Lloyds share price: Lender seen exposed to competition from challengers

on Nov 15, 2016
Updated: Oct 21, 2019

Goldman Sachs remains bearish on Lloyds Banking Group (LON:LLOY), arguing that the UK’s largest mortgage lender is at a bigger risk from competitors encroaching on the four major’s traditional stamping ground, Proactive Investors has reported. The analysts meanwhile have recommended blue-chip peer Royal Bank of Scotland Group (LON:RBS).

Despite the downbeat comments Lloyds’ share price has gained ground in today’s trading, having added 1.39 percent to 61.41p as of 14:38 GMT, and outperforming the benchmark FTSE 100 index which is currently 0.61 percent better off at 6,794.65 points. The bank’s shares have lost more than 15 percent of their value over the past year, as compared with an 11-percent rise in the Footsie, and still continue to trade well below the government’s break-even price of 73.6p.

Goldman Sachs reiterated its ‘sell’ rating on Lloyds today, valuing the shares at 50p. The analysts point to competition from challengers on the UK’s ‘Big Four’, especially in mortgages where ringfencing rules and the newly introduced term funding scheme provide a strong incentive for some banks to substantially increase their exposure.
Proactive Investors quoted the US bank as saying that Lloyds is most exposed to this trend, being the UK’s largest mortgage lender, and with a significantly higher pricing point. With a risk of an accelerated erosion of its mortgage book, the part government-owned bank might have to close the current pricing gap with the rest of the market.
The 21 analysts offering 12-month price targets for Lloyds for the Financial Times have a median target of 67.00p, with a high estimate of 93.00p and a low estimate of 40.00p. As of November 12, the consensus forecast amongst 28 polled investment analysts covering the bailed-out lender advises investors to hold their position in the company.
As of 15:04 GMT, Tuesday, 15 November, Lloyds Banking Group share price is 61.40p.

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