Lloyds Banking Group (NYSE: LYG) boosts H1 profit, dividend and share buybacks
Lloyds Banking Group plc reported strong half-year 2026 results, with statutory profit before tax of £4,293 million, 23% higher than the first half of 2025, on total income of £10,626 million (up 13%). Net interest income rose 10% to £7,105 million, while other income increased 21% to £3,521 million. Basic earnings per share were 4.8 pence, compared with 3.8 pence a year earlier. Operating expenses increased to £5,717 million and the impairment charge rose to £616 million, reflecting a weaker economic outlook.
The balance sheet expanded to £994,157 million of assets, with loans and advances to customers of £491,678 million and customer deposits of £500,859 million. The common equity tier 1 capital ratio was 13.6% and the MREL ratio 32.0%. Liquidity remained robust, with an LCR of 144% and NSFR of 123%.
The Board recommended an interim ordinary dividend of 1.58 pence per share (£918 million), 30% higher than the first half of 2025, and is executing an ordinary share buyback of up to £1.75 billion, of which about £1.2 billion had been completed by 30 June 2026. A further buyback of up to £1.0 billion is planned. Retail, Commercial Banking and Insurance, Pensions and Investments all delivered higher underlying profit before tax, while credit performance remained described as strong and stable, with Stage 3 loans at 1.3% of total lending and an ECL allowance of £3,172 million.
Positive
- Profit growth and earnings: Statutory profit before tax rose 23% to £4,293 million on 13% higher total income, with basic EPS increasing to 4.8 pence from 3.8 pence, indicating materially higher profitability in the half-year.
- Capital returns to shareholders: The Board set an interim dividend of 1.58 pence per share (£918 million, up 30% year-on-year) and is executing up to £1.75 billion of buybacks for 2025, alongside a newly announced £1.0 billion ordinary share buyback programme.
Negative
- Higher credit impairment: The impairment charge increased to £616 million from £442 million, driven partly by updated macroeconomic scenarios reflecting a weaker outlook, including a higher unemployment peak and softer UK house price assumptions.
Filing Explained
Existing preference shares are reclassified as Tier 2 capital on July 30, strengthening regulatory capital by approximately £400 million without a disclosed common-share issuance.
This Form 6-K, whose purpose is to furnish material interim information from a foreign private issuer, reports Lloyds Banking Group’s unaudited results for the half-year ended
The incorporation makes this report part of that registration statement, but the filing states that the information does not itself constitute a public offer or an offer to sell securities.
Separately, on
Key Figures
Statutory profit before tax: £4,293 million
Total income: £10,626 million
Impairment charge: £616 million
+5 more
8 metrics
Statutory profit before tax
£4,293 million
Half-year to 30 June 2026, 23% higher than £3,504 million in H1 2025
Total income
£10,626 million
Half-year to 30 June 2026 versus £9,386 million in the prior-year half
Impairment charge
£616 million
Half-year to 30 June 2026, up from £442 million in the first half of 2025
Common equity tier 1 capital ratio
13.6%
At 30 June 2026 compared with 14.0% at 31 December 2025
Total assets
£994,157 million
Group balance sheet total assets at 30 June 2026
Interim ordinary dividend per share
1.58 pence
Recommended interim dividend for 2026, equivalent to £918 million, 30% higher than H1 2025
Ordinary share buyback in respect of 2025
Up to £1.75 billion
Programme announced in January 2026; about £1.2 billion completed by 30 June 2026
New ordinary share buyback intention
Up to £1.0 billion
Further buyback programme expected to complete by 27 January 2027
Key Terms
common equity tier 1 (CET1) capital ratio, risk-weighted assets, structural hedge, motor finance commission redress scheme, +2 more
6 terms
common equity tier 1 (CET1) capital ratio financial
"The Group’s common equity tier 1 (CET1) capital ratio reduced to 13.6%"
The common equity tier 1 (CET1) capital ratio measures a bank’s core capital—mainly common stock and retained earnings—against its assets after those assets are adjusted for risk. Think of it as the size of the bank’s financial cushion compared with the riskiness of what it owns; a higher CET1 ratio means a bigger cushion to absorb losses and generally signals greater safety for investors, though it can also affect returns.
risk-weighted assets financial
"Risk-weighted assets increased by £6.3 billion to £241.8 billion at 30 June 2026"
Risk-weighted assets are a bank’s assets (like loans and investments) adjusted by how risky regulators consider each one, so safer items count less and riskier items count more. Think of it as packing a suitcase where heavy, fragile items take up more “real” space; higher risk-weighted assets mean a bank must hold more capital as a cushion. Investors watch this because it affects a bank’s safety, regulatory limits and ability to lend or return money to shareholders.
structural hedge financial
"driven by higher average interest-earning assets and a higher margin, resulting from stronger structural hedge income"
motor finance commission redress scheme regulatory
"The FCA published policy statement PS26/3 in March 2026 with final rules for its motor finance redress schemes"
expected credit loss (ECL) allowance financial
"The total expected credit loss (ECL) allowance was lower in the first half of 2026 at £3,172 million"
Minimum requirement for own funds and eligible liabilities (MREL) financial
"the Group’s MREL ratio reduced to 32.0% at 30 June 2026"
AI-generated analysis. How Rhea-AI works. Not financial advice.
See more from StockTitan in Google Search and AI answers.
Adds StockTitan as a preferred source · opens Google
FAQ
How did Lloyds Banking Group (LYG) perform financially in the first half of 2026?
Lloyds Banking Group delivered profit before tax of £4,293 million, up 23% year-on-year, on total income of £10,626 million, a 13% increase. Basic earnings per share were 4.8 pence, compared with 3.8 pence in the first half of 2025.
What capital returns did Lloyds Banking Group (LYG) announce for shareholders?
The Board recommended an interim dividend of 1.58 pence per share, equivalent to £918 million and 30% above the prior year. It is also executing an ordinary share buyback of up to £1.75 billion and has announced a further buyback programme of up to £1.0 billion.
What is Lloyds Banking Group’s (LYG) capital position as of 30 June 2026?
At 30 June 2026, Lloyds reported a CET1 capital ratio of 13.6%, a total capital ratio of 18.4% and an MREL ratio of 32.0%. Risk-weighted assets were £241.8 billion, reflecting strong customer lending growth partly offset by optimisation and securitisation activity.
How did credit quality and impairments evolve for Lloyds Banking Group (LYG) in H1 2026?
The impairment charge was £616 million, higher than £442 million a year earlier, including an £80 million net charge from updated macroeconomic scenarios. Stage 3 loans were £6,254 million, 1.3% of total lending, with an overall expected credit loss allowance of £3,172 million.
How did Lloyds Banking Group’s (LYG) main divisions perform in H1 2026?
Retail generated underlying profit before tax of £2,256 million (up 14%), Commercial Banking delivered £1,425 million (up 19%), and Insurance, Pensions and Investments achieved £245 million (up 70%). All three primary divisions reported year-on-year underlying profit growth.
What are Lloyds Banking Group’s (LYG) key liquidity and funding metrics?
The Group reported an LCR of 144% and an estimated NSFR of 123%. LCR-eligible liquid assets were £131.0 billion, and wholesale funding (debt securities and subordinated liabilities) totalled £107.8 billion, supported by diversified term issuance of £10.4 billion in the half-year.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
30 July 2026
Commission File number 001-15246
(Translation of registrant's name into English)
33 Old Broad Street
London
EC2N 1HZ
United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1)
________.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7)
________.
This report on Form 6-K shall be deemed incorporated by reference into the company's Registration Statement on Form F-3 (File
No. 333-287829) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents
or reports subsequently filed or furnished.
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CONTENTS
Basis of preparation | 1 |
Forward looking statements | 1 |
Condensed consolidated income statement (unaudited) | 2 |
Condensed consolidated balance sheet (unaudited) | 3 |
Financial review | 4 |
Divisional results | |
Retail | 7 |
Commercial Banking | 9 |
Insurance, Pensions and Investments | 10 |
Other | 11 |
Risk management | |
Principal risks and uncertainties | 12 |
Capital risk | 13 |
Credit risk | 18 |
Liquidity risk | 28 |
Interest rate sensitivity | 30 |
Condensed consolidated half-year financial statements (unaudited) | 31 |
Condensed consolidated income statement (unaudited) | 32 |
Condensed consolidated statement of comprehensive income (unaudited) | 33 |
Condensed consolidated balance sheet (unaudited) | 34 |
Condensed consolidated statement of changes in equity (unaudited) | 35 |
Condensed consolidated cash flow statement (unaudited) | 38 |
Notes to the condensed consolidated half-year financial statements (unaudited) | 39 |
Signature | 72 |
Page 1 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
EXPLANATORY NOTE
This report on Form 6-K, which includes the unaudited consolidated interim results of Lloyds Banking Group plc for
the half-year ended 30 June 2026, is being incorporated by reference into the Registration Statement with File No.
333-287829.
BASIS OF PRESENTATION
This release covers the results of Lloyds Banking Group plc (the Company) together with its subsidiaries (the
Group) for the half-year ended 30 June 2026. Unless otherwise stated, income statement commentaries
throughout this document compare the half-year ended 30 June 2026 to the half-year ended 30 June 2025 and the
balance sheet analysis compares balances at 30 June 2026 to balances at 31 December 2025.
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act
of 1934, as amended, and section 27A of the US Securities Act of 1933, as amended, with respect to the business, strategy, plans
and/or results of Lloyds Banking Group plc together with its subsidiaries (the Group) and its current goals and expectations.
Statements that are not historical or current facts, including statements about the Group’s or its directors’ and/or management’s
beliefs and expectations, are forward-looking statements. Words such as, without limitation, ‘believes’, ‘achieves’, ‘anticipates’,
‘estimates’, ‘expects’, ‘targets’, ‘should’, ‘intends’, ‘aims’, ‘projects’, ‘plans’, ‘potential’, ‘will’, ‘would’, ‘could’, ‘considered’, ‘likely’,
‘may’, ‘seek’, ‘estimate’, ‘probability’, ‘goal’, ‘objective’, ‘deliver’, ‘endeavour’, ‘prospects’, ‘optimistic’ and similar expressions or
variations on these expressions are intended to identify forward-looking statements. These statements concern or may affect
future matters, including but not limited to: projections or expectations of the Group’s future financial position, including profit
attributable to shareholders, provisions, economic profit, dividends, capital structure, portfolios, net interest margin, capital
ratios, liquidity, risk-weighted assets (RWAs), expenditures or any other financial items or ratios; litigation, regulatory and
governmental investigations; the Group’s future financial performance; the level and extent of future impairments and write-
downs; the Group’s ESG targets and/or commitments; statements of plans, objectives or goals of the Group or its management
and other statements that are not historical fact and statements of assumptions underlying such statements. By their nature,
forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will
or may occur in the future. Factors that could cause actual business, strategy, targets, plans and/or results (including but not
limited to the payment of dividends) to differ materially from forward-looking statements include, but are not limited to: general
economic and business conditions in the UK and internationally (including in relation to tariffs); imposed and threatened tariffs
and changes to global trade policies; acts of hostility or terrorism and responses to those acts, or other such events; geopolitical
unpredictability; the war between Russia and Ukraine; the escalation of conflicts in the Middle East; the tensions between China
and Taiwan; political instability including as a result of any UK general election; market related risks, trends and developments;
changes in client and consumer behaviour and demand; exposure to counterparty risk; the ability to access sufficient sources of
capital, liquidity and funding when required; changes to the Group’s credit ratings; fluctuations in interest rates, inflation,
exchange rates, stock markets and currencies; volatility in credit markets; volatility in the price of the Group’s securities; natural
pandemic and other disasters; risks concerning borrower and counterparty credit quality; risks affecting insurance business and
defined benefit pension schemes; changes in laws, regulations, practices and accounting standards or taxation; changes to
regulatory capital or liquidity requirements and similar contingencies; the policies and actions of governmental or regulatory
authorities or courts together with any resulting impact on the future structure of the Group; risks associated with the Group’s
compliance with a wide range of laws and regulations; assessment related to resolution planning requirements; risks related to
regulatory actions which may be taken in the event of a bank or Group failure; exposure to legal, regulatory or competition
proceedings, investigations or complaints; failure to comply with anti-money laundering, counter terrorist financing, anti-bribery
and sanctions regulations; failure to prevent or detect any illegal or improper activities; operational risks including risks as a result
of the failure of third party suppliers; conduct risk; risks related to new and emerging technologies, including artificial intelligence;
technological changes and risks to the security of IT and operational infrastructure, systems, data and information resulting from
increased threat of cyber and other attacks; technological failure; inadequate or failed internal or external processes or systems;
risks relating to ESG matters, such as climate change (and achieving climate change ambitions) and decarbonisation, including
the Group’s ability along with the government and other stakeholders to measure, manage and mitigate the impacts of climate
change effectively, and human rights issues; the impact of competitive conditions; failure to attract, retain and develop high
calibre talent; the ability to achieve strategic objectives; the ability to derive cost savings and other benefits including, but
without limitation, as a result of any acquisitions, disposals and other strategic transactions; inability to capture accurately the
expected value from acquisitions; assumptions and estimates that form the basis of the Group’s financial statements; and
potential changes in dividend policy. A number of these influences and factors are beyond the Group’s control. Please refer to the
latest Annual Report on Form 20-F filed by Lloyds Banking Group plc with the US Securities and Exchange Commission (the SEC),
which is available on the SEC’s website at www.sec.gov, for a discussion of certain factors and risks. Lloyds Banking Group plc
may also make or disclose written and/or oral forward-looking statements in other written materials and in oral statements made
by the directors, officers or employees of Lloyds Banking Group plc to third parties, including financial analysts. Except as
required by any applicable law or regulation, the forward-looking statements contained in this document are made as of today’s
date, and the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-
looking statements contained in this document whether as a result of new information, future events or otherwise. The
information, statements and opinions contained in this document do not constitute a public offer under any applicable law or an
offer to sell any securities or financial instruments or any advice or recommendation with respect to such securities or financial
instruments.
Page 2 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
STATUTORY INFORMATION (IFRS)
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | ||||||
Interest income | 15,219 | 15,367 | 15,382 | |||||
Interest expense | (8,114) | (8,889) | (8,630) | |||||
Net interest income | 7,105 | 6,478 | 6,752 | |||||
Fee and commission income | 1,752 | 1,464 | 1,654 | |||||
Fee and commission expense | (750) | (608) | (726) | |||||
Net fee and commission income | 1,002 | 856 | 928 | |||||
Net trading income | 812 | 608 | 877 | |||||
Insurance revenue | 1,566 | 1,867 | 1,571 | |||||
Insurance service expense | (1,251) | (1,409) | (1,134) | |||||
Net expense from reinsurance contracts held | (17) | (28) | (111) | |||||
Insurance service result | 298 | 430 | 326 | |||||
Net investment return on assets held to back insurance and investment contracts | 16,152 | 5,316 | 18,528 | |||||
Net finance expense in respect of insurance and investment contracts | (15,960) | (5,317) | (18,727) | |||||
Net investment return and finance result in respect of insurance and investment contracts | 192 | (1) | (199) | |||||
Other operating income | 1,217 | 1,015 | 1,352 | |||||
Other income | 3,521 | 2,908 | 3,284 | |||||
Total income | 10,626 | 9,386 | 10,036 | |||||
Operating expenses | (5,717) | (5,440) | (6,526) | |||||
Impairment | (616) | (442) | (353) | |||||
Profit before tax | 4,293 | 3,504 | 3,157 | |||||
Tax expense | (1,170) | (960) | (944) | |||||
Profit after tax | 3,123 | 2,544 | 2,213 | |||||
Profit attributable to ordinary shareholders | 2,836 | 2,274 | 1,922 | |||||
Profit attributable to other equity holders | 229 | 245 | 218 | |||||
Profit attributable to equity holders | 3,065 | 2,519 | 2,140 | |||||
Profit attributable to non-controlling interests | 58 | 25 | 73 | |||||
Profit after tax | 3,123 | 2,544 | 2,213 | |||||
Basic earnings per share | 4.8p | 3.8p | 3.2p | |||||
Diluted earnings per share | 4.8p | 3.7p | 3.2p |
Page 3 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
At 30 Jun 2026 £m | At 31 Dec 2025 £m | ||||
Assets | |||||
Cash and balances at central banks | 61,530 | 56,661 | |||
Financial assets at fair value through profit or loss | 258,373 | 240,413 | |||
Derivative financial instruments | 20,731 | 19,727 | |||
Financial assets at amortised cost | 570,802 | 553,672 | |||
Financial assets at fair value through other comprehensive income | 40,428 | 36,320 | |||
Other assets | 42,293 | 37,279 | |||
Total assets | 994,157 | 944,072 | |||
Liabilities | |||||
Deposits from banks | 8,208 | 5,779 | |||
Customer deposits | 500,859 | 496,457 | |||
Repurchase agreements at amortised cost | 45,400 | 38,570 | |||
Financial liabilities at fair value through profit or loss | 31,310 | 27,909 | |||
Derivative financial instruments | 17,826 | 16,132 | |||
Debt securities in issue at amortised cost | 90,853 | 78,271 | |||
Liabilities arising from insurance and participating investment contracts | 143,566 | 135,284 | |||
Liabilities arising from non-participating investment contracts | 66,639 | 61,640 | |||
Other liabilities | 33,024 | 26,269 | |||
Subordinated liabilities | 9,235 | 9,894 | |||
Total liabilities | 946,920 | 896,205 | |||
Total equity | 47,237 | 47,867 | |||
Total equity and liabilities | 994,157 | 944,072 |
CAPITAL METRICS
At 30 Jun 2026 | At 31 Dec 2025 | ||||
Risk-weighted assets | £241.8bn | £235.5bn | |||
Common equity tier 1 ratio | 13.6% | 14.0% | |||
Tier 1 capital ratio | 15.5% | 16.2% | |||
Total capital ratio | 18.4% | 18.9% |
Page 4 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
FINANCIAL REVIEW
Income statement
The Group’s statutory profit before tax for the first half of 2026 was £4,293 million, 23% higher than in the first
half of 2025, reflecting higher total income partially offset by higher operating expenses and a higher impairment
charge. Profit after tax was £3,123 million and earnings per share were 4.8 pence (half-year to 30 June 2025:
£2,544 million and 3.8 pence respectively).
Total income for the first half of 2026 was £10,626 million, an increase of 13% on the prior period (half-year to
30 June 2025: £9,386 million). Net interest income of £7,105 million was up 10% (half-year to 30 June 2025:
£6,478 million), driven by higher average interest-earning assets and a higher margin, resulting from stronger
structural hedge income as eligible balances were reinvested into a higher rate environment, partially offset by
asset margin compression, in particular in the UK mortgages portfolio.
Other income increased by 21% to £3,521 million (half-year to 30 June 2025: £2,908 million), with a higher net
investment return and finance result in respect of insurance and investment contracts, higher net fee and
commission income and higher other operating income, partially offset by a lower insurance service result. Net fee
and commission income increased by 17% as a result of strengthening customer activity, while other operating
income increased by 20% as a result of vehicle fleet growth and higher average vehicle rental values in UK Motor
Finance within Retail and strong growth in Lloyds Living.
Total operating expenses of £5,717 million (half-year to 30 June 2025: £5,440 million) reflected business growth
costs, inflationary pressures and the full acquisition of Schroders Personal Wealth (now Lloyds Wealth) in the
fourth quarter of 2025, partially offset by continued cost savings, a lower severance expense and plateauing
investment as this strategic cycle culminates. Alongside this, operating lease depreciation increased due to a
charge in the second quarter for declines in used car prices alongside fleet growth and the depreciation of higher
value vehicles, partially offset by continued risk mitigation.
A remediation charge of £39 million was recognised by the Group in the first half of 2026 (half-year to 30 June
2025: £37 million) across a small number of programmes. There have been no further charges relating to motor
finance commission arrangements. The FCA published policy statement PS26/3 in March 2026 with final rules for
its motor finance redress schemes. Four challenges to the FCA’s schemes have been raised, three by lenders and
one from a consumer group and the implementation of the scheme has now been delayed, given the Upper
Tribunal hearing is not expected before December 2026. The Group will closely monitor how these challenges
develop and consider any potential impact to the existing provision. Despite these uncertainties, the current
provision continues to represent the Group’s current best estimate of the potential impact of the motor finance
issue.
The impairment charge was £616 million (half-year to 30 June 2025: £442 million). The higher charge includes a net
charge from updated multiple economic scenarios (MES) reflecting the impact of the deterioration in economic
outlook in the first quarter due to the Middle East conflict, net of modest second quarter updates. The multiple
economic scenarios impact for the first half of 2026 captures a higher unemployment rate peak and softer house
price outlook compared to the year end view. This is partly offset by the release of the £50 million post model
adjustment for global tariff and political disruption risks within Commercial Banking in the first quarter, now
considered to be adequately captured within assumptions and resulting modelled provisions. Credit performance
remains strong and stable across Retail and Commercial Banking with arrears low and stable in all portfolios.
The Group recognised a tax expense of £1,170 million in the first half of 2026 (half-year to 30 June 2025:
£960 million. An explanation of the relationship between the tax expense and the Group’s accounting profit for
the period is set out on page 49.
Page 5 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
FINANCIAL REVIEW (continued)
Balance sheet
As at 30 June 2026, total assets were £994,157 million, an increase of £50,085 million (31 December 2025:
£944,072 million).
Financial assets at amortised cost were £570,802 million, £17,130 million higher (31 December 2025: £553,672
million), including increases in loans and advances to customers of £10,215 million, reverse repurchase agreements
of £3,365 million, debt securities of £2,648 million and loans and advances to banks of £902 million. Loans and
advances to customers included growth of £1,773 million in UK mortgages, net of the impact of a securitisation of
£1,841 million of primarily legacy Retail mortgages in the second quarter, alongside growth across credit cards, UK
Retail unsecured loans, UK Motor Finance and the European retail business, totalling £2,923 million. Lending
balances also increased in Commercial Banking by £5,903 million, reflecting growth across Corporate and
Institutional Banking and Business and Commercial Banking, net of continued government-backed lending
repayments. Reverse repurchase agreements and debt securities increased in response to market conditions.
Financial assets held at fair value through profit or loss at £258,373 million increased by £17,960 million during the
period, with increased assets held to back insurance and investment contract liabilities reflecting market
movements, alongside an increase within the banking business.
