ShoreCap stays at 'buy' on Lloyds, sees higher share buybacks

3rd May 2019 15:47

(Sharecast News) - ShoreCap stuck to its previous 'buy' recommendation for Lloyds's shares, despite the lender having fallen short of the broker's estimates for its first quarter net interest income.On the flip side, non-interest income, costs and impairments had all come in better-than-expected, analyst Gary Greenwood said in a research note sent to clients.The above, together with Lloyd's unchanged guidance for the full-year led Greenwood to stay put on his own estimates.Nevertheless, the Prudential Regulatory Authority's decision to reduce the regulatory capital requirement (core Tier 1) asked of Lloyds from 14.0% of assets to 13.5%, meant the lender now had more headroom for capital distributions, Greenwood said.Roughly another £1.0bn, the analyst estimated, leading him to raise his forecast for Lloyd's share buybacks in 2020 from £1.5bn to £2.5bn.Lloyds was guiding towards 170-200 basis points of capital generation over 2019, equating to approximately £3.5bn-4.1bn, of which £2.4bn would be consumed by dividends.And now there was the additional £1.0bn of funds available.He kept his estimate of the shares' fair value at 80.0p.