Lloyds TSB Group plc Ordinary 25p (LLOY)

Company overview

Group core activities are retail and corporate banking services along with insurance and investments services. The group also operates via the Lloyds TSB Scotland, Cheltenham & Gloucester (C&G) and Scottish Widows brand names with around 70,000 employees.

HL Comment (7 May 2008)

The group’s recent trading statement again proved reassuring in tone, with management noting that it is on track to deliver a "good performance" over the first half of 2008. Furthermore, management noted that the bank “had continued to capture market share in a number of key areas, whilst improving product margins”, likely to be at the expense of rivals. On the negative, management have decided to suffer a further write-down to profits of £387m, given the impact of market dislocations within the group’s Wholesale and International Banking divisions, although this is put into perspective when allowing for the £5.9 billion write-down which rival Royal Bank of Scotland recently announced.

Acting for negative investor considerations, whilst a rights issue is currently considered unnecessary by management, a sustained deterioration of prospects for the UK property market could force a rethink. On the positive, whether by luck of by judgment, the group’s slower pace of growth over recent years has left it in a stronger position to weather current difficulties in the credit markets. On balance, market consensus opinion is currently tentatively positive in tone. 

All yield figures are variable and not guaranteed.

Fundamental Data

* Prior to 31st December 2004, figures were stated under UK Generally Accepted Accounting Principles (GAAP). Recent figures stated under International Financial Reporting Standards (IFRS).