Lloyds Banking Group (LLOY) - Final Results.

[daveh]

Perhaps with the share price still well down and the company undervalued they have decided now is a good time to direct more of the cash available for shareholder returns to buybacks rather than dividends. Long-term this may be a good move.

Makes a change from my other companies doing buybacks at higher levels than today's share price. I remember pyad railing against buy backs, the HYPer would rather have those shares in their own pocket to distribute as they see fit. I suppose I could get behind the concept if I really thought the best thing a company could do with profits is to buy and cancel their own shares leaving less in the float so dividend money goes further on a per share basis. But didn't we just see the number of shares in circulation compared to years ago had rocketed?

My view is that buybacks are good if the share price is bad. However in past times I've seen too many companies buying back their shares when they were clearly fully-priced and not when they were clearly cheap. To be fair to Lloyds now is a good time to buy back their shares, and they need to buy back loads to get the share count down to what it was before the GFS.

Edit to add yes the share count has gone from ~6b in 2006 to ~60b today. So only 54b to buy back at an approx cost of £27b at today's share price.

[ayshfm1]

It isn't quite the same animal as back then, so possibly not quite as bad as it looks? I'm not sure I'm buying that either!

HBoS was in trouble for reasons most of us are aware of and the then Government didn't want to bail it out. So they proposed to the Lloyds that they could take it over and they would "ensure" the competition commission waived it through. This put a lot more shares into circulation as HboS share were swapped for Lloyds ones.

In the end the Government still had to bail HBoS out, but I imagine the cost was less as the poor Lloyds shareholders did some of the heavy lifting.

As an aside, they "forgot" that the UK was in fact run from Brussels and such decisions were not theirs to make. The EU took a rather different view, made it very clear to Brown and Darling who was really in charge and then forced Lloyds to take some rather unpalatable actions.