Virgin Money first-half profits shrink, Next backs full-year guidance

London open

The FTSE 100 is expected to open 28 points lower on Thursday, having closed up 0.2% on Wednesday at 77,88.37.

Stocks to watch

Challenger bank Virgin Money posted lower first-half profit due to an increase in impairment charges for bad debts and higher investment costs. The bank posted pre-tax profits of £236m compared with £315m a year earlier. Provision for bad debt surged to £144m from £21m, as Virgin updated economic assumptions with some signs of a modest increase in arrears on customer credit cards.

Retailer Next backed its full-year guidance on Thursday as it posted a smaller-than-expected drop in first-quarter sales. In the 13 weeks to 29 April, total full-price sales edged down 0.7%, but Next noted that this was moderately ahead of its guidance for a 2% decline. The company maintained its guidance for full-year pre-tax profit of £795m and earnings per share of 501.9p. It also continues to expect a 1.5% fall in full-year sales.

Newspaper round-up

The chief executive of the London Stock Exchange has called for the bosses of UK companies to be paid more in order to match their counterparts in the US. Julia Hoggett argued that British companies were finding it difficult to attract and retain executives because they offered smaller pay packages than rivals in the US. – Guardian

The City regulator has contacted Capita’s corporate clients urging them to ascertain whether their customers’ data has been compromised after a cyber-attack on the outsourcer in March. The Financial Conduct Authority said it had written to firms it regulates and which outsource work to Capita to ensure they are “fully engaged” in assessing the fallout from the data breach. – Guardian

Airbnb will encourage people to stay in strangers' spare rooms in a return to its “couch-surfing” origins, amid rising concerns about the cost of holiday accommodation. The company said its 1m single-room listings would now be shown in a dedicated section on its app. Privacy information, such as whether the door locks and if it has its own bathroom, will also be added to listings. – Telegraph

Shareholders have staged a revolt against Unilever’s pay for bosses over concerns about potentially excessive rewards. The remuneration deal handed Alan Jope, 59, the chief executive, €5.4 million, including a €3.7 million bonus. Graeme Pitkethly, 56, the finance chief, received €3.8 million, including a €2.58 million bonus. – The Times

The Financial Conduct Authority has said it will change its approach to whistleblowers after a survey revealed widespread dissatisfaction among those who alert the regulator to wrongdoing. The organisation acknowledged problems including whistleblowers not “feeling heard”; a lack of dialogue with them, which prompts doubts about the chances of a proper investigation; and frustration over a shortage of updates, sometimes interpreted as delay and inaction. – The Times

US close

Stocks on Wall Street closed in the red on Wednesday, after the Federal Reserve announced a 25-basis point hike to interest rates in its latest decision.

The Dow Jones Industrial Average dropped 0.8% to close at 33,414.24 points, while the S&P 500 index declined 0.7% to 4,090.75 points, and the tech-heavy Nasdaq Composite retreated 0.46% to end the session at 12,025.33 points.

Market participants had been broadly expecting the Fed’s decision to raise interest rates, although the central bank also hinted that a pause in its tightening cycle could be on the horizon.

In currency markets, the dollar lost ground against both sterling and the euro, weakening 0.03% against both currencies to last trade at 79.57p and 90.37 euro cents, respectively.

Against the yen, the greenback dropped 0.05% to change hands at JPY 134.64.