Lloyds prepare to cut further jobs

The UK taxpayers' stake in Lloyds looks likely to remain in place until after next year’s general election.

Lloyds logo
Source: Bloomberg

On Tuesday 28 October, Lloyds is due to release its third-quarter figures. Current expectations are that the UK bank will see adjusted earnings per share drop from 2.8p down to 2.3p. Sales will be a little higher at £4.777 billion, an improvement from the $4.723 billion last quarter, while the pre-tax profit is called a little lower at £2.324 billion from £2.558 billion.

The latest bank stress test results are due to be released on Sunday 26 October. The general market consensus is that none of the UK-based banks will fail to meet the required cover. That being said it, is expected that as many as 11 of the 130-odd banks up for review will not come up to scratch.

Considering the implications of the 24% stake that the UK taxpayer has in Lloyds, it is looking very unlikely that the bank will be able to disentangle itself before a general election can be held next year.

When Lloyds CEO, António Horta-Osório, took over in 2011 he set about axing 15,000 jobs as part of his cost-cutting plans. The speculation in the city is that he is about to embark on a further 9,000 job cuts. Although this will be bad news for the workforce, proactive measures like this are normally welcomed by the share price.

Since the beginning of August 2013 the share price has spent the majority of its time rangebound between 70p and 80p. If these cuts do materialise and the bank has no issue with the stress test then a move back up to the top of that range looks on the cards.

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