Derivative financial assets were £1,004 million higher at £20,731 million, driven by market movements. Cash and
balances at central banks increased by £4,869 million to £61,530 million and financial assets at fair value through
other comprehensive income of £40,428 million increased by £4,108 million, reflecting changes in liquidity
holdings. Other assets were £5,014 million higher, largely reflecting increased settlement balances, vehicle fleet
growth within UK Motor Finance and growth in investment properties within Lloyds Living.
Total liabilities were £946,920 million, £50,715 million higher over the period (31 December 2025: £896,205
million). Customer deposits of £500,859 million increased by £4,402 million in the period. Retail deposits were
down by £3,333 million, driven by lower Retail UK savings account balances largely in the first quarter, primarily
due to disciplined pricing decisions throughout the tax year-end. Retail UK current account balances were broadly
stable, supported by the strength of the Group’s franchise and proposition. Commercial Banking deposits were up
£7,560 million in the period, with growth in targeted sectors. Repurchase agreements at amortised cost increased
by £6,830 million to £45,400 million (31 December 2025: £38,570 million).
Financial liabilities at fair value through profit or loss increased to £31,310 million (31 December 2025: £27,909
million) as a result of increased trading activity and derivative financial liabilities increased by £1,694 million to
£17,826 million given market movements. Liabilities arising from insurance and investment contracts increased by
£13,281 million, reflecting the corresponding increase in the assets held to back these liabilities. Other liabilities
increased by £6,755 million to £33,024 million, largely due to increased settlement balances. Debt securities in
issue at amortised cost increased by £12,582 million to £90,853 million due to new issuances in the period, while
subordinated liabilities decreased to £9,235 million as a result of redemptions in the period.
Total equity of £47,237 million at 30 June 2026 decreased by £630 million (31 December 2025: £47,867 million).
Profit for the period was more than offset by the impact of the commenced ordinary share buyback programme in
respect of 2025, the dividend paid in May 2026 and movements in the cash flow hedge reserve.
Page 6 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
FINANCIAL REVIEW (continued)
Capital
The Group’s common equity tier 1 (CET1) capital ratio reduced to 13.6% at 30 June 2026 (31 December 2025:
14.0%). Banking business profits for the first half of the year and the £100 million interim dividend received from
the Group’s Insurance business in June 2026, were more than offset by the recognition of the full capital impact of
the ordinary share buyback programme in respect of 2025 (announced in January 2026), the accrual for
foreseeable ordinary dividends including the announced interim dividend, distributions on other equity instruments
and an increase in risk-weighted assets.
The Group’s total capital ratio reduced to 18.4% at 30 June 2026 (31 December 2025: 18.9%) predominantly
reflecting the decrease in CET1 capital, an AT1 instrument call and the increase in risk-weighted assets. This was
partly offset by tier 2 issuance during the period. The MREL ratio reduced to 32.0% at 30 June 2026 (31 December
2025: 32.2%) with the increase in MREL resources, reflecting the increase in other eligible liabilities, more than
offset by the increase in risk-weighted assets.
Risk-weighted assets increased by £6,270 million to £241,783 million at 30 June 2026 (31 December 2025: £235,513
million), largely reflecting the impact of strong customer lending growth and other movements, partially offset by
continued optimisation, including risk transfer and securitisation activity across Commercial Banking and Retail.
The Group’s UK leverage ratio reduced to 5.1% at 30 June 2026 (31 December 2025: 5.4%), reflecting the decrease
in total tier 1 capital and an increase in the leverage exposure measure. The latter primarily reflects strong
customer lending growth, including off-balance sheet commitments, and an increase in holdings of securities
within the liquidity portfolio.
Dividend and share buyback
The Group has a progressive and sustainable ordinary dividend policy whilst maintaining the flexibility to return
further surplus capital through share buybacks or special dividends. The Board has recommended an interim
ordinary dividend of 1.58 pence per share, equivalent to £918 million, representing an increase of 30% compared to
the first half of 2025. This significant step-up reflects the actions taken to derisk the business, our strong capital
position and confidence in the future earnings trajectory of the Group and is consistent with the Board’s
commitment to a progressive and sustainable ordinary dividend.
In January 2026, the Board decided to return surplus capital in respect of 2025 through an ordinary share buyback
programme of up to £1.75 billion, which commenced on 30 January 2026. As at 30 June 2026, the Group had
repurchased c.1.2 billion shares at a cost of £1.2 billion and an average share price of 98.1 pence.
As announced in the Group’s full year 2025 results, given the Board’s confidence in continued capital generation,
the Group now reviews excess capital distributions in addition to the ordinary dividend every half-year. Given the
Group’s strong capital generation and capital position in the first half of the year, the Board has announced its
intention to implement a further ordinary share buyback programme of up to £1.0 billion, which is expected to
complete by 27 January 2027, the day before the announcement of the Group’s 2026 preliminary results.
Page 7 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
DIVISIONAL RESULTS
The Group’s financial reporting segments are differentiated by the type of products provided and by whether the
customers are individuals or corporate entities. At 30 June 2026, the Group’s three primary operating divisions,
which are also its financial reporting segments, were: Retail; Commercial Banking; and Insurance, Pensions and
Investments.
The Group Executive Committee, which is the chief operating decision maker for the Group as defined by IFRS 8
Operating Segments, reviews internal management information based on these segments, which reflect the
Group’s organisational and management structures, in order to assess performance and allocate resources.
The segmental results of the primary operating divisions are set out in “Note 3: Segmental analysis” on page 41,
together with a reconciliation of the total of the segmental results to the Group’s reported profit before tax as
required by IFRS 8.
Retail
Retail provides a broad range of financial services to UK personal customers, including current accounts, savings,
mortgages, credit cards, unsecured lending and motor finance, alongside a growing European mortgages and
savings business. Through market leading products and a focus on deepening customer relationships, Retail aims to
meet more of its customer needs across the lifecycle, within a prudent risk appetite, while embedding consumer
duty principles and delivering good customer outcomes.
Financial performance
•Underlying net interest income increased 9%, with stronger structural hedge earnings and higher unsecured loan
balances, partially offset by continued mortgage refinancing headwinds
•Underlying other income up 10% from fleet growth and higher average vehicle rental values in UK Motor Finance
•Underlying operating lease depreciation charge increased by 18% due to a charge in the second quarter for
declines in used car prices alongside fleet growth and the depreciation of higher value vehicles, partially offset by
continued risk mitigation
•Underlying operating costs down 2%, with continued cost savings and lower severance expense, partially offset
by business growth costs and inflationary pressures. Remediation costs of £17 million, across a small number of
programmes
•Underlying impairment charge of £565 million, higher than the prior period which benefitted from improvements
to house price expectations. The higher charge reflects model updates and a more normalised level of
impairment alongside balance sheet growth. Strong and stable credit performance observed across portfolios
•Loans and advances to customers of £395.4 billion, up £4.7 billion, with an increase of £1.8 billion in UK
mortgages (net of the securitisation of £1.8 billion of primarily legacy balances in April 2026), alongside growth
across credit cards, UK Retail unsecured loans, UK Motor Finance and the European retail business, totalling
£2.8 billion
•Customer deposits of £321.8 billion, down £3.4 billion, including a reduction of £3.3 billion in Retail UK savings
account balances primarily due to disciplined pricing decisions throughout tax year-end. Personal current
account balances broadly in line with 31 December 2025
•Risk-weighted assets up 2%, given strong lending growth and other movements, partially offset by optimisation
activity, including the £1.8 billion securitisation of primarily legacy UK mortgages
Page 8 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
DIVISIONAL RESULTS (continued)
Retail (continued)
Retail performance summary
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Change % | Half-year to 31 Dec 2025 £m | Change % | ||||||||
Underlying net interest income | 5,139 | 4,709 | 9 | 4,928 | 4 | |||||||
Underlying other income | 1,406 | 1,276 | 10 | 1,360 | 3 | |||||||
Underlying operating lease depreciation | (835) | (706) | (18) | (739) | (13) | |||||||
Underlying income, net of underlying operating lease depreciation | 5,710 | 5,279 | 8 | 5,549 | 3 | |||||||
Underlying operating costs | (2,872) | (2,922) | 2 | (2,885) | ||||||||
Remediation | (17) | (41) | 59 | (890) | 98 | |||||||
Total underlying costs | (2,889) | (2,963) | 2 | (3,775) | 23 | |||||||
Underlying impairment charge | (565) | (342) | (65) | (392) | (44) | |||||||
Underlying profit before tax | 2,256 | 1,974 | 14 | 1,382 | 63 |
At 30 Jun 2026 £bn | At 31 Mar 2026 £bn | Change % | At 31 Dec 2025 £bn | Change % | ||||||||
UK mortgages1 | 324.9 | 324.7 | 323.1 | 1 | ||||||||
Credit cards | 18.2 | 17.6 | 3 | 17.3 | 5 | |||||||
UK Retail unsecured loans | 11.1 | 10.9 | 2 | 10.5 | 6 | |||||||
UK Motor Finance | 17.2 | 17.0 | 1 | 16.8 | 2 | |||||||
Overdrafts | 1.3 | 1.3 | 1.3 | |||||||||
Retail Europe | 21.3 | 21.1 | 1 | 20.4 | 4 | |||||||
UK private bank2 | 1.3 | 1.2 | 8 | 1.1 | 18 | |||||||
Retail other2 | 0.1 | 0.2 | (50) | 0.2 | (50) | |||||||
Loans and advances to customers | 395.4 | 394.0 | 390.7 | 1 | ||||||||
Operating lease assets3 | 8.6 | 8.4 | 2 | 8.2 | 5 | |||||||
Total customer assets | 404.0 | 402.4 | 398.9 | 1 | ||||||||
Current accounts | 103.2 | 103.4 | 102.8 | |||||||||
Savings accounts4 | 193.9 | 194.1 | 197.2 | (2) | ||||||||
Retail Europe4 | 15.3 | 15.0 | 2 | 15.3 | ||||||||
UK private bank5 | 9.4 | 9.6 | (2) | 9.9 | (5) | |||||||
Customer deposits | 321.8 | 322.1 | 325.2 | (1) | ||||||||
Risk-weighted assets | 133.1 | 131.9 | 1 | 130.4 | 2 |
1The increase between 31 March 2026 and 30 June 2026 is net of the impact of the securitisation of £1.8 billion of primarily
legacy Retail mortgages in April 2026.
2From the first quarter of 2026, within loans and advances to customers, UK private bank has been presented separately
(having previously presented within Retail other). Comparatives have been represented on a consistent basis.
3Operating lease assets relate to Lex Autolease and Tusker.
4From the first quarter of 2026, within customer deposits, Retail UK savings accounts and Retail Europe have been presented
separately (having previously been presented together as Retail savings accounts). Comparatives have been represented on a
consistent basis.
5Renamed from the first quarter of 2026, previously Wealth.
Page 9 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
DIVISIONAL RESULTS (continued)
Commercial Banking
Commercial Banking serves small and medium-sized businesses and corporate and institutional clients, providing
lending, transactional banking, working capital management, debt financing and risk management services, whilst
connecting customers across the Group. Through investment in digitisation, product development, coverage and
capabilities, Commercial Banking delivers an enhanced customer experience via a digital-first model in Business
and Commercial Banking (BCB) and an expanded client proposition in Corporate and Institutional Banking (CIB).
Financial performance
•Underlying net interest income of £2,014 million, up 14% on the prior year, underpinned by strength in deposits,
including structural hedge refinancing benefits
•Underlying other income decreased 4% to £889 million, with higher revenues from increased transaction banking
and loan markets activity more than offset by the impact of continued UK market volatility and macroeconomic
uncertainty, impacting the Group’s UK focused trading business
•Underlying operating costs up 1% with business growth costs and inflationary pressures, partially offset by
continued cost savings and a lower severance expense. Remediation costs of £12 million across a small number of
programmes
•Underlying impairment charge of £51 million, lower than prior year which reflected deterioration in the economic
outlook. Strong and stable credit performance with continued low levels of default across the portfolio
•Customer lending 7% higher at £96.2 billion, reflecting strong growth in Corporate and Institutional balances
including securitised products and corporate infrastructure, alongside growth in Business and Commercial
Banking, particularly after the impact of government‑backed lending repayments
•Customer deposits 4% higher at £178.6 billion, with growth in targeted sectors
•Risk-weighted assets 4% higher at £81.3 billion, driven by lending growth in both Corporate and Institutional
Banking and Business and Commercial Banking, partially offset by optimisation activity
Commercial Banking performance summary
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Change % | Half-year to 31 Dec 2025 £m | Change % | ||||||||
Underlying net interest income | 2,014 | 1,766 | 14 | 1,904 | 6 | |||||||
Underlying other income | 889 | 926 | (4) | 899 | (1) | |||||||
Underlying operating lease depreciation | (6) | (4) | (50) | (5) | (20) | |||||||
Underlying income, net of underlying operating lease depreciation | 2,897 | 2,688 | 8 | 2,798 | 4 | |||||||
Underlying operating costs | (1,409) | (1,394) | (1) | (1,459) | 3 | |||||||
Remediation | (12) | – | (27) | 56 | ||||||||
Total underlying costs | (1,421) | (1,394) | (2) | (1,486) | 4 | |||||||
Underlying impairment (charge) credit | (51) | (100) | 49 | 40 | ||||||||
Underlying profit before tax | 1,425 | 1,194 | 19 | 1,352 | 5 |
At 30 Jun 2026 £bn | At 31 Mar 2026 £bn | Change % | At 31 Dec 2025 £bn | Change % | ||||||||
Business and Commercial Banking | 28.7 | 28.7 | 28.3 | 1 | ||||||||
Corporate and Institutional Banking | 67.5 | 64.4 | 5 | 62.0 | 9 | |||||||
Loans and advances to customers | 96.2 | 93.1 | 3 | 90.3 | 7 | |||||||
Customer deposits | 178.6 | 173.4 | 3 | 171.1 | 4 | |||||||
Risk-weighted assets | 81.3 | 81.7 | (1) | 78.5 | 4 |
Page 10 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
DIVISIONAL RESULTS (continued)
Insurance, Pensions and Investments
Insurance, Pensions and Investments (IP&I) serves c.10 million customers and holds a top three market share across
Home, Workplace and Individual Annuities businesses. The division continues to invest significantly to enhance and
innovate propositions, leverage our customer relationships across the Group and drive strong customer service.
Financial performance
•Underlying profit before tax of £245 million, up 70%. This includes underlying other income of £818 million, up
19%, driven by strong business performance including in the Workplace business and the integration of Lloyds
Wealth
•Underlying operating costs were up 6%, with continued cost savings more than offset by business growth costs,
inflationary pressures and the impact of the full acquisition of Schroders Personal Wealth (now Lloyds Wealth)
•Balance of deferred profit (including the risk adjustment) stands at £5.2 billion (after release to income of
£225 million), broadly flat to 31 December 2025 and includes £60 million from new business, reflecting higher
annuity volumes and increased Workplace membership
•Life and pensions sales (PVNBP) up 61%, driven by a higher contribution from Workplace, Protection, Annuities
and Scottish Widows Platform businesses
•Payment of a £100 million interim dividend in June 2026 to Lloyds Banking Group plc, supported by a strong
capital position with an estimated pre-dividend Insurance Solvency II ratio of 150% (146% post dividend)
Insurance, Pensions and Investments performance summary
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Change % | Half-year to 31 Dec 2025 £m | Change % | ||||||||
Underlying net interest income | (71) | (78) | 9 | (73) | 3 | |||||||
Underlying other income | 818 | 689 | 19 | 742 | 10 | |||||||
Underlying income | 747 | 611 | 22 | 669 | 12 | |||||||
Underlying operating costs | (494) | (466) | (6) | (467) | (6) | |||||||
Remediation | (7) | (2) | (13) | 46 | ||||||||
Total underlying costs | (501) | (468) | (7) | (480) | (4) | |||||||
Underlying impairment (charge) credit | (1) | 1 | (3) | 67 | ||||||||
Underlying profit before tax | 245 | 144 | 70 | 186 | 32 |
Page 11 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
DIVISIONAL RESULTS (continued)
Other
Other includes the Group’s equity investment businesses, including LDC, Lloyds Living, the Housing Growth
Partnership (HGP), the Group’s share of the Business Growth Fund (BGF) and the MADE Partnership joint venture.
LDC is a leading private equity investor, supporting more than 90 growing SMEs across all regions and sectors of
the UK economy who employ over 25,000 people combined. LDC has more than £2 billion assets under
management. Lloyds Living is the Group’s residential landlord business with c.8,900 homes in operation or
contracted as at 30 June 2026.
Financial performance
•Underlying income of £393 million, 17% higher than the first half of 2025, with higher underlying other income
partially offset by lower underlying net interest income
•Underlying net interest income was lower given increased funding costs to support volume growth in the Group’s
equity and direct investment business, alongside lower divisional recharges from a reduction in structured
medium-term note and AT1 distribution costs
•Underlying other income includes £375 million (half-year to 30 June 2025: £264 million), generated by the
Group’s equity and direct investment businesses, increasing 42% versus the first half of 2025 as a result of strong
income growth from Lloyds Living (up £20 million) and strong realisations and net valuation gains in LDC (up
£78 million)
•Total underlying costs of £104 million in the half-year to 30 June 2026 increased 21% on the prior year, from
business growth and higher remediation costs
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Change % | Half-year to 31 Dec 2025 £m | Change % | ||||||||
Underlying net interest income | 196 | 258 | (24) | 221 | (11) | |||||||
Underlying other income | 197 | 78 | 150 | 31 | ||||||||
Underlying income | 393 | 336 | 17 | 371 | 6 | |||||||
Underlying operating costs | (101) | (92) | (10) | (76) | (33) | |||||||
Remediation | (3) | 6 | (1) | |||||||||
Total underlying costs | (104) | (86) | (21) | (77) | (35) | |||||||
Underlying profit before impairment | 289 | 250 | 16 | 294 | (2) | |||||||
Underlying impairment credit | – | (1) | 2 | |||||||||
Underlying profit before tax | 289 | 249 | 16 | 296 | (2) |
Page 12 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
RISK MANAGEMENT
PRINCIPAL RISKS AND UNCERTAINTIES
The most significant risks faced by the Group are detailed below. External risks may impact delivery against the
Group’s recently updated long-term strategic objectives. They include, but are not limited to, macroeconomic and
geopolitical uncertainties and inflation trends which could have implications for both consumers and businesses.
The Group’s credit performance remains strong and stable; the portfolios are well positioned amid macroeconomic
uncertainty and are proactively monitored to identify signs of stress.
Ongoing oversight of operational resilience risks and continuous enhancements to controls remains critical,
particularly in relation to cybersecurity, IT stability and supplier risk. The Group remains committed to ensuring
lessons are learned from internal and external events of disruption, which may have an impact on the Group’s
ability to continue operations.
The latest position on the motor finance commission redress scheme is detailed on page 67.
The Group remains committed to modernising its technology and strengthening capabilities to ensure safe and
responsible use of models and tools such as artificial intelligence.
Risk management is fundamental to our business model and strategy, and enables the Group to embrace
opportunities responsibly and deliver sustainable growth. Our strong risk management culture, underpinned by the
Group’s risk management framework (RMF), is vital in safeguarding the Group, colleagues and customers against
both existing and emerging risks.
During 2026, the Group has continued to make progress in its risk transformation journey by standardising
practices and streamlining processes, enabling simplification and efficiency. The RMF ensures processes are in place
to facilitate robust risk management and effective decision making to deliver good outcomes for our customers.
The Group has 12 principal risks, underpinned by a suite of level two risks which are reviewed and reported
regularly to the Board. The principal risks consist of capital risk, climate risk, compliance risk, conduct risk, credit
risk, direct investment risk, economic crime risk, insurance underwriting risk, liquidity risk, market risk, model risk
and operational risk.
Direct investment risk is a new principal risk for 2026, covering risks associated within the Group’s growing equity
investments sub-group. Direct investment risk is the risk that the Group's on-balance sheet equity or real estate
investments lose value or underperform resulting in a loss or a lower return than anticipated.
Further information regarding the Group’s principal risks is available on pages 144 to 197 of the Group’s 2025
annual report and accounts.
Page 13 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CAPITAL RISK
Overview
CET1 target capital ratio
The Board’s view of the ongoing level of CET1 capital required by the Group to grow the business, meet current and
future regulatory requirements and cover economic and business uncertainties is c.13.0%, which includes a
management buffer of around 1%. This takes into account, amongst other considerations:
•The minimum Pillar 1 CET1 capital requirement of 4.5% of risk-weighted assets
•The Group’s Pillar 2A CET1 capital requirement, set by the PRA, which is the equivalent of around 1.4% of risk-
weighted assets
•The Group’s countercyclical capital buffer (CCyB) requirement, which is around 1.8% of risk-weighted assets
•The capital conservation buffer (CCB) requirement of 2.5% of risk-weighted assets
•The Ring-Fenced Bank (RFB) sub-group’s other systemically important institution (O-SII) buffer of 2.0% of risk-
weighted assets, which equates to 1.6% of risk-weighted assets at Group level
•The Group’s PRA Buffer, set after taking account of the results of any regulatory stress tests and other
information, as well as outputs from the Group’s own internal stress tests. The PRA requires this buffer to
remain confidential
•The likely performance of the Group in various potential stress scenarios, ensuring capital remains resilient
•The economic outlook for the UK and business outlook for the Group
•The desire to maintain a progressive and sustainable ordinary dividend policy in the context of year-to-year
earnings movements
Minimum requirement for own funds and eligible liabilities (MREL)
The Group is not classified as a global systemically important bank (G-SIB) but is subject to the Bank of England’s
MREL statement of policy (MREL SoP) and must therefore maintain a minimum level of MREL resources. Applying
the MREL SoP to current minimum capital requirements at 30 June 2026, the Group’s MREL, excluding regulatory
capital and leverage buffers, is the higher of 2 times Pillar 1 plus 2 times Pillar 2A, equivalent to 21.0% of risk-
weighted assets, or 6.5% of the UK leverage ratio exposure measure. In addition, CET1 capital cannot be used to
meet both MREL and capital or leverage buffers.
Leverage minimum requirements
The Group is currently subject to the following minimum requirements under the UK Leverage Ratio Framework:
•A minimum tier 1 leverage ratio requirement of 3.25% of the total leverage exposure measure
•A countercyclical leverage buffer (CCLB) which is currently 0.6% of the total leverage exposure measure
•An additional leverage ratio buffer (ALRB) of 0.7% of the total leverage exposure measure applies to the RFB
sub-group, which equates to 0.6% at Group level
At least 75% of the 3.25% minimum leverage ratio requirement as well as 100% of all regulatory leverage buffers
must be met with CET1 capital.
