Barclays Net Up 49%, Hammerson Rights Issue

123jump.com Staff
09 Feb, 2009
New York City

The benchmark stock index in U.K. rose marginally led by Barclays after the lender reported a strong second half performance leveraged by the acquisition of Lehman Brothers North American business. Of the FTSE 100 index stocks, 65 rose, 36 declined, and one was unchanged.

[R]1:00PM New York, 6:00PM London - Barclays reported annual profit after tax rises 4% to £5.3 billion. Hammerson to raise £584.2 million in rights issue.[/R]

The benchmark stock index in U.K. rose marginally led by Barclays after the lender reported a strong second half performance leveraged by the acquisition of Lehman Brothers’ North American business.

Hammerson also gained after announcing its intention to raise £584.2 million through a rights issue to settle its debt obligations.

In London trading FTSE 100 index rose 0.4% or 15.74 to 4,307.61.

Of the FTSE 100 index stocks, 65 rose, 36 declined, and one was unchanged. Barclays led gainers in the index shares with a rise of 10.9% after reporting that its profit after tax in the year ending December 31 rose 4% to £5.3 billion from a year ago.

Barclays Profit Rises 4% to £5.3 billion

Barclays reported today that its profit after tax in the full year ending December 31 rose 4% to £5.3 billion from £5 billion a year ago, but profit before tax fell 14% to £6.1 million from £5 million in the same period a year earlier.

The lender reported that profit attributable to equity holders of the parent fell 1% to £4.4 billion from £4.41 billion a year ago.

Revenues for U.K. Retail Banking advanced 7% to £1.4 billion from £1.3 billion a year earlier, while revenue for Barclaycard rallied 31% to £789 million from £603 million in the comparable year ago period.

However revenues for the commercial bank fell 7% to £1.3 billion from a year earlier and Investment Banking and Investment Management profit before tax fell 24% to £2.6 billion.

The banks write-downs in the review period soared to £8.1 billion and £9.4 billion worth of exposures were sold and redeemed.

According to chief executive officer John Varley, Barclays managed to absorb the huge write-downs and impairment charges through the generation of non-recurrent profits from the acquisition of Lehman Brothers’ assets in North America, including acquisition of Goldfish credit card business in U.K. and the sell of U.K. Closed Life Fund from the credit card processor Visa Inc IPO.

Gains on acquisitions rose to £2.4 billion, including £2.3 billion relating to Lehman Brothers’ North American business, while profit from the disposal of the closed life assurance book increased to £326 million.

In addition, gains on Visa IPO and sales of shares in MasterCard were £291 million.

Hammerson Plc to Raise £584.2 million

Hammerson Plc reported today that it intends to raise £584.2 million by issuing 405.8 million new shares at £1.50 per share to reduce borrowings and net indebtedness.

From June last year the company has sold assets and used net proceeds of £783 million to pay debt.

Chairman of Hammerson John Nelson said, “In the event that the company is unable to execute disposals and that the market value of the Group''s property portfolio continues to decline, there is a risk that the company could breach its gearing covenant in the future.”

Separately, the company reported that like-for-like growth in rental income rose 3.7% in 2008 and adjusted earnings per share fell 5.5% to 38.1 pence per share.

Gainers & Losers

Barclays led advancers in the FTSE 100 index shares with a rise of 10.9% followed by increases in Kazakhmys of 10.9%, in British Land Co. of 10.2%, in Hammerson Plc of 9%, and Liberty International of 8.7%.

Barclays rose after the lender reported profits that beat analyst estimates.

Hammerson rose after announcing today that it intends to raise £584.2 million from a rights issue in order to pay for its debts and borrowings.

Lloyds Banking led decliners in the FTSE 100 index shares with a fall of 4.3% followed by losses in British Sky Broadcasting of 3.7%, in Rolls-Royce of 3.6%, in BAE Systems of 3%, and TUI Travel of 2.9%.

Europe Markets Review

In London FTSE 100 Index closed higher 15.74 or 0.37% to 4,307.61, in Paris CAC 40 Index increased 12.08 or 0.39% to close at 3,134.87 and in Frankfurt DAX index higher 22.19 or 0.48% to close at 4,666.82. In Zurich trading SMI increased 35.41 or 0.69% to close at 5,158.50.