London, Jan 7, 2026, 10:34 GMT — Regular session
- Lloyds shares eased in London trade, slipping under the 100p mark after a recent run-up.
- Broker notes kept the spotlight on UK banks, with Barclays favouring Lloyds over NatWest.
- Investors are turning to late-January results for signals on margins and capital returns.
Lloyds Banking Group plc (LLOY.L) shares were down 0.9% at 99.40 pence by 1019 GMT, dipping below the 100 pence level after opening at 100.30 pence. The stock traded between 99.08 and 100.50 pence and is not far from a 52-week high of 101.70 pence.
The pullback came as fresh survey data underlined a weak UK building backdrop, a sensitive area for lenders with big mortgage books. The S&P Global/CIPS construction PMI printed 40.1 for December, and a housing-related sub-index dropped to 33.5, its weakest since May 2020.
Why it matters now is that Lloyds’ earnings are tightly linked to UK household credit and the housing cycle, leaving the shares exposed to swings in rate expectations and demand for mortgages. With the stock hovering around a round-number level, traders have also been quick to react to broker calls as the bank heads into its 2025 reporting stretch.
Barclays reiterated an “overweight” rating on Lloyds, arguing the bank’s earnings and capital generation run ahead of consensus and pointing to support from “structural hedge” repricing — the portfolio banks use to soften the impact of rate moves on deposit income — as well as loan growth. Barclays projected return on tangible equity (RoTE), a profitability measure versus shareholders’ tangible capital, rising to about 20% by 2028, and it cut NatWest to “equal weight” from “overweight.” 1
Jefferies, in a separate note flagged by Interactive Investor, raised its price target on Lloyds to 119 pence from 105 pence while keeping a “buy” stance. The broker warned that the biggest risk to the UK domestic banks’ investment case remained a sharp shift in interest-rate expectations, and it also pointed to tighter competition for deposits as a potential drag on margins. 2
For investors, the next checkpoint is whether Lloyds can defend net interest margin — the gap between what it earns on loans and pays on deposits — as borrowing costs and competitive pressure move around. They will also look for guidance on credit impairments, costs and any update to capital returns, including dividends and buybacks.
But the backdrop can turn quickly for a domestic lender. A deeper housing slowdown or a broader hit to UK growth would raise the risk of higher loan losses, while faster-than-expected rate cuts would typically compress bank margins.
The market’s next hard catalyst is Lloyds’ preliminary 2025 results on Jan. 29, with the annual report due on Feb. 18, when investors expect fresh detail on margin drivers, capital levels and shareholder distributions. 3
