25th Oct 2023 11:35
(Alliance News) - Lloyds Banking Group PLC stuck to its margin guidance on Wednesday, soothing some investor worry after Barclays PLC cut its outlook, though the lender's third-quarter results were still something of a mixed bag.
The stock was up 1.4% at 41.16 pence each in London late Wednesday morning. It had fallen 2.0% on Tuesday in a negative read-across from the Barclays results, however.
Lloyds on Wednesday said its net income rose 0.7% on-year to GBP4.51 billion from GBP4.48 billion. This was below company-compiled consensus of GBP4.56 billion, however.
Net interest income alone was 1.5% higher at GBP3.44 billion, though this also fell short of consensus of GBP3.45 billion.
Pretax profit more than trebled to GBP1.86 billion from GBP576 million a year earlier, beating consensus of GBP1.82 billion.
Its banking net interest margin improved to 3.08% in the third quarter from 2.98% a year earlier, amid rising interest rates. It was shy of the 3.10% consensus and the 3.14% achieved in the second quarter of the year.
Looking to the rest of 2023, Lloyds backed its aim of a banking net interest margin "greater than" 3.10%. It would top the 2.94% achieved in 2022.
Despite being lower than expected in the third quarter, investors should take "some comfort" in the lender's net interest margin guidance being maintained, broker Shore Capital Markets believes.
Lloyds now expects an asset quality ratio below 30 basis points. It had previously expected this to amount to around 30 basis points. The measure is a loan loss rate, so the lower the better.
"Following this update, we provisionally expect consensus to nudge up slightly given the upgrade to impairment guidance. Capital headroom bodes well for shareholder distributions and we expect a sizeable share buyback of at least GBP2 billion to be announced alongside the full year results in February," Shore Gary Greenwood commented.
Lloyds Banking's numbers followed a mixed set of results from Barclays on Tuesday. Barclays had cut its UK net interest margin guidance, leading to investors fretting over the possibility of a similar disappointment at Lloyds and NatWest Group PLC, which reports on Friday.
Barclays trimmed UK net interest margin guidance. It now expects this to land around "3.05% to 3.10% in 2023". It had previously predicted a UK net interest margin of "less than 3.20% with a current view of around 3.15%".
By Eric Cunha, Alliance News news editor
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