Note from Investec today:
Lloyds is, we believe, in very good shape. Although we do expect another weak statutory result in Q3 2013e, (reflecting a raft of legacy, one-off and/or accounting/tax issues), “underlying” metrics should show very material progress in terms of recovering revenues driven by sharp NIM expansion and a further decline in impairments. However, after an 11% 13-day surge, we now see Lloyds, on 1.5x 2013e tNAV, at fair value. We continue to prefer Lloyds to RBS (Sell) but see notably better value in Barclays (on 0.9x 2013e tNAV). Lloyds Q3 IMS is due on 29 October 2013 at 7am. We forecast an “underlying” PBT of £1.5bn in Q3e – marginally ahead of Q2 2013 and well ahead of prior year, reflecting a continuation of the materially lower impairment trends already seen through H1 2013. We continue to forecast a very sharp QoQ expansion in Net Interest Margin from 2.06% in Q2 to 2.14% in Q3 2013e. Even assuming “seasonally lower” Other Income, we still expect 1% QoQ growth in Total Operating Income to £4.7bn, with costs, impairments and claims flat QoQ.
In Q2 2013, basic EPS fell 98% QoQ from 2.2p to 0.0p, largely reflecting non recurrence of Q1 positive one-offs (St James’s Place, gilt sales, insurance volatility) and £0.6bn of fresh conduct charges. In Q3e, although we assume much lower incremental conduct costs, with the Heidleberg loss on disposal (£330m), the Australian DTA writedown (£350m) and other minor accounting noise, we anticipate an EPS of only 0.2p in Q3 2013e. Indeed, given that we forecast just 0.3p in Q4 2013e (partly reflecting an assumed £0.4bn conduct provision “top-up”) our full year 2013e basic EPS forecast of only 2.7p appears wildly out of line with the Bloomberg consensus expectation of 4.1p.
We downgrade from Buy to Hold. Our RoE-g/CoE-g-derived 80p target price is unchanged. We expect a 1p dividend to be declared in February 2014e."

Lloyds Banking Group PLC Q3 2013 Interim Management Statement

Significant progress in delivering our strategy and supporting our customers
· Continue to support the UK economy through lending to SMEs and first-time buyers, and the Help to Buy scheme
· Core loan book now growing in all divisions; returned mortgage lending to growth in the third quarter
· Returned TSB to the high street and launched a rebranded, revitalised Lloyds Bank in September
· Further strong performance in customer service and in reducing customer complaints
· Non-core asset reduction ahead of plan and capital accretive; year end non-core targets already achieved
· Further increased UK focus with sale of Australian and German businesses; 2014 international presence target achieved
· Further progress in strengthening capital position despite an additional charge for legacy PPI business in the quarter

Substantial increase in Group underlying profit and returns
· Underlying profit increased by 136 per cent to £4,426 million in the first nine months of 2013
· Return on risk-weighted assets increased to 2.01 per cent (first nine months of 2012: 0.74 per cent)
· Underlying profit in the quarter of £1,524 million, up 7 per cent on second quarter and 83 per cent on third quarter of 2012
· Underlying income of £14,019 million in the first nine months, up 1 per cent
· Net interest margin increased 13 basis points to 2.06 per cent, and to 2.17 per cent in the third quarter
· Costs reduced by 6 per cent to £7,110 million, and the impairment charge by 44 per cent to £2,483 million

Strong core business performance, with further increase in profitability and returns
· Core underlying profit increased by 20 per cent to £5,549 million; third quarter up 2 per cent on second quarter
· Core return on risk-weighted assets increased from 2.57 per cent to 3.17 per cent
· Core underlying income of £13,500 million, up 5 per cent (up 2 per cent excluding St. James's Place effects)
· Core margin improved 12 basis points to 2.44 per cent; core impairment charge down 9 per cent to £1,231 million

Statutory profit before tax of £1,694 million; tangible net asset value per share of 51.1p
· Statutory profit before tax of £1,694 million (nine months to 30 Sept 2012: loss of £607 million) including an additional charge for legacy PPI business of £750 million
· Tangible net asset value per share of 51.1p (31 Dec 2012: 51.9p; 30 Jun 2013: 54.6p); third quarter change mainly due to loss on capital accretive non-core disposals, related deferred tax write-off, and adverse pension and PPI movements

Continued balance sheet strengthening and risk reduction
· Group loan to deposit ratio improved to 114 per cent (31 Dec 2012: 121 per cent); core ratio maintained at 100 per cent
· Estimated pro forma fully loaded CRD IV core tier 1 ratio increased to 9.9 per cent (31 Dec 2012: 8.1 per cent)
· Non-core assets reduced to £70 billion (pro forma) in a capital accretive way and non-retail non-core to £30 billion

Guidance further enhanced; remain confident in delivering strategic plan
· Net interest margin now expected to be 2.11 per cent for full year 2013 (previously expected to be close to 2.10 per cent)
· Non-core assets expected to be around £66 billion, with non-retail non-core at around £26 billion, at the year end;
around £15 billion of non-retail non-core assets expected at the end of 2014
· Guidance for costs and capital position remains unchanged
· Expect to continue to grow core loan book in remainder of the year

Goldman Sachs Neutral 0.00 75.00 76.00 Retains

Investec Hold 77.89 80.00 80.00 Reiterates

Numis Hold 77.89 85.00 85.00 Downgrades

Apart from the extra PPI provision, I thought the results were pretty good considering the economic conditions. Seems the brokers weren't overly impressed!

Harry usual sell on the news reaction.

They've had quite a run since May, so a period of consolidation around the results may not be a bad thing.

I'm contemplating adding at this level as I think these have finally cleared the majority of their problems.

