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Lloyds Banking Group Back In Profit In First Half

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http://www.bbc.co.uk/news/business-23527883

Lloyds Banking Group has returned to profit, after announcing it made £2.1bn ($3.2bn) in the six months to the end of June.

It compares with a loss of £456m for the same period last year.

The bank said it had made substantial progress on strengthening its balance sheet, although "further work remains to be done".

The bank, which is 39% owned by the UK government, increased its lending by 1%, or £3bn, over the first half.

The bank said it would be talking to regulators in the coming months about resuming paying a dividend on its shares, which would pave the way for the government to sell off its £19bn stake.

I notice one aspect that's lacking in this all happy clappy crap is there is zero talk about breaking the bank up and splitting of HBoS to ensure we don't have banks too big to fail. Once more all talk that's quite happily been forgot about.

Still the BoE policy of robbing savers to save bankers has worked it appears.

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http://www.bbc.co.uk/news/business-23527883

I notice one aspect that's lacking in this all happy clappy crap is there is zero talk about breaking the bank up and splitting of HBoS to ensure we don't have banks too big to fail. Once more all talk that's quite happily been forgot about.

Still the BoE policy of robbing savers to save bankers has worked it appears.

I presume the 1% lending increase was no mistake- political cover to allow them to say 'we increased lending' without really doing anything. Strange really, their branches are full of HTB adverts, seems they don't push much out at all. Who knew?

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I do think that they should include an estimate of how much of that profit was due to misselling and/or fraud and hence may have to be paid back in the future.

As far as being broken up goes.. they must have spend a fortune on lobbying to make sure that didn't happen.

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The most important thing from Osborne's perspective is that the share price stays above 61p. Another reason for Carney to print, perhaps?

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Interesting updated bit at the bottom of Peston's Blog:

http://www.bbc.co.uk...siness-23528898

(My emphasis)

There are a few more interesting things to say about Lloyds rehabilitation.

First, it is accelerating its net lending to small businesses, at a time when the market continues to shrink. Its stock of loans to small and medium-sized businesses was 5% higher at the end of June than a year earlier.

Second, the widening in its interest rate margin (the gap between what it charges for loans and its own costs to borrow) is largely about a reduction in the rates it has to pay to attract deposits (or to put it another way, this is about meagre returns for savers rather than higher interest rates for borrowers).

Third, the return on its marginal lending is above its cost of capital. In other words, it is able to expand and increase its strength, by accumulating additional capital when it grows the bank as a protection against future losses. This is extremely important, for the confidence of investors and savers, because since the crash banks have found it very challenging (ahem) to earn their cost of capital.

Fourth, although Lloyds is still shrinking the overall size of its mortgage book (net mortgage lending has been shrinking) that is expected to end imminently and net mortgage lending is expected to become positive in the autumn. Because Lloyds is the UK's biggest mortgage lender, that matters, for the health of the housing market.

Fifth, Lloyds' balance sheet is strong: its capital ratios, a test of financial strength, will be better than Barclays', even after Barclays raises all those billions of additional equity capital.

Sixth, there has been a dramatic reduction in its stock of stinky, bad, non-core loans and investments. These were a peak of £250bn at the end of 2008, and are expected to be less than £70bn at the end of the year. And in this £70bn is £30bn of self-certified mortgages (which Lloyds no longer offers any more, because the practice has been discredited) where the borrowers have been keeping up the payments and so they probably don't need to be seen as low quality loans.

Seventh, on 9 September, and with a great £30m splurge on advertising and rebranding, Lloyds will launch the bank that it plans to float on the stock market as a new competitor to all banks. It will put the old TSB name on 630 branches, which will have their own separate computer system, employees and customers (not all of whom are necessarily overjoyed to have been told they are now TSB customers rather than Lloyds customers).

Paging ERIC!

Some interesting points.

Market Share: Lloyds will still be limited by the E. Commission on lending share for while so they are effectively stopping shrinking not ramping to oblivion.

The revised FLS incentives small business lending instead of mortgages so at least that seems to be working.

New lending is profitable unlike some UK banks.

Net negative --> positive lending could have more to do with people remortgaging (especially IO to repayment) if swapping from other banks i.e. Sant

Self-cert now classified as potential impaired :lol:, they are keeping up with the payments so far with record low rates...

Edited by koala_bear

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Easy when you get given essentially free money and don't disclose your losses.

I've had Lloyds shares on an off throughout the crisis, though I have sold all of them for the time being.

I have to confess I'd be rather nervous owning shares in bank when the single largest shareholder is proposing to offload a 40% stake at some point in the near future.

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I've had Lloyds shares on an off throughout the crisis, though I have sold all of them for the time being.

I have to confess I'd be rather nervous owning shares in bank when the single largest shareholder is proposing to offload a 40% stake at some point in the near future.

I think they are fairly nervous about off loading too so I can't see much more than 20-25% being off loaded to institutional investors initially then very small off lots beyond that so as not to sink the price (small lots probably after agreement to restart dividends?)

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Jill Treanor ‏@jilltreanor 22m Lloyds boss tells analysts FLS is a "game changer" and that help to buy will also be a "game changer"

Translation:-

Gidiot's subsidy from taxpayers has saved my ar5e, my bonus and the flotation.

What we need is a game change. What Osborne has given us is extra time.

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From the Peston quoted article they are paying less to depositers. Also the impairment charge has dropped significantly. The problem comes when rates go up and loan book worsens. But aslong as the plates keep spinning....

Edited by Ash4781

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What we need is a game change. What Osborne has given us is extra time.

Classic pump and dump but on a govt/BoE scale.

Can't deny it's impressive stuff.

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Good name......Trusty Savings Bank......how much trust? and what interest rate do they pay on savings in the trustworthy bank? ;)

Edited by winkie

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