Lloyds Banking Group (LYG)
NYSE:LYG
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Lloyds Banking
(NYSE:LYG)
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Rating:64Neutral
Price Target:
$5.50
â–²(10.44% Upside)
Action:DowngradedDate:02/02/26
The score is primarily balanced between a strong, guidance-upgraded earnings-call outlook and a weaker underlying financial quality profile, especially higher 2025 leverage and recent negative free cash flow. Technically, the uptrend supports the stock, but overbought momentum readings add near-term risk, while valuation is broadly reasonable rather than compelling.
Positive Factors
Structural hedge driving NII uplift
A large structural hedge providing multi‑billion pound income that is expected to step up materially supports net interest income and reduces sensitivity to short-term rate swings. This creates a durable tailwind to margins and earnings predictability over the next 2–3 years.
Negative Factors
Marked increase in leverage
A sharp rise in leverage materially increases balance‑sheet risk and reduces financial flexibility. Higher debt-to-equity elevates sensitivity to funding cost shocks, limits scope for downside losses, and may constrain regulatory capital management and strategic optionality over the coming quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Structural hedge driving NII uplift
A large structural hedge providing multi‑billion pound income that is expected to step up materially supports net interest income and reduces sensitivity to short-term rate swings. This creates a durable tailwind to margins and earnings predictability over the next 2–3 years.
Read all positive factors
Lloyds Banking (LYG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$79.20B
Dividend Yield3.19%
Average Volume (3M)22.92M
Price to Earnings (P/E)12.6
Beta (1Y)0.91
Revenue Growth-15.15%
EPS Growth29.78%
CountryUS
Employees61,228
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)0.12
Shares Outstanding14,627,386,000
10 Day Avg. Volume19,933,443
30 Day Avg. Volume22,918,829
Financial Highlights & Ratios
PEG Ratio1.39
Price to Book (P/B)1.41
Price to Sales (P/S)0.90
P/FCF Ratio-94.07
Enterprise Value/Market Cap1.79
Enterprise Value/Revenue2.18
Enterprise Value/Gross Profit2.18
Enterprise Value/Ebitda21.27
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.55
Revenue Forecast (FY)$28.22B
Lloyds Banking Business Overview & Revenue Model
Company Description
Lloyds 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...
How the Company Makes Money
Lloyds Banking Group makes money primarily by earning (1) net interest income and (2) non-interest income (fees, commissions, and insurance-related income).
1) Net interest income (core banking spread)
- The largest driver of earnings for a tradi...
Lloyds Banking Key Performance Indicators (KPIs)
Any
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.
Shows how much income is generated from interest across different business segments, highlighting which areas are most profitable and sensitive to interest rate changes.
Data provided by:
The Fly
The FlyLloyds Banking Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Positive
The call presents a clearly positive trajectory: the company reported broad-based revenue growth (NII +6%, OOI +9%), strong balance sheet momentum (lending +5%, deposits +3%), material cost and RWA savings realized since 2021, and accelerated digital/AI monetization with explicit near-term benefits (GBP 50m in 2025; >GBP 100m expected in 2026). Management upgraded 2026 targets (RoTE >16%, strategic revenue target ~GBP 2bn) and increased shareholder returns (15% dividend uplift and GBP 1.75bn buyback). Headwinds exist — notably a large motor remediation charge (GBP 800m), a still-elevated 2025 cost/income ratio (58.6%) and mortgage margin pressure from COVID-era book maturities and competitive completion margins — but these are framed as manageable and largely being offset by structural hedge income, further efficiency delivery, and diversified OOI growth. On balance the positives significantly outweigh the negatives, and management expressed clear confidence in upgraded 2026 guidance and beyond.Positive Updates
Sustained Revenue and Profit Growth
Statutory profit after tax of GBP 4.8bn; return on tangible equity 12.9% (14.8% excluding Q3 motor provision). Net income GBP 18.3bn, up 7% versus 2024; Net interest income (NII) up 6% and Other operating income (OOI) up 9% year-on-year.
Negative Updates
Large Remediation and Motor Provision
Remediation charges for 2025 totaled GBP 968m, including an GBP 800m additional motor finance provision taken in Q3. The motor provision materially affected reported RoTE (statutory RoTE 12.9% vs 14.8% excluding the motor provision). Uncertainty remains pending final FCA proposals.
Read all updates
Q4-2025 Updates
Positive
Negative
Sustained Revenue and Profit Growth
Statutory profit after tax of GBP 4.8bn; return on tangible equity 12.9% (14.8% excluding Q3 motor provision). Net income GBP 18.3bn, up 7% versus 2024; Net interest income (NII) up 6% and Other operating income (OOI) up 9% year-on-year.
