In 2024, the reversal of fortunes was stark. The share price kicked into gear, doubling in the space of two years or so. The cash was available to pay some chunky dividends too. Anyone buying around the 40p mark in the early months of that year is forecast to receive a 4.2p dividend over the next 12 months. That’s over 10% as an effective yield. Quite the contrast, isn’t it? So what changed?

Consequences

The biggest factor was the increase in interest rates. The Bank of England set interest rates at less than 1% for much of the 2010s – also called the ZIRP (zero interest rate period) era. Then the interest rates shot up in 2022 to counteract rising inflation.

Why was this good for banks? Because it gave them more flexibility. When borrowing costs are higher, there’s more wiggle room between the rates banks lend at and what they borrow at. Higher margins mean higher earnings. And that tends to result in increased dividends and money for buybacks, which puts upward pressure on the share price.

Here’s where things get interesting. The interest rate was supposed to fall slowly from the high of 5.25% to the Bank of England’s target of 2% as inflation fell with it. Not only have rates been falling more slowly than expected, but the consequences of the war in Iran have meant that markets are now expecting a rate hike in 2026 instead.

In other words, the boom times might not be over for the banking sector and the current 96p share price might possibly turn out to be just as good a buy as when it was 41p in 2024.

On a sixpence

There are risks here too. The conflict in the Middle East could change on a sixpence. On the day that I write (8 April), the parties have agreed to a two-week ceasefire. If that stands and turns into lasting peace (which of course we’re all hoping for) then the whole situation around interest rates and inflation could change.

Another danger is the possibility of a windfall tax. The banking sector is right in the crosshairs when profits rise. And a windfall tax had already been mooted last year (although it didn’t happen in the end). That the oil and gas industry had a tax applied in 2022 could be a sign of more sector-specific taxes to come.

On balance? We live in such interesting times that it’s hard to say which way things are going to go. I think Lloyds shares are worth considering nonetheless.

The post Is April 2026 a great time to buy Lloyds shares? appeared first on The Motley Fool UK.

The index is up too, but this still makes it one of the FTSE 100‘s biggest gainers. Unsurprisingly, it’s the ceasefire agreement between Iran and the US that’s doing the heavy lifting.

Let’s take a closer look and explore whether the stock is worth considering.

War isn’t good for banks

Lloyds is the UK’s largest mortgage lender — it’s really not diversified. That makes it one of the most economically sensitive stocks on the index, and the Iran-US conflict constructed almost the worst possible backdrop for a UK retail bank.

How does this work? Well, the mechanism is like a chain reaction.

War in the Gulf caused oil prices to double — jet fuel went even higher. The spike reignited inflation concerns. In turn, even the most dovish members of the Bank of England’s Monetary Policy Commission were talking about being ready to raise interest rates.

We’ve seen gilt yields rise, mortgage rates stay elevated, and transaction volumes stall. In the long run, sustain high energy prices raised the spectre of recession

However, more worryingly, sustained high energy prices raised the spectre of recession. And recession is the one thing a bank concentrated in UK residential mortgages cannot afford.

There are several reasons for this. But largely it’s because banks lend on the assumption that borrowers will remain employed. A period of energy-driven stagflation quietly erodes that assumption across an entire loan book.

The ceasefire changes the calculus — more so if it holds.

Oil prices have already fallen sharply on the news. If the agreement holds, the Bank of England has room to cut interest rates, consumer confidence can stabilise, and the near-term tail risk to Lloyds’ credit quality falls.

It’s not cheap anymore

Adjusting for today’s 8% gain, Lloyds now trades on a forward price-to-earnings ratio of around 10 times, a price-to-book of roughly 1.28 times, and a forward dividend yield of approximately 4.3%.

Institutional analysts are still pointing to a modest undervaluation, and I think ‘modest’ is the operative word here. It’s trading above book value and, for a purely UK-focused, cyclical retail bank with no investment banking ops, it’s fair, rather than a bargain price.

AI is a risk

The market has been distracted by the war in the Gulf. But before that, back in February, investors were getting worried about AI.

AI is great for productivity, but it may be so great that it leads to a sustained wave of professional job losses that flows directly into mortgage arrears. Lloyds’ £300bn-plus home loan book has more exposure to that scenario than almost any other UK-listed company.

