How Is The Lloyds Banking Group’s Lending Commitment Going To Impact The British Businesses in 2020?

  • Jan 08, 2020 GMT
  • Team Kalkine
How Is The Lloyds Banking Group’s Lending Commitment Going To Impact The British Businesses in 2020?

Announcement of a lending commitment for British Businesses in 2020

On 6th January 2020, in the very first week of the year, Lloyd Banking Group Plc announced their commitment of £18 billion worth of lending in the next year to spur the growth of British Businesses and the British Economy as on whole.

The announcement highlighted that this commitment will be used to support new endeavours or businesses by entrepreneurs, small and medium enterprises who are looking to expand and have a solid plan of expansion, smaller businesses looking to expand globally, as well as for some larger businesses who would be looking for additional growth. The Chief Executive Officer of the Company, Mr. António Horta Osório stated, they understand how their clients look towards their support, especially in uncertain times, such as the current scenario, that has been hindered by situations such as Britain’s exit from the European Union as well as a poor economic environment across the globe. Adding that the company is wholeheartedly committed in providing all kinds of necessary support to the businesses in the United Kingdom, which can further spur growth across all sectors to bring back the economic development of the country on track after some challenging times in the past.

This commitment, from company’s end, has come following the year 2019, when the company had pledged the same amount i.e. £18 billion for the support of businesses’ and commercial enterprises’ growth aspirations during the year. Out of this, an amount of £2.6 billion was specifically reserved for the businesses from London, which, has been considered to be the Financial Capital of the world. This helped in improvements of an additional one million of real estate and delivered renewable energy projects, with a capacity of powering up 3.5 million homes in 2020.

As a business case, the company also gave two examples of the businesses it supported through the commitment it made in the year 2019. This included Jealous Sweets, which is a London Based confectionary business. The company supported them with a working capital facility, for the purpose of expanding into newer geographical markets, which eventually helped the company in doubling its turnover. The second, Lerwick Port Authority, was supported with a £3 million funding package for the purpose of developing a new fish market, to support the ever-increasing demand from the fishing industry from the nearby areas. This was also a part of the company’s Clean Growth Finance Initiative (CGFI), a service that helps businesses to obtain discounted finances to move towards carbon emission neutrality.

An overview of the Lloyds Banking Group Plc

Lloyds Banking Group Plc (LON: LLOY) is one of the United Kingdom’s largest banking and financial services companies and is a key entity in providing growth and spurring the British Economy forward, since its inception in the year 1986. The company provides financial solutions to both individual, as well as commercial clients, through an extremely broad spectrum of products and services, which are primarily divided into three core business segments – Retail Banking, Commercial Banking, Insurance and Wealth Management. It also has auxiliary and internal functions such as Risk Management, Financial Management, Audit, Corporate Affairs, People’s management as well as Legal and Compliance.

The company provides its services through a number of well-established brands in the banking sector, the likes of which include Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows, as well as through a wide spectrum of various distribution channels.

Business Segments

  • Retail – Through the retail division of the company, it provides products and services such as Current Accounts, Savings Account, Credit Card, Personal Loans, Mortgages, Motor Finance as well as a pool of services in the insurance domain to individuals and families. Halifax has been awarded to be a leading mortgage and overall lender for the last 16 years in a row, and the group’s overall personal lending stands at the value of over £12 billion. The company, through this division, also provides its services in the Netherlands and Germany.

 

  • Commercial Banking – The commercial banking operation of the group includes providing services and finances to business organisations, with a prime focus on the companies based within the United Kingdom, to support and spur both financial growth of these institutions as well as the economic growth of the company. The company’s products and solutions in this segment include lending, deposits, transaction and merchant banking services and it also supports these companies by providing expert advisory in the capital markets, financial markets as well as in the Private Equity domains.
  • Insurance and Wealth Management – Through this segment, the company supports around 10 million Individuals by providing services such as savings management, retirement planning as well as investment management. Scottish Widows, the group’s brand, is the UK leader in providing life insurance, pensions and investment services, while the company also provides wealth management services through its Bank of Scotland Private Banking Brand. The services in this segment include the likes of retirement, protection and inheritance and real estate planning, tax planning, as well as of providing personal lending.

Key Management Personnel

The following is the list of company’s key management personnel:

 

Source: Company Website

LLOY Stock Price Performance

(Source: Thomson Reuters) Daily Chart as on 08-January-20, prior to the closing of the London Stock Exchange

As on 8th January 2020, at 02:00 P.M GMT, by the time of writing, Lloyds Banking Group Plc’s stock price was reported to have been trading at GBX 62.64 per stock on the London Stock Exchange, a decline in the value of 0.74 per cent or GBX 0.47 per stock, in comparison to the previous day’s closing price, which was reported at GBX 63.11 per stock. The market capitalisation of the company has been reported to be at GBP 44.394 billion in reference to the current stock price.

The Lloyds Banking Group Plc stock has also displayed an upward change in the last six months of the year, of around 8.54 per cent from the stock price of GBX 57.71 that the Lloyds Banking Group Plc’s stock set on July 08, 2019. Lloyds Banking Group Plc’s share has also given a positive return of 0.82 per cent, in the last one month from the price of GBX 62.13 per stock at the time of close of markets on December 09, 2019.

The beta of the stock of Lloyds Banking Group Plc has been reported to be at a value of 0.73. Through this, we can conclude that the movement in the price of Lloyds Banking Group Plc stock, is less volatile as opposed to the movement of the comparative benchmark index in the last year.

Stock Price Performance of the Peers of the company

  • Barclays Plc (LON: BARC) Stock Price Performance

As on 8th January 2020, at 02:10 P.M GMT, by the time of writing, Barclays Plc’s stock price was reported to have been trading at GBX 182.32 per stock on the London Stock Exchange, a decline in the value of 0.45 per cent or GBX 0.82 per stock, in comparison to the previous day’s closing price, which was reported at GBX 183.14 per stock.

The market capitalisation of the company has been reported to be at GBP 31.723 billion in reference to the current stock price.

  • Royal Bank of Scotland Group Plc (LON: RBS) Stock Price Performance

As on 8th January 2020, at 02:15 P.M GMT, by the time of writing, Royal Bank of Scotland Group Plc’s stock price was reported to have been trading at GBX 240.00 per stock on the London Stock Exchange, a decline in the value of 0.25 per cent or GBX 0.60 per stock, in comparison to the previous day’s closing price, which was reported at GBX 240.60 per stock.

The market capitalisation of the company has been reported to be at GBP 29.097 billion in reference to the current stock price.

  • HSBC Holdings Plc (LON: HSBA) Stock Price Performance

As on 8th January 2020, at 02:20 P.M GMT, by the time of writing, HSBC Holdings Plc’s stock price was reported to have been trading at GBX 578.50 per stock on the London Stock Exchange, a decline in the value of 0.84 per cent or GBX 4.90 per stock, in comparison to the previous day’s closing price, which was reported at GBX 583.40 per stock.

The market capitalisation of the company has been reported to be GBP 118.507 billion in reference to the current stock price.

 

Comparative Price Chart of BARC, RBS and HSBA

(Source: Thomson Reuters) Daily Chart as on 08-January-20, prior to the closing of the London Stock Exchange

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