So it was good to see some lateral thinking going on with its new plan to branch into the rental property game.
Not only would this give Lloyds a healthy new revenue stream, but Britain is crying out for more rental properties and the sector needs capital to provide it.
More’s to the point, big, professional landlords with reputations to worry about are likely to be better for tenants than the sometimes ragtag army of buy-to-letters who dominate the market now.
Lloyds is calling its plan Project Generation and wants to use its clout and expertise built up through its Halifax mortgage brand to buy and rent out new and existing housing stock.
It already has links with the big housebuilders through its commercial banking business, but rather than slowly grow a portfolio of rental businesses as properties come on the market, why not be bolder and do it through M&A?
Lloyds should buy Grainger, a cracking good business with a terrific management team and the biggest stock market quoted portfolio of private rented flats in the UK.
Currently valued at £1.8 billion — 6% less than its net asset value— it’s uniquely placed to benefit from the huge demand for rental homes and shortage of supply.
Rent collection is running at 98% despite the Covid economic crisis with like for like growth ticking up nicely at 2.4%. London has been slowing for it somewhat but that is due to lockdowns rather than anything more fundamental.
Lloyds has shown it’s not scared of acquisitions in recent years.
Let’s cap that with a big one that will let Project Generation really help generation rent.