Shares in Lloyds Banking Group (LON:LLOY) have climbed higher in London this morning as the company announced that it would lower its target for its Common Equity Tier 1 (CET1) ratio. The move follows a change in regulatory requirements and comes as the lender prepares to update investors on its first-quarter performance this week, following peers Barclays (LON:BARC), RBS (LON:RBS) and StanChart (LON:STAN).
As of 09:24 BST, Lloyds’ share price had added 1.55 percent to 63.54p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.21 percent higher at 7,434.00 points. The group’s shares have lost a little more than one percent of their value over the past year, largely in line with the Footsie.
Lloyds share price up on CET1 change
Lloyds announced in a statement this morning that it had been notified that the systematic risk buffer for its ring-fenced bank would be 200 basis points which equates to 170 basis points at a group level. The number is below the 210 basis points previously included in the company’s capital guidance, and has resulted in a decrease of the level of CET1 capital targeted by the group, from around 13 percent to around 12.5 percent, plus a management buffer of around one percent.
Bloomberg quoted Jefferies analysts Joseph Dickerson and Aqil Taiyeb as commenting that the Bank of England had cut its requirements more than the market expected, leaving Lloyds with about £1 billion of excess capital that could be used for a buyback this year.
Lender expected to post drop in EPS
The update comes as Lloyds prepares to publish its first-quarter results tomorrow and IG reports that the lender is expected to report earnings of 2p a share, representing a 0.1-percent decline over the year, while revenue is expected have fallen by 1.5 percent to £4.5 billion.