Lloyds Banking Group’s (LON:LLOY) shares will struggle to make headway over the next few months, analysts at Deutsche Bank have forecast. The comments come as the lender, bailed out by the UK government during the financial crisis, prepares to update investors on its first-quarter performance a week from today.
Lloyds’ share price has surged in London this morning, having added 1.29 percent to 64.48p as of 08:28 BST, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.01 percent higher at 7,115.28 points. The group’s shares have lost nearly five percent of their value over the past year, but have recovered some three percent in the year-to-date.
Interactive Investors quoted Deutsche Bank analyst David Lock as commenting yesterday that the broker has upside to its target price for Lloyds, but does “not expect the shares to outperform whilst UK macro and political uncertainties persist”.
“Though Lloyds looks cheap on 2017 price/earnings (PE), unlike most other banks in Europe the PE rises in future years rather than falls,” the analyst explained. His comments came after Prime Minister Theresa May called for a general election in June. They also come ahead of Lloyds’ first-quarter results next Thursday and Lock forecasts underlying profit before tax of £1.85 billion, down from £2.05 billion a year ago, but up from £1.79 billion in the final three months of last year.
Lloyds meanwhile has reportedly chosen Germany as its European base after Brexit. The bank hopes to submit an application to Germany’s financial regulator BaFin to change the status of its Berlin operation by the end of September. Converting the city to a subsidiary is expected to only require Lloyds to add a small number of staff with the city already home to its biggest European operation.