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Business, Finance, Occupation & Industry

Barclays vs Lloyds Banking vs Royal Bank of Scotland

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By G. A. Chester, The Motley Fool

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LONDON — It’s more than five years since Royal Bank of Scotland Group   and Lloyds Banking Group  were bailed out by the British taxpayer — and Barclays   narrowly avoided the same fate by raising 7 billion pounds from investors in Qatar and Abu Dhabi.

Today, RBS is still more than 80% taxpayer-owned, and the taypayer’s stake in Lloyds stands at 39%. Meanwhile, Barclays has joined the ranks of the rank-smelling banks after a series of scandals, the latest of which concerns allegations that Barclays’ Middle East rescuers were loaned money to invest in the bank by Barclays itself.

All three banks still have a long way to go to repair their reputations and businesses. After their recent annual results, which of the three offers investors the best value?

Value basics
Let’s start with the key numbers used by classic value investors: discount to tangible net asset value (TNAV), price to earnings (P/E) ratio, and dividend yield

  Share Price TNAV Per Share Discount to TNAV Forecast P/E 2013 Forecast Yield 2013
Barclays 320p 373p 14% 8.6x 2.3%
Lloyds 50.5p 54.9p 8% 11.7x 0.4%
RBS 308p 446p 31% 12.8x 0%

For a simple overview, if we rank the banks on the three value measures, with one being the best value and three being the worst, we get: Barclays 2, 1, 1; Lloyds 3, 2, 2; and RBS 1, 3, 3. On this basic test of relative value, Barclays stands head and shoulders above its rivals.

For some value investors, the fundamental numbers are all that count, and such investors would declare Barclays the best value without going any further. But let’s go a bit further and see where it takes us.

Assets
The banks have been slimming down their businesses by disposing of non-core assets. The affect of these disposals on the balance sheet can be positive or negative, as Lloyds and RBS demonstrated just last week.

Lloyds sold part of its shareholding in FTSE 250 wealth manager St James’s Place for around 500 million pounds, adding 1.7 pence a share to TNAV — bringing the end-of-year number in the table above up to 56.6 pence and the discount to 11%.

RBS also raised around 500 million pounds last week, but in this case incurred a modestly negative result. The bank’s sale of part of its shareholding in FTSE 250 insurance group Direct Line was at 201 pence a share compared with a carrying value of 216 pence on the year-end balance sheet.

RBS‘s sale of Direct Line was mandated by the European Commission, and both RBS and Lloyds face further forced disposals under obligations to Europe.

Lloyds has been in talks with the Co-operative Group since last July about the sale of 632 branches. Meanwhile, there is currently no definite interest in the 316 branches RBS is obliged to relinquish, and there looks little prospect of RBS avoiding a loss on disposal.

While RBS appears to be more vulnerable to asset writedowns than its rivals, how future asset sales will actually play out is anybody’s guess.

Earnings
The banks have made provisions of billions of pounds for a litany of past vices, including the mis-selling of payment protection insurance and interest rate hedging products. …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Should I Buy Lloyds Banking for My ISA?

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By Maynard Paton, The Motley Fool

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LONDON — You only have a few weeks to use your tax-efficient ISA allowance before the April 5 deadline. ISAs are issued on a use ’em or lose ’em basis, so don’t fluff it. You can save up to 11,280 pounds in the current tax year, and put the lot of it into stocks and shares. To find out more, click here. But which stocks should you buy? How about Lloyds Banking Group  ?

Failures or safe?
Loathe them or loathe them, the major U.K. high street banks are too big to fail. The taxpayer knows this, to their cost. Politicians know it, and feel helpless. The Bank of England knows it, and sets monetary policy accordingly. Does this make Lloyds a failsafe investment for your ISA?

Up, up, up
The big banks have enjoyed a share-price resurgence over the past twelve months.

Royal Bank of Scotland is up 18%, Barclays is up 32%, but Lloyds has trumped them both with a 48% rise. That compares to a return of around 7% from the FTSE 100.