Stress testing
The Group undertakes a wide-ranging programme of stress testing, providing a comprehensive view of the
potential impacts arising from the risks to which the Group and its key legal entities are exposed. One of the most
important uses of stress testing is to assess the resilience of the operational and strategic plans of the Group and
its legal entities to adverse economic conditions and other key risks. As part of this programme the Group
participated in the Bank of England 2025 Bank Capital Stress Test. The scenario tests a severe negative global
aggregate supply shock, leading to deep recessions globally and in the UK. In the scenario, GDP falls 5%,
unemployment and inflation rise, and central banks increase interest rates (peak of 8%). The results were
published in December 2025 and the report concluded that the UK banking system remains well capitalised. The
Group passed the stress test, performing strongly, and was not required to take any capital actions.
Page 14 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CAPITAL RISK (continued)
Capital and MREL resources
In May 2026, the Group launched a successful consent solicitation in respect of its £750 million Fixed Rate Reset
AT1 securities to align their subordination provisions with those of its other AT1 instruments. This facilitates the
reclassification of the Group’s existing preference shares1 as Tier 2 capital from 30 July 2026 and strengthens the
Group's regulatory total capital position and MREL resources by c.£400 million. As this change is effective from 30
July 2026 it will initially be reflected in the Group's Q3 2026 results. An analysis of the Group’s capital position and
MREL resources as at 30 June 2026 is presented in the following table.
At 30 Jun 2026 £m | At 31 Dec 2025 £m | ||||
Common equity tier 1: instruments and reserves | |||||
Share capital and share premium account | 24,682 | 24,686 | |||
Banking retained earnings2 | 20,864 | 20,671 | |||
Banking other reserves2 | 4,186 | 4,374 | |||
Adjustment to retained earnings for foreseeable dividends | (1,379) | (1,429) | |||
48,353 | 48,302 | ||||
Common equity tier 1: regulatory adjustments | |||||
Cash flow hedge reserve | 2,470 | 2,062 | |||
Goodwill and other intangible assets | (5,844) | (5,996) | |||
Prudent valuation adjustment | (313) | (343) | |||
Excess of expected losses over impairment provisions and value adjustments | (827) | (631) | |||
Removal of defined benefit pension surplus | (2,089) | (1,968) | |||
Significant investments2 | (5,277) | (4,708) | |||
Deferred tax assets | (3,633) | (3,812) | |||
Other regulatory adjustments | 21 | 24 | |||
Common equity tier 1 capital | 32,861 | 32,930 | |||
Additional tier 1: instruments | |||||
Other equity instruments | 5,526 | 5,923 | |||
Additional tier 1: regulatory adjustments | |||||
Significant investments2 | (800) | (800) | |||
Total tier 1 capital | 37,587 | 38,053 | |||
Tier 2: instruments and provisions | |||||
Subordinated liabilities | 7,973 | 7,489 | |||
Tier 2: regulatory adjustments | |||||
Significant investments2 | (963) | (963) | |||
Total capital resources | 44,597 | 44,579 | |||
Ineligible AT1 and tier 2 instruments3 | (82) | (79) | |||
Other eligible liabilities issued by Lloyds Banking Group plc4 | 32,780 | 31,232 | |||
Total MREL resources | 77,295 | 75,732 | |||
Risk-weighted assets | 241,783 | 235,513 | |||
Common equity tier 1 capital ratio | 13.6% | 14.0% | |||
Tier 1 capital ratio | 15.5% | 16.2% | |||
Total capital ratio | 18.4% | 18.9% | |||
MREL ratio | 32.0% | 32.2% |
1Includes 9.25% preference shares (ISIN GB00B3KS9W93), 6.413% preference shares (ISIN USG5533WAA56/US539439AC38),
6.657% preference shares (ISIN US539439AE93/US539439AF68) and 9.75% preference shares (ISIN GB00B3KSB238).
2In accordance with banking capital regulations, the Group’s Insurance business is excluded from the scope of the Group’s
capital position. The Group’s investment in the equity and other capital instruments of the Insurance business are deducted
from the relevant tier of capital (‘Significant investments’), subject to threshold regulations that allow a portion of the equity
investment to be risk-weighted rather than deducted from capital. The risk-weighted portion forms part of threshold risk-
weighted assets.
3Instruments not issued out of the holding company.
4Includes senior unsecured debt.
Page 15 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CAPITAL RISK (continued)
Movements in CET1 capital resources
The key movements are set out in the table below.
Common equity tier 1 £m | ||
At 31 December 2025 | 32,930 | |
Banking business profits1 | 2,999 | |
Movement in foreseeable dividend accrual2 | 50 | |
Dividends paid on ordinary shares during the year | (1,420) | |
Adjustment to reflect full impact of share buyback3 | (1,756) | |
Dividends received from the Insurance business | 100 | |
Movement in treasury shares and employee share schemes | 209 | |
Fair value through other comprehensive income reserve | 103 | |
Deferred tax asset | 179 | |
Goodwill and other intangible assets | 152 | |
Excess regulatory expected losses | (196) | |
Significant investments4 | (569) | |
Distributions on other equity instruments | (229) | |
Other movements | 309 | |
At 30 June 2026 | 32,861 | |
1Under banking capital regulations, profits made by Insurance are removed from CET1 capital. However, when dividends are
paid to the Group by Insurance these are recognised through CET1 capital.
2Reflects the reversal of the brought forward accrual for the final 2025 ordinary dividend, net of the accrual for the foreseeable
2026 ordinary dividend.
3Share buyback in respect of 2025, announced in January 2026.
4The increase in significant investments reflects part of the impact of the internal transfer of the ownership of Lloyds Wealth
Management Holdings Limited and subsidiaries to Scottish Widows Group Limited. The overall impact on CET1 capital was
broadly neutral.
The Group’s CET1 capital ratio reduced to 13.6% at 30 June 2026 (31 December 2025: 14.0%) reflecting the
reduction in CET1 capital resources and the increase in risk-weighted assets during the period.
CET1 capital resources reduced by £69 million, with banking business profits for the first half of the year and the
receipt of the dividend paid up by the Insurance business more than offset by:
•The accrual for foreseeable ordinary dividends in respect of the first half of 2026, inclusive of the announced
interim ordinary dividend of 1.58 pence per share, and distributions on other equity instruments
•The recognition of the full capital impact of the ordinary share buyback programme announced as part of the
Group’s 2025 year end results, which commenced in January 2026
Page 16 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CAPITAL RISK (continued)
Movements in total capital and MREL
The Group’s total capital ratio reduced to 18.4% at 30 June 2026 (31 December 2025: 18.9%) predominantly
reflecting the decrease in CET1 capital, an AT1 instrument call and the increase in risk-weighted assets. This was
partly offset by tier 2 issuance during the period.
The MREL ratio reduced to 32.0% at 30 June 2026 (31 December 2025: 32.2%) with the increase in MREL resources,
reflecting the increase in other eligible liabilities, more than offset by the increase in risk-weighted assets.
Risk-weighted assets
At 30 Jun 2026 £m | At 31 Dec 2025 £m | ||||
Foundation Internal Ratings Based (IRB) Approach | 47,848 | 47,782 | |||
Retail IRB Approach | 93,812 | 90,354 | |||
Other IRB Approach1 | 23,830 | 23,292 | |||
IRB Approach | 165,490 | 161,428 | |||
Standardised (STA) Approach1 | 27,840 | 27,166 | |||
Credit risk | 193,330 | 188,594 | |||
Counterparty credit risk2 | 6,837 | 6,835 | |||
Securitisation | 9,013 | 8,472 | |||
Market risk | 4,835 | 3,844 | |||
Operational risk | 27,768 | 27,768 | |||
Risk-weighted assets | 241,783 | 235,513 | |||
of which: threshold risk-weighted assets3 | 10,518 | 10,672 |
1Threshold risk-weighted assets are included within Other IRB Approach and Standardised (STA) Approach.
2Includes credit valuation adjustment risk.
3Threshold risk-weighted assets reflect the element of significant investments and deferred tax assets that are permitted to be
risk-weighted instead of being deducted from CET1 capital. Significant investments primarily arise from the investment in the
Group’s Insurance business.
Risk-weighted assets increased by £6.3 billion to £241.8 billion at 30 June 2026 (31 December 2025: £235.5 billion),
largely reflecting the impact of strong customer lending growth and other movements, partially offset by continued
optimisation, including risk transfer and securitisation activity across Commercial Banking and Retail.
Page 17 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CAPITAL RISK (continued)
Leverage ratio
The table below summarises the component parts of the Group’s leverage ratio.
At 30 Jun 2026 £m | At 31 Dec 2025 £m | ||||
Total tier 1 capital | 37,587 | 38,053 | |||
Exposure measure | |||||
Derivative financial instruments | 20,731 | 19,727 | |||
Securities financing transactions | 75,357 | 71,967 | |||
Loans and advances and other assets | 898,069 | 852,378 | |||
Total statutory balance sheet assets | 994,157 | 944,072 | |||
Qualifying central bank claims | (61,316) | (56,231) | |||
Deconsolidation adjustments1 | (225,802) | (210,617) | |||
Derivatives adjustments | (1,117) | (283) | |||
Securities financing transactions adjustments | 2,463 | 2,489 | |||
Off-balance sheet items | 48,559 | 44,410 | |||
Amounts already deducted from tier 1 capital | (12,582) | (12,622) | |||
Other regulatory adjustments2 | (6,243) | (2,879) | |||
Total exposure measure | 738,119 | 708,339 | |||
UK leverage ratio | 5.1% | 5.4% | |||
Leverage exposure measure (including central bank claims) | 799,435 | 764,570 | |||
Leverage ratio (including central bank claims) | 4.7% | 5.0% | |||
Total MREL resources | 77,295 | 75,732 | |||
MREL leverage ratio | 10.5% | 10.7% |
1Deconsolidation adjustments relate to the deconsolidation of certain Group entities that fall outside the scope of the Group’s
regulatory capital consolidation, primarily the Group’s Insurance business.
2Includes adjustments to exclude lending under the UK Government’s Bounce Back Loan Scheme (BBLS).
Analysis of leverage movements
The Group’s UK leverage ratio reduced to 5.1% at 30 June 2026 (31 December 2025: 5.4%), reflecting the decrease
in total tier 1 capital and an increase in the leverage exposure measure. The latter primarily reflects strong
customer lending growth, including off-balance sheet commitments, and an increase in holdings of securities
within the liquidity portfolio.
Page 18 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK
Overview
Credit performance has remained strong and stable in the first half of 2026, despite continued macroeconomic
uncertainty. The Group maintains a prudent approach to credit risk appetite and risk management, supported by
strong credit origination criteria, including affordability tests and robust LTVs within secured portfolios.
Across both the UK mortgages and unsecured portfolios, new to arrears and flows to default have remained low
and stable. Credit performance in the Commercial Banking portfolio also remains strong and stable, with low levels
of defaults. The Group continues to closely monitor the impacts of the economic and geopolitical environment
through a comprehensive suite of early warning indicators and robust governance arrangements, alongside
targeted risk mitigation action plans which are in place to support customers and protect the Group’s position.
The impairment charge in the first half of 2026 was £616 million, up from £442 million in the prior year, and
includes a net charge from updates to the Group’s macroeconomic outlook of £80 million compared to a release of
£9 million in the prior year. This largely reflects the impact from the deterioration in economic outlook in the first
quarter due to the Middle East conflict, net of modest second quarter updates. The MES impact for the half-year
captures a higher unemployment peak and softer house price outlook compared to the position at 31 December
2025. This is partly offset by the release of the £50 million post model adjustment for global tariff and political
disruption risks within Commercial Banking in the first quarter, now considered to be adequately captured within
assumptions and resulting modelled provisions. Excluding macroeconomic updates, the Group’s impairment charge
has increased compared to the prior year driven by Retail, reflecting model updates, a more normalised level of
impairment alongside balance sheet growth, and lower one-off provision releases in Commercial Banking. The total
expected credit loss (ECL) allowance was lower in the first half of 2026 at £3,172 million (31 December 2025:
£3,228 million), following the securitisation of primarily legacy Retail mortgages in the second quarter.
Stage 2 loans and advances to customers are lower at £40,898 million compared to the end of 2025 (31 December
2025: £42,679 million) following securitisation activity and strong credit performance. Securitisation activity and
an increase in new lending also resulted in the proportion of Stage 2 loans and advances being diluted to 8.3% of
total lending (31 December 2025: 8.8%), with stable Stage 2 coverage at 2.7% (31 December 2025: 2.7%).
Stage 3 loans and advances to customers are lower at £6,254 million versus the prior year (31 December 2025:
£6,526 million), and as a percentage of total lending is stable at 1.3% (31 December 2025: 1.3%), following
continued strong performance, securitisation and repayments in Commercial Banking. Stage 3 coverage increased
to 17.0% (31 December 2025: 15.9%).
Prudent risk appetite and risk management
•The Group continues to take a proactive approach to credit risk management. This is driven by prudent risk
appetite and robust oversight, particularly in response to the ongoing challenges within the external
environment. Risk appetite firmly aligns to the Group’s strategy, supporting our customers through ongoing
economic uncertainties in both global and domestic markets
•Sector, asset and product concentrations within the portfolios are closely monitored and controlled, with
mitigating actions in place as appropriate. Sector and product risk parameters help to manage the Group’s
exposure to higher risk and cyclical sectors, segments and asset classes
•The Group’s effective risk management seeks to enable early identification and active management of customers
and counterparties who may be showing signs of distress
•The Group continues to support its customers to ensure they receive appropriate levels of assistance as required
Page 19 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK (continued)
Impairment charge (credit) by division
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Change % | Half-year to 31 Dec 2025 £m | Change % | ||||||||
UK mortgages | 39 | (133) | 73 | 47 | ||||||||
Credit cards | 264 | 200 | (32) | 121 | ||||||||
UK unsecured loans and overdrafts | 149 | 163 | 9 | 94 | (59) | |||||||
UK Motor Finance | 106 | 111 | 5 | 101 | (5) | |||||||
Other | 7 | 1 | 3 | |||||||||
Retail | 565 | 342 | (65) | 392 | (44) | |||||||
Commercial Banking | 51 | 100 | 49 | (40) | ||||||||
Insurance, Pensions and Investments | – | (1) | 3 | |||||||||
Other | – | 1 | (2) | |||||||||
Total impairment charge | 616 | 442 | (39) | 353 | (75) |
Credit risk balance sheet basis of presentation
In the following tables, purchased or originated credit-impaired (POCI) assets include a fixed pool of mortgages
that were purchased as part of the HBOS acquisition at a deep discount to face value reflecting credit losses
incurred from the point of origination to the date of acquisition. The residual expected credit loss (ECL) allowance
and resulting low coverage ratio on POCI assets reflects further deterioration in the creditworthiness from the date
of acquisition. Over time, these POCI assets will run off as the loans redeem, pay down or as loans are written off.
Total expected credit loss allowance
At 30 Jun 2026 £m | At 31 Dec 2025 £m | ||||
Customer related balances | |||||
Drawn | 2,947 | 3,011 | |||
Undrawn | 205 | 197 | |||
3,152 | 3,208 | ||||
Loans and advances to banks | 1 | 1 | |||
Debt securities | 6 | 5 | |||
Other assets | 13 | 14 | |||
Total expected credit loss allowance | 3,172 | 3,228 |
Page 20 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK (continued)
Total expected credit loss allowance sensitivity to economic assumptions
The measurement of ECL reflects an unbiased probability-weighted range of possible future economic outcomes.
The Group achieves this by generating four economic scenarios to reflect the range of outcomes; the central
scenario reflects the Group’s base case assumptions used for medium-term planning purposes, an upside and a
downside scenario are also selected together with a severe downside scenario. If the base case moves adversely, it
generates a new, more adverse downside and severe downside which are then incorporated into the ECL.
Consistent with prior years, the base case, upside and downside scenarios carry a 30% weighting; the severe
downside is weighted at 10%.
The following table shows the Group’s ECL for the probability-weighted, upside, base case, downside and severe
downside scenarios. The stage allocation for an asset is based on the overall probability-weighted probability of
default and hence the staging of assets is constant across all the scenarios. In each economic scenario the ECL for
individual assessments is held constant reflecting the basis on which they are evaluated. Judgemental adjustments
applied through changes to model inputs or parameters, or more qualitative post model adjustments, are
apportioned across the scenarios in proportion to modelled ECL where this better reflects the sensitivity of these
adjustments to each scenario. The probability-weighted view shows the extent to which a higher ECL allowance
has been recognised to take account of multiple economic scenarios relative to the base case; the uplift being
£342 million compared to £366 million at 31 December 2025.
Probability- weighted £m | Upside £m | Base case £m | Downside £m | Severe downside £m | |||||||||||
UK mortgages | 669 | 316 | 473 | 844 | 1,794 | ||||||||||
Credit cards | 645 | 528 | 623 | 722 | 835 | ||||||||||
Other Retail | 982 | 910 | 962 | 1,026 | 1,121 | ||||||||||
Commercial Banking | 861 | 645 | 757 | 992 | 1,429 | ||||||||||
Other | 15 | 15 | 15 | 15 | 15 | ||||||||||
At 30 June 2026 | 3,172 | 2,414 | 2,830 | 3,599 | 5,194 | ||||||||||
UK mortgages | 731 | 341 | 510 | 937 | 1,943 | ||||||||||
Credit cards | 603 | 498 | 579 | 674 | 777 | ||||||||||
Other Retail | 991 | 922 | 969 | 1,036 | 1,126 | ||||||||||
Commercial Banking | 888 | 690 | 789 | 1,010 | 1,414 | ||||||||||
Other | 15 | 15 | 15 | 15 | 15 | ||||||||||
At 31 December 2025 | 3,228 | 2,466 | 2,862 | 3,672 | 5,275 | ||||||||||
Page 21 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK (continued)
Total expected credit loss allowance sensitivity to economic assumptions (continued)
The impact of isolated changes in the UK unemployment rate and House Price Index (HPI) has been assessed on a
univariate basis. Although such changes would not be observed in isolation, as economic indicators tend to be
correlated in a coherent scenario, this gives insight into the sensitivity of the Group’s ECL to gradual changes in
these two critical economic factors.
The impacts are assessed as changes to probability-weighted modelled ECL inclusive of the impacts upon staging
of assets, excluding post model adjustments.
The table below shows the impact on the Group’s ECL resulting from a 1 percentage point increase or decrease in
the UK unemployment rate. The increase or decrease is presented based on the adjustment phased evenly over the
first 10 quarters of all four scenarios. A more immediate increase or decrease would drive a more material ECL
impact as it would be fully reflected in both 12-month and lifetime probability of defaults.
At 30 June 2026 | At 31 December 2025 | ||||||||||
1pp increase in unemployment £m | 1pp decrease in unemployment £m | 1pp increase in unemployment £m | 1pp decrease in unemployment £m | ||||||||
UK mortgages | 13 | (11) | 11 | (11) | |||||||
Credit cards | 56 | (53) | 54 | (53) | |||||||
Other Retail | 24 | (24) | 25 | (25) | |||||||
Commercial Banking | 76 | (56) | 58 | (48) | |||||||
ECL impact | 169 | (144) | 148 | (137) | |||||||
The table below shows the impact on the Group’s ECL in respect of UK mortgages of an increase or decrease in loss
given default for a 10 percentage point increase or decrease in HPI. The increase or decrease is presented based on
the adjustment phased evenly over the first 10 quarters of all four scenarios.
At 30 June 2026 | At 31 December 2025 | ||||||||||
10pp increase in HPI £m | 10pp decrease in HPI £m | 10pp increase in HPI £m | 10pp decrease in HPI £m | ||||||||
ECL impact | (162) | 245 | (172) | 261 | |||||||
Page 22 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK (continued)
Loans and advances to customers and expected credit loss allowance
At 30 June 2026 | Stage 1 £m | Stage 2 £m | Stage 3 £m | POCI £m | Total £m | Stage 2 as % of total | Stage 3 as % of total | |||||||||||||
Loans and advances to customers | ||||||||||||||||||||
UK mortgages | 288,559 | 28,802 | 3,814 | 4,350 | 325,525 | 8.8 | 1.2 | |||||||||||||
Credit cards | 16,326 | 2,094 | 305 | – | 18,725 | 11.2 | 1.6 | |||||||||||||
UK unsecured loans and overdrafts | 11,153 | 1,403 | 209 | – | 12,765 | 11.0 | 1.6 | |||||||||||||
UK Motor Finance | 14,991 | 2,507 | 158 | – | 17,656 | 14.2 | 0.9 | |||||||||||||
Other | 22,396 | 411 | 123 | – | 22,930 | 1.8 | 0.5 | |||||||||||||
Retail | 353,425 | 35,217 | 4,609 | 4,350 | 397,601 | 8.9 | 1.2 | |||||||||||||
Business and Commercial Banking | 24,669 | 3,403 | 987 | – | 29,059 | 11.7 | 3.4 | |||||||||||||
Corporate and Institutional Banking | 65,010 | 2,278 | 658 | – | 67,946 | 3.4 | 1.0 | |||||||||||||
Commercial Banking | 89,679 | 5,681 | 1,645 | – | 97,005 | 5.9 | 1.7 | |||||||||||||
Other1 | 19 | – | – | – | 19 | – | – | |||||||||||||
Total gross lending | 443,123 | 40,898 | 6,254 | 4,350 | 494,625 | 8.3 | 1.3 | |||||||||||||
Customer related ECL allowance (drawn and undrawn) | ||||||||||||||||||||
UK mortgages | 61 | 199 | 287 | 122 | 669 | |||||||||||||||
Credit cards | 219 | 280 | 146 | – | 645 | |||||||||||||||
UK unsecured loans and overdrafts | 158 | 200 | 117 | – | 475 | |||||||||||||||
UK Motor Finance2 | 223 | 143 | 79 | – | 445 | |||||||||||||||
Other | 21 | 9 | 32 | – | 62 | |||||||||||||||
Retail | 682 | 831 | 661 | 122 | 2,296 | |||||||||||||||
Business and Commercial Banking | 84 | 158 | 138 | – | 380 | |||||||||||||||
Corporate and Institutional Banking | 94 | 119 | 262 | – | 475 | |||||||||||||||
Commercial Banking | 178 | 277 | 400 | – | 855 | |||||||||||||||
Other | 1 | – | – | – | 1 | |||||||||||||||
Total | 861 | 1,108 | 1,061 | 122 | 3,152 | |||||||||||||||
Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | ||||||||||||||||||||
Stage 1 % | Stage 2 % | Stage 3 % | POCI % | Total % | ||||||||||||||||
UK mortgages | – | 0.7 | 7.5 | 2.8 | 0.2 | |||||||||||||||
Credit cards | 1.3 | 13.4 | 47.9 | – | 3.4 | |||||||||||||||
UK unsecured loans and overdrafts | 1.4 | 14.3 | 56.0 | – | 3.7 | |||||||||||||||
UK Motor Finance | 1.5 | 5.7 | 50.0 | – | 2.5 | |||||||||||||||
Other | 0.1 | 2.2 | 26.0 | – | 0.3 | |||||||||||||||
Retail | 0.2 | 2.4 | 14.3 | 2.8 | 0.6 | |||||||||||||||
Business and Commercial Banking | 0.3 | 4.6 | 14.0 | – | 1.3 | |||||||||||||||
Corporate and Institutional Banking | 0.1 | 5.2 | 39.8 | – | 0.7 | |||||||||||||||
Commercial Banking | 0.2 | 4.9 | 24.3 | – | 0.9 | |||||||||||||||
Other | 5.3 | – | – | – | 5.3 | |||||||||||||||
Total | 0.2 | 2.7 | 17.0 | 2.8 | 0.6 | |||||||||||||||
1Contains central fair value hedge accounting adjustments.
