HSBC CEO John Flint steps down from bank after just 18 months

HSBC boss John Flint has fallen victim to a top-level reshuffle at the bank despite racking up a 16 per cent rise in first half profits.

The firm said this morning it needed a change at the helm to deal with a “challenging global environment”. Flint, who has been chief executive for around a year-and-a-half, is stepping down “by mutual agreement”.

Reporting first half results this morning, HSBC said pre-tax profits rose to $12.4bn (£10.2bn), 16 per cent up from $10.7bn this time last year.

Revenue was $29.4bn, an eight per cent rise, while earnings-per-share increased to 42 cents.

The bank reported investments of $2.2bn in the first half of the year, up 17 per cent year-on-year, on “near and medium-term initiatives to grow the business and enhance digital capabilities”.

London-headquartered HSBC, which makes more than 80 per cent of its profit in Asia, said that its global commercial banking unit head Noel Quinn will be interim chief executive. The board would consider internal and external candidates for the new CEO, it said.

Chairman Mark Tucker is said to have disagreed with former CEO Flint on how fast the bank should have met profit targets.

Analysts predicted that Europe’s biggest bank would slow down in the second quarter, but after pre-tax profits of $6.2bn in the first three months of the year it has remained largely stable on profit.

However, in its lacklustre US division, it said it was unlikely to meet its six per cent return on average tangible equity (RoTE) target by 2020. This was in part because of falling interest rates in the US, and “geopolitical issues” which “could impact a significant number of our major markets”.

The bank also pointed to Brexit, saying the impact of the UK’s exit from the EU remained “highly uncertain”.

Tucker thanked Flint for his “commitment” and “dedication”. He said: “In the increasingly complex and challenging global environment in which the bank operates, the board believes a change is needed to meet the challenges that we face and to capture the very significant opportunities before us.”

Chief financial officer Ewen Stevenson said this morning the bank was “not on track” with the turnaround of its US business. “The US revenue outlook has become more challenged in recent months.”

“We recognise the current returns in the US are not acceptable,” he added.

“We’re actively managing costs and investment growth in order to respond to a more challenged revenue outlook,” said Stevenson.

Flint said: “I have agreed with the board that today’s good interim results indicate that this is the right time for change, both for me and the bank.”

RBS reveals bumper £1.7billion dividend windfall for shareholders

Royal Bank of Scotland has unveiled a bumper £1.7 billion dividend payout, delivering a welcome boost for shareholders including the British taxpayer.

The partially state-owned bank announced a special dividend of 12p per share alongside an ordinary interim payment of 2p per share this morning.

Approximately £1billion of the £1.7billion total will go into the Government coffers thanks to the stake in the bank taken as part of its financial crisis bailout.

The hefty payout has been facilitated by the bank’s highest half-year profits in more than a decade, with a 130 per cent jump to £2billion.

Meanwhile, operating pre-tax profits outstripped forecasts, rising 48 per cent to £2.7billion.

Shares in the bank have fallen 5.6 per cent to 204.8p following the update though.

The figures were boosted by the sale of its stake in Saudi bank Alawwal, which completed its merger with Saudi British Bank in June.

Attributable profit for the second quarter was up 35 per cent to £1.3billion. Costs were down by £173million, with a target in place for £300million savings by the end of the year.

Net lending was up 2.5 per cent, while the bank recorded £14.3billion in gross new mortgage lending.

No new provisions have been made for further PPI claims ahead of this month’s deadline.

Chief executive Ross McEwan said: ‘Given the uncertain and competitive environment, we are focused on the areas we can control; costs are down, capital and liquidity are strong, and we continue to grow lending to the real economy.’

No announcements were made regarding the hunt for McEwan’s successor, who is leaving to become boss of National Australia Bank.

Russ Mould, investment director at AJ Bell commented:  ‘Despite all the excitement about Royal Bank of Scotland paying £1.7 billion in dividends to shareholders – including the Treasury which will get about £1 billion given it still holds a major stake in the company – the real story is that the bank is highly unlikely to meet its financial targets.

‘If you exclude the sale of a stake in Saudi Arabia’s Alawwal Bank then its return on tangible equity in the first half of the year was only 7.5 per cent. That’s some way short of the 12 per cent target for 2020.

‘Elements of the story are unchanged, namely that RBS is still suffering from margin pressure thanks to a price war in the mortgage market,’ he continued.

‘With the increasing prospect of a Brexit no-deal on the horizon, Royal Bank of Scotland looks to be in a difficult situation.’

‘And for investors holding the shares as a source of income, they will need to consider the risk of a volatile share price and the potential for capital losses. The market is certainly spooked by today’s announcement given how the shares have fallen.’

Global trade war beckons as China to retaliate if Trump increases tariffs

China has pledged to retaliate if President Trump goes ahead with his threat to impose more tariffs on its exports, escalating the trade war between the biggest economies in the world and rattling global markets.

Beijing said that it would not succumb to blackmail after the White House revealed plans to extend duties across almost all Chinese goods exported to the United States within weeks.

