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Lloyds bank

ursaminortaur
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Lloyds bank

#407710

Postby ursaminortaur » April 28th, 2021, 3:19 pm

Lloyds profits soar as it cuts bad debt provisions by £459 million.


https://www.theguardian.com/business/2021/apr/28/lloyds-profits-soar-as-covid-loan-loss-provisions-released

Earnings at Lloyds Banking Group have rebounded, with a forecast-beating £1.9bn in pre-tax profits for the first quarter, as the lender released cash that had been earmarked for potential loan defaults triggered by the pandemic.

The upbeat results came as other European lenders reported strong quarterly trading. Profits at Santander jumped to nearly five times their level last year after the Spanish bank avoided further loan loss charges, while Deutsche Bank recorded its highest quarterly profit since 2014 after a bumper performance by its investment bank.

Lloyds released £459m from a cash pile meant to cover bad debts in the first three months of the year, in stark contrast to the £1.4bn charge it took at the start of the outbreak in 2020. The banking group put aside £4.2bn last year amid fears that business and personal customers would fail to keep up with their loan payments.

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Re: Lloyds bank

#407713

Postby scrumpyjack » April 28th, 2021, 3:28 pm

ursaminortaur wrote:Lloyds profits soar as it cuts bad debt provisions by £459 million.


https://www.theguardian.com/business/2021/apr/28/lloyds-profits-soar-as-covid-loan-loss-provisions-released

Earnings at Lloyds Banking Group have rebounded, with a forecast-beating £1.9bn in pre-tax profits for the first quarter, as the lender released cash that had been earmarked for potential loan defaults triggered by the pandemic.

The upbeat results came as other European lenders reported strong quarterly trading. Profits at Santander jumped to nearly five times their level last year after the Spanish bank avoided further loan loss charges, while Deutsche Bank recorded its highest quarterly profit since 2014 after a bumper performance by its investment bank.

Lloyds released £459m from a cash pile meant to cover bad debts in the first three months of the year, in stark contrast to the £1.4bn charge it took at the start of the outbreak in 2020. The banking group put aside £4.2bn last year amid fears that business and personal customers would fail to keep up with their loan payments.


Not surprisingly the poor old Guardian doesn't understand company accounting. The company does not 'set aside a cash pile' when it makes a provision for a possible bad debt. It simple records a liability for the provision as a charge in the P&L account and a liability in the Balance Sheet (being the double entry). Pity they can't recruit business journalists who actually have some knowledge of business.

ursaminortaur
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Re: Lloyds bank

#407736

Postby ursaminortaur » April 28th, 2021, 4:36 pm

scrumpyjack wrote:
ursaminortaur wrote:Lloyds profits soar as it cuts bad debt provisions by £459 million.


https://www.theguardian.com/business/2021/apr/28/lloyds-profits-soar-as-covid-loan-loss-provisions-released

Earnings at Lloyds Banking Group have rebounded, with a forecast-beating £1.9bn in pre-tax profits for the first quarter, as the lender released cash that had been earmarked for potential loan defaults triggered by the pandemic.

The upbeat results came as other European lenders reported strong quarterly trading. Profits at Santander jumped to nearly five times their level last year after the Spanish bank avoided further loan loss charges, while Deutsche Bank recorded its highest quarterly profit since 2014 after a bumper performance by its investment bank.

Lloyds released £459m from a cash pile meant to cover bad debts in the first three months of the year, in stark contrast to the £1.4bn charge it took at the start of the outbreak in 2020. The banking group put aside £4.2bn last year amid fears that business and personal customers would fail to keep up with their loan payments.


Not surprisingly the poor old Guardian doesn't understand company accounting. The company does not 'set aside a cash pile' when it makes a provision for a possible bad debt. It simple records a liability for the provision as a charge in the P&L account and a liability in the Balance Sheet (being the double entry). Pity they can't recruit business journalists who actually have some knowledge of business.


Maybe you would prefer the FT's take on the same story

https://www.ft.com/content/8cf861e5-b51e-42ac-bbe5-4a569fac1c82

Lloyds Bank profits surge after reversal of loan loss provisions
.
.
.
Lloyds, the UK’s largest retail lender, reported a pre-tax profit of £1.9bn for the three months to March, up from less than £100m in the same period last year.

