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London open: Stocks drift as RBS posts its ninth consecutive loss
Stocks in London drifted lower in early trade as investors waded through a deluge of earnings, with RBS in the spotlight.
AT 0825 GMT, the FTSE 100 was down 0.1% to 7,262.62.
Mike van Dulken at Accendo Markets said: “FTSE sentiment may be impacted by RBS chalking up its ninth straight annual loss and outlook suggesting more to come (legacy clean-up, US legal settlements) before a return to profitability. This is rather at odds with peer Lloyds which continues to recover, able to offer special dividends and the government’s bailout stake sale almost complete.”
RBS fell after saying its losses widened in the year to 31 December as the bank was hit by legacy issues. It reported a loss of £6.96bn for 2016, bigger than the £1.98bn loss it posted the year before.
The bank was faced with litigation and conduct costs of £5.9bn, which includes a £3.1bn provision in relation to the mis-selling of mortgage-backed securities in the US in the run-up to the financial crisis. Meanwhile, the bank also booked £2.1bn in restructuring costs, compared to £2.9bn the year before.
Micro Focus retreated after reconfirming that it did not expect to grow revenue in its current financial year, while also noting overnight results showed HPE Software saw revenues fall but profit margins improve ahead of their agreed merger.
Property website Rightmove edged down despite reporting a rise in full-year 2016 pre-tax profit to £161.5m from £137.1m a year ago.
Engineer IMI was also on the back foot after it said pre-tax profit in 2016 slipped to £208m from £219m the previous year.
Workspace nudged lower after announcing the acquisition of the freehold of a west London office building for £98.5m.
Jupiter Fund Management was weaker after it posted a jump in profit for 2016 but said inflows for the year nearly halved.
Going the other way, Standard Life pushed up as it said revenue for 2016 grew “against a backdrop of volatile investment markets” as the insurer aims to increase its exposure to the Indian market through the acquisition of Max Life.
British Airways and Iberia parent International Consolidated Airlines Group flew higher after it announced a new share buyback and reported improved profits in the fourth quarter of last year and guidance for continued improvement in 2017.
Education publisher Pearson, which issued a profit warning in January, advanced after it held its dividend steady as full year pre-tax losses widened to £2.5bn from £433m in 2015.
Bookmaker William Hill racked up healthy gains as it said group net revenue was up 1% to £1.6bn in the year to 27 December.
On the data front BBA mortgage approvals are at 0930 GMT. In the US, the University of Michigan consumer sentiment index is at 1500 GMT.
