London open: FTSE falls; Lloyds, Centrica results in focus
By Michele Maatouk
Date: Thursday 20 Feb 2025
(Sharecast News) - London stocks fell in early trade on Thursday as investors mulled a slump in consumer confidence and results from the likes of Lloyds and Centrica.
At 0830 GMT, the FTSE 100 was down 0.3% at 8,689.26.
Investors were mulling a survey out earlier from the British Retail Consortium, which showed that consumer confidence worsened this month, with views about the economic situation and personal finances taking a hit.
The BRC Consumer Sentiment Monitor for February showed that 50% of people expect the state of the UK economy to worsen over the next three months, up from 48% in January and 42% in December.
With just 13% of consumers expecting better conditions and 32% predicting no change, that nets out to a balance of -37, down from -34 the month before.
This was the fifth straight month of worsening expectations, and a sharp drop since the summer, when more people predicted an improvement in conditions than a deterioration.
"People's expectations of the economy reached a new low, having fallen almost 40 points since July 2024," said the BRC's chief executive Helen Dickinson.
Consumer views of their own financial situation fell to a balance of -11 in February from -4 in January, and while personal retail spending expectations rose to -5 from -9, this may have been driven by expectations of higher prices in the coming months, the BRC said.
"With many businesses warning of the impact that April's employer NIC's increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried," Dickinson said.
Two-thirds of retailers have said that prices will have to rise due to £7bn of additional costs coming their way, which include higher employer national insurance contributions and a new packaging levy, the BRC said.
"With many businesses warning of the impact that April's employer NIC's increase will have on hiring, and the rising energy price cap pushing up the cost of domestic bills, it is little surprise that many households are worried. And while there was a positive increase in expectations of personal retail spending, this may be largely driven by the expectations of higher prices in the future," Dickinson said.
In equity markets, British Gas owner Centrica surged as it hiked its dividend and announced a £500m share buyback after full-year earnings beat forecasts.
Anglo American was also a high riser despite posting a full-year loss of $3.1bn after a large impairment related to its De Beers diamond operation as it continued restructuring plans to focus on copper and iron ore.
The loss attributable to shareholders compared to a profit of $283m in 2023, while the dividend was cut to 64 cents a share, from 96 cents.
Lloyds Bank gained even as it said annual profit fell 20.4%, worse than expected, and set aside an extra £700m to cover potential claims against motor finance commission deals.
Pre-tax profit came in at £5.97bn, compared to £7.5bn a year earlier and consensus estimates of £6.39bn.
Net interest margin - the difference between savings and loan rates - fell 16 basis points to 2.95%.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the £700mn motor finance charge "tarnishes a strong final quarter".
"Lloyds has capped off a strong year with a clouded fourth-quarter result, setting aside a hefty £700m provision for potential charges related to the ongoing motor finance saga. While you could argue the provision is overly cautious, Lloyds holds the largest exposure of any major UK bank, and the outcome remains uncertain. Despite this, the stock is up over 40% in the past year, reflecting a solid banking outlook and robust performance," he said.
"Beneath the surface, Lloyds is delivering strong results. Excluding the motor finance charge, fourth-quarter figures exceeded expectations, thanks to borrowers performing better than anticipated. Remarkably, Lloyds has managed to improve its loan quality over the course of the year, defying fears that borrowers would buckle under the pressure of persistent inflation."
On the downside, opioid addiction treatment maker Indivior tanked after results.
Recruiter Hays lost ground as it reported a drop in first-half profit amid "challenging" market conditions, as economic and political uncertainty weighed on client and candidate confidence.
Market Movers
FTSE 100 (UKX) 8,689.26 -0.27%
FTSE 250 (MCX) 20,717.92 0.05%
techMARK (TASX) 4,729.44 -0.79%
FTSE 100 - Risers
Centrica (CNA) 146.85p 8.06%
Anglo American (AAL) 2,443.50p 3.10%
Hiscox Limited (DI) (HSX) 1,060.00p 2.02%
Lloyds Banking Group (LLOY) 64.06p 1.94%
Ashtead Group (AHT) 5,004.00p 1.15%
Kingfisher (KGF) 247.50p 1.10%
Fresnillo (FRES) 778.50p 1.04%
Diageo (DGE) 2,133.50p 0.95%
Antofagasta (ANTO) 1,865.50p 0.81%
Beazley (BEZ) 823.00p 0.73%
FTSE 100 - Fallers
BP (BP.) 450.95p -2.67%
BAE Systems (BA.) 1,314.50p -2.27%
Imperial Brands (IMB) 2,718.00p -2.16%
AstraZeneca (AZN) 11,462.00p -2.07%
easyJet (EZJ) 488.00p -1.87%
GSK (GSK) 1,419.00p -1.29%
Land Securities Group (LAND) 575.00p -1.20%
Scottish Mortgage Inv Trust (SMT) 1,113.00p -1.07%
Rolls-Royce Holdings (RR.) 636.80p -0.90%
HSBC Holdings (HSBA) 888.10p -0.82%
FTSE 250 - Risers
Ithaca Energy (ITH) 137.80p 5.03%
Hilton Food Group (HFG) 920.00p 4.19%
Hochschild Mining (HOC) 194.20p 2.75%
Greencoat UK Wind (UKW) 113.50p 2.71%
TBC Bank Group (TBCG) 4,100.00p 2.50%
Ibstock (IBST) 167.20p 2.20%
Ferrexpo (FXPO) 101.00p 1.71%
Endeavour Mining (EDV) 1,770.00p 1.67%
Mony Group (MONY) 206.80p 1.57%
W.A.G Payment Solutions (WPS) 67.00p 1.52%
FTSE 250 - Fallers
Indivior (INDV) 670.50p -22.75%
Diversified Energy Company (DEC) 1,164.00p -5.29%
NCC Group (NCC) 130.20p -4.26%
Genuit Group (GEN) 356.50p -2.33%
CMC Markets (CMCX) 210.00p -2.33%
Vesuvius (VSVS) 405.50p -2.29%
Hays (HAS) 71.50p -2.12%
Me Group International (MEGP) 218.00p -1.80%
Dr. Martens (DOCS) 65.70p -1.65%
Bridgepoint Group (Reg S) (BPT) 371.20p -1.64%
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