Lloyds share price rises as lender offloads loan portfolio ahead of results

on Jul 30, 2015
Updated: Oct 21, 2019

Lloyds Banking Group Plc (LON:LLOY) has offloaded a £2.6 billion portfolio of commercial Irish loans, the bailed-out lender has revealed. The disposal comes ahead of the bank’s first-half report due tomorrow.

Investors have reacted positively to the disposal, with Lloyds’ share price having added 0.71 percent to 86.21p as of 08:01 BST. The shares are slightly outperforming the broader market.
The blue-chip lender announced in a statement this morning that it had inked a deal to sell a portfolio of Irish loans to a consortium comprising Goldman Sachs-affiliated entity Ennis Property Finance Limited, Feniton Property Finance Limited, an entity affiliated to CarVal, as well as Bank of Ireland. The gross value of the assets is £2.6 billion, of which £2.3 billion were impaired last year, resulting in pre-tax losses of about £130 million. Lloyds expects to receive about £827 million from the deal at current exchange rates.

The bailed-out lender noted in the statement that the disposal was part of its strategy of trimming riskier assets and creating a low-risk, UK-focused bank. Following the transaction, which is expected to complete in the last quarter of the year, Lloyds’ exposure to commercial assets in Ireland will stand at less than £30 million.
The disposal comes ahead of Lloyds’ highly-anticipated first-half results tomorrow, when the part government-owned lender is expected to report a pretax profit of £2 billion. The result will come despite a projected £1-billion charge booked for mis-sold payment protection insurance (PPI), which will take the lender’s total PPI charges to £13 billion. Investors are also expecting an update on Lloyds’ capital return plans, with a dividend announcement likely to make the stock more attractive ahead of the Treasury’s planned retail offer.
As of 08:06 BST, Thursday, 30 July, Lloyds Banking Group share price is 85.60p.

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