Lloyds Banking Group’s bad debts have managed to exceed analysts’ estimates, even as the bank’s £4bn proforma loss was better than the worst expectations.
The lender set aside £13.4bn for bad debts, far more than the £11.3bn estimate of eight analysts surveyed earlier by Bloomberg. The proforma loss compared with a profit of £1.95bn in the year-earlier period, Lloyds said in a statement on Wednesday. That proforma loss strips out an £11bn negative goodwill gain on its HBOS acquisition. On a statutory basis, the bank reported an interim profit before tax of £6bn.
UBS analyst John Paul Crutchley – who has a “buy” rating on Lloyds – summed up the bank’s situation in a client note on Tuesday, reported by Bloomberg, saying: “The bank is going through its period of maximum stress right now… Losses on the HBOS loan book have accelerated to levels beyond original expectations”.
It all makes a very nice welcome for Sir Win Bischoff when he takes over as chairman from Victor Blank on September 15. Having sat through – and attempted rather ineffectually – to address Citigroup’s recent meltdowns and travails as Citi’s chairman, Sir Win may feel right at home in his new position.
Further echoes of Citi’s predicament have arisen lately with reports that the European Commission is considering forcing Lloyds – and possibly RBS – to sell branches and other assets in order to join a plan to insure £260bn of assets with the government.
Perhaps, though, Sir Win could also spare a moment to read the FT’s Lex note from last month (July 1) which advised:
The first job of the new chairman, if he is to have any credibility with stakeholders other than the desperate politicians who brokered Lloyds TSB’s disastrous takeover of HBOS , should be to sack his chief executive, Eric Daniels.
Related links:
An impaired Lloyds – FT Alphaville
Lloyds Banking Group 2009 interim results – Lloyds website
Kroes warns of forced Lloyds asset sales – FT