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(Alliance News) - UBS Group on Tuesday posted a decline in annual profit, with recurring net fee income down on margin compression and its investment bank suffering from "challenging market conditions".
The Swiss bank separately announced it has agreed to sell a majority 51% stake in UBS Fondcenter, part of its Asset Management business division, to Clearstream, a unit of stock market operator Deutsche Boerse providing post-trade services.
Zurish-based UBS will initially keep its minority 49% stake in the combined business, which will be named Fondcenter, but will enter an agreement under which it may sell this stake to Clearstream at a later date.
UBS and Clearstream are to ink long-term commercial cooperation agreement to provide services to UBS's Wealth Management and Asset Management divisions, as well as to corporate and institutional clients unit of Personal & Corporate Banking.
Once the deal closes, UBS hopes to recognise a USD600 million post-tax gain plus a CET1 capital increase of around USD400 million. UBS plans to de-consolidate Fondcenter, accounting for its minority interest as an investment in an associate.
UBS Chief Executive Sergio Ermotti said: "We are delighted to reach this agreement with Clearstream, building on the successful relationship we have had with them and Deutsche Boerse Group for many years. Through this transaction, and our long-term cooperation arrangements, we can achieve greater scale and breadth of offering for our clients and create significant value for our shareholders."
For 2019, UBS reported a pretax operating profit of USD5.58 billion, down 6.8% from USD5.99 billion. Including tax expense and profit attributable to non-controlling interests, the net profit attributable to shareholders fell 22% to USD4.30 billion from USD5.52 billion.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.8% at 7,590.51
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Hang Seng: down 2.7% at 28,019.85
Nikkei 225: closed down 0.9% at 23,864.56
DJIA and S&P 500: Wall Street closed for holiday Monday.
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GBP: firm at USD1.3007 (USD1.2998)
EUR: firm at USD1.1095 (USD1.1083)
Gold: firm at USD1,562.41 per ounce (USD1,560.87)
Oil (Brent): down at USD64.61 a barrel (USD65.18)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
Switzerland - World Economic Forum opens in Davos.
0930 GMT UK labour market statistics
1100 CET Germany ZEW indicator of economic sentiment
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A man showing symptoms of a SARS-like virus after visiting China is being held in isolation at his Australian home, in the country's first suspected case of the coronavirus, health officials said. A Queensland Health spokesperson said man had recently returned from the central Chinese city of Wuhan, believed to be the epicentre of an outbreak of coronavirus, which has infected a total of 218 people and caused at least four deaths. Queensland's chief medical officer Jeannette Young said he was recovering at home in the northeastern city of Brisbane, where health authorities were awaiting the results of tests to determine whether he had contracted the new virus. News of Australia's first suspected case came as the country said it would introduce heightened medical screening for travellers arriving in Sydney from Wuhan starting Thursday.
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The Bank of Japan slightly upgraded its growth forecast for the world's third-biggest economy but kept its super easy monetary policy unchanged. The central bank said after a two-day policy gathering that it now expects 0.9% expansion in the year to March 2021, an upgrade from a previous projection of 0.7%. The brighter assessment came after Prime Minister Shinzo Abe issued a stimulus package last year to prop up the economy and dampen the effects of an October hike in consumption tax from eight to 10%. The decision also followed a fresh trade deal clinched between the US and China, easing a concern that had long worried global investors.
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The starkly opposed visions of US President Donald Trump and Swedish teen activist Greta Thunberg on climate change will clash in Davos on Tuesday as the World Economic Forum tries to face up to the perils of global warming on its 50th meeting. The four-day gathering of the world's top political and business leaders in the Swiss Alps gets under way seeking to meet head-on the dangers to both the environment and economy from the heating of the planet. Trump, who has repeatedly expressed scepticism about climate change, is set to give the first keynote address of Davos 2020 on Tuesday morning, on the same day as his impeachment trial opens at the Senate in Washington. Around the same time, Thunberg will also attend a meeting at the forum, where she is expected to underline the message that has inspired millions around the world – that governments are failing to wake up to the reality of climate change.
