Lloyds share price bounces off key support
Lloyds share price bounces off key support amid ongoing motor finance loan compensation uncertainty.
Lloyds Court of Appeal ruling impact on its share price
The Lloyds Banking Group share price has dropped 17% from its 52-week October high at 63.46 pence (p), underperforming the FTSE 100 due to legal and financial challenges stemming from a Court of Appeal ruling.
This decision deemed certain undisclosed commissions on motor finance loans unlawful, broadening the scope of an ongoing Financial Conduct Authority (FCA) investigation. The ruling has raised concerns about mounting compensation costs, with RBC Capital estimating a potential bill of £3.9 billion, significantly higher than the £450 million Lloyds initially provisioned.
Lloyds versus FTSE 100 year-to-date charts
These financial liabilities could halve Lloyds’ £2 billion share buyback plan, potentially returning only £1 billion to shareholders. Additionally, the bank has scrapped all commission payments across its £15 billion Black Horse car finance division.
Despite these pressures, Lloyds maintains its current provisions and has highlighted favourable outcomes in related legal cases. Analysts, however, remain cautious, with concerns about regulatory clarity and rising investor anxiety.
While Lloyds’ financial position remains stable, uncertainty over compensation costs and the potential impact on shareholder returns has dampened investor sentiment. The broader implications for other lenders, including Barclays and Santander United Kingdom (UK), have also raised questions about regulatory oversight and market reactions.
Lloyds analyst ratings
TipRanks gives Lloyds a Smart Score of 2, underperform, with 3 ‘buy’, 7 ‘hold’ and 1 ‘sell’ analyst recommendations.
TipRanks Smart Score
According to London Stock Exchange Group Data & Analytics, 1 analyst rates Lloyds as a ‘strong buy’, 5 as a ‘buy’, 12 as a ‘hold’ and 1 as a ‘sell’ with a mean price target at 65.19 p, 5% above current levels (as of 3 December 2024).
Lloyds analyst ratings
Lloyds share price technical analysis
The Lloyds share price seems to be bouncing off its key 53.08p - 52.68p support zone which contains the March high and June, August, October and November lows and as such is expected to hold.
Lloyds share price daily chart
Were this not to be the case and a fall through the 52.68p August low to occur on a daily chart closing basis, a decline towards the December 2023 high and the April 2024 low at 49.42p - 48.38p may ensue.
While Monday’s intraday low at 52.54p underpins on a daily chart closing basis, however, the April high at 54.28p may well be revisited and probably also the 200-day simple moving average (SMA) at 55.17p.
For the long-term uptrend in the Lloyds share price to resume, though, the mid-November high at 57.08p will need to be exceeded.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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