Nomura, Goldman focus on Lloyds´s guidance after Q3 numbers

A 17% drop in 'other operating income' led to a 6% miss on underlying pre-tax profits. Nevertheless, that was compensated for by a leaner cost structure than had been anticipated.

Assets also performed better than markets had discounted.

"Impairments picked up slightly, likely driven by fewer write backs, but remained (at 15 bps) at a very low level," Goldman Sachs pointed out in a research note e-mailed to clients.

At £500m PPI provisions were also in-line with management´s guidance for about £1bn in claims by year-end, assuming a stable claims volume.

However, financial guidance for 2015 was mixed, Goldman´s Martin Leitgeb and Nick Baker said.

The outlook for net interest margins in 2015 was upped slightly while guidance for other income was lowered, to slightly below the FY14 level, they said.

So while Lloyds expected other income to recover in the fourth quarter, "given limited disclosure on this P&L item we expect the focus of the earnings call at 09.30am to be on the forward outlook for other income."

Looking out into 2016, Nomura chipped in saying: "we expect to see revenue downgrades to the tune of £400m-500m mainly owing to OOI. However, cost control was strong in the quarter and asset quality continues to surprise, so most of this revenue downgrade will be offset.

Longer term estimates might see more of an impact as consensus will look to normalise cost of risk, rather than pass on the 3Q beat."