Friday preview: UK economic growth seen slowing, RBS results under scrutiny

The market expects an softening of growth to 0.4% quarter-on-quarter in the first three months of 2017 from 0.7% in the fourth quarter of 2016, which would be the slowest rate since a year ago.

Annual growth is seen as improving to 2.2% in the first quarter compared to the 1.9% year-on-year growth in the fourth quarter of 2016, according to the consensus estimate.

"The first quarter GDP growth slowdown is expected to have been primarily the consequence of increasingly squeezed consumers markedly reining in their spending," said economist Howard Archer at IHS Markit, with inflation rise markedly amid muted earnings growth.

He forecast 2017 will become even more challenging for the UK economy – and particularly for consumers as their purchasing power is squeezed harder still, with data on Thursday from the European Commission showing worsening consumer confidence but improved business sentiment data.

Company news

Fresh from the settlement over its 2008 rights issue announced on Thursday, Royal Bank of Scotland's first quarter results are even more likely to continue to see ‘non operating’ or ‘below the line’ items as the key issues.

Analysts at Barclays said they did not expect significant progress on either US residential mortgage-backed securities or Williams and Glyn at this point and expect below-the-line charges to fall to £350m from £5.3bn in 4Q16.

"We see underlying operational momentum continuing with pre provision earnings up 4% QoQ as some pull back in NatWest Markets performance is more than offset by the seasonality of the UK bank levy."

Analyst at Deutsche Bank agreed that it was expected to be a relatively quiet quarter for RBS: "Of greater focus to the market will be how margins and loan growth performed in 1Q17 (management expect the two to offset each other over the medium term) and the Natwest Markets division after a volatile income performance over the last 2 years."

Barclays is also due to report its own Q1 numbers, with its capital generation – including prospects for further Barclays Africa Group (BAGL) sales in South Africa – expected to come under scrutiny.

Following the recent cabinet reshuffle in South Africa, where a new finance minister was appointed, amongst others, UBS analysts said they understood the £750m separation dowry agreed with BAGL management and the local regulator – and not yet provided by Barclays at a group level – had yet to receive ministerial approval.

Looking at Laird, Numis recalled full year results in early March where a number of factors left the company “well placed” this year, including savings from the operational improvement plan, an expected improved performance from Novero and actions taken in the Performance Materials division.

Consensus expectations are for an improvement in pre-tax profit to around £60m in 2017 from £51m last year, with Numis expecting the trading update to provide revenue performance of the three divisions under the new segments.

Rotork should also provided guidance on order intake in the period and outlook for the year, with oil & gas at 52% of sales remaining the key market.

Upstream may be starting to improve but we do not expect the more important downstream/midstream to be showing much upturn yet and likely to offset upstream recovery, said Numis.

Computacenter will provide a first-quarter update, where the company typically gives an update on the absolute and relative revenue performance for the quarter.

Focusing on the progression towards its half-yearly forecasts, Barclays was looking for interim revenues of £1,583.6m, representing 0.6% constant currency growth, but more importantly for a return to more normalised seasonality in the adjusted PBT.

Friday 28 April

UK ECONOMIC ANNOUNCEMENTS
GFK Consumer Confidence (00:01)
Index of Services (09:30)
Q1 2017 GDP growth (09:30)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
M3 Money Supply (EU) (09:00)
Retail Sales (GER) (07:00)
U. of Michigan Confidence (US) (15:00)

FINALS
Vimetco NV GDR (Reg S)

TRADING ANNOUNCEMENTS
Barclays, Computacenter, EMIS, Laird, Rotork, Royal Bank of Scotland Group

INTERIM DIVIDEND PAYMENT DATE
Abbey, Henderson EuroTrust, Smiths Group, Softcat, Wolseley

QUARTERLY PAYMENT DATE
Aberdeen Diversified Income and Growth Trust , Ediston Property Investment Company, Funding Circle SME Income Fund, Middlefield Canadian Income PCC, Real Estate Investors, Schroder Income Growth Fund, The SME Loan Fund, TwentyFour Select Monthly Income Fund Limited , Value and Income Trust

GMS
Byblos Bank SAL GDR (Reg S), O'Key Group GDR (Reg S) (WI)

EGMS
BBGI SICAV S.A. (DI)

AGMS
Aberdeen Smaller Companies Income Trust, Alpha Pyrenees Trust Ltd., BBGI SICAV S.A. (DI), Byblos Bank SAL GDR (Reg S), EMIS Group, HSBC Holdings, Laird, M Winkworth, Mincon Group , O'Key Group GDR (Reg S) (WI)

FINAL DIVIDEND PAYMENT DATE
Amino Technologies, CLS Holdings, Franchise Brands, Glanbia, Maven Income & Growth 3 VCT, Maven Income and Growth VCT 5, Octopus AIM VCT 2, Octopus Titan VCT , Old Mutual, Wynnstay Group