2UK Motor Finance includes £250 million relating to provisions against residual values of vehicles subject to finance leases.
Page 23 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK (continued)
Loans and advances to customers and expected credit loss allowance (continued)
At 31 December 2025 | Stage 1 £m | Stage 2 £m | Stage 3 £m | POCI £m | Total £m | Stage 2 as % of total | Stage 3 as % of total | |||||||||||||
Loans and advances to customers | ||||||||||||||||||||
UK mortgages | 284,307 | 30,414 | 4,016 | 5,076 | 323,813 | 9.4 | 1.2 | |||||||||||||
Credit cards | 15,258 | 2,326 | 274 | – | 17,858 | 13.0 | 1.5 | |||||||||||||
UK unsecured loans and overdrafts | 10,601 | 1,397 | 193 | – | 12,191 | 11.5 | 1.6 | |||||||||||||
UK Motor Finance | 14,222 | 2,786 | 141 | – | 17,149 | 16.2 | 0.8 | |||||||||||||
Other | 21,245 | 392 | 145 | – | 21,782 | 1.8 | 0.7 | |||||||||||||
Retail | 345,633 | 37,315 | 4,769 | 5,076 | 392,793 | 9.5 | 1.2 | |||||||||||||
Business and Commercial Banking | 24,362 | 3,329 | 979 | – | 28,670 | 11.6 | 3.4 | |||||||||||||
Corporate and Institutional Banking | 59,658 | 2,035 | 778 | – | 62,471 | 3.3 | 1.2 | |||||||||||||
Commercial Banking | 84,020 | 5,364 | 1,757 | – | 91,141 | 5.9 | 1.9 | |||||||||||||
Other1 | 540 | – | – | – | 540 | – | – | |||||||||||||
Total gross lending | 430,193 | 42,679 | 6,526 | 5,076 | 484,474 | 8.8 | 1.3 | |||||||||||||
Customer related ECL allowance (drawn and undrawn) | ||||||||||||||||||||
UK mortgages | 55 | 208 | 309 | 159 | 731 | |||||||||||||||
Credit cards | 205 | 277 | 121 | – | 603 | |||||||||||||||
UK unsecured loans and overdrafts | 172 | 214 | 112 | – | 498 | |||||||||||||||
UK Motor Finance2 | 202 | 149 | 79 | – | 430 | |||||||||||||||
Other | 17 | 11 | 35 | – | 63 | |||||||||||||||
Retail | 651 | 859 | 656 | 159 | 2,325 | |||||||||||||||
Business and Commercial Banking | 92 | 165 | 120 | – | 377 | |||||||||||||||
Corporate and Institutional Banking | 107 | 136 | 263 | – | 506 | |||||||||||||||
Commercial Banking | 199 | 301 | 383 | – | 883 | |||||||||||||||
Other | – | – | – | – | – | |||||||||||||||
Total | 850 | 1,160 | 1,039 | 159 | 3,208 | |||||||||||||||
Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | ||||||||||||||||||||
Stage 1 % | Stage 2 % | Stage 3 % | POCI % | Total % | ||||||||||||||||
UK mortgages | – | 0.7 | 7.7 | 3.1 | 0.2 | |||||||||||||||
Credit cards | 1.3 | 11.9 | 44.2 | – | 3.4 | |||||||||||||||
UK unsecured loans and overdrafts | 1.6 | 15.3 | 58.0 | – | 4.1 | |||||||||||||||
UK Motor Finance | 1.4 | 5.3 | 56.0 | – | 2.5 | |||||||||||||||
Other | 0.1 | 2.8 | 24.1 | – | 0.3 | |||||||||||||||
Retail | 0.2 | 2.3 | 13.8 | 3.1 | 0.6 | |||||||||||||||
Business and Commercial Banking | 0.4 | 5.0 | 12.3 | – | 1.3 | |||||||||||||||
Corporate and Institutional Banking | 0.2 | 6.7 | 33.8 | – | 0.8 | |||||||||||||||
Commercial Banking | 0.2 | 5.6 | 21.8 | – | 1.0 | |||||||||||||||
Other | – | – | – | – | – | |||||||||||||||
Total | 0.2 | 2.7 | 15.9 | 3.1 | 0.7 | |||||||||||||||
1Contains central fair value hedge accounting adjustments.
2UK Motor Finance includes £243 million relating to provisions against residual values of vehicles subject to finance leases.
Page 24 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK (continued)
Retail
•The Retail portfolio has continued to deliver strong credit performance in the first half of 2026 and remains well
positioned despite ongoing macroeconomic challenges. Consumers continue to demonstrate resilience amid
inflationary pressures driven by the external environment
•A robust approach to risk management is firmly embedded across the division, underpinned by strong
affordability and indebtedness controls, which supports a prudent approach to risk appetite. Lending strategies
are regularly reviewed and calibrated to reflect any changes in macroeconomic conditions
•In both the UK mortgages and unsecured portfolios, new to arrears and flow to default rates have remained low
and stable during the first half of the year. In UK Motor Finance, new to arrears and flows to default reduced in
the second quarter as the operational impacts from voluntary terminations eased
•The Retail impairment charge in the first half of 2026 was £565 million, which includes a £77 million charge from
updated macroeconomic outlook. This is higher than the £342 million charge for the first half of 2025, which
benefitted from a release of £84 million from improvements in the Group’s macroeconomic outlook. Excluding
macroeconomic updates, the impairment charge is higher than the prior year, reflecting model updates and a
more normalised level of charge alongside balance sheet growth
•Retail customer related ECL allowance as a percentage of drawn loans and advances (coverage) has remained
stable at 0.6% (31 December 2025: 0.6%)
•Strong credit performance, securitisation activity and higher portfolio balances have reduced Stage 2 loans and
advances to 8.9% of the Retail portfolio (31 December 2025: 9.5%). Stage 2 ECL coverage is stable at 2.4%
(31 December 2025: 2.3%)
•Low and stable flows to default have also resulted in Retail Stage 3 loans and advances remaining stable at 1.2%
of total loans and advances (31 December 2025: 1.2%)
•Stage 3 ECL coverage increased to 14.3% (31 December 2025: 13.8%)
UK mortgages
•The UK mortgages portfolio increased to £325.5 billion (31 December 2025: £323.8 billion), net of a £1.8 billion
securitisation of primarily legacy balances in the second quarter of 2026. This increase was driven by sustained
customer demand
•New to arrears in the UK mortgages portfolio reduced throughout the first half of 2026. The portfolio remains
well positioned with a strong loan to value (LTV) profile. Portfolio quality improved during the period, supported
by robust affordability and credit controls with higher risk legacy vintage balances continuing to reduce through
natural attrition and securitisation activity
•The impairment charge of £39 million for the first half of 2026 is higher than the credit of £133 million in the first
half of 2025, predominately benefitted from a favourable update to house prices. Excluding macroeconomic
updates, the impairment charge is higher year-on-year due to lower one-off benefits
•Stage 2 loans and advances have reduced to 8.8% of total UK mortgages balances (31 December 2025: 9.4%)
following securitisation activity along with strong and stable credit performance
•Continued strong and stable credit performance and higher portfolio balances also resulted in Stage 3 loans and
advances remaining stable at 1.2% (31 December 2025: 1.2%). Stage 3 ECL coverage remained broadly stable at
7.5% (31 December 2025: 7.7%)
Page 25 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK (continued)
UK mortgages product analysis
At 30 June 2026 | At 31 December 2025 | ||||||||||||||||||||||
Mainstream | Buy-to-let | Specialist | Total | Mainstream | Buy-to-let | Specialist | Total | ||||||||||||||||
UK mortgages loans and advances to customers (£m) | 275,760 | 48,114 | 1,651 | 325,525 | 273,106 | 47,858 | 2,849 | 323,813 | |||||||||||||||
UK mortgages greater than 3 months in arrears1 | |||||||||||||||||||||||
Number of cases | 15,727 | 2,591 | 1,463 | 19,781 | 17,070 | 3,351 | 2,208 | 22,629 | |||||||||||||||
Total mortgages accounts (%) | 1.0 | 0.7 | 10.2 | 1.0 | 1.0 | 1.0 | 8.6 | 1.1 | |||||||||||||||
Value of loans2 (£m) | 2,298 | 413 | 258 | 2,969 | 2,518 | 486 | 397 | 3,401 | |||||||||||||||
Total mortgages balances (%) | 0.8 | 0.9 | 15.6 | 0.9 | 0.9 | 1.0 | 13.9 | 1.1 | |||||||||||||||
Loan to value | |||||||||||||||||||||||
Less than 60% (%) | 50.1 | 61.1 | 93.2 | 51.9 | 52.0 | 64.1 | 90.0 | 54.2 | |||||||||||||||
60% to 70% (%) | 15.0 | 21.7 | 4.5 | 15.9 | 15.4 | 21.4 | 6.4 | 16.2 | |||||||||||||||
70% to 80% (%) | 16.3 | 17.1 | 1.6 | 16.4 | 15.5 | 14.4 | 2.0 | 15.2 | |||||||||||||||
80% to 90% (%) | 15.8 | 0.1 | 0.5 | 13.4 | 14.4 | 0.1 | 0.9 | 12.2 | |||||||||||||||
90% to 100% (%) | 2.8 | – | 0.1 | 2.4 | 2.7 | – | 0.4 | 2.2 | |||||||||||||||
Greater than 100% (%) | – | – | 0.1 | – | – | – | 0.3 | – | |||||||||||||||
Total (%) | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Average loan to value3 | |||||||||||||||||||||||
Stock of residential mortgages (%) | 45.4 | 48.9 | 31.4 | 45.7 | 44.7 | 48.2 | 32.0 | 45.0 | |||||||||||||||
New residential lending in the period (%) | 66.9 | 61.8 | n/a | 66.2 | 64.7 | 58.8 | n/a | 64.1 | |||||||||||||||
1Excluding repossessions.
2Value of loans represents gross book value of mortgages more than three months in arrears. These accounts are a subset of
total Stage 3 given the exclusion of accounts in possession and those meeting other Stage 3 criteria.
3Average loan to value is calculated as total loans and advances as a percentage of the total indexed collateral of these loans
and advances.
Page 26 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK (continued)
Credit cards
•Credit card balances increased to £18.7 billion (31 December 2025: £17.9 billion), driven by higher demand for
new cards and increased customer spending
•The credit card portfolio continues to evidence a prime book. New to arrears have remained low and stable over
the first half of the year and repayment rates remain strong
•The impairment charge of £264 million for the first half of 2026 is higher than the charge of £200 million in the
first half of 2025, due to updates to the Group’s macroeconomic outlook, notably upward revisions to the
unemployment forecast, compared to favourable updates in the first half of 2025. Excluding macroeconomic
updates, the higher impairment charge reflects model updates, a more normalised level of charge and the effects
of an adjusted process to improve customer outcomes. Total ECL coverage is stable at 3.4% (31 December 2025:
3.4%)
•Stable credit performance and higher portfolio balances resulted in a reduction in Stage 2 loans and advances to
11.2% of total credit card balances (31 December 2025: 13.0%). Stage 2 ECL coverage increased to 13.4% (31
December 2025: 11.9%), following updates to model loss rates
•Stage 3 loans and advances remained stable at 1.6% (31 December 2025: 1.5%). Updates to model loss rates also
increased Stage 3 ECL coverage to 47.9% (31 December 2025: 44.2%)
UK unsecured loans and overdrafts
•UK unsecured loans and overdraft balances increased to £12.8 billion (31 December 2025: £12.2 billion) driven by
sustained customer demand
•The impairment charge of £149 million for the first half of 2026 is lower than the charge of £163 million for the
first half of 2025, due to calibration benefits this year reflecting strong and stable credit performance
•Strong credit performance and higher portfolio balances within unsecured loans resulted in a reduction in
Stage 2 loans and advances to 11.0% of total balances (31 December 2025: 11.5%). Stage 2 ECL coverage
decreased to 14.3% (31 December 2025: 15.3%)
•Stage 3 loans and advances remained stable at 1.6% (31 December 2025: 1.6%). While Stage 3 ECL coverage
reduced to 56.0% (31 December 2025: 58.0%)
UK Motor Finance
•UK Motor Finance balances (which exclude operating leases) increased to £17.7 billion (31 December 2025:
£17.1 billion), driven by retail demand, alongside increased stocking
•UK Motor Finance credit performance is strong, with lower new to arrears in the second quarter reflecting a
reduction in operational factors relating to voluntary terminations during the first quarter of the year. Updates to
Residual Value (RV) and Voluntary Termination (VT) provisions held against Personal Contract Purchase (PCP)
and Hire Purchase (HP) lending are included within ECL and the impairment charge. Declines in used car prices
have primarily driven an ECL increase to £250 million as at 30 June 2026 (31 December 2025: £243 million)
•The impairment charge of £106 million for the first half of 2026 is in line with the charge of £111 million for the
first half of 2025. Increased RV and VT provisions drove higher Stage 2 ECL coverage 5.7% (31 December 2025:
5.3%), with Stage 2 loans and advances reducing to 14.2% (31 December 2025: 16.2%)
•Stage 3 loans and advances remained stable at 0.9% (31 December 2025: 0.8%), with Stage 3 ECL coverage
reducing to 50.0% (31 December 2025: 56.0%)
Other
•Other Retail loans and advances increased to £22.9 billion (31 December 2025: £21.8 billion), largely driven by
growth in the European business
•Stage 2 loans and advances remained stable at 1.8% (31 December 2025: 1.8%), supported by higher portfolio
balances, with coverage across stages also stable. Stage 3 loans and advances reduced to 0.5% of total loans and
advances (31 December 2025: 0.7%)
•There was a £7 million impairment charge in the first half of 2026, compared to a £1 million charge in the first half
of 2025
Page 27 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CREDIT RISK (continued)
Commercial Banking
•Portfolio credit performance has remained strong and stable amid ongoing external headwinds, with credit
strategies and policy operating within established risk appetite. The Group continues to monitor external
developments and assess potential impacts on the macroeconomic environment
•The Group undertakes regular reviews of portfolio segments. Higher-risk sectors and exposures are clearly
identified and actively managed, with appropriate mitigating actions in place. Credit strategies, appetite,
sensitivities and mitigation plans remain up to date, enabling rapid response to emerging risks and opportunities
while continuing to support clients and protect the Group
•Credit playbooks and deep dive reviews covering a range of downside scenarios are maintained and updated as
conditions evolve. Early warning indicators and risk appetite metrics are actively monitored to support timely
insight and proactive intervention where required
•The Group continues to provide early, targeted support to customers in difficulty through its Watchlist and
Business Support framework. More vulnerable industry sectors are monitored closely, as are second and third
order risks (for example, supply chain issues or input cost increases), to ensure risk appetite remains appropriate
and early risk mitigating actions can be taken. This approach balances prudent risk management with support for
financially viable clients, reinforcing the Group’s focus on resilience and responsible client outcomes
•Commercial Banking UK Real Estate committed drawn lending increased by net £0.1 billion to £10.1 billion in the
first half of 2026 (net of £2.2 billion exposures subject to protection through significant risk transfer (SRT)
securitisations). Performance has remained strong and stable within the sector, with limited flow of new cases to
Watchlist and BSU. The average LTV of 45% remains stable
•The net impairment charge in the first half of 2026 was £51 million, versus £100 million in the first half of 2025,
which recognised deterioration in the economic outlook. Excluding macroeconomic updates, credit performance
remains strong and stable with low levels of defaults. ECL allowances decreased in the year to £855 million at 30
June 2026 (31 December 2025: £883 million)
•Stage 2 loans and advances increased to £5,681 million (31 December 2025: £5,364 million) with the proportion
of total loans and advances to customers remaining stable at 5.9% (31 December 2025: 5.9%), with strong and
stable credit performance resulting in lower Stage 2 ECL coverage at 4.9% (31 December 2025: 5.6%)
•Stage 3 loans and advances decreased to £1,645 million (31 December 2025: £1,757 million) and as a proportion
of total loans and advances to customers reduced to 1.7% (31 December 2025: 1.9%), largely driven by net
repayments in the first half of 2026. Stage 3 ECL coverage increased to 24.3% (31 December 2025: 21.8%)
following the reassessment of a small number of existing cases in default
Business and Commercial Banking
•Business and Commercial Banking lending increased marginally to £29.1 billion (31 December 2025: £28.7 billion),
with new business partially offset by continued amortisation of the portfolio, particularly government‑backed
lending
•Stage 2 loans and advances increased to £3,403 million (31 December 2025: £3,329 million). Stage 2 as a
proportion of total loans and advances to customers remained stable at 11.7% (31 December 2025: 11.6%), while
Stage 2 ECL coverage decreased to 4.6% (31 December 2025: 5.0%)
•Stage 3 loans and advances increased marginally to £987 million (31 December 2025: £979 million), and remained
stable at 3.4% (31 December 2025: 3.4%) as a proportion of total loans and advances. Stage 3 ECL coverage
increased to 14.0% (31 December 2025: 12.3%) following the reassessment of a small number of existing cases in
default
Corporate and Institutional Banking
•Corporate and Institutional lending increased to £67.9 billion (31 December 2025: £62.5 billion), reflecting
growth in Institutional balances including securitised products, alongside corporate infrastructure growth.
Lending growth remains within risk appetite, while maintaining strong obligor and asset quality
•Stage 2 loans and advances increased to £2,278 million (31 December 2025: £2,035 million). Stage 2 as a
proportion of total loans and advances to customers remained stable at 3.4% (31 December 2025: 3.3%), with
Stage 2 ECL coverage reducing to 5.2% (31 December 2025: 6.7%)
•Stage 3 loans and advances decreased to £658 million (31 December 2025: £778 million) and as a proportion of
total loans and advances to customers reduced to 1.0% (31 December 2025: 1.2%), driven by a small number of
repayments and write offs. Stage 3 ECL coverage increased to 39.8% (31 December 2025: 33.8%) following the
reassessment of a small number of existing cases in default
Page 28 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
LIQUIDITY RISK
Overview
The Group has maintained its strong funding and liquidity position. Total wholesale funding1 has increased to
£107.8 billion as at 30 June 2026 (31 December 2025: £95.6 billion). The Group maintains access to diverse sources
and tenors of funding.
The Group’s liquid assets continue to exceed the regulatory minimum and internal risk appetite, with a liquidity
coverage ratio (LCR)2 of 144% as at 30 June 2026 (31 December 2025: 145%) calculated on a Group consolidated
basis based on the PRA rulebook. The decrease in the LCR resulted from a reduction in liquid assets, from
repayments of Bank of England Term Funding Scheme with additional incentives for SMEs (TFSME) partially offset
by an increase in customer deposits and wholesale funding. All assets within the liquid asset portfolio are hedged
for interest rate risk. Liquidity risk is managed at a legal entity level with the Group consolidated LCR representing
the composite of the Ring-Fenced Bank and Non-Ring-Fenced Bank entities.
LCR eligible assets2 have reduced slightly to £131.0 billion (31 December 2025: £131.4 billion). In addition to the
Group’s reported LCR eligible assets, the Group maintains borrowing capacity at central banks which averaged
£97 billion in the 12 months to 30 June 2026 (31 December 2025: £87 billion). The net stable funding ratio3 remains
robust at 123% as at 30 June 2026 (31 December 2025: 124%).
LCR eligible assets comprise of £125.0 billion LCR level 1 eligible assets (31 December 2025: £125.8 billion) and
£6.0 billion of LCR level 2 eligible assets (31 December 2025: £5.6 billion). These assets are available to meet cash
and collateral outflows and regulatory requirements. The Insurance business manages a separate liquidity portfolio
to mitigate insurance liquidity risk.
The banking business also has a significant amount of non-LCR eligible liquid assets which are eligible for use in a
range of central bank or similar facilities. Future use of such facilities will be guided by prudent liquidity
management and economic considerations, with external market conditions factored in.
During the first half of 2026, the Group accessed wholesale funding1 across a range of currencies and markets with
term issuance volumes totalling £10.4 billion. The Group has increased levels of below 1-year money market
wholesale funding throughout the first half of 2026, following TFSME repayments in 2025. The Group continues to
manage below 1-year money market funding to support balance sheet funding needs. The total outstanding
amount of drawings from the TFSME has remained stable at £8.8 billion as at 30 June 2026 (31 December 2025:
£8.8 billion), with further maturities in 2027 and beyond. The repayment of TFSME maturities has been factored
into the Group’s funding plans.
The Group’s credit ratings remain well positioned and continue to reflect the strength of the Group’s management
and franchise, along with its robust financial performance and capital and funding position. In May 2026, Fitch
upgraded senior unsecured ratings for Lloyds Bank plc and Lloyds Bank Corporate Markets plc following a
methodology update.
1The Group has revised its definition of wholesale funding to comprise debt securities in issue and subordinated liabilities only.
Deposits from banks are no longer included, reflecting the behavioural liquidity characteristics of bank depositors.
Comparatives have been represented on a consistent basis.
2Based on an average of month-end observations over the last 12 months.
3Based on an average of the last four quarter-end observations.
