Lloyds Banking Group (NYSE: LYG) lifts 2025 profit, hikes dividend and buyback
Filing Impact
Filing Sentiment
Form Type
6-K
Lloyds Banking Group reported strong 2025 full-year results, with statutory profit before tax of £6.7 billion, up 12% year-on-year, and net income of £18.3 billion, up 7%. Return on tangible equity reached 12.9%, or 14.8% excluding a motor finance commission charge.
Underlying net interest income grew 6% to £13.6 billion on a 3.06% banking net interest margin, while underlying other income rose 9% to £6.1 billion. Loans increased 5% to £481.1 billion and customer deposits 3% to £496.5 billion. The pro forma CET1 ratio was 13.2%, or 14.0% before buyback accruals.
The Board plans total 2025 capital returns of up to £3.9 billion, including an ordinary dividend of 3.65p per share (up 15%) and a share buyback of up to £1.75 billion. For 2026, Lloyds targets underlying net interest income of about £14.9 billion, a cost-to-income ratio below 50%, asset quality ratio around 25 basis points, capital generation above 200 basis points and return on tangible equity above 16%, while managing CET1 towards roughly 13.0%.
Positive
- None.
Negative
- None.
Insights
Solid 2025 growth, higher payouts, guidance stepped up for 2026.
Lloyds Banking Group delivered statutory profit before tax of £6.7 billion, up 12%, with net income up 7% driven by a 3.06% banking net interest margin and 9% underlying other income growth. Loans and deposits grew 5% and 3% respectively, showing balanced franchise expansion.
Cost pressures from investment, growth and inflation lifted operating costs 3%, but the cost-to-income ratio improved to 58.6%, helped by £1.9 billion of gross savings since 2021. Credit quality remained strong with a 0.17% asset quality ratio despite a higher impairment charge versus a prior-year model-driven release.
Capital generation of 147 basis points supported a pro forma CET1 ratio of 13.2% after accruals for a £1.75 billion buyback and higher dividend. For 2026, management guides to underlying net interest income of about £14.9 billion, return on tangible equity above 16% and capital generation over 200 basis points, while targeting a CET1 level around 13.0%.
Capital remains strong despite higher payouts and risk-weighted asset growth.
The CET1 ratio stood at 14.0% at 31 December 2025, or 13.2% pro forma for the announced buyback. Risk-weighted assets rose 5% to £235.5 billion on lending growth and Retail secured CRD IV model impacts, partly offset by optimisation.
Capital generation of 178 basis points before the motor finance provision, and 147 basis points after, absorbed higher ordinary dividends and buyback accruals. The Insurance division paid £200 million of dividends during 2025, supporting group capital.
Management continues to target capital generation above 200 basis points in 2026 and expects a Day 1 Basel 3.1 risk-weighted asset reduction of about £6–8 billion from 1 January 2027. The stated goal is to manage CET1 toward roughly 13.0%, in line with the Board’s view of required capital plus management buffer.
|
|
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16a
of the Securities Exchange Act of 1934
29
January 2026
LLOYDS BANKING GROUP plc
(Translation
of registrant's name into English)
5th Floor
25 Gresham Street
London
EC2V 7HN
United Kingdom
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover Form 20-F or Form 40-F.
Form
20-F..X.. Form 40-F
Index
to Exhibits
Item
No.
1 Regulatory News Service Announcement, 29 January
2026
re: 2025
results
Lloyds Banking Group plc
2025 results
29 January 2026
CONTENTS
|
Results for the full year
|
1
|
|
Income statement (underlying basis)A
and key balance sheet
metrics
|
3
|
|
Quarterly informationA
|
4
|
|
Balance sheet analysis
|
5
|
|
Group results – statutory
basis
|
6
|
|
Group Chief Executive’s statement
|
7
|
|
Summary of Group resultsA
|
9
|
|
|
|
|
Divisional results
|
|
|
Segmental analysis – underlying basisA
|
18
|
|
Retail
|
19
|
|
Commercial Banking
|
21
|
|
Insurance, Pensions and Investments
|
23
|
|
Equity Investments and Central Items
|
27
|
|
|
|
|
Risk management
|
|
|
Principal risks and uncertainties
|
29
|
|
Capital risk
|
30
|
|
Credit risk
|
35
|
|
Liquidity risk
|
48
|
|
Interest rate sensitivity
|
50
|
|
|
|
|
Statutory information
|
|
|
Condensed consolidated financial statements
(unaudited)
|
51
|
|
Consolidated income statement (unaudited)
|
51
|
|
Consolidated statement of comprehensive income
(unaudited)
|
52
|
|
Consolidated balance sheet (unaudited)
|
53
|
|
Consolidated statement of changes in equity
(unaudited)
|
54
|
|
Consolidated cash flow statement (unaudited)
|
56
|
|
Notes to the condensed consolidated financial statements
(unaudited)
|
57
|
|
|
|
|
Key dates
|
|
|
Basis of presentation
|
61
|
|
Alternative performance measures
|
61
|
|
Forward-looking statements
|
62
|
|
Contacts
|
68
|
Preliminary results
The financial information contained in this document is unaudited
and does not constitute statutory accounts within the meaning of
section 434 of the Companies Act 2006.
Forward-looking statements
This news release contains forward-looking statements. For further
details, reference should be made to page 1.
Alternative performance measures
The Group uses a number of alternative performance measures,
including underlying profit, in the description of its business
performance and financial position. These measures are labelled
with a superscript ‘A’ throughout this document, with
the exception of content on pages 1 to 2 and pages 1 to 8 which is, unless otherwise
stated, presented on an underlying basis. Further information on
these measures is set out on page 1.
RESULTS FOR THE FULL YEAR
“In 2025, we entered the second phase of our five year
strategy and continued to deliver for customers, shareholders and
wider stakeholders. As our strategic transformation accelerates
into 2026, we remain guided by our purpose of Helping Britain
Prosper in driving positive change in areas where we can have
impact at scale and create value.
The Group demonstrated sustained strength in financial performance
in 2025, including in the final quarter, with continued balance
sheet and income growth, as well as strong cost discipline and
credit performance. This performance enables total shareholder
distributions of c.£3.9 billion for the year.
Looking ahead to 2026 and the culmination of the five year strategy
we set out in 2022, our continued business momentum and strategic
delivery enable us to upgrade guidance. The sustained strength in
performance means we are well positioned for 2026 and beyond.
Having entered this year on a positive trajectory, I look forward
to sharing more detail on the next stage of the Group’s
strategy, beyond the current plan, in July.”
Charlie Nunn, Group Chief Executive
Delivering on our purpose-driven strategy, confident in delivering
2026 strategic outcomes
●
Diversified
revenue growth across the business through focusing on building the
core franchise, deeper customer relationships, developing high
value business areas and cross-Group collaboration
●
Delivered
£1.4 billion of annualised additional revenues from strategic
initiatives in 2025; now confident in delivering c.£2 billion
by the end of 2026 (ahead of previous target of c.£1.5
billion)
●
Enhancing
operating leverage through transforming delivery capabilities and
capitalising on scale, driving gross cost savings of £1.9
billion since 2021
●
Progress
in digital capabilities to innovate at scale and reinforce
competitive strength, driving revenue and efficiency opportunities,
as highlighted at the Digital and AI seminar in November 2025.
Focused on extending leadership position across new and emerging
technologies including Generative AI (Gen AI) and digital
assets
Sustained strength in financial
performance1
●
Statutory
profit before tax of £6.7 billion (2024: £6.0 billion)
benefitting from higher total income, partially offset by higher
operating expenses and a higher impairment charge. Return on
tangible equity of 12.9%, or 14.8% excluding a charge for motor
finance commission arrangements in the third quarter. Fourth
quarter return on tangible equity of 15.7%
●
Underlying
net interest income of £13.6 billion, up 6% compared to 2024.
This reflects a banking net interest margin of
3.06%, up 11 basis points year-on-year (up 4 basis
points in the fourth quarter to 3.10%), alongside higher average
interest-earning banking assets of £462.9 billion
●
Underlying
other income of £6.1 billion, 9% higher than 2024 (2% higher
in the fourth quarter versus the third), driven by strengthening
customer activity and the benefit of strategic
initiatives
●
Operating
lease depreciation of £1,454 million, up 10%, due to fleet
growth, the depreciation of higher value vehicles and declines
in used electric car prices, partially offset by risk mitigation
actions
●
Operating
costs of £9.8 billion, up 3% versus the prior year, reflecting
strategic investment (including increased severance expense),
business growth costs and inflationary pressures, partially offset
by cost savings from investment and continued business-as-usual
cost discipline
●
Remediation
costs of £968 million, of which £800 million related to
the potential impact of motor finance commission arrangements taken
in the third quarter
●
Underlying
impairment charge of £795 million, reflecting strong and
stable credit performance and an asset quality ratio of 17 basis
points
Growth in the customer franchise
●
Underlying loans and advances to customers of
£481.1 billion increased by £22.0 billion (5%) in
the year, with growth across Retail of
£18.8 billion
and Commercial Banking of £2.7 billion. Balances
increased by £4.0 billion in the fourth quarter, significantly
driven by an increase in UK mortgages, Retail unsecured products
and the European retail business
●
Customer
deposits of £496.5 billion increased by £13.8
billion (3%) in the year, with £5.5 billion growth in
Retail and £8.5 billion in Commercial Banking. Customer
deposits reduced by £0.2 billion in the fourth quarter, with
£1.0 billion growth in Retail current accounts, more than
offset by a reduction in Commercial Banking balances
RESULTS FOR THE FULL YEAR (continued)
Strong capital generation driving increased capital
returns
●
Strong
capital generation of 147 basis points, or 178 basis points
excluding the third quarter charge for motor finance. Pro forma
CET1 ratio of 13.2% after increased ordinary dividend and announced
share buyback
●
Risk-weighted
assets of £235.5 billion, up £10.9 billion in 2025,
reflecting lending growth and Retail secured CRD IV increases,
partially offset by ongoing optimisation activity
●
Tangible
net assets per share of 57.0 pence, up 4.6 pence in 2025,
benefitting from attributable profit, the unwind of the cash flow
hedge reserve and a reduction in the number of shares following the
share buyback programme. This was partially offset by capital
distributions, a lower pension surplus and higher intangible
assets
●
The
Board has recommended a final ordinary dividend of 2.43 pence per
share, resulting in a total ordinary dividend for 2025 of 3.65
pence per share, up 15% on the prior year and in line with the
Group's progressive and sustainable ordinary dividend
policy
●
Given
the Group’s strong capital position, the Board has also
announced its intention to implement an ordinary share buyback
programme of up to £1.75 billion. Going forward, the Group
will now review excess capital distributions in addition to the
ordinary dividend every half year
●
Total
capital returns in respect of 2025 of up to £3.9
billion
2026 guidance
Based on our sustained strength in financial performance and our
current macroeconomic assumptions, for 2026 the Group
expects:
●
Underlying
net interest income of c.£14.9 billion
●
Cost:income
ratio of less than 50% (including operating costs of less than
£9.9 billion)
●
Asset
quality ratio of c.25 basis points
●
Return
on tangible equity now of greater than 16%
●
Capital generation of greater than 200 basis
points2
●
To
pay down to a CET1 ratio of c.13.0%
1 See the
basis of presentation on page 1.
2 Excludes capital
distributions.
INCOME STATEMENT (UNDERLYING
BASIS)A
AND KEY BALANCE SHEET
METRICS
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying net interest income
|
13,635
|
|
|
12,845
|
|
|
6
|
|
Underlying other income
|
6,120
|
|
|
5,597
|
|
|
9
|
|
Operating lease depreciation
|
(1,454)
|
|
|
(1,325)
|
|
|
(10)
|
|
Net income
|
18,301
|
|
|
17,117
|
|
|
7
|
|
Operating costs
|
(9,761)
|
|
|
(9,442)
|
|
|
(3)
|
|
Remediation
|
(968)
|
|
|
(899)
|
|
|
(8)
|
|
Total costs
|
(10,729)
|
|
|
(10,341)
|
|
|
(4)
|
|
Underlying profit before impairment
|
7,572
|
|
|
6,776
|
|
|
12
|
|
Underlying impairment charge
|
(795)
|
|
|
(433)
|
|
|
(84)
|
|
Underlying profit
|
6,777
|
|
|
6,343
|
|
|
7
|
|
Restructuring
|
(46)
|
|
|
(40)
|
|
|
(15)
|
|
Volatility and other items
|
(70)
|
|
|
(332)
|
|
|
79
|
|
Statutory profit before tax
|
6,661
|
|
|
5,971
|
|
|
12
|
|
Tax expense
|
(1,904)
|
|
|
(1,494)
|
|
|
(27)
|
|
Statutory profit after tax
|
4,757
|
|
|
4,477
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
7.0p
|
|
|
6.3p
|
|
|
0.7p
|
|
Dividends per share – ordinary
|
3.65p
|
|
|
3.17p
|
|
|
15
|
|
Share buyback value
|
£1.75bn
|
|
|
£1.70bn
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
Banking net interest marginA
|
3.06%
|
|
|
2.95%
|
|
|
11bp
|
|
Average interest-earning banking assetsA
|
£462.9bn
|
|
|
£451.2bn
|
|
|
3
|
|
Cost:income ratioA
|
58.6%
|
|
|
60.4%
|
|
|
(1.8)pp
|
|
Asset quality ratioA
|
0.17%
|
|
|
0.10%
|
|
|
7bp
|
|
Return on tangible equityA
|
12.9%
|
|
|
12.3%
|
|
|
0.6pp
|
|
|
At 31 Dec 2025
|
|
|
At 31 Dec 2024
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying loans and advances to customersA
|
£481.1bn
|
|
|
£459.1bn
|
|
|
5
|
|
Customer deposits
|
£496.5bn
|
|
|
£482.7bn
|
|
|
3
|
|
Loan to deposit ratioA
|
97%
|
|
|
95%
|
|
|
2pp
|
|
CET1 ratio
|
14.0%
|
|
|
14.2%
|
|
|
(0.2)pp
|
|
Pro forma CET1 ratioA,1
|
13.2%
|
|
|
13.5%
|
|
|
(0.3)pp
|
|
UK leverage ratio
|
5.4%
|
|
|
5.5%
|
|
|
(0.1)pp
|
|
Risk-weighted assets
|
£235.5bn
|
|
|
£224.6bn
|
|
|
5
|
|
Wholesale funding2
|
£99.4bn
|
|
|
£92.5bn
|
|
|
7
|
|
Liquidity coverage ratio3
|
145%
|
|
|
146%
|
|
|
(1)pp
|
|
Net stable funding ratio4
|
124%
|
|
|
129%
|
|
|
(5)pp
|
|
Tangible net assets per shareA
|
57.0p
|
|
|
52.4p
|
|
|
4.6p
|
A See page 1.
1 31 December 2025 and 31
December 2024 pro forma CET1 ratios reflect the full impact of the
share buybacks announced in respect of 2025 and 2024. 31 December
2024 pro forma CET1 ratio also reflects the ordinary dividend
received from the Insurance business in February 2025. The CET1 and
pro forma CET1 ratios at 31 December 2025 both reflect an ordinary
dividend received from the Insurance business in December 2025,
that would previously have been received in February of the
following year.
2 Excludes balances
relating to cash collateral of £1.5 billion (31 December 2024:
£2.8 billion).
3 The liquidity coverage
ratio is calculated as a simple average of month-end observations
over the previous 12 months.
4 The net stable funding
ratio is calculated as a simple average of month-end observations
over the previous four quarter-ends.
