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04/8/2020
12:08 | freddie01: Are further falls ahead for the Lloyds, Barclays and HSBC share prices?
Could there be more difficulties for the share prices of Lloyds Banking Group PLC (LON:LLOY) (LLOY.L), Barclays PLC (LON:BARC) (BARC.L) and HSBC Holdings plc (LON:HSBA) (HSBA.L)?
The share prices of Lloyds Banking Group PLC (LON:LLOY) (LLOY.L), Barclays PLC (LON:BARC) (BARC.L) and HSBC Holdings plc (LON:HSBA) (HSBA.L) are a very long way off their levels from six months ago.
For instance, the Lloyds share price is down from 57p six months ago to around 27p today. The bank’s focus on the UK in a period where Brexit could dominate investor outlooks may hold its investment performance back to some extent in the short run.
Likewise, Barclays and HSBC’s share prices could fall further as the economic challenges posed by Covid-19 weigh on global GDP growth. In Barclays’ case, it has benefitted from its investment banking performance since the start of the year, although its share price is still down by 40% since February.
HSBC, meanwhile, is down 41% in the last six months. It intends to ramp-up its cost-cutting strategy to improve efficiency. I think it could benefit from greater geographic diversity than Lloyds, with the long-term prospects for many Asian economies being stronger than for the UK.
To my mind, all three FTSE 100 banks face further stock price volatility in future months. However, I think that they have been able to strengthen their financial positions over the past few years so that they are better equipped to survive a period of slow, or even negative, economic growth.
Further, I feel that they have sound strategies to return to growth in the long run. For instance, Lloyds has invested in digital growth, Barclays has a diverse business model, while growing disposable incomes in Asia could push HSBC’s profitability higher.
For now, though, I’m expecting more share price volatility in the short run. Lloyds, Barclays and HSBC could continue to be unpopular stocks with investors to my mind due simply to a difficult economic outlook. Over the long run, I feel they offer recovery potential because of their strategies, but they could be slow burners as a result of weak investor sentiment currently facing the sector.
hTTps://investomania.co.uk/2020/08/are-further-falls-ahead-for-the-lloyds-barclays-and-hsbc-share-prices/
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02/8/2020
07:36 | freddie01: Lloyds Banking facing near perfect storm of challenges, say analysts
Analysts at Shore Capital, however, encouraged investors to look through this disappointing set of results and “reflect on the strength of the balance sheet and scope for profits to improve materially in future as the economy recovers”
Lloyds Banking Group PLC (LON:LLOY) is facing a near “perfect storm” of challenges, according to analysts, and glimmers of hope are “few and far between”.
Heading into the results, the consensus forecast had been for a negligible loss of £13mln, having announced an adjusted £558mln profit in the first quarter.
But Britain’s biggest mortgage lender swung to an underlying loss before tax of £839mln in the first half of the year, which was worse than investors and the City expected.
“This is primarily due to much higher than expected impairments as the group has adjusted its macro-economic assumptions to reflect a more challenging outlook,” said analyst Gary Greenwood at Shore Capital, with Lloyds lifting bad loan impairment charges by £2.4bn to £3.8bn.
A statutory loss before tax of £676mln, which compared to expectations of a £31mln loss, saw a further drag from £70m of restructuring charges and £233mln of gains related to market volatility and other items.
Greenwood added that Lloyds earlier assumptions “seemed optimistic” and pointed out that much of the additional provision obtain transitional relief “so there is a delayed impact to capital”.
Richard Hunter, head of markets at Interactive Investor, said: “The current environment is proving to be a hard slog for Lloyds, and the difficulties are unfortunately set to continue.
“Since its last update, Lloyds estimates that the economic outlook has deteriorated further, partly because of the immediate impact of the pandemic in its second quarter, but also due to the likelihood of significantly higher defaults on loans in the next few months as various government support schemes subside.