Page 29 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
LIQUIDITY RISK (continued)
Group funding requirements and sources and reconciliation to the balance sheet
At 30 Jun 2026 £bn | At 31 Dec 2025 £bn | Change % | |||||
Group funding position | |||||||
Total Group assets | 994.2 | 944.1 | 5 | ||||
Less other liabilities1 | (286.7) | (261.7) | (10) | ||||
Funding requirements | 707.5 | 682.4 | 4 | ||||
Deposits from banks (excluding cash collateral received) | 6.2 | 3.8 | 63 | ||||
Customer deposits | 500.9 | 496.5 | 1 | ||||
Repurchase agreements – non-trading | 36.6 | 29.8 | 23 | ||||
Term Funding Scheme with additional incentives for SMEs (TFSME) | 8.8 | 8.8 | |||||
Repurchase agreements at amortised cost | 45.4 | 38.6 | 18 | ||||
Wholesale funding2 | 107.8 | 95.6 | 13 | ||||
Total equity | 47.2 | 47.9 | (1) | ||||
Funding sources | 707.5 | 682.4 | 4 |
At 30 June 2026 | Included in funding analysis £bn | Cash collateral received £bn | Fair value and other accounting methods £bn | Balance sheet £bn | |||||||
Deposits from banks | 6.2 | 2.0 | – | 8.2 | |||||||
Customer deposits | 500.9 | – | – | 500.9 | |||||||
Repurchase agreements at amortised cost | 45.4 | – | – | 45.4 | |||||||
Debt securities in issue | 96.7 | – | (5.8) | 90.9 | |||||||
Subordinated liabilities | 11.1 | – | (1.9) | 9.2 | |||||||
Wholesale funding2 | 107.8 | – | |||||||||
Total equity | 47.2 | – | – | 47.2 | |||||||
Funding sources | 707.5 | 2.0 | |||||||||
At 31 December 2025 | |||||||||||
Deposits from banks | 3.8 | 2.0 | – | 5.8 | |||||||
Customer deposits | 496.5 | – | – | 496.5 | |||||||
Repurchase agreements at amortised cost | 38.6 | – | – | 38.6 | |||||||
Debt securities in issue | 83.9 | – | (5.6) | 78.3 | |||||||
Subordinated liabilities | 11.7 | – | (1.8) | 9.9 | |||||||
Wholesale funding2 | 95.6 | – | |||||||||
Total equity | 47.9 | – | – | 47.9 | |||||||
Funding sources | 682.4 | 2.0 | |||||||||
1Other liabilities represent balance sheet liabilities not included in funding analysis, primarily balances in the Group’s Insurance
business and liabilities held at fair value.
2The Group has revised its definition of wholesale funding to comprise debt securities in issue and subordinated liabilities only.
Deposits from banks are no longer included, reflecting the behavioural liquidity characteristics of bank depositors.
Comparatives have been represented on a consistent basis.
Page 30 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
LIQUIDITY RISK (continued)
Analysis of term issuance in the half-year to 30 June 2026
Sterling £bn | US dollar £bn | Euro £bn | Other currencies1 £bn | Total £bn | ||||||||||
Securitisation2 | 0.4 | – | 0.7 | – | 1.1 | |||||||||
Covered bonds | 1.5 | – | 1.7 | – | 3.2 | |||||||||
Senior unsecured notes | 0.8 | 2.1 | 2.0 | 0.7 | 5.6 | |||||||||
Subordinated liabilities | 0.5 | – | – | – | 0.5 | |||||||||
Total issuance | 3.2 | 2.1 | 4.4 | 0.7 | 10.4 |
1Includes Australian dollar and Japanese yen.
2Securitisation includes externally issued notes from significant risk transfer transactions.
INTEREST RATE SENSITIVITY
The Group manages the risk to its earnings and capital from movements in interest rates centrally by hedging the
net liabilities which are stable or less sensitive to movements in rates. The notional balance of the sterling
structural hedge stood at £246 billion at 30 June 2026 (31 December 2025: £244 billion).
Illustrative cumulative impact of parallel shifts in interest rate curve1
The table below shows the banking book net interest income sensitivity to an instantaneous parallel shift in
interest rates. Sensitivities reflect shifts in the interest rate curve. The actual impact will also depend on the
prevailing regulatory and competitive environment at the time. This sensitivity is illustrative and does not reflect
new business margin implications and/or pricing actions today or in future periods, other than as outlined. The
sensitivity is greater on downward parallel shifts due to pricing lags on deposit accounts.
The following assumptions have been applied:
•Instantaneous parallel shift in interest rate curve, including UK Bank Rate
•Balance sheet remains constant
•Illustrative 50% pass-through on deposits and 100% pass-through on assets, which could be different in practice
Year 1 £m | Year 2 £m | Year 3 £m | ||||||
+50 basis points | c.150 | c.325 | c.625 | |||||
+25 basis points | c.75 | c.175 | c.300 | |||||
-25 basis points | (c.100) | (c.175) | (c.300) | |||||
-50 basis points | (c.200) | (c.350) | (c.625) |
1Sensitivity based on modelled impact on banking book net interest income, including the future impact of structural hedge
maturities. Annual impacts are presented for illustrative purposes only and are based on a number of assumptions which are
subject to change. Year 1 reflects the 12 months from the 30 June 2026 balance sheet position.
Page 31 of 72 |
CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
The half-year ended 31 December 2025 information disclosed throughout the report is presented as supplementary
information and is not required to be disclosed in accordance with IAS 34.
Condensed consolidated income statement (unaudited) | 32 | |
Condensed consolidated statement of comprehensive income (unaudited) | 33 | |
Condensed consolidated balance sheet (unaudited) | 34 | |
Condensed consolidated statement of changes in equity (unaudited) | 35 | |
Condensed consolidated cash flow statement (unaudited) | 38 | |
Notes to the condensed consolidated half-year financial statements (unaudited) | ||
1 | Basis of preparation and accounting policies | 39 |
2 | Critical accounting judgements and key sources of estimation uncertainty | 40 |
3 | Segmental analysis | 41 |
4 | Net fee and commission income | 44 |
5 | Insurance business | 44 |
6 | Operating expenses | 47 |
7 | Retirement benefit obligations | 47 |
8 | Impairment | 48 |
9 | Tax | 49 |
10 | Fair values of financial assets and liabilities | 50 |
11 | Derivative financial instruments | 58 |
12 | Allowance for expected credit losses | 59 |
13 | Debt securities in issue | 66 |
14 | Provisions | 66 |
15 | Subordinated liabilities | 69 |
16 | Earnings per share | 69 |
17 | Dividends on ordinary shares and share buyback | 70 |
18 | Contingent liabilities, commitments and guarantees | 70 |
Page 32 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Note | Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | |||||||
Interest income | ||||||||||
Interest expense | ( | ( | ( | |||||||
Net interest income | ||||||||||
Fee and commission income | ||||||||||
Fee and commission expense | ( | ( | ( | |||||||
Net fee and commission income | 4 | |||||||||
Net trading income | ||||||||||
Insurance revenue | ||||||||||
Insurance service expense | ( | ( | ( | |||||||
Net expense from reinsurance contracts held | ( | ( | ( | |||||||
Insurance service result | 5 | |||||||||
Net investment return on assets held to back insurance and investment contracts | ||||||||||
Net finance expense in respect of insurance and investment contracts | ( | ( | ( | |||||||
Net investment return and finance result in respect of insurance and investment contracts | 5 | ( | ( | |||||||
Other operating income | ||||||||||
Other income | ||||||||||
Total income | ||||||||||
Operating expenses | 6 | ( | ( | ( | ||||||
Impairment | 8 | ( | ( | ( | ||||||
Profit before tax | ||||||||||
Tax expense | 9 | ( | ( | ( | ||||||
Profit after tax | ||||||||||
Profit attributable to ordinary shareholders | ||||||||||
Profit attributable to other equity holders | ||||||||||
Profit attributable to equity holders | ||||||||||
Profit attributable to non-controlling interests | ||||||||||
Profit after tax | ||||||||||
Basic earnings per share | 16 | |||||||||
Diluted earnings per share | 16 |
The accompanying notes are an integral part of the condensed consolidated half-year financial statements.
Page 33 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 20251 £m | Half-year to 31 Dec 20251 £m | |||||||
Profit for the period | |||||||||
Other comprehensive income | |||||||||
Items that will not subsequently be reclassified to profit or loss: | |||||||||
Post-retirement defined benefit scheme remeasurements: | |||||||||
Remeasurements before tax | ( | ( | |||||||
Current tax | |||||||||
Deferred tax | ( | ||||||||
( | ( | ||||||||
Movements in revaluation reserve in respect of equity shares held at FVOCI: | |||||||||
Change in fair value | ( | ||||||||
Deferred tax | |||||||||
( | |||||||||
Gains and losses attributable to own credit risk: | |||||||||
Gains (losses) before tax | ( | ( | |||||||
Deferred tax | ( | ||||||||
( | ( | ||||||||
Items that may subsequently be reclassified to profit or loss: | |||||||||
Movements in revaluation reserve in respect of debt securities held at FVOCI: | |||||||||
Change in fair value | ( | ||||||||
Current tax | |||||||||
Deferred tax | ( | ( | |||||||
( | |||||||||
Income statement transfers in respect of disposals | ( | ||||||||
Deferred tax | ( | ||||||||
( | |||||||||
Income statement transfers in respect of impairment | ( | ||||||||
Movements in cash flow hedge reserve: | |||||||||
Effective portion of changes in fair value taken to other comprehensive income | ( | ( | |||||||
Deferred tax | ( | ||||||||
( | ( | ||||||||
Net income statement transfers | |||||||||
Deferred tax | ( | ( | ( | ||||||
( | |||||||||
Movements in foreign currency translation reserve: Currency translation differences (tax: £ | ( | ||||||||
Total other comprehensive (loss) income for the period, net of tax | ( | ||||||||
Total comprehensive income for the period | |||||||||
Total comprehensive income attributable to ordinary shareholders | |||||||||
Total comprehensive income attributable to other equity holders | |||||||||
Total comprehensive income attributable to equity holders | |||||||||
Total comprehensive income attributable to non-controlling interests | |||||||||
Total comprehensive income for the period |
item. Comparatives are represented on a consistent basis.
The accompanying notes are an integral part of the condensed consolidated half-year financial statements.
Page 34 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
Note | At 30 Jun 2026 £m | At 31 Dec 2025 £m | |||||
Assets | |||||||
Cash and balances at central banks | |||||||
Financial assets at fair value through profit or loss | 10 | ||||||
Derivative financial instruments | 11 | ||||||
Loans and advances to banks | |||||||
Loans and advances to customers | |||||||
Reverse repurchase agreements | |||||||
Debt securities | |||||||
Financial assets at amortised cost | |||||||
Financial assets at fair value through other comprehensive income | 10 | ||||||
Goodwill and other intangible assets | |||||||
Current tax recoverable | |||||||
Deferred tax assets | |||||||
Retirement benefit assets | 7 | ||||||
Other assets | |||||||
Total assets | |||||||
Liabilities | |||||||
Deposits from banks | |||||||
Customer deposits | |||||||
Repurchase agreements at amortised cost | |||||||
Financial liabilities at fair value through profit or loss | 10 | ||||||
Derivative financial instruments | 11 | ||||||
Notes in circulation | |||||||
Debt securities in issue at amortised cost | 13 | ||||||
Liabilities arising from insurance and participating investment contracts | 5 | ||||||
Liabilities arising from non-participating investment contracts | |||||||
Other liabilities | |||||||
Retirement benefit obligations | 7 | ||||||
Current tax liabilities | |||||||
Deferred tax liabilities | |||||||
Provisions | 14 | ||||||
Subordinated liabilities | |||||||
Total liabilities | |||||||
Equity | |||||||
Share capital | |||||||
Share premium account | |||||||
Other reserves | |||||||
Retained profits | |||||||
Ordinary shareholders’ equity | |||||||
Other equity instruments | |||||||
Total equity excluding non-controlling interests | |||||||
Non-controlling interests | |||||||
Total equity | |||||||
Total equity and liabilities | |||||||
The accompanying notes are an integral part of the condensed consolidated half-year financial statements.
Page 35 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Attributable to ordinary shareholders | |||||||||||||||||||||||||
Share capital1 £m | Share premium1 £m | Other reserves £m | Retained profits £m | Total £m | Other equity instruments £m | Non- controlling interests £m | Total £m | ||||||||||||||||||
At 1 January 2026 | |||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||
Profit for the period | – | – | – | ||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||
Post-retirement defined benefit scheme remeasurements, net of tax | – | – | – | – | – | ||||||||||||||||||||
Movements in revaluation reserve in respect of FVOCI assets, net of tax: | |||||||||||||||||||||||||
Debt securities | – | – | – | – | – | ||||||||||||||||||||
Gains and losses attributable to own credit risk, net of tax | – | – | – | ( | ( | – | – | ( | |||||||||||||||||
Movements in cash flow hedge reserve, net of tax | – | – | ( | – | ( | – | – | ( | |||||||||||||||||
Movements in foreign currency translation reserve, net of tax | – | – | ( | – | ( | – | – | ( | |||||||||||||||||
Total other comprehensive (loss) income | – | – | ( | ( | – | – | ( | ||||||||||||||||||
Total comprehensive (loss) income2 | – | – | ( | ||||||||||||||||||||||
Transactions with owners | |||||||||||||||||||||||||
Dividends (note 17) | – | – | – | ( | ( | – | ( | ( | |||||||||||||||||
Distributions on other equity instruments | – | – | – | – | – | ( | – | ( | |||||||||||||||||
Issue of ordinary shares | – | – | – | – | |||||||||||||||||||||
Share buyback3 | ( | – | ( | ( | – | – | ( | ||||||||||||||||||
Repurchases and redemptions of other equity instruments | – | – | – | ( | – | ( | |||||||||||||||||||
Movement in treasury shares | – | – | – | – | – | ||||||||||||||||||||
Value of employee services | – | – | – | – | – | ||||||||||||||||||||
Total transactions with owners | ( | ( | ( | ( | ( | ( | |||||||||||||||||||
Realised gains and losses on FVOCI equity shares | – | – | – | – | – | – | – | ||||||||||||||||||
At 30 June 20264 | |||||||||||||||||||||||||
1Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been
represented on a consistent basis.
2Total comprehensive income attributable to owners of the parent was £2,804 million.
3Contains a closed period accrual of £580 million.
4Total equity attributable to owners of the parent was £47,012 million.
The accompanying notes are an integral part of the condensed consolidated half-year financial statements.
Page 36 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (continued)
Attributable to ordinary shareholders | |||||||||||||||||||||||||
Share capital1 £m | Share premium1 £m | Other reserves £m | Retained profits £m | Total £m | Other equity instruments £m | Non- controlling interests £m | Total £m | ||||||||||||||||||
At 1 January 2025 | |||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||
Profit for the period | – | – | – | ||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||
Post-retirement defined benefit scheme remeasurements, net of tax | – | – | – | ( | ( | – | – | ( | |||||||||||||||||
Movements in revaluation reserve in respect of FVOCI assets, net of tax: | |||||||||||||||||||||||||
Debt securities | – | – | – | – | – | ||||||||||||||||||||
Equity shares | – | – | – | – | – | ||||||||||||||||||||
Gains and losses attributable to own credit risk, net of tax | – | – | – | – | – | ||||||||||||||||||||
Movements in cash flow hedge reserve, net of tax | – | – | – | – | – | ||||||||||||||||||||
Movements in foreign currency translation reserve, net of tax | – | – | – | – | – | ||||||||||||||||||||
Total other comprehensive income (loss) | – | – | ( | – | – | ||||||||||||||||||||
Total comprehensive income2 | – | – | |||||||||||||||||||||||
Transactions with owners | |||||||||||||||||||||||||
Dividends (note 17) | – | – | – | ( | ( | – | ( | ( | |||||||||||||||||
Distributions on other equity instruments | – | – | – | – | – | ( | – | ( | |||||||||||||||||
Issue of ordinary shares | – | – | – | – | |||||||||||||||||||||
Share buyback3 | ( | – | ( | ( | – | – | ( | ||||||||||||||||||
Issue of other equity instruments | – | – | – | ( | ( | – | |||||||||||||||||||
Repurchases and redemptions of other equity instruments | – | – | – | ( | ( | ( | – | ( | |||||||||||||||||
Movement in treasury shares | – | – | – | – | – | ||||||||||||||||||||
Value of employee services | – | – | – | ||||||||||||||||||||||
Changes in non- controlling interests | – | – | – | – | ( | ||||||||||||||||||||
Total transactions with owners | ( | ( | ( | ( | ( | ( | |||||||||||||||||||
Realised gains and losses on equity shares held at FVOCI | – | – | ( | – | – | ||||||||||||||||||||
At 30 June 20254 | |||||||||||||||||||||||||
1Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been
represented on a consistent basis.
2Total comprehensive income attributable to owners of the parent was £3,497 million.
3Contained a close period accrual of £622 million.
4Total equity attributable to owners of the parent was £46,717 million .
The accompanying notes are an integral part of the condensed consolidated half-year financial statements.
Page 37 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (continued)
Attributable to ordinary shareholders | |||||||||||||||||||||||||
Share capital1 £m | Share premium1 £m | Other reserves £m | Retained profits £m | Total £m | Other equity instruments £m | Non- controlling interests £m | Total £m | ||||||||||||||||||
At 1 July 2025 | |||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||
Profit for the period | – | – | – | ||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||
Post-retirement defined benefit scheme remeasurements, net of tax | – | – | – | ( | ( | – | – | ( | |||||||||||||||||
Movements in revaluation reserve in respect of FVOCI assets, net of tax: | |||||||||||||||||||||||||
Debt securities | – | – | – | – | – | ||||||||||||||||||||
Equity shares | – | – | ( | – | ( | – | – | ( | |||||||||||||||||
Gains and losses attributable to own credit risk, net of tax | – | – | – | ( | ( | – | – | ( | |||||||||||||||||
Movements in cash flow hedge reserve, net of tax | – | – | – | – | – | ||||||||||||||||||||
Movements in foreign currency translation reserve, net of tax | – | – | – | – | – | ||||||||||||||||||||
Total other comprehensive income (loss) | – | – | ( | – | – | ||||||||||||||||||||
Total comprehensive income2 | – | – | |||||||||||||||||||||||
Transactions with owners | |||||||||||||||||||||||||
Dividends (note 17) | – | – | – | ( | ( | – | ( | ( | |||||||||||||||||
Distributions on other equity instruments | – | – | – | – | – | ( | – | ( | |||||||||||||||||
Issue of ordinary shares | – | – | – | – | |||||||||||||||||||||
Share buyback | ( | ( | ( | – | – | ( | |||||||||||||||||||
Issue of other equity instruments | – | – | – | ( | ( | – | |||||||||||||||||||
Repurchases and redemptions of other equity instruments | – | – | – | ( | – | ( | |||||||||||||||||||
Movement in treasury shares | – | – | – | – | – | ||||||||||||||||||||
Value of employee services | – | – | – | – | – | ||||||||||||||||||||
Total transactions with owners | ( | ( | ( | ( | ( | ( | |||||||||||||||||||
Realised gains and losses on equity shares held at FVOCI | – | – | ( | – | – | ||||||||||||||||||||
At 31 December 20253 | |||||||||||||||||||||||||
1Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been
represented on a consistent basis.
2Total comprehensive income attributable to owners of the parent was £2,490 million.
3Total equity attributable to owners of the parent was £47,668 million.
The accompanying notes are an integral part of the condensed consolidated half-year financial statements.
Page 38 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | ||||||
Cash flows (used in) provided by operating activities | ||||||||
Profit before tax | ||||||||
Adjustments for: | ||||||||
Change in operating assets | ( | ( | ( | |||||
Change in operating liabilities | ||||||||
Non-cash and other items | ||||||||
Tax paid | ( | ( | ( | |||||
Tax refunded | ||||||||
Net cash provided by (used in) operating activities | ( | |||||||
Cash flows used in investing activities | ||||||||
Purchase of financial assets | ( | ( | ( | |||||
Proceeds from sale and maturity of financial assets | ||||||||
Purchase of property, plant and equipment | ( | ( | ( | |||||
Purchase of other intangible assets | ( | ( | ( | |||||
Proceeds from sale of property, plant and equipment | ||||||||
Net cash provided by (used in) other investing activities | ( | |||||||
Acquisition of businesses and joint ventures, net of cash acquired | ( | ( | ||||||
Net cash used in investing activities | ( | ( | ( | |||||
Cash flows used in financing activities | ||||||||
Dividends paid to ordinary shareholders | ( | ( | ( | |||||
Distributions in respect of other equity instruments | ( | ( | ( | |||||
Distributions in respect of non-controlling interests | ( | ( | ( | |||||
Interest paid on subordinated liabilities | ( | ( | ( | |||||
Proceeds from issue of subordinated liabilities | ||||||||
Proceeds from issue of other equity instruments | ||||||||
Proceeds from issue of ordinary shares | ||||||||
Share buyback | ( | ( | ( | |||||
Repurchases and redemptions of subordinated liabilities | ( | ( | ( | |||||
Repurchases and redemptions of other equity instruments | ( | ( | ( | |||||
Net cash used in financing activities | ( | ( | ( | |||||
Effects of exchange rate changes on cash and cash equivalents | ( | |||||||
Change in cash and cash equivalents | ( | |||||||
Cash and cash equivalents at beginning of period | ||||||||
Cash and cash equivalents at end of period |
Interest received was £14,932 million (half-year to 30 June 2025: £14,966 million; half-year to 31 December 2025:
£14,877 million) and interest paid was £8,311 million (half-year to 30 June 2025: £8,784 million; half-year to
31 December 2025: £7,805 million).
Cash and cash equivalents comprise cash and non-mandatory balances with central banks and amounts due from
banks with an original maturity of less than three months. Included within cash and cash equivalents at 30 June
2026 is £14 million (30 June 2025: £19 million; 31 December 2025: £16 million) held within the Group’s long-term
insurance and investments operations, which is not immediately available for use in the business.
The accompanying notes are an integral part of the condensed consolidated half-year financial statements.
Page 39 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
These condensed consolidated half-year financial statements as at and for the period to 30 June 2026 have been
prepared in accordance with International Accounting Standard 34 (IAS 34), Interim Financial Reporting as issued
by the International Accounting Standards Board (IASB) and comprise the results of Lloyds Banking Group plc (the
Company) together with its subsidiaries (the Group). They do not include all of the information required for full
annual financial statements and should be read in conjunction with the Group’s consolidated financial statements
as at and for the year ended 31 December 2025 which were prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the IASB. Copies of the 2025 annual report on Form 20-F are available on
the Group’s website. Terminology used in these condensed consolidated half-year financial statements is
consistent with that used in the Group’s 2025 annual report on Form 20-F.
