LLOY - Share buyback 2019



20 years of bad sentiment tells you something?

Now add the challenger banks. The app banks that all youth will grow up with as normal banking. All this competition that didn’t exist a decade or so ago


They wont admit it, but traditional banks have no interest in retail banking looking forward. It won’t be the big source of cash it used to be, for them to gamble

It’s like the high street retail sector. No solutions



I hope it gives you a period of income. And i hope for a good duration. Just don’t make the mistake that many have over the years here. It’s not a solid forever banker (pardon the pun)


Thats not the markets primary concern. Look at BA years ago. It announced losses but because not as big as expected, price flew up (less loss beat expectation)

A few billion profit is not going to aid banks. They have to have the ability to consistently beat market expectations.

Banks were once able to when they had no constraints on their investing/gambling

Now it’s very difficult with ringfencing etc, to beat expectation constantly. So not much interest to value buyers

Why is that an issue to income investors? Because if no SP value buyers , SP will simply fall. Eroding all div gains.

It’s why SP performance is important. No capital /value buyer interest, is detrimental to div returns. It’s why income funds first analyse capital return potential (good funds anyway)

So if you want to simply buy and hold forever, and not be overactive in markets, choose a sector where you foresee longevity. At least then Maybe, SP may come back for you.

Oil sector… probably not a great long term prospect
Banking sector … same
Retail sector already screwed…

Pharma probably best bet. Something like that.

I think you said your retired. I forget. But maybe you’ll want your capital one day for some big plan. So a sector not under long term scrutiny most likely best


Maybe you need to read up on challenger Banks like Metro Bank and Tesco Bank before making these comments … hahaha

They actually not up to the challenge it’s now appears and are really struggling to take on the big guns like The Halifax PLC


I said app banks 're challenge
.tesco bank just a pointer for Lloyds haha


I’ll keep an eye on the volumes and read the RNS in more detail. The majority of sales are via LSE but they also detail sales via BATE, CHIX and Turquoise. I gather that the three latter may be dark pools. I had not heard of these. So I live and learn.

Thank you


Thank you.

The article seems to confirm what I suspected:

“So it is the market makers who actually set the current share price, and they decide the level to set it at by balancing buyers and sellers.”

It seems they do this by having an order called an executable quote. Their prices seem to be reactive to what is going on in the market rather determining what goes on in the market. But any intervention is going to have some influence on the market.

The opening, midday and closing auctions also have some influence on price determination. Limit orders also seem to come into the equation. I am reading the document MIT201 on the LSE Group website together with related documents to gain a better insight into price determination in the SETS system. (Not that this will make me a better investor / trader!)

As far as Lloyds buy back is concerned the rationale may be along the lines, “Lloyds are buying back their shares because nobody else will buy them. The shares cannot be worth much, can they?”. So the price paid falls from a weighted maximum of 66.27p to a weighted minimum of 56.86p over the buy back period so far. The last few days have mercifully seen a slight change of sentiment with the weighted day average creeping up to 57.74p. (FWIW: I calculate the overall buyback weighted average at 61.83p.)



These links might help in understanding other trading venues.

BATS Chi-X Europe
BATE is the Market Identification Code for the CBOE EUROPE - BXE ORDER BOOKS

I am unsure that one could describe these venues as “Dark Pools”.

A good source to see an overview of the volume for a share is the “Fragulator Live” supplied by Fidessa. You will have to register, but it is free.

An example of what is available is shown below for Friday’s LLOY trading.

[Not sure of the resolution of this image. If not sufficiently viewable please say so and I will post the original screen views]


Where do you get that conclusion?

There is no easy way of determining what proportion of the shares traded each day is taken by the buybacks. However, if I were to assume that all the shares bought back were traded on the LSE, then the buyback volume would have represented between 1.4% and 25% of the shares traded on the LSE. This is shown in the graphic below.

I could extract the data from the Fidessa site, but this is a lot of work, and I am not prepared to spend the time doing it. However, it is clear that there is a considerable interest in trading LLOY shares, and there seems to be quite a large number of people buying LLOY shares, since it appears the between 98.6% and >75% of the shares traded were taken on non-buyback transactions.

Remember that the above percentages assume all buyback trades are on the LSE, something we know is incorrect since a proportion of the buyback transactions is on other trading venues. The real percentages are much smaller.


