A £433m boost from selling shares in wealth management company St James’s Place Capital (STJ), a 43 per cent impairment charge cut to £1.8bn, and an eight basis point net interest margin recovery, helped drive Lloyds’ (LLOY) underlying profit up 178 per cent at the half-year stage to £2.9bn. That recovery even led management to flag-up the possibility of a return to the dividend list.
The impairment slide significantly reflects progress in Ireland, where the impairment charge tumbled 57 per cent to £385m. That helped the lenders' wealth asset finance and international business to cut its loss by 86 per cent to £101m. Improving credit quality also helped boost the retail arm's underlying profit by 11 per cent to £1.64bn, after the impairment charge there fell 16 per cent. Similarly, commercial banking turned last year’s £83m loss into a £634m profit after its bad debt charge nearly halved.
Lloyds' Basel III-based capital ratio has now reached a comforting 9.6 per cent, too - Barclays’ (BARC) ratio, in contrast, will only make 9.3 per cent after its £5.8bn rights issue. Although a further £450m payment protection insurance (PPI) mis-selling charge has pushed PPI provisions up to an eye-watering £7.28bn.
Investec Securities expects full-year EPS of 3.1p (2012: 2p loss), a 1p dividend and net tangible assets (NTA) of 56.5p.
LLOYDS BANKING GROUP (LLOY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 73.03p | MARKET VALUE: | £52bn | |
| TOUCH: | 73.03-73.04p | 12-MONTH HIGH: | 73.2p | LOW: 29.2p |
| DIVIDEND YIELD: | nil | PE RATIO: | 66 | |
| NET ASSET VALUE: | 61p | |||
| Half-year to 30 Jun | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2012 | -0.46 | -1.00 | nil |
| 2013 | 2.13 | 2.20 | nil |
| % change | - | - | - |
