Wow, what a set of results for the giant state-sponsored Lloyds Banking Group. For the first half of this year it has lost only £4 billion, less than the five analysts thought it would. Still much more than LLoyds thought it would but, hey so what? The shares have been up as much as 13% today.
That is a huge boom for a FTSE100 company. There must be some great high fives going on in the boardroom.
Quite how reality bites into this utopia is not hard to see. HBOS loans are approaching default rates of 8% - that makes Northern Wreck look sober and conservative. HBOS is a toxic virus which has invaded Lloyds and is right now trying to lay waste to its new host.
Lending as a whole is being shrunk in the current market, except for not very competitive mortgage deals. So much for the Government insisting on increasing lending to corporates.
Also there is the small matter of the negative goodwill (i.e. HBOS worth more than Lloyds accounted for). This can all be undone with future bad losses. It is more accounting hocus pocus.
At the moment in the market, everything is being read as a good sign, but LLoyds ain't healthy and won't be for years. That bodes ill for both the economy and the taxpayer