It pays to be conservative when managing the expectations of a tetchy market. For Lloyds Banking Group, though, that meant investors looked past an upgrade to its margins and returns guidance this year, which were already firmly embedded in consensus figures.
It’s hardly surprising that with inflation still well above the Bank of England’s target of 2 per cent, Threadneedle Street would go further on ratcheting up rates, in turn keeping Lloyds’ margin fatter for longer. The lender expects its net interest margin, a key gauge of profitability that reflects the difference between what a bank charges for loans and pays out on deposits, to be above 3.10 per cent this year, better than the 3.05 per cent it had stuck to three months ago.
