Another hike in payment protection insurance (PPI) provisions explained Lloyds' (LLOY) headline loss. The lender set aside £1.5bn in the fourth quarter, bringing PPI provisions for 2012 to a painful £3.58bn and to £6.78bn in total. A £400m charge was also made against mis-selling interest rate products. Ignore all that and underlying pre-tax profit rose to £2.61bn from last year's £638m, although net interest margin slipped again, by 14 basis points to 1.93 per cent.
The improvement in adjusted profits largely reflected a £4.1bn reduction in group impairment charge from £9.8bn to £5.7bn, helped by a 61 cent (£1.9bn) fall in provisions in the Irish book - although that still represents a hefty 22 per cent of the group charge. The retail side's impairment charge fell steeply, too, from £700m to £1.27bn, which along with a cut in divisional costs helped retail's underlying profit rise 16 per cent to £3.2bn. Provisions also fell sharply at the commercial banking business, although it still reported a £324m loss. The insurance and life business, meanwhile, saw profits fell 24 per cent to £1.1bn, partly reflecting increased weather-related claims.
Investec expects 2013 EPS of 1p (from a loss of 2p in 2012).
LLOYDS BANKING GROUP (LLOY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 52.41p | MARKET VALUE: | £36.9bn | |
| TOUCH: | 52.4-52.44p | 12-MONTH HIGH: | 56.1p | LOW: 24.8p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 62.5p | |||
| Year to 31 Dec | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2008 | 0.76 | 6.70 | 11.4 |
| 2009 | 1.04 | 7.50 | nil |
| 2010 | 0.28 | -0.50 | nil |
| 2011 | -3.54 | -4.10 | nil |
| 2012 | -0.57 | -2.00 | nil |
| % change | - | - | - |
