Lloyds to invest $4.2bn in technology

Bloomberg

Lloyds Banking Group Plc is seeking to catch up with peers and will invest more than 3 billion pounds ($4.2 billion) in technology as part of a new three-year strategic plan. It will also buy back up to 1 billion pounds of its own shares.
Chief Executive Officer Antonio Horta-Osorio called the investment in technology a “massive undertaking,” at a press conference in London on Wednesday for its 2017 results. Lloyds shares climbed 1.8 percent to 69.04 pence at 8:39 a.m. in London trading.
Britain’s largest mortgage lender also guided that net interest margin, costs and capital generation should all improve in 2018, according to a filing on Wednesday. Marring the results, there was yet another 600 million-pound charge for mis-sold payment protection insurance in the fourth quarter, which contributed to pretax profit falling 20 percent and missing analysts’ estimates.
“Whilst the bank missed on profit, the results look robust to us,” Jefferies Group LLC analyst Joseph Dickerson said. The guidance
“suggests Lloyds has materially re-assessed the earnings power of
its business.”
Seven years into his tenure, Horta-Osorio, 54, is stepping up investment in technology as customers increasingly access their accounts online rather than visit branches. While the CEO helped steer Lloyds to profitability and full private ownership, the UK-focused bank is tied to the strength of its home economy, which has been hit by Britain’s divorce from the European Union and the prospect of higher interest rates.
Investing in a digital transformation, closing branches and reducing the workforce was already prioritised by the lender four years ago when it announced 9,000 job cuts and a 1 billion-pound digital investment. In 2016, the bank said a further 3,000 jobs would go and last month revealed plans to eliminate about 1,000 roles.
The 3 billion pounds Lloyds plans to invest in tech over three years is far lower than some of its rivals. Analysts at Autonomous Research LLP estimate that Deutsche Bank AG spends about $4.1 billion a year on information technology and Wall Street giant JPMorgan Chase & Co. around $7.4 billion annually.