Lloyds Banking Group: Strategy execution in focus; Income diversification to drive sustainable 20%+ returns

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Lloyds Banking Group: Strategy execution in focus; Income diversification to drive sustainable 20%+ returns

C A Z E N O V E Europe Equity Research

31 July 2026

Lloyds Banking Group Neutral

LLOY.L, LLOY LN

Strategy execution in focus; Income diversification to Price (30 Jul 26):116p

drive sustainable 20%+ returns Price Target (Dec-27):121p

Following the Group’s investor day, we came away constructive on management’s European Banks

ACability to deliver stronger, sustainable returns, across diverse income streams, with Sheel Shah, CFA

the pace of NII to trail Other income through the plan. We keep our EPS broadly (44-20) 7134-8455

unchanged, now forecasting slightly lower ROTE growth to 19.5% 28E and 20.6% sheel.shah@jpmorgan.com

30E, with a stronger run-rate for dividends at a 4-5% yield against a lower outlook Venkat Madasu

for buybacks (aggregate £14bn 26-30E vs c£17bn previously) given RWA growth. (44-20) 3493-9041

Operating leverage remains a focus, with the CIR to decline annually to c44% venkat.madasu@jpmorgan.com

JPMe 30E, while the Group’s cash investments of £13bn across the plan are Kian Abouhossein

expected to yield c£2bn of gross cost savings and Other income growth at c8% (44-20) 7134-4575

kian.abouhossein@jpmorgan.com

CAGR. Strategically, we see several interesting growth opportunities including J.P. Morgan Securities plc

deeper penetration of the bancassurance model (vs 20% mortgage-protection

cross-sell at present), an integrated transport ecosystem, connected commerce Specialist Sales contact details:

propositions, and Wealth & workplace pensions, amongst others, which offer Gigi Sparling - Specialist Sales -

deeper client penetration enabled by the Group’s tech infrastructure and data European Financials

capabilities.