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The Lloyds Banking Group (LSE:LLOY) share price has enjoyed a 28% rally over the past year. It’s only a few pence off fresh 52-week highs. Yet some key events are coming up that I feel investors should note down carefully, as they have the potential to either catapult the stock higher or cause a correction lower. Here are the details.
Half-year results
On July 24, the H1 2025 results will come out. This provides investors with a key update on how the bank is doing. Q1 profit before tax fell by 13% in comparison to the same quarter last year. Part of this was due to higher costs, blamed partly on inflationary pressures and the “timing of strategic investments… and business growth costs.”
It’ll be interesting to see if these costs are starting to yield results, and if not, then the timings for when the investments should begin to kick in should be provided. More broadly, the H1 results should contain guidance for the rest of the year. If profit before tax is expected to fall further, potentially blamed on interest rate cuts or a slowing UK economy, this could cause the stock to fall further.
However, the push for more deposits and lending could help the bank. If results show this part of the business is growing, it could provide investors with confidence in the health of the business.
Bank of England meeting
On August 7, the next Bank of England meeting will take place, with economists having a consensus view that a 0.25% rate cut is coming. This would take the base rate down to 4%.
I think that most investors are anticipating this move, so I don’t see much reaction in the Lloyds share price from this action alone. However, it’s the forward guidance here from the committee that could really swing the stock. Recent poor UK data on GDP and employment have given rise to the suggestion that the central bank team may need to cut interest rates more aggressively to support the economy.
If they comment and agree on this, I think the Lloyds share price could take a hit. Lower rates would shrink the net interest margin the bank makes. Moreover, concerns about a weaker economy could lead customers to cut back on spending and curtail loan applications.
The bottom line
Given the current elevated price of Lloyds stock, I’m not too keen to jump in and buy now ahead of these two events. I do believe in the long-term vision of the bank. Therefore, I’m going to add the stock to my watchlist. If we do get a move lower from any short-term panic, I’ll seriously consider buying a small amount and then look to increase my position in the coming months.
If it continues to rally without any move lower, then I’ll have to live with it. But risk management in investing is key, and that’s what I’ll do.
