The US brokerage Jefferies believes 2017 will be the first time in five years Lloyds Banking Group PLC’s (LON:LLOY) fee income HASN’T shrunk - a landmark for the lender, and a potentially crucial one. To date the black horse bank has focused on buttressing its net interest margin, a trend that is likely to give way to top line growth going forward. Achieving this stable earnings base is likely to be the biggest factor dictating the success or otherwise of Lloyds, bigger than Brexit or credit risk, said Jefferies. It said 2016 was the ‘trough year’ for the bank. It is predicting 1% top line growth in 2017 (before adding in the contribution from the recently-acquired MBNA business) and “5% absolute growth through 2019” on the same basis. Its revenue forecast is around 5% above the City consensus, while per share earnings predictions are around 16% ahead of the pack for 2017 through to 2019. Jefferies has pushed its price target up by 4p a share to 86p on the back of the tweaks it has made to its numbers and remains a ‘buyer’ of the stock. It is one of a number of City firms to re-look at estimates as Britain’s biggest lender has eased back from from its margin-focused self-help strategy. Of the 17 analysts logged as following Lloyds by the Brokerforecasts site, ten are positive on the stock with only four ‘sellers’. The remainder think the shares are fully valued. At 10am, the shares were changing hands for 66.44p.
Jefferies believes 2017 will be the first time in five years Lloyds’ fee income HASN’T shrunk
Jefferies has pushed its price target for Lloyds up by 4p a share to 86p on the back of the tweaks it has made to its numbers and remains a ‘buyer’ of the stock