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Lloyds Banking Group PLC was upgraded by Citigroup, as the US bank’s analysts expect European lenders to benefit from a stronger interest-rate outlook amid ongoing economic shockwaves from the Iran war. The analysts said events in Iran have shifted market rate expectations, with the forward curve now implying two interest rate rises from the European Central Bank (ECB) this year.
The note argues that higher rates typically support bank profitability by widening the margin between what lenders earn on loans and what they pay on deposits. Citigroup also said European banks remain “one of the few sectors” still seeing upgrades to earnings forecasts.
According to the analysts, the forecast improvements are being driven by resilient revenues and, in some cases, better cost guidance from management teams. They also pointed to the potential for further efficiency gains, noting that banks are expected to adopt artificial intelligence tools over the next three years to improve productivity and reduce costs.
Citigroup added that lenders are generating surplus capital. It said this capital can be returned to shareholders through share buybacks, or used to fund lending growth and acquisitions.
While Citigroup upgraded Lloyds, it said the stock is not yet one of its top picks in the sector. The bank’s preferred names are HSBC Holdings PLC and France’s Société Générale.
Shares in Lloyds were down 2.1% to 99.95p on Thursday, after the stock went ex-dividend.
Citi also upgraded Deutsche Bank to “neutral/high risk” as part of the same note.
Premium gym chains are entering a “golden era” that is ending or already in decline, as rising operating costs collide with shifting consumer preferences toward more flexible, community-based ways to exercise. Long-term memberships are shrinking, margins are pressured by higher rents and facility expenses, and competition from smaller, more personalized…