Lloyds Banking Group’s share price climbed higher at the end of last month as the bank’s third quarter profits came in ahead of expectations. Statutory profit before tax for the period came in at £1.8 billion when the analyst consensus had been for £1.7 billion. However, while Lloyds’ share price saw a gain from its October 19th year-to-date low of 56.13 pence, up to 59.49 pence early this month, it is still significantly down from its January high of 71.26 pence. That’s a headache for all those investing online in the bank’s shares through ISAs and SIPPs.
However, there is hope the company’s ongoing digital transformation will have a significant impact on cost efficiencies. As the group moves away from traditional banking and onto digital platforms, it has been announced that over 6000 back-office roles will be cut. However, there will be a net addition of around 2000 positions with the lender targeting 8240 new roles directly related to its ‘digital transformation’ process.
The move has resulted in strong condemnation by the Unite union whose spokesperson Rob MacGregor stated:
“As the profits stack up for Lloyds, so does the uncertainty for loyal staff who work hard to serve customers. This latest announcement will undoubtedly hit the morale of staff who have had to endure round after round of job cuts, branch closures and constant upheaval.”
However, the bank’s management and shareholders will argue, with strong justification, that the business cannot hope to maintain its market position in a digital banking future without a shift in its employee profile.
Traditional back office and branch roles are being shed with new employees more likely to be data scientists or software engineers. While the most recent announcement by the bank tried to focus on the new jobs being created and the opportunity for staff whose current roles will be made redundant being offered the opportunity to retrain, Lloyds has cut around 50,000 positions over recent years as 500 bricks-and-mortar branches have closed.
However, with £3 billion being invested in readying Lloyds Banking Group for the digital era, much of which is going on new employees with digital and tech skills, as well increasing training hours by 50%, it is in many regards natural to presume that the skill set of employees must also change with the developing business model. Investors in the bank will be hoping that a streamlined and digital-focused Lloyds returns its share price to the pre-crisis days of a decade ago.