Lloyds (LSE: LLOY) shares lately touched a 52-week excessive of 79.19p, a welcome sight after years of volatility and pandemic-era underperformance. The final time the shares traded that prime was late 2015.

Naturally, this can be a promising signal for long-suffering shareholders like me. However for brand spanking new buyers, the query is whether or not the latest rally leaves any worth on the desk – or if the chance has already handed.

What’s driving the surge?

The share price has climbed over 40% 12 months up to now, supported by a modest enchancment in investor sentiment in direction of UK banks. A sector-wide improve by analysts has additionally helped. Rising rates of interest have expanded internet curiosity margins, whilst financial knowledge counsel the Financial institution of England might start easing charges within the second half of 2025.

On this surroundings, Lloyds — with its home focus and huge retail deposit base — might emerge as a key beneficiary.

However the financial institution’s newest Q1 outcomes weren’t flawless. Underlying earnings fell 7% to £1.52bn, with the financial institution placing apart £105m to arrange for a possible rise in dangerous loans. The decline was partly because of increased working prices and regulatory prices. These challenges, mixed with ongoing financial uncertainty, might weigh on efficiency within the second half of the 12 months.

A dependable dividend inventory

Regardless of the blended earnings, Lloyds continues to return money to shareholders within the type of dividends. The 2024 closing dividend of two.11p per share was paid in Might, bringing the full-year yield to round 4.7% at present costs. The group additionally introduced a £2bn share buyback earlier this 12 months.

For income-focused buyers, that’s enticing. Whereas not the very best yield on the FTSE 100, it’s backed by a well-capitalised stability sheet and a CET1 ratio of 13.7%. Offered the UK avoids a extreme downturn, the dividend seems sustainable.

Digital shift and department closures

Like many excessive avenue banks, Lloyds is grappling with the shift to digital, lately asserting plans to shut 136 branches throughout the UK by March 2026. The financial institution has dedicated to no job losses, however the transfer underscores a broader transformation — and the prices related to it.

On the similar time, Lloyds is investing in expertise and digital companies, aiming to enhance effectivity and buyer expertise. Whereas the upfront expense is critical, these efforts might place the financial institution extra competitively over the long run.

Nonetheless low cost?

Even after the latest rally, Lloyds shares nonetheless commerce under their pre-pandemic ranges. The inventory’s valued at round 7.5 occasions ahead earnings — a pretty valuation by historic or sector requirements. That provides a margin of security for value-oriented buyers.

Nevertheless, progress could also be modest. As a largely UK-focused financial institution, it lacks the worldwide diversification of some rivals. Any setback within the UK housing market or rise in unemployment might rapidly affect efficiency.

Lloyds shares might now not be the deep worth play they had been final 12 months, however they nonetheless look moderately priced for long-term buyers in search of revenue and gradual capital progress.

Whereas not with out dangers, the financial institution’s secure dividend, bettering sentiment and leaner price base make it price contemplating for a diversified passive revenue portfolio — even close to a 52-week excessive.