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Lloyds Share Price Slumps After 85% Drop in Profits Forces Bonus Cancellations

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Lloyds share price slumped 4.33% on Monday after the cost of insuring its exposure to debt rose significantly after a tightening of coronavirus restrictions. 

The discovery of a highly contagious strain of the coronavirus has prompted the UK government to increase restrictions in London and several towns. Credit default swaps for several UK lenders were reported to have risen, as per an IHS Markit report released on Friday. 

The same day, Lloyds Banking Group announced it was cancelling all employee bonuses for 2020 after profits slumped. Lloyds’ share price was already under pressure on Friday after profits crashed 85% in the first three quarters of the year. 

The outgoing CEO Antonio Horta-Osorio had already waived his 2020 bonus ahead of his exit next year. Lloyds’ share price is currently trading at 33.02.

Technical Levels to Watch

The steep drop seen on the daily chart shows Lloyds’ share price perilously close to taking out the 33.095 support. This support had been violated earlier in the day, but a bounce on the 32.10 support enabled buyers to recoup some of the lost ground. Sellers still have the upper hand and a breakdown of 33.095 puts 32.10 under pressure as well. If this level gives way, the lower edge of the channel will also capitulate, bringing 31.250 and 29.765 into the picture.

However, if the price holds up above the 33.09 support, then buyers could have some momentum to take the price towards the 34.77 resistance level, with 35.99 and 37.02 lining up as upside targets. 

Lloyds Share Price; Daily Chart