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Tuesday, December 6, 2022

FTSE 100 Live 23 February: Rio Tinto pays record dividend as Barclays returns £2.5 billion, oil price steady

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Rio dividend set to fall in 2022

Rio Tinto shares fell slightly as its results were a little short of City hopes, offsetting a bigger-than-expected dividend.

Rio has now paid out almost three quarters of its earnings over the last six years, but HL Select fund manager Steve Clayton expects the going to get tougher as inflation pushes costs higher.

Clayton also notes that Rio will be spending $7.5 billion (£5.5bn) through the rest of the decade on decarbonising its operations.

He added: “The 2021 dividend is one of the largest paid by any UK company, reflecting the sheer scale of Rio’s cash generation in these market conditions.

“We expect the pay out to be lower in 2022, reflecting less favourable operating conditions, but to still represent an attractive yield to shareholders, with City analysts suggesting a pay out of around $6.95 a shares, representing a prospective yield of almost 9%.”

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Barclays shares higher on results cheer

Barclays shares gained 2% as the fourth quarter element of its annual results came in ahead of City expectations and the banking giant also boosted capital returns to £2.5 billion.

Interactive Investor’s head of markets Richard Hunter said: “Amid a banking results season which has so far been light of cheer, Barclays has managed to nudge the dial somewhat.”

Barclays was joined on the blue-chip risers board by a number of travel-related stocks, with British Airways owner IAG and Rolls-Royce both more than 1.5% higher.

The FTSE 100 index rose 31.69 points to 7525.90, but Rio Tinto failed to benefit from its record dividend as shares fell 13p to 5678p.

A rise of 142.15 points to 21,135 for the FTSE 250 index was led by student accommodation developer Unite as its shares jumped 8% in the wake of annual results.

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Metro Bank losses continue

The chief executive of Metro Bank insists his turnaround plan is working despite another year of big losses.

The challenger bank lost £245.1 million last year, it said today, as a £5.4m fine for poor governance, provisions for a separate investigation into the same history accounting issues, and restructure costs weighed. Assets were flat at £22.5 billion but revenue rose 17% to £397 million.

CEO Dan Frumkin said: “Two years into the turnaround, our strategy is delivering meaningful results as we move towards profitability.”

While losses continued in 2021, they were down from £311 million a year earlier. However, last year’s losses were far above the pre-pandemic loss of £130 million. The bank last made a profit in 2018.

Frumkin was bought in to turnaround the struggling bank in the wake of an accounting error that saw over 90% of Metro’s value wiped out.

Shares ticked up 0.83p, 0.9%, to 94.58p.

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Rio Tinto declares record dividend

Rio Tinto’s total dividend for 2021 worth $16.8 billion (£12.3bn) is a record for the miner and one of the largest in UK corporate history.

The pay-out of $10.40 a share equates to 79% of underlying earnings, which today hit $21.4 billion (£9.1bn) after the global economy recovered and as iron ore and other commodity prices surged.

The results come as the Anglo-Australian miner battles to improve its reputation after the scandal caused by the destruction of the ancient Aboriginal caves at Juukan Gorge.

Chief executive Jakob Stausholm said Rio was well placed for a decarbonising world. He added: “We have a portfolio that is well positioned, and are targeting disciplined investment in commodities that will see strong demand in the coming decades.”

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Ted Baker enjoys strong Christmas despite Omicorn surge and supply chain woes

Ted Baker has posted bumper profits for the winter period despite a pandemic trade slump and supply chain misery.

The British luxury fashion brand noted double-digit sales growth in its latest earnings call and has forecast it will meet its financial targets for the year ahead.

Group sales are up 35% compared to Winter 2020, even though working from home was the norm amid Omicron concerns.

The retailer’s line of Womenswear, bags, footwear and tops, sold particularly well alongside a successful home and bedding product expansion in the US.

CEO Rachel Osborne heralded a strong improvement in the British brand’s trading margin as “Ted re-establishes its premium brand positioning”.

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No bonus for Jes Staley as Barclays watches probe into Epstein

Barclays is withholding bonus payments from Jes Staley, the chief executive who left last year amid an investigation into the details of his relationship with Jeffrey Epstein, the financier and convicted sex offender.

Staley is getting £2.4 million in pay and a £120,000 pension allowance, however, for 2021.

The annual report shows that Staley was paid around £24 million in his near 7-year stint at the bank. And that he holds 18 million shares in Barclays including £3.3 million worth granted by Barclays as an “unvested” award for 2021-2023.

An investigation into Staley’s characterisation of his relationship with Epstein, who died in prison, is ongoing.

Read more here.

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FTSE 100 set for steady start

Oil prices are steady at $97 a barrel and the FTSE 100 index set to open slightly higher as traders await developments in the Ukraine crisis.

The extent of the West’s sanctions against Russia left markets underwhelmed, although there remains hope for further diplomacy in an effort to avoid a full-blown conflict.

US benchmarks were last night more than 1% lower on their return from an extended weekend, with futures markets pointing to a rise of 0.6% for the S&P 500 later today.

CMC Markets also expects the FTSE 100 index to climb 18 points to 7512 after finishing a choppy session in positive territory last night.

Brent crude is trading at just below $97 a barrel, having reached a peak of $99.50 in the hours after Russia ordered troops into two breakaway regions of eastern Ukraine.

Deutsche Bank markets commentator Jim Reid said: “Geopolitical tensions continue to remain the dominant theme in markets, although a number of assets have now begun to stabilise after heavy losses on Monday and early Tuesday.”

Later today, Bank of England governor Andrew Bailey and three colleagues on the monetary policy committee are due to speak to MPs on the Treasury Select Committee, with inflation and the interest rate outlook a key focus.

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