The directors consider that it is appropriate to continue to adopt the going concern basis in preparing these
condensed consolidated half-year financial statements. In reaching this assessment, the directors have taken into
account the uncertainties affecting the UK economy and their potential effects upon the Group’s performance and
projected funding and capital position; the impact of further stress scenarios has also been considered. On this
basis, the directors are satisfied that the Group will maintain adequate levels of funding and capital for the
foreseeable future.
The Group’s accounting policies are consistent with those applied by the Group in its financial statements for the
year ended 31 December 2025 and there have been no changes in the Group’s methods of computation.
The IASB has issued its annual improvements and a number of amendments to the IFRS Accounting Standards
effective 1 January 2026, including Amendments to IFRS 9 Financial Instruments and Amendments to IFRS 7
Financial Instruments Disclosure. These improvements and amendments have not had a significant impact on the
Group.
There are a number of new accounting pronouncements issued by the IASB with an effective date of 1 January
2027, including IFRS 18 Presentation and Disclosure in Financial Statements which replaces IAS 1 Presentation of
Financial Statements. While many of the existing requirements of IAS 1 Presentation of Financial Statements are
retained, IFRS 18 Presentation and Disclosure in Financial Statements introduces additional disclosure obligations
in relation to the structure of the income statement, management-defined performance measures, and the
aggregation and disaggregation of financial information. IFRS 18 will have no impact on the Group’s net profit as it
impacts neither recognition nor measurement. The new standard will impact the presentation of the Group’s
results as it requires that operating, investing and financing activities are presented separately. There will also be a
change in the Group’s cash flow statement as IFRS 18 requires that the first line of the cash flow statement is
operating profit rather than profit before tax.
The Group has had no significant related party transactions during the half-year to 30 June 2026. Related party
transactions for the half-year to 30 June 2026 are similar in nature to those for the year ended 31 December 2025.
Full details of the Group’s related party transactions for the year ended 31 December 2025 can be found in the
Group’s 2025 annual report on Form 20-F.
Page 40 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
The preparation of the Group’s financial statements in accordance with IFRS requires management to make
judgements, estimates and assumptions in applying the accounting policies that affect the reported amounts of
assets, liabilities, income and expenses. Due to the inherent uncertainty in making estimates, actual results
reported in future periods may be based upon amounts which differ from these estimates. Estimates, judgements
and assumptions are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. In preparing the
financial statements, the Group has considered the impact of climate-related risks on its financial position and
performance. While the effects of climate change represent a source of uncertainty, the Group does not consider
there to be a material impact on its judgements and estimates from the physical, transition and other climate-
related risks in the short-term.
The Group’s significant judgements, estimates and assumptions are unchanged compared to those disclosed in
note 3 of the financial statements included in the Group’s 2025 annual report on Form 20-F. Further information
on the critical accounting judgements and key sources of estimation uncertainty for the allowance for expected
credit losses is set out in note 12.
Page 41 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Lloyds Banking Group provides a wide range of banking and financial services in the UK and in certain locations
overseas. The Group Executive Committee (GEC) remains the chief operating decision maker, as defined by IFRS 8
Operating Segments, for the Group.
The segmental results and comparatives are presented on an underlying basis (pre-tax), the basis reviewed by the
chief operating decision-maker. The underlying basis is derived from the recognition and measurement principles of
the IFRS Accounting Standards with the effects of the following excluded in arriving at underlying profit:
•Restructuring costs relating to merger, acquisition, integration and disposal activities
•Volatility and other items, which includes the effects of certain market volatility including that relating to the
Group’s hedging arrangements, the amortisation of purchased intangible assets and the unwind of acquisition-
related fair value adjustments
For the purposes of the underlying income statement, operating lease depreciation (net of gains on disposal of
operating lease assets) is shown as an adjustment to total underlying income.
There has been no change to the descriptions of the segments as provided in note 4 to the Group’s financial
statements for the year ended 31 December 2025.
Half-year to 30 June 2026 | Retail £m | Commercial Banking £m | Insurance, Pensions and Investments £m | Other £m | Total £m | |||||||||
Underlying net interest income | ( | |||||||||||||
Underlying other income | ||||||||||||||
Total underlying income | ||||||||||||||
Underlying operating lease depreciation1 | ( | ( | ( | |||||||||||
Underlying income, net of underlying operating lease depreciation | ||||||||||||||
Underlying operating costs | ( | ( | ( | ( | ( | |||||||||
Remediation | ( | ( | ( | ( | ( | |||||||||
Total underlying costs | ( | ( | ( | ( | ( | |||||||||
Underlying impairment charge | ( | ( | ( | ( | ||||||||||
Underlying profit before tax | ||||||||||||||
External income | ( | |||||||||||||
External operating lease depreciation1 | ( | ( | ( | |||||||||||
Inter-segment (expense) income | ( | ( | ||||||||||||
Net income | ||||||||||||||
Loans and advances to customers2 | ||||||||||||||
External assets | ||||||||||||||
Customer deposits | ||||||||||||||
External liabilities | ||||||||||||||
1Net of losses on disposal of operating lease assets of £32 million.
2Other includes central fair value hedge accounting adjustments.
Page 42 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 3: Segmental analysis (continued)
Half-year to 30 June 2025 | Retail £m | Commercial Banking £m | Insurance, Pensions and Investments £m | Other £m | Total £m | |||||||||
Underlying net interest income | ( | |||||||||||||
Underlying other income | ||||||||||||||
Total underlying income | ||||||||||||||
Underlying operating lease depreciation1 | ( | ( | ( | |||||||||||
Underlying income, net of underlying operating lease depreciation | ||||||||||||||
Underlying operating costs | ( | ( | ( | ( | ( | |||||||||
Remediation | ( | ( | ( | |||||||||||
Total underlying costs | ( | ( | ( | ( | ( | |||||||||
Underlying impairment (charge) credit | ( | ( | ( | ( | ||||||||||
Underlying profit before tax | ||||||||||||||
External income | ( | |||||||||||||
External operating lease depreciation1 | ( | ( | ( | |||||||||||
Inter-segment (expense) income | ( | ( | ||||||||||||
Net income | ||||||||||||||
Loans and advances to customers2 | ||||||||||||||
External assets | ||||||||||||||
Customer deposits | ||||||||||||||
External liabilities | ||||||||||||||
Half-year to 31 December 2025 | ||||||||||||||
Underlying net interest income | ( | |||||||||||||
Underlying other income | ||||||||||||||
Total underlying income | ||||||||||||||
Underlying operating lease depreciation1 | ( | ( | ( | |||||||||||
Underlying income, net of underlying operating lease depreciation | ||||||||||||||
Underlying operating costs | ( | ( | ( | ( | ( | |||||||||
Remediation | ( | ( | ( | ( | ( | |||||||||
Total underlying costs | ( | ( | ( | ( | ( | |||||||||
Underlying impairment (charge) credit | ( | ( | ( | |||||||||||
Underlying profit before tax | ||||||||||||||
External income | ( | |||||||||||||
External operating lease depreciation1 | ( | ( | ( | |||||||||||
Inter-segment (expense) income | ( | ( | ||||||||||||
Net income | ||||||||||||||
Loans and advances to customers2 | ||||||||||||||
External assets | ||||||||||||||
Customer deposits | ||||||||||||||
External liabilities |
1Net of losses on disposal of operating lease assets of £3 million in the half-year to 30 June 2025 and £7 million in the half-year
to 31 December 2025.
2Other includes central fair value hedge accounting adjustments.
Page 43 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 3: Segmental analysis (continued)
Group statutory basis | Removal of: | Total of segments’ amounts | ||||||||||||||
£m | Restructuring1 £m | Volatility and other items2,3,4 £m | Insurance gross up5 £m | £m | ||||||||||||
Half-year to 30 June 2026 | ||||||||||||||||
Net interest income | Underlying net interest income | |||||||||||||||
Other income | ( | Underlying other income | ||||||||||||||
( | ( | Underlying operating lease depreciation6 | ||||||||||||||
Total income | ( | Underlying income, net of underlying operating lease depreciation | ||||||||||||||
Operating expenses6 | ( | ( | ( | Total underlying costs | ||||||||||||
Impairment charge | ( | ( | ( | Underlying impairment charge | ||||||||||||
Profit before tax | ( | Underlying profit before tax | ||||||||||||||
Half-year to 30 June 2025 | ||||||||||||||||
Net interest income | Underlying net interest income | |||||||||||||||
Other income | ( | Underlying other income | ||||||||||||||
( | ( | Underlying operating lease depreciation6 | ||||||||||||||
Total income | ( | Underlying income, net of underlying operating lease depreciation | ||||||||||||||
Operating expenses6 | ( | ( | ( | Total underlying costs | ||||||||||||
Impairment charge | ( | ( | Underlying impairment charge | |||||||||||||
Profit before tax | Underlying profit before tax | |||||||||||||||
Half-year to 31 December 2025 | ||||||||||||||||
Net interest income | Underlying net interest income | |||||||||||||||
Other income | ( | Underlying other income | ||||||||||||||
( | ( | Underlying operating lease depreciation6 | ||||||||||||||
Total income | ( | Underlying income, net of underlying operating lease depreciation | ||||||||||||||
Operating expenses6 | ( | ( | ( | Total underlying costs | ||||||||||||
Impairment charge | ( | ( | Underlying impairment charge | |||||||||||||
Profit before tax | Underlying profit before tax | |||||||||||||||
1Restructuring, previously presented within volatility and other items, is now shown separately. Comparative periods are
represented on a consistent basis.
2In the half-year ended 30 June 2026 this comprised the effects of market and other volatility (gains of £186 million); the
amortisation of purchased intangibles (£65 million); and fair value unwind (losses of £9 million).
3In the half-year ended 30 June 2025 this comprised the effects of market and other volatility (gains of £27 million); the
amortisation of purchased intangibles (£40 million); and fair value unwind (losses of £35 million).
4In the half-year ended 31 December 2025 this comprised the effects of market and other volatility (gains of £45 million); the
amortisation of purchased intangibles (£46 million); and fair value unwind (losses of £21 million).
5Under IFRS 17, expenses which are directly associated with the fulfilment of insurance contracts are reported as part of the
insurance service result within statutory other income. On an underlying basis these expenses remain within costs.
6Net of losses on disposal of operating lease assets of £32 million (half-year to 30 June 2025: £3 million; half-year to 31
December 2025: £7 million). Statutory operating expenses includes operating lease depreciation. On an underlying basis
Page 44 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | ||||||
Fee and commission income: | ||||||||
Current accounts | ||||||||
Credit and debit card fees | ||||||||
Commercial banking and treasury fees | ||||||||
Unit trust and insurance broking | ||||||||
Factoring | ||||||||
Other fees and commissions | ||||||||
Total fee and commission income | ||||||||
Fee and commission expense | ( | ( | ( | |||||
Net fee and commission income |
Current account and credit and debit card fees principally arise in Retail; commercial banking and treasury fees
and factoring arise in Commercial Banking; and unit trust and insurance broking arise in Insurance, Pensions and
Investments.
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | ||||||
Insurance revenue | ||||||||
Amounts relating to the changes in liabilities for remaining coverage: | ||||||||
CSM recognised for services provided | ||||||||
Change in risk adjustments for non-financial risk for risk expired | ||||||||
Expected claims and other insurance services expenses | ||||||||
Charges to funds in respect of policyholder tax and other | ||||||||
Recovery of insurance acquisition cash flows | ||||||||
Total life | ||||||||
Total non-life | ||||||||
Total Insurance revenue | ||||||||
Insurance service expense | ||||||||
Incurred claims and other directly attributable expenses | ( | ( | ( | |||||
Changes that relate to past service: adjustment to liabilities for incurred claims | ( | ( | ||||||
Changes that relate to future service: (losses) reversal of losses on onerous contracts | ( | ( | ||||||
Amortisation of insurance acquisition cash flows | ( | ( | ( | |||||
Total life | ( | ( | ( | |||||
Total non-life | ( | ( | ( | |||||
Total Insurance service expense | ( | ( | ( | |||||
Net expense from reinsurance contracts held | ( | ( | ( | |||||
Insurance service result |
Page 45 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 5: Insurance business (continued)
Half-year to 30 June 2026 | ||||||||
Life £m | Non-life £m | Total £m | ||||||
Net gains on financial assets and liabilities at fair value through profit or loss | ||||||||
Foreign exchange | ||||||||
Investment property gains | ||||||||
Net investment return on assets held to back insurance and participating investment contracts1 | ||||||||
Net investment return on assets held to back third party interests in consolidated funds | ||||||||
Net investment return on assets held to back non-participating investment contracts | ||||||||
Net investment return on assets held to back insurance and investment contracts | ||||||||
Net finance expense from insurance and participating investment contracts | ( | ( | ( | |||||
Net finance expense from reinsurance contracts held | ( | ( | ||||||
Net finance expense from insurance, participating investment and reinsurance contracts | ( | ( | ( | |||||
Movement in third party interests in consolidated funds | ( | |||||||
Change in non-participating investment contracts | ( | |||||||
Net finance expense in respect of insurance and investment contracts | ( | |||||||
Net investment return and finance result in respect of insurance and investment contracts | ||||||||
Half-year to 30 June 2025 | ||||||||
Life £m | Non-life £m | Total £m | ||||||
Net gains on financial assets and liabilities at fair value through profit or loss | ||||||||
Foreign exchange | ||||||||
Investment property gains | ||||||||
Net investment return on assets held to back insurance and participating investment contracts1 | ||||||||
Net investment return on assets held to back third party interests in consolidated funds | ||||||||
Net investment return on assets held to back non-participating investment contracts | ||||||||
Net investment return on assets held to back insurance and investment contracts | ||||||||
Net finance expense from insurance and participating investment contracts | ( | ( | ( | |||||
Net finance income from reinsurance contracts held | ||||||||
Net finance expense from insurance, participating investment and reinsurance contracts | ( | ( | ( | |||||
Movement in third party interests in consolidated funds | ( | |||||||
Change in non-participating investment contracts | ( | |||||||
Net finance expense in respect of insurance and investment contracts | ( | |||||||
Net investment return and finance result in respect of insurance and investment contracts | ( | |||||||
Page 46 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 5: Insurance business (continued)
Half-year to 31 December 2025 | ||||||||
Life £m | Non-life £m | Total £m | ||||||
Net gains on financial assets and liabilities at fair value through profit or loss | ||||||||
Foreign exchange | ( | ( | ||||||
Investment property losses | ( | ( | ||||||
Net investment return on assets held to back insurance and participating investment contracts1 | ||||||||
Net investment return on assets held to back third party interests in consolidated funds | ||||||||
Net investment return on assets held to back non-participating investment contracts | ||||||||
Net investment return on assets held to back insurance and investment contracts | ||||||||
Net finance expense from insurance and participating investment contracts | ( | ( | ( | |||||
Net finance expense from reinsurance contracts held | ||||||||
Net finance expense from insurance, participating investment and reinsurance contracts | ( | ( | ( | |||||
Movement in third party interests in consolidated funds | ( | |||||||
Change in non-participating investment contracts | ( | |||||||
Net finance expense in respect of insurance and investment contracts | ( | |||||||
Net investment return and finance result in respect of insurance and investment contracts | ( | |||||||
1Includes income of £9,890 million (half-year to 30 June 2025: £3,426 million; half-year to 31 December 2025: £11,583 million) in
respect of unit-linked and with-profit contracts measured applying the variable fee approach. The assets generating the
investment return held to back insurance contracts and participating investment contracts are carried at fair value on the
Group’s balance sheet.
At 30 June 2026 | Present value of future cash flows £m | Risk adjustment £m | Contractual service margin £m | Other £m | Total £m | ||||||||||
Insurance contract assets | ( | ( | |||||||||||||
Liabilities arising from insurance contracts and participating investment contracts1 | ( | ( | ( | ( | |||||||||||
Net liability | ( | ( | ( | ( | |||||||||||
Insurance acquisition assets | |||||||||||||||
Insurance and participating investment contracts net liability | ( | ( | ( | ( | |||||||||||
At 31 December 2025 | |||||||||||||||
Insurance contract assets | ( | ( | |||||||||||||
Liabilities arising from insurance contracts and participating investment contracts1 | ( | ( | ( | ( | |||||||||||
Net liability | ( | ( | ( | ( | |||||||||||
Insurance acquisition assets | |||||||||||||||
Insurance and participating investment contracts net liability | ( | ( | ( | ( | |||||||||||
1Excluding insurance acquisition assets.
Page 47 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | ||||||
Staff costs: | ||||||||
Salaries and social security costs | ||||||||
Pensions and other post-retirement benefit schemes (note 7) | ||||||||
Restructuring and other staff costs | ||||||||
Premises and equipment costs1 | ||||||||
Depreciation and amortisation | ||||||||
UK bank levy | ||||||||
Regulatory and legal provisions (note 14) | ||||||||
Other | ||||||||
Operating expenses before adjustment for: | ||||||||
Amounts attributable to the acquisition of insurance and participating investment contracts | ( | ( | ( | |||||
Amounts reported within insurance service expenses | ( | ( | ( | |||||
Total operating expenses |
1Net of losses on disposal of operating lease assets of £32 million (half-year to 30 June 2025: losses of £3 million; half-year to
31 December 2025: losses of £7 million).
At 30 Jun 2026 £m | At 31 Dec 2025 £m | ||||
Defined benefit pension schemes: | |||||
Present value of funded obligations | ( | ( | |||
Fair value of scheme assets | |||||
Net pension scheme asset | |||||
Other post-retirement schemes | ( | ( | |||
Total amounts recognised in the balance sheet | |||||
Recognised on the balance sheet as: | |||||
Retirement benefit assets | |||||
Retirement benefit obligations | ( | ( | |||
Total amounts recognised in the balance sheet |
£m | ||
Asset at 1 January 2026 | ||
Income statement credit | ||
Employer contributions | ||
Remeasurement | ||
Asset at 30 June 2026 |
Page 48 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 7: Retirement benefit obligations (continued)
comprised as follows:
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | ||||||
Defined benefit schemes | ( | ( | ( | |||||
Defined contribution schemes | ||||||||
Total charge to the income statement |
At 30 Jun 2026 % | At 31 Dec 2025 % | ||||
Discount rate | |||||
Rate of inflation: | |||||
Retail Price Index (RPI) | |||||
Consumer Price Index (CPI) | |||||
Rate of salary increases | |||||
Weighted-average rate of increase for pensions in payment |
In July 2024, the Court of Appeal handed down a judgment (Virgin Media Limited v NTL Pension Trustees Limited)
which potentially has implications for the validity of amendments made by pension schemes that were contracted
out on a salary-related basis between 6 April 1997 and the abolition of contracting-out in 2016. The Pension
Schemes Act 2026 gives affected pension schemes the ability to retrospectively obtain written actuarial
confirmation that historic benefit changes met the necessary standards. The Group has not made any allowance
for the possible impact of the ruling as it is currently unclear whether any additional liabilities might arise, and if
they were to arise, how they would be reliably measured. The Group is continuing to review scheme amendments
to decide whether any subsequent actions are required and will continue to monitor developments.
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | ||||||
Loans and advances to customers | ||||||||
Debt securities | ||||||||
Financial assets held at amortised cost | ||||||||
Financial assets at fair value through other comprehensive income | ( | |||||||
Other assets | ( | |||||||
Loan commitments and financial guarantees | ( | ( | ||||||
Total impairment charge |
There was a £78 million charge in respect of residual value impairment and voluntary terminations within the
Group’s UK Motor Finance business in the current period (half-year to 30 June 2025: £70 million; half-year to
31 December 2025: £67 million).
Page 49 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
In accordance with IAS 34, the Group’s income tax expense for the half-year to 30 June 2026 is based on the best
estimate of the weighted-average annual income tax rate expected for the full financial year. The tax effects of
one-off items are not included in the weighted-average annual income tax rate, but are recognised in the relevant
period. An explanation of the relationship between tax expense and accounting profit is set out below:
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | ||||||
Profit before tax | ||||||||
UK corporation tax thereon at 25.0% (2025: 25.0%) | ( | ( | ( | |||||
Impact of surcharge on banking profits | ( | ( | ( | |||||
Non-deductible costs: conduct charges | ( | |||||||
Non-deductible costs: bank levy | ( | |||||||
Other non-deductible costs1 | ( | ( | ( | |||||
Non-taxable income1 | ||||||||
Tax relief on coupons on other equity instruments | ||||||||
Non-taxable (non-deductible) foreign exchange gains (losses)1 | ( | ( | ||||||
Tax-exempt gains on disposals | ||||||||
Tax losses where no deferred tax recognised | ( | ( | ||||||
Differences in overseas tax rates | ( | ( | ||||||
Policyholder tax in respect of the life assurance business | ( | ( | ( | |||||
Deferred tax in respect of life assurance policyholder tax | ( | ( | ( | |||||
Adjustments in respect of prior years | ( | |||||||
Tax effect of share of results of joint ventures | ( | |||||||
Provision for Pillar 2 current income taxes | ||||||||
Tax expense | ( | ( | ( |
1Non-taxable (non-deductible) foreign exchange gains (losses) on non-sterling denominated other equity instruments and on
net investment hedging of subsidiaries, previously shown in aggregate within other non-deductible costs and non-taxable
income, are now presented as an individual line item. Comparatives are represented on a consistent basis.
The Group, as a proxy for policyholders in the UK, is required to record taxes on investment income and gains. This
policyholder tax is levied on the Group, but is then recharged to the policyholder as part of the charge to funds.
Although the net impact on the Group’s profit after tax is £nil , IFRS requires the policyholder tax to be included in
tax expense and the offsetting income to be included within profit before tax. The impact of this grossing up on
the effective tax rate can be seen in the reconciliation of tax expense above.
Page 50 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
The valuations of financial instruments have been classified into three levels according to the quality and reliability
of information used to determine those fair values. Note 17 to the Group’s financial statements for the year ended
31 December 2025 details the definitions of the three levels in the fair value hierarchy.
Financial instruments classified as financial assets at fair value through profit or loss, derivative financial
instruments, financial assets at fair value through other comprehensive income and financial liabilities at fair value
through profit or loss are recognised at fair value.
The Group manages valuation adjustments for its derivative exposures on a net basis; the Group determines their
fair values on the basis of their net exposures. In all other cases, fair values of financial assets and liabilities
measured at fair value are determined on the basis of their gross exposures.
value in the Group’s consolidated balance sheet, grouped into levels 1 to 3 based on the degree to which the fair
value is observable. There were no significant transfers between level 1 and level 2 during the period.
