- Lloyds Bank share price is on an upbeat momentum, with the bank having previously set aside £1.15 billion to settle potential compensations.
The UK Supreme Court ruling on motor finance malpractice has injected a fresh impetus into Lloyds Bank share price, with Monday’s 9% gain likely to be the beginning of bigger medium-term gains. The stock was up by 0.2% in the opening hour of trading on Tuesday, rising to 52-week highs of 83.92p. The prevailing sentiment is firmly bullish after the bank survived regulatory fines that could have cost it hundreds of millions of pounds.
Lloyds Bank (LON: LLOY) previously set aside £1.15 billion to cover potential claims arising from an appeals court ruling in favour of three buyers who argued that discretionary commission arrangements between car sellers and vehicle finance institutions was skewed and designed to hurt consumers. About 80,000 potential compensation cases had been in the pipeline prior to last week’s Supreme Court ruling, with industry analysts estimating that it could have cost UK banks as high as £45 billion to settle.
Lloyds Bank has been the UK’s biggest motor loan provider and a win by consumers would have hurt its balance sheet. However, specialist lender, Close Brothers was the most exposed , and filed the case alongside another specialist lender, South Africa’s First Rand. That said, the Supreme Court ruling leaves room for small-sized compensations of about £950 per deal, according to a proposal floated by industry regulator, Financial Conduct Authority (FCA).
Looking ahead, investors will likely raise their appetite and that could see Lloyds Bank share price stay on the ascending trajectory in the medium-term. The bank was already reporting strong performance in successive quarters prior to the car finance scandal and the closing of that chapter spells good news for its growth plans.
Lloyds Bank Share Price Prediction
The momentum on Lloyds Bank share price favours the upside to continue above 81.60p. That will likely see initial resistance encountered at 84.00p. However, a stronger momentum will clear that barrier and potentially test 85.00p.
Alternatively, going below 81.60p will shift the momentum to the downside. In that case, primary support will likely come at 80.74. Breaking below that level will invalidate the upside narrative. Also, it could clear the way for an extended decline to test 80.00p.
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