Lloyds Shares Surge Past Pound Mark Ahead Of Results

Lloyds Banking Group, one of Britain’s largest lenders, has been making waves on the London Stock Exchange as its shares surged past the psychologically significant £1 mark this week, reaching 103.25 pence in early trading on January 22, 2026. That move, representing a 1.8% climb, puts Lloyds at the upper end of its 52-week range and marks the first time since before the global financial crisis that the stock has so convincingly held above the symbolic threshold, according to Investing. The rally has reignited interest from both retail and institutional investors, especially ahead of the bank’s much-anticipated full-year results due on January 29.

This momentum comes after a remarkable period of growth for Lloyds. Over the past year, its shares have soared by 78%, and over five years, they’ve notched up an impressive 185% gain, not even counting dividends, as highlighted by The Motley Fool UK. The total return since mid-2022 stands at a whopping 215%, Seeking Alpha reported, prompting many to reconsider their investment strategies regarding the venerable FTSE 100 bank.

UBS, the Swiss banking giant, has taken note of Lloyds’ performance, raising its price target from 90p to 103p. However, UBS remains cautious, maintaining a neutral rating ahead of the forthcoming earnings call. The firm’s analysts project that Lloyds could deliver around 25% year-on-year growth in pre-provision profit by 2026, driven by about 8% growth in net interest income and modest cost inflation, as reported by Proactiveinvestors UK. But the numbers leave little margin for error, especially given the uncertainties that may follow the conclusion of Lloyds’ current 2022–26 strategic plan.

Despite the recent rally, Lloyds’ valuation story is nuanced. Nineteen analysts polled by Investing currently set an average 12-month price target at 101.11p, with 12 recommending a “Buy” and seven suggesting “Hold.” Curiously, that average target now sits just below the actual share price, underscoring some skepticism about further upside. The consensus across the sector, according to Russ Mould, investment director at AJ Bell, is clear: “The Big Four, domestic, and FTSE 100 banks all share similar strategies—focusing on cost reduction, digital transformation, and sticking to core strengths to manage risk and boost returns on equity.”

William Howlett, financials analyst at Quilter Cheviot, echoed this sentiment, telling City AM that Lloyds and HSBC “remain solid, execution-led stories with clear capital return appeal,” and that boards will likely assess CEOs on their ability to deliver on strategic promises rather than short-term market swings. This focus on execution is especially relevant as Lloyds, like its peers, faces a challenging regulatory and economic landscape.

Retail investors, meanwhile, are increasingly turning their attention to dividends. The Motley Fool UK projects Lloyds will pay a 4.01p per share dividend in 2026. At the current share price, an investor would need to hold approximately 25,000 shares—valued at about £26,000—to earn £1,000 annually before tax. While this calculation highlights the income potential, it’s far from a guarantee, and the author cautions that investors should always consider their own circumstances and seek professional advice before making decisions.

For those pondering how best to hold Lloyds shares, the debate between using a Stocks and Shares ISA or a Self-Invested Personal Pension (SIPP) has become particularly relevant in 2026. Both investment wrappers offer tax advantages, but in different ways. An ISA allows investors to draw all dividends and capital gains tax-free, with the added flexibility of accessing funds at any time. In contrast, SIPP contributions receive upfront tax relief at the investor’s marginal rate—meaning a basic-rate taxpayer’s £8,000 contribution is topped up to £10,000—but withdrawals (after age 57, up from 55 in 2026) are taxed as income, except for 25% which can usually be taken tax-free.

Given the frozen income tax thresholds in 2026, some investors, as reported by The Motley Fool UK, prefer to hold dividend-paying shares like Lloyds in an ISA, where the income stream is entirely shielded from tax. The trailing yield on Lloyds shares has dipped to 3.15% due to the share price rally, but dividends have been rising at about 15% per year and are expected to yield 3.6% in 2026 and 4.2% in 2027. This steady growth has made Lloyds particularly attractive for long-term income investors, though the author notes that growth may slow if falling interest rates begin to squeeze bank margins.

Of course, the picture isn’t entirely rosy. The shadow of the UK motor finance scandal still hangs over Lloyds. In October 2025, the bank set aside £1.95 billion in provisions—including an additional £800 million charge—to cover potential redress costs. This prompted Lloyds to lower its guidance for return on tangible equity to about 12%, a key measure of profitability that excludes intangibles. CEO Charlie Nunn, speaking at the time, emphasized, “Strong capital generation was supported by income growth, cost discipline, and strong asset quality.” The bank has signaled its intent to challenge the regulator’s approach, so the ultimate cost remains uncertain, as reported by Reuters.

The rally above £1 is more than just a number for Lloyds. It carries historical weight: the last time shares were consistently above this level was before the global financial crisis. Earlier this month, Lloyds shares hit a high of 101.30p and closed at 100.75p, according to City AM. The move has sparked bullish chatter among retail investors, with some analysts suggesting that crossing back above a pound could mark a turning point in sentiment. Yet, as the average analyst target now lags the market price, the sustainability of this rally is under scrutiny.

With Lloyds’ full-year results just around the corner, investors are eager for clarity on several fronts: the sustainability of earnings, the outlook for capital returns, and whether the bank can maintain its momentum above the £1 mark once the headlines fade. The sector-wide mantra—cut costs, digitise, and safeguard capital—remains firmly in place, and Lloyds’ performance in the coming months will likely hinge on its ability to execute on these fronts while navigating regulatory headwinds and macroeconomic shifts.

For now, Lloyds stands as a symbol of the shifting fortunes in UK banking: a stock that’s both a testament to post-crisis recovery and a reminder of the risks that still lurk beneath the surface. The next chapter will be written when the bank reveals its hand on January 29, and investors—both seasoned and new—will be watching closely to see if the story above £1 is just beginning or nearing its end.