PLC (LSE:RR.) is expected to reveal an improved but not entirely encouraging performance on Thursday as the engine maker’s aerospace division continues to be impacted by the slow pace of recovery in aviation.
Second-half group sales should come in around £6.3bn, according to UBS, which would equate to a 27% rise on the preceding six months or an 8% improvement against last year’s comparatives.
(Read the full Rolls-Royce preview here.)
Genus
First-half profits from Genus PLC (LSE:GNS) are forecast to be 22% lower than last year due to the impact in China and as the period last year was particularly strong, said broker Peel Hunt.
Pre-tax profit is expected to be £37mln versus £47.1mln, with reported headline PBT of £48.4m last year less £1.3mln adjustment.
The key points to note, said the broker, are an expected reduction of circa £13mln in the contribution from China, higher travel costs compared to the previous year, as well as a delay in R&D spend.
Looking at the results on a two-year basis, Peel Hunt said the first half is at a similar level despite around £6mln reduction in China, £5m higher R&D spend and £5mln impact from currency.
“This demonstrates the strong performance of the business ex-China.”
FRIDAY
IAG
Shares in British Airways owner International Airlines Group PLC are currently positioned for the company to enjoy a better 2022 than 2021 – so say analysts at UBS.
The market will be keen to see whether Friday’s results keep the British flag carrier on course.
Omicron was the big threat to travel through the fourth quarter though the holiday season will have presented something of an imperative for a certain volume of passengers.
Eyeing up the airline group’s statement UBS, in a note, said it anticipates improved traffic levels for Q4 versus Q3 – which had equated to some 56% of the pre-pandemic level.
UBS forecasts fourth-quarter revenue to be around €3.5bn, up almost three times from the same period a year earlier, along with much smaller losses of €306mln at the EBTIDA level and a €398mln net loss, compared to the massive €4.2bn and €1.3bn losses a year ago.
Rightmove
Rightmove PLC (LSE:RMV) is scheduled to publish preliminary results on Friday, having reported 58% revenue growth and an 86% jump in operating profits for the first half of 2021.
Compared to pre-pandemic 2019 revenues were up 4% and profits 6% higher, demonstrating the large amount of pricing power the market-leading service has with estate agents.
Although, on Wednesday, Sophie Lund-Yates, Hargreaves Lansdown equity analyst, was wary of the company’s outlook.
“Rising interest rates and soaring inflation could take the heat out the very buoyant property market, [which] may have a knock-on effect for the total number of estate agents, which is already falling.
“This isn’t the end of the world while Rightmove can pump up prices for remaining agents, but severe pressure would limit its ability to do this,” Yates commented.
Significant announcements scheduled for 21-25 February
Monday 21 February
Interims: Dechra Pharmaceuticals PLC (LSE:DPH), Finsbury Food Group (AIM:FIF) PLC, Sylvania Platinum (AIM:SLP) Ltd, Tristel PLC (AIM:TSTL)
Finals: Bank of Cyprus Holdings PLC. Go-Ahead Group PLC (LSE:GOG)
Economic data: Rightmove House Price Index (UK)
Tuesday 22 February
Interims: Blancco Technology Group (AIM:BLTG) PLC, Bluefield Solar Income Fund (LSE:BSIF) Limited, Hargreaves Lansdown PLC (LSE:HL.), Oxford Cannabinoid Technologies PLC, Petra Diamonds, Springfield Properties PLC (AIM:SPR)
Finals: Antofagasta PLC (LSE:ANTO), Bank of Georgia Group PLC (LSE:BGEO), Coca-Cola, HSBC Holdings PLC, InterContinental Hotels Group PLC, Smith & Nephew PLC (LSE:SN), Synectics (AIM:SNX) PLC, Thungela Resources Ltd
AGMs: Aberdeen Diversified Income and Growth Trust PLC, Image Scan Holdings PLC (AIM:IGE)
Economic data: Public Sector Net Borrowing (UK), Consumer Confidence (US)
Wednesday 23 February
Trading announcements: Clinigen Group PLC (AIM:CLIN), Ted Baker PLC (LSE:TED)
Interims: Avingtrans PLC (AIM:AVG), Cap-XX Ltd, Netcall
Finals: Barclays PLC (LSE:BARC), Capital and Counties Properties PLC, Georgia Capital PLC, Photo-Me International PLC (AIM:PHTM), Rio Tinto PLC (LSE:RIO), UNITE Group PLC
AGMs: Blencowe Resources PLC (LSE:BRES), Gooch & Housego, Income & Growth VCT PLC, RWS Holdingsa PLC, Tharisa PLC (LSE:THS, JSE:THA), Titon Holdings (LSE:TON) PLC
Economic data: MBA Mortgage Applications (US), Crude Oil Inventories (US)
Thursday 24 February
Interims: Genus PLC (LSE:GNS), Hays PLC (LSE:HAS)
Finals: Aston Martin Lagonda Global Holdings PLC (LSE:AML), BAE Systems PLC (LSE:BA.), Centrica PLC (LSE:CNA), Conduit Holdings Limited, Derwent London (AIM:DLN) PLC, Drax Group (LSE:DRX) PLC, Hikma Pharmaceuticals, Howden Joinery Group (LSE:HWDN) PLS, Inchcape PLC (LSE:INCH), Lloyds Banking Group PLC (LSE:LLOY), MacFarlane Group PLC, Morgan Sindall Group PLC (LSE:MGNS), Rathbones Group PLC (LSE:RAT, OTC:RTBBF), Serco Group (LSE:SRP) PLC, Spectris PLC (LSE:SXS), St James’s Place PLC, WPP PLC (LSE:WPP), Rolls-Royce Holdings PLC (LSE:RR.), Grafton Group PLC (ISE:GFTU), Metro Bank (LSE:MTRO),
AGMs: Bankers Investment Trust PLC (LSE:BNKR), Ediston Property Investment Company Plc (LSE:EPIC), Integrafin Holdings PLC, Victorian Plumbing Group PLC (AIM:VIC)
Economic data: Continuing Claims (US), Initial Jobless Claims (US), New Homes Sales (US)
Friday 25 February
Trading announcements: Babcock International (LSE:BAB) PLC
Interims: European Opportunities Trust PLC (LSE:JEO)
Finals: Evraz PLC (LSE:EVR), Jupiter Fund Management PLC (LSE:JUP), Pearson PLC (LSE:PSON), Rightmove PLC (LSE:RMV), International Consolidated Airlines
AGMs: Caledonian Trust (AIM:CNN) PLC, GRIT Investment Trust PLC (LSE:GRIT), On The Beach Group PLC
Economic data: Personal Consumption Expenditures (US), Personal Income (US), Personal Spending (US), Pending Home Sales (US), U. of Michigan Confidence (US)
US week ahead
Monday: Berkshire Hathaway (NYSE:BRK)
Tuesday: Home Depot, Caesar’s Entertainment, Macy’s
Wednesday: HP, eBay, Hertz
Thursday: Moderna, Newmont Mining, Dell
Friday: Liberty Broadband, Formula1