Lloyds Results 22-Feb; Revenues And (FCA) Reviews

Lloyds Banking (LLOY LN) reports 4Q23 results on 22-Feb which will likely focus on the revenue outlook and the FCA motor finance review, we feel.

• Key income statement points: revenue expectations are for a near-10% fall as rate tailwinds subside; the key net interest margin (NIM) is seen at 302bp, below mgmt guidance of c.3.1%. Domestic credit quality (which looked better than expected in Barclays UK results) will be closely watched, too.
• Credit metrics: non-performing loan levels (which only rose 11bp at Barclays UK) should be relatively flat and CET1 is seen at 14.2%. Considering mgmt’s internal target is closer to 13.5%, questions will be asked about the delta there.
• Other issues: Iran sanctions busting story in the press recently (citing both Lloyds and Santander) may generate some column inches but, more important, is the motor finance issue. The FCA has launched a wide-ranging review of improper conduct here and Lloyds is broadly the market leader. Some reports cite industry legal liabilities as high as GBP5bn and Lloyds has a high-teens market share in the area, we feel.