“The wider challenges are exacerbated given the bank’s perceived status as a barometer of the UK economy. With GDP growth remaining under pressure and the unemployment rate potentially yet to peak, the uncertainty around Brexit negotiations takes on additional significance given an already faltering economy.”
More cautious than Barclays
UBS analyst Jason Napier said Lloyds’ new guidance “looks cautious when compared with Barclays”, which released results a day earlier.
FTSE 100 rival Barclays had issued what felt like a cautious outlook for the second half of the year, stressing its dependence on a strong recovery in developed economies such as the US and the UK, where unemployment remains a major concern.
Barclays said the second half of the year is expected to continue to be challenging, but said impairments were expected to be below those in the first half, which were increased by £1.6bn in the second quarter to £3.7bn, and that its investment banking arm was “well positioned”.
Lloyds, on the other hand, which does not have an investment bank, said investors should not expect a near term recovery for income.
Like Barclays, it expects loan losses will also be less than the first half, guiding to a total of £4.5bn-£5.5bn, with stable net interest margin, costs below £7.6bn and risk-weighted assets flat to “slightly up” on the first half.
“Lloyds is, by and large, a bread and butter bank,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
“It takes deposits and makes loans – cross selling wealth management, pension and insurance products on the side. Unfortunately it’s the core lending business which has been hit hardest by the current crisis.”
With lower Bank of England interest rates squeezing loan profitability, together with a massive shift in the loan book away from profitable consumer lending and towards less lucrative commercial lending through government support schemes, Lloyds has little elbow room.
“While some of the headwinds elsewhere in the bank, such as insurance sales, look set to diminish as lockdowns come to an end, and consumer borrowing should pick up too, the long term challenges of low interest rates and anaemic economic growth are probably here to stay for some time,” Hyett said.
“These are hardly ideal conditions for Lloyds, in fact they’re pretty close to the perfect storm.”
Glimmers of hope?
Hunter said any glimmers of hope “are unfortunately few and far between” - pointing to the increased adoption of digital banking during lockdown plus the combined effort by the banks, government and Bank of England to encourage economic recovery, “and consign their chequered reputation to the history books” following their ignominious role in the global financial crisis, with banks are positioning themselves to be part of the solution rather than a large part of the problem.
Lloyds itself has lent around £9bn through government-backed lending schemes, giving an additional 1.1mln payment holidays and 33,000 capital repayment holidays standing alongside.
While the bank has a comfortable CET1 capital ratio of 14.6% and an as-yet unused PPI provision of £745mln, which could be released in part or in full after all claims have been settled, Hunter the results make for difficult reading.
With an 8% fall to 26p on Thursday, Lloyds shares are down 59% so far in 2020, compared to a 45% fall for other mainstream UK banks and a 22% drop for the wider FTSE 100.
This is indicative of the market trying to price in the sheer scale of the challenge which Lloyds faces, says Hunter.
“Reasons for optimism on shorter-term prospects, it appears, will need to wait for another day. In the meantime, it remains to be seen whether the market consensus of the shares as a buy, and indeed having recently moved to being the preferred play in the sector, will come under some serious review.”
Shore Cap's Greenwood offered a more optimistic view, suggesting the second quarter “represents an awful set of results, [but] we think this is could be a nadir in terms of quarterly profitability (excluding bank levy) with economic activity starting to improve and significant forward-looking provisions already set aside”.
At the previous day's closing price of 28p, Lloyds traded on 0.54 times trailing tangible net asset value per share of 51.6p.
Greenwood said he sees fair value at 43p, offering a potential 54% upside.
“We would encourage investors to look through a very disappointing set of Q2 results and reflect on the strength of the balance sheet and scope for profits to improve materially in future as the economy recovers.
“We think much of the bad news is already in the numbers and, more importantly, the share price.”
[...]
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23/7/2020
16:30 | cobourg1: As I remember the bank regulator asked the banks to forgo paying dividends and bonuses for the rest of the year in the National Interest to help the economy recover. Had they not done so voluntarily they would have been forced to I imagine.
