Results from Lloyds Banking Group PLC (LSE:LLOY), including better profits than expected for the fourth quarter, were seen as solid but far from spectacular in the City, but that did't stop the shares climbing to their highest since 2008.
Following the results, the shares fell in early trading but by lunchtime were up over 2% to 106.73p, their highest since the global financial crisis (or GFC as it's known in the Square Mile).
Much of the upside surprise in the Q4 profit came from lower-than-expected impairments and volatile below-the-line items, analysts said, rather than a fundamental beat on core metrics.
Net interest income and margin were both slightly below consensus, reflecting continued pressure from mortgage competition and deposit pricing.
Shore Capital analyst Gary Greenwood described the beat as “low quality” and saw little in the upgraded 2026 guidance to shift consensus materially.
The price-to-tangible net asset value multiple (either trailing at 1.8x or forward at 1.7x) is "now the highest it has been since before the GFC and, without any likely upgrade to consensus, the shares may now pause for breath. "
Jason Napier at UBS largely echoed that view, noting Lloyds’ 2026 targets, including a raised return on tangible equity (RoTE) of over 16%, were mostly in line with existing forecasts.
However, the UBS analyst a day earlier had said he still sees UK banks' valuations as "attractive", though Lloyds was one of the least so, with a preference for lender lower P/E multiples such as Barclays, NatWest, StanChart and Shawbrook.
At AJ Bell, Russ Mould praised Lloyds' delivery in a lower-rate environment and saw further potential as diversification into insurance and wealth management under boss Charlie Nunn pays off.
But he added the market’s “desultory” response may reflect the shares having already climbed 70% over the past 12 months.
Investors now look ahead to CEO Charlie Nunn’s new strategic update in the summer.
Richard Hunter at Interactive Investor said Lloyds, the first out of the gates in the UK bank reporting season, "opened proceedings in some style", if ignoring the additional £800 million motor finance redress provision.
He said the numbers are "solid proof of the progress which Lloyds is achieving", with the net interest margin growing despite falling Bank of England rates, with a benefit of a growing structural hedge contribution, which is designed exactly to mitigate the group’s susceptibility to changes in a falling interest rate environment, "and which should provide a further revenue boost this year".
He highlighted that the customer deposit exodus "seems to have steadied", driven largely by commercial banking, with the refocused strategy seeing the total number of banking app users provide "a springboard for further capital light growth", along with the recent acquisition of Schroders Personal Wealth.
"Lloyds continues to display the kind of strong and dependable performance which has increasingly attracted global investors not only to the bank and the sector, but the primary index as a whole."