Lloyds share price will be on the spotlight on Monday after reports that the bank is considering acquiring Embark Group. LLOY shares ended the week at 46.55p, which is 100% above the lowest level since last year. The bank has a market cap of more than 33 billion pounds.
Lloyds Bank strong growth
Lloyds Bank share price has done relatively well this year. On Friday, the stock ended the day close to its highest level since March last year. The stock has done better than all FTSE 100 banks, as shown below.
LLOY vs other FTSE 100 banks
There are several reasons why Lloyds Bank has done well in the past few months. First, the UK economy has done relatively well because of the government support. Indeed, the unemployment rate dropped to 4.9% in March. In comparison, the US unemployment rate surged to 6.1% in April. This performance means that the Bank of England (BOE) will not push interest rates to the negative zone.
Second, the mortgage industry has done well in the past few months. This is primarily because of low-interest rates and the fact that the government has removed stamp duty for home purchases. Indeed, the construction PMI has continued to rise while the homebuilders like Barratt Development and Persimmon have done well. This matters because Lloyds is the biggest mortgage provider in the UK.
Third, the Lloyds share price has risen because of the return of dividends as it brings its last year’s provisions to this year’s profits. In fact, the bank reported more than 3.7 billion pounds of revenue in the most recent quarter. It had set aside more than 4.2 billion pounds in provisions last year.
The Lloyds share price will be on the spotlight on Monday after Bloomberg reported that the firm is about to acquire Embark Group for 400 million pounds. Embark has more than 38.5 billion of assets under management. It will mark the biggest acquisition by a UK-based bank in the past few months.
Lloyds share price forecast
On the daily chart, we see that the LLOY share price has been in a recovery mode in the past few months. The shares have continued to approach the important resistance level of 50p. It is also nearing the 50% Fibonacci retracement level.
Further, the shares have remained above the 50-day and 25-day exponential moving averages (EMA). Therefore, there is a possibility that the shares will keep surging in the near term as bulls target the next key level at 50p. A drop to 42.50, which is along the 61.8% retracement will invalidate this trend.