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Investment Platform Analysis: Lloyds

By James Fox

  • Published: September 12, 2024
  • Edited by: Antonia Medlicott
  • Last Update: 2 weeks ago
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icon Analyst commentary

Lloyds is one of the UK’s largest banking groups and it makes almost all of its money in the UK after the bank’s international operations were rationalised and sold off following the Financial Crisis.

While Lloyds is best known for its lending, it also offers a range of investment options for customers, including Cash ISAs and Stocks and Shares ISAs. Investors can trade in UK and international shares, funds, ETFs, and other securities through these platforms.

While Lloyds offers these diverse investment products, the bank does not publicly disclose its Assets Under Management (AUM) or the number of investors using its services, making it difficult to gauge the exact scale of its investment operations.

Is your money safe with Lloyds?

Investors can rest assured that their money is generally considered safe with Lloyds Bank. As one of the UK's largest and oldest financial institutions, Lloyds is covered by the Financial Services Compensation Scheme, protecting up to £85,000 per person.

The bank has remained profitable for some time and maintains a strong capital position, with a healthy Common Equity Tier 1 ratio well above regulatory minimums. Like other banks, Lloyds undergoes regular stress tests and is subject to stringent oversight.

While no investment is entirely risk-free, Lloyds' size, profitability, and regulatory compliance contribute to its reputation as a secure financial institution.

Director/Major shareholders – buying & selling


The table below shows major transactions over the past four months by insiders. The majority of these transactions appear to be share purchases. This tends to be a positive indication of the health of a company.

  • Andrew Walton – Corporate Director
    Informative Sell – 82,950 shares
  • Charlie Nunn –  Chief Executive Officer
    Uninformative Buy Grant/Award/Other Acquisition – 257,709 shares
  • William Chalmers – Chief Financial Officer
    Uninformative Buy Grant/Award/Other Acquisition –  123,700 shares
  • Ron Van Kemenade – Chief Operating Officer
    Uninformative Buy, Grant/Award/Other Acquisition – 70,403 shares
  • Sharon Doherty – Chief People Officer
    Uninformative Buy, Grant/Award/Other Acquisition – 1,662,336 shares
  • John Winter – Divisional Chief Executive Officer
    Uninformative Buy, Grant/Award/Other Acquisition – 179,460 shares
  • Catherine Woods – Non-Executive,Director
    Uninformative Buy – 3,654 shares
  • Jasjyot Singh – Divisional Chief Executive Office
    Uninformative Buy Auto Buy – 36,624 shares
  • John Winter – Divisional Chief Executive Office
    Uninformative Buy Auto Buy – 18,454 shares
  • Joanna Harris – Divisional Chief Executive Office
    Uninformative Sell Options Exercised and partly Sold
    – 46,317 shares

Financial Metrics


Revenue vs previous year vs consensus estimates.

Revenue generation has lifted at Lloyds Bank in recent years, and one of the primary reasons for this is higher interest rates. The company’s net interest margin (NIM) has expanded along with central bank rates. The lender is also experiencing positive tailwinds from the unwinding of its structural hedge.

Earnings per share (EPS) vs previous year vs consensus estimates.

Earnings per share (EPS) have improved dramatically since the end of the pandemic. Higher net interest income has contributed significantly to this improved performance. Forecasts suggest a dropoff in 2024 reflecting some NIM compression and a fine possibly falling within the reporting period.

Return on equity vs previous year and quarter vs consensus estimates

Return on Equity (RoE) is a standard measure of profitability when assessing bank stocks. According to data from FactSet, RoE improved from a fairly low base during the pandemic to around 12.6% in 2023.

Return on Risk Weighted Assets vs previous year and quarter vs consensus estimates

Return on Risk-Weighted Assets (RWA) is a financial metric used primarily in the banking industry to measure a bank's profitability relative to its risk-adjusted assets. This ratio provides insight into how efficiently a bank is using its capital to generate profits while accounting for the riskiness of its assets. The data above shows that Lloyds’s return on RWA has improved significantly since 2020.

CET1 ratio vs previous year and quarter vs consensus estimates

Common Equity Tier 1 (CET1) is a key measure of a bank's financial strength, representing its core capital as a percentage of risk-weighted assets. A higher CET1 ratio indicates greater resilience to financial stress. The above graph shows that the CET1 has remained substantially above minimum required levels in recent years.

Analysts’ price targets and ratings including commentary.

Based on 16 analysts offering 12-month price targets for Lloyds Bank in the last 3 months, the average price target is 61.94p with a high forecast of 74p and a low forecast of 54p.

FAQs

The next set of quarterly results is expected on 23 October 2024.

The Full Year Results Announcement is due in late February 2025.