Lloyds Banking Share Discussion Threads

[bargainbob] 08/1/2020 12:08

Jacko , i suspect the car dealers will be equally exposed too. I hope the hounds of hell go after the Arthur Daley types .

[jacko07] 08/1/2020 11:12

PCP car loan mis-selling is the next hurdle, how much is Lloyds exposed.

[zzxqry] 08/1/2020 10:59

hazelst
10 Oct '18 - 15:03 - 108046 of 108054 0 0 0
sb888 could be a useful investment tool as he gets it wrong EVERY time.



mrjellyfish
12 Oct '18 - 09:25 - 108544 of 108571 0 2 0
Elcapital 2018.I told you to die when you were sb888,now I'm telling you now you vile scum !

[poikka] 08/1/2020 10:57

Madness innit: banks borrow at x% and lend at x+(y-z)%. If they can't make a living for investors....

[bargainbob] 08/1/2020 10:09

Owain Bennallack, Co-Advisor -- Motley Fool Share Advisor
Dear fellow Fool Stonedyou,

A few years ago, the clouds seemed to be abating for British banks like Lloyds Banking Group (LSE: LLOY), Barclays (LSE: BARC), HSBC (LSE: HSBA), and even beleaguered Royal Bank of Scotland (LSE: RBS).

The extremes of the financial crisis had passed. Post-crisis regulation was tougher, but it seemed possible investors would welcome the extra scrutiny and be more confident about owning banks. The Eurozone crisis had been and gone.

Sure, Payment Protection Insurance (PPI) claims were taking a toll on profits – but that surely couldn't last much longer? Soon stronger balance sheets would enable the banks to grow their dividends, and even buy back shares.

I'd watched a similar recovery already in US bank stocks. It seemed only a matter of time before the same thing happened here. I even recommended banks in our Motley Fool Share Advisor service.

Sadly, those were far from my best recommendations!

Fate had other ideas for investors in UK banks.


The banking blues

Starting in late 2015 it seemed one headwind after another thwarted any advance in bank share prices. Some of these reflected real business issues, but others were about sentiment. Either way, the recovery stalled.

There was Brexit, for starters. Starting with the Referendum campaign, the four-year saga stoked uncertainty and dampened economic activity – Britain went from the fastest-growing G7 nation to the slowest, and property wobbled. There's also been angst about future financial regulation and market access. None of this is good for banks.

Then there are the UK's persistently low interest rates. These depress the net interest margin for banks, making it harder to cream a profit from matching borrowings with savings. A few years ago we seemed closer to the end of the low interest rate era. But if you have cash savings you'll know how that went!

Individual banks have their own issues, too. Barclays and HSBC were hit by scandals and fines over historical money laundering and tax evasion. Lloyds found it had inherited a fraud problem when it picked up Bank of Scotland in the HBOS merger. Royal Bank of Scotland had to pay billions of dollars to US regulators over financial crisis misconduct.

And the PPI bills kept coming. Lloyds had expected a £1bn provision taken in 2016 to be the last "big" addition to the total it had set aside for customer, capping its bill at £17bn. Yet Lloyds has now set aside nearly £22bn to meet PPI claims. That's £5bn more out the door to disgruntled customers rather than being reinvested, or returned to shareholders via dividends or buybacks.

Nor did UK banks doing business overseas provide much relief. Emerging market specialist Standard Chartered (LSE: STAN) had to undertake a $5bn rights issue in late 2015, and it has been a slog to rebuild profitability since. Even HSBC – the least woeful of the UK's big banks – has faced surging costs and a sluggish top-line, causing it to miss its return targets. Alongside Standard Chartered it's also faced months of unrest in its home market of Hong Kong.

The icing on this unappealing cake for many investors was the prospect of a Labour government under Jeremy Corbyn, with potentially bank-unfriendly regulation to follow. I'm not making a political point here – you only need to see how bank shares surged following the Conservative win to appreciate political risk had been in the price.


