Analysts have focused on the extra payment protection insurance (PPI) costs which Lloyds Banking Group (LON:LLOY) set aside in its interim update, Proactive Investors reports. The comments came after the bailed-out lender booked £460 million for the scandal ahead of a claims deadline next year.
Lloyds’ share price rallied in the previous session, gaining 1.65 percent to close at 63.41p, with investors reacting positively to the group’s update. The stock outperformed the broader UK market, with the benchmark FTSE 100 index giving up 95.85 points to close 1.24 percent lower at 7,652.91, pressured by renewed worries over the trade tensions between the US and China.
PPI costs ‘unwelcome development’
Proactive Investors quoted Richard J Hunter, head of markets at Interactive Investor, as commenting yesterday that Lloyds’ additional PPI provision marked ‘an unwelcome development,’ with the issue having long cast shadow over the sector and the bailed-out lender in particular.
“It is especially galling given that the Q1 update suggested that these provisions were on a downward trajectory and that the issue was close to being consigned to the history books,” he pointed out.
AJ Bell investment director Russ Mould meanwhile commented that the lender’s hike in its shareholder payout was only ‘slightly marred’ by the PPI provision.
“This issue should be put to bed in the relatively near future given the August 2019 deadline for claims to be made,” he added, as quoted by Proactive Investors.
Analyst ratings update
UBS and JPMorgan Chase & Co, which see Lloyds as a ‘buy,’ set price targets on the stock of 87p and 85p, respectively, in the wake of the results. According to MarketBeat, the blue-chip lender currently has a consensus ‘hold’ rating and an average price target of 74.67p.