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Ash4781

Lloyds Banking To Get Housing Boost, Says Bullish Morgan Stanley

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http://www.proactiveinvestors.co.uk/companies/news/59888/lloyds-banking-to-get-housing-boost-says-bullish-morgan-stanley-59888.html

Morgan Stanley has upgraded its view on state-controlled Lloyds Banking (LON:LLOY) to 'overweight' on a more bullish view of the outlook for UK housing.

The broker has raised its earnings per share estimate for 2015 by 15% and now says Lloyds is its top pick in the sector as it expects the bank to build up its capital faster than before while having the potential to be re-rated as dividends are reinstated.

Evidence that the UK housing market is picking up is coming through already, it says. The higher earnings it now expects reflect the likelihood of higher loan volume as demand picks up aided by ‘Help to Buy’; continued benign asset quality and the potential capital benefit as higher risk loans on existing books reduce.

On the capital building side, Morgan Stanley expects deferred tax assets (£5.6bn) and insurance deductions (£3.8bn) to reduce significantly, while Lloyds will also benefit from a 20% UK corporate tax rate from 15 April.

Over time Morgan Stanley sees Lloyds as a yield play and a core holding for income funds.

The risks are that the shares have risen strongly already, plus there are substantial legacy and regulatory issues, but even with these Lloyds has the potential to re-rate up to 1.5 times the value of tangible net assets or more as investors refocus on the earnings/dividend potential.

Morgan Stanley’s share price target is 93p and its stance ‘overweight’.

It's not a source I recognise (I may see if the research report is available) but highlights, atleast to me, what's going on. The savers will pay with little to no interest on capital, mortgage sales volume improves straight to the bottom line, and the balance sheet loan book improves through the housing market ramping.

Still it's un sustainable but I guess the strategy will then be to flip off to the private (individual amateur investors - the public- free shares?) at some point after which the public finances will have be tackled, and then bank implodes again, and we are back where we started.

Edited by Ash4781

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http://www.proactiveinvestors.co.uk/companies/news/59888/lloyds-banking-to-get-housing-boost-says-bullish-morgan-stanley-59888.html

It's not a source I recognise (I may see if the research report is available) but highlights, atleast to me, what's going on. The savers will pay with little to no interest on capital, mortgage sales volume improves straight to the bottom line, and the balance sheet loan book improves through the housing market ramping.

Still it's un sustainable but I guess the strategy will then be to flip off to the private (individual amateur investors - the public- free shares?) at some point after which the public finances will have be tackled, and then bank implodes again, and we are back where we started.

Today's HTB is both a complete admission of the legacy of failure of the last government combined with the inability of the present government to fix the mess courageously.

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