Deutsche Bank Raises Lloyds (LYG) Price Target to £90, Recommends “Buy”

Lloyds Banking Group plc (NYSE:LYG) is one of Goldman Sachs’ top penny stock picks. On June 20, Deutsche Bank increased its target price for Lloyds from 88 GBp to 90 GBp. The firm also continues to recommend a “Buy” rating for Lloyds shares. This decision is based on an updated outlook for the U.K. banking sector, with a renewed focus on future growth potential.

A busy banking hall, reflecting the growth and scale of the company’s commercial banking services.

Deutsche Bank said it is shifting its investment focus within the U.K. banking sector. The emphasis is moving from “rising returns to future growth potential.” In that regard, the investment bank highlighted Lloyds as a preferred stock, particularly among “domestically focused” U.K. banks. This preference is driven by expectations of “steady deposit inflows and a supportive economic backdrop.”

Deutsche Bank anticipates that the return on equity for the banking sector will expand into the “high teens” by 2027. Furthermore, capital generation is expected to double over the same period. While acknowledging that further gains in profitability may be limited beyond 2027, the firm suggests that banks should focus on growth, both organically and through acquisitions. The analysis notes that the U.K. market is moving past a deleveraging phase, with loan and deposit growth consistently surpassing expectations.

Lloyds Banking Group plc (NYSE:LYG) is a U.K.-based financial services company. It offers retail banking, commercial banking, insurance, pensions, and investment services through brands like Lloyds Bank, Halifax, Bank of Scotland, and Scottish Widows. Its retail segment provides current accounts, savings, mortgages, credit cards, and motor finance to individuals.

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Disclosure: None. This article is originally published at Insider Monkey.