Lloyds: Back to black

Friday..........You guessed it!

RP - I think you've rather understated the key questions in this report - 20 odd paragraphs on a possible £1bn profit, and a final two line paragraph obliquely referring to the hundreds of billions that Lloyds needs to refinance in the not too distant future.

Still, it is nice to read some good news for a change, not that I think it’ll last that long!

>Whether it can shrink enough without damaging the British economy (by depriving households and businesses of valuable loans) is the big unanswered question.

The story is often revealed at the end of a piece of writing.

>That said, a successful economy requires banks that make profits.

This is the context. The uncontrolled creation of money as debt.

And the loans from the government?...............
Looks like a paper recovery to me. The banks have being using such large figures to show losses and profits that no one really knows how much money they lost, or borrowed. I thought to relate the money to an airplane, roughly £50 million give or take, but that is still too big a sum. So I worked out that, give or take, you repair every pothole in the road system and resurface a lot of the really bad ones for less than the profits, let alone the loans.

And then the banks put up the rates and don't lend out the cash!!!!!!
Maybe this all human nature and not business.

66. At 7:20pm on 26 Feb 2010, AgeTheGod wrote:
“… and I’d be very surprised if Lloyds isn’t declaring an after tax profit before the end of the year – though I expect it to be Q4 not Q3 – because underneath the headline figure of -£6.3Bn there was actually a reasonable profit for Lloyds.”

And so it comes to pass…

No doubt Eric Daniels will now get a massive bonus next year for this “unprecedented recovery” never seen before in the history of big corporates And nothing at all to do with the fat that a lot of the “toxic debt” write-offs actually weren’t that toxic.

I thought at first when RP was being interviewed on Today about Lloyds that he might, just might, find it in himself to say something positive. However, I suppose that was too much to ask. I'm sure RP wiould rather slit his wrists than report good news positively. The doom and gloom merchant may himself be the single most negative influence on business confidence. I felt that this morning it even came across that Evan Davis was embarrassed by his negativity.

'That said, a successful economy requires banks that make profits.'

But here, surely, you are just defining what 'a successful economy' is.

This is a subtle linguistic point.

Think of China (and don't think too affectionately about the SEZs).

How liberal-democratic anarchism is currently sustained/reinforced is really quite subtle.

In the end, the SEZs will, I predict, break 'Anglo-Saxon' capitalism.

Great. Their people can now afford to pay some higher taxes
than the rest of us, and we can get our money back sooner.

Then, when they've squared off the bail-outs (and paid
a large "moral hazard" premium for the recession they caused),
we can break them up to stop this happening again.

Sounds good, so let's get cracking.

Borrow at near zero percent lend at 18 percent - banks should d*** well make a profit - and get give a large share of 200 bn QE. In fact almost any idiot could make a profit - that is any idiot who bothered to check on the creditworthiness of those it lends to.

Now we have saved the banks, what about saving the people who saved the banks! The savers and lenders who have suffered zero interest rates for far too long - make saving worthwhile and do it PDQ!

How to make money when banking in a "New Labour Wonderland".

You lose loads of money so the government bails you out. The government then reduces interest rates to nearly nil so you can borrow from them at virtually no cost.

As your costs are radically reduced you increase your margins even further on personal loans, credit card interest rates and overdrafts (especially for businesses) by putting up rates. You demand extra collateral for all debts making the loan to asset ratio better.

Because of the very low interest rates and the fear that all those commercial property owners can't pay you cut a deal with them to keep their interest rates low in the short term which means they can still pay the reduced interest rates so that you don't have to declare the loans as non performing and thus include them as losses.

In this world how could anyone fail to make a profit.

Looks like your last set of commnets on Lloyds Results were somewhat overstated as usual, why do you seem to take such a negative stance on them? Results are always backwards looking, you failed to comment sufficiently on the future trends which were set out very clearly in their statements.

Sir Victor Blank's peerage can't be too far off now.

I guess they'll award it to him for services to...er...services!

(and of course...it will have nothing to do with Gloobal Brown, HBOS, a certain cocktail party and the waiving of anti-competition legislation)

https://en.wikipedia.org/wiki/Victor_Blank

Ah yes..that little question of re-financing.
RP I would love to hear your thoughts on Government and Banking re-financing (not to mention some of the more exposed Corporations) that is due in the next couple of years. According to my calculator it is a non trivial subject....

Lloyds predicts profit > shares goes up > profit goes up

In the end of the day though, they haven't achieved anything meaningful, just more of the same old same - market speculations.

It appears Robert has been spreading his wings away from Banking and into after dinner speaking.

https://www.insurancetimes.co.uk/story.asp?sectioncode=10&storycode=383325&c=2

Hooray... I've just won a £50 bet.

Lloyds return to profit was very easy to predict. It operates in a captive market, picks its own return figures, isn't lending and so on and so forth.

Robert says quite rightly that a successful economy requires banks that make profits but it also requires banks that support the economy. Lloyds nor the other banks in the UK have been doing that for decades.

RP: 'That said, a successful economy requires banks that make profits.'

No it doesn't - it requires that banks don't make a loss and charge it on to the taxpayer.

Anyway, how exactly do these banks make a 'profit'? (Rhetorical question).

