At first glance the Lloyds Banking Group FY2019 numbers might be a cause for doom and gloom.
For example, full year net profits drop by one-third year-over-year to £3bn.
And then there is PPI and a £2.5bn. But we knew that and the numbers had already been disclosed and provisions set aside.
Revenues are down by 4% to £17.1bn partly on ongoing margin pressure but there are a number of positive metrics. And bear in mind that the Lloyds net interest margin continues to outperform its peer group average.
Shareholders will be heartened by the 5% rise in the dividend. The market is taking the results in its stride with the share price up 2.% following release of the results.
Lloyds FY2019 highlights
Successful cost control results in total costs reducing by 5% to £8.3bn.
This is reflected in a cost income ratio of 48.5% and a level its peer group cannot match.
Specifically, the Lloyds cost-income ratio is now about 13.3 percentage points below its UK peer group average.
Market share gains include 11% growth in personal current accounts against overall market growth of 7.3%.
In total, the three brands – Lloyds, Halifax and Bank of Scotland – account for 17.3 million current accounts. This represents a 2.5% increase since 2017.
Lloyds FY2019 digital banking highlights
Over the last two years Lloyds has invested £2bn in strategic initiatives. Furthermore, technology spend now represents 19% of operating costs.
Virtual assistants now manage up to 5,000 customer conversations daily, with customer satisfaction increasing by more than 10 percentage points.
Over 5 million customers now enjoy single customer view capability. This will rise to around 9 million by the end of 2020.
Lloyds is the largest UK digital bank by customers with 16.4 million digitally active customers, up 22% since 2017. Over the same period, mobile banking users rise by 39% to 10.7 million.
The bank now originates 75% of products digitally.
Branch highlights include the launch of a flagship Bank of Scotland branch in Glasgow. In addition the bank opened Home by Halifax, an innovative store in London dedicated to supporting customers buying their homes.
Lloyds FY2019: looking ahead
The bank forecasts a net interest margin for fiscal 2020 within the range of 2.75% to 2.80%. Lloyds expects to deliver a return on tangible equity of 12% to 13%. On the other hand, this compares to a previous target of 14% to 15%.