Lloyds share price popped to a multi-decade high as investors cheered the recent earnings and the Supreme Court decision on motor insurance. LLOY jumped to a high of 80.90p, up by 323% above its lowest level during the pandemic.
Supreme Court motor insurance ruling
Lloyds Bank stock price popped after the Supreme Court ruled that lenders will not have to pay compensation to millions of customers over car finance loans.
The case centered on whether or not car dealers had a duty to act in the interest of car buyers when selling a vehicle on finance.
Therefore, analysts believe that the company’s compensation to these claims would be lower than expected. Before the ruling, the estimate is that companies would have to pay £30 billion today. Now, the expectation is that the cost will be between £9 billion and £11.5 billion.
In a statement, Lloyds Bank said that it would keep under review its £1.2 billion provision for motor finance claims. It also noted that the final charge would not be material.
Strong earnings
The new development followed Lloyds Bank’s publication of strong earnings that were better than expected.
Lloyds Bank said that its profit rose to £2.5 billion in the year’s first half, up from £2.4 billion in the previous year. Higher operating costs and an impairment charge offset the profit.
Most importantly for investors, Lloyds Bank increased its dividend by 15% and continued to reduce its outstanding shares through buybacks. In a statement, the CEO said:
“We have shown sustained strength in our financial performance in the first half of 2025, with income growth, cost discipline and robust asset quality, driving strong capital generation and increased shareholder distributions, with a 15% increase in the interim ordinary dividend.”
Lloyds Bank’s management believes that its business will continue doing well this year. It expects that the net interest income will be about £13.5 billion. Its capital generation will be about 175 basis points, while the operating costs will be £9.7 billion.
A key catalyst for the Lloyds share price this week is the upcoming Bank of England (BoE) interest rate decision. Analysts expect that bank will decide to cut interest rates by 0.25% in a bid to supercharge the economy.
Interest rate cuts impact banks negatively by reducing their net interest income (NII). On the positive side, this slowdown is usually offset by the potential economic growth.
Lloyds share price analysis
LLOY stock chart | Source: TradingView
The weekly chart shows that the LLOY stock price has been in a strong bull run in the past few months. It jumped to a high of 81p as investors cheered the motor insurance verdict.
The stock has jumped above all moving averages, a sign that the momentum is continuing. Also, the Relative Strength Index (RSI) has moved close to the overbought level.
Therefore, the stock will likely continue rising in the near term, with the kry target being at 85p. However, there is a risk that it will go through a mean reversion as investors start to book profits.
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