Financial assets | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | |||||||
At 30 June 2026 | |||||||||||
Financial assets at fair value through profit or loss: | |||||||||||
Loans and advances to banks | |||||||||||
Loans and advances to customers | |||||||||||
Reverse repurchase agreements | |||||||||||
Debt securities | |||||||||||
Treasury and other bills | |||||||||||
Contracts held with reinsurers | |||||||||||
Equity shares | |||||||||||
Total financial assets at fair value through profit or loss1 | |||||||||||
Financial assets at fair value through other comprehensive income: | |||||||||||
Debt securities | |||||||||||
Equity shares | |||||||||||
Total financial assets at fair value through other comprehensive income | |||||||||||
Derivative financial instruments | |||||||||||
Total financial assets carried at fair value |
1Other financial assets mandatorily at fair value through profit or loss include assets backing insurance contracts and
investment contracts of £224,952 million.
Page 51 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 10: Fair values of financial assets and liabilities (continued)
Financial assets | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | |||||||
At 31 December 2025 | |||||||||||
Financial assets at fair value through profit or loss: | |||||||||||
Loans and advances to banks | |||||||||||
Loans and advances to customers | |||||||||||
Reverse repurchase agreements | |||||||||||
Debt securities | |||||||||||
Treasury and other bills | |||||||||||
Contracts held with reinsurers | |||||||||||
Equity shares | |||||||||||
Total financial assets at fair value through profit or loss1 | |||||||||||
Financial assets at fair value through other comprehensive income: | |||||||||||
Debt securities | |||||||||||
Equity shares | |||||||||||
Total financial assets at fair value through other comprehensive | |||||||||||
Derivative financial instruments | |||||||||||
Total financial assets carried at fair value |
1Other financial assets mandatorily at fair value through profit or loss include assets backing insurance contracts and
investment contracts of £209,545 million.
Financial liabilities | Level 1 £m | Level 2 £m | Level 3 £m | Total £m | |||||||
At 30 June 2026 | |||||||||||
Financial liabilities at fair value through profit or loss: | |||||||||||
Debt securities in issue | |||||||||||
Liabilities in respect of securities sold under repurchase agreements | |||||||||||
Short positions in securities | |||||||||||
Other | |||||||||||
Total financial liabilities at fair value through profit or loss | |||||||||||
Derivative financial instruments | |||||||||||
Liabilities arising from non-participating investment contracts | |||||||||||
Total financial liabilities carried at fair value | |||||||||||
At 31 December 2025 | |||||||||||
Financial liabilities at fair value through profit or loss: | |||||||||||
Debt securities in issue | |||||||||||
Liabilities in respect of securities sold under repurchase agreements | |||||||||||
Short positions in securities | |||||||||||
Other | |||||||||||
Total financial liabilities at fair value through profit or loss | |||||||||||
Derivative financial instruments | |||||||||||
Liabilities arising from non-participating investment contracts | |||||||||||
Total financial liabilities carried at fair value |
Page 52 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 10: Fair values of financial assets and liabilities (continued)
Valuation control framework
Key elements of the valuation control framework include model validation (incorporating pre-trade and post-trade
testing), product implementation review and independent price verification. The framework covers processes for
all 3 levels in the fair value hierarchy. Formal committees meet quarterly to discuss and approve valuations in more
judgemental areas.
Transfers into and out of level 3 portfolios
Transfers out of level 3 portfolios arise when inputs that could have a significant impact on the instrument’s
valuation become market observable; conversely, transfers into the portfolios arise when sources of data cease to
be observable.
Valuation methodology
For level 2 and level 3 portfolios, there is no significant change to the valuation methodology (techniques and
inputs) disclosed in the Group’s financial statements for the year ended 31 December 2025 applied to these
portfolios.
Movements in level 3 portfolio
Financial assets at fair value through profit or loss £m | Financial assets at fair value through other comprehensive income £m | Derivative assets £m | Total financial assets carried at fair value £m | ||||||||
At 1 January 2026 | |||||||||||
Exchange and other adjustments | ( | ( | |||||||||
Gains recognised in the income statement within other income | |||||||||||
Gains recognised in other comprehensive income within the revaluation reserve in respect of financial assets at FVOCI | |||||||||||
Purchases/increases | |||||||||||
Sales/repayments | ( | ( | ( | ( | |||||||
Transfers into the level 3 portfolio | |||||||||||
Transfers out of the level 3 portfolio | ( | ( | |||||||||
At 30 June 2026 | |||||||||||
Gains recognised in the income statement, within other income, relating to the change in fair value of those assets held at 30 June 2026 | |||||||||||
At 1 January 2025 | |||||||||||
Exchange and other adjustments | ( | ||||||||||
Gains (losses) recognised in the income statement within other income | ( | ||||||||||
Gains recognised in other comprehensive income within the revaluation reserve in respect of financial assets at FVOCI | |||||||||||
Purchases/increases | |||||||||||
Sales/repayments | ( | ( | ( | ( | |||||||
Transfers into the level 3 portfolio | |||||||||||
Transfers out of the level 3 portfolio | ( | ( | ( | ||||||||
At 30 June 2025 | |||||||||||
Gains (losses) recognised in the income statement, within other income, relating to the change in fair value of those assets held at 30 June 2025 | ( | ( | |||||||||
Page 53 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 10: Fair values of financial assets and liabilities (continued)
Financial liabilities at fair value through profit or loss £m | Derivative liabilities £m | Total financial liabilities carried at fair value £m | ||||||
At 1 January 2026 | ||||||||
Exchange and other adjustments | ( | ( | ||||||
Losses (gains) recognised in the income statement within other income | ( | ( | ||||||
Additions | ||||||||
Redemptions | ( | ( | ( | |||||
At 30 June 2026 | ||||||||
Losses recognised in the income statement, within other income, relating to the change in fair value of those liabilities held at 30 June 2026 | ||||||||
At 1 January 2025 | ||||||||
Exchange and other adjustments | ||||||||
Gains recognised in the income statement within other income | ( | ( | ( | |||||
Additions | ||||||||
Redemptions | ( | ( | ( | |||||
At 30 June 2025 | ||||||||
Gains recognised in the income statement, within other income, relating to the change in fair value of those liabilities held at 30 June 2025 | ( | ( | ( |
Page 54 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 10: Fair values of financial assets and liabilities (continued)
Significant unobservable inputs in level 3 valuations
fair value and classified as level 3 and provides the range of those inputs at the balance sheet date.
For each portfolio, the minimum and maximum significant unobservable inputs that are used in the balance sheet
valuation are shown.
Significant unobservable inputs affecting the valuations are unchanged from those described in the Group’s
financial statements for the year ended 31 December 2025.
At 30 June 2026 | Valuation technique | Significant unobservable input | Minimum | Maximum | Carrying value £m | |||
Financial assets at fair value through profit or loss | ||||||||
Loans and advances to customers | Discounted cash flows | Credit spreads | ||||||
Market values - property valuation | HPI growth | |||||||
Debt securities | Discounted cash flows | Credit spreads | ||||||
Market approach | Earnings multiple | |||||||
Equity shares | Underlying asset/net asset fair value (incl. property prices) | Price | n/a | n/a | ||||
Market approach | Earnings multiple | |||||||
—% | ||||||||
Financial assets at fair value through other comprehensive income | ||||||||
Debt securities | Discounted cash flows | Credit spreads | ||||||
Equity shares | Underlying asset/net asset fair value (incl. property prices) | Price | n/a | n/a | ||||
Derivative financial assets | ||||||||
Interest rate derivatives | Option pricing model | Interest rate ATM volatility | ||||||
Discounted cash flows | Uncertainty of recovery rates | |||||||
Level 3 financial assets carried at fair value | ||||||||
Financial liabilities at fair value through profit or loss | ||||||||
Securitisation notes and other | Discounted cash flows | Credit spreads | ||||||
Derivative financial liabilities | ||||||||
Interest rate derivatives | Option pricing model | Interest rate ATM volatility | ||||||
Shared appreciation rights | Market values - property valuation | HPI growth | ||||||
Level 3 financial liabilities carried at fair value | ||||||||
Page 55 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 10: Fair values of financial assets and liabilities (continued)
Significant unobservable inputs in level 3 valuations (continued)
At 31 December 2025 | Valuation technique | Significant unobservable input | Minimum | Maximum | Carrying value £m | |||
Financial assets at fair value through profit or loss | ||||||||
Loans and advances to customers | Discounted cash flows | Credit spreads | ||||||
Market values - property valuation | HPI growth | |||||||
Debt securities | Discounted cash flows | Credit spreads | ||||||
Market approach | Earnings multiple | |||||||
Equity shares | Underlying asset/net asset fair value (incl. property prices) | Price | n/a | n/a | ||||
Market approach | Earnings multiple | |||||||
Financial assets at fair value through other comprehensive income | ||||||||
Debt securities | Discounted cash flows | Credit spreads | ||||||
Equity shares | Underlying asset/net asset fair value (incl. property prices) | Price | n/a | n/a | ||||
Derivative financial assets | ||||||||
Interest rate derivatives | Option pricing model | Interest rate ATM volatility | ||||||
Discounted cash flows | Uncertainty of recovery rates | |||||||
Level 3 financial assets carried at fair value | ||||||||
Financial liabilities at fair value through profit or loss | ||||||||
Securitisation notes and other | Discounted cash flows | Credit spreads | ||||||
Derivative financial liabilities | ||||||||
Interest rate derivatives | Option pricing model | Interest rate ATM volatility | ||||||
Shared appreciation rights | Market values - property valuation | HPI growth | ||||||
Level 3 financial liabilities carried at fair value | ||||||||
Reasonably possible alternative assumptions
Valuation techniques applied to the Group’s level 3 instruments involve the use of unobservable inputs. The
calculation of the effect of reasonably possible alternative assumptions for those inputs are included in the tables
and is unchanged from that described in note 17 to the Group’s financial statements for the year ended
31 December 2025.
For each portfolio, the maximum and minimum changes presented reflect the difference between the significant
unobservable inputs used in the balance sheet valuation and those used when applying reasonably possible
alternative assumptions.
Page 56 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 10: Fair values of financial assets and liabilities (continued)
Sensitivity of level 3 valuations
The tables below set out the effects of reasonably possible alternative assumptions for categories of level 3
financial assets and financial liabilities.
At 30 June 2026 | Significant unobservable input | Max up | Max down | Favourable changes1 £m | Unfavourable changes1 £m |
Financial assets at fair value through profit or loss | |||||
Loans and advances to customers | Credit spreads | ( | ( | ||
HPI growth | ( | ( | |||
Debt securities | Credit spreads | ( | ( | ||
Earnings multiple | ( | ( | |||
Equity shares | Price | ( | ( | ||
Earnings multiple | ( | ( | |||
Financial assets at fair value through other comprehensive income | |||||
Debt securities | Credit spreads | ( | ( | ||
Equity shares | Price | ( | ( | ||
Derivative financial assets | |||||
Interest rate derivatives | Interest rate ATM volatility | ( | ( | ||
Uncertainty of recovery rates | ( | ( | |||
Financial liabilities at fair value through profit or loss | |||||
Securitisation notes and other | Credit spreads | ( | ( | ||
Derivative financial liabilities | |||||
Interest rate derivatives | Interest rate ATM volatility | ( | ( | ||
Shared appreciation rights | HPI growth | ( | ( | ||
1Where the exposure to a significant unobservable input is managed on a net basis, only the net impact is shown in the table.
Page 57 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 10: Fair values of financial assets and liabilities (continued)
Sensitivity of level 3 valuations (continued)
At 31 December 2025 | Significant unobservable input | Max up | Max down | Favourable changes1 £m | Unfavourable changes1 £m |
Financial assets at fair value through profit or loss | |||||
Loans and advances to customers | Credit spreads | ( | ( | ||
HPI growth | ( | ( | |||
Debt securities | Credit spreads | ( | ( | ||
Earnings multiple | ( | ( | |||
Equity shares | Price | ( | ( | ||
Earnings multiple | ( | ( | |||
Financial assets at fair value through other comprehensive income | |||||
Debt securities | Credit spreads | ( | ( | ||
Equity shares | Price | ( | ( | ||
Derivative financial assets | |||||
Interest rate derivatives | Interest rate ATM volatility | ( | ( | ||
Uncertainty of recovery rates | ( | ( | |||
Financial liabilities at fair value through profit or loss | |||||
Securitisation notes and other | Credit spreads | ( | ( | ||
Derivative financial liabilities | |||||
Interest rate derivatives | Interest rate ATM volatility | ( | ( | ||
Shared appreciation rights | HPI growth | ( | ( | ||
1Where the exposure to a significant unobservable input is managed on a net basis, only the net impact is shown in the table.
Page 58 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 10: Fair values of financial assets and liabilities (continued)
Group’s consolidated balance sheet. The fair values presented in the table are at a specific date and may be
significantly different from the amounts which will actually be paid or received on the maturity or settlement date.
At 30 June 2026 | At 31 December 2025 | ||||||||||
Carrying value £m | Fair value £m | Carrying value £m | Fair value £m | ||||||||
Financial assets | |||||||||||
Loans and advances to banks | |||||||||||
Loans and advances to customers | |||||||||||
Reverse repurchase agreements | |||||||||||
Debt securities | |||||||||||
Financial liabilities | |||||||||||
Deposits from banks | |||||||||||
Customer deposits | |||||||||||
Repurchase agreements at amortised cost | |||||||||||
Debt securities in issue | |||||||||||
Subordinated liabilities | |||||||||||
The carrying amounts of cash and balances at central banks and notes in circulation are a reasonable
approximation of their fair values.
At 30 June 2026 | At 31 December 2025 | ||||||||||
Fair value of assets £m | Fair value of liabilities £m | Fair value of assets £m | Fair value of liabilities £m | ||||||||
Trading and other | |||||||||||
Exchange rate contracts | |||||||||||
Interest rate contracts | |||||||||||
Credit derivatives | |||||||||||
Equity, commodity and other contracts | |||||||||||
Hedging | |||||||||||
Derivatives designated as fair value hedges | |||||||||||
Derivatives designated as cash flow hedges | |||||||||||
Total recognised derivative assets/liabilities | |||||||||||
Page 59 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
The calculation of the Group’s allowance for expected credit losses requires the Group to make a number of
judgements, assumptions and estimates. These are set out in full in note 21 to the Group’s financial statements for
the year ended 31 December 2025, with the most significant set out below.
modelled, those that have been individually assessed and those arising through the application of judgemental
adjustments.
At 30 June 2026 | Modelled ECL £m | Individually assessed £m | Judgemental adjustments £m | Total ECL £m | |||||||
UK mortgages | |||||||||||
Credit cards | |||||||||||
Other Retail | |||||||||||
Commercial Banking | ( | ||||||||||
Other | |||||||||||
Total | |||||||||||
At 31 December 2025 | |||||||||||
UK mortgages | |||||||||||
Credit cards | |||||||||||
Other Retail | |||||||||||
Commercial Banking | ( | ||||||||||
Other | |||||||||||
Total | |||||||||||
Adjustments to modelled ECL
UK mortgages: £67 million (31 December 2025: £108 million)
These adjustments principally comprise:
Repossession risk: £67 million (31 December 2025: £85 million)
Additional ECL continues to be held judgementally to capture the potential repossession and recovery risk from
specific subsets of largely long-term defaulted cases. The reduction in the adjustment comes from the
reclassification of one part previously needed to set an anticipated longer duration between default and
repossession than was observable at the time. Having now seen that elongation emerge and subsequently
normalise there is now sufficient observable behaviour to return to a data driven approach.
Adjustment for specific segments: £nil (31 December 2025: £13 million)
An adjustment was previously required to address fire safety and cladding uncertainty as not fully captured
through collective models. This adjustment has been fully released as the risk is now deemed immaterial following
reduction in exposure to these properties.
Credit cards: £56 million (31 December 2025: £63 million) and Other Retail: £73 million (31 December 2025:
£75 million)
These adjustments principally comprise:
Lifetime extension: Credit cards: £49 million (31 December 2025: £49 million) and Other Retail: £9 million
(31 December 2025: £9 million)
An adjustment is required to extend the lifetime used for Stage 2 exposures on Retail revolving products from a
three-year modelled lifetime, which reflected the outcome data available when the ECL models were developed,
to a more representative lifetime. Incremental defaults beyond year three are calculated through the extrapolation
of the default trajectory observed throughout the three years and beyond.
Page 60 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 12: Allowance for expected credit losses (continued)
Adjustments to loss rates: Other Retail: £37 million (31 December 2025: £25 million)
An adjustment is made to the loss given default (LGD) assumptions within the motor credit model to capture
observed loss rates and the latest outlook on used car prices. The increase in the period reflects both the further
adjustment required as the model now captures distorted historical loss-data from the Covid-period, as well as a
small expected deterioration in loss rates.
Commercial Banking: £(56 ) million (31 December 2025: £(22 ) million)
These adjustments principally comprise:
Corporate insolvency rates: £(106 ) million (31 December 2025: £(122 ) million)
The volume of UK corporate insolvencies continues to exhibit an elevated trend beyond December 2019 levels,
revealing a marked misalignment between observed UK corporate insolvencies and the Group’s equivalent credit
performance. This dislocation gives rise to uncertainty over the drivers of the observed trends in the metric and the
appropriateness of the Group’s Commercial Banking model response which uses observed UK corporate
insolvencies data to anchor future loss estimates to. Given the Group’s stable credit performance, a negative
adjustment is applied by reverting judgementally to the long-term average of the insolvency rate. The scale of the
negative adjustment reduced in the period reflecting the reduction in observed actual UK corporate insolvency
rates, narrowing the gap of the misalignment.
Adjustments for loss given defaults (LGDs): £50 million (31 December 2025: £50 million)
An adjustment is required for a specific segment of the SME portfolio which judgementally applies a more
appropriate blended LGD rate from credit risk profile segments more aligned to experience.
Global tariff and political disruption risks: £nil (31 December 2025: £50 million)
An adjustment was previously held to recognise the potential risks to specific drivers across various corporate
sectors not reflected in broad macroeconomic model drivers. These were in relation to potential nuanced risks to
businesses inherent in the base case which could also worsen in the downside scenarios. This adjustment has been
fully released as these risks are considered to be adequately captured within assumptions and resulting modelled
provisions.
Page 61 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 12: Allowance for expected credit losses (continued)
Base case and MES economic assumptions
The Group’s base case economic scenario has been updated to reflect ongoing geopolitical developments and
conditions in financial and commodity markets through to the balance sheet date. The Group’s updated base case
scenario has four conditioning assumptions. First, developments in global conflicts, technology or financial sector
issues do not cause a significant degree of financial market volatility. Second, a drift towards further
deglobalisation and financial market fragmentation continues as part of a reordering of global economic relations,
adding to economic frictions. Third, the UK’s existing macroeconomic framework for monetary and fiscal policy
remains in place, alongside broader continuity on other areas of government policy. Fourth, advancements in AI
begin to boost UK productivity growth but worsen the employment outlook in a ‘transitional’ phase around the
turn of the decade.
Based on these assumptions and incorporating the economic data published in the second quarter of 2026, the
Group’s base case scenario is for a slow expansion in gross domestic product (GDP) and a further rise in the
unemployment rate alongside small gains in residential and commercial property prices. Although inflationary
pressures attributable to the conflict in the Middle East are yet to peak, UK Bank Rate is expected to remain on
hold during 2026, before reaching a ‘neutral’ policy stance in 2027. Risks around this base case economic view lie in
both directions and are largely captured by the generation of alternative economic scenarios.
The Group’s approach to generating alternative economic scenarios is set out in detail in note 21 to the financial
statements for the year ended 31 December 2025. The Group has taken into account the latest available
information at the reporting date in defining its base case scenario and generating alternative economic scenarios.
The scenarios include forecasts for key variables as at the second quarter of 2026. Actuals for this period, or
restatements of past data, may have since emerged prior to publication and have not been included.
Scenarios by year
The key UK economic assumptions made by the Group are shown in the following tables across a number of
measures explained below.
Annual assumptions
Gross domestic product (GDP) growth and Consumer Price Index (CPI) inflation are presented as an annual
change, house price growth and commercial real estate price growth are presented as the growth in the respective
indices over each year. Unemployment rate and UK Bank Rate are averages over the year.
Five-year average
The five-year average reflects the average annual growth rate, or level, over the five-year period. It includes
movements within the current reporting year, such that the position as of 30 June 2026 covers the five years 2026
to 2030. The inclusion of the reporting year within the five-year period reflects the need to predict variables which
remain unpublished at the reporting date and recognises that credit models utilise both level and annual changes.
The use of calendar years maintains a comparability between the annual assumptions presented.
Page 62 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 12: Allowance for expected credit losses (continued)
At 30 June 2026 | 2026 % | 2027 % | 2028 % | 2029 % | 2030 % | 2026 to 2030 average % |
Upside | ||||||
Gross domestic product growth | ||||||
Unemployment rate | ||||||
House price growth | ||||||
Commercial real estate price growth | ||||||
UK Bank Rate | ||||||
CPI inflation | ||||||
Base case | ||||||
Gross domestic product growth | ||||||
Unemployment rate | ||||||
House price growth | ||||||
Commercial real estate price growth | ( | |||||
UK Bank Rate | ||||||
CPI inflation | ||||||
Downside | ||||||
Gross domestic product growth | ( | |||||
Unemployment rate | ||||||
House price growth | ( | ( | ( | ( | ( | |
Commercial real estate price growth | ( | ( | ( | ( | ( | ( |
UK Bank Rate | ||||||
CPI inflation | ||||||
Severe downside | ||||||
Gross domestic product growth | ( | ( | ( | |||
Unemployment rate | ||||||
House price growth | ( | ( | ( | ( | ( | ( |
Commercial real estate price growth | ( | ( | ( | ( | ( | ( |
UK Bank Rate | ||||||
CPI inflation | ( | ( | ||||
Probability-weighted | ||||||
Gross domestic product growth | ||||||
Unemployment rate | ||||||
House price growth | ||||||
Commercial real estate price growth | ( | ( | ( | ( | ( | ( |
UK Bank Rate | ||||||
CPI inflation |
Page 63 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 12: Allowance for expected credit losses (continued)
At 31 December 2025 | 2025 % | 2026 % | 2027 % | 2028 % | 2029 % | 2025 to 2029 average % |
Upside | ||||||
Gross domestic product growth | ||||||
Unemployment rate | ||||||
House price growth | ||||||
Commercial real estate price growth | ||||||
UK Bank Rate | ||||||
CPI inflation | ||||||
Base case | ||||||
Gross domestic product growth | ||||||
Unemployment rate | ||||||
House price growth | ||||||
Commercial real estate price growth | ||||||
UK Bank Rate | ||||||
CPI inflation | ||||||
Downside | ||||||
Gross domestic product growth | ( | ( | ||||
Unemployment rate | ||||||
House price growth | ( | ( | ( | ( | ( | |
Commercial real estate price growth | ( | ( | ( | ( | ( | |
UK Bank Rate | ||||||
CPI inflation | ||||||
Severe downside | ||||||
Gross domestic product growth | ( | ( | ||||
Unemployment rate | ||||||
House price growth | ( | ( | ( | ( | ( | |
Commercial real estate price growth | ( | ( | ( | ( | ( | |
UK Bank Rate | ||||||
CPI inflation | ( | |||||
Probability-weighted | ||||||
Gross domestic product growth | ||||||
Unemployment rate | ||||||
House price growth | ( | |||||
Commercial real estate price growth | ( | ( | ( | ( | ( | |
UK Bank Rate | ||||||
CPI inflation |
Page 64 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 12: Allowance for expected credit losses (continued)
Base case scenario by quarter
Gross domestic product growth is presented quarter-on-quarter. House price growth, commercial real estate price
growth and CPI inflation are presented year-on-year, i.e. from the equivalent quarter in the previous year.
