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Lloyds Banking Group PLC (LSE:LLOY) can still be one of the highest yield shares in its sector, even amidst the increased risk in its motor finance businesses, that’s according to analysts at Citibank.

Citi’s London-based analysts today issued a note, after updating their model for Lloyds, and said that Lloyds' motor finance business faces ‘redress risk’ which would potentially eat into cash that would otherwise be spent buying back Lloyds shares.

“Nonetheless, the all-in yield would still be around 17% for 2024, one of the highest in the sector, the NIM [net interest margin] looks set to inflect from 2Q24, and [the] valuation still screens as cheap,” Citi analyst Andrew Coombs said in the note.

Citi rates the FTSE 100 constituent banking share as a ‘buy’.

The UK’s Financial Conduct Authority (FCA) last week launched a probe into historic discretionary commissions in the UK’s motor finance market after finding customers continue to lose out.

After banning models linking brokers’ commission to interest rates charged to customers for motor finance in 2021, the FCA said many were now struggling to claim compensation. Despite a “high number of complaints”, the FCA said, “firms are rejecting most complaints because they consider that they have not acted unfairly”.

Lloyds was subsequently identified by City brokers as one of the most exposed to any potential fallout depending on the investigation's findings.

Analysts at Barclays have analysed the comments from the regulator and believe that it raises the possibility of compensation being paid the banks. While uncertainty is “high”, it suggests a potential provision range of £0.5-£1.0 billion for Lloyds.

https://www.proactiveinvestors.co.uk/companies/news/1038672/lloyds-tipped-to-retain-one-of-best-yields-for-investors-despite-motor-finance-risk-1038672.html

In my last post......if it has not already been deleted, "slivering" should be slithering! 😎

Pt51

lol.....still here. Be careful where you tread, there is a snake slivering around in the grass.

"Shal, tobacco and alcohol price rises have largely driven an unexpected increase .. !"

Another classic from Daft.....bless his cotton socks! 🤡🤡

Daft....you should DYOR better.......your'e posting links to news articles that have already been posted.

"Investors state side have us down nearly 6% now."

That's ADR just catching up with 2 days falls in London as US Markets were closed yesterday.

Seany....I was referring to Martin Lewis.

It's old news! Have you been asleep for the last week Daft!

W⚓

STP.......FFS change the record!

Chid......ffs go and take some happy pills!

"but once again Lloyds kicks everyone in the teeth."

It's not Lloyds kicking everyone in the teeth. Once again, it is the FCA that has done the damage, along with a knee jerk reaction to an ROUGH ESTIMATE of potential amount of compensation on a tweet by Martin Lewis.

Nucky....."I’m out anyway. Back in at 35p"

if your stop loss was set at 43p then you must still be invested as the days low so far is 43.04p?

To me it stinks that the FCA change the rules in 2021 regarding commission received by dealerships and interest rates charged, but then allow retrospective claims to be allowed for compensation for a practice that was allowed prior to the rule change.

Agrostar......the issue is that when people taking out the loans accepted the terms and costs, they were not informed that commission was being paid to the dealership out of the costs. They should have been advised of that before taking out the loan. Having said that, surely the responsibility for this lies firmly with the dealership, not the Finance Provider?

"Lloyds Banking Group fell 2.5% after it was seen as facing the largest monetary hit among UK banks from the review of motor finance, being undertaken by the Financial Conduct Authority.

Barclays suggested a potential provision range of GBP500 million to GBP1.0 billion for Lloyds, while RBC Capital Markets put the figure at GBP1.2 billion.

Bank of America downgraded Lloyds to 'neutral' from 'buy'."

https://www.morningstar.co.uk/uk/news/AN_1705337874845326400/london-market-close-sluggish-stocks-slip-back-in-absence-of-us-spur.aspx

Well sell up then.

"Order at 34.5p"

🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣

So that will be any potential windfall from Telegraph sale and Scottish Widows bulk annuity book sale flushed down the toilet! And maybe have to make extra provision as well?

How much is the loaf of bread that cost you £15 last year costing now?