Lloyds share price: 4 things to watch out for in its half-year results

The UK lender unveils its half-year results on Wednesday, with its share price continuing to be hampered by weaker consumer lending and the prospect of a no-deal Brexit.

Lloyds Banking Group is set to unveil its half-year results on Wednesday, with analysts expecting a relatively stable performance, though its share price continues to be weighed down by consumer lending and no-deal Brexit concerns.

IG looks at some of the key things to watch out for ahead of its half-year results.

Analysts expect decent half-year performance

Lloyds is expected to report pre-tax profit of £4.3 billion, up from £3.1 billion a year earlier, while revenue is expected to rise to £9.4 billion.

However, the bank’s first quarter results will likely still be on the minds of many investors after revealing flat revenues and showed the lender remains burden by a rise in bad loans on its balance sheet.

Lloyds contends with weakening consumer lending

The British lender continues to contend with weakening consumer credit growth, which poses a major challenge to Lloyds and the wider UK banking sector.

However, the bank’s mortgage growth remains promising and has been able to offset weaker demand for consumer credit to a certain degree.

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Lloyds continues with cost-cutting measures

The bank continues with its cost-cutting and capital management plans, which are designed to lift the bank’s return on tangible equity (ROTE).

At the least, this strict approach to cost control will help lessen the weakening of consumer loan growth, although it will be unable to counter it entirely.

No-deal Brexit threatens to hurt UK lenders

Lloyds and its rivals in the UK banking sector remain fearful about the prospect of a no-deal Brexit -something that has become more likely since the appointment of Boris Johnson as the new British prime minister.

In the event of a no-deal departure from the EU, Lloyds will likely see a sharp decline in loan rates and larger impairment fees for the bad loans on its books as the wider UK economy is expected to struggle in the near-term.

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