Lloyd set to write off more than a billion in toxic debts

Analysts predict that the Lloyds Banking Group is set to write off an estimated 13 billion pounds on loans to commercial property, business and mortgage holders. The write-offs will mean that the bank will show a half-year loss of 6.3 billion pounds. If these provisions were to be put to one side Lloyds would be highly profitable as well as enjoying a dominant share of the UK market and the support of the public.

The forecasts are that insurance companies stand to lose one billion pounds in premium income this year as the recession continues to bite. Cash flow problems could mean that the UK public will allow “non-vital” policies to lapse. A recent survey has shown that 17 percent of consumers are considering cutting back on their insurance spending next time their policies are up for renewal. The encouraging news is that 75 percent of the insurance buying public intends to maintain the status quo.

The UK’s largest gas retailer, Centrica, which operates under the British Gas brand, announced on Friday that they have made £1.3 billion pound bid for North Sea gas producer Venture Production in an effort to increase their gas supply sources reserves. Centrica announced in their statement that they had increased their holdings in Venture from 23.6 percent to 29 percent with the acquisition of a stake owned by 3i private equity group.

One of Britain’s largest pizza chains, Papa John has announced their intention to increase its number of stores from 135 to 300 by 2013. A move that will create hundreds of jobs. Papa John has already opened 17 stores this year so far and plans a further 15 in the second half. The company announced sales for the second quarter were up 14 percent on last year.

On the FTSE Friday, the insurance sector continued to fall backwards for the fifth consecutive, with solvency problems apparently a concern. Aviva was down 4.9 percent to 278 pence, taking its loss this week to 19 per cent on fears of dividend cuts. . Prudential on Friday dropped 2.8 per cent to 353 pence and Legal & General fell 2.7 per cent to 51 pence.

Retailers continued to do better, with Tesco leading the way with gains of 2.9 percent to 357 pence.
The UK heat wave has pushed electrical goods retailers to the forefront with department store John Lewis reporting an exceptional demand for air conditioners and fans.

Kingfisher were up 1 per cent to 188 pence with the Home Retail Group also rising 2 per cent firmer at 272 pence. Both reported strong sales as well as significant stock reductions after last year’s wet and cold summer.

Also doing better and not only because of the hot summer are Punch Taverns whose shares gained 4.4 percent as analysts announce that they see positive catalysts for the British pubs company going into 2010.
Improved revenues and margins helped by the better weather, as well as a shift in sales mix, lower utility costs and higher staff productivity all contributed to the optimistic forecast.

The FTSE 100 posted a fourth weekly decline, closing the day down 31.49 points at 4,127.17 and over 100 points on the week’s trading.
The FTSE 250 also dropped by 49.57 points to end an unstable week on 7,184.43

Sterling fell against the Dollar on Friday to $1.6215, leaving it 0.8 percent lower in the week. It also tumbled 4.6 percent this week to 150.62 yen, its fourth weekly drop. After climbing almost 13 percent against the dollar in the first half of the year, the pound is sliding as investor’s expectations for an accelerated revival in the U.K. economy begin to slowly fade.

Pound/US dollar 1.6215
Pound/Euro 1.1637
Pound/Japanese Yen 150.459
Pound/Swiss Franc 1.7626.

The Dow Jones finished for the weekend on the wrong foot, down 36.65 points to but 8146.52 while the NASDAQ rose another 3.48 points to settle on 1756.03.
Concerns about the state of the world economy has forced the price of oil below $60 a barrel mark. Crude oil for August delivery slipped 54 cents to $59.87 a barrel, having fallen as low as $58.72.

The International Energy Agency (IEA) predicts demand to fall 2.9% from earlier predictions in 2009.

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Tags: Bank, Banking, Economy, Financial News, Lloyds Banking Group, Mortgage, Stocks and shares, UK Banks