Lloyds share price is in drop mode for the second day running, after a fall in annual profit as well as an increase in its bad debt portfolio spooked investors.
Lloyds Banking Group reported a 26% drop in its annual profits, as it continues to restructure its operations following the almost complete exit of the UK government in December 2019. It also reported an increase in its bad debt portfolio, with a spike in impairments on bad loans to the tune of £1.3 billion. This figure represents a near 50% increase on the same item from the previous year, as a steep drop in the price of second-hand cars has badly hit its car financing division.
Compensations running into billions of pounds were also written off from its operational profits to settle claims of clients who were mis-sold a category of protection insurance. The global stock market selloff that is into the second day of the week as a result of increasing global spread of the coronavirus is also taking its toll on the stock, as Lloyd share price now trades £2.92 lower than Friday’s close.
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Technical Outlook for Lloyds Share Price
Lloyds share price opened the week with a massive downside gap which has not been covered. This move took the asset out of the descending channel and has taken it on a path of collision with the immediate downside support target at 52.56, where previous lows of 31 July, 18/25 September 2019 exist.
A breakdown of this area opens the door for Lloyds share price to push towards the 50.44 price level, where a previous low was seen on 9 October last year. Support targets at 49.07 and 48.12 come become relevant if the 50.44 support price fails to hold up to seller scrutiny.
On the flip side, price recovery from a bounce off the 52.56 support will aim to close the gap, which will bring Lloyds share price with 55.47, where the lower border of the broken channel is expected to act in its new role as a resistance. 58.57 can only be attained as an upside target if Lloyds share price gets further bullish interest.