The FTSE 100 bank’s share price fell by 4.88% to 53.02 after its interim figures were released, becoming the worst performer of the day.
Despite more than doubling its pre-tax profit to £2.5bn, Lloyds announced in its interim results it would be cutting costs by £1.4bn by the end of 2017 through closing an additional 200 branches and trimming 3,000 jobs.
Underlying profit was down 5%, however, to £4.2bn and total net income was 1% lower at £8.9bn.
Eric Moore, co-manager of the Miton Income Fund, found Lloyd’s interim results to be decidedly lacklustre.
“There was a disappointment on both the capital generation and dividend side and those were the only bull cases for Lloyds. Even though the dividend was up 13%, it was not as far up as people had hoped and fell short of the medium-term dividend forecast,” Moore said.
“Lloyds have clearly taken a step backwards but it’s not a disaster,” said Moore. However, he said it’s worth noting “their income hook is not as compelling now as it was.”
Hermes senior credit analyst, Filippo Alloatti, was also concerned by Lloyds’ guidance on capital generation and concerns about asset quality.
“The Bank of England has not spent a single day without warning of the possibility of tension within the commercial property markets and Lloyds is one of the most exposed banks to that sector. We will have to see how the asset quality will evolve, but I think it is safe to assume it will deteriorate from here.”