Lloyds Banking Group (LON: LLOY) Near Record High After BoE Stress Test: Latest Share Price, News and 2026 Stock Forecast

This article is for information only and does not constitute investment advice.

Lloyds Banking Group share price today: still pushing toward £1

Lloyds Banking Group plc (LON: LLOY) is ending 2025 near the very top of its trading range.

As of the afternoon of 3 December 2025, Lloyds’ London‑listed shares are trading around 97p, having touched an intraday high just under 98p, according to real‑time data from Investing.com and Google Finance. ^[1]

Hargreaves Lansdown data show: ^[2]

Close on 3 December: about 96.7p
52‑week range: roughly 52.4p – 97.7p
Market capitalisation: just under £57bn
Dividend yield (trailing): about 3.3%
One‑year share price gain: a little over 80%

A year-long rally has turned Lloyds from a perennial “value trap” into one of 2025’s standout FTSE 100 performers, with TechStock² estimating gains of over 50% year‑to‑date and around 80% over 12 months. TS2 Tech+1

On 3 December specifically, MarketBeat reports that Lloyds set a new 52‑week high after JPMorgan lifted its price target from 100p to 102p, with the stock trading as high as 97.74p and last seen around 97.2p on heavy volume. ^[3]

What is moving Lloyds stock on 3 December 2025?

1. A clean pass in the Bank of England’s 2025 stress test

The biggest fresh catalyst is regulatory, not earnings.

In a regulatory filing dated 2 December, Lloyds announced that it “comfortably” passed the Bank of England’s 2025 Bank Capital Stress Test (BCST). Under a severe downturn scenario – involving deep global recessions, rising unemployment and sharp falls in property prices – the BoE calculated: ^[4]

Stressed CET1 capital ratio:10.9%, versus a minimum requirement of 5.9%
Stressed leverage ratio:4.6%, versus a minimum of 3.3%
No capital actions required (no forced dividend cuts or capital raises under the scenario)

Crucially, Lloyds notes that these stressed ratios are achieved without converting its AT1 contingent convertible bonds into equity, underscoring that common equity alone provides the modeled shock‑absorbing buffer. ^[5]

For equity holders, this BoE verdict matters in three ways:

It confirms that Lloyds’ starting capital position (CET1 around the high‑13% area at the end of 2024) gives it significant room to absorb shocks. ^[6]
It reduces the immediate risk of regulatory pressure to hoard capital instead of returning it through dividends and buybacks.
It supports the argument that Lloyds can keep growing its loan book – and its payout – while staying within prudential limits.

The stress‑test success is one reason the stock is now testing that psychologically important £1 level.

2. Motor‑finance scandal: provisions up, uncertainty not gone

The other major story hanging over Lloyds all year has been the UK motor‑finance mis‑selling scandal.

In October, Lloyds increased its provision for potential compensation by £800m, taking its total motor‑finance provision to about £1.95bn, according to reporting in The Guardian. ^[7] The bank’s Q3 2025 Interim Management Statement confirms that remediation charges for the first nine months of the year reached £912m, largely due to that extra motor‑finance charge. ^[8]

While the industry feared a “second PPI” scenario, the UK Supreme Court’s ruling on car‑finance hidden commissions earlier this year was broadly favourable for lenders. Lloyds’ own markets‑news page notes that the court found such commissions were not automatically unlawful, and that following the ruling the bank said any change to its provision is “unlikely to be material” in the context of the group. ^[9]

However, the story is far from over:

The Financial Conduct Authority (FCA) is designing a redress scheme. A November Reuters piece suggested potential industry‑wide costs around £11bn if most eligible borrowers claim, with an upper range closer to the high‑teens of billions in some scenarios. ^[10]
On 3 December, the FCA and UK authorities signalled that the pause on processing motor‑finance complaints will be lifted in May 2026, with compensation and administrative costs for the industry still expected to total roughly £11bn. ^[11]

Lloyds is widely seen as one of the largest single contributors to this bill. The current £1.95bn provision may ultimately prove sufficient or excessive – but the uncertainty will likely linger into the formal launch of the FCA scheme in 2026.

Under the bonnet: Q3 2025 results and fundamentals

Lloyds’ fundamentals in 2025 have been stronger than the headline legal provisions suggest.

