On Thursday, Lloyds Banking Group will kick off the banking season with the announcement of its 2015 figures, which this year have an even more special interest. Lloyds, forced to accept an injection of £20 billion (Dh104.03bn) of government money in 2008 in return for a 43 per cent stake, is now healthy enough to consider paying out £2bn in dividends, including a special one-off payment of £500 million.
The big question the City is waiting to see the answer to is this: will the Bank of England, which has the ultimate say over it, agree that it has sufficient reserves to do so?
For seven years, Lloyds, which used to be one of the great income stocks so loved by small investors (it yielded up to 9 per cent in the early 2000s, twice that of the other banks), paid no dividend at all. It returned to the dividend list only last year with a token payout. This week, however, its chief executive, Antonio Horta-Osorio, wants to send the message that the bad days are behind it and that it is a fully functioning, well-capitalised and profitable bank with a bright future.
The government’s shareholding is now down to 9 per cent and it has so far sold its shares at a modest profit on its 73.6 pence price book value. However, in the great wipeout in the markets this year, which have taken a particularly heavy toll on bank shares, Lloyds dropped from 78p to 53p at one point before recovering to 61.8p now (Friday’s close).
A year ago they were touching 90p, and some of those shareholders who had stuck by the stock and followed their rights were in danger of getting their money back. The government was laughing all the way to the Bank (of England).
George Osborne, the British chancellor, was so chuffed by this that he even contemplated a Tell Sid-style (a classic, Thatcher-era advert to sell off British Gas shares) offer of his remaining shares to the general public. It would have made a nice little contribution – about £7bn – to his borrowing requirement. Now he has had to abandon, or at least postpone, the exercise.
Mr Horta-Osorio’s case is that the Black Horse bank is now, in the slightly exaggerated words of one newspaper over the weekend, “awash with cash”, and could hand back £20bn to shareholders over the next five years. When it ran into the post-Lehman crisis, Lloyds was the strongest of all the British domestic banks (which excludes HSBC and Standard Chartered), with a core, Tier 1 capital ratio of 6 per cent.
The acquisition of HBOS and £46bn of write-offs changed all that. But today, the figure is over 12 per cent and climbing, despite paying out about £14bn in compensation for mis-selling payment protection insurance, PPI.
Lloyds’ underlying profit, despite low interest rates and an unfriendly banking climate, has climbed back to £8bn a year and it is generating more cash than it needs. It doesn’t need or want more capital – so why not give some back to the long-suffering shareholders?
Lloyds’ predicament is what is called a “high-class problem”. Across Europe other banks are preparing for yet another financial crisis as collapsing oil and commodity prices, negative interest rates and miserable economic performances take their toll. At home, Standard Chartered is expected to announce a loss of about US$500m later this week after a massive restructuring charge. RBS, of which the government holds more than 80 per cent, will reveal its eighth annual loss in a row and the government has resigned itself to never seeing its money back. Barclays has all sorts of problems, including the Amanda Staveley fees saga, which I wrote about a few weeks ago (and which is becoming more fascinating by the day), and its figures ill reflect that.
Investors and pension funds reliant on dividends have also taken a savage beating elsewhere. One after the other, many of the old dependables, which never cut their dividends in their history, have either abandoned them altogether or reduced them sharply: Rio Tinto, Glencore and Anglo American, devastated by the commodity price collapse, have all delivered bad news on this front. The great oil companies BP and Shell are also struggling.
HSBC, however, to the market’s relief, yesterday announced it was retaining its “progressive” dividend policy with an increase from 50 cents to 51 cents, despite making a surprise $850m loss in the fourth quarter.
Lloyds alone is promising to relieve the gloom. It still has problems, with at least another £2bn of PPI payments to go, and potential competition issues because of its dominant market shares. It has so far laid off 45,000 staff since the 2008 merger with HBOS, with another 9,000 to go (giving it savings of £3bn a year).
As it goes more and more digital, it plans to close another 200 branches, and stands accused of charging its customers too much and treating its staff ruthlessly. Within a few years the headlines of profiteering at the expense of customers and staff, which used to plague the banks, will no doubt return. But for Mr Horta-Osorio, that’s another “high-class” problem.
The fact of the matter is that all of this was what the old Lloyds management set out to achieve when it bid for HBOS in 2008: market dominance, huge cost savings and No 1 position in British banking. They’re all there. Unfortunately it has come at a massive cost to shareholders: the number of shares in issue has gone from 5.5bn to 72bn.
Surely after all that suffering they deserve a little reward.
