Lloyds Banking Group PLC (GB:LLOY) is among the top four banks in the UK, providing services to 30 million customers. The bank enjoyed a solid year in 2022 with record profits. Looking ahead, analysts maintain a positive outlook on the stock and project a potential upside of approximately 45% from its current level.
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On the flip side, investors and some analysts also hold a cautious view of UK banking stocks, even though they presented a decent set of numbers in Q1 2023.
Cautious Outlook
During its first-quarter earnings for 2023, the bank restated its full-year guidance; however, it cautioned that net interest margins are expected to decrease this year. Lloyds predicts a decline in inflation to 3% starting next year, along with the Bank of England initiating rate reductions from the same time onward. Additionally, the bank holds even more bearish forecasts for the UK housing market for the upcoming quarters.
Still a Dividend Gem
In 2022, the bank paid a dividend of 2.4p per share, which is expected to increase to 2.7p and 3.0p per share in 2023 and 2024, respectively. Lloyds currently carries a dividend yield of 5.3%, which is above the average yield of 3.8% of the UK blue-chip companies.
Recent Ratings
Just four days ago, Martin Leitgeb from Goldman Sachs confirmed her Buy rating on the stock, projecting a growth potential exceeding 75% in the share price. Leitgeb is a three-star-rated analyst on TipRanks and mainly covers financial stocks across global markets.
Prior to this, J.P. Morgan analyst Raul Sinha also reiterated his Buy rating on the stock five days ago.
Is Lloyds Banking Group a Good Share to Buy?
Based on analysts’ assessments on TipRanks, the stock is believed to possess further potential and could be considered a favorable investment option. In general, LLOY stock holds a Moderate Buy rating, with five Buy and three Hold recommendations.
The average price prediction for a 12-month period is 65.57p, which implies a 45% growth from the current price.
Conclusion
Despite a slightly tougher operating environment, analysts expect the share prices of UK banks to remain relatively resilient. Lloyds have benefited a lot from the rising interest rates, but investors should be prepared for fluctuations due to prevailing economic uncertainty.