This lot keep banging their drum :- Espirito Santo Execution Noble Sell 77.91 79.62 59.00 59.00 Reiterates

trying to get in on the cheap.... some hope!

Halifax - hardly - see post 4515.

skin meant the broker not you!

Oh I see - I've just added a few @77.9p - my dearest purchase!

waiting for more market reaction but certainly much better news this morning.

Citigroup Neutral 0.00 83.00 83.00 Reiterates

Deutsche Bank Buy 0.00 77.00 90.00 Retains

Barclays Capital Overweight 0.00 85.00 85.00 Retains

(Reuters) - The UK's Lloyds Banking Group (LLOY.L) said it has opened an internal probe into its own currency trading after regulators started investigating possible manipulation in the market.

"We are aware that a number of regulatory and enforcement authorities are investigating foreign exchange trading and, as a result, we believe it is prudent to review our own foreign exchange trading over recent years and have commenced such a review," the bank said in a statement on Wednesday.

It said it would report anything it finds to the relevant authorities and assist them as requested.

Several banks, including Barclays (BARC.L) and UBS (UBSN.VX), have said they were cooperating with regulators investigating possible manipulation.

At this stage, Lloyds is not part of the investigation, a person familiar with the matter said.

Physician heal thyself!

get in first admit misconduct no fine seems to be the order of the day.

Broker note from Canaccord Genuity:
"Year to date, LLOY has returned 59% TSR, and trading on 1.5x current tangible book looks optically expensive vs. its 2 yr avg of 0.8x and UK peers on 0.8x. However a declining cost of equity, will likely drive further near term upside, due to i) dividend resumption, ii) rapidly improving capital levels iii) de-risking & better asset quality. Other near-term risk mitigants include, the Help to Buy scheme (mainly via a UK wealth effect) and more broadly the UK Government’s ‘ownership’ of the banking sector’s revival into the 2015 election. We re-iterate BUY with target price 85p (from 62p), seeing limited downside risk pre the May 2015 election.
Core LLOY has an impressive normalised RoTCE of 17.7%: While the incremental core earnings boost from declining deposit margins and falling loan losses is likely to fade somewhat in 2014, we expect that the core RoTCE will be supported by i) cost efficiencies, ii) business growth especially in underweight areas such as unsecured lending and corporate fee income where LLOY has only 12% UK market share vs. its 25% share of mortgages and current accounts.
Dividend resumption in 1Q14 = ‘clean bill of health’ from BoE Based on CEO 3Q13 results commentary, we think dividends will resume in 1Q14- which has signalling value to general investors that “LLOY is back” post crisis. A LIBe 2015e 4.0p dividend (c 55% payout) implies a 5.3% yield
Higher capital requirements a non issue: Investors will dust off their Modigliani and look through the BoE’s super-equivalence requirement (to operate with above Basel 3 capital levels) and view anything above 10% of RWAs as excess capital. By YE15 we forecast a Basel 3 core tier 1 of 11.5% implying excess capital of £4.1bn, 7% of market cap. While some will argue that any ‘excess’ capital is trapped, in fact it will be offset by a lower cost of equity (ignoring a minor tax shield impact)."

Sale of Asset Mgt Business SWIP

LLOYDS BANKING GROUP ANNOUNCES SALE OF ASSET MANAGEMENT BUSINESS SCOTTISH WIDOWS INVESTMENT PARTNERSHIP

Lloyds Banking Group plc (Group) announces that it has agreed to sell its asset management business Scottish Widows Investment Partnership Group Limited (SWIP) to Aberdeen Asset Management plc (Aberdeen) for an initial consideration payable in Aberdeen shares with a value of approximately £560 million, and a further deferred consideration, payable in cash, of up to £100 million, as described below. As part of the transaction, the Group will enter into a long-term strategic asset management relationship, whereby Aberdeen will manage assets on behalf of the Group.

The sale and strategic relationship are expected to result in a stronger asset management partner for the Group and its customers, combining Aberdeen and SWIP's strengths across fixed income, real estate, active and quantitative equities, investment solutions and alternatives. SWIP's management and employees will transfer to Aberdeen upon completion.

The sale does not include Scottish Widows, the Group's life, pensions and investment business, which remains core to the Group.

In consideration for SWIP, the Group will receive approximately 132 million new ordinary shares of Aberdeen, equivalent to approximately 9.9 per cent of its enlarged issued ordinary share capital. Aberdeen has also committed to deliver additional consideration 12 months after completion calculated with reference to the amount by which Aberdeen's volume-weighted average share price for the five trading days prior to completion (the "VWAP") is below 420 pence but above a floor of 320 pence. To the extent the VWAP is below 320 pence, the Group has the option to terminate the sale. Based on Aberdeen's share price of 427 pence at close on 15 November 2013, the Group's shareholding in Aberdeen would have a value of approximately £560 million. In addition, further consideration of up to £100 million will be payable in cash over a five year period depending on the growth in business generated from the strategic relationship with the Group.


more..

LONDON (Reuters) - Lloyds Banking Group will probably sell 30 to 50 percent of its stake in the 631 bank branches being re-branded as TSB when the new entity floats on the stock market in 2014, a newspaper reported.

TSB's Chief Executive Peter Pester told Britain's Sunday Telegraph that TSB will begin its roadshow relatively soon, with the listing planned for the middle of next year.

The share sale will also include a retail offering, Pester said.

Lloyds was ordered to sell the branches by European regulators as a penalty for receiving a 20-billion-pound ($32 billion) government bailout in the 2008 financial crisis.

Pester also said that in the ten weeks since TSB launched a new advertising campaign, customers had been signing up for current accounts twice as quickly as the group had estimated.