The banks have been the major beneficiaries of the central-banker policy of flushing markets with loose money and liquidity. Lloyds did particularly well out of the Bank of England‘s Funding for Lending Scheme, picking up 22 billion pounds to fund cheap loans, compared to just 9 billion pounds for Barclays.

Lloyds has also been working hard to mend its broken business and simplify its sprawling operations, off-loading everything from private-equity assets to Irish property loans, and selling 632 branches to the Co-operative Bank. Lloyds has also pulled out of ten territories, and is now focused mostly on the U.K.

Cutting its losses
Lloyds’ full-year results for 2012 showed a dramatic slowdown in the rate at which it is losing money.

Losses fell to 570 million pounds, down from a massive 3.5 billion pounds in 2011. The 2012 figure included 1.9 billion pounds set aside for mis-selling payment protection insurance (PPI) and interest rate swaps. Excluding mis-selling claims, the bank’s underlying group profit actually rose to 2.6 billion pounds, up from 638 million pounds in 2011.

Compare that to the 5.2 billion pounds pre-tax loss posted by RBS, and Lloyds starts to look positively healthy.

Lloyds also plumped up its financial cushion, or core tier 1 ratio, by another 12%, and cut group costs by 5% to 10 billion pounds, two years ahead of schedule. Management now plans another 9.8 billion pounds of cost cutting in 2013.

And the bank continues to raise money by off-loading assets, scooping 520 million pounds from institutional investors by selling a 20% stake in financial advisor St James’s Place. Lloyds still has a 37% holding, but won’t sell any more shares for at least a year. Every little helps.

One scandal after another
If you’re considering Lloyds for your ISA, you also have to be aware of every scrap of potential downside.

We’re all victims of the banks, but the banks are their own worst enemies. The PPI mis-selling scandal has so far cost …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Lloyds Banking Group Raises 520 Million Pounds Following St James's Place Share Disposal

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By Maynard Paton, The Motley Fool

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LONDON — The shares of Lloyds Banking   climbed 1p to 51p during early London trade this morning after the bank said it had raised £520m following the sale of part of its stake in St James’s Place .

Lloyds said it had sold 101 million shares at 510 pence and would retain its remaining 186 million shares for at least another 12 months.

The shares of St James’s Place fell 17 pence, or 3%, to 520 pence during early trade.

Lloyds claimed the disposal would realize a 400 million-pound accounting gain and would improve the group’s core tier 1 capital by approximately 600 million pounds.

The bank also calculated the sale would improve the group’s net tangible assets per share by 1.7 pence per share. Annual results published earlier this month showed Lloyds boasting net tangible assets of 54.9 pence per share.

This morning’s Lloyds share price could therefore represent 90% of the strengthened balance sheet.

Lloyds confirmed the share placing reflected its strategy to simplify the group and focus on its core customer franchise. It added the proceeds would be used for “general corporate purposes.”

Lloyds acquired its stake in St James’s Place, a financial services group and member of the FTSE 250 index, as part of the ill-fated merger with HBOS during the 2008-9 banking crash.

St James’s Place retains a network of financial advisors that serve 140,000 clients and manages some 35 billion pounds of customer money.

The mid-cap has seen its shares recover with the wider market during the last few years, with the price rallying 66% since last May. Indeed, the firm’s annual results published last month revealed a dividend lifted 33% for the third consecutive year and confirmation of a repeat increase for 2013.

Of course, whether the disposal means Lloyds shares are now a buy and St James’s Place shares are now a sell — or vice versa — remains up to you to decide.

However, if you already own shares in Lloyds or St James’s Place and are looking for an attractive investment idea outside of the financial sector, this free special report covers a tip-top growth opportunity.

Indeed, the blue chip in question has lifted its earnings per share by 44% since 2009, owns subsidiaries that might carry considerable hidden value — and has just been declared “The Motley Fool’s Top Growth Stock for 2013.”

Just click here to download the report — it’s free.

The article Lloyds Banking Group Raises 520 Million Pounds Following St James’s Place Share Disposal originally appeared on Fool.com.

Maynard does not own any share mentioned in this article.
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Source: FULL ARTICLE at DailyFinance