The rise in hostilities hit equities, with indices across Asia, Europe and America falling into the red. The FTSE 100 fell by 177.81 points, or 2.3 per cent, to 7,407.06, while the CAC 40 in France and the Dax in Germany fell by 3.2 per cent and 2.8 per cent, respectively.

Earlier, the CSI in China fell by 1.5 per cent and the Nikkei in Japan lost 2.1 per cent. On Wall Street, the Dow Jones industrial average closed 0.4 per cent down, while the technology-focused Nasdaq dropped by 1.3 per cent.

The US has imposed import levies on Chinese exports worth $250 billion as Mr Trump sought to assert a protectionist trade agenda. Beijing has hit back with tariffs on American products worth $110 billion.

Mr Trump surprised markets on Thursday by announcing that a new $300 billion catalogue of goods from China would face US duties of 10 per cent from September 1. This is set to include consumer goods such as mobile phones, toys and shoes.

Chinese officials expressed hope that the Trump administration would “give up its illusions” and resume negotiations based on equality and mutual respect. “If America does pass these tariffs, then China will have to take the necessary countermeasures to protect the country’s core and fundamental interests,” Hua Chunying, a foreign ministry spokeswoman, said. “We won’t accept any maximum pressure, intimidation or blackmail. On the major issues of principle, we won’t give an inch.”

Wang Yi, the Chinese foreign minister, said that introducing more tariffs “is definitely not a constructive way to solve the economic and trade frictions”.

Mr Trump indicated that talks between American and Chinese officials in Shanghai this week had failed to bear fruit. He accused Beijing of failing to deliver on a series of promises and said that President Xi was “not going fast enough” in seeking a deal.

He has vowed from the outset to shield his country “from the ravages of other countries making our products, stealing our companies and destroying our jobs” and has claimed that trade wars are “good, and easy to win”.

Mr Trump’s officials also have sought to put China’s alleged illicit trading activity, which include forced technology transfers, at the centre of talks. Mike Pompeo, US Secretary of State, lamented “decades of bad behaviour”. Beijing denied claims of economic malpractice.

The president unveiled an agreement to open European markets to American beef exports yesterday, which allows the US to fulfil up to 35,000 tons of the EU’s 45,000-ton annual quota for hormone-free beef imports. It comes after repeated threats from Mr Trump to launch a full-scale trade war against the EU, by imposing

25 per cent tariffs on all vehicles imported to America from the bloc, among other things. Negotiators from both sides of the Atlantic continue to try to thrash out a broader trade agreement.

Mr Trump said yesterday that the beef deal would increase American exports by 46 per cent in the first year and by 90 per cent within seven years, and ultimately to $420 million annually from $150 million today.

His latest blow in the tit-for- tat row with China dominated markets, however. Gold and government bonds — assets deemed to be safe havens at times of uncertainty — jumped as investors sought security. Oil prices, after their worst day in three years, recovered slightly. Brent crude rose by 2.6 per cent, or $1.56, to $62.06 per barrel.

Hu Xijin, editor of the Chinese state-run Global Times, said that Beijing “will focus on the national strategy under a prolonged trade war” and wrote on Twitter: “New tariffs will by no means bring closer a deal that the US wants, it will only make it further away.”

Oxford Economics, the consultancy, said that US-China relations had “obviously soured” further, and added: “We expect this step to make China less keen to achieve a deal and more determined to prepare itself for long-term economic tension with the US.”

Aston Martin ‘on knife-edge’ after crashing to £79m loss

The luxury carmaker blamed falling sales in Britain and Europe, as well as global “macroeconomic uncertainty”, for the poor performance, which sent its shares to a new low.

They closed at 498p, down 12 per cent and little more than a quarter of their £19 float price last October, continuing a woeful performance that has marked one of the worst initial public offerings of recent times. About 1,000 employees of the company that bought shares in the listing are among those nursing heavy losses.

Aston Martin sought to play down speculation that it could be forced to tap shareholders for more cash, suggesting that it would turn to debt markets if needed.

Max Warburton, an analyst at Bernstein, said that the company was “on a financial knife-edge” with “very, very little room for error or further external pressures”. He suggested that it consider suspending executive pay.

Aston Martin is one of the best-known names in British car manufacturing, thanks in no small part to its cars featuring in the James Bond film franchise. It has gone bust seven times in its 106-year history.

Andy Palmer, 56, chief executive, has been seeking to turn around its fortunes with plans to expand its range, including its first sports utility vehicle, the DBX, (pictured above) due to be launched next year.

However, the company has been dogged by doubts over its growth plans since its listing and last week it stunned the stock market by warning that it expected to sell between 6,300 and 6,500 cars to dealers this year, compared with the 6,441 it delivered last year and the 7,200 to 7,400 it had forecast when it was floated. It also warned that profit margins would fall from a forecast 13 per cent to 8 per cent.

Yesterday it reported a £79 million pre-tax loss for the first six months, down from £21 million profit in the same period a year earlier, as revenues fell by 4 per cent to £407 million.

“We are disappointed that our projections for wholesales have fallen short of our original targets, impacted by weakness in two of our key markets as well as continued macroeconomic uncertainty,” Mr Palmer said.

