Financial Trading Blog
Stock of the day 26/02/2015 – Lloyds Banking Group PLC
Lloyds’ performance on the markets couldn’t help but look flat in 2014, especially in contrast to the phenomenal gains the bank made had made in 2013. It started the year at 79p, compared to 49p at the beginning of 2013; it quickly reached its 2014 peak of 86p by mid-January, and from that point onwards struggled to match the robust growth it saw the previous year.
Its first quarter decline culminated in its year-low of 70p in mid-April; the stock then became locked in between the support level of 70p and the resistance level of 80p, spending most of the year flitting within this range. Aptly Lloyds opened 2015 at 75p, roughly its average price for the final two thirds of 2014, but a strong February has seen the stock back up to just below 80p share.
Since the New Year began, there has been a flurry of news that is pointing in the right direction for Lloyds. Firstly there has been the continued success of the TSB Banking Group, which recently saw a 2.3% rise in management pretax profit and is now considering acquisitions. This banking group was made out of the corpses of old Lloyds TSB branches, and is currently half-owned by the Lloyds Banking Group itself.
Next was this morning’s full year announcement from the Royal Bank of Scotland, with RBS posting £3.5 billion in losses, down from £9 billion in 2013. This bodes well for Lloyds, since RBS is around a year behind the company in terms of its recovery schedule, so this deficit contraction points to good news for the sector as a whole.
Finally, and most significantly, Lloyds’ share price was boosted by the announcement that the UK Government cut its stake in Lloyds to below 24%, raising £500 million for the taxpayer, and pointing to the continued recovery of the banking group. Considering that Lloyds’ already posted small pre-tax profits in 2013, this year’s results could be more boisterous considering that the banking group is likely to restart dividend payments for the first time since August 2008.
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