The week that was: Investors get the jitters as lenders are hit by bad debts

Fears that consumers have been over-extending themselves resurfaced again last week with Lloyds TSB reporting a jump in bad debt charges. While first-half profits increased 9 per cent, the market got a little jumpy when Lloyds said impairment losses on bad loans were up 52 per cent to £670m.

Statistics released by the Bank of England also suggested that consumers were getting nervous. UK lending to households rose in June by the second-smallest amount this year, the bank found.

But it was not all gloom. Paul Gratton, the chief executive of online bank Egg, said concerns about loan losses at UK banks were probably overdone. And Northern Rock, the mortgage lender, was able to post a 10.6 per cent rise in profits.

Away from banks, the booming oil price meant only one thing for BP and Shell: huge profits. But while BP said first-half profit had risen 29 per cent to $10.5bn (£5.9bn), an explosion in March at a Texas oil refinery affected its earnings

Meanwhile, Royal Dutch Shell unveiled half-year profits of £5.8bn, or £1.3m an hour. But it doesn't plan to stop there. Shell plans to increase the money spent on exploring for oilfields to £1bn both this year and next year. Investors had been concerned that Shell wasn't doing enough to replace its falling oil reserves.

While high oil prices have been kind to BP and Shell, they haven't been good news for the world economy. This is despite the US economy growing at an annual pace of 3.4 per cent from April through June, according to government statistics. The prospects for the UK economy, however, appear not to be so bright.

The National Institute for Economic and Social Research predicted last week that economic growth would slow sharply to 2 per cent this year.

There were further concerns on the UK high street when women's clothing retailer Monsoon warned that the recent London bombings had affected its performance.

While retail conditions may be tough, consumers are still buying chocolate and soft drinks. Cadbury Schweppes last week reported its best interim trading performance in a decade, with pre-tax profit reaching £344m.

There was plenty of action in the media sector as Rupert Murdoch's son, Lachlan, quit as deputy chief operating officer at News Corp. Lachlan, 33, was seen as a likely successor to his father but is instead moving to Australia. Pearson, meanwhile, the owner of the Financial Times newspaper, named Glen Moreno as its new chairman to succeed Lord Stevenson. Mr Moreno was a former chief executive at investment company Fidelity. Trinity Mirror, the owner of the Daily Mirror, warned that the advertising outlook remained gloomy.

And Reuters shares fell on Tuesday after chief executive Tom Glocer unveiled his growth strategy. He pleaded for investors to take a long-term view on his plans to reduce costs and increase investment, but the reaction was mixed.

Independent Comment
blog comments powered by Disqus
News in pictures
World news in pictures
       

Day In a Page

Johnny Marr talks relationships and reunions

He's worked with Modest Mouse, the Pet Shop Boys and Beck, to name a few, and recently released his first solo album. So why, wonders Johnny Marr, do people still hark on about The Smiths?
After the flood: From Haiti to Britain, one man has captured the devastation of our increasingly deluged lands

In pictures: After the flood

From Haiti to Britain, one man has captured the devastation of our increasingly deluged lands
Death becomes her: Meet the very modern mortician who champions 'cool' funerals

Death becomes her: A very modern mortician

Ever considered baking a loved one's remains into a cake or putting their ashes in fireworks? If so, talk to Caitlin Doughty, champion of the alternative death industry.
How long can the 'Keep Calm' trend carry on?

How long can the 'Keep Calm' trend carry on?

At first it seemed clever and cute. Then the 'Keep Calm' motif went mad, spawning endless offshoots.
The man who built Brum: A lament for the demise of John Madin's Brutalist Birmingham

John Madin: The man who built Brum

The architect's buildings were supposed to leave an indelible, futuristic mark on his beloved hometown but they are now being inexorably torn down.
School of chop: Learning the art of butchery at the Ginger Pig

School of chop: Learning the art of butchery

How do you butcher a lamb? Or make Mexican street food in a British kitchen? Christopher Hirst finds out.
James Pembroke: The man who's eaten everywhere

The man who's eaten everywhere

Few people know more about restaurants than James Pembroke, who only spent five mealtimes at home during his entire childhood.
A Berliner in 1963 – but did John F Kennedy once admire Adolf Hitler?

A Berliner in 1963 – but did John F Kennedy once admire Adolf Hitler?

The young JFK praised 'superior' Nordic races during visits to Germany
Banned Iranian director Mohammad Rasoulof to attend Cannes Film Festival 2013, his first public appearance since prison

Banned Iranian director to attend Cannes Film Festival

Mohammad Rasoulof to make his first public appearance since being imprisoned three years ago
Seeing the larger picture: Inspiring images of space

Seeing the larger picture: Inspiring images of space

An exhibition explores images how photography has shaped astronomy
Eat Spam and carry on: Wartime pamphlets could teach us a thing or two about healthy, thrifty eating

Eat Spam and carry on

Wartime pamphlets could teach us a thing or two about healthy, thrifty eating
Facial hair: Cat beards and the purrrsuit of excellence

Facial hair

Cat beards and the purrrsuit of excellence
The 10 Best salt and pepper sets

The 10 Best salt and pepper sets

Whether they're for everyday use or to make your dining table look just right, it's worth getting a stylish shaker...
Ferran Soriano: Predicting success if Manchester City 'vision' is followed

Ferran Soriano: Predicting success if Manchester City 'vision' is followed

Chief executive says trophies will come if a 'core' of suitable players is in place
Thomas Müller: We couldn't handle losing a Champions League Final again

Thomas Müller: We couldn't handle losing a Champions League Final again

The Bayern Munich forward tells Tim Rich his side have to shed chokers' tag after two recent final defeats