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    AV.   GB0002162385

AVIVA PLC

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Lloyds Bank reassures investors on future of preference shares

04/25/2018 | 03:30am EDT
Customers use ATMs at a branch of Lloyds Bank in London

LONDON (Reuters) - Britain's Lloyds Banking Group said it would not cancel its preference shares following investor complaints about the possibility after insurer Aviva abandoned its plans to scrap the high-yielding shares.

LONDON (Reuters) - Britain's Lloyds Banking Group said it would not cancel its preference shares following investor complaints about the possibility after insurer Aviva abandoned its plans to scrap the high-yielding shares.

George Culmer, the bank's chief financial officer, provided the reassurance on Wednesday as Lloyds reported first-quarter profits that just missed analysts' expectations.

"Absolutely no discussion on these and absolutely no plans to cancel these irredeemable preference shares through a reduction in capital," Culmer told a media call.

Aviva sparked fears among investors and drew the attention of regulators when it said last month it was considering cancelling the securities, sending preference shares in financial firms plunging.

Lloyds reported pre-tax profit of 1.6 billion pounds in the first quarter, just missing analyst expectations of 1.82 billion pounds.

While falling short of the average of analysts forecasts based on Thomson Reuters data, the bank's profits grew by 23 percent compared with the 1.3 billion pounds it posted in the same period last year.

"Lloyds has made a good start to 2018," said Laith Khalaf, senior analyst at Hargreaves Lansdown, adding that the bank is benefiting from rising interest rates and its 2016 acquisition of credit card firm MBNA from Bank of America.

But he added while the bank has rebuilt profits and delivered steady returns to investors, share price gains had been more elusive.

The bank's shares were down 0.6 percent at 0715 GMT.

MANDATE SALE

Finance director Culmer said the bank is into a second round of bidding for the around 109 billion pound asset management mandate that it withdrew from Standard Life Aberdeen (SLA) in February.

The 11 billion pound merger that created SLA triggered the right for Lloyds and Scottish Widows, which is part of the British bank, to review an agreement struck in 2014 for Aberdeen to manage pension assets on behalf of Lloyds’ insurance and wealth units as Standard Life is a "material competitor" to both.

"We’ve entered round two now with a more select group of bidders, and what I can say is obviously we’ve not allowed into round two any bidder with whom we have material competition concerns," Culmer said on Wednesday.

Chief Executive Antonio Horta-Osorio said the bank's first quarter results demonstrated the strength of its business model, and maintained his upbeat tone on the UK economy.

"The UK economy continues to be resilient, benefiting from low unemployment and continued GDP growth," he said, adding the bank had seen no deterioration in asset quality and expected this to continue throughout 2018.

Lloyds' exposure to consumers' finances via mortgages and unsecured lending like credit cards make it a bellwether for the British economy.

While loan impairments rose to 258 million pounds over the first three months of 2018, compared with the 127 million pounds seen in the same period last year, Culmer stressed this was "nothing to do" with a deterioration in the bank's loan book or the economy.

The bank, which laid out a fresh three-year strategy in February, also reported a common equity tier one capital ratio of 14.4 percent and took another 90 million pounds in provisions to resolve issues related to its mis-selling of payment protection insurance.

(Reporting by Emma Rumney and Lawrence White, editing by Sinead Cruise)

By Emma Rumney and Lawrence White


ę Reuters 2018
Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. -1.59% 2638 Delayed Quote.52.95%
AVIVA PLC -1.10% 386 Delayed Quote.20.02%
BANK OF AMERICA CORPORATION -0.39% 37.98 Delayed Quote.25.80%
JUST GROUP PLC 1.66% 98.2 Delayed Quote.38.20%
LLOYDS BANKING GROUP PLC -0.08% 46.52 Delayed Quote.27.76%
THOMSON REUTERS CORPORATION 0.90% 131.52 Delayed Quote.26.09%
WILL GROUP, INC. 0.20% 983 End-of-day quote.-2.29%
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Financials
Sales 2021 46 772 M 64 952 M 64 952 M
Net income 2021 2 260 M 3 138 M 3 138 M
Net cash 2021 8 664 M 12 032 M 12 032 M
P/E ratio 2021 6,73x
Yield 2021 5,62%
Capitalization 15 330 M 21 188 M 21 289 M
EV / Sales 2021 0,14x
EV / Sales 2022 0,14x
Nbr of Employees 28 596
Free-Float 97,1%
Chart AVIVA PLC
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Aviva plc Technical Analysis Chart | AV. | GB0002162385 | MarketScreener
Technical analysis trends AVIVA PLC
Short TermMid-TermLong Term
TrendsBearishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 21
Last Close Price 390,30 GBX
Average target price 468,27 GBX
Spread / Average Target 20,0%
EPS Revisions
Managers and Directors
Amanda Blanc Chief Executive Officer & Executive Director
Jason Michael Windsor Chief Financial Officer & Director
Mark George Culmer Non-Executive Chairman
Nitinbhai Babubhai Maganbhai Amin Chief Operating Officer
Michael Mire Independent Non-Executive Director
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