LYG changes
Pick any two versions below to diff them.
- Price
- $5.26
- Discount category
- Below intrinsic value
- Next earnings
- 2027-01-28
- Next earnings is estimate
- Yes
- Company name
- Lloyds Banking Group
- Sector
- Banks
- About
- Lloyds Banking Group (Lloyds) is the largest financial services provider in the United Kingdom, with about 28 million customers and about 1 million businesses. Its brands include Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows. It gives mortgages, current and savings accounts, credit cards, motor finance and loans to people, and lending and other services to businesses and large companies. UK mortgages were £325.2 billion of the £495.5 billion of underlying loans and advances to customers at September 30, 2026. The group also has insurance, pensions and wealth businesses, including Lloyds Wealth. In May 2026, it bought Curve, a digital payments company. The shares trade on the London Stock Exchange. LYG is an ADR on the New York Stock Exchange, and one ADS represents four ordinary shares. Charlie Nunn is the Group Chief Executive.
- Thesis
- Lloyds trades below its intrinsic value because investors fear that lower interest rates in the UK will cut its income, and that motor finance redress can cost more than its provision. The results are strong: in the first nine months of 2026, underlying net interest income rose 10% to £11,084 million, the banking net interest margin rose to 3.21% and return on tangible equity was 17.9%. Statutory profit before tax rose to £6,625 million from £4,678 million, partly because the 2025 figure included a charge of £800 million for motor finance. For the gap to close, three things must be true. Income from the structural hedge must keep growing as old hedges mature at higher rates. Credit quality must stay strong, with an asset quality ratio near 25 basis points. The FCA redress schemes for motor finance must not need a much larger provision; an Upper Tribunal hearing on the challenges is listed for the second half of February 2027. The full-year 2026 results, expected in late January 2027, with the first targets of the Accelerate 2030 strategy, are the next test.
- Risks
- The FCA redress schemes for motor finance commission are challenged in the Upper Tribunal, with a hearing in the second half of February 2027. The final cost can be higher than the provision, to which the group added £800 million in Q3 2025. Lower Bank of England rates and competition for deposits and mortgages can lower the net interest margin. Most loans are in the UK, so a weak UK economy, higher unemployment or lower house prices can increase impairment charges. The operating lease business has many vehicles. Operating lease depreciation rose 17% to £1,261 million in the first nine months of 2026, partly because used car prices fell. The ADS price moves with the pound against the U.S. dollar. One ADS represents four ordinary shares.
- Balance sheet
- Lloyds funds itself mainly with customer deposits, which were £502.8 billion at September 30, 2026, against underlying loans and advances to customers of £495.5 billion, so the loan to deposit ratio was 99%. Wholesale funding was £109.9 billion. The CET1 ratio was 13.3%, the total capital ratio 17.9%, the UK leverage ratio 5.0% and the liquidity coverage ratio 143%. Risk-weighted assets were £247.4 billion. Tangible net assets per share were 55.4p, and there were 57,409 million ordinary shares in issue, excluding own shares. The underlying impairment charge was £930 million in the first nine months of 2026, an asset quality ratio of 25 basis points. The interim ordinary dividend for 2026 is 1.58p per share. For a bank, net debt is not a useful measure, so this profile does not show debt figures. As of 2026-09-30.
- Checkpoints
- Oct 29, 2026: Q3 2026 results: income and credit. Passed. Watch: Net interest income growth with an asset quality ratio near 25 basis points passes; a new motor finance charge fails. Outcome: Underlying net interest income rose 10%, the asset quality ratio was 25 basis points and there was no new motor finance charge. Jan 28, 2027 (estimate): Full-year 2026 results and Accelerate 2030 targets. Pending. Watch: Return on tangible equity above 16% and targets with higher returns pass; lower capital returns fail. Feb 2027 (estimate): Upper Tribunal hearing on motor finance redress. Pending. Watch: A result that keeps the cost within the provision passes; a larger redress scheme fails.
- Recent events
- 2026-10-29: Lloyds reported results for the first nine months of 2026. Statutory profit before tax rose to £6,625 million, earnings per share rose to 7.6p from 4.8p and return on tangible equity was 17.9%. The CET1 ratio was 13.3%. Lloyds said that it is on track to meet its 2026 guidance, including underlying net interest income of more than £14.9 billion. 2026-07-30: Lloyds reported first half 2026 results. It declared an interim ordinary dividend of 1.58p per share, up 30%, and announced a share buyback of up to £1.0 billion. 2026-04-02: Lloyds said that, after its review of the final FCA rules for the motor finance redress scheme, it does not currently expect a change to its provision. It said that response rates, operational costs and litigation are still uncertain. 2026-01-29: Lloyds reported full-year 2025 results. Statutory profit after tax was £4,757 million and earnings per share were 7.0p. The total ordinary dividend for 2025 was 3.65p per share, up 15%, and the Board announced a share buyback of up to £1.75 billion.