The bottom line

Lloyds shares are not expensive, and the ceasefire — if made permanent — removes a genuine risk. However, with the stock now nudging the higher end of what you’d comfortably pay for a cyclical bank, there may be better value elsewhere.

It’s still worth considering for the long run, but this margin of safety concern should be front of mind.

The post Up 8%: what’s going on with Lloyds shares today? appeared first on The Motley Fool UK.

A year ago, US foreign policy was creating stock market volatility. Does that sound familiar at all?

Then and now

So this time last year, investors were focused on tariffs. The question was whether these were a negotiating move or a long-term policy.

The answer turned out to be something of a mix. But it caused share prices to fluctuate while events unfolded (and still do, to some extent). But as a UK-focused bank, Lloyds was somewhat insulated from this. The stock however, fell as much as 11% during the volatility.

Right now, investors are more interested in the conflict in the Middle East. Again, how long this is supposed to last is unclear. The effect on Lloyds – once again – is indirect (coming via inflation and interest rates). But the implications are real and the stock’s down as a result.

Bouncing back?

Based on this, investors might see the recent decline as a buying opportunity. And they could be right, but a couple of things are worth noting. One is that Lloyds isn’t the firm that stands to benefit most from a quick resolution to the conflict. Several other companies have more at stake.

Another is that some much bigger risks are still ongoing. Most notably, the company’s ongoing motor loans issue has been progressing. The scheme for loans taken out between April 2014 and November 2024 begins in July. And the scheme for earlier loans begins in September.

Exactly how much the bank will have to pay out is still unclear. But I think this is a much bigger issue for investors right now.

Room for optimism?

Lloyds has reserved £1.95bn to cover costs. That’s well below the £4.6bn some analysts had suggested, but the bank has had some good news. Some loans are excluded and other payouts are capped. Most importantly, the Supreme Court ruled that broker commissions didn’t constitute bribes.

Both of these are positive. But there’s still a big point of uncertainty for investors, which is what the take-up rate from customers will be.

Lloyds is anticipating around 75%. If that turns out to be too low, the bank might find itself paying out more than it anticipated. That’s a major risk for investors. And it’s unlikely to be resolved by the end of 2027, which makes buying the stock right now risky.

What to do?

Despite everything, £10,000 invested in Lloyds’ shares a year ago is now worth £15,068. And that isn’t including £512 in cash dividends.

It’s hard to argue with that result. But a lot of this is because certain risks haven’t gone as badly as they might have. There’s still plenty of uncertainty. That’s true of both Lloyds specifically and the stock market more generally.

The outcome of the motor loan issue is difficult to assess accurately. And Lloyds isn’t the company with the most to gain from a Middle East resolution. As a result, I think there are more obvious opportunities elsewhere. So that’s where I’m focusing my investing at the moment.

The post £10,000 invested in Lloyds Banking Group shares 12 months ago is now worth… appeared first on The Motley Fool UK.

But the risks are growing rapidly for the FTSE 100 bank. And while predicting near-term price movements is a tricky business, I think Lloyds shares might plunge again before too long. Want to know why?

War threats

The biggest threat right now is a prolonged conflict in the Middle East. A war that lasts months could give energy prices a considerable price boost as supply disruptions increase. This has the power to supercharge inflation and weigh on economic growth.

The Strait of Hormuz remains largely closed as Iran threatens maritime traffic, impacting oil shipments. And supply dangers are growing as key energy facilities in the region become increasingly targeted. Just this weekend, the Kuwait Petroleum Corporation reported “significant material losses” from Iranian drone attacks.

The problem is that neither the US, nor Israel and Iran are showing signs of backing down, meaning a period of elevated oil prices is possible.

Double-edged sword

For Lloyds, this has the power to fuel a significant share price correction. Its 80% rise in 2025 reflected growing expectations of falling interest rates in the UK. In this environment, retail banks can experience a strong rise in loan demand along with falling credit impairments.

It stands to reason that the bank could reverse in value as interest rate hopes dwindle. In fact, the market is now pricing in two interest rate hikes before the end of 2026 when reductions were previously tipped. An enduring conflict will naturally drive speculation of further earnings-denting interest rate increases.