Because the economy could be in turmoil at the end of the year due to Brexit and other factors, paying dividends whilst trying to collect bounce back loans, dealing with mortgage arrears, etc, may not go down too well with the government even then. At this stage we just don't know. Could be well into 2021 before we see any dividends. I am hoping that something will be said next Thursday but it may still be too early.
I doubt that the provisions for bad debts will be as great as the market is apparently pricing in either. A lot of the loans have the government standing behind them and Lloyds is in the fortunate position of being the UK's largest mortgage provider. If a lot of people are in trouble due to "An act of God" and government policy, that same government simply can't stand by whilst a large number of its citizens are thrown out on the streets. So more government backup in one form or another is possible IMO. I think the banks will be asked to go easy on repossessions at the very least.
As soon as the market gets a real handle on the situation at Lloyds (next Thursday?) there could be something of a re-rate.
The share price looks grim at the moment but nothing lasts forever. Dividends or not, as I see it, Lloyds should be at least 35-40p on assets alone, never mind dividends, earnings or growth prospects. The share price looks as though Lloyds is going bust, but it is very definitely not going bust.
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07/7/2020
07:38 | freddie01: Britain's unluckiest bank boss? Brexit and coronavirus hammered Lloyds shares - but analysts believe Horta-Osorio turned the 'basket case' around
Horta-Osorio, who has been in the top job at Lloyds since March 2011
Highly-paid long-term boss has helped steer bank through turbulence
But, share price performance remains poor and dividends are on hold
Antonio Horta-Osorio, the boss of Lloyds Banking Group, is stepping down from his role as chief executive at the lender by June next year.
Horta-Osorio, who has been in the top job at Lloyds since March 2011, said his decision to quit the bank had left him feeling 'mixed emotions.'
He has overseen the bank through some torrid times, including the lender’s transition back into private hands after its £21billion state bailout during the global financial crash, the HBOS fraud debacle, the Brexit vote and now, Covid-19.
Yet, Lloyds' FTSE-100 listed shares are trading at barely half where they were when he took the job in the aftermath of the financial crisis that had seen an arranged marriage between Lloyds and Halifax and the bank's value hammered.
Despite the shares slump in recent years, many City insiders believe Horta-Osorio can bask in the knowledge that he oversaw Lloyds' return to a profit and the creation of a leaner, more cost-effective bank, which also included the spin-off of TSB.
And that during a period of rock-bottom interest rates and the persisatent burden of the PPI scandal.
Russ Mould, investment director at AJ Bell, thinks Horta-Osorio will be looking for a 'grandstand finish', including potentially a return to dividend payouts for shareholders before his tenure ends.
Lloyds, together with other big-name banks including Barclays, HSBC and RBS, suspended dividend payments for the entirety of this year at the Bank of Englan's request in March.
Shares in Lloyds have dropped around 50 per cent so far this year, while HSBC and Barclays have fallen by around 35 per cent respectively. Meanwhile, shares in RBS, which is majority state-owned, have also fallen by around half this year, wiping £15billion off its market capitalisation.
Today, Lloyds' share price is currently up just over 1 per cent to 31.34p, while in May 2017 when the Government finally offloaded its remaining stake in Lloyds meaning it returned fully to private hands, it was over the 70p mark. Further back in May 2015, the shares were trading closer to the 90p mark and in 2008 before the crash, stood not far below 300p.
Russ Mould thinks Lloyds' dismal share price price performance over the last few years cannot all be laid squarely at the management team's door.
Mould said: 'The UK's modest economic growth record in the wake of the financial crisis has not helped and the bank has also been hampered by record-low interest rates and Quantitative Easing programmes.
'While they have been designed by the Bank of England to stimulate borrowing and growth, they have made it harder for Lloyds to make a risk-adjusted return on its loan book, and net interest margins have been consistently under pressure.
