Lloyds Closes Year With Good Quarter and Lays Out New Strategy; Fair Value Estimate Maintained

Narrow-moat Lloyds reported fourth-quarter underlying profits before impairments of GBP 1,318 million versus GBP 1,440 million a year ago. The performance was good, however. Cleaned for remediation charges, which are lumpy from quarter to quarter and were high in the last quarter of 2021 (GBP 775 million), profits before impairment increased 34%. Income generation was good with net interest income growing 8% to GBP 2,893 million. Average interest earning asset growth of 3% and the net interest margin expanding to 257 basis points from 246 basis points a year ago both positively affected this good performance. Operating expenses were flat, if we exclude the higher remediation charge related to HBOS. We maintain our GBX 68 per share fair value estimate.