Lloyds share price analysis after earnings: is it a buy?

Lloyds share price held steady today, Oct. 23, as the market reacted to the latest earnings, which showed that the company continued doing well this year. LLOY was trading at 84.6p, up by about 70% above the lowest level this year. 

Lloyds Bank posted strong earnings

Lloyds, one of the biggest banks in the UK, published strong financial results even as the economy remains in stagflation. Its results showed that the statutory profit dropped to £3.3 billion in the third quarter from £3.8 billion in the same period last year. 

The profit dropped because the company took a £800 million charge relating to the motor insurance compensation, which come after the Supreme Court ruling a few months ago. The total provision now stands at over £1.950 billion.

READ MORE: Here’s why the Barclays share price jumped after Q3 earnings

Lloyds Bank’s underlying net interest income rose by 6% to £10.1 billion in the first nine months of the year, giving it a net interest margin of 3.04%.

The company also boosted its forward guidance, estimating that the underlying net interest income will be £13.6 billion, while the Return on Tangible Equity (RoTE) will be 12%.

These results came a few days after the management announced the full buyout of Schroders Personal Wealth, which was previously operated as a joint venture. The full acquisition brought in about £17 billion in assets under management (AUM) and 60,000 clients. It will now be rebranded as Lloyds Wealth.

Lloyds Bank’s growth happened as the company’s lending and deposits remained steady. Its lending jumped to £477 billion in the last quarter, while its deposits rose to £496 billion. In a statement, Charlie Nunn, the CEO said:

“Our strategic progress combined with this financial performance gives us confidence in our performance for the year and our 2026 guidance.”

Lloyds Bank believes the UK economy will grow by just 1% in the coming year and that the unemployment rate will continue rising gradually. 

The company may start to feel the impact of the Bank of England’s interest rate cuts. However, the company has a £244 billion structural hedge in place, which is helping it boost its margins. A Bloomberg analyst said:

“With a 13.8% CET1 ratio and reiterated plans to run it down to 13% next year, this year’s buyback could surpass the £1.8 billion already embedded in 2025 expectations.”

The other main risk is that the UK is bracing for a challenging annual budget on November 26 as Chancellor Rachel Reeves struggles to fill a multi-billion-pound hole. One of the proposals to bridge this gap is to launch a windfall tax on the financial services industry that has boomed in the past few months.

READ MORE: NatWest share price forecast ahead of Q3 earnings: buy or sell?

Lloyds share price technical analysis 

The daily timeframe chart shows that the Lloyds Bank share price has been in a strong uptrend in the past few months and is now hovering near its highest level this year.

The stock remains above the 50-day and 100-day Exponential Moving Averages (EMA). It also remains above the lower side of the ascending channel  

Top oscillators like the Relative Strength Index and the MACD have continued rising in the past few months. Therefore, the stock will likely continue rising as bulls target the next key resistance level at 90p.

READ MORE: Unicredit share price analysis as earnings growth continues

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