Lloyds beats estimates for underlying profit in Q4

Shares of Lloyds Banking Group PLC (LON: LLOY) are trading up on Thursday after the financial institution reported better-than-expected underlying profit for its fiscal fourth quarter.

Notable figures in Lloyds’ financial update

The London-headquartered firm said it had £1.97 billion ($2.37 billion) of underlying profit in its recent quarter versus £1.85 billion expected.

Lloyds ended 2022 with CET1 ratio of 14.1%, missing estimates by 10 basis points. In the press release, CEO Charlie Nunn said:

The Group has delivered a robust financial performance with strong income growth, continued franchise strength and strong capital generation, enabling increased capital returns for shareholders.

Also on Thursday, the financial services behemoth proposed 1.60 pence a share of final dividend and revealed plans of announcing a £2.0 billion stock buyback programme as well.

Lloyds Banking Group’s outlook for the future

Lloyds now forecasts its banking net interest margin to surpass 3.05% in 2023 – down from 3.22% in the fourth quarter.

Return on tangible equity, it added, is expected around 13% for the current year as well as the next year. That also suggests a 50 basis points decline versus 2022.

The lender guided for an increase in operating costs as well to about £9.1 billion this year and a further tick up to £9.2 billion in 2024. Its cost to income ratio target of under 50% by 2026 remained unchanged.

For the year, Lloyds stock is up roughly 10% at writing. Wall Street has a consensus “overweight” rating on the financial services company.

Source: https://invezz.com/news/2023/02/23/lloyds-underlying-profit-q4/