It was only a question of when one of the government owned banks in the UK would announce some good news, and today was that day. The Lloyds Banking Group today announced that it expected to make a full-year profit in 2010. Unsurprisingly, its shares have jumped ~8% to 60p on the news. RBS shares leapt 5.5% to 44.3p.
I can’t help feeling that there is a bit of electioneering going on here (i.e. Gordon Brown putting pressure on the banks Labour invested in to announce some good news). It seems an odd time for Lloyds to be making a prediction for the whole of 2010. They have based their prediction on just 10 weeks of trading.
Having said that, I am very happy. I suggested buying RBS when its shares were incredibly cheap at around 30p and since early February they have risen 48%!
Lloyds is a far more UK-focused bank than RBS so its announcement would seem to indicate that Britain is starting to do much better. I suspect this is why it was chosen to make the announcement, to try and boost confidence in the UK’s economy and stimulate investment/growth.
RBS & Lloyds will be massive cash generators in the future and are still ‘cheap’ by historical standards if you can be patient. The UK government will not be a shareholder forever.