Broker snap: Nomura keeps 'reduce' rating for Lloyds

Lloyds' first-quarter results were modestly ahead of consensus estimates, but Nomura has maintained its 'reduce' rating for the bank, saying that the strong share-price reaction on Tuesday morning was overdone.The stock was up 4.43% at 55.87p after having hit an intraday high of 57.21p early on.Underlying profit before tax (PBT) came in at £1,085m, ahead of the Bloomberg consensus estimate for £1,027m and Nomura's £884m prediction.However, underlying core PBT of £1,477m missed the broker's forecast for £1,654m and was below the fourth-quarter (2012) figure of £1,480m.Nomura thinks that Lloyds' cost guidance - to reduce total costs to £9.6bn this year, better than previous £9.8bn target - will likely drive headline upgrades to consensus estimate of 1-2% but this is driven by the sale of its stake in St James's Place relative to current expectations.The broker said that the "core cost of risk has not improved from the 2012 run rate".A 42p target price for the stock was maintained.BC