'The regulatory call to cancel dividend payments in calendar 2020 also kicked away a big part of the investment case for Lloyds' shares as the pandemic began to make its presence felt.'
Other analysts agree that Horta-Osorio's tenure has been largely dominated and steered by external events beyond his control.
Nicolas Ziegelasch, an analyst at Killik & Co, said: 'Since joining the bank in 2011, António Horta-Osório has presided over a challenging period for Lloyds, which included a sluggish UK economy, low interest rates, and significant PPI costs.
'Whilst the macroeconomic impact of Brexit and COVID-19 may persist in the medium term, looking further out we continue to like Lloyds as a leader in UK banking that can generate excess capital over time.'
Meanwhile, Michael Hewson, chief analyst at CMC Markets UK, said Horta-Osorio had managed to steer the lender from being a 'virtual basket case' after it was forced to swallow HBOS in 2008 to a 'strong and stable performer, whose share price performance over the past ten years, doesn’t do justice to the job done.'
Analysts at Goodbody UK said: 'Despite the multiple external headwinds that the bank has faced during Horta-Osorio’s tenure, he has delivered a successful strategy overhaul as well as substantive transformation from an organisational efficiency perspective.
'While he will be sorely missed, it is not surprising that he is planning to move on after what will be 10 years at the helm come 2021. Indeed, speculation about where he will land next (he is just 56 years of age) will surely include the potential Santander role – as well as Unicredit were Jean-Pierre Mustier to leave for pastures new at some stage.'
In 2018, Lloyds reported record profits of £5.3billion, and while 2019 was disappointing largely due to PPI provisions, the bank has managed to return to some semblance of health, shake off the dead hand of government support, and a final PPI bill of over £20billion.
In April this year, Lloyds reported a 95 per cent drop in first quarter profits as it counts the cost of the pandemic to the economy.
hTTps://www.thisismoney.co.uk/money/markets/article-8493507/Lloyds-boss-Antonio-Horta-Osorio-turned-basket-case-bank-around.html
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02/7/2020
21:13 | stonedyou: Is the Lloyds share price undervalued?
Could the Lloyds Banking Group PLC (LON:LLOY) (LLOY.L) share price deliver improving performance from its current level?
The Lloyds Banking Group PLC (LON:LLOY) (LLOY.L) share price has so far failed to deliver improved performance as the FTSE 100 (INDEXFTSE:UKX) has made gains in the past couple of months.
For instance, the bank’s shares are 5% down over the past three months. The index has risen 10% in that time.
I think that Lloyds and other banks face a difficult set of circumstances. The UK economy is likely to experience a challenging period in my view that could weaken profitability across the industry.
https://investomania.co.uk/2020/06/is-the-lloyds-share-price-undervalued/
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29/6/2020
08:05 | freddie01: Is the Lloyds share price undervalued?
Could the Lloyds Banking Group PLC (LON:LLOY) (LLOY.L) share price deliver improving performance from its current level?
The Lloyds Banking Group PLC (LON:LLOY) (LLOY.L) share price has so far failed to deliver improved performance as the FTSE 100 (INDEXFTSE:UKX) has made gains in the past couple of months.
For instance, the bank’s shares are 5% down over the past three months. The index has risen 10% in that time.
I think that Lloyds and other banks face a difficult set of circumstances. The UK economy is likely to experience a challenging period in my view that could weaken profitability across the industry.
As well as the prospect of payment defaults and lower demand for new loans, historic low interest rates may be required for some time to provide the economy with a boost. That’s not just because of the potential impact of coronavirus, but also due to the end of the Brexit transition period now being around six months away.
As a UK-focused bank, Lloyds’ share price could be hurt more than its peers by Brexit in my view. However, I feel that this is a known risk, and may have been priced in to some extent.
In terms of investor sentiment, a lack of dividends and a difficult economic outlook mean that it’s difficult to find an obvious catalyst for the stock in the short run.