QUARTERLY
INFORMATIONA
|
|
Quarter
ended
31 Dec
2025
£m
|
|
|
Quarter
ended
30 Sep
2025
£m
|
|
|
Change
%
|
|
Quarter
ended
30 Jun
2025
£m
|
|
|
Quarter
ended
31 Mar
2025
£m
|
|
|
Quarter
ended
31 Dec
2024
£m
|
|
|
Quarter
ended
30 Sep
2024
£m
|
|
|
Quarter
ended
30 Jun
2024
£m
|
|
|
Quarter
ended
31 Mar
2024
£m
|
|
|
Underlying net interest income
|
3,529
|
|
|
3,451
|
|
|
2
|
|
3,361
|
|
|
3,294
|
|
|
3,276
|
|
|
3,231
|
|
|
3,154
|
|
|
3,184
|
|
|
Underlying other income
|
1,594
|
|
|
1,557
|
|
|
2
|
|
1,517
|
|
|
1,452
|
|
|
1,433
|
|
|
1,430
|
|
|
1,394
|
|
|
1,340
|
|
|
Operating lease depreciation
|
(379)
|
|
|
(365)
|
|
|
(4)
|
|
(355)
|
|
|
(355)
|
|
|
(331)
|
|
|
(315)
|
|
|
(396)
|
|
|
(283)
|
|
|
Net income
|
4,744
|
|
|
4,643
|
|
|
2
|
|
4,523
|
|
|
4,391
|
|
|
4,378
|
|
|
4,346
|
|
|
4,152
|
|
|
4,241
|
|
|
Operating costs
|
(2,585)
|
|
|
(2,302)
|
|
|
(12)
|
|
(2,324)
|
|
|
(2,550)
|
|
|
(2,450)
|
|
|
(2,292)
|
|
|
(2,298)
|
|
|
(2,402)
|
|
|
Remediation
|
(56)
|
|
|
(875)
|
|
|
94
|
|
(37)
|
|
|
–
|
|
|
(775)
|
|
|
(29)
|
|
|
(70)
|
|
|
(25)
|
|
|
Total costs
|
(2,641)
|
|
|
(3,177)
|
|
|
17
|
|
(2,361)
|
|
|
(2,550)
|
|
|
(3,225)
|
|
|
(2,321)
|
|
|
(2,368)
|
|
|
(2,427)
|
|
|
Underlying profit before impairment
|
2,103
|
|
|
1,466
|
|
|
43
|
|
2,162
|
|
|
1,841
|
|
|
1,153
|
|
|
2,025
|
|
|
1,784
|
|
|
1,814
|
|
|
Underlying impairment charge
|
(177)
|
|
|
(176)
|
|
|
(1)
|
|
(133)
|
|
|
(309)
|
|
|
(160)
|
|
|
(172)
|
|
|
(44)
|
|
|
(57)
|
|
|
Underlying profit
|
1,926
|
|
|
1,290
|
|
|
49
|
|
2,029
|
|
|
1,532
|
|
|
993
|
|
|
1,853
|
|
|
1,740
|
|
|
1,757
|
|
|
Restructuring
|
(30)
|
|
|
(7)
|
|
|
|
|
(5)
|
|
|
(4)
|
|
|
(19)
|
|
|
(6)
|
|
|
(3)
|
|
|
(12)
|
|
|
Volatility and other items
|
87
|
|
|
(109)
|
|
|
|
|
(37)
|
|
|
(11)
|
|
|
(150)
|
|
|
(24)
|
|
|
(41)
|
|
|
(117)
|
|
|
Statutory profit before tax
|
1,983
|
|
|
1,174
|
|
|
69
|
|
1,987
|
|
|
1,517
|
|
|
824
|
|
|
1,823
|
|
|
1,696
|
|
|
1,628
|
|
|
Tax expense
|
(548)
|
|
|
(396)
|
|
|
(38)
|
|
(577)
|
|
|
(383)
|
|
|
(124)
|
|
|
(490)
|
|
|
(467)
|
|
|
(413)
|
|
|
Statutory profit after tax
|
1,435
|
|
|
778
|
|
|
84
|
|
1,410
|
|
|
1,134
|
|
|
700
|
|
|
1,333
|
|
|
1,229
|
|
|
1,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
2.2p
|
|
|
1.0p
|
|
|
1.2p
|
|
2.1p
|
|
|
1.7p
|
|
|
1.0p
|
|
|
1.9p
|
|
|
1.7p
|
|
|
1.7p
|
|
|
Banking net interest marginA
|
3.10%
|
|
|
3.06%
|
|
|
4bp
|
|
3.04%
|
|
|
3.03%
|
|
|
2.97%
|
|
|
2.95%
|
|
|
2.93%
|
|
|
2.95%
|
|
|
Average interest-earning banking assetsA
(£bn)
|
470.3
|
|
|
465.5
|
|
|
1
|
|
460.0
|
|
|
455.5
|
|
|
455.1
|
|
|
451.1
|
|
|
449.4
|
|
|
449.1
|
|
|
Cost:income ratioA
|
55.7%
|
|
|
68.4%
|
|
|
(12.7)pp
|
|
52.2%
|
|
|
58.1%
|
|
|
73.7%
|
|
|
53.4%
|
|
|
57.0%
|
|
|
57.2%
|
|
|
Asset quality ratioA
|
0.14%
|
|
|
0.15%
|
|
|
(1)bp
|
|
0.11%
|
|
|
0.27%
|
|
|
0.14%
|
|
|
0.15%
|
|
|
0.05%
|
|
|
0.06%
|
|
|
Return on tangible equityA
|
15.7%
|
|
|
7.5%
|
|
|
8.2pp
|
|
15.5%
|
|
|
12.6%
|
|
|
7.1%
|
|
|
15.2%
|
|
|
13.6%
|
|
|
13.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
31 Dec
2025
|
|
|
At
30 Sep
2025
|
|
|
Change
%
|
|
At
30 Jun
2025
|
|
|
At
31 Mar 2025
|
|
|
At
31 Dec
2024
|
|
|
At
30 Sep 2024
|
|
|
At
30 Jun 2024
|
|
|
At
31 Mar 2024
|
|
|
Underlying loans and advances to customersA,1
(£bn)
|
481.1
|
|
|
477.1
|
|
|
1
|
|
471.0
|
|
|
466.2
|
|
|
459.1
|
|
|
457.0
|
|
|
452.4
|
|
|
448.5
|
|
|
Customer deposits (£bn)
|
496.5
|
|
|
496.7
|
|
|
|
|
493.9
|
|
|
487.7
|
|
|
482.7
|
|
|
475.7
|
|
|
474.7
|
|
|
469.2
|
|
|
Loan to deposit ratioA
|
97%
|
|
|
96%
|
|
|
1.0pp
|
|
95%
|
|
|
96%
|
|
|
95%
|
|
|
96%
|
|
|
95%
|
|
|
96%
|
|
|
CET1 ratio
|
14.0%
|
|
|
13.8%
|
|
|
0.2pp
|
|
13.8%
|
|
|
13.5%
|
|
|
14.2%
|
|
|
14.3%
|
|
|
14.1%
|
|
|
13.9%
|
|
|
Pro forma CET1 ratioA,2
|
13.2%
|
|
|
13.8%
|
|
|
(0.6)pp
|
|
13.8%
|
|
|
13.5%
|
|
|
13.5%
|
|
|
14.3%
|
|
|
14.1%
|
|
|
13.9%
|
|
|
UK leverage ratio
|
5.4%
|
|
|
5.2%
|
|
|
0.2pp
|
|
5.4%
|
|
|
5.5%
|
|
|
5.5%
|
|
|
5.5%
|
|
|
5.4%
|
|
|
5.6%
|
|
|
Risk-weighted assets (£bn)
|
235.5
|
|
|
232.3
|
|
|
1
|
|
231.4
|
|
|
230.1
|
|
|
224.6
|
|
|
223.3
|
|
|
222.0
|
|
|
222.8
|
|
|
Wholesale funding (£bn)
|
99.4
|
|
|
103.5
|
|
|
(4)
|
|
92.2
|
|
|
89.4
|
|
|
92.5
|
|
|
93.3
|
|
|
97.6
|
|
|
99.9
|
|
|
Liquidity coverage ratio3
|
145%
|
|
|
145%
|
|
|
|
|
145%
|
|
|
145%
|
|
|
146%
|
|
|
144%
|
|
|
144%
|
|
|
143%
|
|
|
Net stable funding ratio4
|
124%
|
|
|
126%
|
|
|
(2)pp
|
|
127%
|
|
|
128%
|
|
|
129%
|
|
|
129%
|
|
|
130%
|
|
|
130%
|
|
|
Tangible net assets per shareA
|
57.0p
|
|
|
55.0p
|
|
|
2.0p
|
|
54.5p
|
|
|
54.4p
|
|
|
52.4p
|
|
|
52.5p
|
|
|
49.6p
|
|
|
51.2p
|
|
1 The increases between 31
March 2024 and 30 June 2024 and between 30 September 2024 and 31
December 2024 are net of the impact of the securitisations of
primarily legacy Retail mortgages, of £0.9 billion and
£1.0 billion respectively.
2 31 December 2025 and 31
December 2024 pro forma CET1 ratios reflect the full impact of the
share buybacks announced in respect of 2025 and 2024. 31 December
2024 and 30 June 2025 ratios also reflect the ordinary dividends
received from the Insurance business in February 2025 and July 2025
respectively. The CET1 and pro forma CET1 ratios at 31 December
2025 both reflect an ordinary dividend received from the Insurance
business in December 2025, that would previously have been received
in February of the following year.
3 The liquidity coverage
ratio is calculated as a simple average of month-end observations
over the previous 12 months.
4 The net stable funding
ratio is calculated as a simple average of month-end observations
over the previous four quarter-ends.
BALANCE SHEET ANALYSIS
|
|
At 31 Dec
2025
£bn
|
|
|
At 30 Sep 2025
£bn
|
|
|
Change
%
|
At 30 Jun
2025
£bn
|
|
|
Change
%
|
|
At 31 Dec 2024
£bn
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK mortgages
|
323.1
|
|
|
321.0
|
|
|
1
|
317.9
|
|
|
2
|
|
312.3
|
|
|
3
|
|
Credit cards
|
17.3
|
|
|
16.8
|
|
|
3
|
16.4
|
|
|
5
|
|
15.7
|
|
|
10
|
|
UK Retail unsecured loans
|
10.5
|
|
|
10.3
|
|
|
2
|
9.9
|
|
|
6
|
|
9.1
|
|
|
15
|
|
UK Motor Finance1
|
16.4
|
|
|
16.1
|
|
|
2
|
16.0
|
|
|
3
|
|
15.3
|
|
|
7
|
|
Overdrafts
|
1.3
|
|
|
1.2
|
|
|
8
|
1.2
|
|
|
8
|
|
1.2
|
|
|
8
|
|
Retail Europe2
|
20.4
|
|
|
19.9
|
|
|
3
|
19.0
|
|
|
7
|
|
16.8
|
|
|
21
|
|
Retail other2
|
1.3
|
|
|
1.4
|
|
|
(7)
|
1.2
|
|
|
8
|
|
1.1
|
|
|
18
|
|
Business and Commercial Banking
|
28.3
|
|
|
28.8
|
|
|
(2)
|
29.1
|
|
|
(3)
|
|
29.7
|
|
|
(5)
|
|
Corporate and Institutional Banking
|
62.0
|
|
|
61.3
|
|
|
1
|
59.7
|
|
|
4
|
|
57.9
|
|
|
7
|
|
Central Items3
|
0.5
|
|
|
0.3
|
|
|
67
|
0.6
|
|
|
17
|
|
–
|
|
|
|
|
Underlying loans and advances to customersA
|
481.1
|
|
|
477.1
|
|
|
1
|
471.0
|
|
|
2
|
|
459.1
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail current accounts
|
102.8
|
|
|
101.8
|
|
|
1
|
100.6
|
|
|
2
|
|
101.3
|
|
|
1
|
|
Retail savings accounts
|
212.5
|
|
|
212.4
|
|
|
|
213.1
|
|
|
|
|
208.2
|
|
|
2
|
|
Wealth
|
9.9
|
|
|
9.5
|
|
|
4
|
9.7
|
|
|
2
|
|
10.2
|
|
|
(3)
|
|
Commercial Banking
|
171.1
|
|
|
172.6
|
|
|
(1)
|
170.2
|
|
|
1
|
|
162.6
|
|
|
5
|
|
Central Items
|
0.2
|
|
|
0.4
|
|
|
(50)
|
0.3
|
|
|
(33)
|
|
0.4
|
|
|
(50)
|
|
Customer deposits
|
496.5
|
|
|
496.7
|
|
|
|
493.9
|
|
|
1
|
|
482.7
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
944.1
|
|
|
937.5
|
|
|
|
919.3
|
|
|
3
|
|
906.7
|
|
|
4
|
|
Total liabilities
|
896.2
|
|
|
891.8
|
|
|
|
872.4
|
|
|
3
|
|
860.8
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shareholders’ equity
|
41.8
|
|
|
40.2
|
|
|
4
|
40.4
|
|
|
3
|
|
39.5
|
|
|
6
|
|
Other equity instruments
|
5.9
|
|
|
5.2
|
|
|
13
|
6.3
|
|
|
(6)
|
|
6.2
|
|
|
(5)
|
|
Non-controlling interests
|
0.2
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
|
0.2
|
|
|
|
|
Total equity
|
47.9
|
|
|
45.6
|
|
|
5
|
46.9
|
|
|
2
|
|
45.9
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares in issue, excluding own shares
|
58,799m
|
|
|
59,196m
|
|
|
(1)
|
59,938m
|
|
|
(2)
|
|
60,491m
|
|
|
(3)
|
1 UK Motor Finance
balances on an underlying basisA
exclude a finance lease gross up. See
page 1.
2 Within underlying loans
and advances, Retail Europe, previously presented within Retail
other, is reported separately. The comparatives are represented on
a consistent basis. Retail other primarily includes the Wealth
business.
3 Central Items includes
central fair value hedge accounting
adjustments.
GROUP RESULTS – STATUTORY BASIS
The results below are prepared in accordance with the recognition
and measurement principles of IFRS® Accounting
Standards. The underlying basis results are shown on
page 3.
|
Summary income statement
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
13,230
|
|
|
12,277
|
|
|
8
|
|
Other income1
|
6,192
|
|
|
5,726
|
|
|
8
|
|
Total income1
|
19,422
|
|
|
18,003
|
|
|
8
|
|
Operating expenses
|
(11,966)
|
|
|
(11,601)
|
|
|
(3)
|
|
Impairment
|
(795)
|
|
|
(431)
|
|
|
(84)
|
|
Profit before tax
|
6,661
|
|
|
5,971
|
|
|
12
|
|
Tax expense
|
(1,904)
|
|
|
(1,494)
|
|
|
(27)
|
|
Profit after tax
|
4,757
|
|
|
4,477
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to ordinary shareholders
|
4,196
|
|
|
3,923
|
|
|
7
|
|
Profit attributable to other equity holders
|
463
|
|
|
498
|
|
|
(7)
|
|
Profit attributable to non-controlling interests
|
98
|
|
|
56
|
|
|
75
|
|
Profit after tax
|
4,757
|
|
|
4,477
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares in issue (weighted-average –
basic)
|
59,790m
|
|
|
62,413m
|
|
|
(4)
|
|
Basic earnings per share
|
7.0p
|
|
|
6.3p
|
|
|
0.7p
|
1 Net finance expense in
respect of insurance and investment contracts, previously shown
separately, is now included within other income as part of total
income. The comparative period is represented on a consistent
basis.
|
Summary balance sheet
|
At 31 Dec
2025
£m
|
|
|
At 31 Dec 2024
£m
|
|
|
Change
%
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash and balances at central banks
|
56,661
|
|
|
62,705
|
|
|
(10)
|
|
Financial assets at fair value through profit or loss
|
240,413
|
|
|
215,925
|
|
|
11
|
|
Derivative financial instruments
|
19,727
|
|
|
24,065
|
|
|
(18)
|
|
Financial assets at amortised cost
|
553,672
|
|
|
531,777
|
|
|
4
|
|
Financial assets at fair value through other comprehensive
income
|
36,320
|
|
|
30,690
|
|
|
18
|
|
Other assets
|
37,279
|
|
|
41,535
|
|
|
(10)
|
|
Total assets
|
944,072
|
|
|
906,697
|
|
|
4
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Deposits from banks
|
5,779
|
|
|
6,158
|
|
|
(6)
|
|
Customer deposits
|
496,457
|
|
|
482,745
|
|
|
3
|
|
Repurchase agreements at amortised cost
|
38,570
|
|
|
37,760
|
|
|
2
|
|
Financial liabilities at fair value through profit or
loss
|
27,909
|
|
|
27,611
|
|
|
1
|
|
Derivative financial instruments
|
16,132
|
|
|
21,676
|
|
|
(26)
|
|
Debt securities in issue at amortised cost
|
78,271
|
|
|
70,834
|
|
|
10
|
|
Liabilities arising from insurance and participating investment
contracts
|
135,284
|
|
|
122,064
|
|
|
11
|
|
Liabilities arising from non-participating investment
contracts
|
61,640
|
|
|
51,228
|
|
|
20
|
|
Other liabilities
|
26,269
|
|
|
30,644
|
|
|
(14)
|
|
Subordinated liabilities
|
9,894
|
|
|
10,089
|
|
|
(2)
|
|
Total liabilities
|
896,205
|
|
|
860,809
|
|
|
4
|
|
Total equity
|
47,867
|
|
|
45,888
|
|
|
4
|
|
Total equity and liabilities
|
944,072
|
|
|
906,697
|
|
|
4
|
GROUP CHIEF EXECUTIVE’S STATEMENT
2025 was a key year for the Group, entering the second phase of our
strategy, investing for the benefit of our customers and wider
stakeholders and guided by our purpose of Helping Britain Prosper.
As we enter 2026, our transformation is accelerating, supported by
strong business momentum as well as enhanced digital capabilities
and innovative propositions that are driving growth and efficiency
across the franchise.
The Group demonstrated sustained strength in financial performance
in 2025, with franchise, balance sheet and income growth. Strong
business performance drove capital generation across the year of
147 basis points allowing total shareholder distributions of
£3.9 billion, even after an additional £800 million
charge for motor finance in the third quarter.
Given our continued strategic execution and sustained strength in
financial performance, we remain confident in meeting our 2026
commitments (including our upgraded target for return on tangible
equity) and the Group’s outlook beyond 2026. We look forward
to setting out the next phase of the Group’s strategy, beyond
the current plan, in July.
Sustained strength in financial performance
Statutory profit before tax was £6.7 billion, up 12%
year-on-year, with higher underlying profit of
£6.8 billion, driven by 7% growth in net income,
partially offset by higher operating costs and a higher underlying
impairment charge. Net income of £18.3 billion benefitted
from a higher banking net interest margin of 3.06% and continued
broad-based growth in underlying other income of 9%. Operating
costs of £9.8 billion increased by 3%, reflecting
strategic investment (including an increased severance charge),
business growth costs and inflationary pressures, partially offset
by increasing cost savings from investment and business-as-usual
cost discipline. The impairment charge remained low at
£795 million, with strong and stable credit performance
across our portfolios. Overall, this resulted in a return on
tangible equity of 12.9%, or 14.8% excluding the motor finance
charge.
The Group’s franchise and balance sheet grew during 2025.
Underlying loans and advances to customers of
£481.1 billion were up £22.0 billion (5%),
reflecting growth across all Retail areas including UK mortgages
and the European business, alongside growth in Corporate and
Institutional Banking. Customer deposits of
£496.5 billion increased by £13.8 billion (3%)
across the year. This included growth in Retail of
£5.5 billion, driven by strength in current accounts and
savings, and Commercial Banking of £8.5 billion, including
growth in targeted sectors.
The Group delivered strong capital generation of 147 basis
points in 2025 (178 basis points excluding the motor finance
charge), and has a pro forma CET1 ratio of 13.2%. Given the capital
generation and strength of the CET1 position, the Board has
recommended an increased final ordinary dividend of 2.43 pence per
share, resulting in a total dividend for the year of 3.65 pence per
share, up 15% on the prior year. In addition, the Group has
announced its intention to implement an ordinary share buyback of
up to £1.75 billion, as we continue to distribute excess
capital to shareholders. Together this represents distributions of
£3.9 billion in respect of 2025. Going forward, reflecting
increasing confidence in our capital generation, the Group will now
review excess capital distributions in addition to the ordinary
dividend every half year.
