Lloyds’ (LSE:LLOY) shares continue to be among the most popular with British investors. Considering the bank stock’s up close to 40% since the start of the year, it’s not difficult to see why. And when zooming out to the last five years, this impressive upward trajectory has only continued.

So just how much money have investors made? And is it too late to jump on the bandwagon?

Calculating returns

Since July 2020, the Lloyds share price has more than doubled from around 30p per share to 75p today. And when including the extra gains from dividends along the way, shareholders have reaped an impressive 142% total return. That’s the equivalent of 19.3% a year – a Buffett-like return enough to transform a £1,000 initial investment into £2,420.

By comparison, index fund investors owning the FTSE 100 during this period would only be sitting on around £1,710. That’s not bad, but it’s notably behind the British banking stock.

Of course, past performance is quite a poor indicator of future returns. Don’t forget that just because something has gone up in the past, doesn’t mean it will continue to do so in the future. So with that in mind, should investors be considering Lloyds for their portfolios today?

Still room for growth?

There are a number of institutional investors following this business. And even the rival team at Barclays have highlighted Lloyds’ potential. In fact, they’ve even placed a 90p price target on the bank, suggesting that another 20% return could materialise over the next 12 months.

The investment thesis is that Lloyds will continue to benefit from widening net interest margins courtesy of its structural hedges. For reference, structural hedges convert variable-rate cash flows into fixed-rate cash flows, enabling banks like Lloyds to lock in an interest rate for a specific period, even if the Bank of England starts cutting interest rates for everyone else.

If everything goes according to plan, the return on tangible equity could reach as high as 16% by 2027, giving management the flexibility to potentially launch generous share buybacks or dividend hikes.

So far, this sounds like Lloyds could be a terrific addition to an investment portfolio in 2025. But as all intelligent investors know, there’s no reward without risk.

Digging deeper

While structural hedges are creating a nice short-term tailwind, continued interest rate cuts from the Bank of England will eventually catch up with Lloyds’ lending margin.

Should rates once again stabilise near 0% like they did between 2009 and 2020, then growth could prove exceptionally challenging. And we might once again enter a long stretch of time where the Lloyds share price refuses to move anywhere. As a reminder, during this last 11-year period, Lloyds shares remained almost entirely flat, lagging significantly behind its parent index.

There’s also the more imminent concern relating to the motor finance mis-selling scandal that’s currently being considered by the Courts. Should the verdict be unfavourable, Lloyds could be paying an enormous fine. While this won’t be a disaster, it will be large enough to make an impact and potentially send the share price tumbling.

So is the stock worth considering? I think so. At least, in my opinion, the growth opportunity’s sufficiently large to warrant a deeper investigation for investors seeking exposure to this industry.