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BROKER RATING CHANGES
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GOLDMAN RAISES GLENCORE TO 'BUY' (NEUTRAL) - PRICE TARGET 280 (250) PENCE
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CITIGROUP RAISES RELX TO 'BUY' ('NEUTRAL') - TARGET 2300 (1880) PENCE
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JPMORGAN CUTS MONDI TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 1730 (2000) PENCE
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COMPANIES - FTSE 100
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BP Chief Financial Officer Brian Gilvary is to retire following a 34-year stint with the oil major. He will be replaced by Murray Auchincloss, who is currently CFO of BP's Upstream segment. Auchincloss will take up the role of group CFO and join the board on July 1.
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Australian miner BHP Group kept the majority of its annual production guidance unchanged, as it reported a solid interim output performance in copper and iron, but a decline in petroleum and coal. For the six months to the end of December, BHP's copper production was 885,400 tonnes, up 7% from 825,300 tonnes the year before, as output grew from the Escondida and Pampa Norte mines in Chile, and the Olympic Dam mine in Australia. The group kept its annual copper production guidance unchanged at 1.71 million tonnes to 1.82 million tonnes. Iron ore production for the six month period increased by 2% to 121.4 million tonnes, up 2% from 119.3 million tonnes the prior year, following record production from Jimblebar in Australia, and a train derailment which impacted results in the prior year. Annual iron ore output remains estimated at 242 million tonnes to 253 million tonnes.
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easyJet said it made a strong start to financial year 2020 with continued positive momentum, which has led to an upgrade of its revenue per seat guidance. For the first quarter to December 31, easyJet said revenue rose 9.9% to GBP1.43 billion, passenger revenue increased 9.7% to GBP1.12 billion and ancillary revenue increased by 11% to GBP301 million. easyJet said it expects first-half revenue per seat to increase by mid-to-high single digits, compared to a previous forecast for it to rise by low-to mid-single digits. Passenger numbers in the quarter increased by 2.8% to 22.2 million, driven by an increase in capacity of 1.0% to 24.3 million seats. Total airline revenue per seat increased by 8.8% at constant currency. Further, easyJet said it expects to deliver a first half headline loss before tax better than the first half of 2019. The company posted an interim loss of GBP275 million.
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Fitch Ratings said a court ruling in India could leave Vodafone Group's Indian business facing "severe" liquidity problems. Last week, the Indian Supreme Court rejected an appeal by Vodafone's Indian joint venture, Vodafone Idea, against a decision to make it pay USD4 billion in fees. Vodafone Idea is operated by Vodafone alongside Bharti Airtel. Vodafone Idea and other firms in the beleaguered Indian telecom sector were ordered in November to pay a combined USD13 billion in past spectrum and licence fees. "The Indian Supreme Court's rejection on January 17 of a review petition against its earlier ruling in a long-running telecommunications sector tax case, is credit negative for the industry. Two incumbents, Vodafone Idea and Bharti Airtel, will be particularly affected," said Fitch.
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COMPANIES - FTSE 250
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IG Group Holdings said it has made good strategic and operational progress towards delivery of its medium-term targets as it presses ahead with its revised strategy. For the six months to November 30, net trading revenue came in at GBP249.9 million, down from GBP251.0 million a year before. Operating profit was GBP100.1 million, down from GBP112.5 million. IG Group is to pay an interim dividend of 12.96 pence per share and expects to maintain its full-year dividend at 43.2p in financial 2020. IG said Chief Financial Officer Paul Mainwaring will retire later this year and the search for his replacement is underway.
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TalkTalk Telecom Group has sold its FibreNation business and stake in Bolt Pro Tem to CityFibre Infrastructure Holdings for GBP200 million. TalkTalk intends to use the proceeds to strengthen its balance sheet and completion of the sale is expected to occur in March, it said.
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COMPANIES - INTERNATIONAL
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Facebook plans to hire 1,000 more people in the UK by the end of 2020, with a large number working on technologies to remove harmful content. The social network said more than half of the recruits will work in technology-focused roles across software engineering, product design and data science, as well as developing the WhatsApp app, and Workplace, its business-skewed version of Facebook. Many will work within the firm's Community Integrity team, which builds the tools used to detect and remove harmful content across Facebook's platforms, addressing issues from spam and abuse to violence and personal safety. London is Facebook's biggest engineering hub outside of the US, and the platform is currently building new office space in King's Cross, due to open in late 2021. The latest additions will bring its total employee count in the UK to more than 4,000 by the end of the year, the company said.
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Tuesday's Shareholder Meetings
Mitchells & Butlers
John Lewis of Hungerford
Polo Resources
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
