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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Tesco PLC    TSCO   GB0008847096

TESCO PLC

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Tesco : Banking Business to Sell Mortgage Portfolio to Lloyds Bank for Around GBP3.8 Billion

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09/03/2019 | 02:38am EDT

By Oliver Griffin

U.K. supermarket Tesco on Tuesday said its banking business has agreed to sell its mortgage portfolio to Lloyds Banking Group for around 3.8 billion pounds ($4.6 billion).

Tesco said that as part of the sale by Tesco Personal Finance PLC, the entire residential mortgage portfolio and arrangements for the administration will transfer to Halifax, which is a division of Lloyds' wholly owned Bank of Scotland PLC.

Tesco Personal Finance--also known as Tesco Bank--has more than 23,000 mortgage customers in its portfolio, with a lending balance of around GBP3.7 billion, the supermarket said. The customer accounts will be transferred to Halifax once necessary arrangements have been delivered and the transfer of the legal title is expected to take place by the end of March 2020.

Lloyds said the acquired portfolio will generate good returns to the group, and that it now expects its open mortgage book assets at the end of 2019 to be ahead of the balance at the end of last year.

Lloyds said it will buy the mortgage portfolio using existing internal resources. The deal will have a minimal impact on capital, Lloyds said. It forecast an impact in the mid-to-high single-digits basis points at the end of the year.

Tesco said the deal was in line with its banking business's strategy of focusing on a reduced number of products and services.

Sale proceeds will be used for re-investment into Tesco Bank's customer officer, the transformation of the business and the rebalancing of retail and wholesale funding sources, given the reduction in overall lending.

Write to Oliver Griffin at oliver.griffin@dowjones.com; @OliGGriffin

Stocks mentioned in the article
ChangeLast1st jan.
LLOYDS BANKING GROUP 2.68% 55.51 Delayed Quote.7.06%
TESCO PLC 1.56% 241.5 Delayed Quote.27.04%
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Financials (GBP)
Sales 2020 64 719 M
EBIT 2020 2 906 M
Net income 2020 1 538 M
Debt 2020 12 076 M
Yield 2020 3,30%
P/E ratio 2020 15,3x
P/E ratio 2021 14,0x
EV / Sales2020 0,55x
EV / Sales2021 0,53x
Capitalization 23 510 M
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Mean consensus BUY
Number of Analysts 19
Average target price 272,97  GBp
Last Close Price 241,50  GBp
Spread / Highest target 30,4%
Spread / Average Target 13,0%
Spread / Lowest Target -8,90%
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Managers
NameTitle
David John Lewis Group Chief Executive Officer & Director
John Murray Allan Non-Executive Chairman
Antony John Hoggett Chief Operating Officer
Alan James Harris Stewart Chief Financial Officer & Executive Director
Guus Dekkers Chief Technology Officer
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CP ALL PUBLIC COMPANY LIMITED--.--%24 050