The Lloyds Bank share price may react big to this news. Here’s what I think it means for investors

The Lloyds Bank share price can be impacted significantly by developments in the group. Investors would be advised to look out for them.

| 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.

FTSE 100 banking biggie Lloyds Bank (LSE: LLOY) will have a new CEO soon. The present CEO, António Horta-Osório, has resigned. He will transition out by 2021, when his successor will take over. Horta-Osorio’s term since 2011 has coincided with a largely sagging trend for the Lloyds Bank share price. Can fortunes turn for the long-beleaguered stock with a leadership change?

The past informs the present

The Lloyds Bank share price dropped dramatically during the financial crisis. When the new CEO joined in 2011, he already had his hands full with all that had happened since the crisis began. This included the Halifax Bank of Scotland rescue acquisition, which snowballed into a bigger situation. LLOY itself had to be bailed out, making it part owned by the British government. 

Much has changed since. LLOY has returned to being a privately owned bank and has done relatively better compared to its peers, according to this Reuters report. But there’s a crisis underway again. Even though Lloyds isn’t directly in the line of fire, like hospitality, tourism, and entertainment businesses, it has been hit by the weak economy.

The Lloyds Bank share price, as a consequence, is currently at around the same levels as it was during the financial crisis. In fact, LLOY’s among the few FTSE 100 shares that hasn’t benefited from the recent stock market rally. And this is when even stocks like cruise provider Carnival have made big share price gains. 

Reviving the Lloyds Bank share price

This sugggests that it’s not just the coronavirus crisis that’s dragging down the Lloyds Bank share price. Brexit uncertainty for a UK-concentrated banking entity and the PPI claims fiasco from last year are two examples of other things that have gone wrong. Now there’s the recession in the mix. It’s easy to see why investors are unsure.

I am now keenly interested in knowing what the new CEO’s response will be. Specifically, I’d like to know if they can bring the Lloyds Bank share price back to its pre-2008 crisis levels. One of LLOY’s FTSE 100 peers, HSBC, for instance, is undergoing deep restructuring. Similarly, I’m now waiting to know if LLOY will undertake any measures to make it a more profitable buy for its shareholders.

It’s too soon to say, of course, what will happen next. The outgoing CEO is still at the helm, and will be until early next year. The decision on the new CEO hasn’t been made. The Lloyds Bank share price has barely reacted to the exit news so far. But I reckon it will, over the course of 2020, as the bank’s next steps become clearer. I’ll watch closely for future developments. But for now, I just don’t see enough reason to invest in a stock that doesn’t offer either growth or income. 

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.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Carnival, HSBC Holdings, and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

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

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

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

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »