Three years ago, Lloyds‘ (LSE: LLOY) share price hovered around the 40p mark. Today, it’s touching 105p, a rise of more than 160%. Investors have also enjoyed a steady flow of dividends on top, turbocharging their returns.

But lately there have been signs of a slowdown. Is the party over for now?

Why the FTSE 100 bank’s shares soared

Lloyds and its FTSE 100 banking peers have enjoyed a terrific few years, as higher interest rates boosted lending margins, while consumer spending and stronger economic activity was more resilient than feared. Share buybacks and rising dividends have also attracted investors.

Lloyds has been rolling along nicely. Full-year statutory pre-tax profits rose 12% in 2025 to £6.66bn, despite the costly motor finance mis-selling scandal. The bank set aside around £2bn to cover potential compensation as one of the hardest-hit lenders.

On 29 January, it announced a £1.75bn share buyback, following a £1.7bn programme in 2025. Latest results (30 July) showed first-half statutory pre-tax profits rising 23% to £4.3bn. Lloyds is also investing £13bn in digital transformation and AI, and hopes it will generate an extra £2bn in savings by 2030.

Why the shares have stumbled

The global economy’s looking increasingly troubled, with inflation rising, unemployment climbing and investors worrying about the outlook. Higher interest rates can help bank margins, but can also squeeze borrowers and increase the risk of bad debts.

Lloyds’ shares have fallen around 5% in the past month, as investors take a rain check. The prospect of a banking windfall tax in the Autumn Budget (28 October) gives investors another reason to stay home.

Lloyds trades on a price-to-earnings ratio of 15. While not so expensive, it’s higher than it was. The forward P/E however, is around 10.5, as markets expect earnings to keep growing.

The trailing yield has slipped below 3.5%, due to that share price growth. However, the board has been hiking shareholder payouts at a pretty fair clip and the forward yield is 4.5%, rising to 5.2% in 2027.

What’s the outlook?

So what do the experts say? On 16 October, RBC Capital Markets cut its target from 124p to 115p, fearing increased competition for customer deposits. JP Morgan Cazenove raised its target to 123p in September but is Neutral about the bank, while Jefferies rates Lloyds a Buy with a 127p target.

If correct, it would mark a 21% increase from today. Throw in the forward yield and the total projected return is above 25%. Of course these are only forecasts, not guarantees.

Rising structural-hedge income, planned cost savings and continued earnings growth make Lloyds’ shares worth considering today, but with a long-term view. The bank plays a key role in the UK economy and generates plenty of cash. But after its spectacular rally, growth may slow. Potential investors might want to wait and see what the Autumn Budget brings as it’s only just over a week away.

While we wait, these terrific UK stocks are worth checking out too…

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Harvey Jones owns shares in Lloyds.