Press Release: March 23, 2010
Sources close to Zen International are apparently pleasantly surprised by the announcement from Britains largest mortgage lender, Lloyds Banking Group, that it will return to profit this year.
The bank said impaired loans, which grew 61pc in 2009 and were primarily responsible for its losses, have been lower than expected so far during 2010. Consequently, the bank will be profitable on an overall basis in 2010.
The announcement sent shares in Lloyds up 8pc in early trading and this had the knock-on effect of boosting the rest of the banking sector.
Zen International said that when the lender reported 2009 results in late February, bad loans on HBOS assets had jumped nearly £10bn to £24bn.
Lloyds was strong armed into rescuing HBOS at the zenith of the banking crisis in October 2008 in a move that forced the then far healthier Lloyds TSB to turn to the taxpayer for crisis funding.
Up until that point, Lloyds had far less exposure to the collateralized debt obligations (CDO) assets that initially caused the credit crunch said one of the Zen International sources.
Lloyds said costs had declined in the first 10 weeks of last year. The bank revealed big savings through the integration of its information technology systems and the culling of some 10,000 jobs.
The lender, 41pc owned by the British taxpayer, said in its update that it had performed strongly in the first 10 weeks, with a good income growth.
Zen International said that clients should not be looking to acquire stocks in Lloyds at this time citing the fact that, with interest rate increases in the offing, a rise in mortgage delinquencies would be inevitable.
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