Where’s the Lloyds share price going next?

Lloyds Banking Group‘s (LSE:LLOY) share price is down 7.8% in the last month. But there are some people who think it might have a lot further to fall.

Prediction market platform Polymarket’s users have been taking bets on whether the bank will fail before the end of 2026. But could that really happen?

Betting on a bank run

For those who don’t know, Polymarket’s a US platform that allows people to bet on pretty much anything. That includes a meteor strike, the second coming of Jesus Christ, and the failure of major banks.

Lloyds isn’t the only one attracting attention. There are also contracts covering HSBC and JP Morgan, with around $77,500 (£58,562) wagered so far.

In the context of bank balance sheets, that’s a tiny number. But Treasury Committee member Bobby Dean sees a real threat – and has urged UK regulators to act. His argument is that rapidly rising activity on a bank-failure contract could aggravate shifts in sentiment.

Warren Buffett has highlighted that danger with bank stocks in general. It isn’t necessarily a bank’s financial position that matters – it’s what people think of it. When customers become nervous about a bank’s solvency, telling them about Tier 1 capital ratios doesn’t make any real difference. They just want their money back. 

Buffett has a point. There have been plenty of major bank failures over the last 20 years:

• Northern Rock collapsed in 2007 after a UK bank run.
• Silicon Valley Bank (SVB) lost $42bn in deposits in a single day in 2023.
• Credit Suisse – 167 years old – needed a forced rescue days later.

Each of these came from more than just a loss of customer confidence. But this highlights the importance of looking at — and understanding — a bank’s balance sheet in detail.

For example, Lloyds made £4.3bn in statutory profit in the first half of 2026, yet its tangible net assets per share finished the period exactly where they started.

Shareholder distributions explain part of that. But so do movements in the reserve attached to a £246bn structural hedge – a line item investors need to pay attention to, but often don’t.

The stock

For now, the stock isn’t showing signs of stress. At around 104p, it’s down from August’s 118p high, but nowhere near crisis territory.

At around 1.45 times book value, the market also isn’t pricing in a bank run. And with £322bn of its £501bn in deposits coming from retail customers, Lloyds’ funding’s a lot stickier than SVB’s ever was.

Keep watching

I think Lloyds’ shares are worth keeping an eye on. A full-blown bank run seems unlikely, but if confidence does wobble due to wider economic concerns, the share price could take a significant hit.

And it’s why, for a lot of people, I suspect the best opportunities might be elsewhere. But it’ll be interesting to watch.

Should you invest £5,000 in Lloyds Banking Group Plc right now?

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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

Stephen Wright does not own shares in any of the companies mentioned.