Lloyds Banking Group PLC Looks To Be Turning The Corner

The comeback looks to be on for Lloyds Banking Group PLC (LON: LLOY), making me more bullish than ever.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

When you’re on a roll, you feel unstoppable.

Whether this is after a winning bet, an investment that has gone well or any other event, that winning feeling makes you feel like it will last forever.

Of course, it won’t. However, in business that winning feeling can perhaps best be summed up in one word: momentum.

Indeed, a business that has momentum not only feels like it is unstoppable, in many cases it may well be very difficult for anyone to put a spanner in the works in the short run.

This seems to be the position in which Lloyds (LSE: LLOY) (NYSE: LYG.US) finds itself. It is in the process of shedding non-core assets and focusing on core assets (i.e. the ones that don’t tie up too much capital, offer a relatively high return and are deemed to be not unreasonably risky by the regulator).

So, I was pleased to read that the bank is finalising plans to shift yet another non-core operation. This time it is a German life assurance operation, with Lloyds hoping to receive as much as €400 million from the sale.

Although this is less than the €1 billion the bank had hoped to receive, it has been trying to sell it for over two years so a sale is undoubtedly good news. The buyers look set to be Hannover Re, a German reinsurer, and a clutch of private equity groups who together are hoping to purchase Heidelberger Leben from Lloyds.

Of course, the news comes on the back of a bullish set of results from the company, when the CEO unveiled his strategy for turning the company around. This potential sale would neatly fit in with that plan and would be yet another disposal to show that Lloyds really is on a roll in terms of restructuring its business ready for post-government ownership.

As ever, shares look cheap. Lloyds currently trades on an adjusted prospective price-to-earnings ratio of 14.4, which compares favourably to the wider financials industry group on 19.3 and to the FTSE 100 on 15.

In addition, earnings per share are forecast to grow at an annualised rate of up to 20% over the next two years. This, combined with an aspiration to pay out two-thirds of earnings as dividends, means that, for me, Lloyds really is on a roll.

Of course, you may be looking outside of the banking sector for an addition to your portfolio. If you are, The Motley Fool has come up with a shortlist of its best ideas called 5 Shares You Can Retire On.

It’s completely free to take a look at the shortlist and I’d recommend you do so. Click here to view those 5 shares.

> Peter owns shares in Lloyds.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »