Lloyds 2011 Results are out...

Generali

Masomnia wrote: »

'If you strip out the loss making bits, we made a profit!'

I believe that they are all legitimate ways of describing the pre-tax profits of LLOY. I have no idea if that is actually the case though. The whole thing seems to me like Alice Through the Looking Glass written by opium-addled accountants.

It's an excellent metaphor(?) for what is happening to the banking world right now and possibly the broader economy too.

I was reading today about the (unlikely) possibility of Vodaphone buying up Cable & Wireless Worldwide to gain their tax losses.

wotsthat wrote: »

Sounds brilliant.

I'm so glad I've been a shareholder since 2006:(

You should have held off for a couple of years and let that nice Mr Brown buy the shares on your behalf.

Masomnia

Generali wrote: »

I believe that they are all legitimate ways of describing the pre-tax profits of LLOY. I have no idea if that is actually the case though. The whole thing seems to me like Alice Through the Looking Glass written by opium-addled accountants.

It's an excellent metaphor(?) for what is happening to the banking world right now and possibly the broader economy too.

I was reading today about the (unlikely) possibility of Vodaphone buying up Cable & Wireless Worldwide to gain their tax losses.

Yes I was being a bit facetious I'm sure they are all legitimate, but I do think it's amazing just how much one can 'spin' results to look how one wants them to.

Tbh I think it's good news that the business is profitable apart from PPI, and I think that is useful to know. Presumably they've overestimated the effects of PPI to get the bad news all out of the way now and possibly even make future results look better once Osorio has been in the job a while.

Generali

Masomnia wrote: »

Yes I was being a bit facetious I'm sure they are all legitimate, but I do think it's amazing just how much one can 'spin' results to look how one wants them to.

I picked up on that although maybe others didn't;)

Masomnia wrote: »

Tbh I think it's good news that the business is profitable apart from PPI, and I think that is useful to know. Presumably they've overestimated the effects of PPI to get the bad news all out of the way now and possibly even make future results look better once Osorio has been in the job a while.

It's sometimes known as 'kitchen sinking', chucking all the losses in one period so that future results look good and of course then senior management can be suitably rewarded.

nicko33

Generali wrote: »

I believe that they are all legitimate ways of describing the pre-tax profits of LLOY.

How much profit will HMRC think they have made (for tax purposes)?

Generali

nicko33 wrote: »

How much profit will HMRC think they have made (for tax purposes)?

I have no idea. AFAICS, they paid -£828,000,000 in Corporation Tax in 2011, HMRC paid LLOY. I am not expert at this stuff though so happy to be corrected.

VfM4meplse

Generali wrote: »

Because they might have made a profit of almost 7 billion quid!

Surely £375,000,000 is a small price to pay.:D

Well, which is it? And why would any third party wish to invest in a business that cannot state it's profits (or losses) clearly?

purch

Masomnia wrote: »

'If you strip out the loss making bits, we made a profit!'

On that basis, Greece looks a good bet :eek:

Thrugelmir

Neat summarised review by Peston.

http://www.bbc.co.uk/news/business-17153041

Need to see the full accounts to dig deeper

michaels

How do banks make money?

Retail banking by overcharging for overdrafts, cross-selling overpriced insurance and making a nice interest rate margin by paying no interest on current accounts, low interest on savings accounts and charging lots on loans.

Oh dear, selling dodgy insurance is off the agenda, consumers are being careful about overdraft fees and expensive loans (plus banks are having to be more careful to avoid having to pay back excessive Overdraft charges), with interest rates low consumers are more concerned to shop around for the best savings rates and the 'free' current account money isn't worth nearly as much with 0.%% base rate rather than 5%.

So how about business customers - big ones can issue their own debt cheaply (see investment banking below), small ones don't want to borrow at the risk rated interest rates the banks are offering with many business loans still turning bad with the economy weak and shops and offices lying empty.

So is there money to be made from investment banking? No, activity is down so margins have collapsed as the same players all try and chase a cut of a smaller pot. Trading on their own account is not on really either, it is a zero sum game anyway and given the cost of capital it no longer makes sense. Plus with bonuses highly restricted the brightest and best have goen to work elsewhere.

So I ask again, at the moment, how do banks make money?

Thrugelmir

michaels wrote: »

and making a nice interest rate margin by paying no interest on current accounts,

Current accounts cost money to administer.

The UK is one of the few countries that do not charge for current account services. Though for how much longer........