I do think that Lloyds has made better progress than most UK banks in cutting costs and embracing a digital economy. This requires large investment, which the company seems to be capable of making due in part to the work it has done in becoming more efficient.
Therefore, over the long run I’m optimistic about its potential to produce improving share price performance. It will require an improving economic performance to achieve this, to my mind. Or, at least the prospect of an improving outlook for the banking sector.
How long this will take is unknown, and in the meantime I’m not expecting a fast recovery for the Lloyds share price. Though, over the long run I feel it is could offer good value for money at the moment versus its peers and the FTSE 100.
hTTps://investomania.co.uk/2020/06/is-the-lloyds-share-price-undervalued/
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14/6/2020
11:30 | xtrmntr: The Lloyds (LSE: LLOY) share price showed little inclination to join in the FTSE 100 rally through April and May. However, that changed last week. It soared 19%, flying far ahead of the Footsie's 6.7% rise.Closing on Friday at 35.55p, and with further gains to 37.5p today (as I write), could the big recovery finally be underway for the much-battered Lloyds share price?Buy low and sell highFor stocks in highly cyclical sectors, such as banking, I believe a value-investing approach is the way to go. That's to say, buy low and sell high. As opposed to buy and hold forever. If you look at a multi-decade chart of the Lloyds share price, you'll see how a long-term, buy-and-hold strategy hasn't done investors any favours.Furthermore, many get sucked into buying cyclical stocks at the worst possible time. Namely, when profits are booming, price-to-earnings (P/E) ratios are low, and dividend yields are generous. This was the profile of Lloyds in recent years.Some of us at the Motley Fool - admittedly a minority - were bearish on the Black Horse. They cautioned readers that, in the case of cyclical stocks, high profits, low P/Es and big dividends are very much not indicators of an unmissable bargain with a wide margin of safety. It may seem counter-intuitive, but the best - and safest - time to buy cyclicals is when profits are crushed, P/Es are high, and dividends often slashed or suspended.At such times, you can pick up shares at low prices and, subsequently, sell high in the cyclical recovery.Positive indicators for the Lloyds share priceOne of my fellow Motley Bears on Lloyds, Kevin Godbold, judged last week that the time has come to make the value play on the Black Horse. Noting that "the valuation indicators have lined up," Kevin pointed to:A massive profit fall forecast for 2020A forward P/E of almost 19 (versus the single-digit P/E of recent years)A price-to-tangible net asset value (P/TNAV) of just below 0.5 (another good indicator of cyclical-bottom value)An encouraging "consolidation on the share price chart"I agree with Kevin that Lloyds' valuation indicators look far more promising today than they have for the last few years. I don't do the share-price-chart stuff myself, but I'd add the suspension of Lloyds' dividend (0% yield) to the list of positive indicators.Am I keen on the Lloyds share price?Alongside the positive indicators, Kevin is encouraged by the situation on the ground. He's optimistic about Covid-19 fading quickly, the lifting of restrictions on businesses and consumers, and an earnings recovery for many companies in 2021.He may have timed the cyclical value play perfectly. However, I'm less sanguine on the outlook for the V-shaped recovery the market seems to be increasingly pricing. Even if we don't see a second wave of the virus, I think there's a high risk things could get a lot worse for the economy, and Lloyds' business and share price.Lloyds' last reported TNAV was 57.4p per share. With the shares currently at 37p, the P/TNAV is 0.65. I'd want a much bigger discount than this to encourage me to play the cyclical recovery card.As such, I'm continuing to avoid Lloyds at this stage. But I'd be very interested should we get a P/TNAV down to around 0.35 - meaning a share price of around 20p.As it is, I think there are more promising stocks in the market.
