Lloyds Bank shares continued their strong rally, trading at 101.65p, up 75% from their low in April last year. Investors have been encouraged by recent US bank earnings, and attention is now on Lloyds’ own financial results due this week.
Analysts expect Lloyds to report a strong fourth quarter as the UK economy stabilizes. Net interest income for Q4 is estimated at £3.54 billion, up from £3.451 billion in the previous quarter. Other income, which includes fees, wealth management, and rent from properties, is expected to reach £1.55 billion. If these estimates hold, annual net interest income would rise to £13.648 billion, and other income to £6.08 billion. Consensus forecasts suggest Q4 profit could reach £1.2 billion, bringing the annual total to £4.57 billion.
High UK interest rates have benefited Lloyds, as inflation remains above the Bank of England’s 2% target. December’s CPI came in at 3.4%. The bank has also reduced costs through digital banking and efficiency measures. Analysts expect the cost-income ratio to fall from 60.4% in 2024 to 47.2% by 2028, while the asset quality ratio is expected to rise gradually from 0.1% to 0.27% over the same period.
Shareholder returns are also set to grow. Dividends per share are expected to rise from 3.17p in 2024 to 5.77p in 2028, while share buybacks could increase from £1.7 billion to £3 billion by 2027. Remediation costs related to the motor insurance crisis are expected to fall from £899 million in 2024 to £1 billion in 2025, then decline further to £248 million by 2028.
Technically, Lloyds shares are in a strong uptrend and trading near the upper side of an ascending channel, the highest since 2008. However, the Percentage Price Oscillator shows a bearish crossover, and the RSI is trending downward. This suggests a potential pullback after the earnings release, with 95p acting as the next key support level.
Overall, Lloyds is performing well, supported by high interest rates, cost efficiency, and strong expected earnings, but short-term profit-taking could bring a small correction in the share price.