It’s important to note that rising interest rates are a double-edged sword for banking shares. They can hit customer demand and drive bad loans higher, but they can also boost net interest margins (NIM). The reason? The likes of Lloyds tend to pass on higher interest rates more slowly to savers than borrowers, and bank the difference.

But in the current climate, with UK citizens already experiencing a cost-of-living crisis, the benefits of any rate rises threaten to be swallowed up by the drawbacks.

What next for the shares?

So what could this mean for the Lloyds share price? Considering the FTSE 100 bank still carries a premium valuation, there’s a very real possibility of a fresh price drop.

Today the firm’s price-to-book (P/B) ratio is 1.4, still above the 10-year average of 0.9. To bring the ratio back to this level, Lloyds would need to reverse to 62.95p. That’s 36% below current levels.

As I say, forecasting near-term share price movements is tricky. But right now, investors need to seriously consider that Lloyds shares could slump again. For this reason I’m looking for other shares to buy.

The post Lloyds’ share price is on a rollercoaster! Could it be about to crash 36%? appeared first on The Motley Fool UK.

Here’s a look at how they could potentially fall back to 70p.

High oil prices could hurt the banks

The way I see it, there are three main risks for Lloyds right now. The first is a prolonged period of high oil prices. This would almost certainly be bad for the banks, because high oil prices tend to hurt consumers and businesses and lead to a slowdown in economic growth.

For banks, a slowdown in economic growth tends to translate to lower demand for loans and/or high loan defaults. This, in turn, translates to lower profits.

It’s worth noting that a sharp increase in oil prices (like we’ve just seen) tends to be more damaging to consumers than a slow rise. A sharp spike can really mess with people’s finances (eg sudden petrol cost spikes) and impact their ability to service loans.

A new source of competition

The next risk is competition from digital bank Revolut. No one’s really talking about this right now, but I don’t think we can ignore it. Revolut now has a full UK banking licence. This means that it can compete with Lloyds in areas such as savings accounts and loans.

I expect it to capture market share from the traditional banks in the years ahead. Because it has a really compelling offering.

For example, pay £14.99 a month for its Metal card and you get travel insurance, Uber One membership, access to Perplexity Pro, a Financial Times digital subscription, Class Pass vouchers, WeWork credits, NordVPN access, and more. I don’t see Lloyds offering great deals like this.

It’s worth noting that Revolut is having success both at consumer and business level right now. At the end of 2025, it had 68.3m retail customers (+57% year on year) and 767,000 business customers (+33%).

The AI risk

Finally, we have the artificial intelligence (AI) threat. If companies continue to lay off white collar employees, there’s a genuine chance we could see a spike in loan defaults. This is another risk that can’t be ignored. Businesses that have announced layoffs this year include HSBC, Block, Oracle, and Klarna.

The bull case for Lloyds

Now, of course, these risks and scenarios may not come to fruition. We could see oil prices drop, Lloyds fend off Revolut, and laid off employees move into new roles created by AI.

We could also see Lloyds use AI to its advantage and cut its costs significantly. In banking, AI can be used for identity verification, account opening, customer service, regulation scanning, and much more.

If things played out like this, we could see Lloyds shares hit £1.15 again. They could even keep rising beyond this level.

I’m just not super-confident the shares will return to £1.15 in 2026 though. They could still be worth considering below £1. However, in my view, there are better shares to consider buying today.

The post Lloyds shares: is £1.15 or 70p next? appeared first on The Motley Fool UK.

As such, over the last five weeks, the shares are down around 6.3%. And anyone who put £5,000 to work back in late February is now sitting on £4,685.

A £315 loss obviously isn’t fun. But it’s far from catastrophic. And if Lloyds shares decide to bounce back, investors who hold on through the storm could end up back in the black with a potentially chunky profit.

So the question now becomes, should Lloyds’ investors hold or even consider buying more shares today?

What’s going on with Lloyds?

A lot of the weakened sentiment surrounding this bank stems from the ongoing conflict in Iran and the implications the war has for the British economy. Don’t forget, Lloyds’ performance is strongly tied to the UK’s economic landscape. And another factor dampening investor mood is the recent kick-off of the FCA’s motor finance redress scheme.

