Equities By Region Finance and Banking UK

Lloyds share price: Analysts mull over buyback prospects

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UBS remains bullish on Lloyds Banking Group (LON:LLOY) following the latest Bank of England (BoE) stress test results, Proactive Investors reports. The comments came after all seven financial institutions tested passed the BoE’s health check, with the bailed-out lender, however, emerging as one of the worst performers on account of its “largely UK centric business model”.

Lloyds’ share price has fallen deep into the red in London in today’s session, having given up two percent to 55.02p as of 10:41 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.67 percent lower at 6,991.97 points.

UBS weighs in on stress test results

UBS maintained its ‘buy’ rating on Lloyds with a price target of 80p following the BoE stress test results. Proactive Investors quoted the analysts as saying that UK high street banks could potentially increase dividends and share buybacks once new capital requirements were announced early next year and there was more clarity on Brexit.

“In the event that a Brexit transition is ultimately agreed – the path to which does look potentially bumpy – we’d expect to see these profitable, capital generative stocks re-rate materially,” the broker said, referring to Lloyds and FTSE 100 peers RBS (LON:RBS) and Barclays (LON:BARC).

Share buyback prospects

While the stress test results follow speculation that Lloyds will have room to announce a £2-billion buyback, Interactive Investor has quoted analysts at Deutsche Bank as thinking that a figure closer to £1.5 billion is more likely.

Last month, news emerged that the bailed-out lender hopes to be able to return about £4.5 billion of capital to investors next year via a higher dividend and a share buyback of almost £2 billion. 

As of 10:40 GMT, Friday, 30 November, Lloyds Banking Group share price is 55.00p.

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