Lloyds Banking Half Yearly Report

[idpickering]

Significant business progress with strong start to the Group’s latest strategic plan
 Successful delivery including Open Banking, the launch of Lloyds Bank Corporate Markets and the planned
integration of MBNA and Zurich’s UK workplace pensions and savings business
 Strong start to GSR 3 with increased strategic investment, together with a reduction in the underlying cost base
 Continued growth in targeted segments, including SME, consumer finance and financial planning and retirement
Delivering a strong and sustainable financial performance
 Statutory profit after tax of £2.3 billion, up 38 per cent, and return on tangible equity of 12.1 per cent
 Earnings per share increased 45 per cent to 2.9 pence per share reflecting the improved profitability
 Underlying profit increased 7 per cent to £4.2 billion reflecting increased income and lower total costs
 Net income of £9.0 billion, 2 per cent higher reflecting an improved margin of 2.93 per cent, higher average interest
earning assets at £436 billion and other income of £3.1 billion following a good second quarter
 Operating costs flat, despite increased investment and inclusion of the MBNA cost base; cost:income ratio further
improved to 47.7 per cent (including remediation) and 44.9 per cent (excluding remediation)
 Credit quality remains strong with no deterioration in credit risk indicators; gross asset quality ratio stable at 27 basis
points, with increase in net asset quality ratio to 20 basis points reflecting expected lower releases and write-backs
 Strong capital build of 121 basis points, including 25 basis points from the sale of the Irish mortgage portfolio, with
pro forma CET1 ratio, pre dividend, of 15.1 per cent
 Group’s Pillar 2A CET1 requirement reduced from 3.0 per cent to 2.7 per cent
 Increased interim ordinary dividend of 1.07 pence per share, in line with the Board’s progressive and sustainable
policy
 Tangible net assets per share increased to 52.1 pence per share
Improved guidance for 2018
 Capital increase now expected to be c.200 basis points, pre dividend
 Net interest margin for the full year now expected to be in line with the first half of 2018
 Asset quality ratio now expected to be less than 25 basis points

And later;

Dividends on ordinary shares

An interim dividend for 2018 of 1.07 pence per ordinary share (half-year to 30 June 2017: 1.0 pence) will be paid on
26 September 2018. The total amount of this dividend is £765 million (half-year to 30 June 2017: £720 million).
Shareholders who have already joined the dividend reinvestment plan will automatically receive shares instead of the
cash dividend. Key dates for the payment of the dividends are:

https://www.lloydsbankinggroup.com/glob ... esults.pdf

[daveh]

Key dates are:

paid 26/09/18 ex date 16/08/18 and record date 17/08/18

Still not appeared via investegate for me so thank you Ian for posting.

[idpickering]

Key dates are:

paid 26/09/18 ex date 16/08/18 and record date 17/08/18

Still not appeared via investegate for me so thank you Ian for posting.

You are welcome Dave, and thanks for your input. The report was a bit of an epic!

Ian

[monabri]

An increase of 4.9%.

[miner1000]

An increase of 4.9%.

That's funny, it looks like 7% to me. Please tell me I am not wrong.

[daveh]

An increase of 4.9%.

Except the rolling 12 month divi is down as the last final was 2.05p compared to 2.2p the previous year due to a 0.5p special dividend that wasn't repeated. Performance looks pretty good from my brief overview of the report, so maybe the next final will be significantly up, particularly as we should be coming towards the end of PPI provisions

[tjh290633]

From page 68 of the PDF:

An interim dividend for 2018 of 1.07 pence per ordinary share (half-year to 30 June 2017: 1.0 pence) will be paid on
26 September 2018. The total amount of this dividend is £765 million (half-year to 30 June 2017: £720 million).
Shareholders who have already joined the dividend reinvestment plan will automatically receive shares instead of the
cash dividend. Key dates for the payment of the dividends are:
Shares quoted ex-dividend 16 August 2018
Record date 17 August 2018
Final date for joining or leaving the dividend reinvestment plan 5 September 2018
Interim dividend paid 26 September 2018
On 29 May 2018, a final dividend in respect of 2017 of 2.05 pence per share, totalling £1,475 million was paid to
shareholders.

TJH

[blobby]

With an interim dividend of 1.07p, I’ve now pencilled in my expectation of 2.14p for the final dividend which gives a total yield of 5.1%. I’d buy more if Lloyds were not already my largest shareholding. It seems to me that the company continues to be run very conservatively. The dividend is easily covered and extra cash is being ploughed back into the business or through the purchase of shares. It provides good evidence that the progressive and sustainable dividend policy as stated will be fulfilled, which is the second objective for my HYP shares.

[Gengulphus]

Except the rolling 12 month divi is down as the last final was 2.05p compared to 2.2p the previous year due to a 0.5p special dividend that wasn't repeated.

Actually, yesterday's results put the rolling 12-month dividend up from 1.00p+2.05p = 3.05p to 2.05p+1.07p = 3.12p. Before that this year, February's finals pushed it up from 1.70p+1.00p = 2.70p to that 3.05p if you don't count specials, or down from 1.70p+0.50p+1.00p = 3.20p to that 3.05p if you do count them. So the rolling 12-month dividend is down (from 3.20p to 3.12p) over the last year and if you count specials, but not as a result of yesterday's results.

Personally, I regard it as a clear case of why one should in general not count specials. The fact that a company has called a dividend "special" is a clear warning that shareholders should not expect it to be repeated - i.e. it's a welcome cash bonus (*), but not to be counted as part of their sustainable income from their shareholding. I.e. basically treat special dividends like Lottery or Premium Bond wins (minor ones, not jackpots!).

There's a possible exception for that in the case of companies that have said they intend to make their "specials" part of their regular dividend policy (which AFAIAA Lloyds has not). But treat even that with caution, as companies can change their dividend policy (see viewtopic.php?f=15&t=12943 for a recently-discussed example) and they'll probably be less reluctant to take the axe to a special than an ordinary dividend, since they have basically warned shareholders that they might do so by calling it a special.

(*) If it's not accompanied by a share consolidation, that is. If it is accompanied by a share consolidation, it's not even a cash bonus. Instead, it's effectively just the company compulsorily buying back a fraction of your shareholding at somewhere near market price (apart from being treated as dividend income rather than sale proceeds for tax purposes, if relevant). For a HYPer, that effective compulsory purchase might be welcome, but probably not...

Gengulphus