Unemployment rate and UK Bank Rate are presented as at the end of each quarter.
At 30 June 2026 | First quarter 2026 % | Second quarter 2026 % | Third quarter 2026 % | Fourth quarter 2026 % | First quarter 2027 % | Second quarter 2027 % | Third quarter 2027 % | Fourth quarter 2027 % |
Gross domestic product growth | ||||||||
Unemployment rate | ||||||||
House price growth | ||||||||
Commercial real estate price growth | ( | ( | ( | ( | ( | |||
UK Bank Rate | ||||||||
CPI inflation |
At 31 December 2025 | First quarter 2025 % | Second quarter 2025 % | Third quarter 2025 % | Fourth quarter 2025 % | First quarter 2026 % | Second quarter 2026 % | Third quarter 2026 % | Fourth quarter 2026 % |
Gross domestic product growth | ||||||||
Unemployment rate | ||||||||
House price growth | ||||||||
Commercial real estate price growth | ||||||||
UK Bank Rate | ||||||||
CPI inflation |
Page 65 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 12: Allowance for expected credit losses (continued)
Opening ECL at 31 Dec 2025 £m | Write-offs and other £m | Income statement charge (credit) £m | Net ECL increase (decrease) £m | Closing ECL at 30 Jun 2026 £m | ||||||||||||
UK mortgages | ( | ( | ||||||||||||||
Credit cards | ( | |||||||||||||||
Other Retail | ( | ( | ||||||||||||||
Retail | ( | ( | ||||||||||||||
Commercial Banking | ( | ( | ||||||||||||||
Other | ||||||||||||||||
Total | ( | ( | ||||||||||||||
Opening ECL at 31 Dec 2024 £m | Write-offs and other £m | Income statement charge (credit) £m | Net ECL increase (decrease) £m | Closing ECL at 30 Jun 2025 £m | ||||||||||||
UK mortgages | ( | ( | ( | |||||||||||||
Credit cards | ( | ( | ||||||||||||||
Other Retail | ( | |||||||||||||||
Retail | ( | ( | ||||||||||||||
Commercial Banking | ( | |||||||||||||||
Other | ( | ( | ||||||||||||||
Total | ( | ( | ||||||||||||||
Opening ECL at 30 Jun 2025 £m | Write-offs and other £m | Income statement charge (credit) £m | Net ECL increase (decrease) £m | Closing ECL at 31 Dec 2025 £m | ||||||||||||
UK mortgages | ( | |||||||||||||||
Credit cards | ( | ( | ||||||||||||||
Other Retail | ( | ( | ||||||||||||||
Retail | ( | ( | ||||||||||||||
Commercial Banking | ( | ( | ( | |||||||||||||
Other | ( | |||||||||||||||
Total | ( | ( | ||||||||||||||
The total allowance for expected credit losses includes £250 million (30 June 2025: £211 million; 31 December 2025:
£243 million) in respect of residual value impairment and voluntary terminations within the Group’s UK Motor
Finance business.
Page 66 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
At 30 June 2026 | At 31 December 2025 | ||||||||||||||||
At fair value through profit or loss £m | At amortised cost £m | Total £m | At fair value through profit or loss £m | At amortised cost £m | Total £m | ||||||||||||
Senior unsecured notes issued | |||||||||||||||||
Covered bonds | |||||||||||||||||
Certificates of deposit issued | |||||||||||||||||
Securitisation notes | |||||||||||||||||
Commercial paper | |||||||||||||||||
Covered bonds and securitisation programmes
At 30 June 2026, the covered bonds held by external parties and those held internally, were secured on certain
loans and advances to customers amounting to £33,936 million (31 December 2025: £22,072 million) which have
been assigned to bankruptcy remote limited liability partnerships to provide security for issues of covered bonds by
the Group. The Group retains all of the risks and rewards associated with these loans and the partnerships are
consolidated fully with the loans retained on the Group’s balance sheet.
The Group’s securitisation vehicles issue notes that are held both externally and internally, and are secured on
loans and advances to customers amounting to £29,918 million at 30 June 2026 (31 December 2025: £27,766
million), the majority of which have been sold by subsidiary companies to bankruptcy remote structured entities.
As the structured entities are funded by the issue of debt on terms whereby the majority of the risks and rewards
of the portfolio are retained by the subsidiary, the structured entities are consolidated fully and all of these loans
are retained on the Group’s balance sheet.
Cash deposits of £3,734 million (31 December 2025: £3,359 million) which support the debt securities issued by the
structured entities, the term advances related to covered bonds and other legal obligations, are held by the Group.
Provisions for financial commitments and guarantees1 £m | Regulatory and legal provisions £m | Other £m | Total £m | ||||||||
At 1 January 2026 | |||||||||||
Exchange and other adjustments | ( | ( | ( | ( | |||||||
Provisions applied | ( | ( | ( | ||||||||
Charge for the period | |||||||||||
At 30 June 2026 | |||||||||||
1In respect of loans and advances to customers.
Page 67 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 14: Provisions (continued)
Regulatory and legal provisions
In the course of its business, the Group is engaged on a regular basis in discussions with UK and overseas regulators
and other governmental authorities on a range of matters, including legal and regulatory reviews and, from time to
time, enforcement investigations (including in relation to compliance with applicable laws and regulations, such as
those relating to prudential regulation, consumer protection, investment advice, employment, business conduct,
systems and controls, environmental, sustainability, competition/anti-trust, tax, anti-bribery, anti-money
laundering and sanctions). Any matters discussed or identified during such discussions and inquiries may result in,
among other things, further inquiry or investigation, other action being taken by governmental and/or regulatory
authorities, increased costs being incurred by the Group, remediation of systems and controls, public or private
censure, restriction of the Group’s business activities and/or fines. The Group also receives complaints and pre-
action correspondence in connection with its past conduct and claims brought or threatened by or on behalf of
current and former employees, customers (including their appointed representatives), investors and other third
parties and is subject to legal proceedings and other legal or regulatory actions from time to time. Any such events
or circumstances could have a material adverse effect on the Group’s financial position, operations or cash flows.
Provisions are held where the Group can reliably estimate a probable outflow of economic resources. The ultimate
liability of the Group may be significantly more, or less, than the amount of any provision recognised. If the Group
is unable to determine a reliable estimate, a contingent liability is disclosed. The recognition of a provision does not
amount to an admission of liability or wrongdoing on the part of the Group. During the half-year to 30 June 2026
the Group charged a further £39 million in respect of legal actions and other regulatory matters and the unutilised
balance at 30 June 2026 was £2,188 million (31 December 2025: £2,276 million). The most significant items are
outlined below.
Motor commission review
There have been no further charges relating to motor finance commission arrangements for the period ending 30
June 2026. As at 30 June 2026, the total provision recognised is £1,950 million.
The Supreme Court judgment in Johnson v FirstRand Bank Limited in August 2025 found that there was an unfair
relationship under s.140A of the Consumer Credit Act (CCA). Following that judgment, the FCA published
Consultation Paper CP25/27 in October 2025 setting out detailed proposals for a scheme to redress unfair
customer relationships in the context of historic motor finance agreements.
The FCA subsequently published its policy statement and final rules for its motor finance redress schemes on 30
March 2026. On 2 July 2026, the FCA stated that the schemes have been partially suspended by the Upper
Tribunal, pending the outcome of challenges from a number of parties. As a result, firms are not required to
calculate or pay compensation or issue compensation-related communications under the original timetable for the
schemes, although they must continue preparatory activities and comply with the aspects of the schemes which
have not been suspended, including communicating with customers who are not entitled to redress under the
schemes. The FCA further stated that if the schemes, or parts thereof, were quashed, the FCA would need to
carefully consider all options. One of these options includes a ‘no scheme’ scenario, and the FCA also announced
that firms should plan for this scenario in the event of successful challenge.
The FCA also announced on 2 July 2026 that payments to customers will begin in 2027 if the schemes are upheld,
based on Upper Tribunal hearing dates in December 2026 or the second half of February 2027. The Group will
continue to consider carefully potential implications of the challenges to the schemes and any impact on the
existing provision arising from any challenges succeeding (whether in full or in part) and the regulatory response to
the challenge outcome (including a possible “no scheme” scenario).
The pause on motor finance complaints handling was lifted on 31 May 2026. This does not impact motor finance
complaints within the scope of the FCA’s redress schemes as the schemes’ rules disapply complaint handling time
limits for such complaints. The FCA also lifted the pause on handling motor finance complaints in respect of leasing
products on 5 December 2025, such products not being within the scope of the FCA redress schemes. The Group
continues to receive new complaints as well as claims in the County Courts in respect of motor finance
commissions. A large number of those claims have been stayed, as has a claim in the Competition Appeal Tribunal.
On 30 June 2026, the Court of Appeal determined that, in a case before it involving Black Horse Limited, a member
of the Group, multiple unfair relationship claims could be dealt with via one bulk Claim Form. Leave to appeal has
been sought by Black Horse Limited. It remains uncertain how many customers will pursue court action given that
the schemes are intended to provide a simpler alternative for redress.
Page 68 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 14: Provisions (continued)
The ultimate financial impact of this issue will be determined by a number of factors still to be resolved, in
particular, challenge and litigation outcomes, customer response rates, operational costs, any further interventions
and any broader implications of legal and/or regulatory developments. Given the significant level of uncertainty in
terms of these factors, the ultimate financial impact on the Group could differ materially from the amount
provided. The total £1,950 million provision continues to represent the Group’s current best estimate of the
potential impact of the motor finance issue.
HBOS Reading – review
The Group continues to apply the recommendations from Sir Ross Cranston’s review, issued in December 2019,
including a reassessment of direct and consequential losses by an independent panel (the Foskett Panel), an
extension of debt relief and a wider definition of de facto directors. The Foskett Panel’s full scope and
methodology was published on 7 July 2020. The Foskett Panel’s stated objective is to consider cases via a non-
legalistic and fair process and to make its decisions in a generous, fair and common sense manner, assessing claims
against an expanded definition of the fraud and on a lower evidential basis.
In June 2022, the Foskett Panel announced an alternative option, in the form of a fixed sum award which could be
accepted as an alternative to participation in the full re-review process, to support earlier resolution of claims for
those deemed by the Foskett Panel to be victims of the fraud.
All of the population have now had an initial decision, with a small number of the populations’ challenges to the
Panel’s initial decision ongoing through the published process, with operational costs, redress and tax costs
associated with the re-reviews recognised within the amount provided.
Notwithstanding the settled claims and the increase in outcomes which builds confidence in the full estimated
cost, uncertainties remain and the final outcome could be different. The Group remains committed to
implementing the recommendations in full. There is no confirmed timeline for the completion of the re-review
process nor the separate review by Dame Linda Dobbs.
Payment protection insurance (PPI)
The Group continues to receive and challenge PPI litigation cases, with mainly operational costs and legal fees
associated with litigation activity (including via bulk claims forms) recognised within regulatory and legal
provisions.
Customer claims in relation to insurance branch business in Germany
The Group continues to receive claims from customers in Germany relating to policies issued by Clerical Medical
Investment Group Limited (subsequently renamed Scottish Widows Limited), with smaller numbers of claims
received from customers in Austria and Italy. Operational costs, redress and legal fees associated with the claims
are recognised within regulatory and legal provisions.
Other
The Group carries provisions of £93 million (31 December 2025: £119 million) in respect of dilapidations, rent
reviews and other property-related matters.
Provisions are also made for staff and other costs related to Group restructuring initiatives at the point at which
the Group becomes committed to the expenditure; at 30 June 2026 provisions of £180 million (31 December 2025:
£170 million) were held.
The Group carries provisions of £43 million (31 December 2025: £41 million) for indemnities and other matters
relating to legacy business disposals in prior years. Whilst there remains significant uncertainty as to the timing of
the utilisation of the provisions, the Group expects the majority of the remaining provisions to have been utilised
by 31 December 2026.
Page 69 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Total £m | |
At 1 January 2025 | |
Issued during the period | |
Repurchases and redemptions during the period | ( |
Foreign exchange movements | ( |
Other movements (cash and non-cash) | |
At 30 June 2025 | |
Issued during the period | |
Repurchases and redemptions during the period | ( |
Foreign exchange movements | |
Other movements (cash and non-cash) | |
At 31 December 2025 | |
Issued during the period | |
Repurchases and redemptions during the period | ( |
Foreign exchange movements | |
Other movements (cash and non-cash) | ( |
At 30 June 2026 |
Half-year to 30 Jun 2026 £m | Half-year to 30 Jun 2025 £m | Half-year to 31 Dec 2025 £m | ||||||
Profit attributable to ordinary shareholders – basic and diluted |
Half-year to 30 Jun 2026 million | Half-year to 30 Jun 2025 million | Half-year to 31 Dec 2025 million | ||||||
Weighted average number of ordinary shares in issue – basic | ||||||||
Adjustment for share options and awards | ||||||||
Weighted average number of ordinary shares in issue – diluted | ||||||||
Basic earnings per share | ||||||||
Diluted earnings per share |
Basic earnings per share are calculated by dividing the profit or loss attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the year, which has been calculated after deducting
ordinary shares representing the Group’s holdings of own shares in respect of employee share schemes.
For the calculation of diluted earnings per share the weighted average number of ordinary shares in issue is
adjusted to assume conversion of all dilutive potential ordinary shares that arise in respect of share options and
awards granted to employees. The number of shares that could have been acquired at the annual average price of
the Company’s shares based on the monetary value of the subscription rights attached to outstanding share
options and awards is determined. This is deducted from the number of shares issuable under such options and
awards to leave a residual bonus amount of shares which are added to the weighted average number of ordinary
shares in issue, but no adjustment is made to the profit or loss attributable to ordinary shareholders.
Page 70 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
An interim dividend for 2026 of 1.58 pence per ordinary share (half-year to 30 June 2025: 1.22 pence per ordinary
share) will be paid on 15 September 2026. The total amount of this dividend is £918 million, before the impact of
any further cancellations of shares purchased under the Group’s buyback programme (half-year to 30 June 2025:
£729 million, following cancellations of shares under the Group’s buyback programme up to the record date, was
paid to shareholders).
On 19 May 2026, a final dividend in respect of 2025 of 2.43 pence per ordinary share, totalling £1,420 million,
following cancellations of shares under the Group’s buyback programme up to the record date, was paid to
shareholders.
the cash dividend. Key dates for the payment of the recommended dividend are outlined below.
Shares quoted ex-dividend for 2026 interim dividend | 6 August 2026 |
Record date for 2026 interim dividend | 7 August 2026 |
Final date for joining or leaving the interim dividend reinvestment plan | 24 August 2026 |
Interim 2026 dividend paid | 15 September 2026 |
On 30 January 2026 the Group commenced an ordinary share buyback programme to purchase outstanding
ordinary shares. As at 30 June 2026, the Group has purchased c.1.2 billion ordinary shares under the programme,
for a total consideration of £1.2 billion. In addition, the Board has announced its intention to implement a further
ordinary share buyback programme of up to £1.0 billion, which is expected to complete by 27 January 2027, the day
before the announcement of the Group’s 2026 preliminary results.
Contingent liabilities, commitments and guarantees arising from the banking business
At 30 June 2026 contingent liabilities, such as performance bonds and letters of credit, arising from the banking
business were £3,027 million (31 December 2025: £3,009 million).
The contingent liabilities of the Group arise in the normal course of its banking business and it is not practicable to
quantify their future financial effect. Total commitments and financial guarantees were £169,331 million (31
December 2025: £157,574 million), of which in respect of undrawn formal standby facilities, credit lines and other
commitments to lend, £97,768 million (31 December 2025: £88,135 million) was irrevocable.
Capital commitments
Excluding commitments in respect of investment property, capital expenditure contracted but not provided for at
30 June 2026 amounted to £788 million (31 December 2025: £610 million) and related to assets to be leased to
customers under operating leases. Capital expenditure in respect of investment properties which had been
contracted for but not recognised in the financial statements was £382 million (31 December 2025: £312 million).
The Group’s management is confident that future net revenues and funding will be sufficient to cover these
commitments.
Interchange fees
With respect to multi-lateral interchange fees (MIFs), the Group is not a party in the ongoing or threatened
litigation which involves the card schemes Visa and Mastercard or any settlements of such litigation. However, the
Group is a member/licensee of Visa and Mastercard and other card schemes.
Litigation has been brought by or on behalf of retailers against both Visa and Mastercard in the English Courts, in
which retailers are seeking damages on grounds that Visa and Mastercard’s MIFs breached competition law. This
includes a final judgment of the Supreme Court in 2020 that certain historic interchange arrangements of
Mastercard and Visa infringed competition law and a subsequent judgment of the Competition Appeal Tribunal in
June 2025 finding that all default interchange fee rules of Mastercard and Visa (including after the Interchange Fee
Regulation) infringed competition law.
Separate litigation was brought on behalf of UK consumers in the English Courts against Mastercard (settlement of
which was approved by the Competition Appeal Tribunal in the first half of 2025).
Page 71 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 18: Contingent liabilities, commitments and guarantees (continued)
Any impact on the Group of the litigation against Visa and Mastercard remains uncertain at this time, such that it is
not practicable for the Group to provide an estimate of any potential financial effect. Insofar as Visa is required to
pay damages to retailers for interchange fees set prior to June 2016, contractual arrangements to allocate liability
have been agreed between various UK banks (including the Group) and Visa Inc, as part of Visa Inc’s acquisition of
Visa Europe in 2016. These arrangements cap the maximum amount of liability to which the Group may be subject
as the amount of cash consideration received by the Group in 2016 for the sale of its stake in Visa Europe.
LIBOR and other trading rates
Certain Group companies, together with other panel banks, were previously named as defendants in private
lawsuits in the US in connection with their roles as panel banks contributing to the setting of US dollar, Japanese
yen and Sterling London Interbank Offered Rate. Certain Group company dismissals from these lawsuits remain
subject to appeal.
A Group entity is also named as a defendant in a Dutch class action, raising LIBOR manipulation allegations and
one English claim relating to the alleged mis-sale of interest rate hedging products which also includes an allegation
of LIBOR manipulation.
It is currently not possible to predict the scope and ultimate outcome on the Group of any private lawsuits. As
such, it is not practicable to provide an estimate of any potential financial effect.
Tax authorities
The Group has an open matter in relation to a claim for group relief of losses incurred in its former Irish banking
subsidiary, which ceased trading on 31 December 2010. In 2020, HMRC concluded its enquiry into the matter and
issued a closure notice denying the group relief claim. The Group appealed to the First Tier Tax Tribunal. The
hearing took place in May 2023. In January 2025, the First Tier Tribunal concluded in favour of HMRC. The Group
believes it has applied the rules correctly and that the claim for group relief is correct. Having reviewed the
Tribunal’s conclusions and having taken appropriate advice the Group has appealed to the Upper Tier Tax
Tribunal, and does not consider this to be a case where an additional tax liability will ultimately fall due. If the final
determination of the matter by the judicial process is that HMRC’s position is correct, management believes that
this would result in an increase in current tax liabilities of approximately £980 million (including interest) and a
reduction in the Group’s deferred tax asset of approximately £270 million. Following the First Tier Tax Tribunal
outcome, the tax has been paid to HMRC and recognised as a current tax asset, given the Group’s view that the
tax liability will not ultimately fall due. The appeal has been listed for hearing in March 2027, however final
conclusion of the judicial process may not be for several years.
There are a number of other open matters on which the Group is in discussions with HMRC (including the tax
treatment of costs relating to HBOS Reading), none of which is expected to have a material impact on the
financial position of the Group.
Arena and Sentinel litigation claims
The Group is facing claims brought by (i) Arena Television Limited and Arena Holdings Limited and (ii) Sentinel
Broadcast Limited, alleging breach of duty and/or mandate in connection with an external fraud. The Group is
continuing to defend the claims, which are now proceeding to trial expected in October 2028. At this stage, it is
not practicable to estimate the final outcome of the matter or its financial impact (if any) to the Group.
Other legal actions and regulatory matters
In addition, in the course of its business the Group is subject to other complaints and threatened or actual legal
proceedings (including class or group actions) brought by or on behalf of current or former employees, customers
(including their appointed representatives), investors or other third parties, as well as legal and regulatory reviews,
enquiries and examinations, requests for information, audits, challenges, investigations and enforcement actions,
which could relate to a number of issues. This includes matters in relation to compliance with applicable laws and
regulations, such as those relating to prudential regulation, employment, consumer protection, investment advice,
business conduct, systems and controls, environmental, sustainability, competition/anti-trust, tax, anti-bribery,
anti-money laundering and sanctions, some of which may be beyond the Group’s control, both in the UK and
overseas. Where material, such matters are periodically reassessed, with the assistance of external professional
advisers where appropriate, to determine the likelihood of the Group incurring a liability. The Group does not
currently expect the final outcome of any such case to have a material adverse effect on its financial position,
operations or cash flows. Where there is a contingent liability related to an existing provision the relevant
disclosures are included within note 14.
Page 72 of 72 |
LLOYDS BANKING GROUP PLC | 2026 HALF-YEAR RESULTS |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorised.
LLOYDS BANKING GROUP plc | ||
By: | /s/ William Chalmers | |
Name: | William Chalmers | |
Title: | Chief Financial Officer | |
Dated: | 30 July 2026 | |
Filing Exhibits & Attachments
5 documentsOther Documents
- EX-101 XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT 103.8 KB
- EX-101 XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT 153.4 KB
- EX-101 XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT 392.3 KB
- EX-101 XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT 821.2 KB
- EX-101 XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT 609.7 KB