Lloyds share price forecast as earnings jump, odds of BoE rate hikes jump

Lloyds Bank's share price surged to 113.75p on Thursday after the company posted strong financial results, extending a trend seen across European and American banks this earnings season. LLOY now trades at its 2008 high, having climbed nearly 30% from its lowest level this year.

Lloyds Bank published strong results

LLOY stock has done well this year, coinciding with the ongoing performance of top European and American banks. This growth has been helped by the elevated interest rates and the fact that the economy is doing fairly well.

Lloyds Bank, which has over 26 million customers, said that its statutory profit before tax jumped to £4.3 billion from £3.5 billion in the same period last year. Its underlying net interest income jumped to £7.3 billion up by 9% YoY, with its net interest margin hitting 3.19%.

The company’s other income, which includes ATM fees and brokerage commissions, rose by 11% to £3.3 billion.

Its only blemish was its rising operating lease depreciation, which soared by 18% to £841 million.

Most importantly, the company continued boosting its shareholder returns. It hiked the interim ordinary dividend to 1.58 pence per share, which is equivalent to £918 million, up by 30% YoY. It now has a dividend yield of 3.2%, higher than the average FTSE 100 yield of 3%. In a statement, Charlie Nun, the CEO, said:

“In the first half of 2026, we delivered sustained strength in financial performance, with continued income growth, improving operating leverage, strong credit performance, growing capital generation and increasing shareholder returns.”

In addition to the high interest rates, the company has also managed its costs well. It has been careful in adding workers, and has increased the usage of technology. Its operating costs were flat in the quarter at £4.9 billion. This is notable as the company recently completed the acquisition of Schroders Personal Wealth, which is now known as Lloyds Wealth.

Looking forward, the next key catalyst for the Lloyds share price will be the Bank of England (BoE) interest rate decision. Economists expect the bank will leave interest rates unchanged. However, with the US-Iran war escalating, there is a likelihood that the bank will hike later this year. As the Polymarket poll shows, odds of a rate hike happening this year has jumped to 42%.

LLOY stock chart | Source: TradingView

The daily chart shows that the LLOY share price has been in a strong uptrend in the past few months. Recently, however, it has moved sideways, remaining between the key support and resistance levels at 109.10p and 115.45p.

The stock formed an ascending channel and is now hovering near its upper side. It has also remained above the 50-day and 100-day Exponential Moving Averages (EMA).

Also, the stock has formed a bullish flag pattern, which is made up of a vertical line and a horizontal channel. Therefore, the most likely scenario is where it continues rising, with the next key target to watch being at 120p.