Over the past few years, Lloyds (LSE: LLOY) had been an excellent performer on the stock market. Lloyds’ shares have more than doubled over the past five years.

While today’s yield of 3.9% already looks tasty, someone who bought five years ago at the cheaper price would now be earning a yield of over 8%.

Still, I have no plans to buy Lloyds’ shares for my portfolio. I have a couple of key reasons.

Heavy exposure to the UK housing market

The first is that Lloyds is far more domestically focused than some rivals like Barclays and HSBC. It is also highly dependent on the UK housing market, as it is the nation’s largest mortgagee.

That is both good and bad, as I see it. On one hand, a domestic focus means the bank is less likely to suffer from mistakes in overseas business dragging down the whole company’s performance.

It also means that, when the UK housing market does well, Lloyds can do well. It is massively profitable right now.

However, that UK mortgage exposure is also a sizeable risk. If the market softens, for example because interest rates go up a lot, that could lead to higher default rates. That might badly hurt Lloyds’ earnings power.

Questionable strategy in a shifting world

The second reason I am not keen to buy Lloyds shares is because of my own experience as a customer. Like many other UK banks, Lloyds has been closing large numbers of branches. This may save costs in the short term, but in the long term I see it as a basic strategic error on a grand scale.

The existing branch network is a key differentiator for legacy banks against fintechs like Revolut and Wise. I think Lloyds (and other legacy banks) should be working to emphasise their points of difference with fintechs. Instead they are doing the opposite.

Recently, I happened to need to visit a Lloyds branch in central London. Closures meant the nearest was still a considerable distance away, in Oxford Street. With such a prime location I was hoping to be impressed. Instead, a slow-moving line waited for a woefully inadequate number of tellers.

Standing in line, feeling unhappy about the experience and noticing that other customers and the staff also looked far from thrilled, I compared the experience to the positive comments I hear from many Revolut customers.

All financial institutions have some unhappy customers, of course. But as a long-term investor, I look at a company’s long-term strategy – and Lloyds seems to me like the strategy is about short-term cost economies, not long-term business building.

I’m looking elsewhere

I could be wrong of course. Lloyds continues to do well. It has deep strengths, from the size of its customer base to its portfolio of brands. (Even there though, I think the recent decision to scrap the historic Halifax name reeks of short-termism).

I do not like the risks in the business model given the current share price. I also think the long-term strategy is questionable.

Having happily bought Wise shares recently, Lloyds is still not on my shopping list.

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Christopher Ruane owns shares in Wise.