LONDON, Jan 29, 2026, 12:40 GMT — Regular session
- Lloyds shares climbed roughly 2%, reaching the peak of their 52-week range following the full-year results
- Bank unveiled a £1.75 billion share buyback and lifted its profit forecast for 2026
- Motor finance redress and guidance on 2026 net interest income continue to be major variables
Lloyds Banking Group (LLOY.L) shares climbed Thursday following an upgrade to its 2026 profitability target and the announcement of a new share buyback, maintaining strong investor interest in Britain’s banking sector.
This update is significant since Lloyds is highly sensitive to rates and heavily exposed to mortgages. Traders frequently use its guidance as an early indicator of how UK lenders might fare amid easing interest rates and fierce deposit competition.
The motor finance commission dispute remains unresolved, pushing banks to reserve hefty amounts for potential compensation and legal fees. The ultimate cost is still up in the air.
Lloyds shares climbed 2.2% to 106.8 pence, hovering close to their 52-week peak after fluctuating between 103.35p and 106.80p during the session. Barclays and HSBC also gained ground in London trading. (Investing)
The bank posted a 12% jump in annual pre-tax profit, hitting 6.7 billion pounds—beating the 6.4 billion-pound forecast from analysts. It also raised its 2026 return on tangible equity target to above 16%. CEO Charlie Nunn said the bank had “continued our strategic execution and momentum,” despite charges related to compensating customers for mis-sold motor finance. (Reuters)
Lloyds declared a final dividend of 2.43 pence per share, pushing the total payout for 2025 to 3.65p, roughly 15% higher than last year. The bank plans to repurchase up to £1.75 billion in shares and will now assess excess capital returns twice a year. It also forecasted net interest income for 2026 at around £14.9 billion — the difference between what it earns on loans and pays on deposits. (Lloyds Banking Group)
Away from the numbers, Lloyds doubled down on its tech story. The group projects over £100 million in extra value from next-generation AI in 2026, building on roughly £50 million in 2025. It has already rolled out more than 50 generative AI use cases. Group Chief Operating Officer Ron van Kemenade said, “AI is already delivering real value” for both the business and its customers. (Lloyds Banking Group)
On motor finance, the key issue is whether the existing provision will hold up as the regulator and courts finalize their rulings. Richard Hunter, head of markets at interactive investor, pointed out that “the consensus is that the current provision will be sufficient,” highlighting Lloyds’ total provision of 1.95 billion pounds for the matter. (Interactive Investor)
The share rally isn’t guaranteed to last. If the motor finance redress bill overshoots estimates, UK rates fall more quickly than expected, or bad-loan charges climb, the bank’s 2026 targets and buyback speed could come under pressure.
Investors are set to dig deeper into Lloyds’ 2026 guidance on net interest income, costs, and returns, while also awaiting more details on the strategy update scheduled for July. The next key date on the company’s calendar is the release of its 2025 annual report on Feb. 18. (Lloyds Banking Group)
