Lloyds share price: HSBC trims valuation on lender

Analysts argue group’s Q2 results showed limited loan growth

Lloyds share price: HSBC trims valuation on lender

Analysts at HSBC have trimmed their price target on Lloyds Banking Group (LON:LLOY), while maintaining their ‘hold’ rating on the shares. The move follows the bailed-out lender’s recent second-quarter results.

Lloyds’ share price has fallen into the red in today’s session, having given up 0.35 percent to 59.89p as of 13:32 BST, marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.50 percent lower at 7,518.50 points. The group’s shares have given up just under seven percent of their value over the past year, as compared with about a 1.8-percent gain in the Footsie.

HSBC trims valuation on Lloyds

HSBC, which sees Lloyds as a ‘hold,’ lowered its price target on the bailed-out lender from 72p to 68p today. Proactive Investors quoted the analysts as saying that the group’s second quarter results had showed limited loan growth and broadly flat margins but “very strong profitability thanks to a low cost-income ratio and low impairments”.

The analysts further reckon that Lloyds’ common tier equity 1 ratio targets need to rise and may be forced to after this year’s stress test.

‘No particular rush to upgrade’

“True, fee income was better than expected, but in large part this appears to have been driven by stronger than anticipated gains on the sale of the legacy gilt book,” HSBC pointed out, adding that while Lloyds’ share price “has fallen nine percent in the last three months, we feel in no particular rush to upgrade our rating”.

Today’s news comes after news emerged this week that the bailed-out lender will raise interest rates on some of its savings accounts at the end of the month. The move followed the Bank of England’s recent rate hike.

As of 14:00 BST, Friday, 17 August, Lloyds Banking Group share price is 59.96p.

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