EVEN with thousands more job cuts on top of the 15,000 already gone since 2011, Lloyds Banking Group’s new three-year strategy unveiled by boss Antonio Horta-Osorio cannot be branded same old, same old. As he convincingly suggested yesterday, his first three years in charge were steadying a ship still listing badly after the financial crash had seen Lloyds TSB under Eric Daniels dragooned by government into buying and sending the banking bomb disposal unit into the competence illusion that was HBOS.
That initial strategy was about simplifying and strengthening a bank that had over-reached itself with some Whitehall arm-twisting amid unprecedented crisis.
By contrast, the new strategy until 2017 is about growth and a major change of focus to “digitisation” – an ugly word, but one describing a paradigm shift in the way banking is done by customers.
People are now doing their transactions increasingly away from the counter, and more on smartphone, tablet and computer. That is the thinking behind a central plank of Lloyds’ new strategy of closing 200 branches (50 new ones will open), and throwing £1 billion over the next three years at digitisation and self-service in the reduced branch network.
The latter, by the way, sounds much like the banking industry’s version of the supermarket sector’s self-service checkouts, but with money rather than food in the bagging area.
I don’t have to imagine the brave new world. At one bank branch I use (no names, no pack drill) I sometimes think some of the counter-freed staff are actually employed to wish customers a nice day. Personal interactions, background music, more open-plan by the month, a visit to the bank is almost becoming a leisure experience (almost).
More seriously, Lloyds is now profitable again on both statutory and underlying levels, bad debts are well down, and a restored dividend looks in sight after a lengthy hiatus since the dark days of 2008.
Against this notably more positive backcloth, new setbacks like the latest £900 million provision for PPI (payment protection insurance) mis-selling, and the bank’s less than lustrous performance in the European Union bank stress tests, need perspective. They are jolts that won’t derail the more positive trajectory.
There is still 25 per cent of the taxpayer stake in the bank for the government to sell. But that is down from a state-owned high water mark of about 40 per cent, and has much more psychological than operational significance for Lloyds these days.
There remain residual pitfalls in the industry so that any optimism on any individual player has to be tempered. For instance, Vince Cable is not chuffed at Lloyds withdrawing its previous commitment not to close any “last man standing” branches in remote areas.
But the group’s new strategic plan at least has the advantage of starting life on the front foot.
BP uses divi as silver bullet against headwinds
BP KNOWS what to do to soften the blow at a big cash-generative business when a profits fall bites. Crank up a nice, defensive divi rise!
A near-20 per cent fall in quarterly profits, from falling oil prices and declining Russian revenues as sanctions have an impact, was dealt with via a 5.3 per cent rise in the payout to shareholders.
The share price ended up 1.6 per cent as investors decided BP had the underlying momentum to continue its graduated recovery from the disaster that was the Gulf of Mexico oil spill in 2010. Shrewd.