Lloyds Banking Group Share Price Near 10‑Year High: Is LLOY Stock Still a Buy in December 2025?

Published 1 December 2025 – This article is for information only and is not investment advice.

Lloyds share price today

Lloyds Banking Group’s London‑listed shares (LSE: LLOY) closed on 1 December 2025 at around 94.6p, close to a 52‑week high of 96.9p and well above the 52‑week low of 52.4p. At this level the group is valued at roughly £55.7bn, on a price/earnings ratio of about 19.6 times based on recent earnings. ^[1]

Over the last 12 months the share price has climbed a little over 80%, making Lloyds one of the standout performers in the FTSE 100 in 2025. ^[2]

In New York, Lloyds’ American Depositary Receipt (ADR), traded under the ticker LYG, changed hands around $5.10 on Monday, close to its one‑year high of $5.14 and up sharply from a 12‑month low of $2.56. ^[3]

The question many investors are now asking is whether there is still upside left after such a strong run – or whether risks like the UK car‑finance scandal and fresh litigation could cap the gains.

What’s been driving Lloyds’ 2025 rally?

1. Strong underlying earnings and higher margins

Despite some eye‑catching provisions, Lloyds’ core business has been quietly improving.

For the nine months to 30 September 2025, the bank reported: ^[4]

Underlying net interest income (NII) of £10.1bn, up 6% year‑on‑year.
Net income (including other income) of £13.6bn, up 6%.
A banking net interest margin (NIM) of 3.04%, up from 2.94% a year earlier.
Growth in loans and advances to customers to £477bn and customer deposits to nearly £497bn.

However, a further £800m provision for historic motor‑finance mis‑selling pushed total remediation charges for the year to £912m, dragging the quarterly statutory profit before tax down 36% to £1.17bn, even though this still beat market expectations. ^[5]

Capital remains robust. Lloyds ended Q3 with a CET1 capital ratio of 13.8%, well above regulatory minimums, and year‑to‑date capital generation of around 110 basis points (141 bps excluding the motor‑finance hit). ^[6]

In its fixed‑income investor presentation, the bank nudged 2025 guidance higher, forecasting: ^[7]

2025 NII (excluding motor) of about £13.6bn (up from £13.5bn guidance).
2025 operating costs of roughly £9.7bn (excluding a Q4 impact from its Schroders Personal Wealth acquisition).

And for 2026, management is still targeting:

Cost–income ratio below 50%
Return on tangible equity (RoTE) above 15%
Capital generation above 200 bps a year
CET1 ratio trimmed to around 13% – still a healthy cushion

These medium‑term targets help explain why many investors are prepared to look through near‑term noise from provisions and litigation.

2. Rising dividends and big share buybacks

Lloyds continues to direct a large share of profits back to investors.

For 2024, the group paid a total ordinary dividend of 3.17p per share, up 15% year‑on‑year, and announced a £1.7bn share buyback alongside results. In total, about £3.6bn was returned to shareholders for the year. ^[8]

Because the share price was much lower at the time, that dividend equated to a yield of roughly 5.8% on 2024 prices. On today’s near‑95p price, the same 3.17p dividend corresponds to a trailing yield of about 3.3% – still meaningful, but less eye‑catching. ^[9]

In 2025, Lloyds has already increased its interim dividend to 1.22p, again 15% higher than the previous year, supported by double‑digit growth in half‑year profits and rising deposits. ^[10]

External analysts expect the payout to keep growing. IG’s dividend forecast, for example, projects: ^[11]

Around 3.4–3.6p per share in 2025,
Rising towards 4.0p or more in 2026,

which at current prices would translate to forward yields of roughly 3.5–4.2%, assuming those estimates are met.

At the same time, buybacks are shrinking the share count. Lloyds repurchased about 3.7bn shares under its £2bn 2023 programme at an average price of just over 54p, and the £1.7bn 2024 programme, launched in February 2025, remains in progress. ^[12]

The bank confirmed on 1 December that it now has 58.93bn ordinary shares in issue, all with voting rights and no treasury shares, underlining how buybacks and employee plans are shaping the capital base. ^[13]

3. A friendlier political backdrop for UK banks

Another key driver came from Westminster rather than the City.

