Lloyds Banking Group: Sky reports LBG examining an Aldermore bid; our scenario maths

研报英文原文证据摘录

Lloyds Banking Group: Sky reports LBG examining an Aldermore bid; our scenario maths

10.27 10.20

its risk appetite and decided on an orderly ownership transition as the path forward.

12/27E 11.63 12.17

Press reports indicate advisors have been appointed. Though motor redress was the

12/28E 13.15 13.99

trigger for the sale, Aldermore is more mortgage lender than car financier. Sky reports

LBG's interest is at least partly down to Aldermore's SME and project finance Jason Napier, CFA

capabilities. Split within. Analyst

jason.napier@ubs.com

Deal maths: Plenty of overlap, potential efficiency, funding, capability gains +44-20-7568 5037

Aldermore's loan and deposit book is ~4% of LBG's and ~3% of its profits with the gap Sanjena Dadawala

in declared ROTE (Aldermore 12% at a 13% CET1, LBG >15%) down largely to better Analyst

sanjena.dadawala@ubs.com

fee income contribution at LBG as a group. Cost/income and cost/loans metrics – the

+44-20-7567 0753

area in which Shawbrook, a stock we like a lot, stands out – were largely similar between

Aldermore and LBG. In a scenario assuming 20% cost synergies – excluding funding Stephan Potgieter, CFA

upside – takes Aldermore's cost/income to 45%, funded by a restructuring charge of Analyst

stephan.potgieter@ubs.com

25% of Aldermore's historic costs, in a cash-funded transaction (slightly lower

+44-20-7568 8162

buybacks), all else equal we'd see a purchase adding c. 2-3% to LBG EPS at 0.5-0.8x

target TNAV.

Valuation: 9.4x FY27E EPS, 1.8x TNAV for 18-19% ROTE

On our forecasts, LBG is trading at a slight discount to the sector at 9.4x FY27E EPS, 1.8x

TNAV for an 18-19% ROTE. Next scale catalyst is the 2Q result and FY28 (and potentially

FY30) strategic update on 30 July. Our LBG price target is based on a SOTP valuation.