Proactive Investors -
- FTSE 100 up 67 points to 7,665.
- NatWest (LON:NWG) gets new boss, posts best year since 2008.
- Retail sales impress in January.
Lloyds won’t curtail returns like Close Brothers - analysts
Lloyds Bank (LON:LLOY) is unlikely to follow Close Brothers and forgo returning value to shareholders in anticipation of a Financial Conduct Authority probe into the motor finance market.
Close Bros scraps dividend due to FCA motor finance probe
That’s the view of Jefferies analysts, who stuck to a forecast of a £2.5 billion Lloyds share buyback for 2023.
“In our view, other than the fact that Close Brothers and Lloyds both operate in the car finance market, the two firms cannot be compared,” analysts said.
Lloyds has experience in operational complexities related to redress schemes, Jefferies said, while the scale of any such refunds would have a very different impact of each firm.
UBS analysts also optimistic, reiterating a ‘buy’ rating, but said they saw Lloyds provisioning £1 billion annually over the coming two years in preparation for any punishments.
Shares climbed 2.3% to 42.51p.
Retail volatility justifies GDP decline - analyst
Analysts have noted that December’s sharp decline in retail sales, followed by an impressive resurgence in January, could help make sense of the UK’s slip into recession late last year.
Sales climbed 3.4% month on month in January, as per ONS data, following a 3.3% fall in December and smashing analysts’ expectations for 1.5% growth.
According to Scope Markets analysts, the strong sales figures bolster “claims that the first quarter will bring a welcome rebound in economic growth”.
“The surge in both the value and volume of transactions served to highlight a relatively strong picture for demand,” analysts said.
Thursday had bought news that UK gross domestic product (GDP) contracted by 0.3% over the final quarter of the year, tipping the UK into technical recession after negative growth was also recorded in the preceding three quarters.
Given the decline in December, the retail sales data “provides yet another consideration for traders that continue to process yesterday's slump into a technical recession,” Scope said.
Shares in retailers JD Sports Fashion PLC (LON:JD) and Frasers Group PLC (LON:FRAS) climbed 1.7% and 1.1% respectively on the back of the figures.
On the flip side, Scope added hopes that the Bank of England could start base rate cuts sooner rather than later may well be in question now on the uptick in retail data.
“This will have taken some of the pressure off the Bank of England after a week that saw lower-than-expected inflation and growth,” analysts said.