Black Beauty: A Recovering Quadruped

Unloved Lloyds is looking cheap (Could've been said last year when the year close was circa 450)
By Ruth Sutherland

Published 01 January 2005, Daily Mail

What is happening at Lloyds TSB? (Wouldn't we all like to know :-)

The bank has been a recidivist underperformer and is deeply unloved by the market. (May be changing in my view as I have said since end November)

The Black Horse is looking lame - the shares, 817p two years ago, have fallen to 473p - but it remains a powerful brand with a good high street franchise. (Been arguing that sort of thing under 4 quid as well as presently, but then I am deranged allegedly ;-)

Once it can show it has sealed off the problems at its Scottish Widows division, a bid could emerge, probably from an overseas player such as Citigroup of the US, as UK predators would face competition problems. (Citigroup have always been favourite in my book because of the Daniels [and others taken on by him] connection but I don't think it's good place to hang your hat)

Without a bid, the shares could slip, with risks of more insurance write-offs or pressure on the dividend. But currently, the shares yield nearly 8pc, well ahead of the bank's savings accounts. (First point, see previous comments. Second point, always possible with such an aggressive equity policy but can't see it, especially as first dividend has been confirmed as due. Third point I no longer comment on as it is not a serious issue any more)

Last year I tipped Abbey as a takeover target at 536 1/2p. It fell into the arms of Spain's Banco Santander, whose one-for-one share offer plus the 31p dividend is now worth 662 1/2p - a nice profit. (The lady has a record ;-)