RBC Downgrades Lloyds Banking Group Rating, Price Target Amid Competitive UK Deposit Market

09:17 AM EDT, 10/16/2026 (MT Newswires) -- RBC Capital Markets downgraded its rating and price target for Lloyds Banking Group (LLOY.L) amid expectations that the competitive environment in the UK deposit market will continue past the third quarter. "Whilst structural hedge repricing should provide the bank with a material NII tailwind, today's downgrade reflects our more cautious view on competition in the UK deposit market and second order implications for NIM, a dynamic we believe is underappreciated. Despite being 6% below consensus adj PBT in FY28, an undemanding valuation keeps us from downgrading to Underperform," the research firm said Friday. The rating on the stock was lowered to sector perform from outperform, while the price target was revised to 1.15 pounds sterling from 1.24 pounds. "In a competitive deposit environment, our preference is to own banks that have: i) narrower ring-fence bank perimeters (less funding pressure from corporate loan growth, relative beneficiaries of ring-fence reform); ii) lower ring-fence bank loan-to-deposit ratios (correlated with lower deposit betas). LLOY does not tick either of these boxes." RBC also updated its financial forecasts for the British lender for 2026 through 2030, including lower adjusted EPS and profit before tax projections over the five-year period.