UK-based Lloyds Banking Group Plc (LYG,LLOY.L), Friday, in an update on trading for the first 10 weeks of 2010, said its trading performance for the period has been strong against each area of its recent guidance and the banking net interest margin is trending in line with its recent forecast. Lloyds believes that the full year 2010 will be profitable on a combined businesses basis. The company's shares are currently trading up by 8% on the London Stock Exchange. The company's chief executive Eric Daniels is expected to present to investors at the Morgan Stanley European Financials Conference on March 24, 2010.
According to the company, the presentation will focus on its opportunities to build sustainable earnings momentum and will also update the guidance provided to investors in its 2009 preliminary results announcement on February 26. Further, Lloyds said it will provide a short update on current trading. On a combined businesses basis and also excluding last year's gains from liability management transactions, banking net interest margin is trending in line with recent view, which has resulted in a good level of income growth, the company said. While announcing its full year results in February, the company said net interest margin is expected to increase in 2010 to about 2%. Lloyds specified that it has managed to control costs, which came in below the prior-year period levels. Impairment provisions at present are trending on lower than anticipated levels.
As a result, the company now expects to deliver a better impairment performance in 2010 in retail and corporate businesses, compared to the forecast provided earlier.
In the year 2009, there was a significant increase in impairments to GBP 24 billion from GBP 14.9 billion in the previous year, mainly due to the HBOS portfolios and their high level of exposure to commercial property. Also, the company experienced a significant rise in impairment levels in lending portfolios. "Overall, based on the Group's current economic and regulatory assumptions which remain unchanged since our recent 2009 preliminary results announcement, the Group believes that it will be profitable on a combined businesses basis in 2010," the company stated. In the last week of February, Lloyds reported a narrower loss before tax for the full year 2009, helped by lower write-downs on treasury assets and profits from debt swaps. On a combined business basis, the company reported a pre-tax loss of GBP 6.3 billion, compared to a loss of GBP 6.71 billion reported in 2008. Profit attributable to equity shareholders were GBP 2.83 billion or 7.5 pence per share, compared to a profit of GBP 772 million or 6.6 pence per share in the prior year.
Net trading income for the full year was GBP 19.1 billion, compared to a trading loss of GBP 9.19 billion in the prior year. Other income, net of insurance claims, increased 74% to GBP 11.24 billion, mainly reflecting the absence of last year's investment write-downs, and the gains on liability management transactions. "Although we are forecasting a slow, below trend, economic recovery, the Group is successfully addressing the near term challenges and is well positioned to deliver value for our customers and shareholders. As a result, the financial performance of the Group's continuing businesses is expected to improve significantly in 2010 and beyond," the company said at that time. Lloyds is scheduled to publish its Interim Management Statement on April 27. LLOY.L is currently trading at 60.08 pence, up 4.53 pence or 8.15%, on a volume of 149 million shares. In the past 52 weeks, the shares traded in a range of 45.3 pence-125 pence on the LSE. LYG closed Thursday's regular trading at $3.41 on the NYSE.
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