Lloyds Full Year Results

[idpickering]

Strong financial performance with improved profit and returns on both a statutory and underlying basis

· Statutory profit before tax at £5.3 billion, 24 per cent higher, with a return on tangible equity of 8.9 per cent

· Underlying profit of £8.5 billion, 8 per cent higher, with an underlying return on tangible equity of 15.6 per cent

· Net income at £17.5 billion, 5 per cent higher with improved net interest income and other income; net interest margin increased to 2.86 per cent

· Positive operating jaws; market leading cost:income ratio improved to 46.8 per cent

· Asset quality remains strong with asset quality ratio of 18 basis points

· Continued lending growth in targeted segments including SME and the open mortgage book

· Strong capital generation of 245 basis points with a CET1 ratio of 15.5 per cent, pre dividend and share buyback

· CET1 capital requirement of c.13 per cent plus a management buffer of around 1 per cent

· Total ordinary dividend of 3.05 pence per share, up 20 per cent on 2016, and a share buyback of up to £1 billion representing an increase in total capital returns of up to 46 per cent. Total capital return of up to £3.2 billion.

And later;

Dividend

The Board has recommended a final ordinary dividend of 2.05 pence per share. This is in addition to the interim ordinary dividend of 1.0 pence per share that was announced at the 2017 half year results. The total ordinary dividend per share for 2017 of 3.05 pence per share has increased by 20 per cent from 2.55 pence per share in 2016.

https://www.investegate.co.uk/lloyds-ba ... 00054607F/

[idpickering]

Also released today;

LLOYDS BANKING GROUP STRATEGIC UPDATE

'I am delighted to announce today our strategy for the next three years which will transform the Group for success in a digital world.



Over the last six years the Group has made huge progress and has built many strong capabilities including the largest and top rated digital bank in the UK. As we enter the next phase of our journey our team is determined to further improve the business, enhance customer experience and deliver superior shareholder returns.

https://www.investegate.co.uk/lloyds-ba ... 00054610F/

Summary Remuneration Announcement

The purpose of this announcement is to provide transparency in a single remuneration disclosure. It contains details of upcoming remuneration disclosures for the Group, including salary, Group Performance Share, Group Ownership Share awards and Fixed Share Awards for the Person Discharging Managerial Responsibilities (PDMR).

https://www.investegate.co.uk/lloyds-ba ... 00064623F/

[nmdhqbc]

So by my reckoning the dividend is flat year on year. They just put the special 0.5p last year to be non-special still totaling to 3.05p. Chose to buy back instead which they estimate to be the equivalent of a 1.4p per share. Not great for those income fund managers desperate for dividends.

[idpickering]

Brace yourself, as they missed the analyst's estimate.

Ian.

[idpickering]

So by my reckoning the dividend is flat year on year. They just put the special 0.5p last year to be non-special still totaling to 3.05p. Chose to buy back instead which they estimate to be the equivalent of a 1.4p per share. Not great for those income fund managers desperate for dividends.

Or us HYPers neither! I was intending to top up my Lloyds holdings next month. Hmm?

Ian.

[Darka]

Or us HYPers neither! I was intending to top up my Lloyds holdings next month. Hmm?
Ian.

I still think it's a good share to buy for the long term, and if the price drops then surely it's a better deal

[idpickering]

Or us HYPers neither! I was intending to top up my Lloyds holdings next month. Hmm?
Ian.

I still think it's a good share to buy for the long term, and if the price drops then surely it's a better deal

Very true Darka. I'm looking at the middle of next month, so who knows where it'll be by then anyway.

Ian.

[idpickering]

Brace yourself, as they missed the analyst's estimate.

Ian.

Surprisingly, up 1.8% on market opening. Not that we care about that here.

Ian.

[johnhemming]

Surprisingly, up 1.8% on market opening. Not that we care about that here.

I am holding Lloyds for capital gain. With an underling profit of over 8bn and current market cap of 50bn IMO It has some way to go. Spending 1.40p on buybacks rather than yield will tighten the market a bit as well. Daily trades look to be around 100M so they would potentially buy the equivalent of 15 days trades.

[granretire]

Dates:
xd 19 April
pay 29 May
(2.05p)

[monabri]

I refer and agree with Darka's comment above.

Over the years, Lloyds have set aside £18 billion for PPI claims. All that will stop in 2019. Hopefully that will be the rot treated and that sort of money can be redeployed going forward.

In the new tax year and when divis are available, Lloyds will be a strong top up contender for me.

[MoVert]

Time to ponder maybe deploying some of my accumulated LLPC pref share dividends into ordinaries?

[kempiejon]

Time to ponder maybe deploying some of my accumulated LLPC pref share dividends into ordinaries?

Well the ords yielding about 4.5% but forecast more and the prefs 5% the argument is made stronger, especially as the ords will hopefully increase dividends and you know the pref won't.

[Gengulphus]

So by my reckoning the dividend is flat year on year. They just put the special 0.5p last year to be non-special still totaling to 3.05p. ...

Well, either one counts specials and sees Lloyds as having paid dividends of 0.00p, 0.75p, 2.75p, 3.05p, 3.05p for the five years 2013-2017, or one doesn't and sees them as having paid ordinary dividends of 0.00p, 0.75p, 2.25p, 2.55p, 3.05p for those years with a couple of essentially-one-off bonuses in the form of 0.5p specials. But both ways, one will have received (once the just-declared 2.05p final has been paid) the same amount in total, starting and ending in the same places.

So the only real difference lies in what one feels one can reasonably expect in the future. One way, the sequence of increases after resuming dividends for 2015 is +266.7%, +10.9%, 0.0%, suggesting a recovery that has ground to a halt; the other, it is +200.0%, +13.3%, +19.6%, suggesting a continuing strong recovery. IMHO both suggestions have to be treated rather cautiously, due to the shortage of data, but they do lead to very different ideas about the amount of dividend income one thinks one is likely to receive in the future - a HYPer's primary goal.

I don't feel I can reasonably entirely rule out either possibility. The continued-strong-recovery interpretation is more consistent with the traditional implied "don't expect this to be repeated each year" message of the term "special dividend", but that message has been eroded more recently by some companies using (IMHO abusing) it when their intended message is "do expect this to be repeated each year, we just think there's a slightly bigger chance that we won't be able to than for our 'ordinary' dividend". And Lloyds have cast a bit of doubt on their use of the term by repeating their special dividend for 2015 the following year...

But on the whole, I strongly favour the continued-strong-recovery interpretation over the recovery-ground-to-a-halt one. It seems more consistent with everything else I see in these results, and one repeat of a special dividend isn't very good evidence that the directors were intending to make it a regular event.

In any case, we'll get some better evidence around the end of July, when Lloyds' interim results come out. If there is a continued strong earnings recovery, we should see the directors declaring an interim dividend well above last year's 1.00p. If instead the recovery has ground to a halt, the interim dividend will probably be unchanged.

Gengulphus

[johnhemming]

lloyds have paid out billions in ppi (off thevtop of my head 18) this is coming to an end.

[vrdiver]

Over the last six years the Group has made huge progress and has built many strong capabilities including the largest and top rated digital bank in the UK.

https://www.investegate.co.uk/lloyds-ba ... 00054610F/

(my bold)

I wonder what First Direct think about that claim?

I'm sure LLOY are using the term in a very specific way, but FD are quite proud of their ratings! The point being, if Lloyds are bigging-up their progress, will it come back and bite when progress is assumed but not delivered? (not exactly an SI-aligned thought, more a curious meandering into director-speak and the gap between it and reality...)