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Lloyds share price: what would a no-deal Brexit mean?

Downward pressure continues to weigh on Lloyds share price, with Brexit taking an extra toll on a lender that has pivoted to become a more domestically focused retail bank, binding its future closer to the UK economy.

Since the end of July, Lloyds share price has fallen more than 10% to 49p a share as of 10:50 GMT on Tuesday.

The stock’s decline is a testament to how destructive Brexit has been for UK lenders, but it is worth mentioning that Lloyds share price has also suffered at the hands of a monumental PPI complaints fiasco, with the bank unveiling that its total PPI provisions equated to £20 billion.

Thankfully, that figure won’t rise any further with the deadline for PPI complaints finally arriving on August 29. But its PPI complaints, along with macro-economic headwinds like Brexit, will continue to weigh on Lloyds share price over the second-half of the year.

Lloyds: Brexit weights heavy on refocused retail bank

Brexit continues to hinder the performance of British lenders, but it is taking an extra toll on Lloyds, which has pivoted to become a more domestically focused retail bank, with its health more closely tied to that of the wider UK economy.

As it stands, the prospect of a no-deal Brexit remains high and, if allowed to happen, would likely plunge the UK economy into turmoil and force the Bank of England to lower interest rates.

‘The Group has continued to make strong strategic progress during the first half of 2019 and delivered a good financial performance with market leading efficiency and returns,’ Lloyds Group CEO António Horta-Osório said in its half-year results.

‘The economy has remained resilient although economic uncertainty has led to some softening in business confidence as well as in international economic indicators.’

However, the future stability of the UK economy will rely heavily on the type of Brexit that the country finally gets, with British lawmakers attempting to force the government to request yet another delay from Brussels this week.

Lloyds: Broker forecasts

In August, US-based investment banks JP Morgan and Goldman Sachs reiterated their neutral rating for Lloyds stock, issuing a target price of 60p and 61p respectively.

Analysts at UBS remained the most optimistic about the stock’s performance, leaving their buy rating unchanged and issuing a target price of 70p.

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Trading around Brexit

Find out how Britain’s EU exit continues to affect traders, and discover:

  • How you can trade on Brexit
  • The markets you should be watching
  • Brexit trading strategies for key assets

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