Lloyds Banking Group, the FTSE 100 titan and owner of the UK's largest motor finance lender Black Horse, will release its first-quarter update on Wednesday, with investors keen to see progress on wealth management and resolution of the motor finance scandal.
Wealth Management Expansion in Focus
The bank's wealth proposition, considered underdeveloped compared to peers, is under scrutiny. The acquisition of the remaining 49.9% of Schroders Personal Wealth (SPW) in October, which manages £17bn in assets and serves 60,000 clients, signals intent. Richard Hunter of interactive investor noted that investors will watch for updates on mass affluent plans.
Rival banks have also been aggressive: NatWest purchased Evelyn Partners for £2.7bn, and HSBC invested $5m in a luxury wealth centre in London. Lloyds must compete to capture a slice of the wealth management pie.
Motor Finance Scandal Nearing Resolution
The Financial Conduct Authority (FCA) finalized its redress scheme in March, reducing the industry's bill to £9bn from £11bn, with 12.1m qualifying agreements (down from 14.2m). Average payout is estimated at £830. Lloyds has provisioned around £2bn for potential payouts and, while disappointed, will not challenge the scheme. Russ Mould of AJ Bell expects litigation costs to remain modest.
Lloyds' stock, often a barometer for the UK economy, has been volatile, recently surpassing 100p for the first time in nearly 20 years before declining amid Iran war-induced market turbulence. Provisions for bad loans may rise, echoing the first quarter of 2022 after Russia's invasion of Ukraine.
CEO Charlie Nunn, who took the helm in 2021, faces pressure to demonstrate growth in wealth management and closure on motor finance issues.
