Lloyds Unexpectedly Swings to a 1st Half Pretax Loss After High Impairments: Update
30 Luglio 2020 - 10:33AM
Dow Jones News
--Lloyds' impairment charge significantly higher in second
quarter
--The U.K. bank's prospects remain uncertain
--Lloyds' balance sheet has remained strong
By Sabela Ojea
Lloyds Banking Group PLC reported Thursday an unexpected swing
to a pretax loss for the first half of 2020 after booking a large
impairment charge due to the coronavirus pandemic, and said that
its outlook remains highly uncertain.
The U.K.'s largest retail bank posted a pretax loss of 602
million pounds ($782.4 million) for the first half compared with a
profit of GBP2.90 billion for the same period a year earlier. The
lender was expected to report a pretax profit of GBP42 million for
the first six months of the year, according to its own compilation
of consensus.
The FTSE-100 lender's net income decreased 38% to GBP5.48
billion. The bank was expected to post a net income of GBP7.4
billion for the period, according to its own compilation of
forecasts.
These results were driven by the bank's performance during the
second quarter of the year, which were marked by a pretax loss of
GBP676 million, from a profit of GBP74 million in the first
quarter, and a net income of GBP3.46 billion, compared with GBP3.95
billion in the previous quarter of 2020.
The bank took impairments of GBP2.39 billion in the second
quarter after booking a GBP1.43 billion charge in the first quarter
of the year due to the coronavirus pandemic, a total of 3.82
billion, up from the expected GBP2.9 billion impairments for the
first-half based on Lloyds' compilation of estimates.
"The increased impairment charge was primarily due to future
potential losses arising from the revised economic outlook for the
U.K. economy as a result of the coronavirus outbreak," the lender
noted.
The bank ended the period with a common equity Tier 1 ratio--a
key measure of balance-sheet strength--of 14.6%, up from 13.6% at
the year-earlier period.
"The outlook has clearly become more challenging since our first
quarter results, with the economic impact of lockdown much larger
than expected at that time...We will inevitably be impacted within
the existing book and potentially in the new lending we are
undertaking to support our customers. However, the group's loan
portfolio remains robust and well positioned given our business
model," Chief Executive Antonio Horta-Osorio said.
Shares at 0746 GMT were down 1.78 pence, or 6.3% at 26.59
pence.
Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix
(END) Dow Jones Newswires
July 30, 2020 04:18 ET (08:18 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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