Mr Warburton said that management needed to “hope and pray the DBX can launch bang on time, and save the situation” and in the meantime the company should aggressively cut back costs, including potentially “suspending the top guys’ compensation for a period”.

He said the results showed that Aston Martin had burnt through cash more quickly than expected and that the position was “not comfortable”. Management appeared to be “ruling out an equity-raise”, but raising debt was likely to be announced soon and would be expensive, but was “somewhere between prudent and essential”.

Mark Wilson, 45, chief financial officer, said: “If we require additional financing from sources with which we are familiar and, in particular, in the debt markets to maintain that capacity, then, that’s what we’ll go out and do.” He added that Aston Martin had more cash than a year ago.

Nissan plans to cut 10,000 jobs as for Sunderland workers fear for jobs

Eight thousand Nissan workers in the UK are anxiously awaiting news as to where big cuts by the Japanese car manufacturer will fall.

Before the company’s half-year earnings figures, which are expected to be published tomorrow, reports out of Tokyo indicate that Nissan could call for 10,000 redundancies worldwide, double the 4,800 cuts the manufacturer had previously indicated. The news is expected to come overnight.

Nissan — Japan’s second largest automotive group, behind Toyota — is one of the UK’s largest automotive employers alongside Jaguar Land Rover and BMW, which builds Minis and Rolls-Royces in the country, and Ford, which assembles car and van engines.

The UK is Nissan’s main European base, employing 7,000 people at its sprawling manufacturing facilities in Sunderland, where it assembles nearly 500,000 vehicles a year, most notably the best-selling Qashqai model. There are another 1,000 employees working for its sales and marketing operations headquartered in Maple Cross, Hertfordshire, as well as at its engineering and research technical centre at Cranfield, Bedfordshire, and its design studio, the birthplace of the Qashqai, in Paddington, London.

A spokesman for Nissan declined to comment on the reports, saying: “We have made no announcement.”

The future of Nissan in Sunderland has been a political hot potato ever since Theresa May cut a secret deal with Nissan’s boss at the time, Carlos Ghosn, giving assurances of support for the plant during the uncertainties of Brexit. That, however, did not prevent Nissan from pulling plans to bring its X-Trail 4×4 model to the Sunderland assembly lines.

The reports out of Tokyo indicated that the focus of the job cuts may be in the Americas. Its South American plants are seen to be of low profitability while the carmaker has also been reporting weak sales in the United States.

The job cuts come against a backdrop of crisis at the auto giant. It lost its charismatic leader and saviour, Mr Ghosn, amid allegations of financial wrongdoing at the turn of the year. That destabilised its cross-shareholding alliance with Renault, the French carmaker. It has long been argued, most notably by Emmanuel Macron when he was the French economics minister, that more Nissan models should be manufactured at Renault’s under-utilised plants in France.

Nissan’s financial performance has not been good. Global sales fell last year by 4.4 per cent to 5.5 million. That included a 9 per cent fall in the US and a near-15 per cent fall in Europe, where there has been a backlash against diesel vehicles, directly impacting the Nissan Qashqai. In the first three months of the year, Nissan’s earnings fell to a nine-year low with a warning of worse to come.

UK shoppers more likely to be positive in online reviews than negative

UK shoppers are more likely to post a positive online review than one that is negative, research has found.

The research discovered that 71 per cent of UK shoppers will go online to leave a review if they have had a good experience of a product or service, only 52 per cent go on-line after a bad experience.

The findings were revealed in a survey examining attitudes to online reviews among 2,000 UK consumers. It found that the most common subjects for reviews are restaurants, followed by electronic goods and holidays.

“It’s quite refreshing to see that for UK shoppers the positive outweighs the negative when it comes to sharing reviews online,” said Matt West, CMO at Feefo. “Yet although it’s great to be praised, no business need ever fear bad feedback. With advanced technologies such as sentiment analysis, all reviews become a hugely valuable source of insight into how a business is performing and where improvements can be made.”

Exploring the future of reviews, the research found that 91 per cent of respondents want to save themselves time by having multiple reviews for a single product summarised, while 75 per cent would like to see product ratings left by friends and family.

And although written reviews remain most popular, there is increasing demand for video and voice reviews. In fact, 51 per cent said they would be more likely to buy a product if they could view a video review and 54 per cent are interested in listening to voice reviews.

“Whatever the method, consumers know what they are looking for in reviews, so businesses need to respect that and provide them with honest, verified, but not filtered reviews they can rely on,” said West.

Yair Cohen, internet law and social media lawyer at Cohen Davis Solicitors and panellist at a Feefo roundtable event, said: “Video reviews have a higher level of credibility, especially when the reviewer is on-screen speaking to the camera.” But he said trust in online reviews requires a new regulatory body to establish standards and establish greater credibility in the whole review system.

In other findings, the research revealed differences in attitudes between the sexes, with for example, 70 per cent of women saying they read reviews before buying, compared with 61 per cent of men. More men, however, read reviews by professionals than women. Men are also more likely to watch product videos than women.