Banking on a recovery

Still reading? Congratulations! If you got through that litany of woe without running away screaming then you might have the constitution to be an investor in UK banks.

Of course you might ask why you'd want to. Setting fire to money will at least heat and light your home…

Well, the reason to consider bank stocks is most of those headwinds are easing, if not becoming tailwinds:

The PPI drama is near a close. Yes, we've heard this before, but we're months past the final deadline for claims. The banks are running out of people to wheelbarrow cash to.
The new Tory government under Boris Johnson with its big majority breaks the Brexit deadlock. The supposed danger of a Corbyn-led government has passed, too. I expect things to continue to be bumpy, but at least we have a functioning government. If consumer and business sentiment improves in turn, the economy should get its mojo back. That's great for banks.
A strengthening economy would bring the prospect of higher interest rates back onto the table. I wouldn't expect big moves, but even small advances could help boost Net Interest Margin from today's depressed levels.
Finally (or perhaps that should be fine-ly?) the big misconduct charges for legacy misdeeds by the UK banks appear to be in the rearview mirror. I don't doubt there's a new scandal brewing somewhere, but hopefully the increased scrutiny and regulation will (for now) curb their misadventures.

It's also important to note there's been underlying progress at the banks over the past few years, even if that hasn't yet shown up yet in their share prices.

Costs have been slashed and in some cases less attractive territories and units have been jettisoned. Dividends have been restored. Most of the big banks have been buying back their shares cheap, which is the one upside of the low prices we've seen.

True, if following the banks over the past five years has taught me anything, it's their capacity to disappoint. Still, with the possible exception of property, I'm not sure there's a sector better poised to benefit from recent changes in the outlook for the UK – and property doesn't have the end of those crippling PPI provisions to cheer, either.

Banks seem to me cheap, and the outlook better than for several years. 2020 vision may usually mean looking backwards, but maybe bank investors can finally look ahead.

Until next time,

[crossing_the_rubicon] 08/1/2020 09:57

Oh dear, trouble at t'mill.


Already released, German new factory orders were down in November, the country's Federal Statistics Office said, with foreign orders falling sharply.

In November 2019, price-adjusted new manufacturing orders were down 1.3% compared to October and were down 6.5% compared to November 2018.

Market consensus, according to FXStreet, was for a 0.3% rise in orders.

"All in all, there are still no signs at all of a bottoming out for German industry. Instead, the free fall continues. In fact, there is simply one word to describe the current state of the German industry: 'dire'," said Carsten Brzeski at ING.

[crossing_the_rubicon] 08/1/2020 09:38

"freddie017 Jan '20 - 18:46 - 288853 of 288872
Easily solved yes dont sell alcohol at airports or on planes.

I don't agree with that at all. I'm flying in March and look forward to two or three pints at the airport before going.Like most things people look to penalise everyone because of a few idiots that can't control themselves"


Agree with Freddie. Why penalise everyone because an odd few cant control themselves and have no manners???Penalise the individual concerned so the rest of us can enjoy a couple of bevvies during the flight.




"mr.elbee7 Jan '20 - 20:09 - 288858 of 288872
lovely people the English"


Scottish even worse. Ditto Welsh.

[maxk] 08/1/2020 09:19

It's grim oop north...

[jordaggy] 08/1/2020 09:18

Never the less they love volitility and weak holders.

[utrickytrees] 08/1/2020 08:43

Justin Trudeau to send a load of gender neutral troops to Tehran to give them floppy fringes and beanie hats in response to the Ukrainian airline disaster.

[mr.elbee] 08/1/2020 08:32

yep but they cant predict what Donald or the mad mullahs do or the reaction

they are only kids after all!

[jordaggy] 08/1/2020 08:25

Looks quite obvious to me that the mm's target stocks heavily held by retail investors...mm's love the financials, money for old rope.

[diku] 07/1/2020 23:00

What chance AHO might just retire within the next 12 months...AHO has made money out of Lloy so step down while the going is good...