Guiding purpose of Helping Britain Prosper
The fundamentals of the UK economy are constructive. Our purpose allows us to play a key
role in promoting UK prosperity, aligning our strategy to support
UK economic growth sectors. As part of this, we recently committed
to providing a further £35 billion of new finance to companies
investing and operating in the UK in 2026. Alongside, we remain
focused on improving access to quality and affordable housing,
lending £17 billion to first time buyers, as well as
supporting £3.2 billion of new finance to the social housing
sector in 2025.
We continue to financially empower our customers. For example, our
Ready-Made Pensions product is a simple, long-term financial
planning solution benefitting customers including those who do not
participate in auto-enrolment. Of the over 7,000 accounts opened
since launch, c.40% are self-employed customers.
Supporting the net zero transition remains a significant strategic
and commercial opportunity. The Group has cumulatively delivered
over £70 billion of sustainable financing since 2022,
including over £21 billion in 2025.
Second phase of purpose-driven strategy, continued strong momentum,
on track for 2026
In 2025, we entered the second phase of our five year strategic
plan, continuing to scale the core business, driving growth in high
value areas, deepening customer relationships and strengthening
cross-Group collaboration. Strong strategic momentum means we now
expect to generate c.£2 billion of additional revenues from
strategic initiatives by the end of 2026, exceeding our initial
£1.5 billion target.
GROUP CHIEF EXECUTIVE’S STATEMENT (continued)
In 2025 we continued to grow our Retail franchise through
innovative new propositions and enhanced capabilities. We
maintained our focus on high-value segments, building our Mass
Affluent current account offering with the launch of our Lloyds
Premier product. As the UK’s largest digital bank, we
continued to accelerate the shift to mobile-first. We now have
c.21.5 million customers using our app, an increase of c.45% since
2021. Alongside, we recently announced the acquisition of Curve
(subject to regulatory approval) which will reinforce our leading
digital experiences, including enhanced digital wallet
capabilities.
In Insurance, Pensions and Investments (IP&I), we are
reinforcing our competitive position in areas of strategic focus.
We now have over 750,000 customers using our core app for workplace
pension customers, helping to drive regular workplace pension
contributions up 5% year-on-year. With the intention of
capitalising on our position as the UK’s only scale
integrated financial services provider, we continue to embed
IP&I products across banking journeys. The protection take-up
rate for mortgage customers is now at 20% in 2025, up from 15% in
2024. Alongside, the recent full acquisition of Schroders Personal
Wealth accelerates delivery of our Wealth strategy and will deepen
relationships in a high value segment.
In Commercial Banking, we are building a digitally-led relationship
bank and driving income diversification through capital efficient
growth. In Business and Commercial Banking, we have strengthened
deposit and lending growth capabilities through enhanced digital
propositions. This includes our new Gen AI powered application
which simplifies the Commercial Real Estate lending journey by
expediting the tenancy schedule process. In Corporate and
Institutional Banking, we are delivering on our ambition to become
a broader scale solution provider, meeting more of our customer
needs. For example, in 2025 we launched a market-leading FX
solution, supporting a c.21% increase in foreign exchange volumes
year-on-year.
Finally, within Equity Investments, alongside strong LDC
performance in 2025, our Lloyds Living business continues to be a
significant growth driver, with a portfolio of close to 8,000
homes, up from c.5,500 this time last year.
As we deliver growth we are focused on improving operating leverage
through cost and capital efficiency. Since 2021 we have delivered
£1.9 billion of gross cost savings through both
business-as-usual management as well as more transformational
initiatives enabled by strategic investment. Alongside, we have
driven £24 billion of risk-weighted asset optimisation,
primarily through enhanced capabilities, data improvements and risk
reduction transactions.
Leveraging our enablers to drive long-term competitive
strength
As highlighted in our recent Digital and AI seminar, our investment
in technology, data and people underpins our ambitions to grow the
business with innovation and improved operating leverage. Advances
in our infrastructure and capabilities allow us to deliver on our
strategic priorities, such as enabling a seven minute mobile
current account opening process, in line with the sector best,
driving c.85% of our current account openings in 2025. Digital
investments have also supported simplification of our technology
estate and helped improve productivity, with an increase of c.45%
in active customers served per distribution FTE since 2021.
Finally, we are extending our leadership across new and emerging
technologies, including Gen AI and digital assets, and are
well-placed to succeed in a period of potentially transformational
change for the industry. Our c.50 major live Gen AI use cases
delivered c.£50 million of value in 2025, as we built the
foundations of our capabilities. We are now targeting over
£100 million of incremental P&L benefit from Gen AI in
2026, as we start to scale the foundations.
Together, these developments drive improved operating leverage,
helping towards our target cost:income ratio of less than 50% in
2026. As we enter the final year of our current strategy, we remain
confident in our 2026 ambitions to generate higher, more
sustainable returns for our shareholders. Beyond 2026, we are
committed to continuing income growth, improving operating leverage
and stronger, sustainable returns.
2026 guidance
Based on our sustained strength in financial performance and our
current macroeconomic assumptions, for 2026 the Group
expects:
●
Underlying
net interest income of c.£14.9 billion
●
Cost:income
ratio of less than 50% (including operating costs of less than
£9.9 billion)
●
Asset
quality ratio of c.25 basis points
●
Return
on tangible equity now of greater than 16%
●
Capital generation of greater than 200 basis
points1
●
To
pay down to a CET1 ratio of c.13.0%
1 Excludes capital
distributions.
SUMMARY OF GROUP
RESULTSA
Statutory results
Income statement
The Group’s statutory profit before tax for 2025 was
£6,661 million, 12% higher than in 2024. This included
higher total income, partially offset by higher operating expenses
and a higher impairment charge. Profit after tax was
£4,757 million and earnings per share were 7.0 pence
(2024: £4,477 million and 6.3 pence
respectively).
Total income for 2025 was £19,422 million, an increase of
8% on the prior year (2024: £18,003 million). Net interest
income of £13,230 million was up 8% (2024: £12,277
million), driven by higher average interest-earning assets and a
higher margin, benefitting from franchise led volume growth and
stronger structural hedge income as eligible balances were
reinvested in a higher rate environment, partially offset by
continued mortgage and deposit headwinds.
Other income increased by 8% to £6,192 million (2024:
£5,726 million), with higher other operating income and a
higher insurance service result, partially offset by lower net
trading income. Other operating income increased by 22% to
£2,367 million (2024: £1,934 million) as a result of
vehicle fleet growth and higher average vehicle rental values in UK
Motor Finance within Retail. The insurance service result increased
by 56% to £756 million (2024: £486 million), benefitting
from higher income in the workplace pensions business, higher
general insurance income net of claims and the full acquisition of
Schroders Personal Wealth in the fourth quarter. This was alongside
the gain on sale of the Group’s bulk annuities portfolio to
Rothesay Life plc in the first half of the year. Net trading income
reduced to £1,485 million (2024: £1,812 million), largely
due to market movements partially offset by strong income growth
from Lloyds Living.
Total operating expenses of £11,966 million (2024:
£11,601 million) included a higher remediation charge relating
to motor finance commission arrangements. Excluding remediation,
the impact of strategic investment (including planned higher
severance), business growth costs (including the full acquisition
of Schroders Personal Wealth) and inflationary pressures were
partially mitigated by cost savings from investment and continued
business-as-usual cost discipline. Operating expenses include
operating lease depreciation which increased due to fleet growth,
the depreciation of higher value vehicles and declines in used
electric car prices, partly mitigated through lease extensions,
used car leasing and remarketing agreements.
A remediation charge of £968 million was recognised by the
Group in 2025 (2024: £899 million), including
£800 million in relation to the potential impact of motor
finance commission arrangements taken in the third quarter,
bringing the total provision recognised for motor finance to
£1,950 million.
The 2025 impairment charge was £795 million, up from £431
million in 2024 which benefitted from a large credit from
improvements in the Group’s economic outlook. In Retail, the
charge for 2025 reflected both strong performance alongside the
benefits from calibrations and model refinements and a debt sale.
In Commercial Banking, higher charges in the first half of the year
driven by a small number of individual cases were more than offset
by releases from Stage 1 and Stage 2 model calibrations capturing
strong credit performance and reducing interest rates throughout
the year.
SUMMARY OF GROUP RESULTS (continued)
Statutory results (continued)
Balance sheet
As at 31 December 2025, total assets were £944 billion,
£37 billion higher than the prior year (31 December 2024:
£907 billion). Financial assets at amortised cost were
£554 billion, £22 billion higher versus the prior
year (31 December 2024: £532 billion), supported by
increases in loans and advances to customers. This included growth
of £10.8 billion in UK mortgages, alongside growth across UK
Retail unsecured loans, credit cards, UK Motor Finance and the
European retail business totalling £7.3 billion. Lending
balances increased by £2.7 billion in Commercial Banking, with
higher Institutional balances including securitised products,
alongside corporate infrastructure growth, partially offset by
repayments of government-backed lending.
Financial assets held at fair value through profit or loss at
£240 billion increased by £24 billion during the year,
with increased holdings in the Insurance business as a result of
market gains on investments held to back insurance and investment
contract liabilities as well as increased reverse repurchase
agreements in the banking business.
Derivative financial assets were £4 billion lower at £20
billion versus the prior year (31 December 2024: £24
billion), driven by market movements in the year. Financial assets
at fair value through other comprehensive income
of £36 billion increased by £6 billion in the
year reflecting increases in liquid asset holdings. Cash and
balances at central banks reduced by £6 billion to £57
billion (31 December 2024: £63 billion) reflecting a change in
the mix of liquidity holdings. Other assets were £4 billion
lower, primarily reflecting the disposal of the Group’s bulk
annuity business in the second quarter, partially offset by
increased operating lease assets resulting from fleet growth and
higher value vehicles in UK Motor Finance and increased investment
properties from business growth in Lloyds Living.
Total liabilities were £896 billion, £35 billion
higher over the year (31 December 2024: £861
billion). Customer deposits of £496 billion increased in
the year by £14 billion. Retail deposits increased £5.5
billion in the year, including growth in Retail savings accounts,
as a result of net inflows to limited withdrawal and fixed term
deposits particularly through increased ISA balances, and growth in
European retail balances. This was alongside strength in current
account balances. Commercial Banking deposits were up £8.5
billion, resulting from growth in targeted sectors. Repurchase
agreements at amortised cost increased by £1 billion to
£39 billion (31 December 2024: £38 billion), following
£13 billion of repayments of drawings from the Bank of
England’s Term Funding Scheme with additional incentives for
SMEs (TFSME), more than offset by increased repurchase
agreements.
Financial liabilities at fair value through profit or loss were
stable at £28 billion at 31 December 2025 and derivative
financial liabilities decreased by £6 billion to £16
billion as a result of market movements. Liabilities arising from
insurance and investment contracts increased by £24 billion
reflecting the increase in policyholder investments. Other
liabilities decreased by £4 billion to £26 billion and
included the effects of the disposal of the Group’s bulk
annuity business, partially offset by increased provisions
primarily driven by the provision increase in relation to motor
finance commission arrangements. Debt securities in issue at
amortised cost increased by £7 billion to
£78 billion, with new issuances in the year, while
subordinated liabilities remained stable at
£10 billion.
Total equity of £48 billion at 31 December 2025 increased by
£2 billion from £46 billion at 31 December 2024.
Profit for the year, the unwind of the cash flow hedge reserve and
issuance of AT1 capital instruments in February 2025 and November
2025 were partially offset by the impact of the ordinary share
buyback programme, the dividends paid in May 2025 and September
2025, as well as the impact of redemptions of AT1 capital
instruments in June 2025 and September 2025, alongside a lower
pension surplus.
SUMMARY OF GROUP RESULTS (continued)
Income statement - underlying
basisA
The Group’s underlying profit was £6,777 million in
2025, up 7% versus the prior year (2024: £6,343 million).
Higher underlying net interest income and higher underlying other
income were partially offset by higher operating costs and a higher
underlying impairment charge given a significant release in 2024
driven by the improved economic outlook. Underlying profit for the
fourth quarter was £1,926 million versus £1,290 million
in the third quarter of the year.
Net incomeA
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying net interest income
|
13,635
|
|
|
12,845
|
|
|
6
|
|
Underlying other income
|
6,120
|
|
|
5,597
|
|
|
9
|
|
Operating lease depreciation1
|
(1,454)
|
|
|
(1,325)
|
|
|
(10)
|
|
Net incomeA
|
18,301
|
|
|
17,117
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
Banking net interest marginA
|
3.06%
|
|
|
2.95%
|
|
|
11bp
|
|
Average interest-earning banking assetsA
|
£462.9bn
|
|
|
£451.2bn
|
|
|
3
|
1 Net of losses on
disposal of operating lease assets of £10 million (2024:
profit of £59 million).
Net income of £18,301 million was up 7% compared to 2024,
driven by higher underlying net interest income and higher
underlying other income, partially offset by an increased charge
for operating lease depreciation. Net income in the fourth quarter
of £4,744 million was up 2% compared to the third quarter
reflecting the same trends.
Within net income, underlying net interest income of £13,635
million was up 6% versus the prior year (2024: £12,845
million). This was supported by a banking net interest margin of
3.06% (2024: 2.95%). The net interest margin benefitted from
franchise led volume growth and stronger structural hedge income as
eligible balances were reinvested in a higher rate environment,
partially offset by continued mortgage and deposit headwinds.
Average interest-earning banking assets in 2025 of
£462.9 billion (2024: £451.2 billion) reflect strong
customer led growth, primarily driven by UK mortgages, credit
cards, UK Retail unsecured loans and the European retail business.
In Commercial Banking, average interest-earning banking assets
reduced, impacted by continued repayments of government-backed
lending within Business and Commercial Banking and lower lending to
banks offsetting non government-backed lending growth. Underlying
net interest income in 2025 also included a non-banking net
interest expense of £515 million (2024:
£469 million), increasing as a result of growth in the
Group’s other operating income activities and the refinancing
of these activities at higher rates. The Group expects underlying
net interest income for 2026 to be c.£14.9
billion.
Underlying net interest income of £3,529 million in the fourth
quarter of 2025 was 2% higher than the third quarter (three months
to 30 September 2025: £3,451 million). A growing structural
hedge contribution more than offset the impact of continued
headwinds from asset margin compression and a reduced UK Bank Rate.
This resulted in an increase in the banking net interest margin to
3.10% (three months to 30 September 2025: 3.06%). Average
interest-earning banking assets were higher in the fourth quarter
at £470.3 billion (three months to 30 September 2025:
£465.5 billion), driven by UK mortgages, the European
retail business and the Corporate and Institutional Banking
business.
The Group manages the risk to earnings and capital from movements
in interest rates by hedging the net liabilities which are stable
or less sensitive to movements in rates. As at 31 December 2025,
the notional balance of the sterling structural hedge was
£244 billion (31 December 2024: £242 billion) with a
weighted average life of approximately 3.75 years (31 December
2024: approximately 3.5 years). The Group generated
£5.5 billion of total income from sterling structural
hedge balances in 2025, an increase of £1.3 billion over
the prior year (2024: £4.2 billion). The Group
expects sterling structural hedge earnings to be
c.£7.0 billion in 2026, to be c.£8.0 billion in
2027, with earnings growth from the structural hedge expected to
continue thereafter.
SUMMARY OF GROUP RESULTS (continued)
Income statement - underlying basisA
(continued)
Underlying other income of £6,120 million in 2025 grew by 9%
compared to the prior year (2024: £5,597 million), driven
by strengthening customer activity and the benefit of investments
in strategic initiatives. This included an increase of 12% in
Retail, driven by UK Motor Finance from fleet growth and higher
average vehicle rental values, alongside strength in income from
current accounts and credit cards. Commercial Banking increased by
1% from higher transaction banking and markets income, partially
offset by lower loan markets activity, with 2024 benefitting from
one-off gains. Insurance, Pensions and Investments underlying other
income was up 11% from strengthening performance in the workplace
pensions business, higher general insurance income net of claims
and the full acquisition of Schroders Personal Wealth in the fourth
quarter. Equity Investments and Central Items benefitted from
strong business growth in Lloyds Living.
Underlying other income in the fourth quarter was up 2% compared to
the third quarter. This was supported by continued growth in UK
Motor Finance within Retail, higher transaction banking income in
Commercial Banking, alongside the full acquisition of Schroders
Personal Wealth in Insurance, Pensions and Investments and
continued business growth in Lloyds Living.
Operating lease depreciation of £1,454 million in 2025 was 10%
higher than in the prior year
(2024: £1,325 million), due to fleet growth,
the depreciation of higher value vehicles and declines in used
electric car prices, partially offset by risk mitigation actions.
Compared to the third quarter of 2025, operating lease depreciation
was 4% higher, in line with the continued growth in fleet size and
year-end valuations. The Group continues to mitigate the risk of
used car price movements through a number of market and customer
initiatives to both improve performance and reduce volatility,
including lease extensions, used car leasing, remarketing
agreements and residual value insurance.
Total costsA
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Operating costsA
|
9,761
|
|
|
9,442
|
|
|
(3)
|
|
Remediation
|
968
|
|
|
899
|
|
|
(8)
|
|
Total costsA
|
10,729
|
|
|
10,341
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
Cost:income ratioA
|
58.6%
|
|
|
60.4%
|
|
|
(1.8)pp
|
Operating costs of £9,761 million increased by 3% in 2025
reflecting strategic investment (including an increased severance
charge), business growth costs (including the full acquisition of
Schroders Personal Wealth) and inflationary pressures. These
factors were partially mitigated by cost savings from investment
and continued business-as-usual cost discipline. Operating costs in
the fourth quarter increased by 12% as expected, which includes the
Bank Levy, additional investment spend and costs associated with
the full acquisition of Schroders Personal Wealth.
A remediation charge of £968 million was recognised by the
Group in 2025 (2024: £899 million), including
£800 million in relation to the potential impact of motor
finance commission arrangements taken in the third quarter,
bringing the total provision recognised for motor finance to
£1,950 million. The FCA published Consultation Paper CP25/27
in October 2025 setting out detailed proposals for a scheme to
redress unfair customer relationships, including a more generous
redress methodology than anticipated in the previous scenario-based
provision. The Group has made representations to the FCA on a
number of aspects of the proposed scheme, including that the
proposed redress methodology does not reflect the loss to the
customer. The Group will assess developments and potential impacts
on the provision following the announcement of the final scheme
rules, which are expected by the end of March 2026. The current
provision represents the Group’s best estimate. In the fourth
quarter the Group recognised a remediation charge of £56
million across a small number of rectification
programmes.
