The Lloyds Banking Group (LSE:LLOY) share price finished November pretty much where it started the month. That doesn’t sound like news, but it’s more interesting than it seems.

In a month where Barclays and NatWest both saw their shares climb over 5%, Lloyds going nowhere is underwhelming. So what should investors think of the stock?

What happened in November?

The market’s still computing the news that Lloyds might be in trouble for practices around car loans. That risk has been known for a long time, but it became more real at the end of October.

There’s still a lot to be decided, including how much customers will be entitled to, what periods will be covered, and how many will actually claim it. That makes things quite uncertain.

It’s hard to be confident valuing a stock when it might have a future liability of an unspecified magnitude. And that’s the main reason the Lloyds share price has underperformed its rivals.

Barclays and NatWest are less exposed to car loans. But the big question right now is whether the Lloyds share price faltering is an opportunity or a trap? I think it might be both.

Assessing the damage

Estimates of what Lloyds might be liable for as a result of the car loan investigation vary. The highest I’ve seen so far is £3.9bn. 

That’s just under 1% of its total loan book, which is where the majority of the bank’s profits come from. But the stock’s fallen over 14% on the news. 

Put another way, a potential £3.9bn fine has caused the firm’s market-cap to fall by around £5.5bn. And that’s leaving aside the fact other bank stocks have moved higher in this time.

There’s also reputational damage to consider. And while that’s even harder to quantify, I think the stock might well be worth a closer look. 

Short-term vs long-term

As I see it, the question of whether investors should see this as a big problem comes down to how long they want to own the stock for. The longer that is, the less I think they need to worry.

£3.9bn is roughly a third of the bank’s annual net interest income. In the context of a five-year investment, that’s roughly 6% of the expected profit, which is fairly significant. 

Over 30 years though, £3.9bn looks more like 1% of the total profit. And that’s within the margin of safety I think investors should want to consider buying the stock in the first place.

It’s not just the £3.9bn that matters – it’s the return on this that Lloyds would have generated in the future. But even so, a longer time means the overall significance of the fine diminishes.

Opportunity?

Car loan liabilities aren’t the only reason the Lloyds share price faltered in November. The bank listed £185m in new shares to use as part of employee incentive schemes.

I don’t see that as a major issue though. It limits the effect of the company’s share buyback programme, but not by a significant amount. 

Overall, I think the stock’s worth considering from a long-term perspective. The outlook for the near future might be weak, but the faltering share price factors in quite a lot of this.