LYG Review

To study annual report. Appears to be undervalued based on historical statistical valuation

Tier1 ratio of 14%, similar to BCS. TNAV of 53 pence is close to current market price. Hence no significant discount from book value.

https://www.lloydsbankinggroup.com/globalassets/documents/investors/2019/2019_lbg_hy_results_presentation.pdf

Mainly a UK domestic bank. Fate tied to UK economy. Comprises of traditional banking, wealth and insurance group. The wealth group is growing fast and much faster than the market.
Decreasing Cost/Income ratio a good sign of cost controlling
Underlying loan is stable and is mainly mortgages. If UK market tank, there will be default and there will be delinquent loans.
Net interest margin around 2.9%  which is relatively stable for last 2 years.
Progressive dividend policy. To commence quarterly payout from 2020 onwards.
Dividend payout ratio is low.


Q&A from 1H2019 report
https://www.lloydsbankinggroup.com/globalassets/documents/investors/2019/2019_lbg_hy_results_faqs.pdf

Company has contingency plans for BREXIT and expect direct impact to be modest since majority of their business is within UK.
Invested in digital experience for future. Expect customer to benefits and stay on with this system.
Stress test indicate robust capital and liquidity levels.

This is a UK economy play. Best is buy after BREXIT where uncertainty is mostly gone. Or a bet towards pound recovery. Bank performance over the last few years is stable despite BREXIT foes overhanging which illustrate their current robust business strategy and model.