The improvement was almost entirely because of the drop in bad debt provisions. Lloyds reported a net impairment credit of £323m, compared with a £1.4bn charge in the first quarter of 2020.

Andrew Coombs, analyst at Citi, said there was “the prospect of further releases as the year progresses”, as the bank held on to some extra provisions that were not directly linked to economic forecasts.

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Re: Lloyds bank

#407741

Postby Arborbridge » April 28th, 2021, 4:47 pm

scrumpyjack wrote:
ursaminortaur wrote:Lloyds profits soar as it cuts bad debt provisions by £459 million.


https://www.theguardian.com/business/2021/apr/28/lloyds-profits-soar-as-covid-loan-loss-provisions-released

Earnings at Lloyds Banking Group have rebounded, with a forecast-beating £1.9bn in pre-tax profits for the first quarter, as the lender released cash that had been earmarked for potential loan defaults triggered by the pandemic.

The upbeat results came as other European lenders reported strong quarterly trading. Profits at Santander jumped to nearly five times their level last year after the Spanish bank avoided further loan loss charges, while Deutsche Bank recorded its highest quarterly profit since 2014 after a bumper performance by its investment bank.

Lloyds released £459m from a cash pile meant to cover bad debts in the first three months of the year, in stark contrast to the £1.4bn charge it took at the start of the outbreak in 2020. The banking group put aside £4.2bn last year amid fears that business and personal customers would fail to keep up with their loan payments.


Not surprisingly the poor old Guardian doesn't understand company accounting. The company does not 'set aside a cash pile' when it makes a provision for a possible bad debt. It simple records a liability for the provision as a charge in the P&L account and a liability in the Balance Sheet (being the double entry). Pity they can't recruit business journalists who actually have some knowledge of business.


Well, being generous, maybe they just wanted to put it in a way which would be understood by the mass of their readers - mostly arts graduates and sociology types.

But regardless of the details, as we are always saying - it's all "fungible", so something somewhere is "released" from whatever it was doing previously! :lol:

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Re: Lloyds bank

#407960

Postby GoSeigen » April 29th, 2021, 11:13 am

scrumpyjack wrote:
ursaminortaur wrote:Lloyds profits soar as it cuts bad debt provisions by £459 million.


https://www.theguardian.com/business/2021/apr/28/lloyds-profits-soar-as-covid-loan-loss-provisions-released

Earnings at Lloyds Banking Group have rebounded, with a forecast-beating £1.9bn in pre-tax profits for the first quarter, as the lender released cash that had been earmarked for potential loan defaults triggered by the pandemic.

The upbeat results came as other European lenders reported strong quarterly trading. Profits at Santander jumped to nearly five times their level last year after the Spanish bank avoided further loan loss charges, while Deutsche Bank recorded its highest quarterly profit since 2014 after a bumper performance by its investment bank.

Lloyds released £459m from a cash pile meant to cover bad debts in the first three months of the year, in stark contrast to the £1.4bn charge it took at the start of the outbreak in 2020. The banking group put aside £4.2bn last year amid fears that business and personal customers would fail to keep up with their loan payments.


Not surprisingly the poor old Guardian doesn't understand company accounting. The company does not 'set aside a cash pile' when it makes a provision for a possible bad debt. It simple records a liability for the provision as a charge in the P&L account and a liability in the Balance Sheet (being the double entry). Pity they can't recruit business journalists who actually have some knowledge of business.


Not all its readers are so pedantic. Lloyds actually does have a cash pile, which is undistributable if not in the P&L. So the Guardian's understanding and description of the situation is pretty good. At lease I hope so because as a shareholder I am looking forward to the resulting higher distributions.

Hmm, 1.9bn in quarterly profit from a bank about which this time last year Fools were saying they could not see where any profits would come from...

GS

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Re: Lloyds bank

#407972

Postby dealtn » April 29th, 2021, 11:29 am

GoSeigen wrote:
Not all its readers are so pedantic. Lloyds actually does have a cash pile, which is undistributable if not in the P&L. So the Guardian's understanding and description of the situation is pretty good. At lease I hope so because as a shareholder I am looking forward to the resulting higher distributions.



So which line in its Balance Sheet is this "cash pile" and how has it changed as a result of the reserves release?

It isn't pedantic to point out nonsense, which is a long way from a "pretty good" understanding and description.

