Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

FTSE Banks: Lloyds Shares Could Continue To Climb

By (Tezcan Gecgil/ )Stock MarketsJun 25, 2021 01:58AM ET
FTSE Banks: Lloyds Shares Could Continue To Climb
By (Tezcan Gecgil/ )   |  Jun 25, 2021 01:58AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

So far, 2021 has been a good year for US financial shares, including banks. Both the Dow Jones Financials Index and Dow Jones Banks Index are up about 20% and 26% year-to-date, respectively.

Similarly, the UK banking sector has shown a strong recovery since the early days of the pandemic. Therefore, today we look at FTSE 100 member Lloyds Banking Group (LON:LLOY) (NYSE:LYG).

Lloyds is one of the largest banks by market cap on the UK’s main index. Others include HSBC (LON:HSBA) (NYSE:HSBC), Barclays (LON:BARC) (NYSE:BCS), NatWest (LON:NWG) (NYSE:NWG) and Standard Chartered (LON:STAN) (OTC:SCBFF).

Here's how shares of these five banks fared in 2021:

  • LLOY: up 28%;
  • HSBC: up 11%;
  • BARC: up 17%;
  • NWG: up 21%;
  • STAN: up 0.5% (i.e, flat).

LLoyds Weekly Chart.
LLoyds Weekly Chart.

On June 24, LLOY stock closed at 47.20p ($2.6 for US-based stock). The current price supports a dividend yield of 1.21%, and the market cap is £33.5 billion (or $46.6 billion).

How Recent Earnings Came In

Lloyds Banking Group operates through three core divisions: Retail, commercial banking and insurance, and wealth. It serves around 30 million customers under 13 brands, including Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows.

The UK’s largest bank released its first quarter trading update and metrics on Apr. 28. Total income decreased 7% year-over-year to £3.64 billion (or $5.06 billion). Pre-tax profit was £1.8 billion (or $2.5 billion), an increase of 338% YOY, while profit after tax was £1.3 billion (or $1.8 billion), up 60% YOY.

The red-hot housing market was the main catalyst for the growth of its mortgage book. Overall, the latest numbers beat market expectations, and made many investors more bullish on the Lloyds share price than they once were.

CEO Antonio Horta-Osorio commented:

“… the underlying asset quality of our different portfolios has remained strong with credit experience benign. Although uncertainty remains, the UK economy is performing better than expected on the back of a very successful vaccination program.”

Horta-Osorio had already announced his retirement, which will take effect in the coming weeks. The bank has named Charlie Nunn as the incoming CEO.

Bottom Line

Banking remains a cyclical industry. Investors focused primarily on growth are generally not big fans of FTSE 100 bank shares. The Great Recession of 2008-09 and domestic banking scandals have proved them to be highly volatile and, therefore, risky investments.

Yet, the recent Q1 numbers and positive momentum in 2021 makes us more bullish on the shares than usual. Recent announcements by the UK government also show that the economy could rebound faster that initially expected. Summer months are likely to see increased consumer spending as well as a return to normal for most businesses.

LLOY stock’s forward P/E and P/S ratios stand at 8.61 and 2.09, respectively. Coupled with the current low price-to-book value of just 0.69, we believe the share price could increase further.

Given how far the shares have risen so far in 2021, however, some short-term profit-taking could also be around the corner. Interested readers would find better value around 45p or even below. Before the end of the year, LLOY stock could make an attempt toward the 55p level seen prior to the start of the pandemic in early 2020.

Finally, those investors who do not want to commit full capital into Lloyds stock but are interested in bank shares could consider an exchange-traded fund (ETF). Examples include:

Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD) - up 25.3% YTD;

iShares Global Financials ETF (NYSE:IXG) - up 19.3% YTD;

SPDR® S&P Bank ETF (NYSE:KBE) - up 23.6% YTD.

Lloyds shares have seen the highest percentage return among these leading banks. The 52-week range has been 23.58p-59.94p.

FTSE Banks: Lloyds Shares Could Continue To Climb

Related Articles

FTSE Banks: Lloyds Shares Could Continue To Climb

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Abdulmumi Mohammed
Abdulmumi Mohammed Jul 05, 2021 2:49PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
to earn some money
Ray Brown
Ray Brown Jun 25, 2021 5:16AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Four core division, not "three core divisions"...
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email