[On :freetrade:] Lloyds (LLOY) 🏦 💰

Lloyds Banking Group PLC is a large British retail bank offering a range of services and products including mortgages, loans, pensions and asset management.

People seem to be very interested in lloyds?

Every weekly tweet of most popular includes it, when people talk about their favourite stock lloyds comes up too.

In terms of banks, it’s revenue, it’s reach etc seems to be just another big bank?

Am I right in thinking it’s just due to it being a decent dividends payer and super cheap?

I think a lot of people are buying it because its so cheap, you can get a share with spare change. I have some but not for that reason, I got some as part of a diverse range of dividend payers


Yeah I have noticed this too. It is a good thing I think to see that there are investors on the platform who aren’t just investing in tech companies and recent IPO entrants!
I have shares on a valuation basis yes, also as an interest rate play (banks in general would fit this criteria), and also because I like the size of their legacy pension plans (Scottish Widows as an example).

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Any bank that can’t understand that everything is going mobile isn’t worth the money. They are gonna have so much costs associated with closing down all the branches

To be fair, I think the Lloyds mobile app is pretty good and offers most features that challengers do.
Plus they can also offer perks like fee free overdrafts etc etc

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I think Lloyd’s realised the importance of mobile. They announced a plan to invest £3bn over the next 3 years in February last year. You can read about that plan here -

How much they’ll do with the 3bn is another question. For example as Poem says, they’ve replicated some of the challenger’s features in their app but the user experience is still far worse in my opinion. And they’re going to be held back a lot by their legacy technology but who knows.


I can’t send money to someone without adding an account number , sort code and receiving a bludey phone call


Great topic & question - why Lloyds? My reasons are below:

  • Undervalued. Its P/B is less than 1 right now and has been kept low due to Brexit & currency issues. Trading volumes on the LSE aren’t looking great now as foreign money isn’t arriving. Even looking at an EV/EBIDA or P/E basis we’re still looking very cheap (cheaper than the US banks which are also crazy undervalued). I have a valuation of 111p a share on the last earnings release based on their continued loan growth (loan growth is 50 basis points ahead of the UK economy) as well as their large existing loan book & credit card business. Another way of looking at this, is to take their non-retail business and apply a UK average PE (14), this gives you a value of about 57p. Based on today’s price you are basically getting their retail business for free.
  • Digital investment. Of all of the big banks they’re really leading here & are pulling away too. Admittedly they aren’t as innovative as some of the challenger banks (love my Monzo account) but the customers they are retaining are the ‘profitable’ ones. Its important to remember with bank stocks that current accounts are a banks liabilities, not their assets (Eg the reverse of everyday consumers). They are miles ahead of the other big banks and continue to pull further ahead with every update.
  • Pricing power. For years they have been at the top of the mortgage & loan best buy tables & continue to do so. Mortgage lending data doesn’t lie & Halifax rarely drop below position 3 in any given quarter. Whilst they continue to have this pricing power they’ll continue to keep their huge market share. To boost this, their NIM (Net Interest Margin) is 2.98% which has both grown YoY & way ahead of the competitors (on a UK basis)
  • Self financing. Rarely do they need to raise further capital to expand so my share of Lloyds is not being diluted. They have managed to re-capitalize the bank, increase their investment in the business, finance growth, pay down debt, buy back share & still increase their dividend over the last few years. Its rare you get this type of opportunity.
  • Antonio. I never buy a company where I don’t like management & Antonio is doing a great job. He got some stick over remuneration recently (probably deservedly so) but he has re-capitalized the bank & taken them from strength to strength - you only need to see how Santander has grown over the last 20 years, he put that growth path in place. His conference calls are always positively cautious & he has made sure that the bank can easily survive any down turn in the economy, short or long term.

Wow, amazing write up thank you!

I think the mobile strategy is super important as pointed out by you and @Freetrade_Team1


I agree its important but I think its important in allowing them to continue what they’re already doing. Its unlikely to really move the needle in terms of taking significant market share but it will keep their market share & reduce their expenses which plays on the long term strategy of Lloyds.

For anybody reading the above, please remember that its based on my own calculations and risk level. It’s not fact & it applies only to me - there are plenty of counter arguments all of my reasons.

In the interests of fairness I’ll highlight the biggest thing going against them (@Freetrade_Team1 called it out before) is technology. The infrastructure is borderline archaic in almost every bank & is streets behind the US banks - they do need to modernise their tech stacks


Lloyds Bank doesn’t seem to be able to get much love from investors. Shares in the group have drifted down from about 85p five years ago to just 58p at the time of writing.

As the stock has been falling, Lloyds’ profits have been rising. So has the bank’s dividend. So what’s the problem? One risk is that the bank’s profits depend heavily on the UK consumer economy, thanks to its £264bn mortgage book and £18bn credit card business. Alongside this, it has over £15bn in motor finance and has lent £32bn to small- and medium-sized businesses.

If the UK economy heads into recession, some of these loans may fall into arrears, causing profits to fall. On the other hand, the economy may not be about to crash. And even if it does, Lloyds’ balance sheet is much stronger than it used to be, thanks to post-2009 regulatory changes.

Taking all this into account, I think Lloyds 6% dividend yield looks a decent buy-and-hold choice for income investors.


Good write ups. I invested into Lloyds a few years ago and it has baffled me why my investment is down so much. I’m glad I’m not the only one who thinks it is a good buy. Maybe Brexit and the fear of a recession had compressed the share price rather.


It makes sense that Lloyds is a decent pick with a somewhat stable price and a decent yield.


Seem to have huge swings in price

I assume your share price return has been negative, but your total return would be positive if you include dividend yield/return on top of share price performance?

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No unfortunately it doesnt. I only bought £400 odd so with HL £12 followed by a rather unfortunate drop i still havent quite broken even. :neutral_face:


:arrow_up: or :arrow_down:

Fool’s take on Lloyds:

Anyone adding Lloyds to their portfolio for 2020?

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I am.

It’s not at its 52-week high, and call me risk-averse, but a dividend yield over 5% from a stable, well-performing company is not that easy to come by.

Screen Shot 2020-01-18 at 3.48.33 PM

Of course, like any other investments, it doesn’t come without its share of risk, and my “well-performing” statement can be challenged.

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