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The Lloyds (LSE: LLOY) share price has been on a tear lately as a strong first-quarter result has helped propel the company’s valuation higher.
With the banking giant’s valuation hitting fresh 52-week highs last week, I thought I’d consider whether there’s still value left on the table for investors in 2025.
Recent Lloyds share price action
Shareholders would be very happy with the company’s share price performance so far this year.
Lloyds’ valuation has increased by 10% since early May and reached a new 52-week high of 78.98p last week before closing at 77.54p on Friday. As I write ahead of the market open on May 26, that makes for a year-to-date gain of over 40%.
One factor that has propelled the Lloyds share price to a 52-week high was its quarterly earnings update earlier this month. The bank reported a statutory profit after tax of £1.1bn and a 12.6% return on tangible equity (RoTE).
That continues an upward profit trajectory from the second half of last year as the bank remained confident of hitting its 2025 and 2026 guidance.
Valuation
All these recent gains mean Lloyds shares are now trading at a price-to-earnings (P/E) ratio of 12.6, which is broadly in line with the FTSE 100 average.
The dividend yield sits at a respectable 4.1%, backed by a total dividend payout of 3.17p per share for 2024. That’s not the highest yield in the market, but it is above the Footsie average and comfortably covered by earnings.
This is also supplemented by a £1.7bn share buyback programme, which forms part of investors’ total return.
For banks, the price-to-book (P/B) ratio is another key metric. Lloyds currently trades at a P/B of one times, which is higher than some peers like Barclays (0.65) but below others like HSBC (1.1) .
My verdict
Lloyds appears to be in decent shape. The bank is profitable, well-capitalised, and returning cash to shareholders through dividends and buybacks. Its valuation metrics suggest to me it’s neither a screaming bargain nor overpriced.
Of course, there are risks to consider. The ongoing fallout from the motor finance scandal could lead to further provisions or regulatory scrutiny. There’s also the broader economic health of the UK, which, if it heads south, could impact loan performance and profitability.
That said, I think the bank’s focus on cost control and digital transformation could also provide future avenues for growth.
Overall, I think the Lloyds share price reflects a bank that’s performing well in a challenging environment. Whether it’s good value at the current valuation really depends on where the UK economy is headed and how well the banking sector performs in the next three to five years.
