FXStreet Article 23/726 Jul 2021 13:13
Lloyds Banking Group H1 21 - 29/07 – Lloyds Banking Group shares have outperformed since its Q1 numbers helped push the share price to 15-month highs in May. Since those peaks, the Lloyds’ share price has slipped back, however year-to-date the shares are very much the outperformers as far as UK banks are concerned, up over 25%. They have been falling in recent weeks, largely over concern about slower growth prospects and falling yields, in line with the rest of the sector. Unlike Barclays, Lloyds did release some of its loan-loss reserves, siphoning back £323m, while also pledging to accrue dividends with the intention of resuming a progressive and sustainable dividend policy. Loan demand for housing was a particular strong point in Q1, with its open mortgage book seeing a 6% increase from a year ago, to £283.3bn, and a 2% rise over the quarter, though credit card spending was down 19% over the year, and 6% on the quarter at £13.5bn. Given the recent strength in the housing market this may have continued in Q2. Management was also more confident about the outlook, saying that lending margins were expected to improve over the rest of the year, with net interest margin expected to be in excess of 245 basis points, up from 240 at the end of the previous quarter, while also seeing an increase in customer deposits. There was a note of caution around the outlook given that more of its customers could find themselves in financial difficulty in the months ahead due to the latest lockdown. Statutory profit in Q1 came in at £1.4bn, with expectations around Q2 expected to be equally as optimistic, however that optimism over the second half could be tempered by recent events as Delta variant cases rise, and the economic picture looks less certain.
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