What’s next for the Lloyds share price?

The Lloyds share price has recovered well since the stock market crash last year. With the UK economy rebounding well, can it return to 60p?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Since dropping significantly in the stock market crash last year, the Lloyds (LSE: LLOY) share price has recovered strongly. In fact, it is currently priced at 43p, an 85% increase from its lows in September last year. As such, can the Lloyds share price return to pre-pandemic prices, or has it already reached its peak.

Trading update

Like a large number of bank stocks, Lloyds’ latest trading update was very positive. Indeed, in the first half of 2021, it was able to generate underlying profits of £4bn, in comparison to a loss of £281m in the same period last year. Such a profit was partially due to the reversal of £333m of impairments taken to cover potential loan defaults last year. This demonstrates the excellent recovery made by Lloyds, against the backdrop of the strong economic recovery in the UK.

These strong results also allowed the company to pay an interim dividend of 0.67p per share. This interim dividend alone equates to an annual yield of 1.5%. The annual dividend yield is estimated to be around 4.5%, which is high in comparison to many other FTSE 100 stocks. It also seems well-covered by profits. Accordingly, I believe that there is scope for this dividend to rise over the next few years, which will hopefully be accompanied by gains in the Lloyds share price.

Lloyds was also able to enhance its predictions for the full year. Indeed, its net interest margin, which measures profitability of the core lending business, is now expected to reach 2.5%. This is compared to a previous target of 2.45%. Hopefully, this will convert into large profits for the full year.


Unlike Barclays, which has a strong investment bank, and HSBC, which has a large presence in Asia, it can be said that Lloyds is not overly diversified. In fact, it works solely in the UK, and generates the majority of its lending profits from mortgages. This has led to plans for Lloyds to become a large UK landlord, aiming to buy 50,000 homes over the next decade. This will take place under the new Citra Living brand.

On the face of it, this sounds like an excellent idea. In fact, it is estimated that it can make £300m of profits from the first 10,000 homes, expected by 2025. But I do have my concerns. House prices are very high at the moment, and with the stamp duty holiday drawing to a close, alongside the potential that interest rates will rise, I do fear a pullback. This would likely have a negative effect on the Lloyds share price, due to its ever-growing presence in the UK housing market. This is a risk to take into account.

Has the Lloyds share price got further to rise?

Clearly, Lloyds will still face headwinds over the next few years, and gains are certainly not guaranteed. Nonetheless, its current results have shown the bank’s excellent recovery. Profits are also broadly in line with what they were before the pandemic. Consequently, I feel the Lloyds share price has got upside potential, and may be able to return to pre-pandemic levels. This is provided the UK economy does not start to deteriorate. Accordingly, I’m tempted to add some shares to my own portfolio. 

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 assessed. Consider taking independent financial advice.

Stuart Blair owns shares in Barclays. The Motley Fool UK has recommended Barclays, HSBC Holdings, and 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.

More on Investing Articles

Investing Articles

Up 14% in 2024, what’s next for the Lloyds share price?

This Fool takes a closer look at what prompted the Lloyds share price to rise this year, and offers her…

Read more »

Investing Articles

5 FTSE 100 stocks to consider for a lifetime of passive income

I see lots of cheap dividend stocks in the FTSE 100 right now, but prices are starting to rise. Here's…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

3 growth stocks I’m desperate to buy as the FTSE 100 dips

Never waste a dip, says Harvey Jones. Three of his favourite growth stocks have fallen over the last month and…

Read more »

Investing Articles

I’d use a £10K ISA to try and generate £900 in dividends annually like this!

Christopher Ruane explains how he would invest a Stocks and Shares ISA in blue-chip companies to try and set up…

Read more »

Investing Articles

Here’s how I’d build a second income stream worth £1,228 a month by investing £10 a day!

A second income stream could come in handy later in life. This Fool explains how she’d build one by investing…

Read more »

Investing Articles

5 FTSE 250 stocks I’d buy for a lifetime of passive income

Here's why I think the FTSE 250 could be the best UK stock market index to go for in 2024…

Read more »

Union Jack flag triangular bunting hanging in a street
Investing Articles

Buy cheap FTSE shares, says HSBC

Analysts at HSBC have upgraded their rating of FTSE stocks and reckon the blue-chip UK index could carry on powering…

Read more »

Couple working from home while daughter watches video on smartphone with headphones on
Investing Articles

It could be worth buying the dip for this FTSE 250 stock, down 7% today

Jon Smith spots a sharp drop in a FTSE 250 stock but explains why this could just be a blip…

Read more »