Ahead of November’s Labour budget, markets had feared an extra levy on the interest banks earn from deposits parked at the Bank of England. When Chancellor Rachel Reeves chose not to introduce new bank‑specific taxes, UK lenders rallied sharply: Lloyds climbed 3.8% on the day, and the FTSE British banks index is now up about 62% since Labour’s election win in July 2024. ^[14]

Research from S&P Global and Deutsche Bank, summarised by Interactive Investor, notes that rising structural hedge income, loan growth and improving fee income have triggered upgrades to sector‑wide net interest income forecasts for 2025 and support expectations that banks’ NII will re‑emerge as a key growth driver into 2026. ^[15]

4. Digital transformation: AI assistant and branch cuts

Lloyds is also pushing hard on digital efficiency.

In early November the bank revealed plans to roll out an AI‑powered conversational financial assistant in 2026, initially tested with around 7,000 employees. The tool is designed to help customers manage budgets, track spending and access personalised guidance through Lloyds’ mobile channels. ^[16]

At the same time, Lloyds is slimming its physical footprint. In January the group announced it would close 136 UK high‑street branches—61 under the Lloyds brand, 61 Halifax and 14 Bank of Scotland—by spring 2026, roughly 15% of its network. Management argues that branch usage at the affected sites has fallen by nearly half over five years, though unions warn about the impact on vulnerable and rural customers. ^[17]

Together, these moves underline the bank’s focus on cutting costs and modernising delivery, but they also carry reputational and execution risks.

The big overhang: car‑finance mis‑selling

The main downside story in 2025 has been Lloyds’ exposure to historic car‑finance commission practices.

In early 2025 the bank added £700m to its provisions following a Court of Appeal ruling and an ongoing probe by the Financial Conduct Authority (FCA), taking the total allocated at that point to about £1.15bn. ^[18]

In October, following the FCA’s consultation on a sector‑wide redress scheme, Lloyds booked another £800m charge, taking total motor‑finance provisions to £1.95bn. The FCA consultation closed on 18 November 2025, and a final policy statement with detailed rules is expected in early 2026. ^[19]

Analysts are split on the ultimate bill. Some estimates suggest Lloyds may need to set aside several billion pounds more if the FCA opts for a particularly generous scheme, while others believe the current provision could prove adequate. ^[20]

For now, the uncertainty is a clear risk: any significant uplift in redress costs would hit earnings, slow capital generation and potentially limit the pace of future buybacks.

Fresh litigation: the £280m Arena TV claim

Adding to the legal clouds, administrators for collapsed broadcaster Arena TV are pursuing a High Court claim reportedly worth around £280m against Lloyds, alleging the bank failed to detect signs of fraud linked to credit facilities. Lloyds has indicated it will defend itself vigorously, and no provision has yet been disclosed for this case. ^[21]

While it is too early to judge the financial impact, the lawsuit is another reminder that legacy credit exposures can still create volatility for shareholders.

How attractive is Lloyds’ dividend now?

From an income perspective, Lloyds still looks appealing relative to cash and government bonds, even if the headline yield has fallen as the share price has risen.

Key points for dividend‑focused investors:

Historic payouts: 3.17p per share in 2024, up 15%, with a long‑run average dividend yield of about 5.7% over the last five years and 6.5% over 10 years, according to external estimates. ^[22]
Coverage: Forecasts suggest dividend cover of around 2.0x in 2025 and 2.2x in 2026, implying earnings should comfortably fund expected payouts if current estimates hold. ^[23]
Buybacks: The ongoing £1.7bn 2024 buyback is shrinking the share count, which supports earnings per share and, over time, can help offset the dilutive effect of equity issued under staff schemes. ^[24]

The flip side is that with the share price now near a decade‑high, new buyers no longer enjoy the 6–7% yields on offer a year ago. On today’s price the prospective yield, using a 3.4–3.6p 2025 dividend range, looks more like 3.5–4%, still reasonable but not outstanding for a cyclical UK bank.

What do analysts and models say about LLOY and LYG?

Sell‑side analyst views

For the London‑listed LLOY shares, MarketBeat data shows: ^[25]

An average 12‑month price target around 95p,
A target range of roughly 77p to 110p,
A consensus rating described as “Moderate Buy”.

In other words, after the recent rally, the average analyst target now sits very close to the current price, implying limited near‑term upside but no strong conviction that the shares are overvalued.

