Lloyds Banking Group (LON:LLOY) and FTSE 100 peer Barclays (LON:BARC) were among the worst performers in the latest European Union stress test. The results come as the Bank of England prepares to post the results from its own health check on December 5.
Lloyds’ share price has been little changed in London this morning, having inched 0.32 percent lower to 59.30p as of 09:00 GMT, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.12 percent lower at 7,085.29 points. The group’s shares have given up just under 12 percent of their value over the past year, as compared with about a 6.3-percent dip in the Footsie.
EU stress test results
The European Banking Authority (EBA) published the results from its latest stress test on Friday, with the health check measuring the lenders’ resilience to a set of adverse shocks, including a disorderly Brexit. The test assumes a severe UK economic scenario combining significant falls in property prices and sterling, rising unemployment and deflation.
Reuters noted in its coverage of the news that while none of the 48 banks tested dropped below the 5.5-percent capital ratio threshold, Lloyds and Barclays unexpectedly came in among the three worst performers, with core capital ratios of 6.8 percent and 6.37 percent, respectively.
Lloyds noted in a statement that its “capital position remains strong having reported a CET 1 ratio post dividend accrual of 14.6 per cent at the recent third quarter results”.
Analysts on Lloyds
Royal Bank of Canada, which rates Lloyds as a ‘buy,’ set a price target of 90p on the shares last week. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 76.28p.