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Lloyds‘ (LSE:LLOY) shares have suffered spectacularly. From around 52p at the start of 2025, the stock rose to 114.60p in February, more than doubling in less than 14 months. And although the share price has retreated slightly since February, Lloyds shares are still hovering around the 100p mark today.
Of course FTSE 100 a bank that many investors had written off as a lackluster, slow-growing institution, these explosive gains paint a very different picture. The question now is, will Lloyds shares double?
Can UK banking continue to rise?
It is not difficult to understand why Lloyds became such a mess. Higher interest rates have increased interest margins significantly, and Lloyds’ profit protection strategies have boosted those profits. And in 2026, this momentum is expected to continue with net interest on track to rise by 9.6%, to £14.9bn, according to management’s updated forecast.
In fact, the bank’s fourth quarter 2025 results significantly beat analyst expectations with earnings per share of up to 2.64p compared to 2.03p expected by analysts. And after that, share price forecasts have been raised in response, with the highest price target reaching 130p.
Compared to where the stock is trading today, this forecast shows that investors can earn an estimated 32% profit over the next 12 months. And that’s before factoring in any additional benefits from profits or purchases.
In other words, it doesn’t look like experts think Lloyds shares will double again anytime soon. But even then there is still a compelling short- and long-term growth opportunity on offer if management continues to execute.
Sadly, this is not a risk-free business. And there is one looming threat that investors should understand before considering Lloyds shares for their portfolio.
Cloud for car finance
At the end of March, the Financial Conduct Authority issued its final ruling on the car sales scandal. And the industry was ordered to start implementing a sector-wide scheme to repair damages worth around £7.5bn in total, with average payouts of £830 per affected customer.
Lloyds, through its financial arm Black Horse, faces the biggest exposure. It has already set aside a £1.95bn offer. More importantly, in April, it announced it would not challenge the FCA’s plan, opting to continue with the compensation plan instead. The decision brings clarity, but it also ensures that a large sum of money goes out the door.
Uncertainty is not completely resolved. Around 30,000 customers have taken separate High Court actions against Lloyds seeking higher payouts than the FCA scheme offers, with a combined claim of £66m. And the FCA’s appeal moratorium expires on 31 May, opening the floodgates to new claims.
So where does that leave investors today?
An important point
Like some institutional analysts, I am skeptical that Lloyds shares will double again in the next 12 months, especially as the auto finance compensation checks are about to be signed.
But later on, I didn’t take it out. Lloyds is still a very profitable business and could prove to be a strong defensive combination for patient investors. So while it may not be a good fit for growth investors like myself, it may still be worth a look for those with a low risk tolerance.
