Lloyds share plunge to the lowest level since June 2012 after the banking group reported heavy losses in the second quarter. Net income fell 11% to £5.4bn. Operating costs declined by 6.5%, but the provisions for bad loans rose to result in a loss before tax of £602 million. The same period in 2019 the bank reported a pre-tax profit of £1.3 billion.
Lloyds provisions rose to £2.4 billion, up from £1.4 billion in the first quarter of the year, and £579 million the 2Q in 2019. The revenues for the second quarter came at £3.5 billion a 21% drop.
The lower interest rates by the Bank Of England narrowed the Net Interest Margin for Lloyds down to 2.40% from 2.89% in 2019. The net interest income fell to £5.5 billion an 11% drop.
The crucial CET1 ratio for Lloyds increased by 0.6% to 14.6% after the bank cancelled the dividend payments and strengthened the bank’s capitalization.
Lloyds Full Year Guidance
The bank expects the net interest margins to remain at 2.4% until the end of the year and the impairments to be between 4.5 billion and 5.5 billion. The operating costs for 2020 estimated to be around 7.6 billion.
Analysts expect that the low-interest rates environment in the UK and weak economic performance would keep the pressure to profit margins in the banking sector and Lloyds.
Lloyds Share Daily Technical Analysis
Lloyds share is 6.41% lower at £26.52 today after the disappointing second-quarter earnings report. Lloyds breached the descending triangle that formed since early June, and now sellers looking for lower levels. The target price after the break is at £22.
What can cancel the bearish trend is if the stock manages to return initially above the daily high at £27.61. The next level to watch is the bottom line of the triangle around £29.28. The critical resistance for Lloyds share stands at £31.24 the 50-day moving average.