Lloyds‘ (LSE:LLOY) shares have been on a remarkable tear. From around 52p at the start of 2025, the stock surged to a peak of 114.60p in February, more than doubling in under 14 months. And while the share price has pulled back slightly since February, Lloyds’ shares are still hovering near the 100p mark today.
For a FTSE 100 bank that many investors had written off as a dull, low-growth institution, these explosive returns paint quite a different picture. The question now is, will Lloyds’ shares double all over again?
Can the UK bank keep climbing?
Understanding why Lloyds has been on such a rampage isn’t hard. Higher interest rates have expanded net interest margins considerably, and Lloyds’ clever interest hedging strategies have amplified those gains. And even in 2026, this momentum’s expected to continue with net interest income on track to climb 9.6%, reaching £14.9bn, according to management’s upgraded forecast.
In fact, the bank’s fourth quarter results for 2025 significantly beat analyst expectations with earnings per share landing at 2.64p compared to the 2.03p that was projected by experts. And subsequently, share price forecasts have been getting hiked in response, with the most bullish price target reaching 130p.
Compared to where the stock’s trading today, this forecast indicates investors could earn a roughly 32% gain over the next 12 months. And that’s before factoring in any extra gains from dividends or buybacks.
In other words, it doesn’t look like the experts think Lloyds’ shares are going to double again soon. But there’s nonetheless still a compelling short- and long-term growth opportunity on offer if management continues to execute.
Sadly, this isn’t a risk-free venture. And there’s one looming threat that investors need to understand before considering Lloyds’ shares for their portfolio.
The motor finance cloud
In late March, the Financial Conduct Authority handed down its final ruling on the motor finance mis-selling scandal. And the industry was ordered to begin executing a sector-wide redress scheme worth an estimated £7.5bn in total, with average payouts of £830 per affected customer.
Lloyds, through its Black Horse motor finance arm, faces by far the largest exposure. It has already set aside a £1.95bn provision. More crucially, in April, it announced it would not challenge the FCA scheme, choosing to proceed with the compensation plan instead. The decision brings clarity, but also confirms that a significant chunk of cash is walking out the door.
The uncertainty isn’t entirely resolved either. Around 30,000 customers have taken separate High Court action against Lloyds seeking higher payouts than the FCA scheme offers, with a collective £66m claim lodged. And the FCA’s complaint pause lifts on 31 May, opening the floodgates to new claims.
So where does that leave investors today?
The bottom line
Like other institutional analysts, I’m sceptical that Lloyds’ shares will double again over the next 12 months, especially with the motor finance compensation cheques on the verge of being signed.
But over the longer term, I wouldn’t rule it out. Lloyds is still a highly cash generative business and could evolve into a robust defensive compounder for patient investors. So while it may not be a great fit for growth investors like myself, it could still be worth a closer look for those with a lower risk tolerance.
The post Could I double my money with Lloyds shares in 2026? appeared first on The Motley Fool UK.
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Zaven Boyrazian 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.
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