Lloyds Banking Group PLC (LLOY)

Lloyds Banking Group PLC (LLOY) - Ian Gordon at Exane BNP Paribas

Lloyds Banking Group Plc, Britain's biggest home loan lender, will allow customers to increase mortgage repayments without penalty, as the bank seeks to cut its 1.03 trillion pound ($1.55 trillion) balance sheet. Existing customers will be allowed to overpay by as much as 20 percent until the end of March next year, the London based lender said in a statement today. "It is a way of getting funding by the back door," said Ian Gordon, an analyst at Exane BNP Paribas in London who has an "outperform" rating on the bank. "It reduces refinancing risk which is welcome in an uncertain world 

Lloyds Banking Group PLC (LLOY) - Jonathan Pierce at Credit Suisse

Tightening in financial markets is a distinct possibility during the course of 2010.". Lloyds may need to shrink its assets by as much as 230 billion pounds to meet new capital requirements, Credit Suisse analyst Jonathan Pierce said in a note on . The bank completed the U. K.'s biggest rights offering last year, raising 13.5 billion pounds. Lloyds has a residential mortgage book of 346 billion pounds, the bank said in an analyst presentation last month. About half will be composed of standard variable rate loans by the year's end, Finance Director Tim Tookey said last month 

Lloyds Banking Group PLC (LLOY) - Jonathan Pierce at Credit Suisse

If there is one thing UK banks agree on at the moment it is this: impairment charges have peaked. Barclays, Lloyds Banking Group, HSBC and RBS all said as much in their respective results statements. . But how quickly will bad charges fall? . Some analysts think they'll decline very rapidly. But Credit Suisse banking analyst Jonathan Pierce, who [ 

Lloyds Banking Group PLC (LLOY) - Marcus Barnard at Oriel Securities

Oriel securities analyst Marcus Barnard said the rights issue was "on a par with its current market cap (£15.3bn] and in sterling terms a larger size to the rights issues from RBS, HSBC or Lloyds.". 

Lloyds Banking Group PLC (LLOY) - Marcus Barnard at Oriel Securities

Credit Suisse Group AG, JPMorgan Cazenove and HSBC Holdings Plc agreed to underwrite in full the $20 billion rights offer. That would be about equal to Lloyds Banking Group Plc's 13.5 billion pounds ($20.4 billion) sale in December, still the U.K.'s biggest. ‘Risk Involved' "If you've got backing from a few banks and a few major shareholders, there will be a way to make this deal happen," said Marcus Barnard , a London based analyst at Oriel Securities Ltd with a "sell" rating on the stock. "The question is the cost and the risk involved." The insurer may be forced to sell assets in India and China to comply with local foreign ownership regulations, he said 

Lloyds Banking Group PLC (LLOY) - Marcus Barnard at Oriel Securities

Embedded value estimates a company's net worth excluding new business. The rights offering would be about equal to Lloyds Banking Group Plc's 13.5 billion pounds ($20.4 billion) sale in December, still the U.K.'s biggest. "If you've got backing from a few banks and a few major shareholders, there will be a way to make this deal happen," said Marcus Barnard , a London based analyst at Oriel Securities Ltd with a "sell" rating on the stock. "The question is the cost and the risk involved." The insurer may be forced to sell assets in India and China to comply with local foreign ownership regulations, he said 

Lloyds Banking Group PLC (LLOY) - Sebastian Orsi at Merrion Stockbrokers

The bank took a 15.3pc average writedown on this part of its loan book, which Merrion Capital analyst Sebastian Orsi said was in line with what the market had factored in for Irish banks in general. "The severe economic downturn has significantly influenced performance, with commercial property prices falling approximately 55pc from their peak, house prices falling approximately 31pc from their peak and unemployment levels currently at 12.5pc," Lloyds said. All told, BoSI has set aside £3.6bn (€4bn) of provisions to cover expected losses on its portfolio. BoSI announced earlier this month that it would close its 44 Halifax branches and broker sourced business by the end of July, to focus on business banking, which is largely a legacy of its 2001 purchase of ICC bank. It plans to axe 750 of its 1,600 strong workforce. 

Lloyds Banking Group PLC (LLOY) - Nic Clarke at Charles Stanley Securities

Nic Clarke, an analyst at Charles Stanley, said: "Many shareholders who have held Lloyds shares for a number of years might not agree with the view of Mr Daniels that 2009 has been a success for Lloyds. 

Lloyds Banking Group PLC (LLOY) - Mark Phin at Keefe, Bruyette & Woods

Keefe, Bruyette & Woods analyst Mark Phin described the figures as "fairly disappointing," adding that impairment charges, while declining, where still higher than expected. He added the guidance implies Lloyds will take around another 14 billion pounds of bad debt charges in 2010. Simon Kennedy is the City correspondent for MarketWatch in London. 

Lloyds Banking Group PLC (LLOY) - Ian Gordon at Exane BNP Paribas

Last year, Lloyds also raised 13.5 billion pounds in Britain's largest ever rights issue. Lloyds shares were down half a percent at 54.6 pence as the London Stock Exchange opened. "The substance and outlook should delight the market," said Ian Gordon, analyst at Exane BNP Paribas. He noted improvements in margins and synergies, and the bank's claim that impairments had peaked 

Lloyds Banking Group PLC (LLOY) - Danny Clarke at Shore Capital Stockbrokers

Danny Clarke, analyst at Shore Capital, said Lloyds had turned in a good set of results, but "we believe better value and growth opportunities lie elsewhere in the sector."