LLOBF - Lloyds Banking Group: How The Supreme Court Ruling May Affect The Stock

2025-03-04 02:00:00 ET

Summary

• Lloyds stock has surged 32% YTD as investors reassess potential remediation charges for the motor finance commission case.
• Despite management having set aside £1.15 billion in provisions, our analysis suggests a conservative estimate of £2.50 billion may be more appropriate, given past Supreme Court decisions.
• The Supreme Court is renowned for historically siding with the claimant with matters regarding commission transparency, but has also been known to be reasonable with its damage assessment.
• The bank's underlying business shows promising growth, with expected increases in revenue across its various divisions.
• Structural hedge benefits, deposit inflows, and expanding loan portfolios position Lloyds for strong revenue and EPS CAGR through to FY27.

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