Lloyds Banking Group Plc. is set to announce a 10% headcount reduction next week as part of a three-year strategy to reduce expenses and focus on its online presence.
Britain’s largest mortgage provider is expected to unveil a plan to let go of around 9 000 people of its staff, as it reports third-quarter results on Tuesday next week, said people with knowledge of the matter.
With less people using Lloyds branches and call centers and more of them settling transactions using their smartphones or tablets, the bank reacted and created a new digital marketing and custom development unit aimed at developing new and improved products. Lloyds online banking services have more than 10 million active consumers, including 4.5 million mobile users.
The cost-cutting plan is expected to include branch closures and the automation of some back-office functions. As of now, the bank has around 88 000 full-time employees across 2 250 branches, after the group sold shares in TSB Banking Group Plc. in June and scratched 631 branches.
This is the second plan to cut jobs since the company released around 30 000 employees after the inauspicious acquisition of HBOS in 2008. In 2011 the bank announced a workforce reduction of 15 000 people.
Similar measures have been taken at Barclays and Royal Bank of Scotland, which already have been cutting through their ranks.
Lloyds has the lowest cost-income ratio of all UK banks, at slightly more than 50%. CEO António Horta-Osório aims to decrease it even more and at the same time boost earnings in an attempt to return Lloyds to full private ownership.
Mr. Horta-Osorio took over as CEO in 2011 and turned the bank profitable again, allowing the UK government to start selling shares. However, the government still holds around a 25% share in Lloyds, but may look to sell more, if the lender is given permission by Britains financial regulator to start paying dividends.
Lloyds Banking Group Plc. didnt make a day change on Wednesday and closed at GBX 75.88, slowing down from a bullish trend started October 17. On Thursday the stock gained 0.08% to trade at GBX 75.94 in the early trading session at 08:43 GMT, marking a one-year decrease of 2.53%. The company is valued at GBP 54.16 billion. According to the Financial Times, The 25 analysts offering 12 month-price targets for Lloyds Banking Group Plc. have a median target of GBX 90.00, with a high estimate of GBX 115.00 and a low estimate of GBX 55.00. The median estimate represents a 18.61% increase from the last closing price of GBX 75.88.
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