Lloyds’ (LSE:LLOY) shares have been on quite a rampage in the last few years. With higher interest rates paving the way to wider net interest margins, the bank’s bottom line has expanded drastically. And it’s taken the share price with it, while also fuelling enormous buyback programmes.

For long-time shareholders, it’s been quite a change of pace compared to the seemingly flat performance of the 2010s.

So just how much money have investors made over the last decade? And is the stock getting ready to deliver even more impressive returns?

Crunching the numbers

Since August 2016, Lloyds’ share price has climbed 106.9%. But when dividends are also thrown into the mix, that number rises to 215.8%! That’s enough to transform an initial £5,000 into a chunky £15,790. And it works out to an average annualised return of 12.2%, comfortably beating the FTSE 100’s 8.6% average over the same period.

Of course, past performance doesn’t guarantee future results. So can Lloyds continue to be a market beater from here?

Can the momentum keep building?

July’s half-year results gave bulls plenty to chew on. Reported pre-tax profits jumped 23% to £4.29bn, alongside a 9% expansion in net income to £9.7bn, driven by a higher banking net interest margin which reached 3.19%, up from 3.04% a year ago.

Obviously, higher interest rates have been a massive boon to this business. But it was management’s prudent decision to capitalise on structural hedges that have allowed lending margins to continue expanding even after the Bank of England started cutting rates.

With both margins and earnings on the rise, the all-important return on tangible equity (RoTE), a measure of how efficiently the bank turns shareholder money into profit, hit 17.1%, comfortably above the bank’s own 16% target.

So it’s no wonder that the dividend just received a 30% boost alongside a freshly announced buyback plan. And combined, Lloyds has now returned a staggering £1.9bn in just six months. So with results this strong, is now the time to start piling in?

The lingering shadow

The FCA’s motor finance redress scheme remains a significant and unresolved problem. And with a decision delayed until at least December 2026 pending an Upper Tribunal hearing, this uncertainty likely won’t be resolved in the immediate future.

Lloyds has already put aside a £1.95bn provision against this. But depending on the ruling, this could be far from sufficient to cover the compensation claims.

Meanwhile, there’s the question of long-term interest rates. Sadly, structural hedges don’t last forever. And as these expire, Lloyds’ lending margins will gradually start to decline, making earnings and dividend growth far harder to sustain.

So does that mean investors should be worried about the long-term picture?

The bottom line

There are some genuine and real risks surrounding this bank. Yet, these risks may still be worth considering. The motor finance compensation claims are ultimately a one-time expense. And while interest rates will eventually tumble, that timeline could be far longer than what many investors currently expect. After all, with the conflict in the Middle East driving up energy inflation, central banks have already paused their rate-cutting schemes.

With that in mind, I think Lloyds could be worth a closer look right now. But it’s not the only potential opportunity I’ve spotted…

Should you invest £5,000 in Lloyds Banking Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?

 See The Six Stocks

Zaven Boyrazian does not hold any positions in the companies mentioned.

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