Latest news with #Lloyds'
Spectator
06-08-2025
- Automotive
- Spectator
Was the car finance judgment fair?
I must modestly doubt that the Supreme Court justices took account of my 12 July column in their ruling on the issue of hidden car finance commissions. But the effect, limiting compensation claims to the more egregious cases of overcharging, is to do exactly what I hoped: namely to head off 'a tsunami of claims that could cripple lenders and provoke a mini banking crisis'. Chancellor Rachel Reeves evidently hoped so too; given that up to 90 per cent of new UK car sales are financed by loans offered through car dealerships, a collapse of that market would have put another ding in an already battered economy. The total claims bill is now estimated by the Financial Conduct Authority at between £9 billion and £18 billion – vs a possible £44 billion if the court had ruled in favour of all claimants. The relief to lenders was evident in Lloyds' decision not to add to the £1.15 billion already set aside for compensation, while shares in Close Brothers, a smaller specialist in the field, shot up by a quarter. The losers are the ambulance-chasing 'claims advisers' who were looking forward to another bonanza akin to the payment protection insurance scandal which cost banks £50 billion. But we should also ask: was the judgment fair? In particular, what of the unsophisticated car buyer who thought the dealer had a duty to offer the best finance deal, rather than to seek richer rewards for himself? On this point, the justices were magisterial. 'Each party… (customer, dealer and lender) was engaged at arm's length from the other participants in the pursuit of separate objectives. Neither the parties themselves nor any onlooker could reasonably think that any participant was doing anything other than considering their own interest.' In short and as always, caveat emptor. Who'da thought? Here's a potpourri of items at the intersection of market swings, consumer whims and 'black swans' – the latter phrase, coined by the author Nassim Nicholas Taleb, meaning unforeseen events with extreme consequences, of which Donald Trump's global tariff attack is surely one. Who would have imagined, for example, that Swiss watchmakers – whose recession-proof sector has long been a staple source of advertising revenues that underpin publications like this one – could be thrown into crisis by a 39 per cent tariff on Swiss exports to the US? Likewise, did anyone predict that the share price of the Danish pharma group Novo Nordisk would fall by two-thirds this year as its bestselling slimming drugs Wegovy and Ozempic were overtaken by the even more in-demand Mounjaro – whose maker Eli Lilly is the share tipsters' new favourite? Next, let's look at food fads. Sliced bread is in retreat in the face of 'carb-conscious health trends as well as baguettes and sourdough', says the Financial Times, reporting rumours of a defensive alliance between the owners of Hovis and Kingsmill. But ice cream is the dish of the day and not just because we're in high summer: Unilever is about to spin out its Magnum arm, the world's largest producer, while Goldman Sachs makes a multi-billion investment in the second-largest, Froneri. And Dishoom, the brasserie chain founded by two cousins in 2010 that has London curry-lovers queuing round the block, has attracted investment from a fund linked to the luxury goods giant LVMH, which values it at a chilli-hot £300 million. But here's a downbeat, rain-stopped-play kind of postscript: who'd have thought concrete could ever go out of fashion? Despite Angela Rayner's rhetoric, the level of housebuilding and infrastructure works in the UK is so quiet that sales of this most basic building material have fallen to their lowest level since 1963. A rather random holiday-season round-up, you may be thinking: what's my point? In fact I've spent most of this week reading a huge pile of entries for The Spectator's Economic Innovator awards to high-growth smaller companies – and marvelling, as ever, at the resilience and optimism they embody. Whatever happens next in this mad, mad world, be thankful for the boldness of entrepreneurs. Animal spirits Whenever I eat at La Récréation in Les Arques – which I apologise for mentioning again, but it really is worth the detour – I think of From Here, You Can't See Paris (2002), Michael Sanders's charming account of a year spent working in the restaurant and observing the seasonal rhythms of south-west France. From my own summer idyll nearby, I really can't see Paris, never mind London or Washington, but I can at least offer some parables and parallels of economic life. The first point of comparison is simply that the manifold uncertainties illustrated by my previous item leave businesses everywhere struggling to meet forecasts and deliver chosen strategies.'C'est la douche froide,' begins Le Figaro's results round-up from the CAC 40 list of leading French companies, collectively reporting a 30 per cent drop in first-half profits attributed to Trump's tariffs and geopolitical turmoil as well as limp EU growth. But at least French inflation, at barely 1 per cent – Andrew Bailey and Rachel Reeves please note – is a fraction of ours (3.6 per cent in June), thanks to low energy costs and the strong euro I observed last week. And at the micro level, in the Dordogne village of St Pompon where I've shared a house for 25 years, the Sud Ouest newspaper reports the opening of a new butchers shop by an enterprising young couple, Elodie and Max, as 'un nouveau chapitre de dynamisme pour cette petite commune'. We've also got a new pub-cum-karaoke joint, Oscar's – and on the drawing board, my own quixotic scheme to create a mini arts centre in a converted barn. I wrote last month about the 'animal spirits' that drive revival against the odds: I'd say they're alive and kicking in this lost corner of la France profonde.
