Lloyds share price rallies as lender passes ‘toughest’ BOE stress test

on Nov 30, 2016
Updated: Oct 21, 2019
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Shares in Lloyds Banking Group (LON:LLOY) have spiked in London trading this morning after the company passed the Bank of England’s (BOE) latest financial health check, dubbed the toughest stress test so far. The lender, bailed out by the UK government during the financial crisis, is not required to take any action following the results.

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As of 08:17 GMT, Lloyds’ share price had gained 1.37 percent to stand at 58.50p, outperforming the blue-chip FTSE 100 index which currently stands 0.05 percent higher at 6,775.45 points. Despite today’s advance, the group’s shares remain about a fifth in the red this year, as compared with an 8.5-percent rise in the Footsie.
Lloyds announced in a statement this morning that it had passed the BOE’s latest stress test, which assessed lenders’ capital adequacy against their own minimum Common Equity Tier 1 (CET1) capital and Tier 1 leverage thresholds.

“Despite the more severe stress on the UK economy, the Group comfortably exceeds the higher capital and leverage thresholds set out for the purpose of the stress test,” the FTSE 100 group said in the statement, adding that it was “not required to take any capital action as a result of this stress test”.
The results are a boost for the bailed-out lender whose shares have come under pressure this year, amid market volatility, particularly following the UK’s decision to leave the European Union, forcing the government to scrap a plan to offer shares in the bank at a discount to retail investors. Analysts at Credit Suisse commented yesterday that worries about Brexit were overdone, with Lloyds’ share price having fallen 36 percent to under 48p in the weeks after the referendum, and having since recovered to -18 percent.
As of 08:35 GMT, Wednesday, 30 November, Lloyds Banking Group share price is 58.43p.

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