Lloyds share price forecast: Q3 earnings preview

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Lloyds (LON: LLOY) share price is consolidating ahead of the upcoming quarterly results. The shares dropped slightly to 42p, which was still much higher than this month’s low of 38.47p. It is still about 21% below the highest level this year. 

Lloyds Bank earnings ahead 

European banks are in the spotlight this week as they publish their quarterly results. These results follow those published by other large American banks like Goldman Sachs, Bank of America, and JP Morgan. 

Lloyds Bank will publish its earnings on Thursday. Analysts expect that the bank will publish strong results because of how it operates. Unlike other banks like Barclays and HSBC, Lloyds is primarily a British bank with no major foreign subsidiaries. It also does not have much investment banking business exposure. 

Therefore, with the UK’s interest rates rising, analysts believe that the company’s revenue rose. Most banks have published strong interest income. For example, HSBC said that its profit jumped by $1 billion to $3.2 billion, helped by higher interest rates. A similar thing happened in the United States, where most big banks recorded a double-digit increase in interest income. 

The consensus among City analysts is that its net interest income rose to 3.2 billion pounds while its net income jumped to 4.4 billion pounds. The firm made 2.8 billion and 4 billion pounds in the same quarter last year. Its profit for the period is expected to come in at 1.3 billion pounds, down from the previous 1.6 billion pounds. 

Meanwhile, expectations are that Lloyds’ Return on tangible equity (ROTE) rose to 14.2% while its CET1 ratio post dividends and buybacks rose to 14. 9%. Lloyds has one of the biggest CET ratio in Europe. 

Lloyds Bank share price will also react to the company’s guidance on dividends and buybacks.

Lloyds share price forecast 

The hourly chart shows that the LLOY share price has been moving sideways lately. It has found strong resistance at 43.60p and is trading at the 50-period moving average. The Relative Strength Index (RSI) has continued moving sideways recently. 

Therefore, there is a possibility that the stock will retreat after earnings as the management warns about the state of the British economy. If this happens, the next key support level to watch will be at 40p.

On the flip side, a move above the resistance at 42.50p will invalidate the bearish view since it will signal that there are more buyers left in the market.

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