Lloyds share price: Lender poised to dash bumper dividend hopes

Lloyds Banking Group (LON:LLOY) is set to dash investor hopes of a big increase in its dividend, The Sunday Times has reported. The news comes ahead of the blue-chip lender’s half-year update on Thursday when the company is expected to unveil a rise in profits.

Lloyds’ share price has been subdued in London this morning, having shed 0.42 percent to 54.27p as of 08:40 BST. The shares are underperforming the broader market, with the benchmark FTSE 100 index having climbed 0.09 percent higher to stand at 6,736.76 points. The group’s shares have lost more than 36 percent of their value over the past year, and are down by more than a quarter in the year-to-date.

The Sunday Times reported yesterday that Lloyds was poised to dash investor hopes of a big increase in its shareholder payouts, with chief executive Antonio Horta-Osorio instead marshalling his resources to withstand a possible downturn in the economy. With the lender’s fortunes largely tied to the domestic economy, leaving it exposed to the predicted post-referendum downturn, the group’s chief executive is expected to be forced to revise business targets.
The newspaper, however, noted that Lloyds was poised to unveil a first-half profit of £1.72 billion, marking a significant increase on last year’s £925 million. The company meanwhile is not expected to set aside any more money to cover costs related to mis-sold payment protection insurance.
Lloyds’ update will follow the surprise outcome of the Brexit referendum last month, which forced the government to shelve a plan to complete the bank’s return to the private sector. While former Chancellor of the Exchequer George Osborne had been hoping to launch a retail sale, new Chancellor Phillip Hammond is expected to scrap the plan to offer shares in the bank to private investors at a discount.
As of 09:04 BST, Monday, 25 July, Lloyds Banking Group share price is 54.16p.