Hi Robert
This article raises some interesting questions as you say
" It has been able to push up the interest rate on mortgages and other loans a bit. So its margin is expected to widen fairly significantly this year, from 1.77% to 2%.

If you are a borrower from Lloyds, you probably therefore won't take the view that its recovery is good news for everyone.

That said, a successful economy requires banks that make profits"

As someone who follows the notayesmanseconomics web blog I notice that he some time ago was suggesting that this is another form of cross-subsidy on our bank bail out and is another moral hazard. I would guess that bank borrowers will agree with him!

He also had an interesting view this week on how the £157 billion of funding might be replaced at least partially from a consultative paper form the Bank Of England.(https://notayesmanseconomics.wordpress.com%29

I love the way people conveniently forget that Lloyds has in fact saved the taxpayer from a far bigger loss that would have been incurred if it didn't take over HBoS. HBoS was the reason for Lloyds' fall from grace and this is in fact excellent news that it is turning around a corporation that was in very bad shape quite quickly. Before you pour scorn on the Black Horse remember that HBoS would have been fully nationalised with an unimaginable cost to the taxpayer so Lloyds did us all a favour.

Congratulations Eric Daniels, you don't seem to be getting enough praise for what is undoubtably a very tough job!

#19 that is a very good point and one I keep forgetting.

Lloyds will come back into much bigger profits than RObert predicts for the simple reason that, as all banks do, when they have a bad year they always over provide for potential bad loans and then a couple of years later write them back in as good loans

Since we are now in the engineered double-bubble before the double-dip which comes after the money runs out one should expect profits to be bubbling.

The trouble is we all know what happens to bubbles.

19. At 11:31am on 19 Mar 2010, Ray Parkins wrote:

"Congratulations Eric Daniels, you don't seem to be getting enough praise for what is undoubtably a very tough job!"

I presume his salary isn't enough already?

Well lets wait and see shall we - I can predict a bumper profit for my business next year - but it doesn't actually mean anything.

This prediction is based on the number of default diminishing and not rising - well with unemployment and job losses still high, bankruptcies on the rise and very little lending going on - I wouldn't be so confident.

Of course when the sovereigns start to default, I'm sure Lloyds won't be looking to pretty then - although this might not start happening until 2011 so maybe a year of profit is possible.

I shall keep this story and refer back to it if things go pear shaped as yet another example of 'bravado over brains'.

10. Ian_the_chopper 'You lose loads of money so the government bails you out. The government then reduces interest rates to nearly nil so you can borrow from them at virtually no cost.'

Let's spell that even more clearly: Banks lose loads of money so the people who elected the government bail them out. The people who elected the government then reduce the rate which banks borrow to nearly nil so tha the banks can borrow from them at virtually no cost whilst lending to the people who elected the government at up to 18% interest rates, and, for this, they will lose future public services which they have paid for the past.

Along with breeding/importing an ever dumber population of consumers whilst reducing the birth rate amongst the opposition via 'female liberation' and expansion of education - That's the way to do it!.

Most people are too dumb to see the long loop. Only a minority do well by this. It has always been so,

19. At 11:31am on 19 Mar 2010, Ray Parkins wrote:

"remember that HBoS would have been fully nationalised with an unimaginable cost to the taxpayer"

Says who apart from you? Maybe it would have been left to fail but its all hypothetical now isn't it?

Perhaps this is a silly question...

Lloyds say they are about to make a profit. Why do we believe them? Whose figures are we looking at? Their own, as vetted by their tame accountants (cough Ernst and Young cough Lehmans cough).

What earthly reason would we have to believe anything these people say?

We still need proper regulation which forces banks to safeguard customer’s deposits!

The problem has been made worse by commercial banks buying up investment banks and reducing competition.

The Jury Team (https://juryteam.org%29 will only allow banks to trade on 10% of their own capital if they have been bailed out by public money.

Banks such as Lloyds have been forced to sell off less profitable parts of their businesses to survive!

We still need to stop the casino banking culture returning to haunt us in the future!

Unlike many I don't roll my eyes every time Robert writes about banks, but I am disappointed that he seems to ignore the excellent results Co-op bank have been making throughout the crisis. Never mind returning to black this year - co-op unveiled record profits yesterday to silence from Robert

Robert,

Is this prediction in line with Lloyd's previous efforts?

https://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3882673.ece

Whoops!

...or this one?

https://www.moneymarketing.co.uk/news/lloyds-predicts-%C2%A315bn-cost-saving-following-hbos-acquisition/179312.article

Uh oh.

What about this one?

https://uk.reuters.com/article/idUKWLA984320070608

What a load of rubbish - now who is going to believe the predictions this time?

Don't make me get out my Baroness Green shoots again. I've even made a joke about it.

Q. Why is a Baroness Vadera like a touch of stalk mildew?
A. Because she spots green shoots and leaves (for the G7)

Before the internet was invented it would be very difficult to track down all these mis-guided and mis-leading predictions - thank the Berners-Lee for such a wonderful invention.

Now we can see exactly who is telling the truth and who isn't. There is no hiding place for anyone. The truth will set us all free....

19. At 11:31am on 19 Mar 2010, Ray Parkins
20. At 12:04pm on 19 Mar 2010, Justin150

Saved the tax payer money???