Yet, for long-term investors, geopolitical crises are ultimately a short-term challenge. And as for the motor financing situation, Lloyds has been preparing for compensation claims for over a year now, setting aside £1.95bn of capital to cover any claims.

In the meantime, with management implementing structural hedges, the bank’s set to benefit from higher interest rates regardless of what the Bank of England gets up to until 2027.

Subsequently, most institutional analysts remain fairly bullish, with 12 out of 19 recommending the stock as a Buy or Outperform, and only two telling investors to Sell.

Paradoxically, some analysts are even predicting the potential for a sudden share price surge triggered by the FCA’s redress scheme. After all, if total compensation claims come in lower than £1.95bn, the excess gets re-added to Lloyds’ bottom line.

What to watch

As previously mentioned, not all analysts are convinced of a buying opportunity here. And research from the team of experts at Shore Capital does raise some valid risks for investors to consider carefully.

Structural dependency on the UK economy means Lloyds could be directly caught in the crossfire of an oil & gas shock-induced recession. And if the situation evolves into an extreme stagflationary environment, the bank could see a wave of impairment charges emerge across its loan book.

Even if this scenario doesn’t emerge, there’s also the question of rising competition within the British mortgage market itself. With plenty of brokers for home buyers to pick from, profit margins on new loans could end up getting squeezed even with structural hedges in place.

So what should investors make of all this?

The bottom line

The overall consensus from institutional analysts is positive. But there’s no denying that Lloyds faces some substantial near-term headwinds that could see its shares take a tumble.

Personally, while I don’t think the business is heading for catastrophe, I think investors may be better served looking at other UK bank stocks which have a more geographically diversified revenue stream.

The post £5,000 invested in Lloyds shares 5 weeks ago is now worth… appeared first on The Motley Fool UK.

Right now, the two have astonishing similarities. In fact all the big UK banks do, as their shares have flown across the board in recent years.

Higher interest rates have driven up net interest margins, the difference between what they pay savers and charge borrowers. It’s a key profit metric. Barclays and Lloyds both made a heap of money in 2025, with pre-tax profits of £9.1bn and £6.7bn, respectively. Profits grew at similar speeds too, 13% and 12%.

FTSE 100 rivals compared

Both announced generous share buybacks, of £1bn and £1.75bn. Share price performance has been very similar too. Last week, as investors gather them over Iran, Barclays and Lloyds shares both climbed 6%. Over 12 months, they’re both up around 36%.

However, Barclays has done notably better over three years. It’s up 180% in that time. Lloyds climbed 105%. In a way, I’d expect that, because there’s a key difference between the two. Lloyds is a pure play on the UK economy. It’s focused on domestic retail and commercial banking, with a big exposure to mortgages and UK consumers.

Barclays is far more diversified. Alongside its UK operations, it has a significant international presence and investment banking division. Its shares are therefore more exposed to global markets and deal-making activity. This makes it riskier, but potentially more rewarding too. Despite that, both have surged the same interest rate wave, then slowed as valuations started to look stretched and interest rate expectations stabilised.

But following solid 2025 results, both look reasonably priced again. Barclays is the cheaper today, with a forward price-to-earnings (P/E) ratio of just 7.75. Lloyds is a little pricier at 9.95. That low P/E has me itching to buy Barclays. Then I remember that it’s exposed to the private equity and shadow banking market, which is under pressure right now. Something I don’t have to worry about with Lloyds.

Banking stock lookalikes

So what about income? Lloyds has the more generous and progressive dividend policy, while Barclays prioritises buybacks. As a result, Barclays’ trailing yield of 2.21% is beaten by Lloyds, which yields 3.73%. On a forward basis, they yield 3.5% and 4.3%, respectively. Personally, I prefer dividends hitting my account, although I’m not averse to the odd buyback or two. Lloyds has also been active on that front.

There are so many similarities. Both are sensitive to economic cycles, although I’d say that Barclays is likely to climb faster during the good times, and fall faster when the market turns. We’ve seen that lately. Barclays shares are down 15% over three months, but Lloyds shares are flat. Which may explain that lower Barclays P/E.

