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Lloyds Banking lifts guidance and shrugs off bad debt concerns

Published 27/07/2022, 09:18
© Reuters.  Lloyds Banking lifts guidance and shrugs off bad debt concerns

Lloyds Banking Group (LON:LLOY) shares rose 5% to 45.7p after raising guidance for the full year following a strong first half.

The banking giant reported net income of £8,451m in the six months to June 30th, up 12%, although EPS slipped to 3.7p from 5.1p.

Shore Capital said it expects to upgrade its full-year profit before tax forecast to around £7bn from the current £6.82bn and EPS to at least 7p from 6.5p.

Reiterating its buy rating, analyst Gary Greenwood said he believed the market is misunderstanding and so mispricing the significant improvement in bank balance sheets since the Global Financial Crisis.

The strong results helped pull NatWest (LON:NWG) Group shares higher as well ahead of its results later this week.

Lloyds had been tipped to do well ahead of the numbers and said banking net interest margin is now expected to be greater than 280 basis points with return on tangible equity expected to top 13%, both of which are upgrades.

Capital generation is now expected to be greater than 200 basis points.

The bank added asset quality remained strong with no current deterioration seen across the portfolio even with the uncertain macro backdrop.

"Our strong financial performance demonstrates the resilience of our business model and customer relationships, and has enabled us to enhance guidance for 2022," said Charlie Nunn, chief executive.

The interim dividend is 0.80p per share, up 20%, and will cost £550mln

Read more on Proactive Investors UK

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