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What now for the Lloyds share price as PPI is put to bed?

Last week, Lloyds Q3 results revealed how last-minute PPI claims nearly wiped out the bank’s profits for the quarter. But with the PPI now over, how will it impact its share price?

Lloyds saw its shares fall by more than 2% on Thursday after its Q3 results revealed that last-minute PPI claims totalling £1.8 billion nearly wiped out the bank’s profits for the quarter.

‘I am disappointed that our statutory result was significantly impacted by the additional PPI charge in the third quarter, driven by an unprecedented level of PPI information requests received in August,’ Lloyds Group CEO António Horta-Osório said.

‘However, our performance continues to demonstrate the resilience of our customer franchise and business model, the strength of our balance sheet and that our strategy is the right one in this environment.’

Looking to trade Lloyds and other bank stocks? Open a live or demo account with IG.

Lloyds shares rebound after disappointing Q3 results

Horta-Osório’s sentiments about the overall health of the bank seem to be shared by investors, with the stock clawing back the losses it suffered in the wake of its Q3 results.

In fact, Lloyds shares gained 3.5% in the days following its quarterly earnings, trading at 58p a share as of 14:30 GMT on Monday.

You can go long or short Lloyds with IG using derivatives like CFDs and spread bets.

Analysts are optimistic about Lloyds share price, especially with the PPI scandal now firmly behind UK banks.

Both Deutsche Bank and UBS issued a target price of 62p a share for the stock in November. However, JP Morgan Cazenove and Société Générale were more upbeat, issuing a target of 68p and 76p respectively.

Lloyds remains resilient despite challenges

Lloyds financial performance has been relatively solid, with the bank battling against a cocktail of headwinds including a competitive mortgage market and a low interest rate environment squeezing margins.

The stock has performed relatively well considering the challenges it is facing, with its share price up 14% on a year-to-date basis.

PPI related charges in its third quarter meant that the lender recorded just £50 million in profits in Q3, putting a significant dent in its bottom line over the first nine months of trading, down 40% to £2.9 billion.

Investors will be excited to see how the bank performs in its final quarter now that the PPI scandal has finally been put to bed.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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