Shares of the UK-based Lloyds Banking Group PLC (GB:LLOY) are rising today after the bank’s Q3 profits exceeded analysts’ expectations. The bank reported a statutory pretax profit of £1.8 billion in Q3, surpassing the average analyst forecast of £1.6 billion. The profit was, however, down from the £1.9 billion reported in Q3 2023. Lloyds shares gained over 2% as of writing.
Lloyds Banking Group is one of the UK’s oldest and largest banks, providing a wide range of financial services.
Lloyds Confirms 2024 Guidance as Confidence Grows
Lloyds confirmed its guidance for 2024, noting improved financial confidence among its customers. The bank expects a return on tangible equity of around 13% and a net interest margin (NIM) exceeding 2.9% in 2024.
For the first nine months, the bank posted a NIM of 2.94%, down from 3.15% a year ago. As a result, the underlying net interest income fell 8% year-over-year to £9.6 billion. However, in Q3, NIM increased to 2.95% from 2.93% in the second quarter. Meanwhile, the return on tangible equity remained at 14% at the end of the first nine months, marking a decline from 16.6% in the previous year.
Additionally, the bank’s lending balances increased by £4.6 billion in the third quarter, reaching £457 billion. This rise was primarily driven by growth in credit cards and unsecured loans. Meanwhile, the mortgage portfolio expanded by £3.2 billion.
Speaking of the positive points, impairment charges were lower than expected, with Lloyds reporting £172 million in Q3 against a consensus of £271 million.
Is Lloyds a Good Share to Buy?
In terms of share price appreciation, analysts are not so bullish on LLOY stock. Analysts believe as NIM appears to have peaked, UK banks may find it challenging to achieve substantial earnings growth in the times ahead. Year-to-date, Lloyds shares have gained 30.5%.
According to TipRanks’ analyst consensus, LLOY stock has a Hold rating based on nine recommendations. The Lloyds share price target is 62.82p, which is similar to the current share price.
