Tight-lipped Lloyds is frustrating the City

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The Independent Online

Lloyds Banking Group yesterday reaffirmed its pledge to turn a profit for the year, but spooked some analysts with cautious comments and caused frustration with the lack hard information it was prepared to give.

Like many banks, Lloyds is fond of producing volumous reports with its results every six months. But unlike a number of rivals, the company says very little at the quarterly stage and this is causing increasing frustration among analysts and others that follow the stock. They argue that Lloyds increasingly looks out of step with best banking industry practice.

The company has sought to damp down the criticism by claiming that because it is not an investment bank, whose earnings can be quite volatile between different quarters, more detail is not needed. The finance director, Tim Tookey, said: "You know, we are not an investment bank that is subject to substantial quarterly ups and downs driven by movements in level of trading performance.

"We are here as a retail and commercial bank, and therefore the predictability of earnings that we have is much greater, so in our case volatility of earnings will be much lower, simply because of the industry that we're in."

But analysts, who have highlighted the issue with the state-owned bank before, to no avail, were unconvinced.

Paul Mumford, a fund manager at Cavendish Asset Management, said: "Lloyds's recovery continues to fire on most cylinders, which is good news for shareholders and the taxpayer. This statement confirms that the once-beleaguered bank is cruising towards a good overall performance for 2010. Nonetheless, the statement was lighter on numbers than one would normally expect, which could provide for a nice or nasty surprise come the final figures."Hank Calenti, the head of bank credit research at Société Générale, said the Lloyds statement "contained a grand total of nine numbers, excluding repetitions". Mike Trippett, an analyst at Oriel Securities, also described the lack of information as "frustrating", while other analysts weighed in with similar criticisms.

There was also concern in some quarters about the company saying that the improvement in margins was only "modest" and, while Lloyds's bad debts continued to fall, the level of group impairments for the second half of the year was expected to improve only "moderately".

These have been the main drivers of Lloyds recent improvement and sceptics worry that the bank could find the going tougher in the coming months, with house prices falling again at a time of mounting concern about Britain's economy.

Lloyds also gave no update on its search for a chief executive to replace Eric Daniels. The field, however, is narrowing with several fancied external candidates being removed from the running in recent months.

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