London, February 6, 2026, 08:02 GMT — Regular session
Lloyds Banking Group (LLOY.L) shares traded near 105.8 pence in early Friday dealings, following a 5.6% drop the day before. (Investing)
The shift follows investors adjusting their interest-rate expectations after the Bank of England kept Bank Rate steady at 3.75% on Thursday, in a tight 5-4 vote. Governor Andrew Bailey indicated there was “scope for some further easing of policy.” (Reuters)
For banks, this is crucial since the rate trajectory directly affects net interest margin — the difference between earnings on loans and what they pay out on deposits. While rate cuts might boost mortgage and business lending, they can squeeze that margin if deposit rates don’t decline at the same pace.
UK bank shares dropped along with the broader market Thursday, as the FTSE 100 fell 0.9%. Matthew Ryan, head of market strategy at Ebury, called the next round of easing “a matter of timing” and pointed to the March meeting as particularly significant. (Reuters)
Lloyds pushed ahead with its buyback. A regulatory notice revealed it purchased 7 million shares on Feb. 5, at a volume-weighted average price of 106.8555 pence. The bank plans to cancel these shares, executing the programme via Goldman Sachs International. (TradingView)
Lloyds is pushing to broaden its earnings beyond UK retail banking. The Financial Times says the bank aims to ramp up lending to large corporate clients and boost services for financial institutions. CEO Charlie Nunn is set to reveal the next strategy phase in July. (Reuters)
Housing data added another twist. Halifax reported a 0.7% rise in British house prices in January, with a 1.0% increase year-on-year. But Amanda Bryden, Halifax’s head of mortgages, cautioned that “affordability remains a challenge” for many prospective buyers. (Reuters)
But the downside scenario is straightforward. If rate cuts come too quickly, earnings could take a hit before loan growth even accelerates. Any weakness in jobs or consumer spending would put credit quality under pressure. And if the corporate rebound does happen, it won’t be immediate.
Thursday’s decline came after a strong rally earlier this week. Lloyds hit a 52-week peak near £1.15 on Feb. 4, then closed at £1.06 on heavier-than-average volume, according to MarketWatch data. (MarketWatch)
Coming up next is the Bank of England’s rate decision on March 19, a key date as markets debate if the initial cut will happen in March or push into later spring. (Bankofengland)