Total costs, including remediation, of £10,729 million were 4%
higher than the prior year, with net income up 7%. The cost:income
ratio was 58.6% (2024: 60.4%) and the cost:income ratio excluding
remediation was 53.3%. For 2026, the cost:income ratio is expected
to be less than 50%, with operating costs expected to be less than
£9.9 billion.
SUMMARY OF GROUP RESULTS (continued)
Income statement - underlying basisA
(continued)
Underlying
impairmentA
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Charges (credits) pre-updated MES1
|
|
|
|
|
|
|
|
|
Retail
|
734
|
|
|
789
|
|
|
7
|
|
Commercial Banking
|
(14)
|
|
|
48
|
|
|
|
|
Other
|
1
|
|
|
(10)
|
|
|
|
|
|
721
|
|
|
827
|
|
|
13
|
|
Updated economic outlook (MES)
|
|
|
|
|
|
|
|
|
Retail
|
–
|
|
|
(332)
|
|
|
|
|
Commercial Banking
|
74
|
|
|
(62)
|
|
|
|
|
|
74
|
|
|
(394)
|
|
|
|
|
Underlying impairment chargeA
|
795
|
|
|
433
|
|
|
(84)
|
|
|
|
|
|
|
|
|
|
|
Asset quality ratioA
|
0.17%
|
|
|
0.10%
|
|
|
7bp
|
The underlying impairment charge was £795 million
(2024: £433 million), resulting in an asset quality
ratio of 17 basis points. The higher charge includes a £74
million net charge from updated multiple economic scenarios (MES),
compared to a credit from MES of £394 million in 2024
which benefitted from an improved economic outlook, notably house
price growth.
The pre-updated MES charge of £721 million for 2025 is
equivalent to an asset quality ratio of 15 basis points. This was
lower compared to the prior year due to strong credit performance,
with arrears low and stable across portfolios, alongside one-off
benefits primarily from model refinements and calibrations. In
Retail, the charge for 2025 reflected both strong performance
alongside the benefits from calibrations and model refinements and
a debt sale. In Commercial Banking, higher charges in the first
half of the year driven by a small number of individual cases were
more than offset by releases from Stage 1 and Stage 2 model
calibrations capturing strong credit performance and reducing
interest rates throughout the year.
The impairment charge in the fourth quarter of
£177 million, equivalent to an asset quality ratio of 14
basis points, includes a £47 million MES charge
reflecting a higher short term unemployment outlook. The low
pre-updated MES charge for the quarter includes model refinement
benefits and a large debt sale write back in Retail which together
reduced the charge. The asset quality ratio excluding the model and
debt sale benefits is considered to be closer to 25 basis points,
both for the full year and the fourth quarter. The Group expects
the asset quality ratio to be c.25 basis points in
2026.
SUMMARY OF GROUP RESULTS (continued)
Income statement - underlying basisA
(continued)
Restructuring, volatility and other items
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying profitA
|
6,777
|
|
|
6,343
|
|
|
7
|
|
Restructuring
|
(46)
|
|
|
(40)
|
|
|
(15)
|
|
Market and other volatility
|
72
|
|
|
(144)
|
|
|
|
|
Amortisation of purchased intangibles
|
(86)
|
|
|
(81)
|
|
|
(6)
|
|
Fair value unwind
|
(56)
|
|
|
(107)
|
|
|
48
|
|
Volatility and other items
|
(70)
|
|
|
(332)
|
|
|
79
|
|
Statutory profit before tax
|
6,661
|
|
|
5,971
|
|
|
12
|
|
Tax expense
|
(1,904)
|
|
|
(1,494)
|
|
|
(27)
|
|
Statutory profit after tax
|
4,757
|
|
|
4,477
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
7.0p
|
|
|
6.3p
|
|
|
0.7p
|
|
Return on tangible equityA
|
12.9%
|
|
|
12.3%
|
|
|
0.6pp
|
|
|
|
|
|
|
|
|
|
|
|
At 31 Dec 2025
|
|
|
At 31 Dec 2024
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Tangible net assets per shareA
|
57.0p
|
|
|
52.4p
|
|
|
4.6p
|
Restructuring costs for 2025 were £46 million (2024:
£40 million). Volatility and other items were a net loss
of £70 million for 2025 (2024: net loss of
£332 million). This included the usual charges for the
amortisation of purchased intangibles of £86 million and
fair value unwind of £56 million. The reduction in fair
value unwind primarily resulted from the maturity of debt
instruments, fair valued as part of the HBOS acquisition. This was
alongside a gain from market and other volatility of £72
million (2024: net loss of £144 million), as a result of the
gain on sale of the Group’s bulk annuities portfolio to
Rothesay Life plc in the first half of the year and the gain
following the full acquisition of Schroders Personal Wealth in the
fourth quarter, partially offset by negative market volatility,
primarily insurance related. Volatility and other items in the
fourth quarter amounted to a net gain of
£87 million.
Return on tangible equity and tangible net asset value
The return on tangible equity for the year was 12.9%, or 14.8%
excluding the third quarter charge for motor finance commission
arrangements (2024: 12.3%), with 15.7% in the fourth quarter.
The Group now expects the return on tangible equity for 2026 to be
greater than 16%.
Tangible net assets per share at 31 December 2025 were 57.0 pence,
up 4.6 pence in the year (31 December 2024: 52.4 pence)
and up 2.0 pence in the fourth quarter. The increase across 2025
resulted from attributable profit, the unwind of the cash flow
hedge reserve and a reduction in the number of shares in issue due
to the ordinary share buyback announced in February 2025. This was
partially offset by capital distributions, a lower pension surplus
and increased intangible assets following the full acquisition of
Schroders Personal Wealth.
Tax
The Group recognised a tax expense of £1,904 million in 2025
(2024: £1,494 million), representing an effective tax
rate of 28.6%. Excluding motor finance remediation costs, the tax
rate would have been 27.2%. The Group expects a medium-term
effective tax rate of around 27% based on the banking surcharge
rate of 3% and the corporation tax rate of 25%.
SUMMARY OF GROUP RESULTS (continued)
Balance sheet
|
|
At 31 Dec
2025
|
|
|
At 31 Dec 2024
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying loans and advances to customersA
|
£481.1bn
|
|
|
£459.1bn
|
|
|
5
|
|
Customer deposits
|
£496.5bn
|
|
|
£482.7bn
|
|
|
3
|
|
Loan to deposit ratioA
|
97%
|
|
|
95%
|
|
|
2pp
|
|
Wholesale funding1
|
£99.4bn
|
|
|
£92.5bn
|
|
|
7
|
|
Wholesale funding <1 year maturity1
|
£37.0bn
|
|
|
£31.3bn
|
|
|
18
|
|
of which: money market funding <1 year
maturity1
|
£26.6bn
|
|
|
£16.9bn
|
|
|
57
|
|
Liquidity coverage ratio – eligible assets2
|
£131.4bn
|
|
|
£134.4bn
|
|
|
(2)
|
|
Liquidity coverage ratio3
|
145%
|
|
|
146%
|
|
|
(1)pp
|
|
Net stable funding ratio4
|
124%
|
|
|
129%
|
|
|
(5)pp
|
|
Total underlying expected credit loss allowanceA
|
£3,353m
|
|
|
£3,651m
|
|
|
(8)
|
1 Excludes balances
relating to cash collateral of £1.5 billion (31 December 2024:
£2.8 billion).
2 Eligible assets are
calculated as a monthly rolling simple average of month-end
observations over the previous 12 months post any liquidity
haircuts.
3 The liquidity coverage
ratio is calculated as a simple average of month-end observations
over the previous 12 months.
4 The net stable funding
ratio is calculated as a simple average of month-end observations
over the previous four quarter-ends.
The Group saw strong customer lending growth in the year, with
underlying loans and advances to customers increasing by £22.0
billion (or 5%) to £481.1 billion. This included growth of
£10.8 billion in UK mortgages alongside growth across UK
Retail unsecured loans, credit cards, UK Motor Finance and the
European retail business totalling £7.7 billion. Lending
balances increased by £2.7 billion in Commercial Banking, with
higher Institutional balances including securitised products,
alongside corporate infrastructure growth, partially offset by
repayments of £1.4 billion of government-backed lending
within Business and Commercial Banking. Underlying loans and
advances increased by £4.0 billion in the fourth quarter,
including growth in UK mortgages, Retail unsecured products and the
European retail business.
Customer deposits of £496.5 billion increased
significantly in the year, by £13.8 billion, or 3%. Retail
deposits were up £5.5 billion in the year, including
£4.0 billion growth in Retail savings accounts, as a result of
net inflows to limited withdrawal and fixed term deposits
particularly through increased ISA balances, and growth in European
retail balances. This was alongside strength in current account
balances. Commercial Banking deposits were up £8.5 billion in
the year (31 December 2024: £162.6 billion), resulting from
growth in targeted sectors. In the fourth quarter, customer
deposits reduced £0.2 billion, with growth in Retail
current accounts of £1.0 billion, offset by a reduction of
£1.5 billion in Commercial Banking, given seasonal flows and
balance sheet management.
The Group saw growth of £7.9 billion net new money during 2025
in Insurance, Pensions and Investments open book assets
under administration (AuA). In total, open book AuA stand at
£232 billion at 31 December 2025. This included
£0.5 billion of net new money and £18 billion of AuA
relating to the full acquisition of Schroders Personal
Wealth.
The Group has a large, high quality liquid asset portfolio held
mainly in cash and government bonds, with all assets hedged for
interest rate risk. The Group’s liquid assets continue to
significantly exceed regulatory requirements and internal risk
appetite, with a strong, stable liquidity coverage ratio of 145% at
31 December 2025 (31 December 2024: 146%) and a net
stable funding ratio of 124% (31 December 2024: 129%). The
loan to deposit ratio of 97%, slightly up versus 31 December
2024, continues to reflect a robust funding and liquidity position,
with significant capacity to grow lending. Wholesale funding
increased to £99.4 billion (2024: £92.5 billion), with
money market funding returning to normalised levels following the
repayment of £13.1 billion of drawings from the Bank of
England’s Term Funding Scheme with additional incentives for
SMEs (TFSME).
SUMMARY OF GROUP RESULTS (continued)
Balance sheet (continued)
The underlying expected credit loss (ECL) allowance reduced to
£3.4 billion at 31 December 2025 (31 December
2024: £3.7 billion). The uplift from the base case to
probability-weighted ECL is £0.4 billion (31 December
2024: £0.4 billion). The ECL allowance includes judgemental
adjustments which increase the ECL by £242 million
(31 December 2024: £15 million
decrease to ECL). The increase compared to 2024 is primarily due to
the removal of negative ECL adjustments previously held for loss
given default adjustments in both Retail Unsecured and Commercial
Banking, where respective model enhancements have removed the need
for an adjustment. The ECL allowance continues to include a
£50 million judgemental adjustment taken in the first half of
the year in respect of the global tariff and geo-political
disruption risks to specific drivers across various corporate
sectors not reflected in broad macroeconomic model
variables.
Capital
|
|
At 31 Dec
2025
|
|
|
At 31 Dec 2024
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
CET1 ratio
|
14.0%
|
|
|
14.2%
|
|
|
(0.2)pp
|
|
Pro forma CET1 ratioA,1
|
13.2%
|
|
|
13.5%
|
|
|
(0.3)pp
|
|
UK leverage ratio
|
5.4%
|
|
|
5.5%
|
|
|
(0.1)pp
|
|
Risk-weighted assets
|
£235.5bn
|
|
|
£224.6bn
|
|
|
5
|
Capital generation
|
Pro forma CET1 ratio as at 31 December 2024A,1
|
13.5%
|
|
|
Banking build (bps)2
|
228
|
|
|
Insurance dividend (bps)
|
9
|
|
|
Risk-weighted assets (bps)
|
(54)
|
|
|
Other movements (bps)3
|
14
|
|
|
Retail secured CRD IV increases (bps)4
|
(19)
|
|
|
Capital generation excluding provision charge for motor finance
commission arrangements (bps)
|
178
|
|
|
Provision charge for motor finance commission arrangements
(bps)
|
(31)
|
|
|
Capital generation (bps)
|
147
|
|
|
Ordinary dividend (bps)
|
(97)
|
|
|
Share buyback accrual (bps)
|
(79)
|
|
|
Pro forma CET1 ratio as at 31 December 2025A,1
|
13.2%
|
|
1 31 December 2025 and 31
December 2024 pro forma CET1 ratios reflect the full impact of the
share buybacks announced in respect of 2025 and 2024. 31 December
2024 pro forma CET1 ratio also reflects the ordinary dividend
received from the Insurance business in February 2025. The CET1 and
pro forma CET1 ratios at 31 December 2025 both reflect an ordinary
dividend received from the Insurance business in December 2025,
that would previously have been received in February of the
following year.
2 Includes impairment
charge and excess regulatory expected losses, excludes the charge
for motor finance commission arrangements.
3 Includes share-based
payments and market volatility.
4 Retail secured CRD IV
increases include additional risk-weighted assets as well as
related excess regulatory expected losses.
The Group’s pro forma CET1 capital ratio at 31 December 2025
was 13.2% (31 December 2024: 13.5% pro forma). Capital generation
during the year was 147 basis points, in line with updated
guidance. Excluding the provision charge for motor finance
commission arrangements in the third quarter, capital generation
was 178 basis points.
SUMMARY OF GROUP RESULTS (continued)
Capital (continued)
Capital generation reflects strong banking build and the £200
million of dividends received from the Insurance business across
July and December 2025, partially offset by risk-weighted asset
increases and the charge for motor finance. Regulatory headwinds of
19 basis points in the year reflect an uplift for the CRD IV model
outcomes on Retail secured. The impact of the interim ordinary
dividend paid in September 2025 and the accrual for the recommended
final ordinary dividend equates to 97 basis points, with a further
79 basis points to cover the accrual for the announced ordinary
share buyback programme of up to £1.75 billion. Capital
generation in the fourth quarter of 37 basis points reflects strong
banking build and the dividend received from the Insurance business
in December 2025, partially offset by risk-weighted asset increases
and regulatory headwinds. The Group reaffirms guidance for capital
generation in 2026 of greater than 200 basis points.
Excluding the full impact of the announced ordinary share buyback
programme, the Group's CET1 capital ratio at 31 December 2025 was
14.0% (31 December 2024: 14.2%).
Risk-weighted assets increased by £10.9 billion to £235.5
billion at 31 December 2025 (31 December 2024:
£224.6 billion). This reflects the impact of strong
customer lending growth, Retail secured CRD IV increases and other
movements, partially offset by continued optimisation activity. In
the fourth quarter, risk-weighted assets increased by £3.2
billion following lending growth and Retail secured CRD IV
increases, partially offset by optimisation activity. In the
context of the Retail secured CRD IV models, an additional
risk-weighted asset increase of £2.0 billion was recognised in
the fourth quarter. This reflects model outcomes, in line with
previous guidance on the anticipated impact and remains subject to
review and approval by the PRA.
The Group expects the initial impact of Basel 3.1 implementation on
1 January 2027 to result in a Day 1 risk-weighted assets reduction
in the range of c.£6 billion to c.£8
billion.
The PRA provided an update to the Group’s Pillar 2A CET1
capital requirement during the third quarter, with the requirement
reducing slightly to c.1.4% of risk-weighted assets from the
previous requirement of c.1.5% of risk-weighted assets. The
Group’s total regulatory CET1 capital requirement remains
c.12% of risk-weighted assets. The Board’s view of the
ongoing level of total CET1 capital required to grow the business,
meet current and future regulatory requirements and cover economic
and business uncertainties remains c.13.0%. This includes a
management buffer of c.1%. The Board intends to pay down to the
CET1 capital target of c.13.0% by the end of 2026.
Pensions
The 31 December 2022 triennial valuation for the main defined
benefit schemes was completed in 2023. Following the contributions
paid in 2023, no further deficit contributions have been paid for
this triennial period (to 31 December 2025). Any future
contributions will be conditional on the 31 December 2025 triennial
valuation which is expected to be completed during
2026.
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. In February
2025, the Board decided to return surplus capital in respect of
2024 through an ordinary share buyback programme of up to £1.7
billion. This commenced on 21 February and completed on 8
December 2025, with c.2.2 billion (c.4%) ordinary shares
repurchased at an average price of 77.13 pence per
share.
In respect of 2025, the Board has recommended a final ordinary
dividend of 2.43 pence per share, which, together with the interim
ordinary dividend of 1.22 pence per share totals 3.65 pence per
share, an increase of 15% compared to 2024, in line with the
Board’s commitment to a progressive and sustainable ordinary
dividend. The Board has also announced its intention to implement
an ordinary share buyback of up to £1.75 billion, which will
commence as soon as is practicable and is expected to be completed
by 31 December 2026.
Based on the combined interim and proposed final ordinary dividends
and the announced ordinary share buyback, the total capital return
in respect of 2025 will be up to £3.9 billion, equivalent to
c.6% (as at 26 January 2026) of the Group’s market
capitalisation value. The Group intends to pay down to its CET1
capital target of c.13.0% by the end of 2026. Going forward, given
the Board’s continued confidence in capital generation, the
Group will now review excess capital distributions in addition to
the ordinary dividend every half year.
