Lloyds Banking (LYG) AI Stock Analysis

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Lloyds Banking

(NYSE:LYG)

Rating:72Outperform

Price Target:

$4.50

▲(6.13%Upside)

Lloyds Banking Group's overall stock score reflects a strong earnings call performance and positive technical signals, which are slightly offset by mixed financial performance and valuation metrics. The company's strategic initiatives and focus on returning value to shareholders are significant strengths, although challenges in revenue growth and cash flow management present notable risks.

Lloyds Banking (LYG) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$62.69B

Dividend Yield5.93%

Average Volume (3M)11.85M

Price to Earnings (P/E)13.1

Beta (1Y)0.78

Revenue Growth-2.65%

EPS Growth-14.84%

CountryUS

Employees61,228

SectorFinancial

Sector Strength78

IndustryBanks - Regional

Share Statistics

EPS (TTM)0.08

Shares Outstanding14,974,829,000

10 Day Avg. Volume9,030,285

30 Day Avg. Volume11,848,623

Financial Highlights & Ratios

PEG Ratio22.13

Price to Book (P/B)0.97

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$4.50

Price Target Upside6.13% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering0

Lloyds Banking Business Overview & Revenue Model

Company DescriptionLloyds Banking Group plc, together with its subsidiaries, provides a range of banking and financial services in the United Kingdom. It operates through three segments: Retail; Commercial Banking; and Insurance and Wealth. The Retail segment offers a range of financial service products, including current accounts, savings, mortgages, motor finance, unsecured loans, leasing solutions, and credit cards to personal and small business customers. The Commercial Banking segment provides lending, transactional banking, working capital management, risk management, debt financing, and debt capital market services to small and medium-sized entities, corporates, and financial institutions. The Insurance and Wealth segment offers insurance, investment and wealth management products and services. It also provides digital banking services. The company offers its products and services under the Lloyds Bank, Halifax, Bank of Scotland, and Scottish Widows brands. Lloyds Banking Group plc was founded in 1695 and is based in London, the United Kingdom.

How the Company Makes MoneyLloyds Banking Group generates revenue through several key streams. Firstly, its retail banking segment offers personal banking services such as current and savings accounts, personal loans, mortgages, and credit cards, earning interest income and fees from these products. Secondly, its commercial banking division provides services to businesses, including lending, transaction banking, and risk management solutions, contributing interest and fee income. Furthermore, the group has a significant insurance arm, Scottish Widows, which provides life, pensions, and general insurance products, generating premium income and investment returns. Lloyds also earns income through wealth and investment management services, offering financial planning, investment advice, and portfolio management to high-net-worth individuals. The company's extensive network and digital platforms enhance its service delivery, while strategic partnerships and a strong focus on customer service and innovation support its overall profitability.

Lloyds Banking Key Performance Indicators (KPIs)

Any

Net Interest Income by Segment

Net Interest Income by Segment
Shows how much income is generated from interest across different business segments, highlighting which areas are most profitable and sensitive to interest rate changes.

Chart InsightsLloyds Banking's Retail segment saw a decline in net interest income from its peak in mid-2023, reflecting potential challenges in consumer lending. Commercial Banking also experienced a downturn since late 2022, possibly due to economic headwinds. However, Equity Investments & Central Items showed significant growth, suggesting strategic gains or asset revaluations. The Insurance, Pensions, and Investments segment remains a drag with consistent negative contributions, indicating ongoing issues. Investors should monitor management's strategies to address these disparities and the broader economic impact on lending activities.

Data provided by:

Main Street Data

Lloyds Banking Earnings Call Summary

Earnings Call Date:Feb 20, 2025

(Q4-2024)

% Change Since: 39.02%|

Next Earnings Date:Jul 24, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a robust financial performance in 2024 with strong shareholder distributions and strategic initiative achievements. However, the provision for motor finance commissions and ongoing cost pressures present challenges. The company's strategic progress and financial guidance for 2025 and beyond are positive, but uncertainties remain regarding specific legal and regulatory outcomes.

Q4-2024 Updates

Positive Updates

Strong Financial Performance in 2024

Lloyds Bank & Group delivered a robust financial performance in Q4 and 2024, with a statutory profit after tax of £4.5 billion and £5 billion excluding the Q4 motor provision. This equates to a return on tangible equity of 12.3%, or 14% ex-motor.

Significant Shareholder Distributions

The company announced a 15% increase in the ordinary dividend and a share buyback of £1.7 billion, distributing a total of up to £3.6 billion, around 9% of the market cap.

Record Mortgage Lending Growth

Mortgage book grew by £6.1 billion in 2024, or £8 billion excluding legacy book securitizations. The company achieved a 20% share of new lending, around 1 percentage point ahead of stock share.

Strategic Initiatives Exceed Expectations

The company delivered £0.8 billion of additional revenues from strategic initiatives, ahead of the £0.7 billion target, and realized £1.2 billion of gross cost savings.

Deposit Growth and Structural Hedge Benefits

Total deposits were up by over £11 billion, or 2%, to £483 billion. The structural hedge income was £4.2 billion, £0.8 billion higher than 2023, with further growth expected.

Negative Updates

Motor Finance Commission Provision

An additional £700 million provision was taken for potential remediation costs relating to motor commission arrangements, totaling £1.15 billion, due to a recent Court of Appeal judgment.

Cost and Inflation Pressures

Operating costs were £9.4 billion in 2024, up 3% year-on-year, in line with guidance but higher than desired due to inflationary pressures and ongoing investments.

Asset Quality Ratio Increase

The asset quality ratio is expected to be circa 25 basis points for 2025, up from the low 10 basis points in 2024, due to the absence of MES benefits and some underlying cost pressures.

