In an effort to become better diversified, Lloyds Banking Group (LLOY.L), Britain's largest mortgage lender, has gone shopping for growth outside of its comfort zone. But is the company taking on unnecessary risk?

According to Reuters, Lloyds, which generates the bulk of its revenue and profits from mortgage loans, has agreed to acquire the MBNA UK credit card business from Bank of America (BAC), spending £1.9 billion ($2.4 billion) and marking the bank's first major acquisition in almost a decade. Partly-owned by the British government, thanks to the government's bail out during the 2007-09 crisis, Lloyds wants to reduce its reliance on mortgage lending, noted Reuters.

The deal, which includes roughly £800 million ($829 million) of acquired equity and assumes £240 million ($248 million) for future claims for mis-sold loan insurance (PPI), is expected to close in the first half of 2017. "Lloyds will be broadly doubling up its exposure to credit cards at a particularly benign point in the bad debt cycle and ahead of a potential slow-down... once the terms of the UK's exit from the EU are reached," Gary Greenwood of Shore Capital said, Reuters reports.

While the deal is being applauded for the strategic use of Lloyd's capital, analysts were quick to point out the risks that comes with it. Britain's uncertain economic outlook remains unclear amid the country's June vote to leave the European Union. However, António Horta-Osório, Lloyds CEO, is focusing more on the potential reward.

"The acquisition... increases our participation in the expanding UK credit card market with a multi-brand strategy and advances our strategic aim to deliver sustainable growth as a UK focused retail and commercial bank," Horta-Osório said.

As to the main objective to better diversify the mortgage business, Joseph Dickerson of Jefferies expects the deal to increase the contribution of the consumer finance business to 21% of the bank's pre-tax profits, rising four percentage points from 17%. Likewise, Lloyds expects MBNA, which made after-tax profits of £123 million ($127 million) in the first half of 2016, to add £650 million ($673 million) per year to group revenues.

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