The Lloyds Banking Group (LSE: LLOY) share price has put in a stunning performance. It’s up 155% over the past five years. And at the time of writing, it’s only a few pence below the highest it has been in that time.
Going by the average of recent broker updates, I see a share price consensus for 121p. That would mean a further 8% above where Lloyds shares are now. And with a trend of targets being raised as new results come in, I think it could mean a fair bit more steady growth for Lloyds shareholders still to come.
Expert targets
Most published consensus averages come in a bit lower than my calculation, at around 118p. And that’s because of a persistent problem.
There’s been a low-end 53p price target on Lloyds shares for quite some time. It’s been stuck there for what seems like a couple of years, and today I can’t find any evidence of who’s behind it. It looks like it’s probably just something stale, never changed, and never removed from consensus.
So I’ve gone with only those targets set since Lloyds released its first-quarter results on 29 July — as they’re the ones based on the most up-to-date figures. And with the exception of Berenberg, whose analysts rate Lloyds a Hold, the others are Buys. In fact, Lloyds is still one of the most hotly-tipped stocks on the FTSE 100.
Do I share the enthusiasm? I do, but with some caution.
Before we get to the positives for Lloyds, let’s address the millstone hanging round its neck. Lloyds has set aside £1.95bn to cover motor insurance compensation claims. The final outcome keeps being delayed, but it hasn’t gone away. And there’s a fair chance the bill for Lloyds could be a good bit more than planned for.
Cracking performance
But aside from that, I’d say Lloyds has been performing about as well as a UK domestic bank could be expected to. Highlights from Q1 results include…
- Pre-tax profit of £2bn, from £1.5bn in 2025
- Underlying net interest income up 8.3% year on year
- Return on tangible equity (RoTE) of 17%, with a CET1 ratio of 13.4%
For the full year, Lloyds expects underlying net interest income of more than £14.9bn, with a RoTE over 16%. And it’s targeting a CET1 ratio at around 13%. To me, those are all signs of a bank pretty much doing everything right.
I really don’t think we’ll see Lloyds share price growth anywhere near the achievements of the past couple of years. And a forecast 3.3% dividend yield might not be exciting enough to raise anyone’s blood pressure.
But I rate Lloyds as a great company trading at a fair price, with steady growth potential. And that’s what billionaire investor Warren Buffett has always urged us to seek.
For growth investors looking for more, I think there are better considerations out there. But as a steady cornerstone for a long-term Stocks and Shares ISA, I rate Lloyds as one to consider, among a key handful of others…
Should you invest £5,000 in Lloyds Banking Group Plc right now?
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Alan Oscroft owns shares in Lloyds Banking Group.
