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I never thought I’d say this about the Lloyds share price, but I’d buy it today!

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Not in a million years did I think I would be writing this article. I can’t remember the last time I considered Lloyds Banking Group (LSE: LLOY) as a viable investment. It’s at least four years. Yet today I argue that the Lloyds share price is so low that it’s in the bargain bin.

I damaged the Lloyds share price

I played a part in the collapse of Lloyds. I worked in the PPI (payment protection insurance) industry from 1991 to 2002. After leaving, I waged war on PPI from 2003 until the claims deadline on 29 August 2019.

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I was a whistleblower, revealing in hundreds of articles, interviews and broadcasts how problematic PPI was. In 2006, the Office of Fair Trading referred the PPI market to the Competition Commission for investigation. I wrote a lengthy exposé to the Commission, earning me the industry nickname of “The guy who killed PPI”.

In the UK’s biggest mis-selling scandal, Lloyds paid out £22bn in PPI compensation, out of a total exceeding £53bn. Ouch!

It’s not easy being a bank

The PPI mis-selling scandal and the global financial crisis of 2008/09 that nearly killed Lloyds are ancient history. But the bank faces other difficulties that hurt the Lloyds share price and its profitability.

For example, the old rule of retail banking was the ‘3:6:3 rule’. Pay savers 3% yearly interest, charge mortgage borrowers 6% a year and pay golf at 3pm. However, in this age of zero and negative interest rates, lending margins have been destroyed. No more 3% NIMs (net interest margins) for UK banks. Also, coronavirus losses will absolutely annihilate banking profits.

Lloyds share price has performed terribly

Any idea how badly the Lloyds share price has done in recent years? Check out this lengthy litany of large losses:

Six months: -50.4%

One year: -44.9%

Two years: -49.5%

Three years: -53.8%

Five years: -63.4%

Owning Lloyds has been disastrous, with the share price halving or worse over four of these five periods. Six months ago, the Lloyds share price hit its 2019/20 high of 73.7p and crashed to a 12-month low of 27.1p on 14 May.

Isn’t it time to buy Lloyds?

I’ll get to the point: Lloyds has been a dog with fleas since 2007, but how low can it go? Every dog has its day and there must come a time when the Lloyds share price has its day in the sun. Without Covid-19, Lloyds could have enjoyed a wildly profitable 2020, but we’ll never know.

I regard today’s Lloyds share price of 31.3p as an option on the bank’s future. There is no dividend and Coronavirus will wipe out earnings in 2020/21. Still, for the price of a packet of crisps, you gain part-ownership of a £22.6bn business.

Lloyds is #1 in UK retail banking by a long, long way. It and a supportive Conservative government should make banking profitable again. Otherwise, we may as well all pack up and go home, because capitalism will be dead. The Lloyds share price is depressed today, but it won’t be forever. I’d buy.

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Cliffdarcy 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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