One of the positives for holding Lloyds Banking Group (LSE: LLOY) shares is that interest rates have been rising.
And that’s relevant to Lloyds because it relies on the spread between interest rates for much of its earnings. Indeed, the spread is the difference between the interest it earns from loaning money and the interest it pays on customers’ deposits.
But making a profit from the interest rate spread tends to be easier when base rates are high. So the prior ultra-low interest rate environment made it tougher for banks like Lloyds to earn a decent crust.
Potential headwinds
Shareholder dividends ahead
One of the outcomes of such unpredictability is the company’s perennial low-looking valuation. And I’m not expecting a re-rating anytime soon, or ever. So, for me, the many variables involved in any analysis of the business make the stock dangerous. And I know many investors have been frustrated by Lloyds over the past few years.
The post Are Lloyds shares a good investment for 2023? appeared first on The Motley Fool UK.
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More reading
- With the Lloyds share price approaching 50p, should I buy more of the stock?
- Will the Lloyds share price recover to its pre-Covid levels in 2023?
- If I had £1k to invest today Iâd buy more Lloyds shares
- Is Lloyds’ share price too cheap for investors to ignore?
- Why interest rate sensitivity makes Lloyds shares a buy for 2023
Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.