Jan 8, 2026, 09:05 GMT
- Jefferies lifted targets to 119p for Lloyds, 560p for Barclays and 720p for NatWest
- Broker said UK bank valuations still trail the wider market despite a strong 2025 rally
- Barclays kept Lloyds “overweight” and cut NatWest to “equal weight” in a separate note
Jefferies lifted its price targets on Lloyds Banking Group, Barclays and NatWest in a fresh note, arguing UK bank shares still have room to rerate despite a strong 2025. The broker raised its targets to 119 pence for Lloyds, 560 pence for Barclays and 720 pence for NatWest. It also kept Buy calls on OSB Group and Paragon Banking Group, with targets of 740 pence and 1,060 pence. 1
The call matters because banks have become too big to ignore in London again. Jefferies said the sector’s weighting has grown to about 17% of the FTSE 100, even as the stocks trade at an estimated discount to the wider market.
That discount persists after last year’s run, and Jefferies framed it as a valuation issue more than an earnings story. UK lenders are still on a two-year forward price-to-earnings multiple that sits below European peers, it said, leaving scope for share prices to move even if forecast upgrades cool.
Jefferies said its new targets fold in 2028 estimates for the first time, with earnings per share seen on average 10% higher than its 2027 expectations. It argued that steady results can do the heavy lifting, with “every quarter of delivery adding support to the thesis that bank profits are more predictable and sustainable than in the past”.
Lloyds was around 99.6p on Thursday, up about 0.7%, while Barclays hovered near 481p and NatWest slipped to about 629p, Hargreaves Lansdown data showed. On those levels, Jefferies’ targets imply roughly 20% upside for Lloyds, 16% for Barclays and 15% for NatWest; Lloyds is up about 19% over three months and nearly 79% over a year. 2
Jefferies pointed to how much the sector has already done for the headline index. UK domestic banks delivered an 80% total shareholder return in 2025 and added 717 points to the FTSE 100’s 1,800-point rise, led by HSBC, the broker said.
Barclays, in a separate note dated Wednesday, kept Lloyds at “overweight” and cut NatWest to “equal weight,” arguing the two lenders are diverging on capital generation and earnings visibility. Barclays forecast Lloyds’ return on tangible equity (RoTE) — a measure of profit against tangible shareholder capital — rising to about 20% by 2028, with its core capital ratio (CET1) steady around 14.6%, while NatWest faces pressure from rising risk‑weighted assets, a regulator’s measure of how risky a bank’s loans are. 3
The rerating case is still hostage to the interest-rate path. Jefferies said a sharp shift in rate expectations can bite bank margins, and it also flagged UK politics and fiercer competition for deposits as potential headwinds.
