Lloyds Banking Group PLC (LSE:LLOY)’s Wednesday earnings were met with positive comments from RBC, which updated its earnings estimates for the FTSE 100 lender.
RBC increased its full-year 2024 profit-before-tax estimates by 1% due to higher other income, offset partially by higher operating lease depreciation.
Commercial division estimates were raised, though estimates in retail banking decreased.
“With inflation expectations stabilising and a more balanced outlook for interest rates, we think that the rates trade has now played out, although banks like Lloyds who have better digital banking and branch offerings should be able to keep deposit betas lower for longer,” analysts stated.
RBC expects the market to reward Lloyds for better cost control and asset quality versus its competitors.
Lower back book mortgage loan to values, less commercial real estate exposure and more conservative macroeconomic assumptions should all work in Lloyds’ favour.
Analysts maintain their outperform rating with a 70p price target against a publication price of 47.68.