Where to next for the Lloyds Banking Group share price?

Lloyds Banking Group share price performance, analyst ratings and technical analysis

​The Lloyds Banking Group share price, up nearly 40% year-to-date, hit levels last traded in August 2015 in May when it formed a minor peak at 79.20 pence in May.

​Lloyds monthly candlestick chart 

​The fact that the Lloyds share price closed on a monthly basis above its major 2016-to-2025 72.76p-to-74.46p resistance zone is long-term bullish with the January 2014 peak at 86.88p and the May-to-June 2015 highs at 89.20p-to-89.34p representing the next technical upside targets.

​In case of a minor retracement lower taking shape, the previous major 72.76p-to-74.46p resistance area should, because of inverse polarity, act as a significant support zone.

​Lloyds daily candlestick chart

​While the early May low at 69.70p underpins, the medium-term uptrend is deemed to be intact.

​Lloyds has a TipRanks Smart Score of ‘5 Neutral’ and is rated as a ‘hold’ with 4 ’buy’, 8 ‘hold’ and 1 ‘sell’ recommendation (as of 06/06/2025).

Lloyd's TipRanks Smart Score chart

​According to LSEG Data & Analytics, 1 analyst has a ‘strong buy’ recommendation for Lloyds, 6 a ‘buy’, 10 a ‘hold’ and 1 a ‘sell’ with a long-term mean price target at 81.67p, 6% above the current share price (as of 06/06/2025).

Lloyd's LSEG Data & Analytics chart

​Mixed Q1 performance reflects sector challenges

​The Lloyds share price saw a stellar rise despite for the first quarter (Q1) of 2025 reporting a 7% decrease in its statutory profit after tax of £1.1 billion from the same period in 2024, primarily due to increased operating costs and a higher impairment charge of £309 million.

​Despite these challenges, the bank achieved a 4% year-on-year (YoY) increase in net income to £4.39 billion, driven by a 3% rise in net interest income to £3.29 billion, supported by a banking net interest margin of 3.03%.

​This mixed performance reflects the broader challenges facing UK banks as they navigate a complex operating environment characterised by persistent cost inflation, evolving credit conditions, and competitive pressures in key markets.

​The results demonstrate Lloyds' ability to grow revenues while facing headwinds from higher operational expenses and increased provisions for potential credit losses, highlighting the delicate balance banks must maintain between growth and profitability.

​Lending growth drives balance sheet expansion

​The bank's lending portfolio expanded by £7.1 billion, reaching £466.2 billion, with UK mortgages contributing £4.8 billion of this growth. Customer deposits also increased by £5.0 billion to £487.7 billion.

​This lending growth demonstrates Lloyds' continued appetite for mortgage business despite a challenging UK housing market characterised by high interest rates and affordability constraints. The bank's dominant position in UK mortgages provides both opportunities and risks as housing market conditions evolve.

​The simultaneous growth in customer deposits suggests that Lloyds is successfully attracting and retaining customers, even as competition for deposits intensifies across the banking sector. This deposit growth provides the funding base necessary to support continued lending expansion.

​The £7.1 billion increase in lending represents solid growth that supports the bank's core business model while contributing to net interest income generation. However, the quality and sustainability of this growth will depend on broader economic conditions and credit performance.

​Cost pressures impact profitability

​Operating costs rose by 6% to £2.55 billion, influenced by inflationary pressures and strategic investments, including planned higher severance costs. This cost increase outpaced revenue growth, contributing to the decline in statutory profit.

​The 6% cost increase reflects the challenging inflationary environment affecting all sectors of the UK economy, with wage increases, technology investments, and regulatory compliance driving higher operational expenses across the banking industry.

​Strategic investments mentioned by the bank likely include digital transformation initiatives, cybersecurity enhancements, and regulatory compliance programmes that are essential for long-term competitiveness but create near-term margin pressure.

​The planned higher severance costs suggest ongoing workforce restructuring as Lloyds continues to optimise its operations and adapt to changing customer behaviours, particularly the shift toward digital banking channels.

