Broker talk of 100p target boosts Lloyds

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SHARES in Lloyds yesterday rose to their highest level this year after analysts at UBS upped their price target on the banking group by more than a third to 100p.

In an upbeat research note, analyst John-Paul Crutchley said the bank was on the “verge of delivering material returns to shareholders through dividends, business growth and potential share buy-backs”.

He continued: “Lloyds is returning to the business model of 1996 to 1999, which we have been anticipating for some time – with costs falling, revenues on an upward path, provisions sharply below expectations and with the capital intensity of the business declining.” He also brought forward his forecast for a dividend payment for the full 2013 results, rather than the end of 2014.

Shares in Lloyds, which closed up 1.96p at 75.7p, have now more than doubled in the past year. Strong gains in recent weeks have heightened prospects of the government looking to start selling down its 39 per cent stake in the bank. The UK government considers that a sale at 61p would allow it to break even, having pumped £20.5 billion into the group to keep it afloat during the 2008 financial crisis.

Meanwhile, Barclays said it had appointed nine more banks to work on its £5.8 billion share sale, taking the size of the total syndicate to 14.

The additional banks include ABN Amro, Banco Santander, BNP Paribas, JP Morgan and RBC Capital Markets. The rights issue, due to be launched in September, is intended to help plug a larger-than-expected capital shortfall.