Lloyds Banking is favourite to deliver a pleasant surprise for its investors when it kicks off the bank season on Wednesday, says Credit Suisse.
Second quarter net profits should be around £1.4bn, suggest analysts at the bank, which is slightly above consensus estimates elsewhere.
Higher short interest rates will give net interest margin (NIM), a key earnings driver, a nudge up suggests the broker.
Credit Suisse expects NII of £3.16bn driven by NIM of 2.79%, up 11bp on the previous quarter, and loan growth of 1%.
Transaction-related revenues should also be helpful and cost control and asset quality be in line with the bank’s targets given the conservative starting assumptions.
Lloyds currently is mid-way through a £2bn share buyback programme, with Credit Suisse expecting another £2bn buyback programme to be announced with the full year results in 2023.
An interim dividend of 0.83p is also being forecast by Credit Suisse, which is 24% higher year-on-year and likely to be a third of the full-year total.
UBS meanwhile, expects the bank to shine in several areas and most strongly in returns from deposits, from more targeted mortgages to protect spreads and from increased hedge size and duration (read more).
Shares today were up 1.7% at 44p.