Lloyds Future More Stable But Still Not Bright

The outlook for Lloyds--while still not bright--finally has stabilised, but we're cutting our fair value estimate to reflect reduced projections

Erin Davis 22 August, 2011 | 4:04PM
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Lloyds (LLOY) nearly destroyed itself in 2008 with its ill-considered acquisition of HBOS. Now, after more than two years of bailouts and struggle, the bank finally appears to be righting itself.

In our opinion, the outlook for Lloyds--while still not bright--finally has stabilised. While we don't expect Lloyds to earn the 20%-25% return on equity it once regularly garnered, we think the bank will generate a 9% ROE by 2013.

We are lowering our fair value for Lloyds by 20p per share as we lower our projections for trading and insurance earnings in response to the difficult environment.

Read the entire note and research report here.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Lloyds Banking Group PLC52.20 GBX0.58Rating

About Author

Erin Davis  is a senior banking analyst for Morningstar.

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