Ivan Fallon is a former business editor of The Sunday Times and the author of Black Horse Ride: The Inside Story of Lloyds and the Financial Crisis.
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Types of bank fraud
1) Phishing
Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
2) Smishing
The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
3) Vishing
The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
4) SIM swap
Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
5) Identity theft
Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
6) Prize scams
Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
What is graphene?
Graphene is a single layer of carbon atoms arranged like honeycomb.
It was discovered in 2004, when Russian-born Manchester scientists Andrei Geim and Kostya Novoselov were "playing about" with sticky tape and graphite - the material used as "lead" in pencils.
Placing the tape on the graphite and peeling it, they managed to rip off thin flakes of carbon. In the beginning they got flakes consisting of many layers of graphene. But as they repeated the process many times, the flakes got thinner.
By separating the graphite fragments repeatedly, they managed to create flakes that were just one atom thick. Their experiment had led to graphene being isolated for the very first time.
At the time, many believed it was impossible for such thin crystalline materials to be stable. But examined under a microscope, the material remained stable, and when tested was found to have incredible properties.
It is many times times stronger than steel, yet incredibly lightweight and flexible. It is electrically and thermally conductive but also transparent. The world's first 2D material, it is one million times thinner than the diameter of a single human hair.
But the 'sticky tape' method would not work on an industrial scale. Since then, scientists have been working on manufacturing graphene, to make use of its incredible properties.
In 2010, Geim and Novoselov were awarded the Nobel Prize for Physics. Their discovery meant physicists could study a new class of two-dimensional materials with unique properties.
Sunday's fixtures
- Bournemouth v Southampton, 5.30pm
- Manchester City v West Ham United, 8pm
Countdown to Zero exhibition will show how disease can be beaten
Countdown to Zero: Defeating Disease, an international multimedia exhibition created by the American Museum of National History in collaboration with The Carter Center, will open in Abu Dhabi a month before Reaching the Last Mile.
Opening on October 15 and running until November 15, the free exhibition opens at The Galleria mall on Al Maryah Island, and has already been seen at the Jimmy Carter Presidential Library and Museum in Atlanta, the American Museum of Natural History in New York, and the London School of Hygiene and Tropical Medicine.
COMPANY%20PROFILE
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The%20specs
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How Filipinos in the UAE invest
A recent survey of 10,000 Filipino expatriates in the UAE found that 82 per cent have plans to invest, primarily in property. This is significantly higher than the 2014 poll showing only two out of 10 Filipinos planned to invest.
Fifty-five percent said they plan to invest in property, according to the poll conducted by the New Perspective Media Group, organiser of the Philippine Property and Investment Exhibition. Acquiring a franchised business or starting up a small business was preferred by 25 per cent and 15 per cent said they will invest in mutual funds. The rest said they are keen to invest in insurance (3 per cent) and gold (2 per cent).
Of the 5,500 respondents who preferred property as their primary investment, 54 per cent said they plan to make the purchase within the next year. Manila was the top location, preferred by 53 per cent.
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
Recipe: Spirulina Coconut Brothie
Ingredients
1 tbsp Spirulina powder
1 banana
1 cup unsweetened coconut milk (full fat preferable)
1 tbsp fresh turmeric or turmeric powder
½ cup fresh spinach leaves
½ cup vegan broth
2 crushed ice cubes (optional)
Method
Blend all the ingredients together on high in a high-speed blender until smooth and creamy.
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
RESULTS
5pm Maiden (PA) Dh70,000 (Dirt) 1,400m
Winner AF Nashrah, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
5.30pm Maiden (PA) Dh70,000 (D) 1,400m
Winner Mutaqadim, Riccardo Iacopini, Ibrahim Al Hadhrami.
6pm Maiden (PA) Dh70,000 (D) 1,600m
Winner Hameem, Jose Santiago, Abdallah Al Hammadi.
6.30pm Maiden (PA) Dh70,000 (D) 1,600m
Winner AF Almomayaz, Sandro Paiva, Ali Rashid Al Raihe.
7pm Handicap (PA) Dh70,000 (D) 1,800m
Winner Dalil Al Carrere, Fernando Jara, Mohamed Daggash.
7.30pm Handicap (TB) Dh70,000 (D) 1,000m
Winner Lahmoom, Royston Ffrench, Salem bin Ghadayer.
8pm Handicap (PA) Dh70,000 (D) 1,000m
Winner Jayide Al Boraq, Bernardo Pinheiro, Khalifa Al Neyadi.
