Citi Now Bullish on Lloyds Shares as European Banks Outlook Shifts

Citi upgraded Lloyds Banking (LON: LLOY) to buy from neutral in a note this week and raised its price target to 114 pence from 106 pence, saying it is “time to re-engage” with European banks as the interest rate outlook and earnings momentum shift in the sector’s favor.

Analyst Andrew Coombs identified Lloyds as one of the few European banks still seeing earnings upgrades, and said potential rate hikes in Europe would provide additional support to profitability.

The upgrade comes despite Lloyds shares slipping 1.5% on Thursday, though the stock remains up 2.4% year-to-date and has gained 55% over the past 12 months.

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Citi’s revised target of 114 pence remains below Deutsche Bank’s 125 pence target, which the German lender set in February while maintaining its own buy rating. JPMorgan, which raised its target to 117 pence in January, continues to hold a neutral rating on the shares.

According to TradingView data, out of 20 analysts covering the stock, 13 have a buy rating, while 6 have a hold rating and 1 has a sell.

In late January, Lloyds reported strong full-year 2025 results, with statutory profit before tax of £6.7 billion, up from £6.0 billion in 2024, alongside a return on tangible equity of 12.9%.

The bank also announced total capital returns of up to £3.9 billion for the year, comprising a 15% increase in its ordinary dividend to 3.65 pence per share and a £1.75 billion share buyback.

Looking ahead, Lloyds guided for underlying net interest income of approximately £14.9 billion in 2026 and a return on tangible equity of greater than 16%, up from 12.9% in 2025.