Read all positive updates
Company Guidance
The call upgraded 2026 guidance across income, efficiency and capital: management now targets return on tangible equity >16% and net interest income around GBP 14.9bn, with a cost/income ratio below 50% (operating expenses <GBP 9.9bn) and capital generation >200 basis points in 2026 while targeting a CET1 of ~13% by year-end; key balance-sheet and income pointers include lending GBP 481bn (up 5%), mortgages GBP 323bn (up 3%, c.19% flow share), deposits GBP 496.5bn (up GBP 13.8bn, +3%), other operating income GBP 6.1bn in 2025 (+9%) with strategic other-income contribution ~GBP 0.9bn, and upgraded strategic initiatives revenue target to c. GBP 2bn; structural hedge notional was GBP 244bn with hedge income c. GBP 5.5bn in 2025 and an expected uplift of ~GBP 1.5bn to c. GBP 7bn in 2026 (c. GBP 8bn in 2027); efficiency and tech metrics included c. GBP 1.9bn gross cost savings since 2021, c. GBP 24bn gross RWA optimization since 2021, 50 GenAI cases delivered ~GBP 50m P&L benefit in 2025 and >GBP 100m expected in 2026, TNAV 57p (up 4.6p), impairment guidance ~25bps for 2026, and shareholder distributions supported by a 15% ordinary dividend increase and a buyback of up to GBP 1.75bn (total capital return up to ~GBP 3.9bn).Lloyds Banking Financial Statement Overview
Summary
Income Statement
70
Positive
Balance Sheet
58
Neutral
Cash Flow
40
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 65.00B | 37.61B | 33.95B | 20.77B | 18.71B |
| Gross Profit | 19.42B | 18.60B | 19.20B | 16.05B | 16.32B |
| EBITDA | 6.66B | 9.40B | 10.41B | 7.18B | 9.73B |
| Net Income | 4.66B | 4.42B | 5.46B | 3.83B | 5.78B |
Balance Sheet | |||||
| Total Assets | 944.07B | 906.70B | 881.45B | 873.39B | 886.52B |
| Cash, Cash Equivalents and Short-Term Investments | 60.60B | 67.07B | 78.11B | 92.05B | 83.41B |
| Total Debt | 95.14B | 88.52B | 93.67B | 91.83B | 91.84B |
| Total Liabilities | 896.21B | 860.81B | 834.09B | 829.48B | 833.37B |
| Stockholders Equity | 47.67B | 45.72B | 47.16B | 43.67B | 52.92B |
Cash Flow | |||||
| Free Cash Flow | -625.00M | -8.76B | 1.35B | 18.16B | 3.39B |
| Operating Cash Flow | 4.33B | -4.39B | 6.81B | 22.01B | 6.62B |
| Investing Cash Flow | -9.97B | -7.69B | -9.82B | 510.00M | -2.54B |
| Financing Cash Flow | -4.00B | -5.93B | -3.50B | -6.61B | -3.23B |
Lloyds Banking Technical Analysis
Positive
4.98
Price Trends
5.29
Positive
5.26
Positive
4.81
Positive
Market Momentum
0.13
Negative
67.80
Neutral
83.44
Negative
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 4.98 is below the 20-day moving average (MA) of 5.17, below the 50-day MA of 5.29, and above the 200-day MA of 4.81, indicating a bullish trend. The MACD of 0.13 indicates Negative momentum. The RSI at 67.80 is Neutral, neither overbought nor oversold. The STOCH value of 83.44 is Negative, 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
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $95.99B | 9.08 | 21.64% | 9.77% | 22.96% | 6.95% | |
74 Outperform | $87.95B | 10.39 | 12.22% | 3.77% | 3.87% | 18.20% | |
71 Outperform | $89.95B | 12.15 | 11.98% | 3.11% | 3.51% | 21.52% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
66 Neutral | $64.33B | 9.69 | 8.51% | 4.12% | 26.83% | 19.23% | |
64 Neutral | $79.20B | 12.62 | 9.93% | 3.19% | -15.15% | 29.78% | |
57 Neutral | $104.30B | 10.79 | 9.73% | 2.31% | -8.02% | 22.45% |
* Financial Sector Average
LYG
Lloyds Banking
5.44
1.82
50.40%
TFC
Truist Financial
51.50
14.68
39.88%
ITUB
Itau Unibanco
8.70
3.03
53.49%
MFG
Mizuho Financial
8.60
3.68
74.80%
PNC
PNC Financial
223.00
67.25
43.18%
USB
US Bancorp
56.66
17.81
45.84%
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.