What will Lloyds share price be in 5 years?

Lloyds (LLOY:LON) shares have been a great investment over the last five years. Believe it or not, they’re up about 200% over this timeframe – a return of around 25% per year. What about the next five years though? Can the share price keep rising or are we likely to see returns moderate?

Timing is key with bank stocks

Before we discuss the five-year outlook for Lloyds shares, it’s worth zooming in on their recent gains. Because the returns generated over the last five years are a little bit misleading.

You see, five years ago, a lot of stocks were heavily depressed due to the coronavirus pandemic (with the world on lockdown and the global economy facing major challenges, bank stocks like Lloyds were under pressure and trading very cheaply). As a result, five-year returns have been larger than usual.

If we look at 10-year returns from Lloyds shares, the numbers are not nearly as impressive. In fact, over the last 10 years, the share price has gone backwards.

This shows that with a stock like Lloyds – which is cyclical – timing is important. If you buy at the wrong time, returns can be underwhelming.

The outlook for Lloyds shares

Looking out over the next five years, it’s hard to know how Lloyds’ share price will perform. Ultimately, there are a lot of variables that could impact the shares.

One such variable is the UK economy. If the economy was to experience weakness, Lloyds shares could underperform. Right now, the bank is performing well (net income for H1 2025 was up 5% year on year to £8.9 billion) because credit conditions are relatively stable. If borrowers were to start defaulting on their loans as a result of economic weakness, however, I’d expect profits to deteriorate and the share price to move lower.

Another variable is UK interest rates. These could impact the bank stock in a few different ways. If rates came down slightly, it could be supportive for Lloyds as it may increase borrowing and refinancing activity. However, if rates were to fall significantly, it may limit the amount of net interest income (the difference between income generated from lending and the costs of borrowing) Lloyds is able to generate, putting pressure on profits.

Regulation is another factor worth mentioning. Banks like Lloyds tend to be targeted by financial regulators on a regular basis. For example, right now, Lloyds is in the spotlight due to the Financial Conduct Authority’s (FCA) investigation into motor finance mis-selling. Further investigations into the bank over the next five years could hurt the shares.

Of course, sentiment towards UK shares and bank stocks will also be important. This year, sentiment towards these areas of the market has been very strong, leading to significant share price gains across the banking sector. Looking ahead, however, sentiment may not remain as bullish. One reason sentiment has been strong this year is that investors have focused on diversifying away from the US market and tech shares.

Finally, investors need to think about FinTech disruption. Right now, FinTech companies are rapidly capturing market share from traditional banks like Lloyds. Digital banks, in particular, are having a lot of success. If this trend continues, it could have implications for Lloyds’ profitability.

My prediction for Lloyds’ share price

Put all this together and there’s a lot to think about when considering where Lloyds shares could go over the next five years. There are many different factors at play, so it’s hard to make an accurate share price forecast.

My own prediction – assuming no major economic downturn but relatively low economic growth in the UK – is that the shares will be trading somewhere between 70p and £1 in five years’ time. In other words, I see the potential for some gains, but I don’t expect the gains to be prolific.