Bloomberg News

Lloyds May Post Loss for 2012 on Bad Loans, Barclays Says

January 06, 2012

(Updates with share price in final paragraph.)

Jan. 6 (Bloomberg) -- Lloyds Banking Group Plc, the U.K.’s largest mortgage lender, may post a loss for 2012 because of higher charges for bad loans, according to analysts at Barclays Capital.

Lloyds may set aside 5 billion pounds ($7.75 billion) of provisions on mortgages for the second half of 2011 through to the end of 2014 and post a net loss of 292 million pounds, as the U.K. suffers a “sharper downturn” and slow recovery, said Rohith Chandra-Rajan, an analyst at Barclays Capital, in a note to clients today. Royal Bank of Scotland Group Plc’s provisions for mortgages may be less than 1 billion pounds, Barclays Capital said.

“Rising unemployment, falling household incomes, a fragile property market and corporate cash flow all challenge a continued improvement in credit quality,” the note said.

U.K. Prime Minister David Cameron said today the country is “in difficult economic times” and that shifting the economy away from a “debt-fueled boom” is taking time. Unemployment as measured by International Labor Organization standards rose by 128,000 to 2.64 million, the most since 1994, the Office for National Statistics said last month.

Lloyds may have a total impairment charge of 20 billion pounds for the second half of 2011 through to the end of 2014 and RBS 13 billion pounds, Barclays Capital said. The government-supported banks have posted an estimated 100 billion of bad loan charges from 2008 through 2011, the analyst said.

Lloyds gained 2.9 percent to 27.13 pence at 2:20 p.m. in London trading, valuing the company at 18.7 billion pounds.

--With assistance from Robert Hutton in London. Editor: Jon Menon

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net.

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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