Lloyds Banking (LON: LLOY) reported its third-quarter results Wednesday, prompting an initial rise in its share price. However, analysts at Citi were cautious following the earnings call.
Lloyds shares ended up closing Wednesday's session down on the day, and while it was flat on Thursday, it has edged around 0.3% higher so far on Friday. The bank
However, Citi said in a note to clients that they were cautious about Lloyds' fourth quarter and “felt the conference call was somewhat underwhelming,” as the CFO was trying to manage expectations into Q4 and 2025.
“For example: (1) 4Q24 NII is expected to be stable QoQ, implying FY24 £12.8bn (in-line with consensus), with any improvement in Banking NIM/AIEA offset by higher non-bank interest expense, which is also expected to tick-up in FY25,” said Citi.
They added that fourth quarter operating income is expected to be seasonally slower while banking net interest margin in 2025 “is only expected to see a ‘gradual increase' with mortgage headwind tapering but continuing until 1Q26.”
Furthermore, Citi noted that Lloyds reiterated £0.2-0.3 billion BAU remediation guidance p.a. (excluding motor finance) despite currently running below this.
The bank reiterated its Neutral rating on Lloyds and concluded that it continues to prefer Natwest, where it sees greater potential for consensus earnings upgrades, and Barclays, where it prefers the valuation.
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