The group’s Q3 2025 update and related presentations show: ^[12]

Net income (nine months to 30 September):£13.6bn, up about 6% year‑on‑year
Underlying net interest income:£10.1bn, also up around 6%
Banking net interest margin (NIM): roughly 3.0–3.05%, up from just under 3.0% a year earlier
Statutory profit after tax (YTD):£3.3bn
Return on tangible equity (RoTE): about 11.9% YTD, or 14.6% excluding the motor‑finance provision
Tangible net asset value (TNAV):55.0p per share, up from 52.4p at the end of 2024
CET1 ratio: around 13.8%
Asset quality ratio: expected to be about 20 basis points for 2025, better than earlier guidance of 25 bps

The motor‑finance hit drags down statutory profit – Q3 pre‑tax profit fell more than a third year‑on‑year – but underlying banking profitability still looks healthy. TS2 Tech

Capital returns: dividends plus an aggressive buyback

Lloyds has been leaning hard into shareholder returns:

StockInvest and dividend data from multiple providers indicate a final dividend of 2.11p per share paid in May 2025, and an interim dividend around 1.22p in September, implying total cash dividends of roughly 3.3p per share for 2025 so far. ^[13]
At a share price near 97p, that equates to a trailing dividend yield around 3.3–3.4%, in line with Hargreaves Lansdown’s estimate. ^[14]

On top of that, Lloyds has been shrinking its share count materially. The Q3 Interim Management Statement notes that the group had repurchased about 1.8bn shares year‑to‑date, with a cash outlay of roughly £1.4bn. ^[15]

TipRanks reported on 3 December that Lloyds bought a further 9.84m shares at an average price just under 97p as part of this ongoing buyback programme, with the shares to be cancelled. ^[16]

For investors, this combination – a mid‑single‑digit dividend yield plus high single‑digit share‑count reduction – is a key part of the bull case.

Macro backdrop: from rate‑hike winner to rate‑cut balancing act

Lloyds is tightly tied to the UK economy and the Bank of England’s policy decisions.

A Yahoo Finance analysis in late November notes that the BoE has already cut interest rates five times since the summer of 2024, and markets still expect more easing as inflation falls back. ^[17]

Earlier in 2025, Lloyds chief executive Charlie Nunn said he expected two further cuts in Bank Rate this year, while also warning the UK government against hiking taxes on financial services after the bank’s robust profits. ^[18]

The rate path is a double‑edged sword for Lloyds:

Higher rates boost margins on its large deposit base.
But as the BoE cuts, competition for savings and the roll‑off of fixed‑rate mortgages can squeeze NIM.

So far, hedging and balance‑sheet management have helped Lloyds to keep margins around 3%, even as the BoE has moved into easing mode. ^[19]

At the same time, Lloyds’ own Business Barometer for November showed UK business confidence falling from 50% to 42%, still comfortably above its long‑run average of 30% but pointing to a softer economic tone heading into 2026. TS2 Tech For a bank so geared to the domestic economy, this matters for future loan growth and credit quality.

How expensive is Lloyds stock now?

There is some disagreement between data providers on the exact valuation multiple, but the picture is consistent:

MarketBeat quotes a price/earnings ratio around 17x based on its earnings data. ^[20]
Hargreaves Lansdown has the trailing P/E closer to 19–20x. ^[21]

Either way, Lloyds now trades at a high‑teens multiple, which is rich relative to its own history and to some other UK banks, but not extreme against global peers with similar returns on equity.

Compared with tangible book value, the stock also looks much less “cheap” than a year ago. With TNAV around 55p and the share price just under 97p, Lloyds is valued at roughly 1.7–1.8 times tangible book. ^[22]

That re‑rating reflects:

Stronger earnings and rising NIM
Proof of capital resilience via the BoE stress test
A large and ongoing share buyback
Relief that the motor‑finance scandal may be painful but manageable, not existential

Analyst ratings and stock‑price forecasts for 2026

City and Wall Street views

The latest MarketBeat snapshot shows analyst opinion split but broadly constructive: three analysts rate Lloyds a Buy and three a Hold, for an overall “Moderate Buy” consensus. The average price target is about 98.5p, only slightly above the current price, although individual targets range from the mid‑80s to around 110p. ^[23]

