Lloyds‘ (LSE:LLOY) shares have had a remarkable 12 months. The stock’s climbed 47.5% since July 2025 and, crucially, broke above the psychologically significant 100p threshold for the first time in almost two decades.
Today, the bank stock trades at around 112p. But the question now is whether the easy money has already been made. And if not, should I be considering this stock for my own portfolio? Let’s take a look.
A bank firing on all cylinders
The underlying business is genuinely performing well. In the first quarter of 2026, pre-tax profits surged 33% higher to £2.03bn, smashing past analyst expectations of £1.84bn. At the same time, net interest income climbed 8% to £3.57bn on the back of a widening net interest margin, which now sits at 3.17%.
What’s more, it seems this strong performance is expected to continue. Management has nudged up its full-year guidance, with net interest income now on track to exceed £14.9bn, paired with a £7bn gain from the bank’s ongoing structural hedges that allowed it to continue enjoying higher interest rates even after the recent cuts.
Return on tangible equity guidance also remains at 16%+. And with Lloyds’ lending engine continuing to work well with a further £5.1bn of new loans issued, the analysts at UBS promptly issued a Buy recommendation following these results.
And pairing all this with the FCA partly suspending the motor finance redress scheme following legal challenges, compensation payments likely won’t land before 2027 at the earliest, removing some short-term uncertainty.
Needless to say, this is all rather positive. So does that make Lloyds an obvious stock for me to consider adding to my portfolio?
What’s the catch?
The continued strong progress and positive regulatory developments haven’t gone unnoticed. In fact, they’re the main reason why Lloyds’ shares have been outperforming lately. And it means that there’s a good chance the expected future growth’s likely already priced in.
When looking at the average consensus from institutional analysts, Lloyds’ shares are only projected to climb to around 125p by this time next year. While that still implies a solid near-11% growth from current levels, it’s hardly on par with the phenomenal returns investors have enjoyed over the last 12 months.
It’s also worth flagging that the motor finance situation remains a bit of a thorn in Lloyds’ side. A delay’s not the same thing as a cancellation.
The bank still has £1.95bn set aside to settle compensation claims. But with industry experts projecting that the total compensation payout could range £8.2bn-£11bn across everyone involved, Lloyds, being one of the most exposed players, might end up having to pay considerably more.
So where does that leave investors today?
The bottom line
Lloyds is a well-run bank delivering real earnings growth, and the longer-term income credentials remain solid. But at 112p, I think it’s unlikely that investors will see another round of 40%+ gains without another surprise earnings catalyst.
That doesn’t mean Lloyds’ shares aren’t worth considering. In fact, for investors looking for a more defensive way to diversify, Lloyds could still be worth considering. But for more growth-focused investors like me, there are likely better opportunities to explore elsewhere.
Should you invest £5,000 in Lloyds Banking Group Plc right now?
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Zaven Boyrazian does not hold any positions in the companies mentioned.
