The Lemon Fool

Lloyds Banking Group (Lloyds, or the Group) today announces that it intends to acquire the Embark Group (Embark), a fast growing investment and retirement platform business. Embark enhances the Group's capabilities to address the attractive mass market and self-directed Wealth segment, completing its Wealth proposition. Embark will also enable the Group to re-platform its pensions and retirement proposition, delivering a market-leading platform for intermediaries and significantly strengthening its offering in Retirement, an important growth market.

Breelander wrote:Acquisition of Embark Group

Embark Group is a fast growing, diversified, financial services business and one of the largest retirement solutions providers in the UK. We operate successfully in both the advised and institutional areas of the retirement market through our leading range of pension, wrap platform, research and consultancy services.

Lloyds is planning to become one of the UK's biggest landlords as it aims to buy 50,000 homes in the next decade, the banking group has confirmed.

The banking giant is to charge tenants rent as a private landlord under its recently launched Citra Living brand.

The Financial Times, which first reported the story, said the bank was aiming to buy 10,000 homes by the end of 2025.

Lloyds is currently the largest mortgage lender in the UK, providing nearly one in four home loans.

Citra Living will initially start small and test its plans in the rental market, with a focus on buying and renting newly-built properties. Its first cohort of homes for rent will begin with 45 new apartments at Fletton Quays in Peterborough.

The Financial Times reported that if Lloyd hit its 2025 target, it would make Citra larger than the current size of Grainger, the UK's current largest private residential landlord, which owns about 9,100 properties and has a market capitalisation of £2.1bn.

Based on current property prices and rental estimates, this would create a portfolio worth £4 billion, generating pre-tax profits of around £300 million, the paper said.

monabri wrote:https://www.bbc.co.uk/news/articles/cjkdyy9xgn3o

"Lloyds is planning to become one of the UK's biggest landlords as it aims to buy 50,000 homes in the next decade."

What are they thinking?

Dod101 wrote:

monabri wrote:https://www.bbc.co.uk/news/articles/cjkdyy9xgn3o

"Lloyds is planning to become one of the UK's biggest landlords as it aims to buy 50,000 homes in the next decade."

What are they thinking?

As I said on another thread, presumably this is just using some of their reserves to buy hard assets, rather like Legal & General has done in buying a housebuilder or two.

Dod

monabri wrote:https://www.bbc.co.uk/news/articles/cjkdyy9xgn3o

"Lloyds is planning to become one of the UK's biggest landlords as it aims to buy 50,000 homes in the next decade."

What are they thinking?

monabri wrote:50,000 homes at £200,000 each....£10 billion.

The concern that crossed my mind was, suppose that there are economic difficulties ahead and increased job losses, are Lloyds going to turf families out onto the street for non payment of rent? Then I see political pressure ( remember the recent Prudential Regulation Authority interference) stepping in and suddenly Lloyds is a landlord with a reduction in income...translation:no dividend payments!

I'm really getting cold feet over Lloyds, they're a bank not a landlord. Besides which, if interest rates do go up, what will happen to house prices which are already overheated.

Arborbridge wrote:

monabri wrote:50,000 homes at £200,000 each....£10 billion.

The concern that crossed my mind was, suppose that there are economic difficulties ahead and increased job losses, are Lloyds going to turf families out onto the street for non payment of rent? Then I see political pressure ( remember the recent Prudential Regulation Authority interference) stepping in and suddenly Lloyds is a landlord with a reduction in income...translation:no dividend payments!

I'm really getting cold feet over Lloyds, they're a bank not a landlord. Besides which, if interest rates do go up, what will happen to house prices which are already overheated.

Do your cold feet therefore extend to LGEN?

monabri wrote:50,000 homes at £200,000 each....£10 billion.

The concern that crossed my mind was, suppose that there are economic difficulties ahead and increased job losses, are Lloyds going to turf families out onto the street for non payment of rent? Then I see political pressure ( remember the recent Prudential Regulation Authority interference) stepping in and suddenly Lloyds is a landlord with a reduction in income...translation:no dividend payments!

I'm really getting cold feet over Lloyds, they're a bank not a landlord. Besides which, if interest rates do go up, what will happen to house prices which are already overheated.

Edit. £4bn portfolio.? They're obviously using different assumptions about housing prices .... and I'd be dubious about the 7.5% yield pre tax.

Bouleversee wrote:Why isn't there a floor plan? Can't form any judgment without that. Is the kitchen in the living room and what are the bedrooms like? I wonder who they are aiming at.

monabri wrote:

Bouleversee wrote:Why isn't there a floor plan? Can't form any judgment without that. Is the kitchen in the living room and what are the bedrooms like? I wonder who they are aiming at.

2nd homes for folk working at the city council new HQ Monday to Friday? It does look like the kitchen and living area are open plan.

monabri wrote:Edit. £4bn portfolio.? They're obviously using different assumptions about housing prices .... and I'd be dubious about the 7.5% yield pre tax.

HIGHLIGHTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2021

Continued business momentum and solid financial performance

• Strong progress on Strategic Review 2021 priorities, including an all channel net promoter score and mobile app net promoter score above 2021 targets, improved capabilities in Markets products and a 12 per cent increase in new clients using the Group's improved merchant services proposition

• Statutory profit before tax of £5.9 billion (£2.0 billion in the quarter) and underlying profit of £6.3 billion (£2.2 billion in the quarter), both up significantly compared to the first nine months of 2020

• Solid net income of £11.6 billion, up 8 per cent (up 20 per cent compared to the third quarter of 2020), benefiting from increased average interest-earning assets of £443.0 billion, a banking net interest margin of 2.52 per cent and other income of £3.8 billion, alongside a reduction in operating lease depreciation

• Sustained cost discipline with operating costs of £5.6 billion, up 1 per cent compared to the first nine months of 2020, including the impact of rebuilding variable pay. Remediation charge of £100 million in the third quarter

• Asset quality remains strong. Net impairment credit of £740 million, including a net credit of £84 million in the third quarter, based upon improvements to the macroeconomic outlook for the UK, combined with robust credit performance. Management judgements in respect of coronavirus of c.£1.2 billion retained

Balance sheet and capital strength further enhanced

• Loans and advances at £450.5 billion, up £10.3 billion (£2.8 billion in the third quarter), driven by strong growth of £15.3 billion in the open mortgage book (£2.7 billion in the third quarter)

• Customer deposits of £479.1 billion, up £28.4 billion (£4.7 billion in the quarter), with continued inflows to the Group's trusted brands, including Retail current accounts up £12.2 billion. Resulting loan to deposit ratio of 94 per cent provides a strong liquidity position and significant potential to lend into recovery

• Strong capital build of 159 basis points. CET1 ratio of 17.2 per cent after dividend accrual, significantly ahead of the ongoing target of c.12.5 per cent, plus a c.1 per cent management buffer and regulatory requirement of c.11 per cent

Outlook

• Given our solid financial performance and the improved UK macroeconomic outlook, the Group is enhancing its guidance for 2021. Based on the Group's current macroeconomic assumptions:

- Net interest margin now expected to be modestly above 250 basis points

- Operating costs expected to be c.£7.6 billion

- Impairment now expected to be a net credit for the year

- Return on tangible equity now expected to be over 10 per cent, excluding the c.2.5 percentage point benefit from tax rate changes

- Risk-weighted assets in 2021 expected to be below £200 billion

• The Group continues to target a return on tangible equity in excess of its cost of equity in the medium term