"Goldman Sachs cut its stance on Lloyds Banking Group to 'sell' from 'neutral' and trimmed the price target 6% to 50p as it pointed to increased competition and low rates. GS pointed out that Lloyds saw a market decline in new business share in the first half of this year, which led to a 3% annualised decline in mortgage balances.
Goldman said it sees two further sources of incremental competition from here.
"(1) HSBC will continue to strengthen its intermediary distribution as it seeks to deploy significant excess deposits into UK mortgages; (2) the Term Funding Scheme will provide the 'challengers' with a very low-cost funding source.
"We view Lloyds' margin maintenance strategy as optimal. Nevertheless, we believe increased competition will have a significant impact on profitability, and downgrade our rating."
GS cut its earnings per share estimate for 2016-18 by 0%-10%, mostly to reflect a 10 basis point cut to the base rate in November and a continued drop in mortgage balances.
Goldman said management is pursing the right strategy by choosing to protect margins over market share or even stock, as a substantial pricing cut would have an even more pronounced impact on earnings.
"A key question for the group going forward will be by how long it can delay significantly lowering its mortgage pricing. Ultimately, we believe it will have to mark to market its pricing at some point. This is when the P&L is likely to take a further hit."
Wids just found a receipt from Aug 08, when I bought a Panda for £490.50 and an Eagle for £478.50. If only I knew and had filled the sock drawer with such instead of these.
Still truth be told I guess I would have sold them on the last hike, if I had invested enough to worry me.
Nearly at the time bought a I kilo bar, just couldn't bring myself to do so though. Still, look at all the friends I have made on here, and all the happiness I have bought to others. Money just cant buy that................can it?
Scfc, more hopeful than positive. But yes, I did think that after such a massive fall in share price, it would recover to far greater heights that it has.
I paid I think just over a pound for the first batch, not £5! OMG, if I had paid £5 I would be less upbeat on them now.
I bought in just prior to the script divi, unsure exactly the date, but thought stupidly I could not go wrong getting one free for every forty purchased. Been brainwashed by Tesco bogof I guess.
Two ri's since and lower b/e because of them, but of course paid in more, and so ended up with more than I should have owned.
Still you know me, not one to complain.
When so many are still in denial does make you think it must be me who is wrong.
But remember, the Government came so very close to the sid sell, and have obviously postponed it, I think for at least two years was mentioned.
So tip in a few more moth balls, or buy the wife a darning needle and look forward to two or three years ahead, when IF all goes reasonably well with Brexit, we may just reach the seventies provided Labour, or world events have not forced full nationalisation upon us as the ONLY way to prevent the UK grinding to a halt.
No wonder the limit of liability to cash coverage in personal accounts has been lowered, and that banks, as I have said before are being forced to hold so much tier one capital.
IF things were REALLY getting better there would be no immediate NEED for such measures.
Stands to reason that those in the know, know what is very likely to happen, and instead of letting banks loan out cash, to make money, as they would in an 'improving' economy, it is all about just being able to survive now and the expected onslaught to come.
Winter of woe firmly on track as far as I can see.
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