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16/2/2020
13:16 | xtrmntr: From Motley Fool.Over five years, the share price of Lloyds Banking Group (LSE: LLOY) has fallen by 24%. Yet there's much to like about the bank, from its dividend yield and potential for growth, to its sector-leading cost control and its evolving business model.Opportunities for growthOne of the big attractions of the shares has to be the dividend yield, which has leapt to 5.6% since the bank reintroduced paying a dividend in 2014. Dividend growth has tended to be consistent and with earnings greater than the dividend payout, there's room for it to keep on growing in the years to come.Its move into wealth management in a link with Schroders is also a possible catalyst for the struggling share price. That business has only recently been launched so there's plenty of opportunity for it to make an impact in future financial results, which could boost the share price.Lloyds owns a majority of the venture and the pricing structure has been designed to undercut rivals a sign that Lloyds and Schroders may be seeking to take a large market share. Other banks are also moving into the space, showing just how attractive and profitable wealth management is as a business.What makes Lloyds greatFrom any investor's point of view, a tight control on costs is a good thing. While HSBC and some other FTSE 100 businesses are often seen to be unwieldy, Lloyds, on the other hand, has a tight grip on its expense account.The cost/income ratio, is under 46% (compared to nearly 48% previously), which is sector-beating and extremely healthy. By closing branches, as it has been doing for years, and becoming increasingly digital, Lloyds can move to reduce costs even further and reward shareholders with higher profits and potentially share buybacks or special dividends.Factors outside of its controlThe external environment also seems to be improving for Lloyds. For now, there's a little more certainty around Brexit in the UK. And the deadline for PPI has now passed, meaning PPI provisions in future financial results should disappear.The UK economy which Lloyds is very much tied to is doing better. Figures out just last week showed the dominant services sector of the economy grew, and by more than was expected. It reached its highest rate since September 2018.Lloyds is looking in good shape, but the share price isn't reflecting this. I think this is because of an ongoing fear about Lloyds' reliance on the UK economy and the ongoing questions around Brexit. But the signs are that the economy is improving and analysts at Jefferies International think the shares can reach 78p a near 37% increase from where they are now. As long as there are no nasty Brexit shocks, I think the Lloyds share price could smash the FTSE 100 this year because it has plenty going for it.A top income share with a juicy 5% forecast dividend yieldIncome-seeking investors like you won't want to miss out on this timely opportunity...Here's your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this out-of-favour business that's throwing off gobs of cash!But here's the really exciting part...Our analyst is predicting there's potential for this company's market value to soar by at least 50% over the next few years...He even anticipates that the dividend could grow nicely too - as this much-loved household brand continues to rapidly expand its online business - and reinvent itself for the digital age.With shares still changing hands at what he believes is an undemanding valuation, now could be the ideal time for patient, income-seeking investors to start building a long-term holding.
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19/1/2020
11:27 | xtrmntr: My colleague Royston Wild has examined the perils that might face Royal Bank of Scotland in the event of a post-Brexit slowdown, and I'd say he's pretty much on the money all round.The same is true for Lloyds Banking Group (LSE: LLOY). Despite a couple of blips upwards, Lloyds shares are down 22% over the past five years, and now find themselves languishing on a prospective P/E multiple of only a little over eight.The revelation by the Office for National Statistics (ONS) that the UK economy shrank by 0.3% in November is not a good sign as we head into 2020. Had it been just a rogue month, I wouldn't be concerned, but the ONS went on to say the economy is continuing to slow over the long term.Talk of an interest rate cut is adding to the pessimism, as is Bank of England (BoE) governor Mark Carney's suggestion that we might need some near-term stimulus.BrexitLloyds has no real European business to lose after having refocused itself as a UK-centric retail bank. But the saving from that one risk opens it up very much to the risks from the UK economy. While a bank with international operations can more easily withstand a downturn in an individual economy, Lloyds could be badly hurt by a UK slump.The bank has progressed well since the financial crisis, with a much healthier balance sheet and the ability to easily pass the BoE's stress tests - it came through the last one in December nicely ahead of the required benchmarks. But it's really open to a slowdown in UK demand, weakness in the mortgage market, and any accumulation of bad debts.Yield and coverThe Lloyds dividend is expected to yield 5.6% this year, and it would be covered 2.1 times by earnings - and I'm happily pocketing my dividend cash each year.But the rapid earnings growth of recent years is set to come to an end with a couple of flat years, though analysts are expecting the progressive dividend to keep growing. That would lift the yield to 6.1% by 2021, but would drop cover to 1.9 times - not a huge worry, but I don't like to see things like dividend cover going in the wrong direction.Still, saying all of that, I still think Lloyds is a buy at today's valuation... providing we don't crash out of the EU with no trade deal.Deal or no-deal?Will Boris go back on his word and agree an extension if 11 months isn't long enough (which it really doesn't seem to be)? We really do need a good trade deal to avoid an economic disaster, and that's the thing I think could give Lloyds a boost.I see much of the Brexit pessimism already built into the Lloyds share price, and I reckon that P/E of eight is way too low for a post-EU trade deal situation. Should we get a deal, I can see a P/E of 10 to 12 coming soon after, suggesting a share price of between 70p and 84p.Dividend yields would be around 4-5%, which seems about right, long term, for a bank.