"as all banks do, when they have a bad year they always over provide for potential bad loans and then a couple of years later write them back in as good loans"????

Well you've given me a laugh today - at least you're keeping your chins up in the face of the total capitulation of Capitalism into the hands of the 'new fascism'.

would this 'profit in a couple of years' be similar to the 'profit the taxpayer will make on it's holding' which we're all waiting expectantly for?
(Update - LLOY 61.15p following this good news)

Break even price? - starts at 75p

It's just a shame that when the dumb dumbs of the market realise this is simply a prediction - the price will be back to where it's been for the last 6 months.

I think this proves there isn't 1 born everry minute - but thousands!!!

We should rejoice in this announcement of 'possible profits' because the country is about to slow right down and we'll have nothing else to do.

https://www.timesonline.co.uk/tol/news/uk/article7068443.ece

Greece - here we come....!

Re comments 6 & 11. Have you not noticed that Robert has now been moved off the BBC homepage? Even the BBC are becoming irritated by his constant negativity. He is rarely on the TV anymore. He made a name for himself for being the one to announce bad news.

The main stock markets from around the world are up 60% in the last year but do you ever hear Robert talking about this?

Robert and your tiring annoying voice - You are now becoming BORING and PREDICTABLE

BBC - we are paying for this service and we deserve better than this JOKER!

# 19. At 11:31am on 19 Mar 2010, Ray Parkins wrote:

> I love the way people conveniently forget that Lloyds has in fact
> saved the taxpayer from a far bigger loss that would have been
> incurred if it didn't take over HBoS.

Yes. Thanks, Lloyds shareholders - your losses were our gains,
according to Ray. And if I had my way, your gains would be our
gains, as well!

# 19. At 11:31am on 19 Mar 2010, Ray Parkins wrote:

> Congratulations Eric Daniels, you don't seem to be getting enough
> praise for what is undoubtably a very tough job!

Any fool (even a banker) can make money when you lend to business as 2.2%, while the base rate stands at 0.5%.

unemployement down: surprisingly good,
banks in profit:good,
footsie up:good,

...but will Kauto Star win the Cheltenham Gold Cup ?? 66% profit in one day...

Hold the front page: big bank says it's going to make a profit. Why are we holding the front page? Is Lloyds going to present its balance sheet, print it on the front page – with facts and figures that can be audited? The Lloyds statement itself was brief, saying that the (partly-nationalized bank) in the first 10 weeks of the year has shown “net interest margin that has come in line with guidance” (What does that mean?)
Why were NO FIGURES INCLUDED?
What worries me is that on this verbal statement alone, Lloyds shares jumped @ 10% to 60.96 pence on the London Stock Exchange.
Okay, so lacking figures from Lloyds, the next questions become:
Who did the analysis and what exactly did they say?
Andrew Lim, an analyst at Matrix Corporate Capital LLC in London: “We are actually quite positive on Lloyds’ earnings,” but with a “hold” rating on the stock. What is the risk factor causing the "hold"?
The risk remains “that the market will increasingly come to view the company as under-capitalized under Basel III” rules. The bank may need to raise as much as 7.8 billion pounds to meet new capital rules proposed by the Basel Committee on Banking Supervision that will come into effect in 2012.”
Hmmmm – undercapitalized? Where have I heard this before?
Its accounts are indeed confusing. I don’t know how confusing they are because I can’t seem to find an intact balance sheet.
So what's driving the recovery?
Ian Gordon, analyst at Exane BNP Paribas in London: Lloyds had indicated its 2010 impairment charge would be about 15B pounds. Ian Gordon has an “outperform” rating on the stock. He says: “0ur forecast was 14.3 billion pounds, and today’s unscheduled trading update suggests that the outturn may yet be even better.”
Careful, careful, all you anxious investors! This point is actually circular reasoning. Lloyds announces unexpected profits; the stock jumps, and one reinforces the other, but neither proves the other.
Here’s the most important thing I can write: I've come across no balance-sheet figures:
What caused the the impairment charge (which was £13.4bn) to drop to £10.6bn (which by the way is still quite a lot).
Lloyds says: I try to ignore anything a company says because companies (for the most part) always put facts and figures in the best possible financial light.
But here's something interesting: Lloyds Banking Group Plc will allow customers to increase mortgage repayments without penalty.
Why?
Lloyds wants to cut its 1.03 trillion-pound (It may actually be $1.55 trillion.) balance sheet. This sort of move is generally called "reducing through the back door".
If this is the sort of stuff on the balance sheet, I'm really concerned about the whole of it.
Why is my key-note so important?
Lloyds is badly undercapitalized.
Andrew Lim, analyst at Matrix Corporate Capital LLC in London: “They need to reduce the size of their balance sheet. The negative is that the people who are likely to be overpaying will be the people who are good credits, leaving Lloyds with the bad credits.”
And try not to forget Lloyds loan-to-deposit ratio was 169%.
Why is this important?
Because Lloyds lends more than it gains from customer deposits, and 169%is high.
So, hold the front page. I'm waiting for the actual balance sheets (with footnotes telling me what money went where and when).
As for you folks who jumped on the investment, best of the luck.

Pound falls - FTSE's up.

The scales are working perfectly.

...now who do you think is buying the 'future profits' of our top 100 companies?

