Lloyds share price: Lender set to escape steep profit fall

on Apr 18, 2016
Updated: Oct 21, 2019

Lloyds Banking Group (LON:LLOY) is expected to have escaped the sharp profit falls seen at US peers this year as it does not have an investment banking arm, The Telegraph has reported, quoting analysts. The news comes ahead of the bailed-out lender’s first-quarter results next week.

Lloyds’ share price has slipped lower in today’s session, having shed 0.25 percent to 68.03p as of 13:08 BST, largely in line with losses in the broader London market, with the blue-chip FTSE 100 index having fallen 0.31 percent to 6,323.83 points. The lender’s shares have lost nearly seven percent of their value in the year-to-date, as compared with a 1.34-percent rise in the Footsie.
The Telegraph reported today that unlike major US banks which have seen profits dive due to a shortage of investment banking deals, Lloyds was likely to escape largely unscathed when it publishes its financial results next week.

“As unremarkable as this might sound, stable profits in this environment and an underlying return on tangible equity of around 14 percent are clearly the exception rather than the rule in European banking,” UBS analyst Jason Napier, said, as quoted by the newspaper. The Swiss bank, however, expects Lloyds to post a dip in pre-tax profits to £1 billion in the first quarter, down from £1.2 billion in the prior-year period.
Napier also expects that the bailed-out lender, which used to pay some of the biggest dividends in the UK before the financial crisis, will be able to pay a dividend of almost 6p for 2016, up from 2.75p for last year, and that the payout to shareholders will keep rising every year to hit 7.5p by the end of the decade. Lloyds is scheduled to update investors on its first-quarter performance on April 28.
As of 13:42 BST, Monday, 18 April, Lloyds Banking Group share price is 68.02p.