Credit Suisse expects Lloyds share price to see modest gains

Lloyds will unveil its full-year (FY) results next week (20 February) and although its earnings will highlight the lender’s resilience in the face of a challenging banking environment, analysts from Credit Suisse offered a modest outlook for the stock in 2020.

Analysts from Credit Suisse issued a ‘neutral’ rating for Lloyds on Tuesday and a modest price target of just 60p a share, with the Swiss lender expecting the stock to deliver a middling performance in 2020 compared to its UK peers.

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Based on Lloyds trading at 57p a share as of 11:30 (GMT) on Wednesday, analysts at the Swiss bank believe the stock has a potential upside of 5.3%.

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HSBC expected to succeed in 2020, says Credit Suisse

Credit Suisse initiated full coverage of the UK banking sector in February, with its analysts most upbeat about the prospects of HSBC, upgrading its rating to ‘outperform’ and stating that the lender was at a ‘pivotal stage, with all the pieces in place to make Strategy 2020 a success’.

‘Our detailed review of HSBC's cost base leads us to conclude that management has yet to address the structural inefficiencies within the group,’ HSBC analyst Claire Kane said in a note.

‘This presents a key opportunity for the new management team to drive return on tangible equity above 11% by the 2022 FY, leading to a re-rating of the shares.’

Lloyds results will reflect its resilience

Investors will be hoping Lloyds results meet its own guidance next week, with the bank’s 2019 outlook reflecting the resilience of the group’s business model and the myriad of headwinds the lender has faced over the last 12 months.

Lloyds expects a net interest margin of 2.88%, with operating costs forecast to come in under £7.9 billion in its FY results.

‘Although continued economic uncertainty could further impact the outlook, the group remains well positioned with the right strategy to continue delivering for customers and shareholders,’ Lloyds said in its Q3 earnings.