Lloyds share price: 3 things to watch out for ahead of its Q3 results
Like many of its peers, Lloyds will likely take a large hit to its bottom line from PPI related charges in its Q3 earnings on Thursday, but this is not the only thing likely to weigh on its performance this quarter.
Lloyds will unveil its Q3 earnings on Thursday, with investors expecting Payment Protection Insurance (PPI) related charges to put a significant dent in its bottom line.
However, it is not the only thing likely to weigh on the bank’s performance this quarter and certainly not the main area of focus for investors ahead of its Q3 results.
PPI charges will hit Lloyds profits hard
PPI charges are expected to make a big dent in Lloyds profits when it unveils its Q3 results on Thursday.
In fact, analysts at Citi expect the bank’s PPI bill to come in at £1.55 billion, resulting in the lender reportinh pre-tax profit of £500 million in its third quarter.
Thankfully, the PPI claim deadline passed on August 29. However, the bank was forced to suspend its share buyback programme in September after warning investors that compensation costs in Q3 will be between £1.2 billion - £1.8 billion – bringing Lloyds total PPI bill to £26 billion.
Lloyds faces uphill battle amid challenging market conditions
Putting PPI aside, Lloyds and other UK lenders are still weighed down by a myriad of headwinds, including a highly competitive mortgage market and a prolonged low interest rate environment that is squeezing net interest margins.
UK banks are also struggling to keep operating costs down leading many lenders to cut thousands of jobs, while growth is being hindered by a slowdown in global economic activity amid Brexit uncertainty and the ongoing US-China trade war.
You can go long or short Lloyds with IG using derivatives such as CFDs.
Lloyds share price remains resilient
Despite the challenges it faces, Lloyds share price has performed well this year, up 14% since the beginning of January.
Its success is owed, in part, to Lloyds successful pivot towards retail banking, with the lender well-positioned to generate attractive returns for shareholders under this strategy.
However, with the bank so focused on retail, its performance relies on the strength of the UK economy, which continues to be hampered by Brexit uncertainty.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.