BUSINESS LIVE: Barclays to buy Tesco Bank; Bellway completions to slump 31%; Howden’s £1.1bn war chest
By Live Commentary
Updated:
The FTSE 100 will open at 8am. Among the companies with reports and trading updates today are Barclays, Tesco, Bellway and S&U. Read the Friday 9 February Business Live blog below.
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Bellway burns through cash reserves
Oli Creasey, property research analyst at Quilter Cheviot:
‘Of some concern for investors will be that during this six month period, Bellway has spent two-thirds of its cash reserves, with the cash on balance sheet reducing from £232m to just £77m.
‘This appears to be a result of increased payments to land creditors (mostly representing contracts signed in the past two years), but the future land obligations have reduced significantly, and net gearing (which includes the impact of future land payments) remains low at c. 5%.
‘While we expect management will want to rebuild this cash buffer over future periods, the reduction isn’t as alarming as the headline reduction suggests.’
Bellway completions to slump 31%
Bellway cheered easing affordability concerns and improved booking rates in the first half of its fiscal year, buoyed by recent cuts in home-loan rates.
The British housing market has seen signs of stability in recent weeks helped by easing mortgage rates, after battling subdued demand for most of last year, while builders have stayed cautious amid macro-economic worries and lack of clarity over the Bank of England’s monetary policy path.
Reflecting the green shoots of recovery in the sector, UK house prices rose more than expected in January, while British lenders in December approved the most number of mortgages since June.
‘While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints,’ CEO Jason Honeyman said in a statement.
Bellway expects to complete 7,500 homes this year, down more than 30 per cent from the 10,945 built in the year to 31 July 2023.
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Barclays to buy Tesco Bank
Barclays is set to buy Tesco’s retail banking operations in a deal worth up to £700million, kickstarting a 10-year ‘exclusive strategic partnership’ that will see the lender market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand.
Barclays boss C.S. Venkatakrishnan said: ‘This strategic relationship with the UK’s largest retailer will help create new distribution channels for our unsecured lending and deposit businesses.
‘We are able to bring our expertise in partnership cards developed over decades in the US to enhance further the highly successful Tesco Clubcard loyalty scheme.
‘Similar to our acquisition of Kensington Mortgages last year, this partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business.
‘We are looking forward to working closely with the team at Tesco over the coming months to enable a smooth transition and, subject to completion of the transaction, we look forward to welcoming Tesco Bank colleagues and customers to Barclays.’
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BUSINESS LIVE: Barclays to buy Tesco Bank; Bellway completions to slump 31%; Howden’s £1.1bn war chest