Lloyds shares jump on profit return

Written By Unknown on Kamis, 01 Agustus 2013 | 19.21

1 August 2013 Last updated at 07:32 ET

Shares in Lloyds have leapt as much as 8% higher, after the bank said it had returned to profit.

The company announced it made £2.1bn ($3.2bn) in the six months to the end of June, compared 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".

Lloyds Banking Group is 39% owned by the UK government.

Share sale

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.

Continue reading the main story

The actual price we as taxpayers paid to buy our £20bn stake in 2008 was 73.6p - and there are many who believe that's what the chancellor should seek to recoup from the aggregate of what will be an episodic process of privatising over months and years"

End Quote

The minimum price that Chancellor George Osborne wants to sell the government's stake is 61p a share, but some think that figure is too low.

Peter McNamara, a former head of personal banking at Lloyds TSB and the current chief executive of ATM operator Note Machine, told the BBC that the sell-off would start soon.

"The political pressure, I think, is on for George Osborne to show a deficit reduction and to claim that this has been a profitable management of this bit of the banking sector back into non-state ownership and the state getting refunded, so I think there's good omens for something to happen fairly promptly on that," he said.

However, the Chief Secretary to the Treasury, Danny Alexander, said the government would not be rushed and there was no set timetable for a sale.

Danny Alexander

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Chief secretary to the Treasury Danny Alexander: "No set timetable" for a return to the private sector for Lloyds Banking Group

"The British taxpayer has invested billions of pounds in the banking system in order to rescue it from catastrophe, and we need to make sure that the taxpayers commitment is returned as we return these banks to the private sector," he told the BBC.

Lloyds' chief executive, Antonio Horta-Osorio, said: "We are now well on track to create a bank with a leading cost position, lower risk, a lower cost of equity, and products and services focused on our customers' needs, to deliver strong, stable and sustainable returns to our shareholders."

Continue reading the main story TSB plans

Mr Horta-Osorio also confirmed Lloyds' plan to rebrand 631 branches in the UK as TSB Bank from 9 September.

Following the rebranding, Lloyds will float off the TSB business, which will have its own board and chairman.

The separation of TSB into a separate entity is aimed at coming into line with European Union rules on state aid and became necessary after a deal to sell the branches to the Co-operative Group fell through.

Bad debts

Bad debts at Lloyds fell 43% to £1.8bn, but the group had to make a further £450m charge to its accounts to cover the compensation for mis-selling of payment protection insurance (PPI).

That means that, so far, the bank's total bill for PPI related costs is now £7.3bn.

On the international front, Lloyds' cost-cutting programme continued in the first half of the year.

It has now closed branches and exited from 17 countries, as it looks to focus on its core UK market.

The bank's plan is to be operating in fewer than 10 countries by the end of next year.


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