After the stock price has skyrocketed over the last few years, I’ve started to wonder if Lloyds (LSE: LLOY) shares were about to fall again! In just a few years, the company’s stock has almost tripled, not to mention the above-average dividends included in the deal. I thought it was growth and growth FTSE100 The bank seemed unstoppable.

Then came 2026. Due to a series of geopolitical events, the share price dropped. This year the decline from top to bottom was over 20%! Although it has recovered some of its gains, you can still buy a Lloyds share for under £1 today – for 97p each, as I write at noon on Friday (April 24). This could be a great chance to get economical shares of a company that’s growing, right?

Why did the share price drop?

Before we answer whether this could be a great buying opportunity, it is worth paying attention to what happened this year. The biggest factor in the decline in Lloyds’ share price is the conflict in Iran, which has two main consequences.

The first issue is the chances of stagflation and economic collapse. Lloyds’ slogan, ‘Helping Britain Prosper’, highlights the inextricable link between the bank and the British economy. Its presence in the country means that any economic weakness resulting from the war in the Middle East means the picture is much less rosy than it was a few months ago.

The second issue is that inflation (if it comes) may result in higher interest rates. When loans become more exorbitant, people default on their loans. These impairments harm your bottom line and can be disastrous on a enormous scale. Given that the Bank of England is already considering increasing interest rates this year, it makes sense that the Lloyds share price would be hit the hardest.

Is this a purchase?

On the other hand, higher interest rates can be a boon for banks. When it is more exorbitant to borrow, there is more flexibility to escalate margins. This is one of the reasons why Lloyds has been increasing profits in recent years.

If earnings continue to grow, we can expect the company’s generous share buyback program to continue. Redemptions cannot be taken lightly.

When people think about the earnings of a FTSE 100 bank, their eyes often turn to dividends – Lloyds predicts a forward dividend yield of 4.4%, which is decent, but not amazing. However, using cash to buy shares and take them off the market puts upward pressure on the share price. This is one (though not the only) reason why the share price has almost tripled in recent years.

Here’s the final bonus: it looks like banks will be one of the sectors that will benefit most from AI. Lloyds expects the utilize of artificial intelligence to add £100 million to value this year alone, and who knows how much this could grow to in the future? I think the stock is worth considering.