Lloyds Banking Preview: Motor Finance And Capital Returns

Lloyds Banking 1Q24 statement is on 24-Apr, the slowing revenue environment will be important but perhaps overshadowed by any news on the FCA Motor Finance review and/or further on management’s relative aggressive language towards increasing leverage.

• Results (on 22-Feb) were broadly in line at net profits with higher costs offset by lower loan losses (and better non-performers). A big equity buyback was announced (though some buyback was expected) with management seemingly relaxed about the FCA Motor Finance review. It guided to further “pay down” of CET1 i.e. increased leverage.
• Lloyds’ spreads are 31bp tighter YTD (broadly in line with EUR IG banks), its equity is up 14% since results (+18% incl. dividend) vs. SX7P +12%, so it’s been a solid performer across asset classes.
• On estimates, revenue and EPS estimates have both been trimmed but by barely 1% so, broadly speaking, little change. That motor finance review promises to be the big delta when we start to get some clarity on potential penalties and restitution.

Results are 0700 (London time) with conf call at 0930, available at: https://web.lumiconnect.com/#/m/193958827