Lloyds Banking Group PLC

Lloyds announces Full year results 21 Feb 2018 (today).

Initial recap of metrics

Firstly, looking at historic metrics, one sees that the group is coming of a historically high PE as pre-Tax recovers. The key fundamentals are posted below.

 

Key Fundamentals 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16
Revenue (£ m) 54804.00 53195.00 39845.00 30889.00 48313.00
Pre-Tax (£ m) 15361.00 415.00 1762.00 979.00 3888.00
EPS -2.00p -1.20p 1.70p 0.80p 2.40p
PE n/a n/a 44.60 91.34 26.05
PEG n/a n/a n/a -1.73 0.13
EPS Growth n/a n/a n/a -52.94% 199.18%
Dividend Cover -0.51 -0.30 0.44 0.08 0.15
Dividend Yield 8.19% 5.02% 5.09% 13.82% 26.12%

 

The headline figure Net interest income increases by 8% to 12,320 (2017) from 11,435 (2016). From the reported data below, it is observed that generally most key metrics are moderately better.

Also of note is a Share buyback up to £1 billion which represents approximately 2% of the current market value (at time of writing).

 

 

So generally speaking a positive.

Stock pricing and value

Now observing stock price it is seen that this is reflected in stock price. The dividend is small, but is beginning to have a basis of cover and should support a continued stable share price. We see the dividend history here coming of a zero base (Banking crisis 2007, capital raises etc.) back to a level of moderate reality.

 

 

Summary Remuneration Announcement

Unsurprisingly, management appears to have been overcompensated for what is an average performance in an otherwise bull market. The remuneration report is found here: http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/LLOY/13540189.html

The above holds true on the basis of all other comparable banks including Metro Bank reporting a huge gain in similar metrics. Given a massive over-payment, the shareholder should expect a moderate performance only as management will continue to be richly rewarded for low shareholder return.

The fact that this dynamic is set to persist means shareholders will observe only moderate improvements at best to continue for some time.

 

Summary

Lloyds continues to come of a low base. Key metrics are improving at a moderate rate. The company can mange its impairments, PPI and other conduct provisions within existing framework so retains intrinsic value due to this measure. The share price will remain robust. However, with the mindset established at executive level, the stock will remain market perform.

 

 

 

 

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