Main events
UK Government ‘closely monitors’ Thames Water
The UK government is “closely monitoring” Thames Water and is ready to take action if necessary, according to the environment secretary, as Britain’s biggest water company fights for its survival, hit by scandals sewage, fines and large debts.
Steve Reed told LBC Radio:
We are closely monitoring the situation with Thames… the company remains stable but if we need to take action we are prepared to do so.
The news came after it emerged that water companies in England could be banned from making a profit under plans for a complete overhaul of the system.
The idea is one of the options being considered by a new commission set up by the Department for Environment, Food and Rural Affairs (Defra) amid public anger over how firms have prioritized profit over the environment.
Sources in the department said they would consider forcing the sale of water companies in England to firms that would run them as unprofitable. Unlike nationalization, the company would not be run by the government, but by a private company, run for public benefit.
The not-for-profit model, which is widely used in other European countries, allows staff to be paid substantial salaries and bonuses, but any profit on them is returned to the company.
Deutsche Bank reports profit rise after smaller hit from lawsuits
Deutsche BankGermany’s biggest bank reported higher third-quarter profits after taking a smaller-than-expected financial hit from shareholder lawsuits over its Postbank division. The bank said it would resume share purchases.
Deutsche halted plans for more share buybacks in July after it booked a 1.3 billion euro court fee related to its botched purchase of the lender. Postbank more than a decade ago. The group has since settled with 80 plaintiffs, about 60% of the lawsuits, and cut provisions by 440 million euros. However, provisions for loan losses doubled from a year ago.
Investor lawsuits that have been going through the courts in recent years allege that the bank underpaid Postbank. This has weighed on Deutsche’s share price.
Deutsche reported a pre-tax profit of 2.3 billion euros between July and September, up 31% from a year earlier, boosted by the release of litigation provisions. Excluding this, profits rose by 6% to €1.8 billion.
Its investment bank beat expectations, with revenue up 11% from a year earlier, mirroring the gains of US rivals such as JPMorgan and Goldman Sachs.
chief executive of Deutsche Christian sewing said:
In these three months, we made significant progress in putting legacy litigation behind us, while also producing a record third quarter profit in our operating business.
However, revenue at the retail division, which includes Postbank, was flat, while corporate banking posted a worse-than-expected 3% drop in revenue.
Shares in Lloyds rose 0.7% after the results, which came in better than expected.
Richard Hunterhead of markets at interactive investor, said:
Lloyds has started the quarterly reporting season unspectacularly, although there are signs of momentum improving as the year progresses…
Overall, these results are not lights out, but they do provide a huge element of comfort that Lloyds continues on its positive journey towards a more streamlined and digital business, supported by a healthy financial position. Moves into other revenue streams such as credit cards and insurance could bolster its core mortgage income, and the group’s confirmation of its targets at the end of the year is proof the bank remains on track.
Intro: Trump trade boosts dollar, gold hits record; Lloyds beats profit expectations
Good morning and welcome to our regular coverage of business, financial markets and the world economy.
The dollar has rallied, buoyed by strong economic data and investors betting on it Donald Trump could reach next month’s presidential election, while gold prices hit a new all-time high amid rising geopolitical tensions in the Middle East.
The dollar rose again today as markets cut the odds of a second Trump administration. Strong US jobs figures earlier this month prompted investors to scale back their expectations for a rate cut by the Federal Reserve, also lifting the currency. The dollar index – which measures the US dollar against six other major currencies – rose to 104.17, the highest since early August.
Gold prices have hit a new record high as conflict in the Middle East along with uncertainty around US interest rates and the US election fueled demand for safe-haven assets.
Spot gold climbed to $2,752 an ounce, while silver prices also rose, up 3% to $34.78 an ounce.
here, Lloyds Banking GroupBritain’s biggest mortgage lender forecast higher house prices after reporting third-quarter earnings ahead of expectations. Chief Executive Officer Charlie Nunn growth in credited income, cost discipline and strong asset quality.
It made a statutory pre-tax profit of £1.8bn between July and September, up from £1.9bn a year earlier but above City forecasts of £1.6bn.
The bank has increased its forecast for UK house prices to rise by 3.1% this year, compared to a previous forecast of 1.9%.
Agenda
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Noon BST: US MBA mortgage applications
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2:45am BST: Bank of Canada interest rate decision
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15:00 BST: President of the European Central Bank Christine Lagarde speaking
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15:00 BST: Eurozone consumer confidence flash for October
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15:00 BST: US home sales for September