The Week Ahead: City frets over Black Horse payout

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The Independent Online

And that, as they say, is that. The banks' reporting season - which got under way all those weeks back on 12 February with numbers from Barclays - will finally come to a close this week with full-year results from Lloyds TSB.

As is often the case with Lloyds, the dividend remains the focus for investors. The market is anticipating a cut, most likely to be in 2005-06 but not before then, so the sustainability of the payout will be scrutinised. Likewise, the chief executive, Eric Daniels, has already ruled out any acquisitions for the next two years, so investors will expect him to maintain this position. However, rumours that the group is eyeing up internet bank Egg - as the majority owner, Prudential, is selling its stake - refuse to go away.

Also featuring on investors' checklists will be the possibility of a £1bn buyback, an event that most analysts hope will be announced this week. They will take a dim view if it is delayed, but against a background of capital concerns, just such a move remains a possibility. Other news is likely to include details of a big rise in IT spending. The money will be spent in part on a much-needed overhaul of existing systems but also to help strengthen Lloyds' share of the UK retail market. Pre-tax profits are forecast to rise from £3.8bn to around £4.2bn.

The other big financial services group reporting this week is insurer Royal & SunAlliance. Most in the City are expecting at least some signs of improvement in the fourth-quarter figures, though this will not be enough to reverse a decline in earnings for the full year. The company is also expected to pay some money back to shareholders - and may also disappoint. Going forward, and investors can continue to expect a challenging ride as RSA has already said 2004 will be a "transitional" year.

Another market stalwart stepping up to report is Shire Pharmaceuticals. Along with its peers, GlaxoSmithKline and AstraZeneca, Shire has been hurt in recent years by the advent of cheap generic versions of drugs it has developed. Yet the City remains on happy terms with Shire.

Williams de Broë, for example, has a "buy" recommendation on the stock. It concedes there are patent issues over its hyperactivity treatment, Adderall XR, but adds that "Shire has the ability to launch some solid products in the new term". Specifically, this relates to a renal drug, Fosrenol, and the market will be keen for an update on this. Final pre-tax profits are likely to improve to $389m (£211m) from $339m.

Just as the pharmaceutical sector has had to battle against generic competition, so the hospitality industry has been kept busy fighting the global downturn. Business travel fell off and even though leisure travel trends are improving, those revenue-boosting Americans remain firmly stuck at home, for the time being at least. The high-end chains have really felt the pinch and on Thursday the sector will hear from one such player, InterContinental Hotels, which is publishing full-year numbers.

The group, formerly part of Six Continents, has already made positive noises and is now more optimistic about recovery across the industry, although Europe remains a tough region. Asia, now fully recovered from last year's Sars epidemic, has been doing better. Pre-tax profits are still expected to have slipped - from around £249m to £130m - but as long as the outlook remains upbeat, investors should be forgiving.

A range of sectors are represented this week, with updates from services group Hays, defence specialist Smiths and its French rival EADS, housebuilder Bovis and oil services business Wood. Over the Channel, updates will be heard form Adidas-Salomon, Deutsche Telekom and advertising giant Publicis.

For those looking for a sure sign of improving market conditions overall, however, the latest FTSE 100 reshuffle is arguably one of the clearest indications yet. In the days of the tech boom and bust, keeping up with the FTSE's quarterly index reshuffles was exhausting. Anything up to six stocks would be ejected from the top flight at any one time as market turbulence played havoc with company valuations.

Just two solitary stocks are expected to swap places next week, however. Based on last Friday's closing prices, pubs group Enterprise Inns is likely to join the FTSE 100, while making room for it by entering the FTSE 250 will be the exceptionally uninteresting Foreign & Colonial Investment Trust. The changes will be based on Tuesday's closing prices and come into effect a few weeks later.