RBS Grows Profit But Sets Aside Further £780m

Royal Bank of Scotland (RBS) has set aside a further £780m to cover the costs of conduct issues, including the PPI mis-selling scandal.

The news was released alongside its third-quarter results which demonstrated that the bank's recovery was continuing to build despite the burden of extra provisions for past mistakes.

RBS said it was taking a £400m charge in anticipation of regulatory action over the alleged manipulation of foreign exchange markets - following a similar move by rival Barclays 24-hours earlier.

It added £100m to its bill for PPI - taking the total to £3.3bn - citing "higher than expected reactive complaint volumes."

The bank, which is 80% owned by the taxpayer after its rescue during the financial crisis, said its profits for the third quarter were up to £1.27bn, compared with a loss of £634m in the same period last year.

It is the first time the bank has reported a profit for three quarters in a row since its bailout.

RBS also confirmed it was retaining Ulster Bank following a strategic review of the business.

Chief executive Ross McEwan said: "In February I placed trust at the heart of my new strategy for our bank.

"We have taken the first steps towards that goal, with early progress in making RBS simpler, clearer and fairer.

"We are reducing costs, and are on track to achieve our capital targets.

"UK and Ireland are showing signs of growth, and impairment trends are significantly better than we had anticipated at the start of the year.

"We have confirmed today that Ulster Bank remains a core part of our bank. We have a good market position and believe that, with investment, Ulster Bank can deliver attractive shareholder returns in the future.

"But we know we still have a long list of conduct and litigation issues to deal with and much, much more to do to restore our customers' trust in us."

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Shares Soar As Japan Boosts Economic Stimulus

Japan's Nikkei stock market climbed to a seven-year high after the country's central bank surprised investors by expanding stimulus to boost economic growth.

The Bank of Japan (BoJ) said it would increase its asset purchases by between 10 trillion yen and 20 trillion yen (£57bn to £114bn) to about 80 trillion yen (£454bn) annually.

The bank also announced it would triple its purchases of exchange-traded funds and real estate investment trusts, saying the loosening of monetary policy would continue as long as was needed to attain an inflation target of 2%.

It confirmed the move following the publication of the country's key economic indicators for September, which showed inflation and household spending both falling with unemployment ticking upwards.

Japan's central bank was under pressure to increase stimulus to support growth as Prime Minister Shinzo Abe weighs approval of another sales tax hike next year.

He and the central bank have sought to spur inflation as a way of encouraging consumers and businesses to spend more and thus support faster growth.

But a sales tax hike in April, from 5% to 8%, slowed the recovery that began in late 2012.

He is due to decide before the end of the year whether to raise the tax to 10% in 2105.

Economists say Japan needs to counter a huge public debt mountain of more than one quadrillion yen (£6.5trn) but increases have proved deeply unpopular.

The bank's action helped the yen weaken further against the dollar - to a seven-year low - with a gradual weakening of the currency a crucial factor in a return to recent profits growth among many Japanese exporters.

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UK To Pay Off Part Of First World War Debt

The Government has announced it will pay off part of the UK's First World War debt - the first such payment for 67 years.

The Treasury said it will repay £218m of the £2bn still owing from the 1914 to 1918 war, as part of a redemption of bonds stretching as far back as the 18th century.

The payment, to be made on 1 February next year, will be the first repayment of National War Bonds by a Chancellor for 67 years.

The 4% consolidated loans were first issued by Chancellor Winston Churchill in 1927, partly to refinance National War Bonds originating from the First World War.

Britain has paid £1.26bn in interest on the bonds since then, according to the Debt Management Office.

Chancellor George Osborne said: "I am delighted to be able to announce today that we will repay part of the country's First World War debts.

"We are only able to take this action today thanks to the difficult decisions that this Government has taken to get a grip on the public finances.

"The fact that we will no longer have to pay the high rate of interest on these gilts means that most important of all, today's decision represents great value for money for the taxpayer."

The Government first issued National War Bonds in 1917 to raise cash to finance the ongoing cost of the First World War.

They paid out an attractive rate of 5% interest, with publicity campaigns asking the public to make a patriotic investment.

Some of the debt being repaid relates to "4% Consols" that date back more than 300 years.

In 1853, the Government consolidated the capital stock of the South Sea Company, which collapsed in the South Sea Bubble financial crisis of 1720.

And in 1888, Chancellor George Goschen converted bonds first issued in 1752 to finance the Napoleonic and Crimean Wars, the Slavery Abolition Act (1835) and the Irish Distress Loan (1847).

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Federal Reserve Turns Off Quantitative Easing

By Sky News US Team

The US Federal Reserve has ended its stimulus programme known as quantitative easing after six years of pumping money into the economy to bolster growth.

The US central bank showed confidence that the nation's economic recovery would remain on track as it ended its monthly bond purchases.

It said the economy continues to grow at a "moderate" pace, while job-market conditions have improved "somewhat".

