1st August 2013
Lloyds is to enter into talks with the regulator about restarting dividend payments. The bank declared half year profits of £2.1bn as Sky News reports after losses of £456m in the same period in 2012. Fund managers say this is the final stage on a journey back to pre-crisis normality.
Steve Davies, co-manager of the Jupiter UK Growth Fund and manager of the Jupiter Undervalued Assets Fund says: “This represents the final stage on its journey back to pre-crisis normality, alongside the gradual sell-down of the government’s stake in the group.”
Davies says Lloyds remains the largest holding in both the Jupiter UK Growth Fund and the Jupiter Undervalued Assets fund.
He adds: “We remain positive about Lloyds’ prospects. With the UK and Irish economies continuing to improve, we see substantial upside for UK banks from here, even after the sharp rally that has taken place over the last 18 months. Lloyds’s results today seem in my view to confirm the strong momentum in its core business.”
The manager notes that although Barclays has had a difficult week, with a much higher capital raising than the market anticipated, but it too has increased its dividend payout ratio from 30% to 40-50%, with the latter kicking in from 2014 rather than the previous aim of 2015.
“Barclays remains a self-help story: the strategic plan announced in February focused on cost savings and this opportunity needs to be pursued with increased vigour. On top of this, shareholders will expect to see a forensic review and deleveraging of the balance sheet now that rules on leverage ratios (required capital as a proportion of total assets) have become clearer.”