Shares in Lloyds Banking Group (LON:LLOY) have slipped marginally into the red as the Bank of England (BoE) unveiled the results from its latest stress test. The bailed-out lender, which returned to full private ownership earlier this year, passed the health check and is not required to take any action.
As of 08:51 GMT, Lloyds’ share price had given up 0.37 percent to 65.27p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.28 percent higher at 7,404.55 points. The group’s shares have added more than 12 percent to their value over the past year, and are up by some four percent in the year-to-date.
Stress test results
The BoE announced today that the results from its latest stress test had showed that Lloyds’ capital position remains above its CET1 ratio hurdle rate of 7.5 percent and Tier 1 leverage ratio hurdle rate of 3.25 percent in the hypothetical stress scenario with a low point of 7.9 percent CET1 ratio and 3.9 percent leverage ratio in 2018 after ‘strategic’ management actions. This year’s BoE scenario included rapidly rising interest rates and unemployment in conjunction with significant falls in property prices and gross domestic product.
No action required
Lloyds hailed the results in a statement, noting that “despite the severity of the stress, the Group exceeds the capital and leverage thresholds set out for the purpose of the stress test before the application of any management actions”.
“Therefore, the Group is not required to take any capital action as a result of this stress test,” the bailed-out lender pointed out.
The stress test results are a boost for Lloyds which returned to full private ownership earlier this year following its taxpayer-funded bailout during the financial crisis.
Barclays (LON:BARC) meanwhile was one of the weakest performers in the BoE health check.