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How will new CEO Charlie Nunn affect the Lloyds share price?

Lloyds share price: Charlie Nunn

When Charlie Nunn, Lloyds Banking Group’s new executive director and group CEO, made clear the direction in which he intends to take the UK banking giant on 16 August, the Lloyds share price closed the day down 1.3%. 

Despite the immediate dip since the announcement of Nunn’s appointment on 30 November 2020, market sentiment has been positive – with the Lloyds share price gaining 26.9% as of the 20 August close. 

However, during his predecessor’s, Sir António Horta-Osório, 10-year tenure, the Lloyds share price fell 26% between 1 March 2011 and the news of Nunn’s appointment in November last year. 

Lloyds share price dips on Nunn’s first day

In Nunn’s statement on 16 August, the first day in his new role, he referenced the bank’s social responsibility plan, Helping Britain Prosper. “As I’ve watched Lloyds from the outside, I’ve been impressed by a company with a really clear purpose. Helping Britain Prosper — and in the context of the coronavirus pandemic, Helping Britain Recover — says everything you need to know about what we’re trying to achieve,” he said. 

The emphasis going forward, he said, would be on “seeking to be a healthy business in a thriving economy”. Lloyds recently announced that it is carefully monitoring the £12bn in government-backed business loans issued during the coronavirus pandemic, with fewer than 10% of its repayments in arrears. 

Nunn plans to spend his early months acquainting himself with the entire business “before outlining any strategic plans”. In the meantime, he indicated the company would be guided by its Strategic Review 2021. 

This review focuses on growing the company’s two core customer segments, personal and business, by enhancing its capabilities in four key areas. These include modernised technology architecture, integrated payment solutions, using data to underpin the organisation’s activities and “implementing reimagined ways of working”.

Nunn to prioritise Embark 

Nunn previously spent 25 years working in financial services. Before joining Lloyds, he held multiple leadership positions at HSBC, including global CEO of Wealth and Personal Banking; group head of Wealth Management and Digital; and global chief operating officer of Retail Banking and Wealth Management.

Nunn is likely to prioritise the success of online savings platform Embark, which Lloyds recently acquired, helping it attract a broader audience for its wealth services.

Lloyds’s landlord vision

As well as focusing on banking, Lloyds aims to purchase 50,000 homes in the next decade, in a bid to become one of the UK’s major landlords. Its Citra Living private rental unit, launched in July, aims to acquire 400 homes by the end of this year and to double this target in 2022.

Various analysts have adjusted their targets for the Lloyds share price based on its recent half-year 2021 results, which saw profits increase to £3.9bn, according to Proactive Investors. Credit Suisse and UBS both increased their price targets for the Lloyds share price, with Credit Suisse reiterating an “overweight” rating for the stocks. 

However, Goldman Sachs cut its rating from neutral to sell, and lowered its Lloyds share price target from 50p to 45p, citing mortgaging pricing as an upcoming headwind for UK banks.

 

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