Lloyds Banking Group shares have returned 151% over the past five years, turning every £1,000 invested into roughly £2,510. With the share price trading near its highest level since before the 2008 financial crisis, investors who bought in early are now asking whether to take profits or hold on.
The case for staying is not without merit. Reuters reported that Lloyds posted statutory pretax profit of £4.3 billion for the first half of 2026, up 23% year-on-year, on net income of £9.7 billion. For the full year 2025, the group recorded statutory profit before tax of £6.7 billion, up 12% year-on-year, according to Lloyds’ annual report. Return on tangible equity reached 12.9% for 2025, or 14.8% excluding one-off charges.
What the Numbers Say About Lloyds Banking Group Shares
That strong run has pushed the valuation higher. By the end of the first half of 2026, the shares were trading at 1.9 times net asset value, even after adjusting for the bank’s ongoing share buyback programme. Shore Capital reiterated a Sell recommendation in late April, citing that level as a reason to be cautious, with a price target of 91p, roughly 17% below the prevailing price at the time of writing.
Shore Capital had previously held a Hold rating on the stock with a target of 84p. When it moved to Sell, it lifted that target to 91p, according to Lloyds Bank market news. The firm acknowledged first-quarter performance was strong but argued the share price already reflected it.
Not everyone agrees. Based on ten analysts tracked by MarketBeat over the past 12 months, the consensus sits at Moderate Buy, with six buy ratings, three holds, and just one sell. The average 12-month price target across those analysts is GBX 114.60, with a high of GBX 127. RBC Capital raised its own target from 100p to 110p in October 2025 after third-quarter results, maintaining an Outperform rating, according to Yahoo Finance.
The group’s 2026 guidance targets net interest income of approximately £14.9 billion, a cost-to-income ratio below 50%, and return on tangible equity above 16%, per the annual report.
Motor Finance: The Overhang That Will Not Go Away
The motor finance mis-selling case remains the clearest risk. Lloyds’ total provision stands at £1.95 billion, including an additional £800 million charge added to cover redress and operational costs, as reported by The Guardian. The Financial Conduct Authority (FCA) has estimated the industry-wide cost at £11 billion, potentially reaching £12.4 billion if all eligible customers file claims.
The Supreme Court ruled largely in favour of banks, finding that hidden commissions were not unlawful, and Lloyds said material changes to its £1.2 billion provision at that stage were unlikely. But compensation payments to affected drivers have been delayed until at least 2027, following an FCA announcement pushing back its central scheme, the BBC reported. Complaints have already been filed against four million finance agreements.
The timeline leaves uncertainty on the balance sheet for at least another two years. Investors weighing the 151% gain against current valuation multiples need to factor in that the full cost of the motor finance issue is not yet settled.
Lloyds also offered an interim dividend of 1.22 pence per share, amounting to £731 million, in the first nine months of 2025, an income stream that remains intact for now and gives holders of longer duration a reason to sit tight rather than sell into the rally.