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31/10/2019
18:12 | jordaggy: City Index...
Last-minute PPI sting won’t be fatal for pay-out plans
As it was for Lloyds Banking Group’s main rivals, the tail of the PPI saga had a sharper sting than expected. Charges related to remediation costs for the two-decade long insurance mis-selling issue amounted to £1.80bn in Q3, against £1.67bn expected by analysts. The harsher than forecast hit partly reflects a last-minute gush of compensation claims that brought Lloyds' buyback plans to an abrupt halt in September.
The group is arguably the best-defended and best-positioned bank focused on the UK for revenues. Yet it is just as hemmed in by economic challenges as peers. Consequently, substantially accelerated growth remains a distant goal. Shareholders have thereby been more focused on capital growth and prospective returns to assess their investment in recent years. So even the hint of a risk to expected higher dividends and share buybacks can be a big deal, particularly with PPI impact also consuming profit targets for the year. (The trading statement didn’t update the bank’s view on its Return on Tangible Equity goal for 2019).
Still, such concerns have been reflected in contained fashion by share price moves in Lloyds (LON:LLOY) stock on Thursday. It retreated by somewhat less than 3% at worst and curbed the loss to about 2% by late morning. Despite Q3 upsets, the buffer of capital Lloyds is obliged to hold as a ratio of total assets improved by a satisfactory extent in Q3. Common Equity Tier 1 Capital stood at 13.5% by quarter end, “in line with the board’s target”. As such, management emits no change to dividend plans and “will give due consideration to the return of any surplus capital at the year end.” Meanwhile, “never say never”, the advice on PPI offered by Lloyds’ previous CEO, remains wise, though post-deadline, claim volumes will continue to decline.
Q3 2019 is yet another quarter Lloyds (LON:LLOY) investors would prefer to forget and that’s reflected in a ten percentage-point share price drop over the last ten days. Still, a firm net interest margin emerged as one of the few high points of the quarter at 2.88% vs. 2.87% expected. Cost control also remained in hand. Lloyds is not compounding past mistakes with new missteps.
Chart points
Over-arching pressure on the shares that could erode more of LLOY’s remaining 9% rise this year should continue, according to technical analysis. The decline since May 2015 is now well established: see the well-corroborated falling trend line since then that was last tagged in mid-October. The 200-week moving average reinforces trend line resistance given that mid-October also featured another failed attempt to get above the 200-WMA, the latest of many rejections in recent years. So long as overhead structures remain intact, objectives will continue to point towards December 2018’s base at 49.53p, and 2019’s 48.2p low from August. These floors are in within reasonable range of June 2016’s post-referendum lows as deep as 46p.
Lloyds Banking Group PLC (LON:LLOY). CFD – Weekly
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PLUS1
