The Finance Owl

Banks – Loans – Mortgages – Money

Lloyds TSB “Celebrates” £4 Billion Losses

Posted by theaccountant August - 5 - 2009 - Wednesday

Lloyds TSB BankWell the world has continued to remain barking mad. Today there has been huge press coverage and apparent celebrations at the £4 billion pre-tax interim loss posted by Lloyds TSB.

The seemingly dubious celebrations are due to the indications that the huge impairment charges that have been made on the appalling mortgage book of HBOS have now accounted for the worse case scenario. One fears that this may prove too optimistic a position, but much of the media is jumping on the news, with many investors also gulping it up, since the Lloyds share-price leapt by nearly 11%.  This has been a massive change to the bad fortunes of Lloyds since the quick purchase of HBOS, which Lloyds has been appearing to be repenting over at leisure.

The one bright light on the horizon for Lloyds is the rumour that it may become the Tesco of the UK banking market.  The interpretation of this is that when recovery does finally arrive the now dominant banking market position will enable Lloyds to make significant profits.

There are many assumptions underlying this, one of which is that Europe will remain content at the exception that was made to the monopolies and mergers commission.  Another example is how the conservatives will react if they come to power in the next twelve months.  Many investors appear to be putting these risks aside and believe that Lloyds will be able to make money from consumer financial products, such as Lloyds TSB personal loans.

But for now, Lloyds appear to be celebrating the £4 billion interim loss.  In fact I have just been talking to a Lloyds employee who stated that it had been the most positive day at work in a long time.

The banking market remains… unusual.

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