Lloyds Banking Group’s shares are on the rise, climbing over 77% year to date, the best gain since 2012. Investors are eyeing the £1 mark, a level last seen in 2008 during the financial crisis. However, some warn that Lloyds is currently overvalued despite its strong performance.

Factors contributing to Lloyds’ stock success include higher inflation and interest rates, boosting net interest margins. The company’s after-tax profits reached £3.3 billion in the nine months to September 2025, despite a car loan scandal costing £800 million in redress. Analysts view Lloyds as a low-risk retail banking option with solid barriers to competition.

Morningstar equity analyst Niklas Kammer believes Lloyds stock is overvalued, with a fair value estimate of 78p per share compared to the current trading price of around 96p. While Lloyds plays a significant role in the UK dividend-paying market, investors should consider the company’s high valuation before buying.

Read more at Morningstar: Stock of the Week: Should I Buy Lloyds Shares?