DIVISIONAL RESULTS
Segmental analysis - underlying
basisA
|
2025
|
Retail
£m
|
|
Commercial
Banking
£m
|
Insurance,
Pensions and
Investments
£m
|
|
Equity
Investments
and Central
Items
£m
|
|
|
Group
£m
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying net interest income
|
9,637
|
|
|
3,670
|
|
|
(151)
|
|
|
479
|
|
|
13,635
|
|
|
Underlying other income
|
2,636
|
|
|
1,825
|
|
|
1,431
|
|
|
228
|
|
|
6,120
|
|
|
Operating lease depreciation
|
(1,445)
|
|
|
(9)
|
|
|
–
|
|
|
–
|
|
|
(1,454)
|
|
|
Net income
|
10,828
|
|
|
5,486
|
|
|
1,280
|
|
|
707
|
|
|
18,301
|
|
|
Operating costs
|
(5,807)
|
|
|
(2,853)
|
|
|
(933)
|
|
|
(168)
|
|
|
(9,761)
|
|
|
Remediation
|
(931)
|
|
|
(27)
|
|
|
(15)
|
|
|
5
|
|
|
(968)
|
|
|
Total costs
|
(6,738)
|
|
|
(2,880)
|
|
|
(948)
|
|
|
(163)
|
|
|
(10,729)
|
|
|
Underlying profit before impairment
|
4,090
|
|
|
2,606
|
|
|
332
|
|
|
544
|
|
|
7,572
|
|
|
Underlying impairment (charge) credit
|
(734)
|
|
|
(60)
|
|
|
(2)
|
|
|
1
|
|
|
(795)
|
|
|
Underlying profit
|
3,356
|
|
|
2,546
|
|
|
330
|
|
|
545
|
|
|
6,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking net interest marginA
|
2.65%
|
|
|
4.93%
|
|
|
|
|
|
|
|
|
3.06%
|
|
|
Average interest-earning banking assetsA
|
£384.6bn
|
|
|
£78.3bn
|
|
|
–
|
|
|
–
|
|
|
£462.9bn
|
|
|
Asset quality ratioA
|
0.19%
|
|
|
0.07%
|
|
|
|
|
|
|
|
|
0.17%
|
|
|
Underlying loans and advances to customersA,1
|
£390.3bn
|
|
|
£90.3bn
|
|
|
–
|
|
|
£0.5bn
|
|
|
£481.1bn
|
|
|
Customer deposits
|
£325.2bn
|
|
|
£171.1bn
|
|
|
–
|
|
|
£0.2bn
|
|
|
£496.5bn
|
|
|
Risk-weighted assets
|
£130.4bn
|
|
|
£78.5bn
|
|
|
£0.5bn
|
|
|
£26.1bn
|
|
|
£235.5bn
|
|
|
2024
|
Retail
£m
|
|
Commercial
Banking
£m
|
Insurance,
Pensions and
Investments
£m
|
|
Equity Investments and Central
Items
£m
|
|
|
Group
£m
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying net interest income
|
8,930
|
|
|
3,434
|
|
|
(136)
|
|
|
617
|
|
|
12,845
|
|
|
Underlying other income2
|
2,354
|
|
|
1,815
|
|
|
1,292
|
|
|
136
|
|
|
5,597
|
|
|
Operating lease depreciation
|
(1,319)
|
|
|
(6)
|
|
|
–
|
|
|
–
|
|
|
(1,325)
|
|
|
Net income
|
9,965
|
|
|
5,243
|
|
|
1,156
|
|
|
753
|
|
|
17,117
|
|
|
Operating costs2
|
(5,566)
|
|
|
(2,752)
|
|
|
(924)
|
|
|
(200)
|
|
|
(9,442)
|
|
|
Remediation
|
(750)
|
|
|
(104)
|
|
|
(19)
|
|
|
(26)
|
|
|
(899)
|
|
|
Total costs
|
(6,316)
|
|
|
(2,856)
|
|
|
(943)
|
|
|
(226)
|
|
|
(10,341)
|
|
|
Underlying profit before impairment
|
3,649
|
|
|
2,387
|
|
|
213
|
|
|
527
|
|
|
6,776
|
|
|
Underlying impairment (charge) credit
|
(457)
|
|
|
14
|
|
|
7
|
|
|
3
|
|
|
(433)
|
|
|
Underlying profit
|
3,192
|
|
|
2,401
|
|
|
220
|
|
|
530
|
|
|
6,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking net interest marginA,3
|
2.54%
|
|
|
4.51%
|
|
|
|
|
|
|
|
|
2.95%
|
|
|
Average interest-earning banking assetsA
|
£370.1bn
|
|
|
£81.1bn
|
|
|
–
|
|
|
–
|
|
|
£451.2bn
|
|
|
Asset quality ratioA
|
0.12%
|
|
|
0.00%
|
|
|
|
|
|
|
|
|
0.10%
|
|
|
Underlying loans and advances to customersA,1
|
£371.5bn
|
|
|
£87.6bn
|
|
|
–
|
|
|
–
|
|
|
£459.1bn
|
|
|
Customer deposits
|
£319.7bn
|
|
|
£162.6bn
|
|
|
–
|
|
|
£0.4bn
|
|
|
£482.7bn
|
|
|
Risk-weighted assets
|
£125.1bn
|
|
|
£73.8bn
|
|
|
£0.4bn
|
|
|
£25.3bn
|
|
|
£224.6bn
|
|
1 Equity Investments and
Central Items includes central fair value hedge accounting
adjustments.
2 In 2025, the Group
revised its treatment of certain divisional variable payment
related costs. Previously reported within divisional operating
costs, these are now included within divisional underlying other
income. Comparative figures have been represented on a consistent
basis, with no net impact on segmental profit or loss. Total Group
comparatives are unchanged.
3 In 2025, the Group
revised its capital transfer pricing methodology; comparative
segmental banking net interest margin has been represented on a
consistent basis.
DIVISIONAL RESULTS (continued)
Retail
Retail offers a broad range of financial services products to
personal customers, including current accounts, savings, mortgages,
credit cards, unsecured loans, motor finance and leasing solutions.
Its aim is to build enduring relationships meeting more of its
customers’ financial needs and improving financial resilience
throughout their lifetime. Retail operates the largest digital bank
in the UK and is improving digital experience through a
mobile-first strategy. Retail delivers market-leading products and
meets consumer duty expectations, working within a prudent risk
appetite. Outside of the UK, Retail has a growing mortgages and
savings focused European business. Through strategic investment and
increased use of data, Retail aims to deepen consumer
relationships, deliver personalised propositions, broaden its
intermediary offering, improve customer experience and increase
operational efficiency.
Strategic progress
●
UK’s largest digital bank with c.21.5
million customers actively using the Group’s mobile apps,
engaging in c.6.5 billion logons in 2025, with c.85% of
current account openings via the seven minute mobile
opening process
●
Announced
the planned acquisition of Curve, a leading digital wallet provider
that combines customers’ bank cards, with unique features
including enabling customers to retrospectively move transactions
between accounts
●
Lent
£17 billion to over 70,000 first time buyers in 2025,
supported by our first time buyer boost proposition
●
Direct mortgage applications up c.32% versus 2024 with 20%
protection insurance take up, up 5 percentage points
●
In credit cards,
launched Lloyds Ultra, a market
leading 1% cashback product supporting a wide range of customer
needs from travel and rewards along with the launch of Lloyds
Advance supporting existing customers starting their credit
journey
●
Introduced
digital co-servicing, to allow customers to view accounts across
Lloyds, Halifax and Bank of Scotland brands in one app and online,
with in branch co-serving reaching over 1 million transactions
since launch
●
Strengthened
and grew relationships with Mass Affluent customers through Lloyds
Premier, supporting customers who have a c.2 times greater depth of
relationship
●
Launched
an enhanced Digital Loan Refinance journey across Lloyds, Bank of
Scotland, Halifax and MBNA, delivering greater flexibility and
convenience and meeting the needs of c.100,000 customers since
launch
●
Empowered
customers financially by providing up-to-date insights on their
credit report, resulting in over 500,000 customers improving their
credit score each quarter
●
Made
electric vehicles more accessible through Tusker, with the fleet
now approaching 85,000 vehicles, up 49% versus 2024, supporting the
UK’s ambition to transition to net zero by 2050
Financial performance
●
Underlying
net interest income increased 8%, with stronger structural hedge
earnings and higher unsecured loan balances, partially offset by
continued mortgage refinancing and deposit churn
headwinds
●
Underlying
other income up 12% from fleet growth and higher average vehicle
rental values in UK Motor Finance, alongside strength in current
account and credit card income
●
Operating
lease depreciation charge increased by 10% due to fleet growth, the
depreciation of higher value vehicles and declines in used electric
car prices. Used car price volatility and performance continue to
be partly mitigated through lease extensions, used car leasing, and
remarketing agreements
●
Operating
costs up 4%, from strategic investment (including planned higher
severance), business growth costs and inflationary pressures,
partially offset by cost savings from investment and continued
business-as-usual cost discipline. Remediation costs of
£931 million include £800 million relating to the
potential impact of motor finance commission arrangements taken in
the third quarter
●
Underlying
impairment charge of £734 million, higher than 2024 which
included a £332 million credit from the improved economic
outlook. 2025 benefits from model refinements and a debt sale write
back in the fourth quarter. Strong credit performance with ongoing
improvement in UK mortgages and stability across
unsecured
●
Underlying
loans and advances to customers of £390.3 billion, up
£18.8 billion, with an increase of £10.8 billion in UK
mortgages alongside growth across UK Retail unsecured loans, credit
cards, UK Motor Finance and the European retail business totalling
£7.7 billion
●
Customer
deposits of £325.2 billion, up £5.5 billion with net
inflows to limited withdrawal and fixed term UK savings including
an additional c.£7.5 billion ISA balances throughout 2025,
alongside growth in European savings, supported by strength in
current accounts balances
●
Risk-weighted
assets up 4% in the year, given strong lending growth and Retail
secured CRD IV model increases, partially offset by optimisation
activity
DIVISIONAL RESULTS (continued)
Retail (continued)
Retail performance
summaryA
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying net interest income
|
9,637
|
|
|
8,930
|
|
|
8
|
|
Underlying
other income1
|
2,636
|
|
|
2,354
|
|
|
12
|
|
Operating lease depreciation
|
(1,445)
|
|
|
(1,319)
|
|
|
(10)
|
|
Net income
|
10,828
|
|
|
9,965
|
|
|
9
|
|
Operating costs1
|
(5,807)
|
|
|
(5,566)
|
|
|
(4)
|
|
Remediation
|
(931)
|
|
|
(750)
|
|
|
(24)
|
|
Total costs
|
(6,738)
|
|
|
(6,316)
|
|
|
(7)
|
|
Underlying profit before impairment
|
4,090
|
|
|
3,649
|
|
|
12
|
|
Underlying impairment charge
|
(734)
|
|
|
(457)
|
|
|
(61)
|
|
Underlying profit
|
3,356
|
|
|
3,192
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Banking net interest marginA,2
|
2.65%
|
|
|
2.54%
|
|
|
11bp
|
|
Average interest-earning banking assetsA
|
£384.6bn
|
|
|
£370.1bn
|
|
|
4
|
|
Asset quality ratioA
|
0.19%
|
|
|
0.12%
|
|
|
7bp
|
1 In 2025, the Group
revised its treatment of certain divisional variable payment
related costs. Previously reported within divisional operating
costs, these are now included within divisional underlying other
income. Comparative figures have been represented on a consistent
basis, with no net impact on segmental profit or loss. Total Group
comparatives are unchanged.
2 In 2025, the Group
revised its capital transfer pricing methodology; comparative
segmental banking net interest margin has been represented on a
consistent basis.
|
|
At 31 Dec 2025
£bn
|
|
|
At 31 Dec 2024
£bn
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
UK mortgages
|
323.1
|
|
|
312.3
|
|
|
3
|
|
Credit cards
|
17.3
|
|
|
15.7
|
|
|
10
|
|
UK Retail unsecured loans
|
10.5
|
|
|
9.1
|
|
|
15
|
|
UK Motor Finance1
|
16.4
|
|
|
15.3
|
|
|
7
|
|
Overdrafts
|
1.3
|
|
|
1.2
|
|
|
8
|
|
Retail Europe2
|
20.4
|
|
|
16.8
|
|
|
21
|
|
Retail other2
|
1.3
|
|
|
1.1
|
|
|
18
|
|
Underlying loans and advances to customersA
|
390.3
|
|
|
371.5
|
|
|
5
|
|
Operating lease assets3
|
8.2
|
|
|
7.2
|
|
|
14
|
|
Total customer assets
|
398.5
|
|
|
378.7
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Current accounts
|
102.8
|
|
|
101.3
|
|
|
1
|
|
Savings accounts
|
212.5
|
|
|
208.2
|
|
|
2
|
|
Wealth
|
9.9
|
|
|
10.2
|
|
|
(3)
|
|
Customer deposits
|
325.2
|
|
|
319.7
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted assets
|
130.4
|
|
|
125.1
|
|
|
4
|
1 UK Motor Finance
balances on an underlying basisA
exclude a finance lease gross up. See
page 1.
2 Within underlying loans
and advances, Retail Europe, previously presented within Retail
other, is reported separately. The comparative is represented
on a consistent basis. Retail other primarily includes the Wealth
business.
3 Operating lease assets
relate to Lex Autolease and Tusker.
DIVISIONAL RESULTS (continued)
Commercial Banking
Commercial Banking serves small and medium businesses and corporate
and institutional clients, providing lending, transactional
banking, working capital management, debt financing and risk
management services, whilst connecting the whole Group to clients.
Through investment in digitisation, product development and
coverage capability, Commercial Banking is delivering an enhanced
customer experience via a digital-first model in Business and
Commercial Banking and an expanded client proposition in Corporate
and Institutional Banking. This is meeting customer growth
objectives, generating diversified capital efficient growth and
supporting customers in their transition to net zero.
Strategic progress
●
Enhanced digital propositions including the fixed term deposits
mobile journey, new mobile lending journey and enriched
personalisation, driving deposit and lending growth
●
Scaled and improved digital servicing offering, enabling greater
customer flexibility and efficiency, with over 1 million
Business Banking and SME customers now able to view and manage
their mandate and signing authorities online
●
Delivered c.£1.6 billion in sustainable finance to SME
customers and provided targeted support to over
9,000 under-represented business owner groups, while launching
innovative propositions with industry partners
●
Launched the first Gen AI powered application in Business and
Commercial Banking, making the Commercial Real Estate lending
journey easier by simplifying and expediting the tenancy schedule
process
●
Awarded
landmark UK Government banking services contract connecting us to
the majority of UK households, with the bank expected to handle
around 400 million transactions a year
●
Named
‘Bank/Funder of the Year’ at The North West Dealmakers
Awards, supporting regional growth
●
Delivered £24.5 billon1
of sustainable financing towards the
three year commitment of £30 billion between 2024 and 2026.
Supported the UK’s initial three carbon capture
projects
●
Markets business achieving first ranking in all
issuer Sterling Structured Finance2
and second ranking in all issuer
Sterling Debt Capital Markets3.
Ranked first for ‘Overall Service Quality’ in Coalition
Greenwich Voice of Client UK Corporate Interest Rate Derivatives
Study for the second year running
●
Delivered
a c.21% year-on-year growth in foreign exchange volumes. Launched a
market-leading foreign exchange execution algorithmic
solution
●
Delivered
UK’s first tokenised collateral transfer on a public
blockchain, awarded ‘Best Bank for Digitalisation’ by
Global Trade Review and enhanced the Markets Intelligence data
product offering
●
Strong
growth in cross-Group collaboration, across pensions, vehicle
leasing and workplace solutions, delivering Group products to
commercial clients
Financial performance
●
Underlying
net interest income of £3,670 million, up 7% on the prior
year, underpinned by strength in deposit franchise including
structural hedge refinancing benefits
●
Underlying
other income increased 1% to £1,825 million, largely driven by
higher transaction banking and markets income more than offsetting
lower loan markets activity, with 2024 benefitting from one-off
gains
●
Operating
costs up 4% reflecting strategic investment (including planned
higher severance), business growth costs and inflationary
pressures, partially offset by cost savings from investment and
continued business-as-usual cost discipline. Remediation costs were
£27 million across a small number of rectification
programmes
●
Underlying
impairment charge of £60 million compared to a credit in 2024
which benefitted from the improved economic outlook. 2025 included
model calibration benefits alongside strong credit performance
particularly in the second half of the year which more than offset
higher Stage 3 charges observed in the first half of the
year
●
Customer
lending was 3% higher at £90.3 billion, reflecting growth in
Institutional balances including securitised products, alongside
corporate infrastructure growth. This was partially offset by
government-backed lending repayments in Business and Commercial
Bankin
●
Customer
deposits 5% higher at £171.1 billion, with growth in targeted
sectors
●
Risk-weighted
assets 6% higher at £78.5 billion, reflecting lending growth
in Corporate and Institutional Banking partially offset by
optimisation activity
1 In line with the
Group’s Sustainable Financing Framework; sustainable
financing since 1 January 2024.
2 Source: LSEG Workspace:
GBP Structured Finance (excluding collateralised debt
obligations).
3 Source: LSEG GBP Debt
Capital Markets; Investment Grade bonds (excluding Sovereign,
supranational and agency).
DIVISIONAL RESULTS (continued)
Commercial Banking (continued)
Commercial Banking performance
summaryA
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying net interest income
|
3,670
|
|
|
3,434
|
|
|
7
|
|
Underlying
other income1
|
1,825
|
|
|
1,815
|
|
|
1
|
|
Operating lease depreciation
|
(9)
|
|
|
(6)
|
|
|
(50)
|
|
Net income
|
5,486
|
|
|
5,243
|
|
|
5
|
|
Operating costs1
|
(2,853)
|
|
|
(2,752)
|
|
|
(4)
|
|
Remediation
|
(27)
|
|
|
(104)
|
|
|
74
|
|
Total costs
|
(2,880)
|
|
|
(2,856)
|
|
|
(1)
|
|
Underlying profit before impairment
|
2,606
|
|
|
2,387
|
|
|
9
|
|
Underlying impairment (charge) credit
|
(60)
|
|
|
14
|
|
|
|
|
Underlying profit
|
2,546
|
|
|
2,401
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Banking net interest marginA,2
|
4.93%
|
|
|
4.51%
|
|
|
42bp
|
|
Average interest-earning banking assetsA
|
£78.3bn
|
|
|
£81.1bn
|
|
|
(3)
|
|
Asset quality ratioA
|
0.07%
|
|
|
0.00%
|
|
|
7bp
|
1 In 2025, the Group
revised its treatment of certain divisional variable payment
related costs. Previously reported within divisional operating
costs, these are now included within divisional underlying other
income. Comparative figures have been represented on a consistent
basis, with no net impact on segmental profit or loss. Total Group
comparatives are unchanged.
