- Lloyds Bank share price has risen by over 13% since the year began
- The bank upgraded its guidance for ROTE in 2026 to 16%, boosting investor confidence
- Bank of England is widely expected to trim interest rates this year, and that could impact NIM negatively but boost mortgage uptake
Since mid-December 2025, Lloyds Banking Group’s (LSE: LLOY) shares have steadily climbed into 2026, gaining over 13% year-to-date. This rise mirrors confidence in UK banking, but what’s the real driver?
Why Lloyds Share Price is Surging
The big reason behind Lloyds Bank share price uptick seems be its strong 2025 results, beating predictions and setting a good tone for the year. The bank reported a 12% profit increase to £6.7 billion before tax, above the £6.4 billion analysts expected. This came from higher net interest income, up 6% to £13.6 billion, thanks to ongoing lending and a hedge that softens interest rate changes.
Market confidence has also grown because the Bank of England (BoE) is expected to cut interest rates. After the base rate dropped to 3.75% in December 2025, further cuts in 2026 are likely to boost mortgage demand, where Lloyds is a big player as the UK’s largest lender. Although rates are slowly going down, Lloyds has a structural hedge in place and is benefiting from older, lower-interest hedges being replaced by fresh ones that have good rates.
Lloyds Bank success is also a result of keeping costs down. In 2025, operating costs were £9.76 billion, and they aim for a cost-to-income ratio below 50% this year.
Is the Rise Sustainable?
The rise looks like it can last, with upgraded guidance for a return on tangible equity above 16% in 2026, up from 12.9% last year. As the UK’s biggest mortgage lender, Lloyds is a gauge of the British economy. With house prices up a bit, the risk of defaults stays low. The bank’s Net Interest Margin (NIM) is stable near 3.06%. Keeping this level with falling rates will test their hedging approach.
Lloyds Bank Share Price Prediction
Lloyds Bank share price daily chart shows good upward movement, with the price at 111.90p and the RSI at 83.36, showing a strong bullish control which will likely continue the uptrend. The next ceiling is at 112.88p 52-week highs, beyond which the bulls could target 114p. However, the RSI also indicates overbought conditions which could trigger some profit taking. If it drops back, expect support at the 100p mark and the 50-day Moving Average, near 98p.
Lloyds Bank share price on the daily chart with resistance and support levels on February 3, 2026. Created on TradingView
The surge was fueled by a 12% profit increase to £6.7 billion in 2025, lower impairments, and expected interest rate cuts boosting mortgage demand
Lloyds uses a structural hedge to handle rate changes. As older, low-yield investments mature, they get reinvested at higher current rates, which boosts income, even with the Bank of England slowly reducing the base rate.
The main risks are a quicker UK economic slowdown, which could raise bad debts, and strong competition in mortgages, which might cut profit margins on new home loans.