Generational responses to the pandemic
Devesh Mamtani from Century Financial believes the cash-hoarding tendency of each generation is influenced by what stage of the employment cycle they are in. He offers the following insights:
Baby boomers (those born before 1964): Owing to market uncertainty and the need to survive amid competition, many in this generation are looking for options to hoard more cash and increase their overall savings/investments towards risk-free assets.
Generation X (born between 1965 and 1980): Gen X is currently in its prime working years. With their personal and family finances taking a hit, Generation X is looking at multiple options, including taking out short-term loan facilities with competitive interest rates instead of dipping into their savings account.
Millennials (born between 1981 and 1996): This market situation is giving them a valuable lesson about investing early. Many millennials who had previously not saved or invested are looking to start doing so now.
COMPANY%20PROFILE%20
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Results
2pm: Maiden (TB) Dh60,000 (Dirt) 1,200m, Winner: Mouheeb, Tom Marquand (jockey), Nicholas Bachalard (trainer)
2.30pm: Handicap (TB) Dh68,000 (D) 1,200m, Winner: Honourable Justice, Royston Ffrench, Salem bin Ghadayer
3pm: Handicap (TB) Dh84,000 (D) 1,200m, Winner: Dahawi, Antonio Fresu, Musabah Al Muhairi
3.30pm: Conditions (TB) Dh100,000 (D) 1,200m, Winner: Dark Silver, Fernando Jara, Ahmad bin Harmash
4pm: Maiden (TB) Dh60,000 (D) 1,600m, Winner: Dark Of Night. Antonio Fresu, Al Muhairi.
4.30pm: Handicap (TB) Dh68,000 (D) 1,600m, Winner: Habah, Pat Dobbs, Doug Watson
COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EAlmouneer%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Dr%20Noha%20Khater%20and%20Rania%20Kadry%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EEgypt%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E120%3Cbr%3E%3Cstrong%3EInvestment%3A%20%3C%2Fstrong%3EBootstrapped%2C%20with%20support%20from%20Insead%20and%20Egyptian%20government%2C%20seed%20round%20of%20%3Cbr%3E%243.6%20million%20led%20by%20Global%20Ventures%3Cbr%3E%3C%2Fp%3E%0A
The specs: 2018 BMW X2 and X3
Price, as tested: Dh255,150 (X2); Dh383,250 (X3)
Engine: 2.0-litre turbocharged inline four-cylinder (X2); 3.0-litre twin-turbo inline six-cylinder (X3)
Power 192hp @ 5,000rpm (X2); 355hp @ 5,500rpm (X3)
Torque: 280Nm @ 1,350rpm (X2); 500Nm @ 1,520rpm (X3)
Transmission: Seven-speed automatic (X2); Eight-speed automatic (X3)
Fuel consumption, combined: 5.7L / 100km (X2); 8.3L / 100km (X3)
MATCH INFO
Al Jazira 3 (O Abdulrahman 43', Kenno 82', Mabkhout 90 4')
Al Ain 1 (Laba 39')
Red cards: Bandar Al Ahbabi (Al Ain)
Company%20Profile
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Seemar’s top six for the Dubai World Cup Carnival:
1. Reynaldothewizard
2. North America
3. Raven’s Corner
4. Hawkesbury
5. New Maharajah
6. Secret Ambition
Results
6.30pm: The Madjani Stakes (PA) Group 3 Dh175,000 (Dirt) 1,900m
Winner: Aatebat Al Khalediah, Fernando Jara (jockey), Ali Rashid Al Raihe (trainer).
7.05pm: Maiden (TB) Dh165,000 (D) 1,400m
Winner: Down On Da Bayou, Royston Ffrench, Salem bin Ghadayer.
7.40pm: Maiden (TB) Dh165,000 (D) 1,600m
Winner: Dubai Avenue, Fernando Jara, Ali Rashid Al Raihe.
8.15pm: Handicap (TB) Dh190,000 (D) 1,200m
Winner: My Catch, Pat Dobbs, Doug Watson.
8.50pm: Dubai Creek Mile (TB) Listed Dh265,000 (D) 1,600m
Winner: Secret Ambition, Tadhg O’Shea, Satish Seemar.
9.25pm: Handicap (TB) Dh190,000 (D) 1,600m
Winner: Golden Goal, Pat Dobbs, Doug Watson.
COMPANY%20PROFILE
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Red Sparrow
Dir: Francis Lawrence
Starring: Jennifer Lawrence, Joel Egerton, Charlotte Rampling, Jeremy Irons
Three stars
French Touch
Carla Bruni
(Verve)