Getting latest data loading
Home / Blog / blog / Lloyds Banking: Shareholder returns trump headwinds

This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.

Lloyds Banking: Shareholder returns trump headwinds

Lloyds Banking Group shares are in the green this morning, albeit off their opening highs, as investors appear happy to ignore headwinds and focus on management’s plans to improve key areas of the business (namely tech), or maybe just the promise of greater shareholder returns.

Shares have stalled at 69p as the company announces a widely touted £1bn share buyback scheme, preferred by management over a special dividend in order to boost return on equity, however perhaps disappointing those investors that would have preferred a cash in hand payment. Full year pre-tax profits improved 24% to £5.2bn, helping to cover a 20% increase in FY dividend to 3.05p, both further positives, however missing consensus of £5.7bn after the group dedicated a further £600m in provisions to cover the mis-selling of PPI, greater than the £450m expected.

With the scandal now expected to cost the holder of the largest UK mortgage book upwards of £19bn (before factoring in any potential future provisions), it’s unsurprising that today’s strategy update also included plans to improve its mortgage lending business. How the bank navigates a more hawkish Bank of England in the coming months (58.5% chance of May hike), maintaining demand in the face of greater interest payments, will also be of key importance to shareholders moving forward.

Whether today’s strategy update will help to improve long term prospects and see a return to 2017’s 73.5p share price highs will be key, but at least in the short term, disguising a profits miss with an attractive offer for investors seeking immediate gratification has proved shrewd.


Henry Croft, Research Analyst, 21 February 2018


 

« Back to Category

This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

Comments are closed.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
.