Over the past year, Lloyds Banking Group (LSE:LLOY) has been through a transformation as it has come out of the pandemic. There are still several key events ahead this year that will be very important for the business and the shares. So as I mull over whether I should invest or not, here are my top three events that could cause the Lloyds share price to jump higher.
July half-year results
Currently, the half-year results for the bank are due out in the last week in July. The last snapshot we got of the business was back in April with a Q1 update. I thought the Q1 information was fairly neutral. The profit after tax of £1.2bn was down £0.2bn from the same quarter last year, but net income was up 12%.
Since Q1, the Bank of England has raised interest rates three times and inflation has continued to rise to above 9%. So in the half-year results, performance could swing either way. Consumer spending could be down as many try to save instead of spend. However, given the higher interest rates, the bank could see a large jump in revenue from holding these deposits.
If the bank is able to show a material improvement from Q1, the share price could spike higher with a greater valuation.
August Bank of England meeting
The next meeting for the central bank is due the first week of August. This is going to be key for Lloyds as interest rates could be set to rise again.
In the past five meetings, the Bank of England has increased the base rate. It now sits at 1.25%, with some analysts calling for another 0.25% hike in August. With inflation remaining high, there is some possibility of a 0.5% increase instead.
I think that the Lloyds share price will jump higher if we get a surprise 0.5% hike instead of 0.25%. The rapid increase in the rate will provide an uplift to revenue for the bank into the second half of the year. The net interest margin will rise. This is the spread between the rate charged on loans versus the rate paid on deposits.
In addition to some of the recent measures taken by the UK government, the Lloyds share price could benefit from further events in the near future. At the moment, it’s only speculation and rumours that an income tax cut could be around the corner. Other tax cuts or spending to help consumers could spark a rally for the bank. Why?
Lloyds is the UK’s largest retail bank. Success very much depends on the welfare of the everyday man on the street. Tax cuts would allow more disposable income for people. This could then help increase mortgage applications, new loans, higher card spending, and much more. Ultimately, if the retail client base feels more financially secure, Lloyds is in a position to benefit.
Good news due for the Lloyds share price
Over the past year, the share price has fallen by 6% and has been in the doldrums. I think there are several events over the summer that could result in a kick-start for Lloyds shares. I’m going to monitor it closely in coming weeks, with the aim of dipping my toe in the water and investing.