Credit Suisse said Lloyds Banking Group PLC (LON:LLOY) continues to be its preferred UK lender, in a note raising estimates for the FTSE 100-listed group.
The Swiss bank reiterated an 'outperform' rating on Lloyds with an 85p target price. In afternoon trading, the stock was changing hands at 66.48p each, up 0.5% on Thursday’s close.
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In the note to clients, Credit Suisse’s analysts said they had raised their earnings per share forecasts for Lloyds’ by 1%, 4%, 6%, respectively, for the period between 2018 and 2020, pointing to the bank’s improved loan impairment guidance.
They added that the increases came despite their forecast for growth in assets at Lloyds’ Insurance & Wealth unit being below what the bank’s management is targeting.
The analysts highlighted the combination of low risk, capital generative retail exposure with upside from an improved macroeconomic backdrop, higher interest rates and falling risk premium as Brexit talks continued to make headway.
There was also the sector-beating yield to go for, they added, which is 7.4% currently, but is seen rising to 9.4% by 2019.