Without the investment banking operations of the likes of Barclays (BARC) and Standard Chartered (STAN), Lloyds (LLOY) felt the full impact of a darker outlook for consumer loans. Credit impairments totalled £3.8bn over the first half, including £2.4bn during the second quarter, which pushed the lender into a pre-tax loss. Management expects to take a hit on bad debts of between £4.5bn and £5.5bn in 2020 and has also guided towards a net interest margin of 2.5 per cent as the base rate reduction will continue to blunt profitability.
A fall in the banking interest margin to 2.4 per cent during the second quarter contributed towards an 11 per cent reduction in net interest income during the first half, along with customer-help initiatives such as interest-free overdrafts. The loan book declined by £3bn during the second quarter as mortgage lending was stymied by the effective shutdown of the property market in the wake of the pandemic. Management said mortgage applications had rebounded in June, surpassing the same month last year.
The consensus forecast for net tangible assets at the end of December 2020 is 53.3p, rising to 55.1p for the following year.
| LLOYDS BANKING (LLOY) | ||||
| ORD PRICE: | 26p | MARKET VALUE: | £ 18.4bn | |
| TOUCH: | 26.46-26.50p | 12-MONTH HIGH: | 74p | LOW: 26p |
| DIVIDEND YIELD: | Nil | PE RATIO: | 52 | |
| NET ASSET VALUE: | 60p | LEVERAGE: | 18.7 | |
| Half-year to 30 Jun | Total operating income (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 23.1 | 2.9 | 2.7 | 1.12 |
| 2020 | 6.87 | -0.6 | -0.3 | nil |
| % change | -70 | - | - | - |
| Ex-div: | na | |||
| Payment: | na |
