At what price would I buy shares in Lloyds Banking Group (LSE: LLOY) stop being a bargain? Every investor may have their own opinion on this, but there is no doubt that the shadowy horse bank brought benefits to many shareholders this year. Since the beginning of 2025, the Lloyds share price has been falling. It has also performed well over the long term, growing 177% in five years.

Shares are still trading for pennies, but have recently been tantalizingly close to breaking the pound barrier.

I do not own the shares. But would it make sense to buy some Lloyds shares for my portfolio now?

Good times for banking

Lloyds is doing well, but it is not alone. After uncertainty over the outlook for loan defaults and the wider economy during the pandemic, UK banking has returned with a vengeance.

Partly Lloyds’ success, partly just the trend. As the UK’s largest mortgage lender, in some ways it is a scratchy indicator of the health of the UK economy in general and the housing market in particular.

This can be a source of huge profits when things go well, as they have in recent years. But it also comes with risks.

If the housing market heads south, it could lead to more borrowers defaulting on their loans. This could be bad news for Lloyds’ profits and its share price.

For now, however, the good times continue.

I don’t like this rating!

But I’m in no rush to invest in Lloyds. In fact, I won’t buy bank shares for now.

My main concern is the risk of a financial downturn that will result in an escalate in loan defaults. For now, while lending in some parts of global debt markets is a concern, the UK housing sector remains solid. Lloyds remains sanguine about keeping default rates at manageable levels.

Thanks to its huge customer base and proven business model, Lloyds continues to make huge profits. This could aid drive the Lloyds share price further up, perhaps to the level of the pound it is already close to – or even further.

Lloyds’ share price to earnings ratio is currently around 17. That doesn’t seem inexpensive to me. I also consider the current price-to-book ratio of around 1.2 to be pricey.

However, this does not mean that the share price cannot escalate from this point on. Sure, it has momentum. If the UK economy recovers, bank profits could benefit, potentially providing more support to Lloyds’ share price.

However, at its current level, the risk profile makes me uncomfortable. For this reason, despite the strengths of the business, I will not invest.