Shore Capital expects ‘significant returns’ from Lloyds Banking Group (LON:LLOY), Citywire reports. The comments came after the bailed-out lender updated investors on its first-quarter performance yesterday, revealing a rise in underlying profits.
Lloyds’ share price lost ground in the previous session, shedding 1.69 percent to close at 65.00p, underperforming the broader UK market. The group’s shares have given up just under three percent of their value over the past year.
ShoreCap upbeat on Lloyds
Shore Capital reiterated its ‘buy’ rating on Lloyds yesterday, with a ‘fair value’ of 80p on the stock. The move came after the bailed-out lender posted its first-quarter results, reporting a six-percent rise in adjusted profit before tax to £2 billion, just shy of the broker’s forecast of £2.1 billion.
“We reiterate our positive stance on Lloyds with a fair value of 80p – 21% upside – which we expect to leave broadly unchanged,” the broker’s analyst Gary Greenwood commented, as quoted by Citywire. “We highlight the group’s relatively high adjusted return on tangible equity and its strong underlying capital generation, which we expect to support significant ongoing returns to shareholders in the form of dividends and share buybacks.”
Group urged to rethink bank closures
In a separate development, Sky News reported that Lloyds’ bottom-line growth had prompted the Federation of Small Businesses (FSB) to urge the lender to ‘rethink’ its branch closures. The FTSE 100 group recently signalled plans to axe 49 branches.
“Now that Lloyds is well and truly back in the black, it should reconsider its aggressive branch closure programme,” FSB national chairman Mike Cherry said, as quoted by the newswire. “The public was there for the bank during the financial crash. It's high time that support was returned.”