This page is quite old hence its rather spartan appearance.
Why not check out our Latest Stories page for our newest articles or search our site for anything.
MARKET COMMENT
By
Lloyds TSB (LSE: LLOY) shareholders are still in the dark. This morning's trading statement guided the bank's followers on profits, but yet again left them wondering about the real value attraction of their holding. Up 12.5p to 417p in early trade, the shares continue to offer an implausible 8.2% yield. Still, no dividend news doesn't necessarily mean bad dividend news. Lloyds TSB confirmed 'significant progress' for the first nine months of 2003 and expects a 'satisfactory' full-year trading performance. Highlights include growth in current accounts, credit cards and Scottish Widows products, a minor increase to the net margin and bad debt levels remaining steady. The details underpin current earnings per share forecasts of around 43.5p for 2003. Of course, the historic dividend, at 34.2p a share, would remain thinly covered at 1.3 times. In the mix this year though is a £900m after-tax profit (about 16p per share) from the disposal of various operations in New Zealand, Brazil and Latin America. Somewhat worryingly, the mutter from the gutter suggests the proceeds are to help shore up the prospective dividend payment. Traditionally, Lloyds TSB value hunters have hoped for a maintained dividend to 'out' the value. Trouble is, any yield 're-rating' would give Lloyds TSB an undeserved earnings valuation; today's forward price to earnings ratio of 10 already puts it on a par with more reliable sector runners such as Barclays (LSE: BARC) and Royal Bank of Scotland (LSE: RBS). With the market having for so long offered the generous yield, the dilemma for investors therefore is whether a dividend cut and additional retained earnings would bolster profit growth and prompt a share price recovery that way.