Yahoo
29-07-2025
- Business
- Yahoo
Trading at a 10-year high after good H1 results, is there any value left in Lloyds share price?
Lloyds' (LSE: LLOY) share price is trading up around a level not seen since 20 August 2015. Some investors might see this rise as reason enough not to buy the shares at this price. Others may regard it as evidence of more bullish momentum to come and jump on the bandwagon. However, neither view is conducive to making big profits over time in my experience. This comprises several years as a very senior investment trader and salesman, and more as a private investor. I know that large, long-term returns can come from identifying the difference between a stock's price and its value. And to clarify, price is whatever the market is willing to pay for a share. Value is what that share is worth, based on the key fundamentals of the underlying business. So, is there any value left in Lloyds shares right now? The core business Lloyds' H1 2025 results released on 24 July saw statutory profit before tax rising 5% year on year to £3.5bn. This exceeded analysts' forecasts of £3.2bn. Net interest income was also up 5% at £6.7bn, driven by growth in mortgage lending and current account business. For the remainder of this year, the bank reaffirmed its £13.5bn net interest income forecast. And it did the same for its 13.5% return on tangible equity target. Analysts estimate that Lloyds earnings will rise 15% each year to end-2027. And it is ultimately this growth that powers any business's share price and dividends higher over time. How does the share valuation look? On the price-to-earnings ratio, Lloyds is top of its peer group, trading at 11.6 against an average of 10.1. These banks comprise NatWest at 8.7, Barclays at 9, Standard Chartered at 11.2, and HSBC at 11.3. So, Lloyds is very overvalued on this measure. The same is true on the price-to-book ratio, although less pronounced, with Lloyds at 1 compared to its competitors' average of 0.9. However, it looks fairly valued on its price-to-sales ratio of 2.7 – the same as its peers' average. To get to the bottom of this, I ran a discounted cash flow (DCF) analysis. This determines where any stock's share price should be trading, based on cash flows for the underlying business. As such, it is a standalone valuation independent of comparables and is the most useful in my view. The DCF for Lloyds shows its shares are 44% undervalued right now. Therefore, their fair value is £1.41. My investment view I would never buy a share priced at under £1, as the price volatility would keep me awake at night. In Lloyds' case, every 1p it moves equates to 1.3% of the stock's entire value! Another major risk is the as-yet undetermined amount it may have to pay for its role in mis-selling car insurance. The UK's Supreme Court will give its ruling on motor finance commissions on 1 August. The Financial Conduct Authority (FCA) will then confirm whether it will proceed with a compensation scheme for affected customers. It has said it will give its verdict on these potentially massive awards within six weeks of the Supreme Court's ruling – so, 12 September. For those with a higher risk appetite than I, Lloyds strong earnings growth renders it worth considering, in my view. The post Trading at a 10-year high after good H1 results, is there any value left in Lloyds share price? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool HSBC Holdings is an advertising partner of Motley Fool Money. Simon Watkins has positions in HSBC Holdings and NatWest Group Plc. The Motley Fool UK has recommended Barclays Plc, HSBC Holdings, Lloyds Banking Group Plc, and Standard Chartered Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business News Wales
24-06-2025
- Business
- Business News Wales
Welsh Businesses Say Greater AI Adoption Will Drive Local Growth
The majority of Welsh firms believe AI adoption will be a key growth driver in the country's economy, according to Lloyds' Business Barometer, as many report AI-related increases in productivity and profitability. More than three in five (63%) Welsh businesses believe greater AI adoption will be a major driver of local economic growth. Of the 61% of the country's businesses already using AI, 81% say it has increased their productivity, while 80% say it has improved their profitability. Firms are most commonly using AI platforms to improve efficiency (71%) or to analyse data and make better-informed decisions (36%). Looking ahead, 24% of Welsh businesses plan to invest more in AI over the next year and more than a fifth (22%) plan to create new AI-specific roles. Firms said the desire to use the technology to help grow their client base (39%) and to drive new or further increases in productivity (36%) were the biggest drivers behind their future investment plans. Companies also said that having a better understanding of the technology and its benefits (41%) and instances of their competitors using AI (18%) would help facilitate even more investment. The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide. Samantha Noble, area director for Wales at Lloyds, said: 'Welsh businesses identify AI as an avenue for local growth, which perhaps reflects their own success with it – the overwhelming majority of firms already using the technology have seen higher productivity and profitability. 'Sharing knowledge and experience will be critical to helping more firms start applying it, and ultimately realising the full potential of the technology is realised.'
Yahoo
03-06-2025
- Business
- Yahoo
2 dirt cheap FTSE 100 shares! Which should investors consider in June?