Quantitative easing had been steadily cut from $85bn (£53bn) to $15bn as the economy began to revive after the 2007-2009 recession.

The Fed's policy committee said in Wednesday's statement following a two-day meeting: "The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability."

It also signalled interest rates would remain low for a "considerable time" following the close of the programme this month.

Most economists expect the Fed to keep that rate on hold until mid-2015. 

The statement largely brushed aside the challenges posed by recent financial market volatility, faltering growth in Europe and a weak inflation outlook.

The Fed suggested that low inflation was not too much of a worry as longer-term expectations "remain stable".

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Barclays Sets Aside £500m For For-Ex Fines

Barclays has confirmed a £500m provision for fines relating to allegations foreign exchange markets were manipulated by banks.

The London-listed lender announced the figure in its third-quarter results statement which also contained further costs associated with the historic payment protection insurance (PPI) mis-selling scandal.

It set aside an additional £170m for PPI and said it was also taking a charge of £160m related to the sale of interest rate hedging products.

The group made a statutory profit before tax of £3.7bn over its first nine-months - a rise of 28% on the same period last year.

The performance was driven by stronger performances from its Personal and Corporate and separate Barclaycard arms though investment bank profits tumbled 38% to £1.3bn as its group contribution continued to shrink under chief executive Antony Jenkins.

He said the results reflected further progress towards key goals under its Transform programme - aimed at making Barclays the 'go-to' bank - and demonstrated greater resilience through its rebalancing from the 'casino banking' days.

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Samsung Admits Mobile Woes As Profits Plunge

Samsung is to restructure its mobile phone unit as sales slow because of fierce competition across its ranges.

The South Korean electronics firm made the announcement following the release of its results for the July to September quarter, in which profits dipped to a near three-year low.

Net profit for the third quarter fell 49% to 4trn won (£2.5bn) while the mobile unit reported operating profit of 1.75trn won (£1bn) - a dramatic decline from 6.7trn won a year ago. 

Its smartphone business - which accounts for more than half its total sales - has faltered under competition from Apple's iPhone6 and Chinese handset makers in an increasingly saturated market.

Apple's iPhone 6 models have proved popular

While it sold more units, Samsung sold them for less.

The firm said: "The average selling price of smartphones declined due to an increased share of middle- to low-end smartphone sales and price reductions of existing smartphone models."

The latest edition of Samsung's previously all-conquering Galaxy S smartphone met with a lukewarm response on its launch in April. 

It was also forced to introduce a new edition of the oversized smartphone Galaxy Note earlier than scheduled in September as the latest iPhone6 from US rival Apple enjoyed better-than-expected demand.

And in the low-to-mid range smartphone segment, Samsung has faced a growing challenge from Chinese firms in key emerging markets including China. 

Lenovo is among Samsung's Chinese competitors

Samsung saw its leading share in the global smartphone market slip to 25.2% in the second quarter of this year from 33.3% a year ago.

At the same time, Chinese firms Huawei and Lenovo saw their combined share grow from 9% to 12.3%.

Kim Hyun-Joon, senior vice president of Samsung's mobile unit, vowed to dramatically reshuffle product line-up to "actively respond" to the needs of the mid and low-end markets.

"Our mobile unit is going through a temporary difficulty, but we are trying to maintain a steady growth by ... fundamentally changing our business structure," he said.

The company promised earlier this month it would soon release a new range of smartphones with "innovative designs."

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Energy Crunch: Plan To Keep The Lights On

National Grid has warned the UK may be forced to resort to emergency measures to keep the lights on if bad weather strikes this winter, with households picking up the bill.

Its annual Winter Outlook report looking at the capacity margin - the gap between total electricity generating capacity and peak demand - was compiled as the country misses output from five key power stations following fires or safety checks.

The network operator put the figure at just 4.1% - its narrowest since 2006/7 - and said that margin of spare capacity could fall further to just 2.8% if weather conditions took a turn for the worse.

Such a scenario would mean the grid failing to meet its "basic reserve requirement" of spare capacity needed to run the system, forcing it to adopt contingencies such as paying factories to shut down and supplying reserves from mothballed power stations.

Power station fires have hit electricity output

National Grid said it was finalising contracts with three sites, Littlebrook in Kent, Rye House in Hertfordshire and Peterhead in Aberdeenshire, to provide reserve capacity that would widen the margin by 2%.

Having to use these power stations would add £1 to the average family bill, the operator confirmed, as it would cost £25m.

1/5

1. Gallery: Blackout Britain: 1970s Power Cuts

   Paul Caldecott, six, was forced to stay at school because his parents couldn't pick him up

2. Four women work in a Slumberdown office in Bond Street, London, during a miners' strike in 1973

3. A woman breastfeeding her baby during a blackout at St Andrews Hospital, Dollis Hill, northwest London

4. Working for Slumberdown had its advantages, as these women could wrap themselves in quilts to keep warm during a blackout

5. Customers and staff at an HMV shop in Oxford Street, London, during a power cut in December 1973

The prospect of an electricity crunch has risen since the summer, when a key measure of risk, called Loss of Load Expectation (Lole) was forecast at 0.5 hours for the coming winter.

