RBC Lifts Lloyds Banking's Price Target, EPS Projections After Q4 2024 Results

European banks continued to surprise with their fourth-quarter revenue and preprovision profit beating estimates and confirming the sector's earnings momentum, Jefferies says in a research note. The pretax profit of the 28 lenders in the broker's coverage surpassed market estimates by around 5% thanks to higher income, in-line provisions and despite slightly higher costs, analysts write. They note that consensus might have had become too bearish on net interest income after a third-quarter sector miss. The analysts flagged that the sector beat pretax profit views for no less than 18 quarters in a row, but that the overperformance had decelerated against Q2 and Q3 of 2024. The Stoxx 600 banking subindex has gained 18% since the start of the year.(elena.vardon@wsj.com)

European equities traded in the US as American depositary receipts were slightly higher late Friday morning, edging 0.11% higher to 1,405.16 on the S&P Europe Select ADR Index, which is flat for the week.

From continental Europe, the gainers were led by pharmaceutical company Novo Nordisk and accommodations booking site trivago , which rose 5.3% and 2% respectively. They were followed by brewing company Anheuser-Busch InBev and telecommunications operator Telefonica , which were up 1.4% and 1% respectively.

The decliners from continental Europe were led by medical device maker EDAP TMS and internet advertising firm Criteo , which fell 4.4% and 3.2% respectively. They were followed by oil and gas companies TotalEnergies and Eni , which were down 1.7% and 1.4% respectively.

From the UK and Ireland, the gainers were led by biopharmaceutical company Verona Pharma and alcoholic beverage company Diageo , which increased 5% and 2.3% respectively. They were followed by biopharmaceutical company NuCana and financial services company Lloyds Banking Group , which advanced 2.7% and 1.7% respectively.

The decliners from the UK and Ireland were led by software firm Endava and biopharmaceutical company Akari Therapeutics , which dropped 3.1% and 1.9% respectively. They were followed by biopharmaceutical company Biodexa Pharmaceuticals B and pharmaceutical company Silence Therapeutics , which lost 4.1% and 2.4% respectively.

AlphaValue/Baader Europe raised its earnings forecasts for Lloyds Banking Group , reflecting a more optimistic outlook based on the UK-based lender's updated 2025 guidance.

Full-year 2025 and 2026 EPS are now projected to reach 0.0771 pound sterling and 0.0782 pound, up 9.95% and 2.99%, respectively, according to a Thursday note.

"This is attributable to a combination of increased revenue expectations (+2.5% in 2025 equally driven by interest and non-interest income), better cost control (operating expense projections reduced by 3% in 2025) and lower loan impairments (-16% in 2025)," analysts said. They, however, warned that the forecast does not take into account potential provisions related to motor finance.

The research firm has a reduce rating on Lloyds, with a target price of 0.635 pound.

Lloyds Banking Group launched a share repurchase program of up to 1.7 billion pounds sterling, it said Friday.

The British lender will repurchase shares to reduce its share capital. It intends to cancel all shares that will be acquired under the program, which will run until Dec. 31.