2 In 2025, the Group
revised its capital transfer pricing methodology; comparative
segmental banking net interest margin has been represented on a
consistent basis.
|
|
At 31 Dec
2025
£bn
|
|
|
At 31 Dec 2024
£bn
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Business and Commercial Banking
|
28.3
|
|
|
29.7
|
|
|
(5)
|
|
Corporate and Institutional Banking
|
62.0
|
|
|
57.9
|
|
|
7
|
|
Loans and advances to customers
|
90.3
|
|
|
87.6
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
Customer deposits
|
171.1
|
|
|
162.6
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted assets
|
78.5
|
|
|
73.8
|
|
|
6
|
DIVISIONAL RESULTS (continued)
Insurance, Pensions and Investments
Insurance, Pensions and Investments (IP&I) serves over 10
million customers, holds a top three market share across Home,
Workplace and Individual Annuities businesses and has
£280 billion in assets under administration. The Group
continues to invest significantly in the business. This includes
enhancing investment propositions, supporting the Group’s
Wealth and Mass Affluent strategy, driving digitisation in customer
facing and operational platforms, innovating intermediary
propositions and contributing to the transition to a low carbon
economy.
Strategic progress
●
Announced
the full acquisition of Schroders Personal Wealth (SPW), previously
a joint venture with Schroders Group, becoming a fully owned
subsidiary and now rebranding to ‘Lloyds Wealth’. The
full acquisition of c.60,000 clients and c.£17 billion in AuA
supports the Group’s ambitions for a market leading
end-to-end wealth offering with financial advice offered to our
banking and workplace customer base
●
Growth
in Ready-Made Investments, with c.84,000 accounts opened to date.
c.40% of customers under the age of 35. Launch of managed growth
funds, a range of multi-asset funds at market leading ongoing fund
charges, bringing institutional pricing to customers to support
their long term investment goals
●
Growth
of 15% in open book AuA to £232 billion (31 December 2024:
£201 billion) and AuA net flows of £7.9 billion,
with a significant contribution from the workplace pension
business. The growth was helped in part by greater collaboration
and penetration across Commercial Banking clients. Excluding SPW,
AuA grew 16%
●
Climate-aware investments increased by £55.4
billion in 2025 driven by the launch of Scottish Widows Lifetime
Investment, bringing overall investments to £81.3 billion,
with the original target met at the end of 20241
●
Industry
leading Trustpilot scores of 4.5 stars for Scottish Widows and 4.7
for Lloyds Insurance, driven by increased investment in automation,
AI adoption and training, following the completion of the migration
of 4 million policies to modern infrastructure
●
More
than 1.75 million digitally registered Scottish Widows customers,
with the core app for workplace pension customers growing by more
than 75% year-on-year to over 750,000 users, c.60% of which are
active users
●
Increased
partnerships product offering with relaunch of the Group’s
motor insurance product through AXA and the recent launch of the
Health Partnership with Vitality, helping to complement the
insurance ecosystem in a low risk, low capital intensity
manner
●
Captured over 14% of new home insurance policy
market, leveraging the Group’s trusted brands and digitising
customer journeys with some claims being settled in as little as
five minutes2
●
Increased Protection market share to 7.8% (30
September 2024: 5.8%) following successful launch of refreshed
advisor proposition in 2024. New business IFA applications more
than double those in 20242
Financial performance
●
Underlying
profit of £330 million was up 50%. This included underlying
other income of £1,431 million, up 11%, driven by strong
business performance including higher general insurance net of
claims, strengthening performance in the workplace pension business
and the integration of Schroders Personal Wealth in the fourth
quarter. Excluding Schroders Personal Wealth, underlying profit was
£303 million, up 38%
●
Operating
costs were up 1%. Excluding Schroders Personal Wealth operating
costs were down 2% with costs savings from investment and continued
business-as-usual cost discipline partially offset by strategic
investment and inflationary pressures
●
Balance
of deferred profits (including the risk adjustment) grew to
£5.2 billion (after release to income of
£413 million), including £93 million from new
business, reflecting value generation in the workplace pensions
business
●
Life
and pensions sales (PVNBP) up 15%, driven by higher contribution
from Workplace, Protection and Scottish Widows Platform businesses,
partially offset by lower sales in the Annuities business due to
market conditions
●
Payment of a further £50 million interim
dividend in December 2025 to Lloyds Banking Group plc, after the
£150 million interim dividend paid in July 2025,
supported by a strong capital position with an estimated Insurance
Solvency II ratio of 144% and
reflected in the robust result in the recent PRA Life Insurance
Stress Test
1 This refers to funds
that have a focus on investment in companies that are either
adapting their business to reduce carbon emissions or developing
solutions to address climate change. Scottish Widows Lifetime
Investment has climate aware ESG-tiled indices developed in
partnership with Robeco.
2 Home insurance Market
Share information as per internal analysis of eBenchmarkers data,
Protection as per the ABI. Home Insurance Shares reflect
information at 30 November 2025, Protection shares as at 30
September 2025.
DIVISIONAL RESULTS (continued)
Insurance, Pensions and Investments (continued)
Insurance, Pensions and Investments
performance summaryA
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying net interest income
|
(151)
|
|
|
(136)
|
|
|
(11)
|
|
Underlying other income
|
1,431
|
|
|
1,292
|
|
|
11
|
|
Net income
|
1,280
|
|
|
1,156
|
|
|
11
|
|
Operating costs
|
(933)
|
|
|
(924)
|
|
|
(1)
|
|
Remediation
|
(15)
|
|
|
(19)
|
|
|
21
|
|
Total costs
|
(948)
|
|
|
(943)
|
|
|
(1)
|
|
Underlying profit before impairment
|
332
|
|
|
213
|
|
|
56
|
|
Underlying impairment (charge) credit
|
(2)
|
|
|
7
|
|
|
|
|
Underlying profit
|
330
|
|
|
220
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
Life and pensions sales (PVNBP)A,1
|
21,047
|
|
|
18,249
|
|
|
15
|
|
New business value of insurance and participating investment
contracts recognised in the yearA,2
|
|
|
|
|
|
|
|
|
of which: deferred to contractual service margin and risk
adjustment
|
93
|
|
|
126
|
|
|
(26)
|
|
of which: losses recognised on initial recognition
|
(13)
|
|
|
(15)
|
|
|
13
|
|
|
80
|
|
|
111
|
|
|
(28)
|
|
|
|
|
|
|
|
|
|
|
Assets under administration (net flows)A,3
|
£7.9bn
|
|
|
£5.7bn
|
|
|
39
|
|
General insurance underwritten new gross written
premiumsA
|
175
|
|
|
197
|
|
|
(11)
|
|
General insurance underwritten total gross written
premiumsA
|
762
|
|
|
737
|
|
|
3
|
|
General insurance combined ratioA
|
89%
|
|
|
97%
|
|
|
(8)pp
|
|
|
At 31 Dec
2025
|
|
|
At 31 Dec 2024
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Insurance Solvency II ratio (pre-dividend)4
|
144%
|
|
|
158%
|
|
|
(14)pp
|
|
Total customer assets under administrationA,3
|
£279.6bn
|
|
|
£247.1bn
|
|
|
13
|
1 Present value of new
business premiums can fluctuate due to timing of new
schemes.
2 New business value
represents the value added to the contractual service margin and
risk adjustment at the initial recognition of new contracts, net of
acquisition expenses and any loss component on onerous contracts
(which is recognised directly in the income statement) but does not
include existing business increments.
3 The movement in asset
inflows and outflows driven by business activity (excluding market
movements). Following the full acquisition of Schroders Personal
Wealth in the fourth quarter of 2025, this presentation includes
Wealth AuAs (previously reported within Retail). For 2025, total
customer assets under administration and net flows now include
£18 billion and £0.5 billion respectively and the
comparative period has been shown on a consistent basis. For 2024,
excluding Wealth AuAs, total customer assets under administration
were £231.9 billion and net flows were £5.3
billion.
4 Equivalent estimated
regulatory view of ratio (including With-Profits funds and post
dividend where applicable) was 140% (31 December 2024: 148%,
post-February 2025 dividend).
DIVISIONAL RESULTS (continued)
Insurance, Pensions and Investments (continued)
Breakdown of net
incomeA
|
|
2025
|
|
2024
|
||||||||||||||
|
Deferred
profit release1
£m
|
|
|
Other in-year profit
£m
|
|
|
Total
£m
|
|
Deferred
profit release1
£m
|
|
|
Other in-year profit
£m
|
|
|
Total
£m
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life open book (pensions, individual annuities, Wealth and
protection)
|
346
|
|
|
455
|
|
|
801
|
|
|
350
|
|
|
318
|
|
|
668
|
|
|
Non-life (General insurance)
|
–
|
|
|
277
|
|
|
277
|
|
|
–
|
|
|
229
|
|
|
229
|
|
|
Other
items2
|
67
|
|
|
135
|
|
|
202
|
|
|
69
|
|
|
190
|
|
|
259
|
|
|
Net incomeA
|
413
|
|
|
867
|
|
|
1,280
|
|
|
419
|
|
|
737
|
|
|
1,156
|
|
1 Total deferred profit
release is represented by contractual service margin (CSM) and risk
adjustment releases from holdings on the balance sheet. CSM is
released as insurance contract services are provided; risk
adjustment is released as uncertainty within the calculation of the
liabilities diminishes. Amounts are shown net of
reinsurance.
2 Other items represents
the income from longstanding business, return on shareholder assets
and interest on subordinated debt.
Movement in the deferred
profit1
(contractual service margin (CSM) and
risk adjustment)
|
|
Life open book
£m
|
|
|
Other products2
£m
|
|
|
Bulk annuities3
£m
|
|
|
Total1
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred profit at 1 January 2025
|
4,216
|
|
|
686
|
|
|
118
|
|
|
5,020
|
|
|
New business
|
93
|
|
|
–
|
|
|
–
|
|
|
93
|
|
|
Release to income statement
|
(346)
|
|
|
(67)
|
|
|
–
|
|
|
(413)
|
|
|
Other movements
|
486
|
|
|
157
|
|
|
(118)
|
|
|
525
|
|
|
Deferred profit at 31 December 2025
|
4,449
|
|
|
776
|
|
|
–
|
|
|
5,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred profit at 1 January 2024
|
4,025
|
|
|
702
|
|
|
578
|
|
|
5,305
|
|
|
New business
|
126
|
|
|
–
|
|
|
–
|
|
|
126
|
|
|
Release to income statement
|
(350)
|
|
|
(69)
|
|
|
–
|
|
|
(419)
|
|
|
Other movements
|
415
|
|
|
53
|
|
|
(460)
|
|
|
8
|
|
|
Deferred profit at 31 December 2024
|
4,216
|
|
|
686
|
|
|
118
|
|
|
5,020
|
|
1 Total deferred profit is
represented by CSM and risk adjustment, both held on the balance
sheet. CSM is released as insurance contract services are provided;
risk adjustment is released as uncertainty within the calculation
of the liabilities diminishes. Amounts are shown net of
reinsurance.
2 Other products includes
longstanding business and European business.
3 Bulk annuities for 2024
reflected the reinsurance agreement entered into as part of the
agreed sale of the in-force bulk annuity portfolio to Rothesay Life
plc, with the impact of the reinsurance agreement included within
Other movements. This sale has since completed.
DIVISIONAL RESULTS (continued)
Insurance, Pensions and Investments (continued)
Volatility arising in the Insurance business
|
|
2025
£m
|
|
|
2024
£m
|
|
|
|
|
|
|
|
|
|
Insurance volatility
|
36
|
|
|
(56)
|
|
|
Policyholder interests volatility
|
256
|
|
|
162
|
|
|
Total volatility
|
292
|
|
|
106
|
|
|
Insurance hedging arrangements
|
(537)
|
|
|
(442)
|
|
|
Total1
|
(245)
|
|
|
(336)
|
|
1 Total insurance
volatility is included within market and other volatility in the
Group underlying basis income statement, which in total resulted in
a gain of £72 million in 2025 (2024: loss of £144
million). See page 2.
Insurance volatility impacts statutory profit before tax (through
market and other volatility) but does not impact underlying profit,
which is based on an expected return. The impact of the actual
return differing from the expected return is included within
insurance volatility. This is because movements in their value can
have a significant impact on the profitability of the Group.
Management believes that it is appropriate to disclose the results
on the basis of an expected return.
The Group manages its Insurance business exposures to equity,
interest rate, foreign currency exchange rate and inflation
movements within the Insurance, Pensions and Investments division.
It does so by balancing the importance of managing the impacts to
both Solvency capital and earnings volatility, as these factors can
impact the dividend that the Insurance business can pay up to
Lloyds Banking Group plc. This approach can result in volatility in
statutory profit before tax. Total insurance volatility resulted in
losses of £245 million (2024: losses of
£336 million), driven by increases in interest rates and
equity markets and decreases in inflation.
DIVISIONAL RESULTS (continued)
Equity Investments and Central Items
Equity Investments and Central Items 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 that span all regions and sectors of the UK economy
and employ over 25,000 people. LDC has almost £2.3 billion
assets under management. Lloyds Living is the Group’s
residential landlord business with 7,750 homes in operation or
contracted as at 31 December 2025. Equity Investments and Central
Items also includes income and expenses not attributed to the
divisions, including residual underlying net interest income after
transfer pricing.
Strategic progress
●
Invested
almost £250 million in 2025 through LDC, taking total capital
deployed since the start of 2020 to over £2
billion
●
More
than half of LDC transactions took place in the fourth quarter of
the year, signalling positive momentum
●
Supported
LDC portfolio companies to make 45 acquisitions, helping them to
grow despite challenging market conditions
●
Exited
11 successful investments where the businesses grew revenues by an
average of 155% and created more than 1,200 jobs. Generated more
than £600 million of exit proceeds and an average money
multiple return of 3.3 times
●
Lloyds
Living portfolio saw significant expansion in 2025 with a completed
portfolio of c.5,450 homes, with c.2,300 additional homes under
development
●
Completed
scheme occupancy in Lloyds Living of 95% and rental growth tracking
at over 4% (annualised basis)
●
Helped
support transition to a low-carbon economy with c.850 all-electric
homes, of which 285 completed in 2025 and a 25 home zero bills
pilot with Octopus Energy
●
HGP
committed to build a further c.2,000 homes taking total homes
committed since investment started in 2016 to over 15,000 and homes
sold of c.5,500. Homes committed in 2025 have high energy
efficiency standards, with 100% target rated as EPC B or above and
1 in 4 rated as EPC A
●
HGP
awarded Specialist Financier of the year by the 2025 RESI Awards
and dedicated 300 days of the senior advisor network of industry
leaders time to support SMEs in the current housing cycle
challenge
●
The
first full year of the MADE Partnership, the LBG/Barratt
Redrow/Homes England master developer joint venture saw MADE
progress master plan opportunities with potential to deliver up to
7,350 new homes
Financial performance
●
Net
income of £707 million 6% lower compared to 2024, with higher
underlying other income more than 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 £579 million (2024: £502 million)
generated by the Group’s equity and direct investment
businesses, increasing 15% versus 2024 as a result of strong income
growth from Lloyds Living (up £69 million), partially
offset by lower income from LDC (down £15
million)
●
Total
costs of £163 million in 2025 decreased 28% on the prior
year, including lower remediation costs
DIVISIONAL RESULTS (continued)
Equity Investments and Central Items (continued)
Equity Investments and Central Items
summaryA
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying net interest income
|
479
|
|
|
617
|
|
|
(22)
|
|
Underlying
other income1
|
228
|
|
|
136
|
|
|
68
|
|
Net income
|
707
|
|
|
753
|
|
|
(6)
|
|
Operating costs1
|
(168)
|
|
|
(200)
|
|
|
16
|
|
Remediation
|
5
|
|
|
(26)
|
|
|
|
|
Total costs
|
(163)
|
|
|
(226)
|
|
|
28
|
|
Underlying profit before impairment
|
544
|
|
|
527
|
|
|
3
|
|
Underlying impairment credit
|
1
|
|
|
3
|
|
|
(67)
|
|
Underlying profit
|
545
|
|
|
530
|
|
|
3
|
1 In 2025, the Group
revised its treatment of certain divisional variable payment
related costs. Previously reported within divisional operating
costs, these are now included within divisional underlying other
income. Comparative figures have been represented on a consistent
basis, with no net impact on segmental profit or loss. Total Group
comparatives are unchanged.
Within this, the performance of 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, is summarised as
follows:
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
Underlying net interest expense
|
(132)
|
|
|
(109)
|
|
|
(21)
|
|
Underlying other income
|
579
|
|
|
502
|
|
|
15
|
|
Net income
|
447
|
|
|
393
|
|
|
14
|
|
Total costs
|
(96)
|
|
|
(78)
|
|
|
(23)
|
|
Underlying profit
|
351
|
|
|
315
|
|
|
11
|
RISK MANAGEMENT
PRINCIPAL RISKS AND UNCERTAINTIES
The most important risks faced by the Group are detailed below.
External risks may impact the success of delivering against the
Group’s long-term strategic objectives. They include, but are
not limited to, macroeconomic and geopolitical uncertainties and
inflation trends which could contribute to the cost of living and
associated implications for consumers and businesses.
Risk management is essential to our business model and strategy,
helping us to embrace opportunities responsibly and drive
sustainable growth for the Group. Our strong risk management
culture, underpinned by our enhanced risk management framework
(RMF), is vital in safeguarding the Group, colleagues and customers
against both existing and emerging risks.
The Group’s credit performance remains strong and stable; the
loan portfolio remains well positioned amid macroeconomic
uncertainty and is closely monitored to proactively identify signs
of stress.
Operational resilience remains crucial, enabling the Group to
prevent, withstand and respond to cybersecurity threats and IT
outages, using intelligence and learnings from recent global
events.