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Re: Lloyds bank

#409140

Postby GoSeigen » May 4th, 2021, 5:52 am

dealtn wrote:
GoSeigen wrote:
Not all its readers are so pedantic. Lloyds actually does have a cash pile, which is undistributable if not in the P&L. So the Guardian's understanding and description of the situation is pretty good. At lease I hope so because as a shareholder I am looking forward to the resulting higher distributions.



So which line in its Balance Sheet is this "cash pile" and how has it changed as a result of the reserves release?

It isn't pedantic to point out nonsense, which is a long way from a "pretty good" understanding and description.



Seriously???

Income Statement:
[2020 Full Year] £m
Impairment (4,060)

[2021 Q1 IMS]
Impairment 336


Balance Sheet as at 31 Mar 2021:
[2021 Q1 IMS] £m
Cash and balances at central banks 61,693 [Dec 2020: 49,888; Dec 2019: 38,880]


...and the increased profit feeds directly through to distributable equity of course...

GS

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Re: Lloyds bank

#409143

Postby dealtn » May 4th, 2021, 7:04 am

GoSeigen wrote:
dealtn wrote:
GoSeigen wrote:
Not all its readers are so pedantic. Lloyds actually does have a cash pile, which is undistributable if not in the P&L. So the Guardian's understanding and description of the situation is pretty good. At lease I hope so because as a shareholder I am looking forward to the resulting higher distributions.



So which line in its Balance Sheet is this "cash pile" and how has it changed as a result of the reserves release?

It isn't pedantic to point out nonsense, which is a long way from a "pretty good" understanding and description.



Seriously???

Income Statement:
[2020 Full Year] £m
Impairment (4,060)

[2021 Q1 IMS]
Impairment 336


Balance Sheet as at 31 Mar 2021:
[2021 Q1 IMS] £m
Cash and balances at central banks 61,693 [Dec 2020: 49,888; Dec 2019: 38,880]


...and the increased profit feeds directly through to distributable equity of course...

GS


Seriously!!!

How has the reserves release affected the Cash and balances at central banks line? (It hasn't)

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Re: Lloyds bank

#409191

Postby GoSeigen » May 4th, 2021, 9:29 am

dealtn wrote:
GoSeigen wrote:
dealtn wrote:
So which line in its Balance Sheet is this "cash pile" and how has it changed as a result of the reserves release?

It isn't pedantic to point out nonsense, which is a long way from a "pretty good" understanding and description.



Seriously???

Income Statement:
[2020 Full Year] £m
Impairment (4,060)

[2021 Q1 IMS]
Impairment 336


Balance Sheet as at 31 Mar 2021:
[2021 Q1 IMS] £m
Cash and balances at central banks 61,693 [Dec 2020: 49,888; Dec 2019: 38,880]


...and the increased profit feeds directly through to distributable equity of course...

GS


Seriously!!!

How has the reserves release affected the Cash and balances at central banks line? (It hasn't)


Never claimed it did, I just supported the article's assertion that there was a cash pile, and that impairments being converted to profits rather than losses means more of that cash is distributable to shareholders. [And yes, I do realise the quantum of $336m this quarter is small fry -- the odd % of market cap. Better than further losses though...]

GS

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Re: Lloyds bank

#411870

Postby dealtn » May 14th, 2021, 11:09 am

ReallyVeryFoolish wrote:Lost my patience this morning with Lloyds Bank shares and sold out. Money will fund a further diversification into an investment trust. Not decided which one just yet.

RVF


>60% return over the past year. I wish I enjoyed more of that kind of impatience.

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Re: Lloyds bank

#411876

Postby dealtn » May 14th, 2021, 11:19 am

ReallyVeryFoolish wrote:
dealtn wrote:
ReallyVeryFoolish wrote:Lost my patience this morning with Lloyds Bank shares and sold out. Money will fund a further diversification into an investment trust. Not decided which one just yet.

RVF


>60% return over the past year. I wish I enjoyed more of that kind of impatience.

Well done, it's all in the timing. I sold at about a 7% loss.

RVF


To be clear I'm not claiming I have made that return (it's much more complicated with perhaps >100 transactions in Lloyds in my investment lifetime). Just odd to hear a reason of impatience as the reason for selling for any share that has risen in price that much that quickly. I would associate impatience with owning a share that you hoped would rise that had traded sideways for a significant time period - hence losing patience.

