Lloyds Banking hones in on motor finance regulatory risk exposure.

TLDR:

• Lloyds Banking Group expected to report a decrease in pretax profit for the fourth quarter.
• The bank’s exposure to regulatory risk in the motor finance industry through its Black Horse brand is a key concern.

Lloyds Banking Group is set to announce its fourth quarter results, with analysts predicting a pretax profit of £1.65 billion, lower than the previous year. Net income and net interest income are also expected to decrease. The company’s shares have dropped amidst concerns about regulatory risks related to the Financial Conduct Authority’s review of the motor finance industry, in which Lloyds has significant exposure through its Black Horse brand. Investors will be closely watching the bank’s net interest margin, operating expenses, potential provisions for regulatory issues, and capital returns. The bank is expected to outline a share buyback program and a final dividend. Analysts will also be looking for guidance on 2024 metrics such as net interest margin, operating expenses, impairments, and return on tangible equity. Lloyds’ handling of potential costs related to motor finance refunds will be a critical factor in determining the phasing of capital returns. Overall, the market will be interested in how the bank navigates the challenges ahead while delivering on targets and managing regulatory risks in the coming year.