The Group continues to modernise its technology and strengthen
capabilities and ensure the safe, responsible use of models and
tools such as artificial intelligence.
The latest position regarding motor finance commission arrangements
and the potential impact is provided on page 1.
During 2025, the Group has continued to make progress in its risk
transformation journey, allowing us to further evolve our risk
management approach to deliver good outcomes for our customers.
This has included the consistent implementation of the RMF
requirements for all of the Group’s legal entities, business
units and functions.
The RMF ensures processes are in place to facilitate robust risk
management and effective decision making.
The Group’s risk policies are supported by risk toolkits,
which set out clear guidance and minimum standards for proactive
identification and effective risk management, fostering a strong
risk management culture across the Group.
The Group has 11 principal risks, which are unchanged in 2025 from
the prior year and are underpinned by a suite of level two risks.
These consist of capital risk, climate risk, compliance risk,
conduct risk, credit risk, economic crime risk, insurance
underwriting risk, liquidity risk, market risk, model risk and
operational risk. These risks are reviewed and reported on
regularly to the Board in alignment with the enhanced
RMF.
The Group will publish a detailed review of all of its principal
risks in the annual report and accounts in February. This will
include definitions and how the principal risks are identified,
assessed, managed, mitigated, monitored and reported. A copy of the
disclosures will be available to view at:
www.lloydsbankinggroup.com/investors/financial-downloads.html.
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 and ensuring capital remains resilient in
these
●
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 31 December 2025, 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.
CAPITAL RISK (continued)
Capital and MREL resources
An analysis of the Group’s capital position and MREL
resources as at 31 December 2025 is presented in the following
table. 31 December 2024 reflects the application of the
transitional arrangements for IFRS 9.
|
|
At 31 Dec 2025
£m
|
|
|
At 31 Dec 2024
£m
|
|
|
|
|
|
|
|
|
|
Common equity tier 1: instruments and reserves
|
|
|
|
|
|
|
Share capital and share premium account
|
24,686
|
|
|
24,782
|
|
|
Banking retained earnings1
|
20,671
|
|
|
19,582
|
|
|
Banking other reserves1
|
4,374
|
|
|
2,786
|
|
|
Adjustment to retained earnings for foreseeable
dividends
|
(1,429)
|
|
|
(1,276)
|
|
|
|
48,302
|
|
|
45,874
|
|
|
Common equity tier 1: regulatory adjustments
|
|
|
|
|
|
|
Cash flow hedge reserve
|
2,062
|
|
|
3,755
|
|
|
Goodwill and other intangible assets
|
(5,996)
|
|
|
(5,679)
|
|
|
Prudent valuation adjustment
|
(343)
|
|
|
(354)
|
|
|
Excess of expected losses over impairment provisions and value
adjustments
|
(631)
|
|
|
(270)
|
|
|
Removal of defined benefit pension surplus
|
(1,968)
|
|
|
(2,215)
|
|
|
Significant investments1
|
(4,708)
|
|
|
(5,024)
|
|
|
Deferred tax assets
|
(3,812)
|
|
|
(4,025)
|
|
|
Other regulatory adjustments
|
24
|
|
|
(83)
|
|
|
Common equity tier 1 capital
|
32,930
|
|
|
31,979
|
|
|
|
|
|
|
|
|
|
Additional tier 1: instruments
|
|
|
|
|
|
|
Other equity instruments
|
5,923
|
|
|
6,170
|
|
|
Additional tier 1: regulatory adjustments
|
|
|
|
|
|
|
Significant investments1
|
(800)
|
|
|
(800)
|
|
|
Total tier 1 capital
|
38,053
|
|
|
37,349
|
|
|
|
|
|
|
|
|
|
Tier 2: instruments and provisions
|
|
|
|
|
|
|
Subordinated liabilities
|
7,489
|
|
|
6,366
|
|
|
Tier 2: regulatory adjustments
|
|
|
|
|
|
|
Significant investments1
|
(963)
|
|
|
(964)
|
|
|
Total capital resources
|
44,579
|
|
|
42,751
|
|
|
|
|
|
|
|
|
|
Ineligible AT1 and tier 2 instruments2
|
(79)
|
|
|
(94)
|
|
|
Amortised portion of eligible tier 2 instruments issued by Lloyds
Banking Group plc
|
–
|
|
|
891
|
|
|
Other eligible liabilities issued by Lloyds Banking Group
plc3
|
31,232
|
|
|
28,675
|
|
|
Total MREL resources
|
75,732
|
|
|
72,223
|
|
|
|
|
|
|
|
|
|
Risk-weighted assets
|
235,513
|
|
|
224,632
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital ratio
|
14.0%
|
|
|
14.2%
|
|
|
Tier 1 capital ratio
|
16.2%
|
|
|
16.6%
|
|
|
Total capital ratio
|
18.9%
|
|
|
19.0%
|
|
|
MREL ratio
|
32.2%
|
|
|
32.2%
|
|
1 In 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.
2 Instruments not issued
out of the holding company.
3 Includes senior
unsecured debt.
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 2024
|
31,979
|
|
|
Banking business profits1
|
4,891
|
|
|
Movement in foreseeable dividend accrual2
|
(153)
|
|
|
Dividends paid on ordinary shares during the year
|
(2,000)
|
|
|
Adjustment to reflect full impact of share buyback
|
(1,710)
|
|
|
Dividends received from the Insurance business3
|
300
|
|
|
Movement in treasury shares and employee share schemes
|
251
|
|
|
Deferred tax asset
|
212
|
|
|
Goodwill and other intangible assets
|
(317)
|
|
|
Excess regulatory expected losses
|
(361)
|
|
|
Significant investments
|
316
|
|
|
Distributions on other equity instruments
|
(463)
|
|
|
Other movements
|
(15)
|
|
|
At 31 December 2025
|
32,930
|
|
1 Under 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.
2 Reflects the reversal of
the brought forward accrual for the final 2024 ordinary dividend,
net of the accrual for the final 2025 ordinary
dividend.
3 Received in February
2025, July 2025 and December 2025.
The Group’s CET1 capital ratio was 14.0% at 31 December 2025
(31 December 2024: 14.2%) with the increase in CET1 capital
resources more than offset by the increase in risk-weighted assets
from year end 2024.
CET1 capital resources increased by £951 million, with banking
business profits for the year and the receipt of dividends paid up
by the Insurance business largely offset by:
●
The
interim ordinary dividend paid in September 2025, the accrual for
the recommended final 2025 ordinary dividend of 2.43 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 2024 year
end results, which completed in December 2025
The full capital impact of the ordinary share buyback programme
announced as part of the Group’s 2025 year end results is
reflected through the Group’s pro forma CET1 capital ratio of
13.2% at 31 December 2025.
CAPITAL RISK (continued)
Movements in total capital and MREL
The Group’s total capital ratio reduced to 18.9% at 31
December 2025 (31 December 2024: 19.0%). The increase in CET1
capital and the issuance of new AT1 and tier 2 capital instruments
during the year was more than offset by AT1 and tier 2 instrument
calls, other tier 2 movements and the increase in risk-weighted
assets.
The MREL ratio remained at 32.2% at 31 December 2025 (31 December
2024: 32.2%) with the increase in MREL resources, reflecting the
increase in other eligible liabilities and total capital resources
after adjustments, broadly offset by the increase in risk-weighted
assets.
Risk-weighted assets
|
|
At 31 Dec 2025
£m
|
|
|
At 31 Dec 2024
£m
|
|
|
|
|
|
|
|
|
|
Foundation Internal Ratings Based (IRB) Approach
|
47,782
|
|
|
43,366
|
|
|
Retail IRB Approach
|
90,354
|
|
|
90,567
|
|
|
Other IRB Approach1
|
23,292
|
|
|
21,878
|
|
|
IRB Approach
|
161,428
|
|
|
155,811
|
|
|
Standardised (STA) Approach1
|
27,166
|
|
|
22,532
|
|
|
Credit risk
|
188,594
|
|
|
178,343
|
|
|
Counterparty credit risk2
|
6,835
|
|
|
7,046
|
|
|
Securitisation
|
8,472
|
|
|
8,346
|
|
|
Market risk
|
3,844
|
|
|
3,714
|
|
|
Operational risk
|
27,768
|
|
|
27,183
|
|
|
Risk-weighted assets
|
235,513
|
|
|
224,632
|
|
|
of which: threshold risk-weighted assets3
|
10,672
|
|
|
10,738
|
|
1 Threshold risk-weighted
assets are included within Other IRB Approach and Standardised
(STA) Approach.
2 Includes credit
valuation adjustment risk.
3 Threshold 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 £10.9 billion to £235.5
billion at 31 December 2025 (31 December 2024: £224.6
billion). This reflects the impact of strong customer lending
growth, Retail secured CRD IV increases and other movements,
partially offset by continued optimisation activity.
CAPITAL RISK (continued)
Leverage ratio
The table below summarises the component parts of the Group’s
leverage ratio.
|
|
At 31 Dec 2025
£m
|
|
|
At 31 Dec 2024
£m
|
|
|
|
|
|
|
|
|
|
Total tier 1 capital
|
38,053
|
|
|
37,349
|
|
|
|
|
|
|
|
|
|
Exposure measure
|
|
|
|
|
|
|
Derivative financial instruments
|
19,727
|
|
|
24,065
|
|
|
Securities financing transactions
|
71,967
|
|
|
69,941
|
|
|
Loans and advances and other assets
|
852,378
|
|
|
812,691
|
|
|
Total statutory balance sheet assets
|
944,072
|
|
|
906,697
|
|
|
Qualifying central bank claims
|
(56,231)
|
|
|
(62,396)
|
|
|
Deconsolidation adjustments1
|
(210,617)
|
|
|
(190,988)
|
|
|
Derivatives adjustments
|
(283)
|
|
|
(6,254)
|
|
|
Securities financing transactions adjustments
|
2,489
|
|
|
3,351
|
|
|
Off-balance sheet items
|
44,410
|
|
|
40,186
|
|
|
Amounts already deducted from tier 1 capital
|
(12,622)
|
|
|
(12,395)
|
|
|
Other regulatory adjustments2
|
(2,879)
|
|
|
(4,127)
|
|
|
Total exposure measure
|
708,339
|
|
|
674,074
|
|
|
|
|
|
|
|
|
|
UK leverage ratio
|
5.4%
|
|
|
5.5%
|
|
|
|
|
|
|
|
|
|
Leverage exposure measure (including central bank
claims)
|
764,570
|
|
|
736,470
|
|
|
Leverage ratio (including central bank claims)
|
5.0%
|
|
|
5.1%
|
|
|
|
|
|
|
|
|
|
Total MREL resources
|
75,732
|
|
|
72,223
|
|
|
MREL leverage ratio
|
10.7%
|
|
|
10.7%
|
|
1 Deconsolidation
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.
2 Includes adjustments to
exclude lending under the Government’s Bounce Back Loan
Scheme (BBLS).
Analysis of leverage movements
The Group’s UK leverage ratio reduced to 5.4% at 31 December
2025 (31 December 2024: 5.5%), with the increase in total tier 1
capital more than offset by the increase in the leverage exposure
measure. The latter primarily reflects increases across loans and
advances and other assets, due in part to strong customer lending
growth, in addition to an increase in off-balance sheet
items.
Pillar 3 disclosures
The Group will publish full year Pillar 3 disclosures in February.
A copy of the disclosures will be available to view at:
www.lloydsbankinggroup.com/investors/financial-downloads.html.
CREDIT RISK
Overview
Credit performance has remained strong and stable in 2025. The
Group maintains a measured approach to credit risk appetite and
risk management with strong credit origination criteria embedded,
including affordability tests and robust LTVs in the secured
portfolios.
In UK mortgages, reductions in new to arrears and flows to default
have been observed, whilst unsecured portfolios continue to exhibit
low and stable arrears trends. Credit performance also remains
strong in Commercial Banking. The Group continues to assess the
impacts of the economic and geopolitical environment carefully
through a suite of early warning indicators and governance
arrangements that ensure risk mitigating action plans are in place
to support customers and protect the Group’s
positions.
The underlying impairment charge in 2025 was £795 million, up
from £433 million in 2024, and includes a net charge from
updates to the Group’s macroeconomic outlook of £74
million compared to a large release of £394 million in
2024. Excluding macroeconomic updates, the Group’s underlying
impairment charge remains low and similar to 2024. The total
underlying probability-weighted expected credit loss (ECL)
allowance was lower in 2025 at £3,353 million
(31 December 2024: £3,651 million) following strong
credit performance and additional benefits from model
refinements.
Stage 2 underlying loans and advances to customers are lower at
£45,413 million versus the prior year (31 December 2024:
£48,075 million) following strong credit performance
particularly within UK mortgages. Additionally, growth in lending
from new business inflows dilute the proportion of Stage 2 loans
and advances to 9.4% of total lending (31 December 2024: 10.4%)
with Stage 2 coverage reducing slightly at 2.6% (31 December
2024: 2.8%).
Stage 3 underlying loans and advances to customers are lower at
£8,349 million versus the prior year (31 December 2024:
£9,021 million), and as a percentage of total lending at
1.7% (31 December 2024: 2.0%). Migrations into Stage 3
from a small number of cases within Commercial Banking were offset
by continued strong performance, especially following improving
default rates within UK mortgages. Growth in house prices combined
with strong credit performance across Retail also reduced the total
Group Stage 3 coverage to 15.9% (31 December 2024:
16.4%).
Prudent risk appetite and risk management
●
The
Group continues to take a prudent and proactive approach to credit
risk appetite and credit risk management with robust oversight.
Risk appetite is in line with the Group’s strategy and helps
support customers through continued economic uncertainties in both
global and domestic markets
●
Sector,
asset and product concentrations within the portfolios are closely
monitored and controlled, with mitigating actions taken where
appropriate. Sector and product risk parameters help manage
exposure to higher risk and cyclical sectors, segments and asset
classes
●
The
Group’s effective risk management seeks to ensure early
identification and management of customers and counterparties who
may be showing signs of distress
●
The
Group will continue to work closely with its customers to ensure
that they receive the appropriate level of support where
required
CREDIT RISK (continued)
Impairment charge (credit) by division
– statutory and underlyingA
basis
|
|
2025£m
|
|
|
2024
£m
|
|
|
Change
%
|
|
|
|
|
|
|
|
|
|
|
UK mortgages
|
(60)
|
|
|
(194)
|
|
|
(69)
|
|
Credit cards
|
321
|
|
|
270
|
|
|
(19)
|
|
UK unsecured loans and overdrafts
|
257
|
|
|
272
|
|
|
6
|
|
UK Motor Finance
|
212
|
|
|
116
|
|
|
(83)
|
|
Other
|
4
|
|
|
(7)
|
|
|
|
|
Retail
|
734
|
|
|
457
|
|
|
(61)
|
|
Business and Commercial Banking
|
(53)
|
|
|
47
|
|
|
|
|
Corporate and Institutional Banking
|
113
|
|
|
(61)
|
|
|
|
|
Commercial Banking
|
60
|
|
|
(14)
|
|
|
|
|
Insurance, Pensions and Investments
|
2
|
|
|
(9)
|
|
|
|
|
Equity Investments and Central Items
|
(1)
|
|
|
(3)
|
|
|
(67)
|
|
Total impairment charge
|
795
|
|
|
431
|
|
|
(84)
|
|
Insurance, Pensions and Investments
(underlying basis)A
|
2
|
|
|
(7)
|
|
|
|
|
Total impairment charge (underlying
basis)A
|
795
|
|
|
433
|
|
|
(84)
|
|
|
|
|
|
|
|
|
|
|
Asset quality ratioA
|
0.17%
|
|
|
0.10%
|
|
|
7bp
|
Credit risk balance sheet basis of presentation
The balance sheet analyses which follow have been presented on two
bases; the statutory basis which is consistent with the
presentation in the Group’s accounts and the underlying basis
which is used for internal management purposes. Further detail is
included on page 62.
Total expected credit loss allowance
– statutory and underlyingA
basis
|
|
At 31 Dec 2025
£m
|
|
|
At 31 Dec 2024
£m
|
|
|
Customer related balances
|
|
|
|
|
|
|
Drawn
|
3,011
|
|
|
3,191
|
|
|
Undrawn
|
197
|
|
|
270
|
|
|
|
3,208
|
|
|
3,461
|
|
|
Loans and advances to banks
|
1
|
|
|
1
|
|
|
Debt securities
|
5
|
|
|
4
|
|
|
Other assets
|
14
|
|
|
15
|
|
|
Total expected credit loss allowance
|
3,228
|
|
|
3,481
|
|
|
Acquisition fair value adjustment
|
125
|
|
|
170
|
|
|
Total expected credit loss allowance
(underlying basis)A
|
3,353
|
|
|
3,651
|
|
|
of which: Customer related balances
(underlying basis)A
|
3,333
|
|
|
3,631
|
|
|
of which: Drawn (underlying
basis)A
|
3,136
|
|
|
3,361
|
|
CREDIT RISK (continued)
Total expected credit loss allowance
sensitivity to economic assumptions – statutory and
underlyingA
basis
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
on a statutory basis being £366 million compared to £445
million at 31 December 2024.
|
|
Probability-
weighted
£m
|
|
|
Upside
£m
|
|
|
Base case
£m
|
|
|
Downside
£m
|
|
|
Severe
downside
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
UK mortgages (underlying
basis)A
|
|
856
|
|
|
466
|
|
|
635
|
|
|
1,062
|
|
|
2,068
|
|
|
At 31 December 2025 (underlying
basis)A
|
|
3,353
|
|
|
2,591
|
|
|
2,987
|
|
|
3,797
|
|
|
5,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK mortgages
|
|
852
|
|
|
345
|
|
|
567
|
|
|
1,064
|
|
|
2,596
|
|
|
Credit cards
|
|
674
|
|
|
518
|
|
|
641
|
|
|
773
|
|
|
945
|
|
|
Other Retail
|
|
950
|
|
|
843
|
|
|
923
|
|
|
1,010
|
|
|
1,172
|
|
|
Commercial Banking
|
|
989
|
|
|
745
|
|
|
889
|
|
|
1,125
|
|
|
1,608
|
|
|
Other
|
|
16
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
17
|
|
|
At 31 December 2024
|
|
3,481
|
|
|
2,467
|
|
|
3,036
|
|
|
3,988
|
|
|
6,338
|
|
|
UK mortgages (underlying
basis)A
|
|
1,022
|
|
|
512
|
|
|
735
|
|
|
1,235
|
|
|
2,773
|
|
|
At 31 December 2024 (underlying
basis)A
|
|
3,651
|
|
|
2,634
|
|
|
3,204
|
|
|
4,159
|
|
|
6,515
|
|
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. In previous assessments, impacts
were assessed as changes to base case modelled ECL only (at 100 per
cent weighting) with staging held flat to the reported view, and
similarly excluded post model adjustments. The updated approach
addresses the limitations of the prior methodology and provides a
more representative view of the potential impact of these
sensitivities.
