Lloyds Bank’s shares go on a nosedive after Britain’s biggest mortgage bank declared that the first quarter revenue was a bit low following the cost-cutting attempt to offset an income drop.
24 Apr 2016 – Bloomberg
Pretax profit, excluding one-time items and its previously owned TSB banking unit, dropped to 2.05 billion pounds ($3 billion) from 2.06 billion pounds a year ago, the London-based bank said in a statement Thursday. While that beat the 2 billion-pound average estimate of four analysts surveyed by Bloomberg, revenue fell 1 percent to 4.4 billion pounds, missing some analysts’ estimates.
Chief Executive Officer Antonio Horta-Osorio is under pressure to intensify cost cutting to boost profit as the Bank of England keeps interest rates at a record low amid concerns over slowing economic growth. The government is looking to sell its remaining 9.2 percent stake in Lloyds after the bank paid a bumper dividend for 2015 and signaled the end of charges for wrongly sold payment protection insurance that have cost the lender more than 16 billion pounds.
“Revenue growth was maybe a little disappointing,” said Gary Greenwood, an analyst at Shore Capital in Liverpool, England with a buy rating on shares. “It was sort of flat and boring. To be honest, there’s nothing I can get too excited about one way or another.”
The stock fell 3 percent to 67.2 pence at 8:29 a.m. in London trading and has slipped about 8 percent so far this year. It remains below the 73.6 pence average price the U.K. paid in its 20.5 billion-pound bailout of the bank at the height of the financial crisis.
“We view these as mixed results,” Citigroup Inc. analysts led by Andrew Coombs wrote in a research note. “We believe regulatory and Brexit risks may hold back the stock in the medium-term.”