LLOY.L
Lloyds Banking Group PLC
Price:  
70.58 
GBP
Volume:  
191,446,720.00
United Kingdom | Banks
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LLOY.L WACC - Weighted Average Cost of Capital

The WACC of Lloyds Banking Group PLC (LLOY.L) is 6.7%.

The Cost of Equity of Lloyds Banking Group PLC (LLOY.L) is 14.10%.
The Cost of Debt of Lloyds Banking Group PLC (LLOY.L) is 5.00%.

Range Selected
Cost of equity 12.30% - 15.90% 14.10%
Tax rate 16.70% - 20.80% 18.75%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.3% - 7.1% 6.7%
WACC

LLOY.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 1.39 1.56
Additional risk adjustments 0.0% 0.5%
Cost of equity 12.30% 15.90%
Tax rate 16.70% 20.80%
Debt/Equity ratio 2.85 2.85
Cost of debt 5.00% 5.00%
After-tax WACC 6.3% 7.1%
Selected WACC 6.7%

LLOY.L's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for LLOY.L:

cost_of_equity (14.10%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.39) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.