Lloyds share price set to slump as its hunt for a new CEO begins

The British lender could see its share price return to its May lows and fall further as the bank battles a rise in bad loans amid its race to find a successor to outgoing CEO Antonio Horta-Osorio.

Lloyds could see its share price return to its May lows and fall further as the bank battles a rise in bad loans amid its race to find a successor to outgoing CEO Antonio Horta-Osorio.

As if the beleaguered British lender hasn’t got enough to contend with, it is attempting to find a fitting replacement for its long-standing CEO amid acutely challenging market conditions and a low interest rate environment that is squeezing margins.

However, the lender has short-listed three top contenders to take the helm and steer Lloyds through the Covid-19 crisis, according to a recent report by the Mail on Sunday.

In the article, City insiders said they expect Vim Maru, head of Lloyds’ personal banking division, to take the top spot at the high street lender. However, many believe he faces stiff competition for the role from two colleagues, namely David Oldfield, head of Lloyds' business bank, and William Chalmers, the bank's newly appointed chief financial officer.

Whoever eventually takes the reigns at Lloyds has an uphill battle ahead of them, with the UK banking sector forced to navigate a myriad of headwinds that so far show no sign of petering out any time soon.

Lloyds is trading at 28p per share at the time of publication, with the stock down 54% year-to-date after falling from its pre-Covid-19 level of 63p which it held at the beginning of January.

Lloyds shifts 1000 staff to handle rise in bad debts due to Covid-19

To help handle a significant rise in bad debts as the economic impact of Covid-19 continues to deepen, Lloyds has diverted 1000 staff to assist customers who are falling behind on loan repayments.

Lloyds and its UK rivals like Barclays, HSBC, Royal Bank of Scotland and Santander have all warned of a major increase in the amount of people falling behind on loan repayments once the Government’s furlough scheme begins to unwind in October.

‘In the months ahead we know that many of our customers will be grappling with their finances following the impacts of Covid-19,’ a Lloyds spokesman said.

‘We want to make sure our colleagues are there when our customers need us.’

Lloyds’ profits are expected to be almost entirely wiped away by the economic impact of the coronavirus pandemic, with some City insiders worried that the lender could record a loss this financial year.

In fact, analysts’ consensus estimates suggest that Lloyds’ half-year (H1) results could see profits tumble from £2.9 billion to just £42 million for the period ending 30 June.

Lloyds will unveil its H1 results on Thursday 30 July.

Lloyds: technical analysis

Unless something changes soon, we are likely to see Lloyds return to its May lows and then follow that up with a move back to 25.5p and the lows of March, according to Chris Beauchamp, chief market analyst at IG.

‘The bounce to 38p from early June is now a distant memory, and having firmly dropped back below the 50-day SMA the share price is firmly in the grip of the short-sellers,’ Beauchamp said.

‘It would require a reversal back above 31.3p to provide hope that the shares have stabilised, with gains above 33p helping to provide a more bullish near-term view. But for now further declines seem likely,’ he added.

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