Surely these should not be countenanced until the bank is fully de-nationalised. Rather like asking the bank for an overdraft and put the ,obey into a savings account. It is not a return of capital anyway but rather an attempt to force the SP up and it does not always work as we have seen. And to compare the situation now with Sir Brian Pitman (guingette) . Well I am not often lost for words. think I need a stiff dram of something.
This mornings FT.Alphville journalists discussing Lloyds and a brokers view that there could be a 6 billion buyback ......
Lloyds Banking Group plc (LLOY:LSE): Last: 83.38, up 0.51 (+0.62%), High: 83.98, Low: 79.58, Volume: 127.38m BE
The consensus move to Lloyds returning surplus capital seems to have happened remarkably quickly. BE
It’s happened before we’ve even managed to slot the last 20% we own BE
Anyway, Jefferies talking about a £6bn cash return BE
Via a buyback. BE
Upgraded to buy. BE
Investors are looking to invest in shares of banks which have de-risked, are returning capital, have positive earnings momentum and are easily understood. LLOY is moving in the right direction on all counts and, for this reason, we believe the shares can appreciate to 102p. In addition to paying 12p of dividends for ’15-17E, we estimate c£6bn of excess capital could be used to repurchase shares. Upgrade to BUY.
Upgrading earnings. We believe that the earnings downgrade cycle has troughed for LLOY and can turn the other direction. Q1 15 results changed our view in this dimension. We see earnings upgrades dictated by: 1) waning below-the line charges; 2) NIM expansion – a feature idiosyncratic to LLOY and driven by lower funding costs and mix towards higher margin consumer lending; 3) further impairment surprise as benign macroeconomic backdrop drives ever lower charges. Our statutory EPS estimates rise 6.6% across ’15-17E.
Higher capital return – but not just dividend. LLOY’s Q1 15 CET1 ratio totaled 13.4% in Q1 15. Given we estimate the bank needs to operate at a level of 13%, higher dividend pay-outs have become realistic. We increase our pay-out assumption to 60% of attributable profit (from 50%). Further, we estimate £6bn of excess capital by 2017 which could enable LLOY to reduce its ridiculously high 72bn shares outstanding (or, conversely, to buy down part of HMT’s shareholding in the bank).
Valuation/Risks Asymmetric risk/reward. We estimate LLOY can achieve a 15% return on required tangible equity by 2017. This, combined with £6bn of excess capital generates a price target of 102p (was 88p), suggesting 23% upside. The implied 12 month forward 1.7x p/tbv multiple is underpinned by an average yield of 5% and prospects of a falling share count. Bull case upside of 42% is 3x bear case downside which drives our BUY rating on the name. Key risks are macro, political and idiosyncratic around operational risk.
I'm expecting it to go back to 77-80p as this has always happened in the past... Maybe this time I'll be pleasantly surprised, but I won't hold my breath. However, the management statement did seem to shift the markets negativity around Lloyds... Hopefully it's not just a temporary thing. Regarding the profit taking, a lot of people have held for a long time for the dividend and general recovery... Would seem a bit premature to sell now it's nearly here!
This is the first trading day in May after results day. Many hedge funds will have done the analysis on Friday with the results and decided whether to speculate on a divi by buying this morning. I would expect a sell-off to occur the second half of this week if one is to materialise once the buying has stopped. Given how long this sat in the 75-78p bracket, many have every right to take profits after waiting this long.
It was an unexpected rise last week, I did expect the shareprice to fall this week as I was expecting profit taking... Maybe it's finally broke out of the 70s for good??? I'm a long term holder and don't trade a float so hoping so....
There has been some talk on here about buy back of shares.......this not something new.....when Sir B P was in charge this was always happening,and we can all remember the dividends paid,and what affect it had on the share price.It is simple economics. Ie reduce the availability of a good and valued commodity,and the price will rise.
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