Board Proposes Final Dividend of 2.43p and £1.75B Buyback Plan
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1d ago
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The Board has recommended a final ordinary dividend of 2.43p per share, resulting in a total ordinary dividend for 2025 of 3.65p per share, up 15% on the prior year and in line with the Group's progressive and sustainable ordinary dividend policy. Given the Group's strong capital position, the Board has also announced its intention to implement an ordinary share buyback programme of up to GBP 1.75B. Going forward, the Group will now review excess capital distributions in addition to the ordinary dividend every half year.
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Analyst Views on LYG
About LYG
Lloyds Banking Group plc is a United Kingdom-based financial services company. The Company provides a range of banking and financial services that are focused primarily on retail and commercial customers. The Company operates through three segments: Retail, Commercial Banking, and Insurance, Pensions and Investments. The Retail segment offers a range of financial services products to personal customers, including current accounts, savings, mortgages, credit cards, unsecured loans, motor finance and leasing solutions. The Commercial Banking segment serves small and medium businesses, as well as corporate and institutional clients, providing lending, transactional banking, working capital management, debt financing and risk management services. The Insurance, Pensions and Investments segment offers insurance, investment and pension management products and services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Lloyds Banking Reports Q4 2025 Earnings Highlights
- Earnings Beat: Lloyds Banking reported a Q4 2025 GAAP EPS of 2.20p, exceeding expectations by 0.20p, indicating sustained profitability despite slight revenue shortfall.
- Revenue Growth: The fourth quarter revenue reached £5.12 billion, an 8.7% year-over-year increase, although it missed expectations by £10 million, reflecting the company's robust market performance.
- Dividend and Buyback Plan: The Board recommended a final ordinary dividend of 2.43p per share, totaling 3.65p for 2025, a 15% increase, while announcing a share buyback program of up to £1.75 billion, showcasing strong capital position.
- 2026 Guidance: For 2026, the Group expects underlying net interest income of approximately £14.9 billion, a cost:income ratio below 50%, and an asset quality ratio of around 25 basis points, demonstrating confidence in future financial performance.
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Lloyds Banking Group Shares Undervalued by 37.4%
- Stock Performance: Lloyds Banking Group's shares recently closed at £1.02, reflecting a 72.7% increase over the past year, yet a 4.8% decline over the last 30 days indicates a contradiction between short-term volatility and long-term growth.
- Valuation Analysis: The Excess Returns model estimates Lloyds' intrinsic value at approximately £1.63 per share, suggesting a 37.4% undervaluation compared to the current price, indicating that the market may not fully reflect its profit potential.
- P/E Ratio Comparison: With a P/E ratio of 17.27x, significantly above the banking industry average of 11.13x, this suggests that the market holds optimistic expectations for Lloyds' future growth, but it may also imply that the current share price is overvalued.
- Investor Sentiment: Simply Wall St assigns Lloyds a valuation score of 2 out of 6, reflecting a cautious market outlook on its future performance, prompting investors to be aware of potential risks and opportunities.
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