[utrickytrees] 07/1/2020 22:47

Millwall fan & Corbyn's off the table for good, that's got to be worth an extra 20p on the share price alone.

[cheshire pete] 07/1/2020 22:08

Couldn't agree more millwallfan, have been watching paint dry with these for > 10 years sad to say. AHO let it be known recently that he and his wife bought LLOY shares for their ISAs. Small beer to them, I know, but could it be a signal of hope for the rest of us? Time will tell.

[millwallfan] 07/1/2020 22:02

Back to Lloyd’s. I am waiting with some anticipation the results in February having just revisited the February 2019 RNS and underlying fundamentals. With PPI out of the way and over 1 billion shares purchased and hopefully further cost reductions I think we may be in for a fairly nice surprise and a new share price floor in the mid 60’s forming a strong platform going forward. Anyone think I’m way out on this ??

[cheshire pete] 07/1/2020 22:01

Labour numbskulls too thick to realise that hard labour socialism is as attractive as the pox. Unless labour can decouple itself from the unions they will gradually whither on the vine. If they behave themselves, we could have 3 terms of Tory Government which is cause for celebration imho.

[cheshire pete] 07/1/2020 21:45

Freddie01: "Easily solved yes dont sell alcohol at airports or on planes.

I don't agree with that at all. I'm flying in March and look forward to two or three pints at the airport before going."

Well said Freddie, used to work out in the Middle East and on the return flight after a spell on leave ex-pats sometimes had a skinfull on the flight and what with the jet lag by the time they came round they were already looking forward to the next leave lol. Never any trouble on the plane though.

LLOY not much movement today.

[royston6] 07/1/2020 21:23

She is Corbyn's love child with Margaret Becket can't you see the resemblance.

[diku] 07/1/2020 21:18

She always looks like she has top heavy make up on...

[maxk] 07/1/2020 21:08

Rebecca Long Bailey is the worst choice Labour could make. So she’s bound to win



PARLIAMENTARY SKETCHWRITER
Follow Michael Deacon7 JANUARY 2020 • 4:53PM









Funny how things turn out. In the leadership contest of 2020, the Labour Left find themselves in the exact same position as Labour moderates did in the leadership contest of 2015. Dazed from an unexpectedly heavy election defeat; devoid of new ideas; and with precisely zero stand-out candidates from their side of the party.

Which is why they’re having to make do with one as drab as Rebecca Long Bailey. Then again, maybe the drabness is the appeal. After all, many on the Left are convinced that Labour only lost the election because of media attacks on Jeremy Corbyn’s character. “Well, they won’t be able to attack Becky Long Bailey’s character! Because she hasn’t got one!”

[xxxxxy] 07/1/2020 20:49

Henry Law 7 Jan 2020 5:26PM@A Gunn They have rigged the system against themselves!  German banks have had to lend to other Eurozone countries in order to maintain demand for German products, but they now hold vast amounts of debt that can never be repaid.Germany has the disadvantage of a currency that is undervalued (for them) by at least 10%, possibly more. This means that Germans are working at least half a day a week for nothing. German workers are, literally, being short changed. What will happen when they notice?How has this situation arisen? EU and Chinese economic policy is based on the conception of trade and economics known as 'mercantilism', which held sway in the seventeenth century. The underlying principle is that the aim of economic policy should be to bring money into the country, for example, by importing gold and silver, as the Spanish and Portuguese did. Nowadays, mercantilist policy concentrates on exporting as much as possible and thereby maintaining a persistent balance of payments surplus. It was ultimately the downfall of Spain and Portugal, which had devoted vast resources to shipping precious metals across the Atlantic. But this ultimately proved to be a futile effort; gold cannot be eaten, or used to for shelter, or fuel, or worn to keep out the cold. All that happened was that prices rose. In its modern incarnation, it has left the German banks full of worthless paper.Mercantlist theory was had been refuted several times over before the eighteenth century was over.