Whatever Lloyds buyback history is in the last two decades, doesn’t make for inspirational expectations on this one or any future ones.


Apart from That, often tracked companies announcing div hikes and commencing buybacks around the same time. Sure you have too. What you think? Varies sector to sector of course


If I search the LLOY RNS’s since July 1999 (using the LLOY investor website), there do not appear to have been any buybacks other than those in 2018 and 2019.

The size of both buybacks is rather small, (representing 2.2% for 2018 and 4% for 2019 of the number of shares in issue at the beginning of the buyback) and a large proportion of the potential effect is negated by the number of new shares issued. Consequently, no major effect on the sp is to be expected from such small buybacks. I think that anybody expecting anything better is looking through rose-tinted spectacles.


I think that dividend hikes and buybacks are announced with the interim or final results, so logically they are announced t the same time. I believe that many Companies include a resolution at the relevant GM that allows the Directors to buyback their own shares, although often this facility is not used. It just allows the Directors more flexibility and avoids having to call a EGM if they suddenly decide to perform a buyback. Many of these proforma resolutions limit the number of shares that can be bought, often to less than 10%.


Cheers for that.

Ok so many see this as an income stock. Very obviously not a capital stock given down nearly 90% since 1999 highs (Apart from traders)

The dividend and non dividend years since 1999 , inflation deducted…and capital losses deducted, whats the shareholder percentage return on capital via div?

Won’t read well for long termers.

Let’s not forget Lloyds on average just kept on sinking in the good years from 1999 in the sector example relative to BARC 2002-2008.

So we know looking forward , even looking cheap at the 50’s range…in value investor terms 're percentage terms, a bit of a pig. Example 57p to 40p is a capital decrease of around 30% (many div years to breakeven )

I dont think any sane income or value investor would be looking to capital returns here in the next 5-10 years.

So at the very minimum, income investors need this to stay in the 50-60 range for a few years. And no value investor support will be backing that.

So the main question… . What’s keeping this at 50-60p for income investors in the 3-5 year range ?

Won’t be profits. Value investors won’t expect repeated expectations being beaten. Won’t be sector. Already written off by many.

Got to be something else. I’m struggling to see what. Any suggestions ?


Il be clear on this as maybe we see it differently. I call it sinking because 2002-2008 relative to BARC, STAN etc, percentage was poor. Loss of value relative to sector gains. To me that’s sinking. But also identifying who to short on turn

This chart will look odd because I put different variables into price most likely , than most.

You can see lloy performance even in sector bounces relative to BARC HSBC and STAN for sample case.

Value investors, some will look to Lloyds divergence from the set and look for it to go back to the average sector value. However we can see there, instead of Lloyds rising, the sector is converging down to Lloyds. No value investor interest. Just why i say many have traditional sector written off . And Lloyds 20 year history is to keep diverging from the sector set… . In theory stay dropping.

This is where we may disagree because my price variables may be a lot different.

Not saying you can’t pop in here for a capital 10-20% gain at stages. I just mean the long term income issue


No dividends were paid from the Final 2008 to the interim 2014. The running yield was around 4% in 1995 and rose to about 10% by 2003, it dipped back to around 8% in 2006 before rising to ~12% in 2008. It has risen incrementally since 2014 to the current 5.6%. It is forescast to rise to 6.7% by 2021.

LLOY posted a pre-tax loss in 2012, but subsequent years have shown annual improvements to the 2018 level of ~£6bn. This is forecast to rise to £8bn this year.

LLOY has not performed too badly this year compared to other Banks and the index, although is quite a bit off its year highs.

Whilst I might agree that LLOY underperformed relative to some other Baanks pre-2009 I do not see what real relevance that has since those were different times. One of the better Banks has been HSBA, which has out-performed all the others since the EU referendum, but LLOY is still beating HSBA this year.

The assessments above are purely SP related and not total return.


I can spot straight off we have much different chart inputs. Can’t argue yours and probably cant argue mine. Interesting battle ahead lol


I do take a lot of relevance from past periods. We just have different approaches to it.


In summary: is this an income investors pick for 5 years? (Lets not look further- nobody lives forever)

I say no. I assume you say yes.

Let’s come back to his post at 40p or 70p and consider it all again. One of us will have missed something at either strike price. I’m always happy to learn if its at 70p. Notes for the future.