Recent moves include: ^[24]

JPMorgan nudging its target from 100p to 102p and keeping a neutral stance
Royal Bank of Canada increasing its target to 110p with an “outperform” rating
Jefferies assigning a 105p target and a Buy recommendation
Shore Capital remaining more reserved with a Hold view around the mid‑80s

On the more quantitative side, technical‑analysis site StockInvest upgraded Lloyds to a “Strong Buy candidate” in late November. Its model, updated on 2 December, projects that – given the current uptrend – the share price could rise about 17% over the next three months, with a 90% probability range between roughly 103p and 115p. ^[25]

TipRanks’ AI‑driven “Spark” tool similarly labels Lloyds as “Outperform”, highlighting positive technical momentum and stable fundamentals, with a fair valuation and moderate dividend yield. ^[26]

These forecasts are inherently uncertain, but they show how the market narrative has turned from “cheap and risky” to “quality domestic bank at a fair price”.

Bull case vs. bear case going into 2026

Bullish arguments, emphasised by outlets such as TechStock² and several brokers, include: TS2 Tech+2TS2 Tech+2

Healthy underlying earnings growth and a RoTE potentially around 12–14% if large one‑off provisions fade
Strong capital ratios, now validated by the BoE stress test
A growing dividend and aggressive buyback programme that together could return a high‑single‑digit percentage of market cap to shareholders annually
Dominant UK retail and SME franchises, with scope to grow fee income via wealth, insurance and rental‑housing initiatives

Bearish perspectives, highlighted in several Yahoo Finance and Motley Fool pieces, stress that: ^[27]

The share price has already rerated sharply – an 80%+ 12‑month gain leaves limited margin of safety if earnings disappoint.
The BoE’s rate‑cutting cycle could erode margins faster than Lloyds can offset via volume growth and hedging.
The motor‑finance compensation scheme, while less frightening than initially feared, could still end up higher than current provisions.
Lloyds’ dividend yield, now around the low‑to‑mid 3% range, is no longer exceptional compared with other high‑yield FTSE 100 stocks; some analysts now prefer alternative income plays.

One Motley Fool article published on 2 December framed the debate as whether the Lloyds share price is more likely to hit £1 soon or retreat toward the mid‑70p level, underscoring how finely balanced sentiment has become near current levels. ^[28]

Key risks to watch

Heading into 2026, investors tracking Lloyds will be watching several key risks:

Regulatory outcomes
The precise design of the FCA’s motor‑finance redress scheme, expected to crystallise in 2026, will determine whether provisions such as Lloyds’ £1.95bn are conservative or need topping up. ^[29]
UK macroeconomic conditions
Lloyds’ own Business Barometer already shows business confidence cooling, though not collapsing. A sharper downturn in employment or house prices would hit both loan growth and credit quality. TS2 Tech+1
Interest‑rate path and competition for deposits
Further BoE cuts, particularly if accompanied by intense competition for savings, could pressure NIM more than current guidance implies.
Litigation and conduct risk beyond motor finance
Large UK banks have a long history of unforeseen conduct charges. While nothing of PPI‑scale is currently visible beyond car‑finance mis‑selling, that legacy remains a structural risk.
Strategic execution
Lloyds is investing heavily in digital transformation, AI and new ventures such as a growing rental‑housing portfolio, which the Financial Times reports has reached around £2bn in value. Execution missteps or overruns in these projects could weigh on returns. ^[30]

Outlook: can Lloyds shares push decisively through £1?

Lloyds Banking Group enters December 2025 with:

A share price within a few pence of the £1 level
A high‑teens P/E and mid‑single‑digit yield
Capital ratios that have just been stress‑tested and passed with significant headroom
A sizeable, ongoing buyback and a commitment to maintaining attractive returns on tangible equity

The bull case says that if the UK achieves something close to a soft landing, the FCA scheme lands near current assumptions, and Lloyds continues to execute on cost control and digital growth, the stock could justify trading above book value and potentially hold a triple‑digit pence price.

The bear case warns that after an 80% rally, expectations may now be ahead of reality; any disappointment on rates, regulation or the economy could see the shares retreat back toward the 80s – or lower – even if the long‑term franchise remains solid.