For the US‑listed ADR LYG, a MarketBeat review of recent broker reports highlights: ^[26]

A consensus rating skewed towards Buy/Outperform, with a mix of buy and hold recommendations.
Forecast earnings per share of around $0.27 for the current year and analysts expecting revenue and EPS to grow again in 2026.

Independent site StockAnalysis aggregates forecasts pointing to revenue growth of about 10% in both 2025 and 2026 and EPS moving from £0.06 in 2024 to around £0.07 in 2025 and £0.10 in 2026 (GBP figures converted for ADR investors). ^[27]

Technical and algorithmic signals

Technical‑analysis dashboards on TradingView currently flag LLOY as a “Buy” on daily and weekly time frames, reflecting the strong upward trend and momentum indicators, albeit with the stock in overbought territory on some oscillators after its rapid climb. ^[28]

Algorithmic forecast models, which extrapolate from price and volume data rather than fundamentals, are more mixed:

CoinCodex projects LYG to trade in a band between $4.82 and $5.31 in December 2025 (roughly flat from today), with a one‑year projection of about $4.60 (around 10% downside) but a speculative upside towards $10 by 2030. ^[29]
StockScan, by contrast, publishes a very bearish set of long‑term scenarios, with average prices in the $1–2 range for 2028‑2030, implying large declines from today’s level. ^[30]

These quantitative tools can be useful sentiment gauges, but they do not incorporate changing regulation, credit‑cycle dynamics or management actions, so most professional investors treat them as supplementary rather than central to an investment case.

Key risks for the Lloyds share price in 2026

Looking into next year, several themes could determine whether the Lloyds rally has further to run:

Final cost of car‑finance redress
- FCA rules in early 2026 will crystallise the bank’s ultimate exposure. Any requirement for sector‑wide refunds beyond current assumptions could trigger new provisions and dent profits. ^[31]
Interest‑rate path and margin pressure
- Lloyds’ strong 2025 NIM partly reflects the lag between interest‑rate cuts and the repricing of customer deposits. Faster‑than‑expected cuts from the Bank of England or more intense competition for savings could compress margins more than the bank currently anticipates. ^[32]
UK economic slowdown
- A weaker housing market or rising unemployment would increase credit impairments. So far, arrears remain low and stable and Lloyds’ asset‑quality ratio stands at a conservative 0.18%, but that could change in a downturn. ^[33]
Operational and reputational issues
- Large‑scale branch closures and the introduction of AI tools both carry execution risk. Mis‑steps could provoke political or regulatory pushback, particularly if vulnerable customers feel left behind by the digital shift. ^[34]
Litigation beyond motor finance
- The Arena TV litigation and any similar legacy cases could create further, currently unquantified liabilities. ^[35]

So, is Lloyds stock a buy, hold or sell now?

From a valuation standpoint, Lloyds no longer looks like the deep‑value bargain it was at the start of 2025, when shares traded near 50p with a high‑single‑digit yield. Today’s price around 95p reflects:

Strong capital generation and generous dividends plus buybacks,
Improved underlying profitability with a 3%+ NIM,
A supportive domestic macro and political backdrop,
But also material but still uncertain legal and regulatory risks.

Broadly, current market and analyst consensus seem to imply:

Decent total‑return potential from dividends and modest earnings growth if motor‑finance costs stay close to the existing £1.95bn provision and management hits its 2026 RoTE target. ^[36]
Limited short‑term upside in the share price after the 80% rally, unless either earnings or capital returns surprise further to the upside. ^[37]
Downside risk if the FCA designs a more generous redress scheme or if the UK economy disappoints. ^[38]

For income‑oriented, long‑term investors comfortable with UK financials and regulatory risk, Lloyds may still justify a place in a diversified portfolio, offering a growing dividend and ongoing buybacks backed by solid capital. For more cautious or shorter‑term traders, the risk/reward trade‑off now looks more finely balanced than it did earlier in the year.

As always, whether LLOY or LYG suits you will depend on your risk tolerance, time horizon and broader portfolio – and professional advice is worth seeking if you’re unsure.

References

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Euronext Stock Market Today, December 1 2025: CAC 40 and Euronext 100 Slip as Cautious December Start Tests Santa-Rally Hopes

US Stock Market Today: 7 Things to Know Before the Opening Bell on December 1, 2025