Lloyds: Good 2022 Results, Raised Mid-Term Outlook, But 7x P/E
(Preview) Company Update (LLOY LN) (Buy)
Summary
Lloyds Banking Group plc 2022 results this morning support the undemanding expectations in our investment case.
Return on Tangible Equity was 13.5% in 2022 and guided to be around 13% in both 2023 and 2024. Our forecasts only assume 11%.
Net Interest Margin will likely remain manageable, and cost growth is moderate. Credit reserves now assume a "mild" recession.
At 51.2p, Lloyds shares are now trading at below 1x Tangible Net Asset Value, 7x 2022 EPS and a 4.7% Dividend Yield.
Our updated forecasts indicate a total return of 44% (14.5% annualized) by 2025 year-end. Buy.
Introduction
Lloyds Banking Group plc released 2022 results this morning (February 22). Lloyds shares fell by as much as 3% in London in the morning, but are currently up 0.5% (at 51.2p) as of 14:45 local time.
We reinitiated our coverage on Lloyds with a Buy rating last July, and Lloyds shares have gained 24% (including dividends) since, though they remain significantly lower than before COVID-19.
2022 results support …