The Banking and Strategy Initiative

Chillin' out till it needs to be funded

European Bank Results Season: The real ones HSBC and StanChart report this week

HSBC and StanC get ready to report results on back of a strong Emrging markets franchise this week on Tuesday and Wednesday , showing everyone how cost of funding can be managed, and how PPI need not be sold to pensioners for profit while Net Interest margins at Llloyds shrink to below 200 basis points having ended 011 at 208 bp and CEO Horta Osario back after a long leave just to tell us how the bank paid GBP 3 bln in misselling fines to end up GBP 2.8 bln in red for 2011, a GBP 2.5 bln ahead of its 2010 scrape. I do not know of any other Tier I bank with cost of funds above 10% let alone the 12% Lloyds expects to be funded by, despite the ring fencing and its insulation from European losses , even most operations cost, with the GBP 8 bln bad loan charges topped by revenues from the same portfolio on the topline.

Pre Tax Profit of GBP 2.8 bln at Lloyds compares with probably GBP 10 bln each at both StanC and HSBC over the year, that much (2.8) coming out of the last quarter itself across diminished trading income but robust retail operations. In asset sales, all global banks have been equal, Lloyds at GBP 53 bln and HSBC at $30 bln incl US cards and small Asia and Latam operations as it tires to get Cost income ratio back to 53-54%

Lloyds paid out $550 bln in bonuses and is striking another 150000 jobs according to the rag Mirror risking union ire for the $2.6 bln in savings it has proposed, taking job losses to 45 000 by end 2012. Payouts at Lloyds reduced by a quarter seemingly as global bank bonus payouts reduced by 40-60% this year


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