If I did buy Barclays, it would introduce a different mix of risks and very new streams. It’s not massive diversification, but spreads my bets within a sector that I like. At today’s low valuation, I think Barclays shares are impossible to resist. It’s at the top of my Buy list.

The post I hold Lloyds. Is it madness to buy Barclays shares too? appeared first on The Motley Fool UK.

Several contributors to The Motley Fool are sceptical about Lloyds. I’m a huge fan, but this made me think I need to calm down, and take a cold hard look at whether it merits my full-throated backing.

Can this FTSE 100 star continue to shine?

So what’s worrying my fellow Fools? They’re worried about the poor outlook for the UK economy, and understandably so. We’ll be lucky to get any growth this year, and given Lloyds’ pure domestic focus, that will hurt. So I get that.

Another recent concern is that falling interest rates would cut net interest margins, the difference between what banks pay savers and charge borrowers. Higher rates have been a huge profit driver in recent years.

I’m less worried myself, as interest rates now seem more likely to rise than fall, if the Iran war drives up oil prices, inflation and interest rates. My concern today is that mortgage demand will slump as a result, in a huge blow to Lloyds as it’s the biggest lender of all, via subsidiary Halifax.

There are other worries. Lloyds investors breathed a sigh of relief on Monday (30 March) when the Financial Conduct Authority said banks will pay a total of £9.1bn to draw a line under the motor-finance mis-selling saga. That’s £2bn less than previously feared. But there’s a chance this may be challenged in the courts, which means the saga isn’t over yet. I’m sorry, but I can’t bring myself to worry over that. It’s a short-term threat. I invest for the long term.

Another threat is that young and hungry challenger banks are quietly munching into market share of the big high street banks. So has all that cooled my ardour?

I still love this income machine

But as well as those cons, I can see an awful lot of pros. Lloyds is making a heap of money. Full-year 2025 profits jumped 12% to a mighty £6.7bn, which allowed it to hike the dividend by 15% and unleash a £1.75bn share buyback.

CEO Charlie Nunn is diversifying into growth areas like insurance and wealth management, to make the business less reliant on the interest rate cycle.

The popular vote seems to be in favour of Lloyds, as it’s shown resilience during recent turbulence. In fact, Lloyds shares climbed 6% last week, and are up 35% over one year. Yet they still look cheap, with a forward price-to-earnings ratio of just 9.95.

While the fast-rising share price has knocked back the dividend yield to 3.7%, the board is still pursuing a highly progressive policy. Market expect the yield to top 4.3% this year, then 5.1% in 2027.

I’m grateful for those insights from my fellow Fools, but investing is a personal decision, and mine is to stick with Lloyds. I’ll hold through the cycle, accepting there will be downs as well as ups, as with every stock. In cold, hard terms, I still think Lloyds shares are worth considering today.

The post It’s time we all took a long, cold look at the Lloyds share price appeared first on The Motley Fool UK.

But how many of the bank’s shares would be needed to beat the highest rate of interest paid on one of its savings accounts? Let’s find out.

Monthly saver

Currently (2 April), it’s possible to earn interest of 6.25% on the bank’s ‘Club Lloyds Monthly Saver’ product. This is likely to be extremely attractive to those with a bit of spare cash. After all, the Bank of England’s base rate is 3.75%.

However, unlike someone wanting to buy the bank’s shares, there’s a monthly £400 limit on how much can be put into the account. Also, the rate quoted is only available for 12 months. After a year, the account reverts back to a ‘Standard Saver’ and pays 1% a year.

And at the risk of being accused of being a bit of a killjoy, it has to be remembered that for many people the interest earned will be taxed. In contrast, dividend income in a Stocks and Shares ISA remains tax free.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

However, leaving these details to one side, the 6.25% rate is higher than the stock’s current yield of 3.8%.

Based on the bank’s 2025 dividend, it would need 34,123 Lloyds shares costing £32,895 to match the £1,250 of interest earned on a £20,000 deposit.

An alternative approach

However, history shows that the stock market has outperformed cash. Indeed, Lloyds’ share price has increased by an average of 16.2% a year since April 2021. This excludes the impact of the dividends received over this period. Of course, there can never be any certainty when it comes to payouts.

