Lloyds share price is closing in on hitting the 100p mark as the multi-year rally gains steam. The stock jumped to a multi-decade high of 95.4p, continuing a trajectory that started in 2020 when it bottomed at 18.56. So, will the LLOY rally accelerate?
Why Lloyds share price is soaring
Lloyds, like other European banks, has been in a strong rally in the past few years, bringing its market capitalization to over $70 billion.
This rally is accelerating at a difficult time for the UK, which is going through a triple-whammy of slow growth, high inflation, and taxes. Rachel Reeves, the Chancellor of the Exchequer, is considering announcing more taxes in her budget speech later this month.
She has also considered a windfall tax on the country’s banks, which have made billions of pounds in profits after the Bank of England hiked interest rates.
LLOY stock has jumped as investors cheered its earnings and its acquisition of Schroders Personal Wealth, a company that has over £17 billion in assets under management and 60,000 clients. The new business is now known as Lloyds Wealth.
The company also published strong financial results, which showed that its net interest income rose by 3% in the third quarter to £3.45 billion. Similarly, the other segment reported a 3% jump in income to £1.55 billion, bringing the total YTD income to £4.6 billion.
The only blemish in that report was its remediation costs, which surged to £875 million in the third quarter. This increase was because of the motor vehicle insurance claims that has been hunting the company for years. On the positive side, there are signs that the crisis is about to end.
The remediation cost dragged its profits, with the third quarter figure falling by 45% to £778 million. Its underlying profit was £1.2 billion, a 36% drop from the same period last year.
Lloyds Bank share price has also done well in the past few years as it continued to gain market share in the UK despite the ongoing competition from brands like Barclays, NatWest, and HSBC. Its lending in the third quarter rose by £6.1 billion to £477 billion, while its deposits rose to £496 billion during the quarter.
Additionally, Lloyds’ share price has done well as the company continued to lower its costs, partly through branch closures. Its operating costs rose by 3% in the last quarter to £7.2 billion.
Lloyds Bank has also continued to return substantial sums of money to its investors through dividends and share repurchases. This will continue as the company reduces its CET-1 ratio to 13%.
Lloyds stock price technical analysis
The daily timeframe chart shows that the Lloyds stock price has been in a strong uptrend in the past few years and is now attempting to move above the resistance level at 100p.
It has recently moved above all moving averages, while the Relative Strength Index (RSI) and other oscillators like the Stochastic and the MACD have continued rising and moved to the overbought level.
Lloyds’ Average Directional Index (ADX) has jumped to 40, a sign that the momentum is accelerating. Therefore, the most likely scenario is where the stock maintains the momentum and hits the resistance level at 100p and then pulls back as investors book profits.
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