Nomura has maintained its 'reduce' rating and 35p target price for Lloyds, saying that while the bank's third-quarter figures were in line with estimates, they are not going to drive upgrades for the core.

The broker said: "Our first take on Q3 results for Lloyds is that most line items are in line with expectations and the surprise coming from asset quality. This will drive consensus upgrades to group earnings but not change core earnings estimates materially, in our view.

"Consensus already has loan losses dropping by £1.2bn from the £6bn in guidance for the full year, and any improvement will more likely be in the non-core, against a flattering economy."

Nomura reckons that these results are likely to reassure investors that management plans are on track.

"However, with the stock already rallying significantly over the year and no material upgrade to core earnings, we would not expect sustained strength on the back of these number and see the +7% opening print this morning as an overreaction on short covering," the broker said.

"Long-term issues remain around deleveraging, capital build, structural margin headwinds but the stock will continue to be driven by risk appetite."

Shares were trading 6.5% higher at 43.2p in mid-morning trade.

BC

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