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The bank reporting season was unusually lively this year, with most high street majors delivering restructuring plans, capital returns, impairment warnings, or a combination of all three.
For its part, Lloyds Banking Group announced a £450mn provision relating to the Financial Conduct Authority’s investigation into historic car finance commissions, a 15 per cent dividend bump, and a £2bn share buyback programme for this year. Pre-tax profits jumped 57 per cent to £7.5bn, although this was partly due a restatement of the 2022 accounts to reflect IFRS17 changes.
Rob Murphy, managing director of Edison Group, said Lloyds’ outlook “remains positive” and that “the shares look undervalued relative to global peers”. The bank certainly did enough in the period to generate a vote of confidence from the chair — City stalwart Sir Robin Budenberg — who bought 1mn shares at 45p each, giving a chunky total outlay of £455,000 as soon as the dealing window opened again after the results.
Perhaps crucial to Budenberg’s confidence is that the charge for car commission claims had little impact on the bank’s core tier one capital ratio, which left dividends and capital payouts unaffected. Some forecasts had predicted that the bank’s CET1 ratio might fall to 12.5 per cent because of this regulatory entanglement. As things stand, Lloyds will pay down to a CET1 of 13.5 per cent this year.
Budenberg, also chair of the Crown Estate, has had a highly successful career as an investment banker and became Lloyds chair at the start of 2021. Between 2010 and 2014, he served as chief executive of UK Financial Investments, which oversees the government’s post-2008 investments in the banking sector, including Lloyds until it returned to full private ownership in 2017. Julian Hofmann
Barclays investment bankers sell up
Two of Barclays’ top investment bankers have sold a combined £4.4mn in shares via nominees after the shares rose to a year high following the bank’s annual results.
Adeel Khan, global head of markets, sold more than £4mn in shares last Monday via Solium Capital UK, administrator of Barclays’ nominee service. Meanwhile, global co-head of investment banking Taylor Wright sold £54,000 in shares via Solium Capital and a further $428,000 (£338,000) worth of American depositary shares via nominee broker Morgan Stanley in two separate transactions last Tuesday.
The nominee arrangements mean the sales may have been made as part of a pooled investment strategy. Barclays declined to comment on the transactions.
Barclays’ share price has climbed 15 per cent since its results on February 20 when it revealed it planned to pay out £10bn in dividends and share buybacks over the next three years. The bank also announced a corporate shake-up, which it hopes will save £2bn by 2026. The shares hit 170p last week, their highest level since last March.
The retail banking arm was its standout performer last year, delivering a 19.2 per cent return on tangible equity as the total business produced a 10.6 per cent return. Its long underperforming investment banking arm remained a drag, not least due to its 8.4 per cent return on tangible equity.
The bank also recorded £25.4bn in contingent liabilities, including potential legal costs relating to Barclays’ advisory service agreements with Qatar Holding dating back to 2008, various ongoing Libor-rigging investigations, and other legal challenges. The total contingent liabilities figure is higher than the £24.2bn it recorded in 2022. Mitchell Labiak
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