It's all an illusion.

Just think what next year's bonuses will be!!

Jacques Cartier wrote:
Great. Their people can now afford to pay some higher taxes
than the rest of us, and we can get our money back sooner.

The majority of the staff will just be happy today that no more job culling looks likely in the near future. I have been working on integration projects which are costing millions and can assure you that this is being done as cheaply and as effective as possible. Most Lloyds staff will have to be content with working twice as hard for the same money until it returns to private ownership.

Costs are being well controlled in comparison to last year and impairment provisions linked to countries still in recession like Ireland are currently trending at lower levels than we anticipated.

I now know how working in the public sector must feel for some people, being treated like a political football and the notion that the banks will be broken up after all the money and resource being spent on integration is ludicrous idea and just a popularist view to appease public anger

Oh what a tangled web we weave.
But of course it all boils down to them and us.
The big state bailed out banks are sitting on billions of pounds of property assets. Those billions will only be realised if the property market recovers.
The banks fortunes depend on the property market.
Folk moving house will only trade up if they perceive their new property being worth it.
First time buyers looking for a bargain will be confounded. The banks must have high property prices.
Last time buyers, for instance those intending to trade their present house for a McCarthy and Stone apartment, will similarly be wanting an upsurge in house prices so they can get a good trade in.
The whole of the UK economy it seems is reliant on house prices steadily climbing. Year on year.
They cannot.
But what will happen, in fits and starts, is that the banks will leech on the government who will then leech on us, the taxpayer.
The recovery of banks means they are leeching directly on us.
Where else are they getting wealth from?
Are we supposed to see this as a good thing?

I presume Lloyds have accounted for this event in it's prediction of profit?

https://www.telegraph.co.uk/finance/financetopics/financialcrisis/7475531/Markets-spooked-as-Greek-rescue-plan-crumbles.html

This comment was removed because the moderators found it broke the house rules. Explain.

31. At 1:18pm on 19 Mar 2010, Peter Goldman wrote:

"The main stock markets from around the world are up 60% in the last year but do you ever hear Robert talking about this? "

...don't you think that has something to do with the pounds demise?

If you're indicator of 'good times' is speculation on the stock market then I'm afraid you're in for a very nasty shock soon.

...but you're right of course - why should anyone be negative, I mean it's only the worst downturn since the great depression - and it hasn't even started properly yet!

34. At 1:28pm on 19 Mar 2010, SSnotbanned wrote:

"unemployement down: surprisingly good,
banks in profit:good,
footsie up:good,"

Unemployment down - from what?
Banks in profit - this is a prediction
Footsie up -> pound down

Optimism in a recession - bad

Keep the faith, keep investing - I'm sure things will turn around soon.....

I feel very suspicious of this news release, Robert. The fact that there is a General Election some time in the next three months does not get a mention in your otherwise astute article.

Did not Lloyds get in the mess it is in because it agreed to take over HBOS to do the government a favour? Was there not a hint of this favour deriving of a friendship of someone senior in Lloyds being a pal of Gordon?

As we all know, the merger has spectacularly misfired and much government money has been put in at about 38p a share.

So, ramp the price up 5p a share - which is the foreseeable consequence of making an announcement like this - and the shares the government bought in huge numbers at 38p can be sold at 20p a share - or more - profit.

This spectacularly reduces government borrowing and makes Gordon look far better to the public with the election pending.

So can I reserve the right to feel a bit suspicious about what is going on.

35. At 1:31pm on 19 Mar 2010, BluesBerry

Please don't shatter the illusion - some people are putting their houses on this 'good news' (and I mean literally)

Of course you're right, just as the good Northern Rock customers left them when they went down - because they were accepted elsewhere - leaving NR with the arrears crowd.

...but don't let it spoil a good story - lets watch these investors who are 'so clever they know the market' lose everything and then ask why Lloyds were allowed to make statements based on thin air.

Just as every crisis brings volatility, volatility breeds bandwaggoning as every invester tries to jump on the next bubble.

...unfortunately the bubbles get shorter, more rapid in expansion and collapse meaning you only have to take your eye off the ball for a second and you're toast.

...but of course all investors know that already - they're so clever they even missed the recession...

30. At 1:15pm on 19 Mar 2010, writingsonthewall

Don't forget our universities are having just a little problem with staff and students too. I've already mentioned the problems in higher education in the US.

https://www.guardian.co.uk/commentisfree/2010/mar/18/university-cuts

I'm sceptical of possible profits: how many public sector workers have car loans and/or mortgages? How many of them are facing redundancy to pay for the bank rescue? And how many people have been successfully claiming their mortgage payment insurance while they are out of work - that year will be running out soon for those in the depths of despair.

And then of course the Guardian is reporting Lloyds are having a bit of a 'Paul Moore' problem at the moment in an employment tribunal.
https://www.guardian.co.uk/business/2010/mar/18/lloyds-banking-tax-avoidance-allegations

Post 23. I don't think any of us got a vote as to whether we should bail the banks out at any price.

They tried a popular vote in Iceland and the people rejected it.

A minority of people voted in Labour in 2005 and I can't remember anything in their manifesto about an open cheque book to bail out a number of banks most of whom conveniently happened to be run by mates of Gordon Brown.

