Insightful Word
  • Investing
  • Stock
  • Economy
  • Politics
  • Investing
  • Stock
  • Economy
  • Politics
No Result
View All Result
Insightful Word
No Result
View All Result
Home Investing

Lloyds share price climbs despite 20% profit drop: what analysts are saying

admin by admin
February 20, 2025
in Investing
0
Lloyds share price climbs despite 20% profit drop: what analysts are saying
0
SHARES
4
VIEWS
Share on FacebookShare on Twitter

Lloyds Banking Group has reported a 20.4% drop in annual profit, falling short of market expectations as the UK’s largest mortgage lender set aside additional funds for potential motor finance payouts.

The bank posted a pretax profit of £5.97 billion for 2024, down from £7.5 billion the previous year and below analyst forecasts of £6.39 billion.

Lloyds attributed the decline to the impact of interest rate cuts on lending margins and the sluggish recovery of the UK economy.

Lloyds’ financial performance

Lloyds’ net interest margin—the difference between savings and loan rates—fell 16 basis points to 2.95%, while underlying net interest income declined 7% to £12.8 billion.

The bank also recorded a sharp decline in fourth-quarter profits, with pretax earnings falling 55% to £824 million from £1.8 billion in the previous quarter.

Despite the overall downturn, net income for the fourth quarter rose by 3.4% to £4.37 billion compared to the same period last year.

However, underlying profit for the quarter plunged 43.1% year-on-year to £993 million, with earnings per share down 41.2% to just 1 pence.

The bank has set aside a £700 million provision for potential motor finance remediation costs, bringing its total provision to £1.15 billion, including the £450 million provided in 2023.

Lloyds stated that the final financial impact remains uncertain.

Dividend increase and share buyback

Despite the profit decline and additional provisions, Lloyds has raised its dividend by 15% to 3.17 pence per share, including a full-year distribution of 2.11 pence.

It also announced a share buyback program worth up to £1.7 billion as part of efforts to return excess capital to shareholders.

Chief executive Charlie Nunn maintained an optimistic outlook, stating, “The group delivered a robust financial performance in 2024. Pleasingly and as expected, income grew in the second half of the year, supported by a rising banking net interest margin and momentum in other income.”

The bank reported that total loans and advances to customers rose by £10.2 billion to £459.9 billion last year, including £6.1 billion in UK mortgage growth.

Customer deposits also saw a significant increase of £11.3 billion, reaching £482.7 billion.

Lloyds results: market reaction and analyst views

Lloyds shares rose more than 2% in early trading despite the lower-than-expected profits, as investors responded positively to the dividend hike and share buyback announcement.

Richard Hunter, head of markets at Interactive Investor, noted that Lloyds remains resilient despite multiple challenges. “Lloyds finds itself in the midst of attacks from several angles, but all things considered, it is standing up defiantly to the challenges,” he said.

However, he cautioned that the motor finance overhang and the recent surge in Lloyds’ share price could limit future gains.

“Despite the headwinds, the shares have been positively related of late, adding 47% over the last year, compared to a 13% rise in the FTSE 100. Without a doubt, Lloyds remains a longer-term play bolstered by generous shareholder returns. That being said, the motor finance overhang and the higher valuation attached to the recent share price gain leaves the shares up with events, with the market consensus coming in at a hold for now.”

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the £700 million motor finance charge had “tarnished” an otherwise strong quarter.

“While you could argue the provision is overly cautious, Lloyds holds the largest exposure of any major UK bank, and the outcome remains uncertain,” he said.

Despite this, he pointed to Lloyds’ improving loan quality as a positive sign.

“Excluding the motor finance charge, fourth-quarter figures exceeded expectations, thanks to borrowers performing better than anticipated. Remarkably, Lloyds has managed to improve its loan quality over the year, defying fears that borrowers would struggle under persistent inflation.”

The post Lloyds share price climbs despite 20% profit drop: what analysts are saying appeared first on Invezz

Previous Post

These S&P 500 index stocks are leading in 2025: are they good buys?

Next Post

How billionaire Caltagirone could influence Italy’s banking M&A wave

admin

admin

Next Post
How billionaire Caltagirone could influence Italy’s banking M&A wave

How billionaire Caltagirone could influence Italy’s banking M&A wave

Trending News

India’s former PM Manmohan Singh cremated with state honours

India’s former PM Manmohan Singh cremated with state honours

December 28, 2024
Weekly equities preview: September jobs report to take center stage

Weekly equities preview: September jobs report to take center stage

September 30, 2024
Fed to cut rates by 25bps in Nov and Dec, approach neutral level sooner- Reuters poll

Fed to cut rates by 25bps in Nov and Dec, approach neutral level sooner- Reuters poll

September 20, 2024
Subscribe to Insightful Word


    Recent News

    Vietnam firms to sign $2B deal for US agricultural products

    Vietnam firms to sign $2B deal for US agricultural products

    June 3, 2025
    Here’s why South Korea’s KOSPI Composite Index is soaring

    Here’s why South Korea’s KOSPI Composite Index is soaring

    June 3, 2025
    Asian markets close: Hong Kong leads gains, Nikkei flat; Sensex falls over 630 pts

    Asian markets close: Hong Kong leads gains, Nikkei flat; Sensex falls over 630 pts

    June 3, 2025
    US stocks unchanged on market open: S&P up 0.09%, Nasdaq up 0.19%

    US stocks unchanged on market open: S&P up 0.09%, Nasdaq up 0.19%

    June 3, 2025

    Recent News

    Vietnam firms to sign $2B deal for US agricultural products

    Vietnam firms to sign $2B deal for US agricultural products

    June 3, 2025
    Here’s why South Korea’s KOSPI Composite Index is soaring

    Here’s why South Korea’s KOSPI Composite Index is soaring

    June 3, 2025

    Latest News

    • Vietnam firms to sign $2B deal for US agricultural products
    • Here’s why South Korea’s KOSPI Composite Index is soaring
    • Asian markets close: Hong Kong leads gains, Nikkei flat; Sensex falls over 630 pts

    About Insightful Word

    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools
    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools

    Copyright © 2025 Insightfulword.com. All Rights Reserved.

    No Result
    View All Result
    • Investing
    • Stock
    • Economy
    • Politics

    Copyright © 2025 Insightfulword.com. All Rights Reserved.