Company Guidance

In the call discussing the 2024 fiscal year results, Lloyds Banking Group reported strong financial performance, aligning with their guidance. Key metrics included a 15% increase in the ordinary dividend and a £1.7 billion share buyback, despite a £700 million provision for Motor finance commissions in Q4. The Group achieved a statutory profit after tax of £4.5 billion, or £5 billion excluding the motor provision, indicating a return on tangible equity of 12.3% or 14% ex-motor. Net income for the year reached £17.1 billion, with a net interest margin of 2.95%. Operating costs were £9.4 billion, up 3% year-on-year. The Group also generated capital of 148 basis points, or 177 basis points excluding the motor provision. For 2025, Lloyds expects net interest income to grow to around £13.5 billion, with a continued focus on cost management and strategic initiatives to drive further revenue growth. Their guidance for 2026 includes maintaining a cost-income ratio below 50% and achieving a return on tangible equity greater than 15%.

Lloyds Banking Financial Statement Overview

Summary

Lloyds Banking presents a mixed financial performance. The income statement shows strong profitability margins but declining revenue growth. The balance sheet is stable, with manageable debt levels and a cautious equity strategy. However, cash flow metrics reveal liquidity challenges, highlighting the need for improved cash management. Overall, the company remains solid but needs to address revenue growth and cash flow conversion to strengthen its financial standing.

Income Statement

Positive

Lloyds Banking showed a mixed income performance. The gross and net profit margins for 2024 were strong at 25.15% and 3.52% respectively, indicating efficiency in cost management. However, a revenue growth decline of 4.58% compared to 2023 suggests challenges in maintaining top-line growth. The EBIT margin remained robust at 100% due to the nature of banking revenue recognition. Nonetheless, the lack of EBITDA data limits comprehensive profitability analysis.

Balance Sheet

Positive

The balance sheet reflects a stable structure with a moderate debt-to-equity ratio of 1.77 in 2024, showing manageable leverage. The equity ratio at 5.04% and a return on equity of 9.67% suggest a cautious but steady approach to capital utilization. Cash reserves decreased significantly, impacting liquidity positions, but overall, the company maintains a solid asset base.

Cash Flow

Neutral

Cash flow metrics highlight some concerns. The free cash flow turned negative in 2024, indicating cash management challenges. The operating cash flow to net income ratio was negative, showcasing inefficiencies in converting income into cash. Free cash flow to net income ratio was also negative, further emphasizing liquidity strains. This signals potential risks if cash flow management does not improve.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	18.60B	18.41B	20.77B	18.71B	18.69B
Gross Profit	17.50B	18.41B	16.05B	16.32B	15.13B
EBITDA	9.40B	10.41B	7.17B	9.72B	3.96B
Net Income	4.42B	5.46B	3.83B	5.78B	1.32B
Balance Sheet
Total Assets	906.70B	881.45B	877.83B	886.52B	871.27B
Cash, Cash Equivalents and Short-Term Investments	62.68B	139.41B	91.63B	76.57B	73.56B
Total Debt	80.92B	93.67B	84.55B	84.66B	101.66B
Total Liabilities	860.81B	834.09B	830.31B	84.66B	101.66B
Stockholders Equity	45.72B	47.16B	47.28B	52.92B	49.18B
Cash Flow
Free Cash Flow	-8.76B	1.35B	18.16B	3.39B	24.27B
Operating Cash Flow	-4.39B	6.81B	22.01B	6.62B	27.17B
Investing Cash Flow	-7.69B	-9.82B	510.00M	-2.54B	-4.00B
Financing Cash Flow	-5.93B	-8.46B	-6.61B	-3.23B	-5.32B

Lloyds Banking Technical Analysis

Technical Analysis Sentiment

Positive

Last Price4.24

Price Trends

50DMA

4.15

Positive

100DMA

3.92

Positive

200DMA

3.38

Positive

Market Momentum

MACD

0.02

Negative

RSI

57.04

Neutral

STOCH

77.22

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LYG, the sentiment is Positive. The current price of 4.24 is above the 20-day moving average (MA) of 4.17, above the 50-day MA of 4.15, and above the 200-day MA of 3.38, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 57.04 is Neutral, neither overbought nor oversold. The STOCH value of 77.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LYG.

Lloyds Banking Risk Analysis

Lloyds Banking disclosed 33 risk factors in its most recent earnings report. Lloyds Banking reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Lloyds Banking Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PNC	80 Outperform	$77.74B	13.43	11.19%	4.12%	3.83%	22.68%
ITUB	74 Outperform	$64.16B	8.96	20.65%	6.56%	-6.74%	5.13%
USB	73 Outperform	$71.19B	10.94	11.66%	4.33%	0.84%	32.55%
LYG	72 Outperform	$62.69B	13.05	8.73%	5.93%	-2.65%	-14.84%
TFC	69 Neutral	$57.95B	12.04	8.13%	5.75%	18.25%	―
Sector *	68 Neutral	$16.89B	11.69	9.78%	3.90%	11.76%	-7.55%
MFG	65 Neutral	$70.15B	12.10	8.45%	2.35%	13.63%	27.77%

* Financial Sector Average

Performance Comparison

LYG

Lloyds Banking

4.25

1.36

47.06%

TFC

Truist Financial

45.21

3.14

7.46%

ITUB

Itau Unibanco

6.31

1.13

21.81%

MFG

Mizuho Financial

5.73

1.23

27.33%

PNC

PNC Financial

196.78

24.40

14.15%

USB

US Bancorp

46.16

2.59

5.94%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 13, 2025