I guess I just misinterpreted your meaning that's all, no problem.

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Re: Lloyds bank

#411884

Postby Vince » May 14th, 2021, 11:37 am

ReallyVeryFoolish wrote:
dealtn wrote:
ReallyVeryFoolish wrote:Lost my patience this morning with Lloyds Bank shares and sold out. Money will fund a further diversification into an investment trust. Not decided which one just yet.

RVF


>60% return over the past year. I wish I enjoyed more of that kind of impatience.

Well done, it's all in the timing. I sold at about a 7% loss.

RVF


I've been underwater with Lloyds since around 2009, absolute stubbornness, never ending rounds of averaging down, and an unhealthy obsession to break even and not be beaten, keep me invested in what has got to be the most frustrating share anyone has ever had the misfortune of holding outside of going bust, sometimes I find myself wishing it had, the pain would have been immense but much less short lived, it's akin to having tooth ache for the last 12 years.

I'll break even at 60.5p, I'm throwing a party on that day, right after I sell the lot.

Vince

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Re: Lloyds bank

#411889

Postby scrumpyjack » May 14th, 2021, 11:46 am

dealtn wrote:
ReallyVeryFoolish wrote:Lost my patience this morning with Lloyds Bank shares and sold out. Money will fund a further diversification into an investment trust. Not decided which one just yet.

RVF


>60% return over the past year. I wish I enjoyed more of that kind of impatience.


That's the 'dead cat bounce' compared with the price 20 years ago :D

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Re: Lloyds bank

#411977

Postby GoSeigen » May 14th, 2021, 6:57 pm

Vince wrote:
ReallyVeryFoolish wrote:
dealtn wrote:
>60% return over the past year. I wish I enjoyed more of that kind of impatience.

Well done, it's all in the timing. I sold at about a 7% loss.

RVF


I've been underwater with Lloyds since around 2009, absolute stubbornness, never ending rounds of averaging down, and an unhealthy obsession to break even and not be beaten, keep me invested in what has got to be the most frustrating share anyone has ever had the misfortune of holding outside of going bust, sometimes I find myself wishing it had, the pain would have been immense but much less short lived, it's akin to having tooth ache for the last 12 years.

I'll break even at 60.5p, I'm throwing a party on that day, right after I sell the lot.

Vince


Would it not be better just to sell the share when it's overpriced? I love Lloyds. Bought it in the mid 2000's. Sold the lot when they cluelessly announced an increased dividend in Jan(?) 2008 (I thought they should have cancelled the div and done a capital raising) and shorted the hell out of them, closed the shorts Jul 2009. Now have been accumulating them for about 4-5 years. I think they are going to be a wonderful wonderful investment.

GS

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Re: Lloyds bank

#413220

Postby Vince » May 19th, 2021, 1:52 pm

GoSeigen wrote:
Vince wrote:
ReallyVeryFoolish wrote:Well done, it's all in the timing. I sold at about a 7% loss.

RVF


I've been underwater with Lloyds since around 2009, absolute stubbornness, never ending rounds of averaging down, and an unhealthy obsession to break even and not be beaten, keep me invested in what has got to be the most frustrating share anyone has ever had the misfortune of holding outside of going bust, sometimes I find myself wishing it had, the pain would have been immense but much less short lived, it's akin to having tooth ache for the last 12 years.

I'll break even at 60.5p, I'm throwing a party on that day, right after I sell the lot.

Vince


Would it not be better just to sell the share when it's overpriced? I love Lloyds. Bought it in the mid 2000's. Sold the lot when they cluelessly announced an increased dividend in Jan(?) 2008 (I thought they should have cancelled the div and done a capital raising) and shorted the hell out of them, closed the shorts Jul 2009. Now have been accumulating them for about 4-5 years. I think they are going to be a wonderful wonderful investment.

GS


That's the trouble with Lloyds, it never seems to be overpriced, it appears to suffer disproportionately to every negative sentiment, Mr. Horta didn't help, he loved giving away billions, some would say it was the right thing to do, but from a shareholder perspective, it never seemed that way. As far as being a wonderful investment, that entirely depends on timing, mine unfortunately, has been extremely unfortunate, however, I'm currently the holder of over 160000 of these money pits, started with 6000, and have ploughed many thousands into trying to get out of the hole I found myself, every time I appeared to be within grasp of dragging myself out of the tar pit that has been Lloyds, someone or something has been standing at the ledge, firmly stamping on my bloodied fingers and kicking me back down into the depths of despair. Jam tomorrow I hear you say, I've seen many fruity days on the horizon, but they all, so far, have been a cruel mirage of £ signs never within touching distance. The small dividend coming next week will keep the lights on for a few months, but the Yacht will have to wait for a year or two more, as is ever with the Black Horse, it runs like the wind, but never in my direction.

