At Lloyds TSB, the big issue is the dividend. The interim payout was held at last year’s level, although there was no firm commitment to do the same for the final dividend. The yield on Lloyds shares is over 7%; such a high level suggests the payout may be cut, although we don’t think it likely. Royal Bank of Scotland, which also includes NatWest, reported strong profits and hinted that the surplus cash it is generating may be returned to shareholders. That’s reassuring, because some thought that once the cost savings from buying NatWest had been digested, there would be little more growth. HSBC, a much more international outfit than its peers, also did well. But the star performer was Barclays, whose profits topped expectations.
As Britain’s pitiful rail system conked out yet again this week, the Strategic Rail Authority was busy redrawing the franchising map. It’s hoped that bigger franchises on clearer terms will result in clean trains running more or less on time. While most of the bidders are the same outfits responsible for the current system, there have been some interesting changes. The presumption that incumbent operators would be well-placed to win new franchises has been well and truly disproved; Arriva, for instance, won the Wales and Borders franchise ahead of incumbent National Express. Cynics are already spotting another pattern: companies winning new franchises often have extensive bus operations in the same area, raising the prospect of buses replacing trains on many routes. Dr Beeching would have loved it.
Ryanair could be forced off its Strasbourg-London route by a French court ruling that prohibits publicly-owned Strasbourg airport from subsidising the airline’s operations there. Ryanair is appealing, but the case could have implications, since Ryanair often receives ‘assistance’ in setting up new routes to under-used airports. The case prompted a lengthy rant from the company’s chief executive in the first-quarter results statement. He also described FreshAer, a new Irish rival on the London-Dublin route, as ‘a bunch of nutters’.
More shenanigans in the fashion world. New Look shares shot up after founder Tom Singh, who still owns 28% of the company, confirmed he is in talks with financial backers. Meanwhile, Monsoon’s chief executive Rose Foster has changed her mind about leaving the company. The volte-face has angered shareholders as news of her original departure caused a steep drop in the share price.