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Who are Lloyds Bank?
Lloyds Bank was founded in 1765 in Birmingham, U.K.
It began when John Taylor, a button maker, and Sampson Lloyd, an iron producer joined forces
. They started a bank called Taylors and Lloyds which served manufacturers and merchants.
Lloyds continued expanding throughout the Industrial Revolution and by the 20th Century, Lloyds Bank had acquired many smaller banking groups in the U.K before expanding internationally.
These days Lloyds bank has over 30 million customers and is well regarded as one of the big boys of the U.K banking Industry.
Lloyds share price has fallen nearly 60% since the start of the year. Which is a staggering drop that far exceeds the 30% average for the FTSE 100 index.
The announcement that the banks would suspend their dividends also didn’t help the situation.
Is the Bank doomed? Or Could this be a great turnaround investment?
IN this video I’m going to give you a full analysis of the stock and detail whether this could be a great investment opportunity.
Central banks around the world have unlocked trillions of dollars of funding and liquidity to make sure the financial system holds together in these tough times. So far, these actions seem to be working.
Reduced interest rates and more liquidity will make it easier for the bank to borrow and lend.
Lloyds’ share price hasn’t been this cheap since 2012, shedding over 60% of its value since the start of 2018.
The bank’s price-to-earnings ratio now sits at 8, massively lower than just a few months ago.
How did Lloyds Bank perform during the Financial Crisis?
In the 2008 financial crisis, Lloyds TSB was hit hard as were the other banking institutes.
Problems at HBOS (Halifax Bank of Scotland) led to a catastrophic fall in share price and the HBOS boss was about to FAIL!
However, this is where Lloyds came out stronger. Although it
went against the rules of the monopolies commission, the government allowed Lloyds Bank to take over Halifax Bank of Scotland.
This acquisition made the Lloyds banking group the largest holder of mortgages in the UK.
The U.K Governement then Bailed out Lloyds with a £20.3bn bailout and the secured 43% in the business.
In 2017 in the U.K government finally sold it’s shares in the Business.
Lloyds Bank SCANDALS?
LLOYDS banking group has battled many scandals over recent years from allegations that the bank ruthlessly mistreated customers as it scrambled for survival during the financial crisis.
This led to a £45.5 million fine for the failure of its Bank of Scotland arm to tell the City watchdog about suspicions of fraud at its now-notorious Reading branch.
According to the guardian, The proceeds of this fraud were spent on Prostitutes and parties!
Now although £45.5 million isn’t a lot for the large banking instates the stigma is still there.
Then there was the PPI( payment protection insurance) which affected many British banks in which they had to repay £53.3billion!
Lloyds was the biggest seller of the dud product!
Now despite these scandals Lloyds bank had battled and recovered, it’s share price was looking healthy up until this latest stock market crash.
While it’s unlikely any of these lenders will escape unscathed from the outbreak, they’re still in a far better position today than they were in 2008/09.
FINAL THOUGHTS:
Overall, UK banks are in a much stronger financial position than they were back in 2008 during the financial crisis. Where many had to be bailed out.
In this case, the 2020 stock market crash doesn’t lie with the banks and this global issue has been the catalyst for the economic uncertainty and market volatility.
If Lloyds can preserve its capital, the bank should be in a feasible position to continue lending to small businesses.
However, with the prospect of many companies having to file for bankruptcy as a result of this global issue, could eat into the bank’s profits…which is a risk.
However, on balance if Lloyds can continue to support businesses in a sustainable and cash-efficient way, there’ll be no need for bailouts or any government support.
It’s extremely low share price at the moment offers a margin of safety for this purchase thus I bought shares in Lloyds.
You should also check out my previous video in which I analysed Barclays bank shares which are some of the cheapest in the FTSE 100 right now with upwards returns of 300% possible!
Barclays shares offer even better value than Lloyds. Check that video out below,
What do you think of Lloyds Bank group as a Business and as a stock?
COMMENT BELOW
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———————–FINANCIAL ADVICE DISCLAIMER. (FROM BACLAYS VIDEO **********************************************************************************
BUT REMEMBER THIS IS NOT FINANCIAL ADVICE SO PLEASE DO YOUR OWN RESEARCH, evaluate your own investing goals, budget and risk tolerance before investing into any stocks mentioned on this channel!
I will leave you with a banking joke,
A local bank is introducing a cash machine built in to a tree. If it’s successful, they might expand to other branches!!
SEE YOU NEXT TIME! 😊