38. At 2:14pm on 19 Mar 2010, modest_mark wrote:
I now know how working in the public sector must feel for some people, being treated like a political football and the notion that the banks will be broken up after all the money and resource being spent on integration is ludicrous idea and just a popularist view to appease public anger

Well you hold on to that thought and pretend the banks are mere victims, honey. Would you suggest the public would be better appeased by delivery of a bunch of flowers and a box of choccies. Get over yourself. The brains of this country do not work for banks! They are teaching kids, performing kidney transplants, working towards better treatments for cancer, conservation, running farms....

Banks back to profitability from excessive charging, much of which was allowed under emergency measures but like taxes will remain with us forever?

So, now everything is 'back to normal', it would appear the US is now leading the charge to destroy any banking reform before it gathers momentum.

What the US Federal Reserve chairman Ben Bernanke told the Committee on Financial Services hearing held in Washington on Feb 10.

"The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system."

The full text is here: https://bit.ly/d480A9

Now there's banking reform you can probably bank on!

Oh dear, pound falls and so does Kauto Star.
You would think that the events would be unconnected.
Unless the ''at risk'' mortgage-holders,bank borrowers e.t.c. have plunged on the Cheltenham favourite and knocked Lloyds ''impairment-charge improvement rate''!!
i.e. ?£8.5 billion-?££6.8billion for 2010

''...that said,a successful economy requires banks that make profits''.

Hmm...
If the ''profit'' (£1 billion)has come from cost savings(£1.5-£2 billion) like job losses, the net benefit to the economy,year 2010, doesn't look much if anything, better off, because of unemployment costs/reduced spending.

# 38. At 2:14pm on 19 Mar 2010, modest_mark wrote:

>> Jacques Cartier wrote:
>> Great. Their people can now afford to pay some higher taxes
>> than the rest of us, and we can get our money back sooner.

> The majority of the staff will just be happy today that no more
> job culling looks likely in the near future.

Yes. Public sector jobs are hard to come by, unless you happen to fall into it because your bank (Northern Rock, RBS, HSBC, Lloyds? ) went bust.

> Most Lloyds staff will have to be content with working twice as hard for
> the same money until it returns to private ownership.

Indeed. It's tougher in the real world, eh?

> I now know how working in the public sector must feel for some people,
> being treated like a political football and the notion that the banks will
> be broken up after all the money and resource being spent on
> integration is ludicrous idea and just a popularist view to appease public
> anger

That would be the same “populist public” that saved you, would it? They would be the people who allowed you to stay in work, rather than signing on (as many of them have had to do). Don't even dream for one moment that things will return to normal when Lloyds returns to private ownership. The gravy train is most definitely in the sidings, waiting to be broken up and melted down, so please quit your state of denial.

I like the hint of humility in your post, though. Keep it up.

Re: 6,11,31
What's to be positive about? So stock markets rose 60% last year... so what? How can you have forgotten what went on in the two years before that so quickly? At least Peston hasn't forgotten. Also, it's only two months ago that we had another scare from Dubai. It's only a month ago that we had further scares from Greece (and Ireland and Italy and Portugal... and the UK.

#32 Yes. Thanks, Lloyds shareholders - your losses were our gains,
according to Ray. And if I had my way, your gains would be our
gains, as well!


Well buy some shares then, if you haven't noticed they are still heavily discounted and if more people follow your lead the taxpayer will get their investment back sooner!

Well done Barclays shareholders!

It loks like you have your executive pay excesses well under control.

https://www.guardian.co.uk/business/2010/mar/19/bob-diamond-pay-barclays

I presume you all got a share?

What do you mean no dividend last year? - But Bob was making all that money???

Don't tell me you're just another set of mugs.

46. At 3:17pm on 19 Mar 2010, copperDolomite

Sometimes the lying is so bad it gets embarrassing.

Did you check out my 'real life' view of California - there is a series, make sure you listen to the commentary. Not professional, but that's why it's realistic.

https://www.youtube.com/watch?v=kin61s3dAZo

Now you don't see none of this on the news.....

It appears the Unite union is e mailing it's members who work for Lloyds with what looks like preparation for a confrontation. Maybe they think that if they can browbeat BA, then they can do the same to Lloyds. A union dispute, isn't going to do a lot for Lloyds' share value.

48. At 3:32pm on 19 Mar 2010, copperDolomite wrote:

The brains of this country do not work for banks! They are teaching kids....

Those that can do, those that can't teach!

42. At 2:38pm on 19 Mar 2010, writingsonthewall wrote:

31. At 1:18pm on 19 Mar 2010, Peter Goldman wrote:

"The main stock markets from around the world are up 60% in the last year but do you ever hear Robert talking about this? "

...don't you think that has something to do with the pounds demise?

Wow! Stock markets around the WORLD are up and it's all because the pound has dropped to back to it's 2001 level. Didn't realise the pound alone was so influential.

If you're indicator of 'good times' is speculation on the stock market then I'm afraid you're in for a very nasty shock soon.

...but you're right of course - why should anyone be negative, I mean it's only the worst downturn since the great depression - and it hasn't even started properly yet!

WOTW you may laugh at the idea that Lloyds has overprovided for bad debts but your many posts indicate you have not a clue when it comes to understanding audited figures.

