Lloyds (LON: LLOY) share price has joined the other European banking companies in a strong comeback. The stock has risen in the past eight straight weeks and is hovering at its highest point since January 2020. It has soared by over 158% from its lowest point during the pandemic.
Lloyds Bank bull run continuesEuropean stocks are doing well as investors cheer their growing shareholder returns and their relative undervaluation compared to peers. The Nasdaq Bank Index has risen for 9 straight weeks and is loitering at its highest point since January 2023.
Lloyds, the biggest UK bank, has done well, helped by its strong finances and the management’s plan to cut costs. In January, the company said that it would slash over 1,600 jobs this year and close some of its branches.
To a large extent, Lloyds Bank is doing well even as the British economy slows. This trend is happening because of the actions of the Bank of England (BoE), which has left interest rates unchanged at the highest point in years.
Higher interest rates have led to more net interest income, helping the company boost its payouts to shareholders. Its statutory profit after tax jumped to £5.5 billion in 2023 and its underlying net interest income stood at £13.8 billion.
As a result, Lloyds Bank has continued boosting its dividends to shareholders. Its final dividend for 2023 came in at 1.84p, higher than the 0.57p that it made in 2020. This means that its dividend has jumped by over 200% in that period.
Lloyds Bank has also been repurchasing its stock. It announced a £2 billion share buyback program in 2023, bringing the total payouts to investors to £3.8 billion. These returns were about 15% of the total company’s market cap.
Lloyds has room to grow its payouts. It ended last year with a CET1 ratio of 14.6%and the management expects that it will drop to 13.5%. It also expects that its return on tangible equity RoTE will be 13% this year and 15% in 2026.
The next important catalyst for Lloyds stock price will be the upcoming earnings scheduled for April 24th. Analysts expect these figures to show that its net interest income came in at £2.25 billion, down from £3.5 billion in Q1’23. Net income is expected to move to £4.3 billion.
Lloyds share price forecast
Turning to the weekly chart, we see that the LLOY stock price has been in a strong bullish trend in the past few weeks. It has flipped the important resistance point at 51.40p into a support level. This is an important level since it was its highest swing on February 6th.
The stock has moved above the 50-week and 25-week Weighted Moving Averages (WMA). Also, the Relative Strength Index (RSI) and the MACD indicator have all moved upwards.
Therefore, the outlook for the stock is extremely bullish, with the next point to watch being at 64.78p, its highest swing in December 2019. That price is about 20% above the current level.
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