RBC Capital has raised its price target for Lloyds Banking Group PLC (LSE:LLOY) from 60p to 70p, reflecting stronger forecasts for the bank’s earnings and shareholder returns.
The bank’s latest results showed steady progress, with rising net interest income and lower-than-expected costs helping to support profitability.
RBC now expects Lloyds to generate £14.2 billion in shareholder returns over the next three years, through dividends and share buybacks.
The firm also sees the bank’s cost-to-income ratio improving, excluding motor finance litigation costs, which have been revised down to £2.5 billion from £3.2 billion.
Despite the upgrade, RBC maintained a neutral “sector perform” rating, suggesting limited further upside for the stock.
The broker highlighted risks from regulatory uncertainty and the wider UK economic outlook but acknowledged Lloyds’ strong position in the market.
In a separate note, UBS maintained its 'neutral' call and 72p a share price target, saying it was keeping this stance "pending greater legal clarity around motor finance refund costs".
In early trading, the stock was unchanged at 67.3p