Lloyds Banking Group: NIM Dynamics Still Playing Out As Expected
Summary
- Shares of British bank Lloyds have continued to do well since my last update in May, outperforming broader European financials by around ten points in that time.
- Q2 was good enough for Lloyds, with net interest margin meeting consensus estimates and low levels of provisioning fueling a significant bottom-line beat.
- Structural hedge income should pick up in the second half of the year, leading to NIM expansion and contributing to net interest income growth.
- At 1.2x tangible book value, these shares still don't reflect the 13-15% return on tangible equity profile that sell-side analysts have penciled in.
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