Lloyds Banking Group PLC Lifts Full-Year Guidance

Lloyds Banking Group PLC (LON: LLOY) says discussions with regulators about dividends will start later this year.

| 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.

The shares of Lloyds Banking (LSE: LLOY) (NYSE: LYG.US) gained 4p, or 6%, to 72.5p during early trade this morning after the bank upgraded its forecasts for the full year.

The FTSE 100 member confirmed its net interest margin for 2013 would now be “close to 2.1%” versus earlier guidance of 1.98%.

Lloyds also said it now expects to reach its non-core assets target of less than £70bn by the end of the year — twelve months ahead of plan.

The updated forecasts accompanied half-year results that showed group underlying profits rising by almost £2bn to £2.9bn. However, statutory profits were hit by costs of £0.9bn that covered various restructuring and legacy items.

In addition, the interim figures revealed a core tier 1 capital ratio of 13.7% and a net tangible asset value of 54.6p per share.

António Horta-Osório, the chief executive of Lloyds, said:

We accelerated the pace of delivery on key elements of our strategic plan in the first half of the year.  We returned our core loan book to growth a quarter earlier than expected, delivered a significant improvement in our net interest margin, and are targeting additional cost reductions. “

Mr Horta-Osório added that the bank continued to meet the Prudential Regulatory Authority’s capital requirements “without recourse to further equity issuance or the utilisation of additional contingent capital securities“.

The bank’s chief executive also suggested a return to dividend payments may be on the horizon, after saying Lloyds now expects “to commence discussions with our regulators in the second half of this year on the timetable and conditions for dividend payments.

Prior to today, City experts reckoned Lloyds would produce earnings of 4.9p per share for 2013 and 5.8p per share for 2014. The latter projection places the shares on a P/E of 13.

Tentative predictions of a 2p per share dividend for next year would supply a 2.7% income.

Of course, whether those ratings, today’s results and the wider outlook for the banking sector now combine to make Lloyds a ‘buy’ is something only you can decide.

But if you currently own Lloyds shares and are looking to complement your holding with another blue-chip opportunity, the Fool’s top analysts have named one company they believe will bring you superior long-term capital growth…

…and such is their conviction, they have declared the share “The Fool’s Top Growth Stock For 2013“.

Simply click here for the full report — it’s free.

> Maynard does not own any share mentioned in this article.

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 Company Comment

Hand of person putting wood cube block with word VALUE on wooden table
Company Comment

Value has been building behind the Diageo share price

Despite the business growing, the Diageo share price first reached its current level just over 19 months ago and hasn't…

Read more »

Older couple walking in park
Investing Articles

5 stocks to buy for high and rising dividend income

I can see a host of shares to buy on the FTSE 100 offering me exceptional levels of income. Here…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I don’t care if FTSE 100 shares fall further, I’m buying them today

I'm happy to go shopping for FTSE 100 shares today, even though I accept that they could have further to…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Rolls-Royce shares are down 18% in a month and I’m finally going to buy them

Investors who bought Rolls-Royce shares have been repeatedly disappointed, but I'm willing to take a chance on them before they…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

How I’d invest £10k in a Stocks and Shares ISA today

Now looks like a good time to buy cheap FTSE 100 shares inside a Stocks and Shares ISA. These are…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Today’s financial crisis is the perfect moment to buy cheap shares

I'm building a portfolio of FTSE 100 stocks by purchasing cheap shares whenever I see an opportunity. There's a good…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

I’d buy Tesco shares in October to bag their 5.4% yield 

Tesco shares have fallen lately but I think this makes them attractively valued for a dividend stock I would aim…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I would do anything to hold Diageo in my portfolio (but I won’t do that)

Diageo is one of my favourite stocks on the entire FTSE 100 and I'd love to hold it, but one…

Read more »