Lloyds to writeoff £13bn!

Andrew64

Clearly, the banking crisis is not over yet.

Lloyds braced for £13bn writeoff

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6689535.ece

"LLOYDS BANKING GROUP is poised to write off as much as £13 billion on its loans to commercial property, businesses and mortgage holders as the crisis engulfing the taxpayer-backed bank deepens. First-half results due to be posted in three weeks will show that its losses are accelerating, in spite of recent suggestions that the worst of the recession is over"

mbga9pgf

http://forums.moneysavingexpert.com/showthread.html?t=1692639

I predict the FTSE is about to have another spanking, especially as I expect widespread banking losses. What is true for Lloyds will also be more or less true for RBS, barclays and the like.

Expectation Dislocation in the markets = falls IMHO.

Heyman_2

The article also says that total write-offs for the group for this year could reach £20 billion. :eek:

Bearing in mind that the bailout for Lloyds AND HBOS together back in October 2008 totalled 17 billion, this is particularly worrying.

http://news.bbc.co.uk/1/hi/business/7666570.stm

Are they essentially back where they started? :eek:

HAMISH_MCTAVISH

Heyman wrote: »

The article also says that total write-offs for the group for this year could reach £20 billion. :eek:

Bearing in mind that the bailout for Lloyds AND HBOS together back in October 2008 totalled 17 billion, this is particularly worrying.

http://news.bbc.co.uk/1/hi/business/7666570.stm

Are they essentially back where they started? :eek:

No, not worrying at all. The banks have since been able to use hundreds of billions of pounds in guarantees to offload assets. They have also been charging massive (and entirely userous) margins on lending for the last 2 years, and so have now substantially rebuilt their balance sheets.

I doubt any further bailouts will be required at all.

Heyman_2

HAMISH_MCTAVISH wrote: »

No, not worrying at all. The banks have since been able to use hundreds of billions of pounds in guarantees to offload assets. They have also been charging massive (and entirely userous) margins on lending for the last 2 years, and so have now substantially rebuilt their balance sheets.

I doubt any further bailouts will be required at all.

The last bailout was 9 months ago, not 2 years, so they've actually only had 9 months to try and rebuild those balance sheets. Writing off yet more loans doesn't exactly inspire confidence, especially with the amounts they're talking about. Plus, the article says -

First-half results due to be posted in three weeks will show that its losses are accelerating

And

The writeoffs for the first six months of the year would match the losses recorded by Lloyds TSB and HBOS in 2008, as they consummated their disastrous merger. The expected bad debt charge is almost twice what Lloyds paid for HBOS when they came together under the government’s watch last autumn. Total writeoffs for this year at Lloyds could exceed £20 billion.

Now, as you may have picked up from my previous posts, I'm a pretty level-headed guy and I'm not into scaremongering and the above quotes appear to be based on fact rather than the usual newspaper spin.

Not sure I can share your seemingingly blind optimism on this one.

HAMISH_MCTAVISH

Heyman wrote: »

The last bailout was 9 months ago, not 2 years, so they've actually only had 9 months to try and rebuild those balance sheets.

Not sure I can share your seemingingly blind optimism on this one.

True, but they have been charging userous rates for almost 2 years now. That all started around late summer/autumn 2007, and has got worse ever since. Falling base rates but increasing bank margins, until we now have the ridiculous situation where FTB's with 10% deposits are being charged up to 7% interest, and business customers are paying as much as double for their overdrafts as they were two years ago.

There has been substantial balance sheet rebuilding going on.

I doubt a further bailout will be needed.

Heyman_2

I agree with the points you are making regarding the margins the banks are now raking in on the more recent additions to their loan books, but the question of whether this will be enough to stave off another State handout is where we disagree.

We shall see!

mbga9pgf

I doubt a further bailout will be needed.

you will be proved completely wrong in the next 6 months.

You are actually telling us that record low lending is supposed to support profit for a massive 17 billion further writedown?

And you expect us to take you seriously?

Want to tell us how many mortgage deals have been signed in the past 9 months since the last write down?

HAMISH_MCTAVISH

mbga9pgf wrote: »

Want to tell us how many mortgage deals have been signed in the past 9 months since the last write down?

Mortgage approvals are currently running around one third of what they were at peak. Bank margins are now around 3 times what they were at peak.

The only people who haven't lost out, it seems, are the bankers......

From the article....

Analysts say that when the huge provisions are put to one side, Lloyds is now highly profitable and has a dominant market share in the UK.

mbga9pgf

1) want to prove those stats with an online link?

2) Want to provide a link as to how much has been lent since 9 months ago?

3) Want to factor in the effect of a reversal in MEW in bank profits? After all, the reversal in MEW is a significant loss maker to the banks.

4) Want to comment on the fact that Lloyds only made a 4.13 billion profit in 2007, at the peak? Where is the other cash coming from hamish?

Answer EACH question.

mbga9pgf

Analysts say that when the huge provisions are put to one side

you cant just say 'ignore the losses, its a profit making business' every business failure in history could do that!