Audited figures are never right, they are an approximation to the right position and should be a sufficiently close approximation to ensure they present a true and fair view of reality.

Many (and in banks cases maybe even all) audited accounts are subject to a certain degree of interpretation (dare one say manipulation and get it past the moderators?). For banks one of the big areas of interpretation is whether and how much to provide against loans going bad.

Historically banks have tended to over-provide for loans going bad in recessionary times. This has nothing to do with banks being cautious and everything to do with managing share price - if a bank has a bad set of figures and its share price is going to get hammered in any case, it makes total sense (at least to the directors who worry about share prices) to throw all the bad news (or potential bad news) into one set of figures, get it over with and the market will move on. As a result when the economy turns they end up having to write back some of the bad debt provisions because the debts did not go bad.

There is nothing unusual in this - banks have done it for decades. What it does mean is that there will be a period, maybe in 12-18 months (which all depends on your view as to when we really come out the recessionary period) when the banks will suddenly appear profitable, even very profitable but in reality this is an accounting myth - but it is the same accounting myth as some of the banks losses.

Of course if you believe that we are living in the "end of days" situation and in fact we are looking at a collapse of capitalism and virtually all debts will go bad then my explanation will make no sense

I am not defending those people who took the risk with investments, hedge funds etc. Fred the Shed , Lehmans etc..... but you need to face up to the fact that they have walked away unpunished and the majority of ordinary dunces you pleasantly refer to must now carry the can.....

#48 copperDolomite

Your list of brainy folk does not actually include any wealth creators.
Mostly a list of state employees. Oh, and a farmer.

Who actually pays for this lot? And the bankers of course..

Arguably the brainy ones can see which way the wind is blowing and gravitate to become bankers.
They need the support of the rest of the country however.
Both to maintain their standard of living and also of course to provide bailouts as and when required.
If there are no brainy folk in the support team then the country will simply fail.
Weighed down by the bankers and other non productive types they will quite simply not be able to compete against global forces so liked by everybody.

Ok they might be heading back to profit but how many years will it be before they start paying tax. They will carry forward the last few years losses offseting the profits so we might receive no tax revinue for 5 or even 10years.

From what I have seen of the changes in the HBOS I would say that the profits are due to ripping off the former HBOS customers. Also I suspect that sometime in the near future, like the TSB, HBNOS will disappear from the high street. Lloyds is a nasty company with more customer complaints having been upheld by the Ombudsman than any other.

What's driving this? How about £200bn of freshly printed money? It's hard not to make a profit when that lot is sprayed at you for the express purpose of ensuring you do make a profit...

54. At 4:29pm on 19 Mar 2010, writingsonthewall wrote:

Well done Barclays shareholders!

It loks like you have your executive pay excesses well under control.

https://www.guardian.co.uk/business/2010/mar/19/bob-diamond-pay-barclays

I presume you all got a share?

What do you mean no dividend last year? - But Bob was making all that money???

Don't tell me you're just another set of mugs.

...............................

WOTW, Envy is such an unattractive trait.

Re post 6,11,31 et al talking about the rise in the stock market you may find the following informative.

[Unsuitable/Broken URL removed by Moderator]

I wouldn't crow over share price performance over a couple of months as shares are a long term investment.

55. At 4:32pm on 19 Mar 2010, writingsonthewall wrote:
46. At 3:17pm on 19 Mar 2010, copperDolomite

Sometimes the lying is so bad it gets embarrassing.

Did you check out my 'real life' view of California - there is a series, make sure you listen to the commentary. Not professional, but that's why it's realistic.

Yes I did. It isn't just trading bubbles that burst. People will finally burst too. The powerful, the bankers with their alleged profits, the politicians must be worried.

Those calling to cut the welfare state are asking for this to happen here. Absolutely shocking! Always remember what justice really means and never, ever forget 'There but for the grace of god go I'.

56. At 4:44pm on 19 Mar 2010, kaybraes

And?
If you can't afford to set fire to your money, stay out of the bookies.
If you can afford to set fire to your money, then why put it in shares?

Employees matter more than shareholders as far as I am concerned; no shareholder can take care of a heart attack or any other emergency while in the sky far above the Atlantic. It is the constant demands of shareholder value that have brought the global economy to this.

57. At 4:53pm on 19 Mar 2010, Uphios wrote:
Those that can do, those that can't teach!

Piffle. Whoever said that wasn't good enough to get onto the degree course and with that level of arrogance, no surprise they were kept away from the precious kids.

The current dogma of banking and government is that if the banks are making a profit that the people will "be repaid." That simply will not happen. The cuts in government will be restored and money spent on other things and your taxes will be higher. That does not sound like a re-payment to me. When the money lost from your retirement account and/or investments is given back to you by the banks that gambled it away, then you will have been repaid.
Words have no meaning in government or the media.

I love the way people conveniently forget that Lloyds has in fact saved the taxpayer from a far bigger loss that would have been incurred if it didn't take over HBoS. HBoS was the reason for Lloyds' fall from grace and this is in fact excellent news that it is turning around a corporation that was in very bad shape quite quickly. Before you pour scorn on the Black Horse remember that HBoS would have been fully nationalised with an unimaginable cost to the taxpayer so Lloyds did us all a favour.

