Deutsche Bank has trimmed its target price for Lloyds Banking Group PLC (LON:LLOY) to 80p from 83p but retains a ‘buy’ rating for the FTSE 100-listed lender after assessing its 2020 strategy programme.
In mid-morning trading, Lloyds shares were steady at 67.5p.
In a note to clients, the German bank’s analysts said, for the first time, Lloyds’ ‘GSR3’ strategy gives an absolute cost target (less than £8bn) for 2020, with the company moving to target statutory returns from 2019 (14-15%), and a higher CET1 (core equity tier 1 ratio) (14%, as expected).
They added: “Importantly, the outlook for below-the-line charges is lower (with investment largely being taken above the line, and PPI nearing the end).”
The analysts think Lloyds’ 2020 targets imply earnings per share of 8.5p, which would put the bank on 8 times target earnings, against the sector average 2020 estimate of 9.6 times.
They added: “Our forecasts are not as optimistic (reflecting lower revenues, higher impairments, offset by lower share count), but despite this we still have 17% upside to our target price.”