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Highlights
- The UK’s largest high street bank is on high alert for cyber-attacks from Russia.
- Besides, Lloyds reported pre-tax profit of £6.9 billion in FY2021, up from £1.2 billion in the previous year, driven by higher income and a net impairment credit.
- The Bank has announced that it would buy back £2 billion of its own shares.
FTSE 100-listed largest high street bank in the UK Lloyds Banking Group Plc (LON: LLOY) has grabbed the attention of investors as it is on “heightened alert” for cyber attacks from Russia as Vladimir Putin announced invasion of Ukraine. On 24 February, the Bank of Scotland owner became the latest financial giant to report bumper annual profits after releasing Covid loss provisions.
The 2021 Result
The year 2021 has been a great financial year for the UK’s largest high street bank with successful strategic executions, franchise growth and ongoing investments. Other UK banks are also expecting strong results after the challenging pandemic period.
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The UK’s largest domestic lender reported pre-tax profit of £6.9 billion in FY2021, up from £1.2 billion in the previous year, driven by higher income and a net impairment credit. The banking group said the profit jumped as it booked a £1.2 billion credit from provisions for bad debts, which was £4.2 billion in FY2020. It also benefitted from a surge of £16 billion in mortgage demand to £293.4 billion.
The bank’s Net Income stood at £15.8 billion, up by 9% from £14.4 billion in FY2020, as its underlying net interest income benefitted from increased average interest-earning banking assets and strengthened banking net interest margin. It has also announced that it would buy back £2 billion of its own shares and has boosted the shareholders dividend payouts of 1.33 pence per share, bringing the total ordinary dividend for FY2021 to 2p per share. Customers’ deposits stood at £476.3 billion, up by £25.6 billion, with Retail current accounts up by 14% to £111.5 billion.
The lender has to pay £1.3 billion redemption charges, with £775 million, including £600 million in the fourth quarter for HBOS Reading scandal, which took place before the financial crisis and said it was reintroducing bonuses for with a pool of £399 million, having axed payouts due to pandemic.
The Bank’s Return on Tangible Equity (RoTE), which measures profitability, increased to 13.8% from 2.3% in FY2020. It expects RoTE to increase over 10% by 2024 and over 12% by 2026. Further, it expects its additional revenues of over £700 million by 2024 and around £1.5 billion by 2026.
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Cyberattack Alert
The high-street bank has been on heightened alert internally around its cyber risk control as the Russia-Ukraine tension had worsened. On Thursday, Russia invaded several cities in Ukraine and landed troops on its coast, following which, the National Cyber Security Center (NCSC) called UK businesses to be on high alert for cyberattacks from Russia, as there were cyber-attacks on Ukraine with international consequences in the past.
© 2022 Kalkine Media®
Stock Performance
UK’s largest domestic lender Lloyds Banking Group Plc (LON: LLOY) is publicly traded on the London Stock Exchange and the New York Stock Exchange and is among the largest companies falling under the FTSE 100 Index.
The market cap of the bank stood at £37,081.92 million and it has provided its shareholders with a return of 20.37% over the last one year, while its year-to-date returns stood at -1.03% as of 4 February 2022. Lloyds Banking Group Plc’s shares were trading at GBX 47.32, down by 9.44% at 11:10 AM (BST) on 24 February 2022.
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Note: The above content constitutes a very preliminary observation or view based on industry trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
