Lloyds Banking Group put in a stronger-than-expected performance post-Barclays in deposit volumes and pricing, analysts at major investment banks said.
Unlike some rivals the UK's largest lender maintained its net interest margin (NIM) guidance, making the bank look to be undervalued at current levels, said UBS.
The Swiss bank said it expects NIM to fall more slowly in the first half of 2024 before stabilising in the remainder of the year.
After the update, UBS said it expects a 5% reduction to consensus earnings per share (EPS) but sees Lloyds as more cash generative - and more stable - than a rating of six times 2024 adjusted earnings suggests.
UBS added that its estimates are broadly unchanged as is its 'buy' rating and 50p share price target.
Post the results, Barclays said there are some headwinds for the sector but now is potentially an "attractive entry point" for investors, keeping its 'overweight' rating even if it trimmed its target price to 67p from 70p.
"Near term Lloyds continues to face headwinds from narrowing asset spreads and rising deposit costs," Barclays said, which with rising non-banking funding costs is likely to weigh on consensus interest income estimates in 2024.
"However, we believe this is a period of peak pain, given our expectations of receding headwinds (notably mortgages), likely improving operating conditions (front book spreads) and a sizable building hedge tailwind, which should stabilise and grow NIM after some sequential softness in 1H24."
They added: "Given this is likely peak pain, we see an attractive entry point for the shares."
Lloyds shares today were down 0.8% at 41.1p and, despite nearly reaching 54p earlier this year, are down 3% over the past 12 months and more than 34% since the start of 2020.