Outlook for Lloyds Banking Group shares in 2020
Our head of markets identifies several reasons why Lloyds may do well in the months ahead.
16th January 2020 12:42
by Richard Hunter from interactive investor
Richard Hunter, interactive investor’s head of markets, identifies several reasons why Lloyds may do well in the months ahead.
[Filmed 19th December 2019]
A stock that may be worth watching in 2020 is Lloyds Banking (LSE:LLOY). It's had a pretty good year, over the last 12 months its shares rising just over 20%. But a lot of that, of course, is down to the “Boris bounce”. If you look back a bit further, over the last five years, the shares are actually down 16%.
So maybe it's time that the UK banking sector in general, or Lloyds in particular, get some revaluation. Obviously, Lloyds has had its problems in terms of both PPI and the difficulty of being able to make money in this historically low interest rate environment.
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Nonetheless, this is a lender with a sector-beating cost income ratio of around 47%, a punchy dividend yield of somewhere around 5.2%, and what is increasingly becoming a stronghold in the new digital environment.
If you add all that together, with the fact that it streamlined its business, it could be interesting. There is, of course, still some caution around the stock as the negotiations with Europe continue, which might explain the fact that the current market consensus of Lloyds is a buy, but a “cautious buy”.
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