Congratulations Eric Daniels, you don't seem to be getting enough praise for what is undoubtably a very tough job!

=============

I'm not surprised, he didn't bear the cost, people like me did! He won't get any praise from me, as I will not recover the losses he, Brown, Blank and Hornby subjected me to. Those 4 stooges effectively nationalised my savings and used them to bail out HBOS. Being a sensible person, helped by doing IT work in Financial Services, where I could never figure out where all the money was coming from, and having suffered in the 2000 recession and seeing how reckless people spent when it wasn't their money, it struck me some years ago that if I wished to protect my Children’s Education I needed to save money, so I saved as much as I could and invested in HBOS, Lloyds and another company, all in all I invested enough so that from September 2010 the remaining 4 years in private schools would be safe. Then Hornby told me his company was 'safe' but that he wanted £4 Billion to prove it, so more of my cash went, then HBOS went bust and Brown and Daniel's trashed Lloyds, I lost in HBOS almost a year's fees, and then Lloyds got trashed and I lost another year of fees. Nor could I afford to keep up my percentage shareholding in the Bank, so guess what, IF Lloyds recovers, I'll still Lose! That Quartet of sharks, with Brown’s connivance rode roughshod over Competition Law and Company Law and the small shareholders like me are paying for it. He and the other three have effectively trashed 7/8 years of my life, the amount of time it took me to save that money. Then I've had only 6/7 months work in the past 14 months - and people wonder why so many of us are up to our eyes in debt. Personally, I wish Daniells at Jericho, preferably when the walls are falling down, and hopefully whilst atop of them conducting a guided tour for the other 3 stooges in the quartet.

45. At 2:48pm on 19 Mar 2010, writingsonthewall wrote:

...but don't let it spoil a good story - lets watch these investors who are 'so clever they know the market' lose everything and then ask why Lloyds were allowed to make statements based on thin air.

==========

They are allowed to do that because they own HBOS, that was standard practice at HBOS in order to get investors to keep stumping up for the rights issues that weren't really needed, HBOS being a strong bank, they were just being cautious.

After a break of ten years I decided to try Lloyds TSB Again. While working as a Gangmaster I sent all the
foreign workers (mainly Poles) to Lloyds TSB as we were told that they were the best in terms of ease of
account opening. I never received any adverse feedback over a 1 year period.
My own experience of the bank was pretty terrible. Very old systems using Fax (everyone uses email these days) and selling me a poor insurance product the trying to triple the cost for the right product for my needs.
The bank I have moved too is not perfect but streets ahead of Lloyds Banking Group.

THIS ONE'S A CORKER!

i.e. a must read!

'German spies may target speculators'
https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7475052/German-spies-may-target-speculators.html

'The financial crisis has heightened European suspicions of the "Anglo-Saxon" liberalised markets advocated by the US and Britain. Now the Germans are considering using methods usually reserved for terrorists against perceived fifth columnists in the hedge fund industry.

"Within Continental Europe there are those that do think that financial speculators are sort of terrorists," Vanessa Rossi, a senior research fellow at Chatham House, told Bloomberg.

European politicians have blamed speculators for the euro's fall against the dollar in the wake of the Greek fiscal crisis and for pushing up the cost of borrowing for states by using bets in credit default markets.'

----------------------------------

Just maybe....the Europeans are less kosher than we are.

So maybe, they are just less affected by the 'Anglo-Saxon' disease.

61. At 5:19pm on 19 Mar 2010, prudeboy

Brainy folk don't create wealth? Really? so the farmer who produces the food is thick is he? And the teacher who teaches children maths doesn't contribbute to the creation of engineers, plumbers, joiners, chefs...... And the doctor who performs a kidney transplant performs no part in returning the tax collector back to health and therefore work?

Right.

What is wealth? What is value?

61. At 5:19pm on 19 Mar 2010, prudeboy wrote:
If there are no brainy folk in the support team then the country will simply fail.

You make my point for me.
Do you think we are looking like an economically sucessful country these days? Been a while since anyone thought that.

Those simpletons (Jacques Cartier is a case in point) who attribute Lloyds' (and Eric Daniels') remarkable achievements in turning around a business that absorbed the basket case HBOS as being down to no more than being able to lending at a decent margin above base rate, are no doubt the same ingrates who simultaneously castigate Lloyds for 'refusing to lend.'

Oh deary me SnoddersB. . .here's a quick lesson in maths. Lloyds has more customers than any other bank, so of course they have more complaints!!! As for TSB disappearing, would that be the same 'TSB' as in 'Lloyds TSB'?

#75,76 copperDolomite

You need to read my comment.

I have to say though that given a choice between teachers and farmers to clean my boots I would choose the farmers any day.

I know an awful lot of teachers and lecturers. A number of farmers too.

Following your comment, 69, to its logical conclusion, teachers would strive to teach the precious ones to become teachers. Where would that get us?

Agreed that we need teachers. Also agreed that we do not live in a logical world.
We need folk to do things. Teachers cannot teach that. They can show us how to educate ourselves. We then do the rest.

No wonder they think they will make a profit-just ask the staff who are losing their jobs. The bank like to think they can ride roughshod over their employees particularly those who worked for HBOS. Ask the unions too whoses members voted against proposed terms and conditions, only to find LBG implementing them anyway.

