Lloyds Banking Group PLC (LSE:LLOY) got a boost (of sorts) from Peel Hunt, which raised its price target by 17% to 70p following a strong end to 2024.
The bank’s fourth-quarter underlying profit before tax came in 13% ahead of consensus, even after setting aside an additional £700 million for motor finance provisions.
Peel Hunt noted that revenues exceeded expectations, with Lloyds upgrading its guidance for income from its structural hedge.
The bank now expects hedge income to be £1.2 billion higher in 2025 than in 2024, and a further £1.6 billion higher in 2026. Other income also performed well, rising 9% in 2024 and expected to maintain that pace over the next two years.
Despite the extra motor finance charge, Lloyds announced a £1.7 billion share buyback, in line with expectations, and increased its dividend per share by 15%, ahead of consensus.
Peel Hunt said the bank is well-positioned to return around £13.7 billion to shareholders over the next three years.
The broker has adjusted its forecasts, cutting 2025 earnings per share estimates by 6% due to a revised outlook for motor finance remediation, but raising its 2026 forecast slightly. Peel Hunt noted it was already at the top end of the consensus range.
The stock was rangebound at 71.6p, 1.6p higher than Peel Hunt's target price, which explains why the broker is recommending investors hold rather than buy the shares.