Lloyds to hand shareholders £17bn by 2027, analysts say
Lloyds Banking Group is poised to return a considerable £17 billion to shareholders by 2027, according to analysis from Jefferies.
The forecast, reported by The Financial Times, anticipates Lloyds will continue its current share buyback program and increase dividend payouts as interest rates stabilise.
Jefferies analysts predict Lloyds will buy back £8.5 billion of shares and distribute £8.6 billion in dividends over the next three years. This projection is based on the bank maintaining a common equity tier one ratio of 13.5 per cent – a key measure of financial strength.
The anticipated returns are fuelled by Lloyds’ strong net interest margin, the difference between what it earns on loans and pays on deposits. While margins are expected to narrow as interest rates fall, Jefferies believes Lloyds is well-positioned to navigate the changing economic landscape.
“Lloyds is well-placed to deliver attractive capital returns,” the analysts wrote in a note. “We forecast buybacks and dividends of £17.1 billion over the next three years.”
The news comes as Lloyds reported strong half-year results earlier this month, with pre-tax profits reaching £3.9 billion.
However, the bank cautioned that economic uncertainty and the potential for higher bad loans could impact its future performance.Despite these concerns, Jefferies’ analysis suggests Lloyds remains a compelling investment for income-seeking investors.
Lloyds to hand shareholders £17bn by 2027, analysts say
Lloyds Banking Group is expected to return a staggering £17bn to shareholders by 2027, according to analysis from jefferies.
The forecast,reported by City A.M., is based on expectations of strong profitability and capital generation from the banking giant. Jefferies analysts predict lloyds will deliver an average return on tangible equity of 12.3 per cent between 2024 and 2027.
This impressive performance is anticipated to fuel substantial shareholder payouts through a combination of dividends and share buybacks.
“We forecast Lloyds returning £17bn of capital to shareholders between 2024-27e (c.15% of current market cap),” Jefferies said in a note to clients.
The prediction comes as Lloyds continues to benefit from higher interest rates, boosting its net interest margin – the difference between what it earns on loans and pays on deposits.
However, the analysts also cautioned that Lloyds’ performance is sensitive to economic conditions, particularly the housing market. A meaningful downturn in the property market could impact the bank’s asset quality and profitability.
Despite this risk, Jefferies remains optimistic about Lloyds’ prospects, reiterating a ‘buy’ rating on the stock with a target price of 55p.
Shares in Lloyds Banking Group were trading at around 48.8p this morning.
Lloyds Shareholders Set for £17bn Payout
Lloyds banking Group shareholders are set for a bumper payout with analysts projecting the lender will return over £17bn to investors by 2027.
the FTSE 100 giant was listed as Jefferies analysts “preferred” banking stock following a strong year-to-date performance.
Shares in Lloyds have jumped over 50 per cent since January. The bank received a hefty boost following the motor finance ruling that bolstered its market value by £3.56bn.
Jefferies analysts Jonathan Pierce and Piriya Rathod said Lloyds’ “longer than average” structural hedge would boost takings in the year to come.Structural hedging is a key strategy deployed by banks to shield profits from interest rate swings.
The bank is set to benefit with old earnings hedged on lower rates maturing and set to be replaced with new ones at the present higher interest rates.
This boost from this strategy alone is set to add over £1bn to Lloyds’ profit in both 2025 and 2026.