Thursday preview: Lloyds Banking Group's full year earnings in focus

Lloyds Banking Group is expected to report a sharp decline in full year profit on Thursday as the company sets aside further provisions for the mis-selling of payment protection insurance (PPI).

UBS estimates that the bank will book a provision for PPI of £2.9bn in the fourth quarter. The compensation for the PPI fund totals around £14bn at the moment. Lloyds is still setting cash aside ahead of the government’s deadline of October 2018 to claim mis-sold PPI.

“At a stated level we forecast a loss before tax of £1.59bn for the quarter and pre-tax profit of £560m for the year (2014 full year: £1.8bn), driven mostly by our assumption that Lloyds will book a fourth quarter provision for PPI of £2.9bn,” UBS analyst Jason Napier said.

“Assuming that in fourth quarter 2015 PPI refunds continued at the same rate as in the third quarter, this provision would be sufficient to take refund cover to 21 months, in line with our expectation of an Financial Conduct Authority-agreed mid 2018 deadline for PPI claims.”

At an underlying level, UBS has forecast full year profit before tax of £1.65bn in 2015, compared to £7.8bn the prior year.

The lender has already reported a decline in total income in the last quarter as the commercial division suffered challenging trading conditions.

In January the government decided to postpone the next sale of its stake in the bank, with Chancellor George Osborne blaming “market turbulence”. The government has tried to attract retail investors with a 5% discount to market value if the share price reaches 73.6p. However, shares were sitting at 62.30p each at 1330 GMT.

Osborne told BBC News that "now is not the right time" and that he would not give the go-ahead until the markets had calmed.

The government said in October the sale of its holding, which was expected to be completed in spring, would raise at least £2bn to reduce national debt by selling shares to private investors.

Lloyds joins a raft of other FTSE 350 companies in reporting its corporate earnings on Thursday with British American Tobacco, Mondi, National Express, Serco, RSA Insurance, Premier Oil, Merlin Entertainments and Playtech among those releasing full year results.

Thursday 25 February

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Bluefield Solar Income Fund Limited, Ceres Power Holdings, Galliford Try, South32 Limited (DI)

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Hayward Tyler Group, red24

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City of London Investment Group, Diageo, Foresight VCT Infrastructure Shares, Hargreaves Services, Heath (Samuel) & Sons, Ingenious Entertainment VCT 1 E Shares, Ingenious Entertainment VCT 1 F Shares, Ingenious Entertainment VCT 1 G Shs, Ingenious Entertainment VCT 1 H Shs, Ingenious Entertainment VCT 2 E Shares, Ingenious Entertainment VCT 2 F Shares, Ingenious Entertainment VCT 2 G Shs, Ingenious Entertainment Vct 2 H Shs, WYG

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GCP Infrastructure Investments Ltd

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Canadian General Investments Ltd., HICL Infrastructure Company Ltd, Real Estate Credit Investments PCC Ltd

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Consumer Price Index (EU) (10:00)
Consumer Price Index (GER) (07:00)
Continuing Claims (US) (13:30)
Durable Goods Orders (US) (13:30)
GFK Consumer Confidence (GER) (07:00)
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M3 Money Supply (EU) (09:00)
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Q4
Nord Gold NV GDR (Reg S), Wentworth Resources Ltd (DI)

GMS
Deltex Medical Group

FINALS
Bodycote, British American Tobacco, Capita, Capita, Coats Group, COLT Group SA, Compagnie de St-Gobain SA, Countrywide, Derwent London, Howden Joinery Group, Kaz Minerals , Lavendon Group, Lloyds Banking Group, Macfarlane Group, Merlin Entertainments , Mondi, National Express Group, Nord Gold NV GDR (Reg S), Playtech, Premier Oil, Relx plc, Rentokil Initial, RSA Insurance Group, Serco Group, Sphere Medical Holding, Spirent Communications, St James's Place, UBM

ANNUAL REPORT
Wentworth Resources Ltd (DI)

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Beazley, Shoe Zone

EGMS
GLI Finance Limited, JPMorgan Private Equity Ltd USD Equity Shares

AGMS
APC Technology Group, Bankers Inv Trust, Ebiquity, Zoopla Property Group (WI), Zytronic

TRADING ANNOUNCEMENTS
Safestore Holdings

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GDP (output, income & expenditure) (09:30)
Index of Services (09:00)

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Cenkos Securities, easyJet, Lancashire Holdings Limited, Maven Income And Growth VCT 6 , Rio Tinto, Shoe Zone, Zytronic