By Lloyds Banking Group is set to announce its financial results for the second quarter of 2023 on Wednesday. Here are the key details:
Pretax Profit Forecast
- The U.K. bank is expected to report a pretax profit of £1.72 billion ($2.21 billion) for the quarter, according to a company-compiled consensus. This is a decrease from the £2.04 billion reported in the same period last year.
Net Income Forecast
- The FTSE 100-listed lender is projected to report a net income of £4.51 billion for the three months ended June 30, compared to £4.34 billion in the year-earlier period. Net interest income is expected to be £3.43 billion, up from £3.19 billion.
What to Watch
CET 1 Ratio
- Analysts anticipate that the bank will end the quarter with a common equity Tier 1 (CET 1) ratio of 14.2%, slightly higher than the 14.1% recorded at the end of the first quarter. The CET 1 ratio is an important indicator of balance-sheet strength.
Return on Tangible Equity (ROTE)
- The lender’s ROTE is expected to be 14.3% for the quarter. Deutsche Bank analysts suggest that there may be potential to revise the bank’s full-year guidance of 13% upwards.
Banking Net Interest Margin
- Market consensus estimates the net interest margin to be 3.10% for the second quarter. Jefferies and Deutsche Bank analysts predict that Lloyds will increase its 2023 guidance from over 3.05% to over 3.10%, while the consensus for the year stands at 3.12%.
Costs
- The bank’s operating costs are projected to reach £2.24 billion. Focus will be on the bank’s performance against its £9.1 billion operating cost target for the year. Analysts will scrutinize factors such as litigation and compensation costs, sour loans, and restructuring expenses that could impact the profit and loss account.
Capital Returns
- Lloyds is expected to declare an interim dividend of 0.92 pence per share, up from last year’s payout of 0.80 pence. However, Jefferies and Citi do not anticipate an announcement for a share buyback at this stage.
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