Broker snap: Lloyds cut to 'hold' by Investec

Investec has cut its rating for Lloyds Banking Group from 'buy' to 'hold', saying that expectations for 2013 are still "slightly frothy".The target price has been left at 85p.Analyst Ian Gordon played down concerns about Ed Milliaband's suggestion for UK banks to sell branches in an effort to limit the size of the country's largest High Street lenders."We were not overly-concerned by Labour Party proposals for fresh intervention to cap market shares and/or trigger further branch divestitures. The potential timing is distant and any financial impact may not prove overtly negative. "However, likely nearer-term pressures continue to constrain our view on valuation," he said.Gordon believes that sell-side forecasts for earnings per share in 2013 are still "frothy", with the current 2.5p estimate more than double what it should be.Meanwhile, there is still upside risk to charges for PPI redress with Lloyds' cover "far too thin".He also said there is could be a further Enhanced Capital Notes (ECN) negative unwind and declines in 'other income'.Also, he said he sees the possible sale of the government's residual 32.7% stake in the bank "as grounds for caution".The stock was 1.2% lower at 82.01p by 11:19 on Friday.BC