Lloyds (LYG) to Close Branches in a Step Toward Digitization

Lloyds Banking Group plc LYG will be closing 49 branches, in sync with the changing consumer preferences and as part of its efforts to move toward digitization. The move will result in nearly 100 job cuts.

The branch closure, expected to occur next year, will affect 32 Lloyds Bank branches, six Halifax branches and 11 Bank of Scotland branches. Earlier this year, Lloyds had announced its plan to lower its branch banking staff to two with tablets. Notably, the company has roughly 2,000 branches across the U.K.

These smaller branches will have no counters and customers will be doing transactions through self-service machines. Further, mortgage advisors will be available via video links.

Lloyds’ spokesman said, “Customers are increasingly choosing to use digital and mobile channels for their everyday banking needs. As a consequence, the number of customers visiting some of our branches has declined in recent years.”

Nonetheless, the company reiterated its view about branches remaining an integral part of service. Further, despite the closure, nearly 95% of Lloyds Bank customers and 90% of Halifax and Bank of Scotland clients will still have a branch within five miles of their home.

Earlier in April, Lloyds had announced its plan to close 100 branches (this was part of its plan announced in 2016). This led to around 300 job cuts. The similar reasons were provided for this decision.

Lloyds has been striving hard to control expenses and strengthen profitability. Through the branch closure strategy, the company expects to enhance operating efficiency.

Shares of Lloyds have rallied 16.8% on the NYSE so far this year, underperforming the industry’s gain of 19%.

Currently, Lloyds carry a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Several other major global banks are undertaking similar measures. Some of these include The Royal Bank of Scotland Group plc RBS, Barclays PLC BCS and HSBC Holdings plc HSBC.

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