Broker snap: Canaccord upbeat about divi possibility at Lloyds

1st Aug 2013 11:02

Canaccord Genuity has placed its 'neutral' rating and target price for Lloyds under review, highlighting the possibility of a dividend next year given the bank's optimistic outlook in its first-half results.Lloyds' figures for the first six months of the year were "strong", Canaccord said, with income and profits coming in ahead of forecasts, and costs and impairments below.The broker said that its 'neutral' recommendation had been based on the assumption that the lender would not be in the position to resume dividends until the end of 2014. It had also been concerned that the market had "got ahead of itself", paying over 1.0 times price/book value (PBV) for a bank generating a return on equity below the cost of equity."But, with the B3 fully loaded core tier-one ratio at 9.6% at H113 and earnings momentum exceeding our estimates, it now appears LLOY could be in a position to pay a 2014 interim," said analyst Gareth Hunt."We continue to believe that dividend re-rate stories offer investors the most attractive risk-reward opportunities in the sector."The stock reacted with impressive gains on Thursday, rising 7.77% to 73.79p by 11:02.BC