What’s next for the Lloyds share price?

The Lloyds share price has been weak in the past month or so, but can its results tomorrow reverse this trend?

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A slew of FTSE 100 companies are releasing their latest results during this week. I have been looking forward to these numbers, because they show the pace of recovery from the pandemic. Among these is Lloyds Bank (LSE: LLOY), one of the most traded FTSE 100 stocks.

A look back

First-quarter results were encouraging. As the pandemic’s threat started receding, it reduced its impairment provisions. It was also optimistic in its outlook. This helped reinforce the momentum that the Lloyds share price had acquired in the November, 2020 stock market rally. In early June, it touched 50p for the first time since the market meltdown early last year. 

However, it has lost some of its mojo ever since. It had fallen by 13% in early July from its June highs, before recovering some of the lost value recently. A sluggish economic recovery and the rise in coronavirus cases in the UK probably contributed to investor bearishness on the stock. 

What to look for in the Lloyds Bank results

I think this makes the next results update even more critical than it would have otherwise been. If the bank continues to make progress, I reckon the Lloyds share price could shed some of the pessimism holding it back. One indication of this would be a pick-up in loans. And its net interest income, which is the difference between interest earned on borrowings from a bank and interest paid by it on deposits, is another indicator to note. If can be indicative of more pricing power for the bank because of robust loans demand. 

I am also looking forward to its earnings per share (EPS) number, which can give a perspective on what to expect from Lloyds Bank’s dividends over time. At present, the bank’s dividends are capped at the Bank of England’s (BoE) direction. However, this can change soon as the economy normalises. 

The EPS number can indicate the potential increase in Lloyds’ dividends when the BoE lifts restrictions. It had a healthy dividend yield before the pandemic. I reckon that as and when it is able to hike its dividends, the Lloyds share price should rise. 

It would also be good to get any further information on the bank’s recent foray into real estate, which can impact its fortunes over time. And last but not the least, its outlook is important. With economic growth still soft and an expected slowdown in the real estate boom, I think there is a possibility that the bank may be more cautious in tomorrow’s release. 

Will the Lloyds share price rise now?

So will the Lloyds share price rise now? I think the bank’s prospects still look much better than they did last year at this time. I am less sure about improvements from the quarter before. All in all, I think this year as a whole may look better. I am optimistic about its share price based on that. But I will wait for the numbers tomorrow just to be doubly sure.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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