​Credit quality and impairment trends

​The higher impairment charge of £309 million indicates a more cautious approach to credit provisioning, likely reflecting economic uncertainties and potential stress in certain lending segments. This increase from lower levels in 2024 suggests normalising credit conditions.

​Lloyds' exposure to UK consumers and businesses makes it particularly sensitive to domestic economic conditions, including employment trends, household finances, and business performance. The increase in impairments may reflect early indicators of stress in these areas.

​The bank's mortgage-heavy lending portfolio means that house price trends and mortgage affordability are key factors influencing credit quality. Any significant deterioration in the UK housing market could lead to further impairment increases.

​Commercial lending impairments will also be important to monitor, as UK businesses face challenges from higher borrowing costs, economic uncertainty, and ongoing pressures from labour costs.

Strong capital position provides stability

​The bank maintained a robust capital position with a Common Equity Tier 1 (CET1) ratio of 13.5% and a return on tangible equity of 12.6%. This strong capital base provides flexibility for both growth investments and shareholder returns.

​The CET1 ratio of 13.5% comfortably exceeds regulatory requirements and provides a substantial buffer against potential economic stress. This capital strength is particularly valuable given the uncertain economic environment and potential for increased credit losses.

​The return on tangible equity of 12.6% remains attractive by UK banking standards, demonstrating Lloyds' ability to generate returns for shareholders despite the challenging operating environment and increased cost base.

​Strong capital ratios also provide strategic flexibility, enabling Lloyds to pursue growth opportunities, make strategic investments, or increase returns to shareholders through dividends and share buybacks as conditions permit.

​Forward guidance and strategic outlook

​Lloyds reaffirmed its 2025 guidance, expecting underlying net interest income of approximately £13.5 billion and operating costs around £9.7 billion. The bank continues to monitor the potential impacts of global economic uncertainties, including trade tensions and regulatory developments, while focusing on strategic initiatives to drive sustainable growth.

​The reaffirmation of guidance suggests management confidence in the bank's ability to navigate current challenges and deliver on its financial targets for the full year. However, this guidance will depend on economic conditions remaining broadly stable.

​The £13.5 billion net interest income target implies continued growth from Q1 levels, supported by lending expansion and maintenance of net interest margins. However, competitive pressures and potential interest rate changes pose risks to this target.

​Operating cost guidance of £9.7 billion suggests continued investment in strategic initiatives while attempting to control inflationary pressures. The bank's ability to deliver on this target will be crucial for maintaining profitability margins.

​Market position and competitive dynamics

​As the UK's largest domestic bank, Lloyds holds a dominant position in key markets including mortgages, current accounts, and SME banking. This market position provides defensive characteristics but also exposes the bank to UK economic cycles.

​The competitive landscape continues to evolve, with challenger banks and fintech companies targeting specific customer segments and products. Lloyds' response through digital transformation and service enhancement will be critical for maintaining market share.

​Regulatory developments, including potential changes to capital requirements, consumer protection measures, and operational resilience standards, could impact Lloyds' business model and operational costs in future periods.

​The bank's focus on sustainable growth suggests a balanced approach between protecting profitability and investing for long-term competitiveness in an evolving banking landscape.

​Investment considerations for Lloyds shares

​For investors considering Lloyds Banking Group, the Q1 results highlight both the strengths and challenges facing the UK's largest domestic bank.

1. ​Research Lloyds' market position, financial performance, and strategic initiatives to understand the investment proposition. 
2. ​Consider how UK economic conditions and interest rate trends might impact the bank's performance and dividend sustainability. 
3. ​Open an account with IG by visiting our website and completing the application process. 
4. ​Search for 'Lloyds Banking Group' or its ticker 'LLOY' on our trading platform or app. 
5. ​Consider your risk tolerance and investment timeframe when building a position in UK banking stocks.

​Share dealing provides a straightforward way to invest in Lloyds for those seeking exposure to UK banking and attractive dividend yields. For more active traders, spread betting and CFD trading offer flexible ways to trade Lloyds sharesaround earnings announcements and economic developments.​​