Since then the Lole risk measure has risen to 1.6 hours, factoring in the fires that have caused the permanent shutdown of Ironbridge in Shropshire and the temporary closure of Ferrybridge in West Yorkshire.

A power station in Barking will also close, while a planned return to service for four EDF nuclear reactors at Heysham in Morecambe, Lancashire, and at Hartlepool, will see them return at only 75% capacity.

A fire earlier this month put half of operations out of action at Didcot B power station in Oxfordshire - which has capacity to supply a million homes.

The part of the site affected by the blaze is expected to return to around 50% service this week.

The Grid report said gas supplies were well ahead of expected peak demand but warned of the uncertain impact of tensions over Ukraine, which could strangle availability from the continent.

Video: Warning Expected Over Blackout Risk

The report warned that in the "extreme scenario" of cold winter conditions and Russia cutting off supplies, the UK may have to arrange factory shutdowns as well and rely on expensive imports from markets further afield such as Asia and South America.

Cordi O'Hara, director of market operation, said: "The electricity margin has decreased compared to recent years, but the outlook remains manageable and well within the reliability standard set by Government.

"As system operator, we have taken the sensible precaution to secure additional tools to bolster our response to tighter margins."

Energy Minister Matt Hancock said lights would stay on across the country.

He told BBC Radio 4: "There will be secure energy supplies this winter. There will be no power cuts to householders."

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Facebook Shares Slip On Cost Growth Warning

A leap in mobile advertising revenue helped Facebook almost double profits in its third quarter but shares fell 10% after it warned on higher costs ahead.

The social network's figures, which confirmed profits at $801m (£496m) and a 59% jump in total revenues to $3.2bn (£1.98bn) over the three months, were well above analysts' expectations.

Mobile advertising revenue made up 66% of total ad revenue in the period - indicating Facebook is succeeding in steering advertisers to its mobile platform at a time when most of its users are using Facebook on phones and tablets.

Though Facebook's results surpassed expectations, investors sent the company's stock down by almost 11% in after-hours trading - spooked by comments during a conference call that 2015 would be a "significant" year for expenses.

Facebook said it expected costs to grow by 55% to 75% next year as it ramps up investment in its workforce, grows existing products and invests in new areas such as WhatsApp, Oculus and video.

This year, Facebook spent $22bn in cash and stock to buy the messaging service WhatsApp and about $2bn on virtual reality company Oculus.

It also re-launched Atlas, a tool for marketers to better target people across "devices, platforms and publishers" and to measure how well the ads work.

Facebook had 1.35 billion average monthly users as of 30 September, an increase of 14% from a year earlier.

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Next Expects £25m Profit Hit From Warm Autumn

Next has reduced its full-year profits' guidance by £25m - a result of unseasonably warm weather in the past two months.

The UK's second-largest clothing retailer, which had warned one month ago that a lack of typically autumnal conditions in October would result in lower profit expectations, said third quarter sales still grew by 5.4%.

But the growth was almost half the 10% it had previously forecast as demand for winter wear remained weak, signalling troubles for the wider sector in the run-up to the Christmas trading season as Next has largely outperformed its rivals for a decade.

Official figures recently showed UK retail sales fell more than expected last month, with clothing demand hindered by the driest
September since records began in 1910.

October is currently on track to be one of the warmest on record.

Next, which trades from over 500 stores in Britain and Ireland, about 200 stores overseas and through its Directory internet and catalogue business, said: "Whilst a cool August meant that the season started well, this was more than offset by much weaker sales in September and October.

"Given the volatility of current trading and the very strong fourth quarter performance last year, we have moderated our expectations for the fourth quarter this year.

"We are now budgeting for full price sales in the final quarter to be within a range of -2% to +4%, with our central profit forecast for the year based on final quarter sales of +1%.

"We have reduced our central profit guidance by 3% to £770m (previously £795m).

The forecast meant that much depended on the Christmas shopping season - crucial to all retailers.

Next said it would update investors on its performance on 30 December.

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Twitter Grows Users But Shares Slip 10%

Twitter's latest results showed progress in efforts to broaden its appeal and revenues but investors were not impressed.

The social network's stock slipped more than 10% in after-hours trading on worries fourth quarter sales may miss targets.

The San Francisco-based company has focused on trying to increase its user base amid concerns it doesn't hold mass appeal in the way that the much-larger Facebook does.

Its user base grew 23% to 284 million monthly active users - a performance seen as progress by analysts - but Twitter still posted a deepening loss of $175m (£109m) in its third quarter.

That compares with a loss of $64.6m (£40m) a year earlier when it was still a private company.

Revenue more than doubled to $361m (£224m).

The focus for investors was its revenue forecasts.

The company said it expected fourth-quarter sales to be in a range of $440m-$450m.

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