Lloyds Shares Jump as Bank Profits Hit 10 Year High

Shares in Lloyds Bank have rallied 4% as the bank revealed fourth quarter profits are the highest on record for a decade

Derya Guzel 22 February, 2017 | 12:59PM
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Lloyds (LLOY) latest annual report reveals a 10-year high in profits for the high-street bank. Pre-tax profits for the fourth quarter hit £973 million, compared to losses of more than £500 million in the last three months of 2015.

The bank reported a net income of £2 billion for 2016, fourfold the previous year’s £466 million.. While net interest income and net fees saw a slide, hinting at signs of the difficult environment for banks, net trading income supported overall top-line growth. Following the full-year results, Morningstar equity analysts will be maintaining our fair value estimate of 77p per share and our narrow moat rating for the bank, meaning we consider it to have a slight competitive advantage over peers. Overall, we view Lloyds' 2016 results as a confidence builder for shareholders and an important milestone for achieving management's long-term targets.

Lloyds is now one of the sturdiest banks in Europe. It nearly destroyed itself in 2008 with its notorious acquisition of HBOS, and the U.K. government ended up with 43.5% of the combined group. Now, after years of bailouts and setbacks, the bank has essentially righted itself, and the government has largely sold down its stake. Lloyds has closed HBOS’ worst businesses, wrote down much of its bad assets, has re-emerged as the powerhouse U.K. bank that it once was.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Lloyds Banking Group PLC43.32 GBX0.40Rating

About Author

Derya Guzel  is an Equity Analyst for Morningstar

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