Devils Advocate writes ""I love the way people conveniently forget that Lloyds has in fact saved the taxpayer from a far bigger loss that would have been incurred if it didn't take over HBoS. HBoS was the reason for Lloyds' fall from grace and this is in fact excellent news that it is turning around a corporation that was in very bad shape quite quickly. Before you pour scorn on the Black Horse remember that HBoS would have been fully nationalised with an unimaginable cost to the taxpayer so Lloyds did us all a favour"".

Nationalising would have been a better option-don't forget the state will be keeping the thousands of staff losing their jobs. With no similar jobs in the banking sector we'll all being drawing benefits

65. At 5:55pm on 19 Mar 2010, Uphios wrote:
54. At 4:29pm on 19 Mar 2010, writingsonthewall wrote:

Well done Barclays shareholders!

It loks like you have your executive pay excesses well under control.

https://www.guardian.co.uk/business/2010/mar/19/bob-diamond-pay-barclays

I presume you all got a share?

What do you mean no dividend last year? - But Bob was making all that money???

Don't tell me you're just another set of mugs.

...............................

WOTW, Envy is such an unattractive trait.

===============

It is, but the emotion WOTW feels might not be Envy, it might be 'Righteous Anger', and that, is an emotion that can change the world. Just kicking out all the current crop of MPs would do for me.

79. At 9:01pm on 19 Mar 2010, prudeboy wrote:
#75,76 copperDolomite
You need to read my comment.

I have
I have to say though that given a choice between teachers and farmers to clean my boots I would choose the farmers any day.
Shocking.

I know an awful lot of teachers and lecturers. A number of farmers too.

Following your comment, 69, to its logical conclusion, teachers would strive to teach the precious ones to become teachers. Where would that get us?

Agreed that we need teachers. Also agreed that we do not live in a logical world.
We need folk to do things. Teachers cannot teach that. They can show us how to educate ourselves. We then do the rest.

All kids are precious, yet surprisingly, very few children in the UK leave school aiming to be teachers. And who do you think teaches kids to 'do science'? Who do you think teaches medics - they do a lot more than reading. And with an attitude like yours I can think of a few farmers who would find a thing or two to do with your boots. Licking isn't one of them.

Sounds to me as though you might have a chip on your shoulder about 'school of life' etc.

End of communication.

#43 W-O-T-W wrote:
''optimism in a recession-bad''

Are we still in ''recession'' ??

No.

Huzza !!

#83 copperDolomite

Read my comments. Dont make anything up.

@Lyle, you are absolutely right! It seems our politicians are ready to forget the past couple of years. We need some delivery on banking reform - urgently.

@BenWright
Thanks for posting up about the The Jury Team (https://www.juryteam.org/p03-casino-banking.php%29 - quite an interesting point you raised to keep banks from acting like casinos!!

In Robert's Unstable Equilibrium blog

39. At 10:26am on 31 Dec 2009, onward-ho wrote:


2010 will be the year the bank shares double and the government recovers the money it lost investing in them.

2010 will be the year the bad debts the government guaranteed will turn out to be not so bad and the government will make a profit on it!

Onward Stride!

Many moons ago I was on a bank audit. The PBT after adjustments surprised the directors by exceeding expecations. Not Good - the next years expectations would be higher - maybe difficult to achieve - and questions about the surprise profits. A journal entry to increase bad debt contingencies easily brought the profits back to the level the directors wanted.
It is easy to see that RBS has sold Angel Trains; Tesco Finance; Far East Franchises; Much Dutch ABN assets; Bought back prefs at £5b profit; Bank China Shares; raised 12b from shareholders ; got help from the US TARP--details? In sum the orig shareholders and asset sales have raised C£ 22B -£25B. RBS has reduced debt exposures by 20% in the last 14 months.
Now we know the bond markets collapsed and that governments world wide stepped in and in RBS case about 25B was invested by HMT in cheap RBS equity. We know that one key to recovery is a restoration of confidence in the bond markets and that banks have to continue to do what they do - lend.
As the dust settles and excellent ratios appear in bank balance sheets worldwide, one factor is very unclear. Have and will the "write down provisions" resulted in actual losses for the banks including RBS?
Is it possible that the truckloads of write downs will be merrily written back into profits when borrowers like me continue to pay up for our liabilities? Is it possible/ probable that the write downs have been overdone and that in the case of RBS 8-9 Billion underlying profits will emerge as the norm.
If So The Market Capitalisation when this is over may well fluctuate between 10 and 17 times "normal expectations of profit".
Let us assume that RBS is "valued by the market at low norm of 10 times profits ....market capitalisation of £80 B may not be all that far off........and if no more screwing/dilution of the shareholders takes place.....that should mean a share price of £1.30 is possible.
That is double Chairman Heston's short term target....and would ensure massive profits for you and the taxpayer. That is good but in the end the dilution and losses experienced by hardworking prudent bank shareholders saving for retirement, it is impossible not to believe, as Michael Portillo has stated - that RBS shareholders have been screwed.
When you are screwed - it is useful to move on - but nevertheless it is good to know the who / how /why elements. Shareholders are entitled to know the ACTUAL loan losses and how the write downs have been arrived at.