Barclays profit drops, IAG operating profit up in H1

London’s FTSE 100 was set to open two points lower than Thursday’s close at 6,719.

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Half year pre-tax profits at Barclays fell 21% to £2.06bn, reflecting the costs of offloading its non-core business.

The bank's core business made pre-tax profits of £3.97bn, up 19% while the non-core business made a loss of £1.9bn.

The non-core loss was mainly due to a £372m writedown relating to the sale of its French business.

Barclays said 2016 core cost guidance of £12.8bn, excluding litigation and conduct charges, and subject to foreign currency movements1, remains unchanged

It added that the existing non-core income and operating expenses guidance for 2016 remains unchanged. 2017 Non-Core operating expenses are expected to be within the range of £400m to £500m excluding notable items. The Non-Core RWA guidance of around £20bn in 2017 remains unchanged.

Barclays said the result of the UK's decision to leave the European Union means that the long-term nature of the UK's relationship with the EU is “unclear and there is uncertainty as to the nature and timing of any agreement with the EU”.

“In the interim, there is a risk of uncertainty for both the UK and the EU, which could adversely affect the economy of the UK and the other economies in which we operate,” Barclays said.

British Airways owner International Consolidated Airlines Group presented its results for the six months to 30 June on Friday, with second quarter operating profit reaching €555m before exceptional items, up from €530m last year.

Excluding Aer Lingus, which IAG holds a 98.05% stake in, operating profit in the second quarter was €487m

The FTSE 100 firm said the net foreign exchange operating profit impact for the quarter was an adverse €148m.

Passenger unit revenue for the quarter dropped 10.2%, or 6.2 % at constant currency and 6.5% excluding Aer Lingus.

Operating profit before exceptional items for the half year was €710m, up 27.9% from €555 million, and excluding Aer Lingus it was €668m.

In the press

Corrado Passera, the veteran Italian businessman and former industry minister, has teamed up with Swiss bank UBS to present a last-ditch alternative rescue proposal to the board of struggling lender Monte dei Paschi di Siena on Friday. The proposal will be presented to MPS only hours before the world’s oldest bank is expected to be ranked as one of the weakest banks in Europe when the results of the latest European stress tests are published on Friday evening. – Financial Times

The plan to build an £18bn nuclear reactor at Hinkley Point was hit with a last-gasp delay on Thursday night as the government decided to hold a new review hours after EDF, the project’s French developer, gave it the go-ahead. Greg Clark, the business and energy secretary, announced that ministers would once more review the project almost immediately after the EDF board had narrowly voted to approve the scheme. – Financial Times

Millions of customers of Lloyds may not see the Bank of England’s expected cut in interest rates next week passed on to them, after the bank said yesterday that it would consider its options in the wake of any move. Any decision by the UK’s largest retail bank not to pass on a cut could put Lloyds on a collision course with regulators and trigger anger among borrowers. However, it would be welcomed by savers, many of whom already earn near-zero rates on their money. – The Times

The number of people being declared insolvent has risen by more than a fifth. In the second quarter 22,503 people were made insolvent, 22 per cent higher than the same period in 2015, and a 6.9 per cent increase on the first three months of 2016. It was the fourth quarterly rise in a row, although insolvency rates remain relatively low by historical standards. R3, the insolvency trade body, said the rise was concerning. “This is the most sustained rise in personal insolvency numbers since the financial crisis,” Andrew Tate, president of R3, said. – The Times

US close

US stocks ended Thursday mixed after a choppy session of trading, as traders continued to digest the Federal Reserve's policy statement alongside a heavy buffet of earnings releases and some mixed jobs data.

Thursday was the busiest day on the earnings calendar, with 60 S&P 500 companies due to report quarterly results.

Recent rising rig data meant the crude prices were wallowing, with West Texas Intermediate down 2% at $41.10 and Brent sliding 1.83 to $42.69.