Broker snap: Lloyds making progress

Last week's results from Lloyds Banking Group showed the part-nationalised lender is making progress on all key issues, Nomura Securities believes."Impairments and the margin/revenue improved more quickly, which should lead to upgrades. The capital and funding positions also improved," Nomura analyst Robert Law said. The broker is maintaining its 80p target price and sticking with its "buy" recommendation . It continues to see further upside potential from the current valuation of 1.2 times tangible book value per share, compared with a sector average of 1.5. "However, more significant strength would require markets to be prepared to discount the longer-term profitability targets and re-rate the shares to near the sector average. We regard this as premature, given the continuing balance sheet risks, notably in asset quality and funding," Law said.The lender indicated that it is expecting earnings per share in 2014 to hit around 13p and is targeting return on equity of as least 15%. Nomura said it takes a more cautious view on progressive margin gain and cost targets.