Lloyds Banking Group PLC (LLOY.L): Thoughts Post Strategy Update: A Plan Built on Conservative Assumptions Plus Optional Upside From New ‘Ecosystem‘

Research evidence excerpt

Lloyds Banking Group PLC (LLOY.L): Thoughts Post Strategy Update: A Plan Built on Conservative Assumptions Plus Optional Upside From New ‘Ecosystem‘

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30 Jul 2026 10:22:20 ET │ 11 pages

Lloyds Banking Group PLC (LLOY.L)

Thoughts Post Strategy Update: A Plan Built on Conservative

Assumptions Plus Optional Upside From New 'Ecosystem'

CITI'S TAKE Buy

Price (29 Jul 26 16:30) £1.11 In our initial reaction - see 2Q26 Small Beat And New 2027-30 Targets As

Target price £1.25 Expected - we argued the 2028 and 2030 RoTE guidance was predicated

on conservative rate assumptions. What became clear from Expected share price return 12.6%

management's presentation is that there is even more conservatism built Expected dividend yield 3.8%

into the targets than we first realised, including: (1) 50bps lower Expected total return 16.4%

reinvestment yields on hedge. (2) Only minor nominal hedge growth. (3) Market Cap £64,636M

Loan/deposit margin compression on ongoing competition. A back-of-the US$86,425M

envelope calculation on hedge upside alone implies NII could be ~£950m

more than implied by 2028 company targets, most of which would drop to

the bottom line, moving RoTE into line with consensus ~20% (vs target

>18%). On strategy, we welcome the vision outlined to provide a complete Andrew Coombs, CFAAC

ecosystem for consumers across their housing, motor, wealth & insurance +44-20-7986-4053

needs; we elaborate more below. Reiterate Buy. andrew.coombs@citi.com

Canberk Benning

Targets Recap vs Consensus - New 2027-30 guidance: (1) NII mid-single digit +44-20-7986-1046

CAGR implying ~£16.4bn 2028 and ~£18.1bn 2030 (vs cons. £17.4bn and £18.8bn). canberk.benning@citi.com

(2) Non-NII high-single digit CAGR implying ~£7.8bn 2028 and ~£9.0bn 2030 (vs Saifur Rahman

cons.