RBC Warns Lloyds' Interest Margin Faces Pressure From Deposit Competition
RBC Capital Markets cut its 2028 pretax profit estimate for Lloyds by 6% and lowered its stock rating, citing intense competition for customer deposits.
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what happened
Analysts Benjamin Toms and Sherry Lin at RBC Capital Markets say Lloyds Banking Group could face greater net interest margin pressure from fierce competition in the U.K. deposit market. According to RBC, the battle for customer savings stayed intense throughout the third quarter.
The analysts also point out that Lloyds has a higher loan-to-deposit ratio, which becomes a real challenge when banks compete hard for deposits.
RBC trimmed its 2028 pretax profit forecast for the bank by 6%, reducing both its margin and loan growth estimates. The firm downgraded the stock to sector perform from outperform and cut its price target to 115 pence from 124 pence. At the time of reporting, shares were down 1.9% at 103.85 pence. Source: Market Talk.
why it matters
For investors following British banks, margins remain the core earnings driver, so rising costs to attract deposits could weigh on profits even if lending holds up. The note is specific to Lloyds and its balance sheet structure, but it may also shape expectations for other U.K. lenders with a similar funding profile.
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- Lloyds' Interest Margin Could be Squeezed by Deposit Competition — Market Talk, 16 October 2026 at 07:47 UTC
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