Lloyds share price underperforms as Exane BNP trims stance on lender

Equities

Downgrade follows post-results review of UK banking sector

Shares in Lloyds Banking Group (LON:LLOY) have fallen into the red in today’s session, as analysts at Exane BNP Paribas trimmed their stance on the bailed-out lender. The Financial Times reports that the move was part of a review of the UK banking sector post results season.

As of 13:08 GMT, Lloyds’ share price had given up 0.08 percent to 66.95p, underperforming the broader UK market, with the blue-chip FTSE 100 index currently standing 0.75 percent higher at 7,169.53 points. The group’s shares have been little changed over the past year, as compared with about a 2.4-percent dip in the Footsie.

Exane BNP Paribas trims stance on Lloyds

Exane BNP Paribas trimmed its rating on Lloyds to ‘neutral’ today. The FT reported that the broker had noted that digital spending was becoming an increasingly important theme, which, the analysts, argue, is driving a growing wedge between earnings per share and cash flow, and hence, dividend potential.

“Combined with more negative guidance on Basel-driven risk-weighted asset inflation, the above leads us to take a slightly more cautious view on the medium-term outlook for dividends where we have cut estimates at most banks,” the broker noted further, as quoted by the newspaper, adding that it feared that its previous 4p dividend estimate for Lloyds for 2018-2021 would “prove stretching — we now assume 3.2p per annum”.

Other analysts on blue-chip lender

JPMorgan Chase & Co, which sees Lloyds as a ‘buy,’ set a price target on the bailed-out lender of 85p on Friday. According to MarketBeat, the company currently has a consensus ‘hold’ rating and an average price target of 75.97p.

Lloyds updated investors on its full-year performance last month, unveiling plans to return £1 billion to shareholders.

As of 13:53 GMT, Tuesday, 06 March, Lloyds Banking Group share price is 66.84p.