Up 33%! Here’s why I’m not buying more Lloyds shares this month

Lloyds Banking Group (LSE: LLOY) shares are up 33% since the start of the new year, making it the best-performing UK bank in 2025.

In its 2024 full-year results, released on 10 March, it posted revenue of £58.22bn — up from £55bn in 2023. However, earnings fell slightly to £4.93bn from £3.92bn. Still, the share price climbed 10% in the week following the report, only to be dashed again by Trump’s trade tariffs in early April.

Fast-forward a couple of weeks and it’s back above 72p per share – only a few percentage points from its 52-week high.

So why not buy more shares now?

Lloyds is currently awaiting a pivotal Supreme Court verdict concerning the alleged mis-selling of car finance loans, a case that could significantly influence its financial standing and share performance. The timeline on the verdict is uncertain but should be more clear in the coming months.

The case alleges that car dealers received commissions from Lloyds’ Black Horse division without fully disclosing this to customers. A Court of Appeal ruling in October 2024 deemed such practices unlawful, prompting Lloyds to increase its compensation provisions to £1.2bn. Analysts suggest that the bank’s total liability could be between £3.2bn and £3.9bn — potentially exceeding £4bn in a worst-case scenario.

The financial implications are already hurting Lloyds’ profitability, as noted above with profits declining despite a rise in revenue. The bank has also suspended commission payments across its £15bn motor finance portfolio and is considering reducing its £2bn share buyback programme by half.

Naturally, the Supreme Court’s decision will be crucial in determining the extent of Lloyds’ financial responsibilities. A ruling against the bank could lead to substantial compensation payouts, which presumably would affect its financial health and shake investor confidence.

Not all doom and gloom

While the case is undoubtedly a black mark on Lloyds’ reputation, it’s well-established enough to recover from the ordeal. Recent performance is testament enough to how hard it’s working to pre-empt any negative outcome. To cut costs, it plans to close 254 branches within the year, including locations under Lloyds, Halifax, and Bank of Scotland brands.

Aside from the cost savings, the move highlights the bank’s commitment to meeting shifting consumer demands and technological advancements.

My hesitation isn’t simply an attempt to time the market and grab some low-priced shares. Although the Trump administration seems to be lessening its tariff threats, we’re not in the clear just yet. Global market’s remain rocky and in the coming months, any investment should be approached with caution.

Analysts seem to agree, although there remains some optimism — the average 12-month price target envisions a 7.3% rise to 78.4p. Broker forecasts are mixed, with Citigroup recently raising its target price from 61p to 71p and maintaining a Buy rating. JP Morgan however, set its target price to 62p and assigned an Underweight rating, indicating caution.

Overall, Lloyds remains a permanent fixture in my portfolio and I’m optimistic about its long-term prospects. Once all the political turmoil subsides and the outcome of the court case gives more clarity, I’d happily consider adding more shares to my holdings.

The post Up 33%! Here’s why I’m not buying more Lloyds shares this month appeared first on The Motley Fool UK.

Should you buy Lloyds Banking Group now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows…

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

More reading

Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Mark Hartley has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.