Lloyds share price analysis and earnings preview: is it a buy or sell?

Lloyds Bank share price continued its strong rally as investors reacted to the recent US bank earnings and as traders focused on the upcoming earnings and as traders focused on its upcoming earnings. It was trading at 101.65p, up by 75% from its lowest level in April last year.

Lloyds Bank to publish its financial results this week

Lloyds Bank stock remained above the important resistance level at 100p this month as American banks released their financial results, which showed that their businesses continued doing well.

The company will publish its financial results this week, which will provide more information about the fourth quarter and the full year. 

Its consensus numbers show that analysts expect its business to have a strong performance in Q4 as the UK economy stabilized.

The net interest income is expected to come in at £3.54 billion, up from £3.451 billion in the previous one. Its other income, which includes ATM fees, wealth management, service charges, and rent from owned properties, continued rising, reaching £1.55 billion.

If these estimates are accurate, it means that it’s net interest income (NIM) for the year will be £13.648 billion, up from £12.84 billion a year earlier. The other income will be £6.08 billion, up from £5.5 billion from a year earlier.

The consensus report shows that its Q4 profit rose to £1.2 billion, bringing the annual figure to £4.57 billion. 

Lloyds, like other European banks, has benefited from the relatively high interest rates in the UK as inflation has remained at an elevated level. 

City analysts believe that the Bank of England will maintain rates higher for longer as UK inflation has remained much higher than the target of 2.0%. The most recent data showed that the headline Consumer Price Index (CPI) rose 3.4% in December.

The company has also benefited from its cost-cutting measures, including the increasing usage of digital banking technology. City analysts believe that the cost-income ratio dropped to 59.6% in the fourth quarter from the previous 68.4%. This figure is expected to keep going downwards, moving from 60.4% in 2024 to 47.2% in FY’28.

At the same time, the asset quality ratio is expected to keep rising, moving from 0.1% in 2024 to 0.27% in FY’28. More shareholder return data are also expected to keep growing in the coming years, with the dividend per share moving from 3.17p in 2024 to 5.77p in 2028. Its share buyback is expected to move from £1.7 billion in 2024 to £3 billion in 2027.

The other key catalyst for the Lloyds share price will be its falling remediation costs, which are expected to move to £1 billion in 2025 from £899 million in 2024. These costs will be because of the motor insurance crisis. It will then continue falling to £248 million in 2028.

Lloyds share price technical analysis 

The daily timeframe chart shows that the Lloyds share price has been in a strong uptrend in the past few months and is now trading at its highest level since 2008. It has formed an ascending channel and is now hovering near its upper side.

The two lines of the Percentage Price Oscillator have formed a bearish crossover pattern. Also, the Relative Strength Index (RSI) has pointed downwards.

Therefore, the most likely scenario is where the LLOY stock price pulls back after earnings as investors start booking profits. If this happens, the next next key level to watch will be at 95p, the lower side of the ascending channel 

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