This year has seen Lloyds Banking Group (LSE: LLOY) shares trade in pounds not pennies for the first time since 2008, which was during the financial crisis.

That has been welcome news for Lloyds shareholders.

So, what would £10k invested in Lloyds shares five years ago, in October 2021, be worth now?

Impressive price gains

During that period, the Lloyds share price has increased 127%. So £10k invested back then would now be worth around £22,700.

For context, that 127% gain compares to the 49% gain over the same period in the FTSE 100 index, of which the black horse bank is a member.

Then again, it is weaker than the 134% growth in Barclays’ share price or the 174% increase in the Natwest share price and much weaker than the 269% growth in the HSBC share price.

In other words, with the benefit of hindsight, buying Lloyds shares five years ago now looks like a classic example of finding a good sector to invest in at that moment, but not the best share within that sector.

Still, a 127% capital gain in five years impresses me.

Don’t forget the dividends!

Nor is the capital gain the only attractive thing here.

Somebody who bought Lloyds shares five years ago, when the share price was around 45p, would so far have received 14.9p per share in dividends. The most recent was paid in the middle of last month.

By my calculations, that means that the £10k investment would already have earned around £3,291 in dividends.

Along with the capital gain, that means the total return to date on the £10k would be roughly £15,991.

The capital gain would be a paper gain if the shares are still held – but that is still a very impressive performance in my view!

Strongly profitable bank

So, could it make sense for me to buy some Lloyds shares today?

After all, the FTSE 100 bank is the country’s largest mortgagee, it has a vast customer base and is massively profitable.

Indeed, it made a £3.1bn statutory profit after tax in the first half of this year. That was a 23% improvement on the same period last year.

However, it is worth stepping back and considering just why Lloyds shares – and sectoral peers – have performed so strongly over the past five years.

Back then, during the pandemic recovery, the economy was fragile, consumer confidence was weak and investors had been shaken. Remember that during the pandemic, all British banks suspended their dividends, at the behest of the Bank of England.

Looking to the future, not the past

What about now, though?

Lloyds’ strong first half profit performance is impressive and suggests business remains robust.

But there is a high level of geopolitical uncertainty and the world economy is increasingly creaking, as increasing government borrowing costs suggest.

British consumer confidence remains weak. The property market has been falling in some areas especially for high cost properties. That poses a risk of higher mortgage default rates, which could hurt Lloyds’ profits.

At today’s price and in today’s economic environment, I am ignoring Lloyds shares in favour of looking for bargains in other parts of the market.

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Christopher Ruane does not hold any positions in the companies mentioned.