Lloyds share price has done well in the past few months and is now hovering near its highest point in years. This rally has coincided with the ongoing surge of other UK banks.
LLOY has jumped by about 50% in the last 12 months. It has continued to underperform other companies like NatWest, HSBC, Standard Chartered, and Barclays. NatWest has soared by over 90%, while Standard Chartered is up by 77%. This article conducts a technical analysis and explains whether the Lloyds share price has more room to grow.
Lloyds share price technical analysis
The weekly chart shows that the LLOY stock price has been in a strong uptrend, as we predicted. It jumped above the key resistance level at 61.42p, its highest point on December 9, 2019, and October last year. That was a big move that signaled that bulls had prevailed.
The LLOY share price has remained above all moving averages, a sign that the momentum is continuing. In trend-following analysis, this performance is a sign that bulls are in control for now.
The Relative Strength Index (RSI) has continued rising, and recently moved above the overbought level. Similarly, the Percentage Price Oscillator (PPO) has remained above the zero line since February. The Awesome Oscillator has turned green.
Therefore, there is a likelihood that the stock will continue its uptrend in the near term as bulls target the next key resistance level at 80p. More Lloyds stock gains will become invalid if the stock plunges below the support at 61.42p.
Lloyds Bank’s business is doing well
The Lloyds share price has surged this year because of the ongoing surge of European bank stocks this year. The Nasdaq Europe Bank Index, which tracks the biggest banks in the region, has soared to a record high. It has jumped by over 44% in the last 12 months.
These stocks have done well because of higher interest rates that helped to boost their earnings per share (EPS). Most of them have used the higher interest income to boost their dividends and share repurchases.
The most recent results showed that Lloyds Bank’s had a statutory profit after tax of about £4.5 billion, down from £5.5 billion a year earlier. The net income dropped by about 5% during the year.
The decline, which the market received well, was because of higher impairment costs due to the motor insurance crisis.
At the same time, Lloyds Bank’s net interest income dropped by 7% to £12.8 billion, while its other underlying income was £5.6 billion.
Lloyds share price also jumped because of its strong FY’25 guidance. The company hopes that its net interest income will be about £13.5 billion, while the return on tangible equity will be 13.5%.
Lloyds Bank has also boosted its dividends and share buybacks. It paid an ordinary dividend of 3.17p a share last year, a 15% increase from a year earlier. It is also reducing its outstanding share count by boosting share buyback by up to £1.7 billion.
One way the company is doing this is by reducing its CET-1 ratio to 13% from 17.2% in 2021. It reduces the ratio by slashing the amount of money in its balance sheet. Even so, its ratio will be higher than other banks like Bank of America and Wells Fargo.
Read more: Analysts are bullish on Lloyds share price: should you?
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