There's no shortage of undervalued FTSE 100 stocks to choose from today. But which of these two banking giants could be the better share to consider as summer kicks off? Let's take a look. Lloyds' (LSE:LLOY) share price has rocketed more than 40% since the start of 2025. Yet concerns over weak economic conditions and multi-billion-pound misconduct charges means it still looks dirt cheap on paper. The bank trades on a forward price-to-earnings growth (PEG) ratio of 0.6. A figure below 1 indicates a share is undervalued. Meanwhile, a 4.4% dividend yield beats the Footsie average by around a percentage point. Hopes over sustained interest rate cuts continue to propel Lloyds' shares higher. Further Bank of England-induced interest rate reductions might help kick-start economic growth, boosting credit demand from businesses and consumers. Its effect could be especially beneficial for homes sales and therefore mortgage uptake, a key area for the company. Lloyds' market share here stands at around 19%. Despite a recent inflationary uptick, I'm confident interest rates will keep falling over the year and into 2026. But this doesn't necessarily mean a 'net win' for the banks. Falling rates are a double-edged sword, as they also weigh on net interest margins (NIMs). This is the difference between what the likes of Lloyds charge borrowers and pay to savers. The Black Horse Bank's margins are already under threat as competition rises across its product lines. I'm also concerned about the prospect of rising impairments as the UK economy struggles. During Q1, the company's underlying impairments soared to £309m from £57m the year before. My biggest fear however, relates to the possibility of crushing penalties if the bank's found guilty of mis-selling car finance. Some believe the £1.2bn it's set aside for such a scenario could be a drop in the ocean. A crisis on the scale of the historical PPI scandal could prove catastrophic for Lloyds' share price along with its dividend. Largely speaking, Asia-focused HSBC (LSE:HSBA) faces the same opportunities and threats as Lloyds right now. While it's not dependent on the UK to drive earnings, it has considerable exposure to China where economic conditions remain tough and is vulnerable to escalating trade wars. However, I think the emerging market bank is a far more attractive proposition to consider. Despite difficulties on the ground, the performance of its core units remain resolute. Underlying revenues and pre-tax profit increased 7% and 11% respectively in the opening quarter. Profits beat forecasts by mid-teen percentages, even though impairments ticked up year on year. Today, HSBC shares trade on a forward price-to-earnings (P/E) ratio of 8.8 times, beating Lloyds' shares (10.9 times) by a healthy margin. The bank's dividend yield is 5.7%, also a healthy distance above its FTSE 100 peer. However, its PEG ratio of 1.3 is less impressive. But, on balance, I think it's the more attractive blue-chip bank to consider today. Its share price is up 11% in 2025 so far and has further scope to rise, driven by surging banking product penetration from current low levels. And unlike Lloyds, it doesn't have a potentially costly motor finance investigation to tackle. Of the two, I much prefer it. The post 2 dirt cheap FTSE 100 shares! Which should investors consider in June? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool HSBC Holdings is an advertising partner of Motley Fool Money. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings and Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Business Times
30-05-2025
- Business
- Business Times
UK business confidence hits 9-month high in boost for Starmer
[LONDON] A gauge of UK business confidence rose to a nine-month-high, climbing back to a level not seen since Prime Minister Keir Starmer first took power, as markets rebounded and trade tensions eased with the US. The Lloyds Business Barometer sentiment gauge rose to 50 in May, the highest since August, according to a survey released on Friday (May 30). The 11-point jump erased the drop seen in April, when US President Donald Trump's tariff hikes sowed turmoil in financial markets and darkened the economic outlook. The jump is the latest evidence of the UK economy's resilience in the face of still-elevated inflation and the lingering risks posed by shifting US trade policies. The economy expanded during the first quarter at the fastest pace in over a year and retail sales are booming, in a positive shift for the Labour government, whose warnings of tax hikes and budget cuts unnerved businesses and consumers late last year. 'The rebound in business confidence suggests that firms might be in a stronger position for the next quarter,' said Hann-Ju Ho, senior economist at Lloyds Commercial Banking. 'The rise in confidence is driven by a sharp increase in economic optimism, reflecting the recovery in financial markets amid the easing of global trade tensions.' The survey, conducted from May 1-16, followed the market rebound that came after Trump paused some of his tariff increases in order to pursue negotiations with trading partners. It also came as the UK on May 8 said it reached the basic outline of a deal with the US that would lower levies on British cars and eliminate them on aluminium and steel, softening the prospective hit to those industries. The Lloyds survey echoes S&P Global's PMI report, which showed that sentiment for the year ahead climbed to the highest in five months in the wake of the UK-US agreement. Most of the rebound came from the services sector, however, while manufacturers continued to report shrinking demand for their exports. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Lloyds' survey also showed that businesses are more upbeat about their own trading prospects and the economic outlook. Confidence among construction businesses climbed to a nine-month high. Sentiment improved across most UK regions, with Northern Ireland, the East Midlands and the South West posting the largest gains. Business inflation expectations also came down in May, thanks to fewer firms planning to push up prices over the next year. The decline reversed April's uptick, when a wide range of cost increases, from food to basic bills, sent the pace of inflation to the highest in over a year. Lloyds' gauge of expected staffing levels rose, suggesting more firms are looking to expand headcount, while the number of employers forecasting pay growth of at least 3 per cent also ticked up. BLOOMBERG