Admittedly, a 16.2% annual return is exceptional. Over the same period, the FTSE 350‘s increased by 6.4% a year.

Even so, high-interest savings accounts are often time limited. In contrast, there’s no restriction (other than an individual’s personal circumstances) on the amount that can be invested in the stock market. And by taking a long-term approach, it’s possible to build impressive wealth.

By way of example, the table below shows how much £400 a month will grow over 25 years depending on the rate of return achieved.

A good run

With its strong track record of generous dividends, I can see why Lloyds has more shareholders than any other UK company.

And since the pandemic, it has performed strongly. In 2025, it beat analysts’ earnings expectations. It also improved its net interest margin and return on tangible equity.  

This has played a major part in driving the bank’s share price higher. Since the start of 2025, it’s risen nearly 80%.

My view

However, in my opinion, Lloyds’ shares no longer look so attractive after their amazing 2025 rally.

Relative to earnings, they are the most expensive of the FTSE 100’s five banks.

And while I acknowledge that analysts are forecasting impressive growth through until 2028, they appear a little too optimistic to me given the bank’s near-total reliance on a subdued British economy that could be badly affected by another round of inflation.

Fortunately, there are lots of other brilliant high-yielding stocks to consider at the moment, ones whose share prices appear to me to offer better value than Lloyds.

The post How many Lloyds shares would I need to target £1,250 annual passive income? appeared first on The Motley Fool UK.

Its business is overwhelmingly centred on everyday UK customers through brands such as Lloyds Bank, Halifax, and Bank of Scotland. It exited most of its international businesses after the 2008 financial crisis and has leaned heavily into its role as a core domestic lender.

So what does this mean for investors? Let’s explore.

Is UK exposure a good thing?

We should start by accepting that the British economy doesn’t impact Lloyds in just one way. Growth, interest rates, credit quality, regulation, among others things, all impact the bank’s operations and eventually, it’s earnings.

Now, there’s something analysts, including myself and John Choong, have often referred to as the ‘Goldilocks Zone. One interpretation of this is when economics conditions are ‘just perfect’ for banks to thrive. In the UK, this would look something like strong and sustainable economic growth — anything above 2% — and interest rates sitting somewhere between 2%-3.5%. Let me explain why.

Strong economic growth — that 2%-plus threshold — is what drives loan demand. When businesses are expanding and consumers are confident, they borrow from the banks — expanding the loan book and contributing to long-term income generation (mortgages, personal loans, business credit lines). A sluggish economy suppresses that demand, and with Lloyds so heavily exposed to the UK domestic economy, there’s nowhere to hide.

But growth alone isn’t enough. The interest rate environment matters just as much, if not more. That’s because of the net interest margin — the difference between what Lloyds earns on loans and what it pays out on deposits.

When rates are too low — say, close to zero as they were for much of the 2010s — that margin gets squeezed. Lloyds can barely charge enough on the money it lends to make meaningful returns.

When rates move too high however, and the problems shift — this is what investors were worrying about as rates surged after the pandemic. Under these circumstance, borrowers start to struggle, defaults rise, and the credit quality of the loan book deteriorates. Mortgage holders on variable rates feel the pinch first, and given Lloyds is the UK’s largest mortgage lender, that’s an acute vulnerability.

It all comes back to the valuation

As with any investment, it’s all relative to the valuation. The current outlook for the UK economy is quite poor — circa 0.5% growth this year — and interest rates should be falling into the Goldilocks Zone, but the war in the Gulf has thrown that into doubt.

This probably isn’t the type of environment that makes Lloyds deserving of a premium valuation. And this, along with concerns about AI disruption in the wider economy, has contributed to a pullback from premium levels seen in January/February.

Today, the bank trades around 8.8 times forward earnings — down from as high 11 times. The forward dividend yield is also pushing 4.7%. In short, this is a more attractive entry point than it was six weeks ago — which is incidentally when I started selling my position in Lloyds.

So is it time for me to buy? I think it’s worth considering, but I feel there are better options elsewhere.

The post Should I buy Lloyds shares before the ISA deadline? appeared first on The Motley Fool UK.