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Lloyds share price: 5 things to watch in 2018 results

There are five important factors to look for before Lloyds 2018 earnings report.

Many investors are eagerly awaiting Lloyds 2018 results this week. Here are five questions than can greatly affect Lloyds earnings.

Will Lloyds profits and net income meet expectations?

Financial analysts expect that Lloyds profits will rise to £6.4 billion from £5.3 billion a year. There’s also expected to be an additional £1.8 billion to pre-tax revenue.

The expected pre-tax revenue will grow 20% for Lloyds’ 2018 results. Lloyds Q3 results were better-than-expected, with £4.69 billion in revenue.

Financial experts project that Lloyds net income will increase as well. Lloyds net income is predicted to grow to £17.5 million and operating costs to remain at £8.2 billion.

Will digitisation hurt or help Lloyds earnings?

Lloyds has been fully invested in digitisation by cutting 6000 employees in autumn 2018 to add 8000 workers to its tech and data services.

‘The group is investing to further digitise the bank and will refresh some existing roles and create new roles within its structure, whole also providing comprehensive retraining for colleagues to help them build their capabilities to meet the demands of these future roles,’ said Lloyds in a statement.

Investors will be watching to see if the digitisation focus and cost-cutting measures paid off for Lloyds results.

Will credit be an important part of Lloyds earnings?

Lloyds earnings could be boosted by its acquisition of the MBNA credit card company. Sophie Lund-Yates, equity analyst at Hargreaves Landsown, noted that investors will look at the performance of the credit card business to see if Lloyds’ results can remain steady. . Investors will also be watching to see if the slowing UK economy will put more bad loans in the bank's loan books and impact Lloyds results.

'This means extra attention needs to be paid to the performance of Lloyds’ recently acquired MBNA credit card business, and its mortgage book. While unemployment and interest rates remain low – usually good news for lenders – it’s important bad loans and default levels aren’t creeping up. [This] week gives Lloyds the chance to prove it’s in a sturdy position, regardless of the wider uncertainty,’ said Sophie Lund-Yates.

Could Brexit hurt Lloyds earnings?

Brexit is also a major factor that can affect Lloyds’ 2018 earnings. While Lloyds’ Q3 earnings were better-than-expected, Lund-Yates notes that Brexit could have an impact on Lloyds’ profits as a mortgage lender and affected the availability of credit for customers.

‘As the UK’s largest mortgage lender, it’s here that investors should focus their attention. The domestic lending space isn’t as rosy as it once was. Brexit uncertainties have weakened demand for, and availability of, credit,’ said Lund-Yates.

Will new hires help Lloyds share price in 2019?

Investors looking at the bank’s future profits in 2019 could see some signs of major change coming to the financial institution. Lloyds is hiring 700 new financial advisors, possibly before another acquisition. Lloyds profits could be helped by the recent acquisition of new talent as well. In addition to the new financial advisers, the bank also hired a new chief financial officer (CFO), William Chalmers. The former Morgan Stanley banker has been touted by chief executive officer, (CEO), António Horta-Osório as a pivotal new part of Lloyds executive team.

Lloyds share price has been slightly higher despite the volatility of Brexit, and these new hires may help increase Lloyds stock.

‘William has a proven track record in financial services and will be a great addition to the executive team,’ said Horta- Osório.

Lloyds 2018 results will be closely watched by investors to see if Brexit and other factors have impacted one of the largest banks in the world.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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