Lloyds and RBS results set to highlight differing fortunes
Lloyds will post its figures on Thursday as it edges ever-closer to being fully returned to private hands, with the Government stake being cut to below 2% earlier this month and the City expecting the holding to be sold off in its entirety by June.
The lender enjoyed a robust 2016, posting its highest annual profits for a decade, with bottom-line profits more than doubling to £4.24 billion from £1.64bn in 2015.
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Hide AdAnalysts at UBS expect Lloyds to have enjoyed a solid start to the new year, forecasting pre-tax profits to have nearly doubled once again in the first quarter, to £1.21bn from £654m a year earlier.
But the vast improvement is largely due to the absence of last year’s hefty £790m charge from its controversial move to buy back expensive bonds from investors.
On an underlying basis, UBS is pencilling in a 6% fall in quarterly profits to £1.94bn.
Lloyds has also recently announced an extra £350m to cover mis-sold payment protection insurance (PPI) claims, which will come off its first-quarter bottom line, while earlier this month it put aside £100m to cover compensation for victims of fraud at the hands of former HBOS staff.
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Hide AdUBS said the wider economy’s prospects will be of key interest for Lloyds, given its role as a major mortgage lender, adding that another focus will be succession planning for boss Antonio Horta-Osorio.
Speculation is mounting in the City that the Portuguese banker will look to leave Lloyds once the Government sells out, with the top job at HSBC tipped as a possible next move.
Part-nationalised rival RBS follows with its results on Friday, in the wake of Chancellor Philip Hammond’s stark admission that the Government is prepared to sell its stake at a loss to the public purse.