Lloyds share price gains ground as Credit Suisse talks up UK banks

on Oct 10, 2017
Updated: Mar 11, 2020

Shares in Lloyds Banking Group (LON:LLOY) have been in demand in today’s session, as analysts at Credit Suisse sounded an upbeat note on UK lenders. The broker further hiked its rating on the bailed-out lender, ahead of the group’s third-quarter statement on October 25.

As of 13:20 BST, Lloyds’ share price had added 1.13 percent to 67.30p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.24 percent higher at 7,525.92 points. The group’s shares have added more than 28 percent to their value over the past year, and are up by some seven percent in the year-to-date.

Credit Suisse upbeat on UK banks

Lloyds has reacted positively to comments by Credit Suisse whose base case for UK-focused high street banks is for a ‘soft Brexit’, with the analysts seeing an increasing likelihood that the transitional deal proposed by Theresa May and backed by Chancellor Philip Hammond becomes permanent.

“Our central scenario of low growth, low unemployment and moderate rate rises is supportive for domestic banks’ capital generation and we continue to believe earnings risk is to the upside,” the analysts pointed out, as quoted by Sharecast.

Lloyds likely winner from ‘soft Brexit’

The analysts further hiked their rating on Lloyds from ‘neutral’ to ‘outperform,’ with a price target of 80p. The analysts argue that the bailed-out lender, which has de-rated relative to UK peers in the year-to-date, would be one of the likely winners from a ‘soft Brexit’.

“We would expect this domestic UK risk-premium to reduce as 1) a softer Brexit becomes the market base case and 2) Lloyds’ earnings and capital generation remain supportive,” Credit Suisse pointed out.

The comments come after Goldman Sachs, which sees Lloyds as a ‘sell,’ set a price target of 56p on the stock yesterday. According to MarketBeat, the company currently has a consensus ‘buy’ rating and an average price target of 74.53p. 

As of 13:50 BST, Tuesday, 10 October, Lloyds Banking Group share price is 67.50p.