Lloyds is also eyeing a return on equity figure of between 14per cent and 15 per cent in 2019, compared with 12.5 per cent in the current quarter. The tight control of the business has already enabled a share buyback of £1.75 billion, alongside a dividend yield of above 5 per cent. Source: TradingView Past performance is not a guide to future performance Last week's announcement from the PRA on the systemic risk buffer requirement for UK's ring-fenced banks should give Lloyds more room to move in terms of future shareholder returns. Lloyds now thinks the current level of capital required to grow the business as well as meet regulatory requirements and cover uncertainties has reduced from around 13 per cent to 12.5 per cent, plus a management buffer of around 1 per cent. It pointed out it had a "progressive and sustainable ordinary dividend policy" and that it would continue to give consideration to the distribution of surplus capital at the end of the year. UBS analyst Jason Napier thinks the PRA news has increased the 2019 pay-out capacity by £1 billion or 2.5 per cent of market cap. When added to Lloyds' own capital generation target, this amounts to the potential for total pay-outs of 10 per cent of market cap for 2019. He continues to have a price target of 80p on Lloyds, while also backing Barclays and RBS as his other 'buy' recommendations in UK banking. Napier, who values Lloyds at 7.1 times 2020 earnings, said:
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