Keep the faith

Vince

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Re: Lloyds bank

#428155

Postby Walkeia » July 16th, 2021, 5:04 pm

TLDR: I've added some Lloyds for income post removal of the dividend suspension. I've left room to top up on weakness - the past decade has seen many headwinds - PPI, bad loans, regulatory fines, technology and low interest rates. I feel most, but not all, are behind us and UK banks can become solid income holdings in a world where it is hard to find similar value.

Full thoughts (excuse any English errors):

A very unusual decision for me to add a single name stock - I own an ETF, investment trust and REIT portfolio.

However after the recent news that the dividend suspension has been lifted for UK banks - Lloyds can potentially return to paying 2.5-3.25p annually / ~5.5 to -7% dividend yield (reference share price 46p). I can understand the accumulated frustration for shareholders owning the bank stocks over the past decade but if I look at the reasons, in my view, for this:

PPI - £36bn total claims by July 2019 when it closed. Not sure any industry could perform well facing this tidal wave of claims. It doesn't matter if you think it was too aggressive against the banks or too lenient - the point is it is finished.

Bad loans / bad banks - I personally felt it wasn't highlighted post financial crisis that RBS's trading operations (the speculators vilified in the press) recovered much of the mark to market losses in 2009 & 2010 (they can arguably still be vilified but more those behind the awful regulatory breaches and massive fines rather than causing the downfall of RBS). The massive longer term damage was reckless lending in the naughties - post financial crisis UK banks became a case of make money from go forward operations - then write down what awful treasury holding (RBS's 1bn Greek bonds from ABN Amro treasury I remember) / loan to some random Irish property development in the middle of no where which is worthless. Again this process was largely complete for LLoyds in the middle of the last decade; for RBS a little later but also complete. Now they are heavily regulated on new lending and I'd argue if their loan books come through the pandemic okay we can expect them to survive more minor economic slowdowns.

Regulatory fines - touched on above - all UK banks struggled from at least one of Libor, mis-selling, FX fixing, European Bond cartel, sanctions breaches etc. The fines were significant and took a long time to go through the courts. Hard to have a share price perform when facing an unknown fine (especially if it is the SEC they were facing) but once again I would argue we are over the worst. I spent some of the last decade working in the financial sector and did see a culture change and an increase of needed oversight.

Increased regulatory oversight - higher costs of business be it reduced over-draft charges, compliance officers, mortgage capital weights, risk weighted assets etc. Largely accommodated now and UK banks are still very profitable and able to sustain solid dividends. The break up and sale of other business units forced on UK banks by the European commission at arguably depressed prices (worldpay, directline, capital one) also now well in the past. Having said this - I did get paid handsomely to move my business account away from RBS to a challenger bank 18 months ago as they agreed to pay 750m to incentivise customers to leave as they accepted isn't wasn't possible to spin off the William's and Glynn brand (after spending 500m on the IT systems trying).

Technology - the rise of Revolut, Wise and challenger banks chipping away at the most profitable businesses of the larger banks. Long term I think this is a real concern but it is a very long term process and is far enough into the future to discount.

Low interest rate environment - something I don't see changing soon which should continue to see NIM under pressure but we have been in this environment for a long time now and banks have adjusted by cutting costs and offering additional services (am I the only one who pays for my current account? - the travel and mobile insurance cover the cost alone). More recently Lloyds has decided to go into the buy to let market with 1,000 homes in Peterborough.

The last point why I have been attracted to UK banks is the pricing of other assets. I feel Lloyds is going to be a reliable 5.5-7% dividend yield with little hassle - this is difficult to beat in the ETF, investment trust universe. That yield is also difficult to beat in residential buy to let; possibly achievable in commercial but this is much higher risk given the state of the high street. Post pandemic I have very happily floated on a rising tide lifting all boats in VWRL and some decent investment trust finds - but from here I do think the UK banks look a decent addition to the portfolio.


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