The financials team at Deutsche Bank are expecting a positive update from Lloyds Banking Group PLC (LSE:LLOY) when it updates its business plan alongside prelims next Thursday (Feb 24).
Referring to it as a potential catalyst event (which means it’s likely to get the Lloyds share price moving), DB said it expects “financial targets above consensus and above other UK banks”.
Specifically, it is predicting Lloyds could target a return on tangible equity of greater than 12% from 2024. That would be superior to any of the local competition and ahead of the 11% consensus figure.
“The shift in business mix has become fundamentally more profitable for Lloyds and the economic backdrop is more favourable than in the past 10 years,” Deutsche said in a note to clients.
On capital return, the German bank expects Lloyds to announce a £1bn buyback and 1.5p dividend.
Going forward, it reckons Lloyds will deliver a 40%-45% dividend payout ratio supplemented by an annual buyback of £1bn – the equivalent to an annual yield of 8%-9%.