On 27th February, after a six and a half year hiatus, taxpayer-backed Lloyds is likely to announce it’s return to dividend payments when it releases it’s annual results. Permission, however, must first be won from the Bank of England’s Prudential Regulatory Authority Arm who are poised to give a verdict this week after several months of exchange between the two. On Tuesday, Lloyds narrowly passed the Bank of England’s “stress test” where it was found to hold capital of 5% of risk-weighted assets under the test scenarios, a mere 0.5% over the pass mark of 4.5%. Where many analysts were expecting Lloyds to be vulnerable here due to it holding the biggest residential mortgage book of any UK lender, this positive result has gone a long way in strengthening it’s case for a modest pay out for the 2014 financial year, with City analysts predicting dividends of 1p per share.
After an extensive clean-up operation at the hands of Chief Executive Antonio Horta-Osorio, which has seen the bank return to profitability, Lloyds now feels it is financially stable enough to start paying dividends again. Despite the double blow of having to part ways with it’s TSB arm last year, which formed part of the conditions for the 2008 £20.5 billion bailout, and a £12billion PPI misselling bill, Lloyds is expected to announce a 3% increase in underlying profits to £6.4billion. Good news for investors, who are set to receive a total of £713.7million from the lender if predictions hold true.
One man to whom this news could come at an extremely handy time is Chancellor George Osbourne, who could not only add an extra £187 million windfall to his budget when he announces it next month, but could also expect the remaining 24.9% share that the government still hold to turn a tidy profit when it comes to sell. With the general election looming, this news would present another arrow in the quiver of a Conservative party who love to talk about the economy.
A minority of analysts, however, still believe that the regulator will be deterred by the closeness of the stress test results and permission will not be granted.
“We believe that expectations that Lloyds will commence a dividend this year are misplaced”
Joseph Dickerson, Jefferies Investment Bank Analyst
It remains to be seen which way the regulator will sway, however I believe that after a long recovery Lloyds is finally back at a point where dividends are again a viable option and that it’s about time that the long-suffering shareholders started to see a glimpse of the dividends that made Lloyds one of the most widely held shares prior to 2008.
Google to Open Artificial Intelligence Centre in China
Google will be opening its first artificial intelligence (AI) research centre in China, despite many of its services being blocked there.
Fei-Fei Li, Chief Scientist of Google Cloud, said:
“I believe AI and its benefits have no borders. Whether a breakthrough occurs in Silicon Valley, Beijing or anywhere else, it has the potential to make everyone’s life better for the entire world. As an AI first company, this is an important part of our collective mission. And we want to work with the best AI talent, wherever that talent is, to achieve it.”
The research centre will focus on basic AI research, and will consist of a team in Beijing, who will be supported by Google China’s engineering teams.
Google’s search engine and its Gmail are banned in China. However, the country has 730 million internet users, making the market too large to ignore.
Google is not the only tech giant facing restrictions in China. Facebook is also banned, while Apple’ App Store has been subject to censorship. In order to comply with government requests, Apple removed many popular messaging and virtual private network (VPN) apps from its App Store in China earlier on this year.
China has recently announced plans to develop artificial intelligence, and wants to catch up with the US. However, human rights groups are concerned by China’s use of artificial intelligence to monitor its own citizens.
A Deal Looks Likely for Disney’s Fox Takeover
Disney is on the cusp of confirming a deal to buy most of 21st Century Fox in a $60bn deal, reports claim. The sale would see Disney acquire 20th Century Fox film studios as well as Sky and Star satellite broadcasts in the UK, Asia and Europe, according to the BBC.
21st Century Fox would retain broadcasting network Fox News and Fox Sports 1. While both would remain independent initially, they “could consider a merger later with the Murdochs’ publishing company, News Corp.,” reported Bloomberg’s David Hellier and Anousha Sakoui.
Fox CEO James Murdoch could potentially be offered a senior position at Disney once the deal is done.
Why It’s Important
Fox has reassessed its place in the current media landscape and decided that to in order to be successful it would need to scale up. Disney has the scale that Fox lacks. By consolidating their efforts around news and sports, Fox will be able to play an important role in the media industry.
On the other hand, Disney’s acquisition will extend the company’s reach. Plans to roll out a new Disney streaming service could benefit from the increased international exposure, where there appears to be the most growth.
Disney would also acquire Fox’s streaming service Hulu, opening new opportunities for Disney to compete with the likes of Netflix and Amazon Prime Video.
ExxonMobil under Shareholder Pressure
The world’s largest oil group has agreed to publish the impact of climate policies on its bottom line.
In recent years, shareholders of the world’s largest oil and gas conglomerates have been pushing companies to publish analysis of the threat they face from climate change and the threat of green policies. In a regulatory filing, Exxon announced that it would change how it reports its results to include a paper on how climate policies are hurting its business. The proposal was backed by around 60% of Exxon’s shareholders back in May, which was led by the New York state employees’ retirement fund. The move follows Exxon’s gradual shift towards addressing climate change; in the 90s, the group campaigned against the Kyoto protocol but has since committed to reducing emissions.
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