London, Feb 2, 2026, 08:19 GMT — Regular session
Lloyds Banking Group shares fell 2.15 pence, or 1.97%, to 106.85 pence in early trading, pulling back from a 52-week peak of 108.95. The stock still boasts a nearly 72% rise over the last year. (Investing)
Shares dipped after Shore Capital downgraded Lloyds to “sell” from “hold,” even while raising its price target to 91p from 84p, according to a broker note. The FTSE 100 was also set to open 0.6% lower, despite Nationwide Building Society reporting that annual house price growth climbed to 1.0% in January. (London South East)
Investors opened Monday on edge, shaken by wild swings in precious metals and a steep plunge in oil that rattled markets and dragged equity futures down. FTSE futures slipped 0.5% during Asian trading, according to Reuters data. (Reuters)
The Bank of England is the key mover for UK lenders this week, with the central bank set to keep its benchmark rate at 3.75% on Thursday. Investors will be tuning in closely—not just to the decision but to the tone of the statement. Sanjay Raja, Deutsche Bank’s chief UK economist, noted that “the timing of those rate cuts … is coming increasingly into question.” (Reuters)
Lloyds, with its strong focus on UK retail and mortgage banking, cares deeply about the trajectory of interest rates. That’s because net interest margins—the difference between what it earns on loans and pays on deposits—are sensitive to rate moves. While slower rate cuts can help preserve those margins, a harsher rate environment risks hitting borrowers if the economy weakens.
Lloyds reported a 12% jump in annual pre-tax profit last week, reaching 6.7 billion pounds. The bank also unveiled a 1.75 billion pound share buyback, a move aimed at boosting earnings per share by cutting the share count. It raised its profitability target but warned of nearly 1 billion pounds in charges linked to compensating customers for mis-sold motor finance. (Reuters)
The downgrade on Monday hit while the stock remained near the high end of its recent range, following a lengthy rerating of UK banks. Some investors seem quicker to take profits when risk appetite falters.
The downside risk remains. If the BoE shifts its stance more abruptly than anticipated, rate-cut expectations could swing back, rattling bank stocks. On top of that, new developments around consumer credit quality or redress expenses would only deepen uncertainty.
The next key dates for markets include Thursday’s Bank of England decision. For Lloyds, upcoming milestones are its annual report and accounts on Feb. 18, followed by the first-quarter interim management statement on April 29, per the bank’s financial calendar. (Lloydsbankinggroup)
