Lloyds Banking shares have limited upside even though the bank upgraded its profits guidance for the year yesterday, said broker Berenberg.
Rising UK interest rates are supporting Lloyds net interest margins (NIM) more materially and rapidly than expected, said the broker, but this was complemented during the first quarter by lower expenses and loan losses.
Berenberg said it has upped its forecast 2023 earnings by 8% but remains underwhelmed by growth in Lloyds’ core business.
Due to this, “We believe that there is limited upside to Lloyds’ share price – including relative to Barclays and NatWest, which trade at a 30% and 5% discount, respectively.”
Shares rose 0.2% to 45.9p.