The ECL impact due to a change in unemployment has reduced in 2025
compared to 2024 as a result of lower loss rates within the
Commercial Banking model. The HPI reduction versus 2024 is due to
lower default rates and a reduced proportion of assets in Stage 2
for UK mortgages, following strong credit performance in the
year.
CREDIT RISK (continued)
Total expected credit loss allowance sensitivity to economic
assumptions (continued)
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 31 December 2025
|
|
At 31 December 20241
|
||||||||
|
1pp increase in
unemployment
£m
|
|
1pp decrease in
unemployment
£m
|
|
|
1pp increase in
unemployment
£m
|
|
|
1pp decrease in
unemployment
£m
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK mortgages
|
11
|
|
|
(11)
|
|
|
13
|
|
|
(12)
|
|
|
Credit cards
|
54
|
|
|
(53)
|
|
|
54
|
|
|
(53)
|
|
|
Other Retail
|
25
|
|
|
(25)
|
|
|
23
|
|
|
(24)
|
|
|
Commercial Banking
|
58
|
|
|
(48)
|
|
|
113
|
|
|
(82)
|
|
|
ECL impact
|
148
|
|
|
(137)
|
|
|
203
|
|
|
(171)
|
|
1 For 2025, impacts are
assessed as changes to probability-weighted modelled ECL inclusive
of the impacts upon staging of assets, excluding post model
adjustments. The comparative period has been represented on a
consistent basis.
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 31 December 2025
|
|
At 31 December 20241
|
||||||||
|
|
10pp increase
in HPI
£m
|
|
|
10pp decrease
in HPI
£m
|
|
|
10pp increase
in HPI
£m
|
|
|
10pp decrease
in HPI
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ECL impact
|
(172)
|
|
|
261
|
|
|
(207)
|
|
|
312
|
|
1 For 2025, impacts are
assessed as changes to probability-weighted modelled ECL inclusive
of the impacts upon staging of assets, excluding post model
adjustments. The comparative period has been represented on a
consistent basis.
Reconciliation between statutory and
underlyingA
bases of gross loans and advances to
customers and expected credit loss allowance on drawn
balances
|
|
Gross loans and advances to customers
|
|
Expected credit loss allowance on drawn balances
|
||||||||||||||||||||||||||
|
|
Stage 1
£m
|
|
|
Stage 2
£m
|
|
|
Stage 3
£m
|
|
|
POCI
£m
|
|
|
Total
£m
|
|
|
Stage 1
£m
|
|
|
Stage 2
£m
|
|
|
Stage 3
£m
|
|
|
POCI
£m
|
|
|
Total
£m
|
|
|
At 31 December 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying basisA
|
430,493
|
|
|
45,413
|
|
|
8,349
|
|
|
–
|
|
|
484,255
|
|
|
737
|
|
|
1,107
|
|
|
1,292
|
|
|
–
|
|
|
3,136
|
|
|
POCI assets
|
(644)
|
|
|
(2,734)
|
|
|
(1,823)
|
|
|
5,201
|
|
|
–
|
|
|
–
|
|
|
(30)
|
|
|
(254)
|
|
|
284
|
|
|
–
|
|
|
Acquisition fairvalue adjustment
|
–
|
|
|
–
|
|
|
–
|
|
|
(125)
|
|
|
(125)
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(125)
|
|
|
(125)
|
|
|
Continuing involvement asset
|
344
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
344
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
(300)
|
|
|
(2,734)
|
|
|
(1,823)
|
|
|
5,076
|
|
|
219
|
|
|
–
|
|
|
(30)
|
|
|
(254)
|
|
|
159
|
|
|
(125)
|
|
|
Statutory basis
|
430,193
|
|
|
42,679
|
|
|
6,526
|
|
|
5,076
|
|
|
484,474
|
|
|
737
|
|
|
1,077
|
|
|
1,038
|
|
|
159
|
|
|
3,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying basisA
|
405,324
|
|
|
48,075
|
|
|
9,021
|
|
|
–
|
|
|
462,420
|
|
|
736
|
|
|
1,199
|
|
|
1,426
|
|
|
–
|
|
|
3,361
|
|
|
POCI assets
|
(762)
|
|
|
(3,310)
|
|
|
(2,305)
|
|
|
6,377
|
|
|
–
|
|
|
–
|
|
|
(39)
|
|
|
(318)
|
|
|
357
|
|
|
–
|
|
|
Acquisition fairvalue adjustment
|
–
|
|
|
–
|
|
|
–
|
|
|
(170)
|
|
|
(170)
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(170)
|
|
|
(170)
|
|
|
Continuing involvement asset
|
798
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
798
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
36
|
|
|
(3,310)
|
|
|
(2,305)
|
|
|
6,207
|
|
|
628
|
|
|
–
|
|
|
(39)
|
|
|
(318)
|
|
|
187
|
|
|
(170)
|
|
|
Statutory basis
|
405,360
|
|
|
44,765
|
|
|
6,716
|
|
|
6,207
|
|
|
463,048
|
|
|
736
|
|
|
1,160
|
|
|
1,108
|
|
|
187
|
|
|
3,191
|
|
CREDIT RISK (continued)
Loans and advances to customers and
expected credit loss allowance – statutory and
underlyingA
basis
|
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
|
|
|
Equity Investments and Central Items1
|
540
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
540
|
|
|
–
|
|
|
–
|
|
|
Total gross lending
|
430,193
|
|
|
42,679
|
|
|
6,526
|
|
|
5,076
|
|
|
484,474
|
|
|
8.8
|
|
|
1.3
|
|
|
UK mortgages (underlying
basis)A,2
|
284,951
|
|
|
33,148
|
|
|
5,839
|
|
|
|
|
|
323,938
|
|
|
10.2
|
|
|
1.8
|
|
|
UK Motor Finance (underlying
basis)A,3
|
13,878
|
|
|
2,786
|
|
|
141
|
|
|
|
|
|
16,805
|
|
|
16.6
|
|
|
0.8
|
|
|
Retail (underlying
basis)A
|
345,933
|
|
|
40,049
|
|
|
6,592
|
|
|
|
|
|
392,574
|
|
|
10.2
|
|
|
1.7
|
|
|
Total gross lending (underlying
basis)A
|
430,493
|
|
|
45,413
|
|
|
8,349
|
|
|
|
|
|
484,255
|
|
|
9.4
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Finance4
|
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
|
|
|
|
|
|
|
|
|
Equity Investments and Central Items
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
Total
|
850
|
|
|
1,160
|
|
|
1,039
|
|
|
159
|
|
|
3,208
|
|
|
|
|
|
|
|
|
UK mortgages (underlying
basis)A,2
|
55
|
|
|
238
|
|
|
563
|
|
|
|
|
|
856
|
|
|
|
|
|
|
|
|
UK Motor Finance (underlying
basis)A
|
202
|
|
|
149
|
|
|
79
|
|
|
|
|
|
430
|
|
|
|
|
|
|
|
|
Retail (underlying
basis)A
|
651
|
|
|
889
|
|
|
910
|
|
|
|
|
|
2,450
|
|
|
|
|
|
|
|
|
Total (underlying
basis)A
|
850
|
|
|
1,190
|
|
|
1,293
|
|
|
|
|
|
3,333
|
|
|
|
|
|
|
|
|
Customer related ECL allowance (drawn and undrawn) as a percentage
of loans and advances to customers
|
|
|||||||||||||||||||
|
|
Stage 1%
|
|
|
Stage 2%
|
|
|
Stage 3%
|
|
|
POCI%
|
|
|
Total%
|
|
|
Adjusted Stage 35
%
|
|
|
Adjusted Total5
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK mortgages
|
–
|
|
|
0.7
|
|
|
7.7
|
|
|
3.1
|
|
|
0.2
|
|
|
|
|
|
|
|
|
Credit cards
|
1.3
|
|
|
11.9
|
|
|
44.2
|
|
|
–
|
|
|
3.4
|
|
|
45.7
|
|
|
3.4
|
|
|
UK unsecured loans and overdrafts
|
1.6
|
|
|
15.3
|
|
|
58.0
|
|
|
–
|
|
|
4.1
|
|
|
60.5
|
|
|
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
|
|
|
13.8
|
|
|
0.6
|
|
|
Business and Commercial Banking
|
0.4
|
|
|
5.0
|
|
|
12.3
|
|
|
–
|
|
|
1.3
|
|
|
15.7
|
|
|
1.3
|
|
|
Corporate and Institutional Banking
|
0.2
|
|
|
6.7
|
|
|
33.8
|
|
|
–
|
|
|
0.8
|
|
|
33.8
|
|
|
0.8
|
|
|
Commercial Banking
|
0.2
|
|
|
5.6
|
|
|
21.8
|
|
|
–
|
|
|
1.0
|
|
|
24.9
|
|
|
1.0
|
|
|
Equity Investments and Central Items
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
Total
|
0.2
|
|
|
2.7
|
|
|
15.9
|
|
|
3.1
|
|
|
0.7
|
|
|
16.5
|
|
|
0.7
|
|
|
UK mortgages (underlying
basis)A,2
|
–
|
|
|
0.7
|
|
|
9.6
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
UK Motor Finance (underlying
basis)A,3
|
1.5
|
|
|
5.3
|
|
|
56.0
|
|
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
Retail (underlying
basis)A
|
0.2
|
|
|
2.2
|
|
|
13.8
|
|
|
|
|
|
0.6
|
|
|
13.8
|
|
|
0.6
|
|
|
Total (underlying
basis)A
|
0.2
|
|
|
2.6
|
|
|
15.5
|
|
|
|
|
|
0.7
|
|
|
15.9
|
|
|
0.7
|
|
1 Contains central fair
value hedge accounting adjustments.
2 UK mortgages balances on
an underlying basisA
exclude the impact of the HBOS
acquisition-related adjustments.
3 UK Motor Finance
balances on an underlying basisA
exclude a finance lease gross
up.
4 UK Motor Finance
includes £243 million relating to provisions against residual
values of vehicles subject to finance leases.
5 Stage 3 and Total
exclude loans in recoveries in credit cards of £9 million, UK
unsecured loans and overdrafts of £8 million, Business and
Commercial Banking of £217 million and Corporate and
Institutional Banking of £1 million.
CREDIT RISK (continued)
Loans and advances to customers and
expected credit loss allowance – statutory and
underlyingA
basis
|
At 31 December 2024
|
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
|
269,760
|
|
|
32,995
|
|
|
4,166
|
|
|
6,207
|
|
|
313,128
|
|
|
10.5
|
|
|
1.3
|
|
|
Credit cards
|
13,534
|
|
|
2,441
|
|
|
265
|
|
|
–
|
|
|
16,240
|
|
|
15.0
|
|
|
1.6
|
|
|
UK unsecured loans and overdrafts
|
9,314
|
|
|
1,247
|
|
|
175
|
|
|
–
|
|
|
10,736
|
|
|
11.6
|
|
|
1.6
|
|
|
UK Motor Finance
|
13,897
|
|
|
2,398
|
|
|
124
|
|
|
–
|
|
|
16,419
|
|
|
14.6
|
|
|
0.8
|
|
|
Other
|
17,373
|
|
|
516
|
|
|
147
|
|
|
–
|
|
|
18,036
|
|
|
2.9
|
|
|
0.8
|
|
|
Retail
|
323,878
|
|
|
39,597
|
|
|
4,877
|
|
|
6,207
|
|
|
374,559
|
|
|
10.6
|
|
|
1.3
|
|
|
Business and Commercial Banking
|
25,785
|
|
|
3,172
|
|
|
1,197
|
|
|
–
|
|
|
30,154
|
|
|
10.5
|
|
|
4.0
|
|
|
Corporate and Institutional Banking
|
55,692
|
|
|
1,996
|
|
|
642
|
|
|
–
|
|
|
58,330
|
|
|
3.4
|
|
|
1.1
|
|
|
Commercial Banking
|
81,477
|
|
|
5,168
|
|
|
1,839
|
|
|
–
|
|
|
88,484
|
|
|
5.8
|
|
|
2.1
|
|
|
Equity Investments and Central Items1
|
5
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
5
|
|
|
–
|
|
|
–
|
|
|
Total gross lending
|
405,360
|
|
|
44,765
|
|
|
6,716
|
|
|
6,207
|
|
|
463,048
|
|
|
9.7
|
|
|
1.5
|
|
|
UK mortgages (underlying
basis)A,2
|
270,522
|
|
|
36,305
|
|
|
6,471
|
|
|
|
|
|
313,298
|
|
|
11.6
|
|
|
2.1
|
|
|
UK Motor Finance (underlying
basis)A,3
|
13,099
|
|
|
2,398
|
|
|
124
|
|
|
|
|
|
15,621
|
|
|
15.4
|
|
|
0.8
|
|
|
Retail (underlying
basis)A
|
323,842
|
|
|
42,907
|
|
|
7,182
|
|
|
|
|
|
373,931
|
|
|
11.5
|
|
|
1.9
|
|
|
Total gross lending (underlying
basis)A
|
405,324
|
|
|
48,075
|
|
|
9,021
|
|
|
|
|
|
462,420
|
|
|
10.4
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer related ECL allowance (drawn and undrawn)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
UK mortgages
|
55
|
|
|
275
|
|
|
335
|
|
|
187
|
|
|
852
|
|
|
|
|
|
|
|
|
Credit cards
|
210
|
|
|
331
|
|
|
133
|
|
|
–
|
|
|
674
|
|
|
|
|
|
|
|
|
UK unsecured loans and overdrafts
|
170
|
|
|
235
|
|
|
118
|
|
|
–
|
|
|
523
|
|
|
|
|
|
|
|
|
UK Motor Finance4
|
173
|
|
|
115
|
|
|
72
|
|
|
–
|
|
|
360
|
|
|
|
|
|
|
|
|
Other
|
16
|
|
|
14
|
|
|
37
|
|
|
–
|
|
|
67
|
|
|
|
|
|
|
|
|
Retail
|
624
|
|
|
970
|
|
|
695
|
|
|
187
|
|
|
2,476
|
|
|
|
|
|
|
|
|
Business and Commercial Banking
|
132
|
|
|
187
|
|
|
166
|
|
|
–
|
|
|
485
|
|
|
|
|
|
|
|
|
Corporate and Institutional Banking
|
122
|
|
|
129
|
|
|
249
|
|
|
–
|
|
|
500
|
|
|
|
|
|
|
|
|
Commercial Banking
|
254
|
|
|
316
|
|
|
415
|
|
|
–
|
|
|
985
|
|
|
|
|
|
|
|
|
Equity Investments and Central Items
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
Total
|
878
|
|
|
1,286
|
|
|
1,110
|
|
|
187
|
|
|
3,461
|
|
|
|
|
|
|
|
|
UK mortgages (underlying
basis)A,2
|
55
|
|
|
314
|
|
|
653
|
|
|
|
|
|
1,022
|
|
|
|
|
|
|
|
|
UK Motor Finance (underlying
basis)A
|
173
|
|
|
115
|
|
|
72
|
|
|
|
|
|
360
|
|
|
|
|
|
|
|
|
Retail (underlying
basis)A
|
624
|
|
|
1,009
|
|
|
1,013
|
|
|
|
|
|
2,646
|
|
|
|
|
|
|
|
|
Total (underlying
basis)A
|
878
|
|
|
1,325
|
|
|
1,428
|
|
|
|
|
|
3,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer related ECL allowance (drawn and undrawn) as a percentage
of loans and advances to customers
|
|
|||||||||||||||||||
|
|
Stage 1%
|
|
|
Stage 2%
|
|
|
Stage 3%
|
|
|
POCI%
|
|
|
Total%
|
|
|
Adjusted Stage 35
%
|
|
|
Adjusted Total5
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK mortgages
|
–
|
|
|
0.8
|
|
|
8.0
|
|
|
3.0
|
|
|
0.3
|
|
|
|
|
|
|
|
|
Credit cards
|
1.6
|
|
|
13.6
|
|
|
50.2
|
|
|
–
|
|
|
4.2
|
|
|
|
|
|
|
|
|
UK unsecured loans and overdrafts
|
1.8
|
|
|
18.8
|
|
|
67.4
|
|
|
–
|
|
|
4.9
|
|
|
|
|
|
|
|
|
UK Motor Finance
|
1.2
|
|
|
4.8
|
|
|
58.1
|
|
|
–
|
|
|
2.2
|
|
|
|
|
|
|
|
|
Other
|
0.1
|
|
|
2.7
|
|
|
25.2
|
|
|
–
|
|
|
0.4
|
|
|
|
|
|
|
|
|
Retail
|
0.2
|
|
|
2.4
|
|
|
14.3
|
|
|
3.0
|
|
|
0.7
|
|
|
|
|
|
|
|
|
Business and Commercial Banking
|
0.5
|
|
|
5.9
|
|
|
13.9
|
|
|
–
|
|
|
1.6
|
|
|
18.4
|
|
|
1.6
|
|
|
Corporate and Institutional Banking
|
0.2
|
|
|
6.5
|
|
|
38.8
|
|
|
–
|
|
|
0.9
|
|
|
38.8
|
|
|
0.9
|
|
|
Commercial Banking
|
0.3
|
|
|
6.1
|
|
|
22.6
|
|
|
–
|
|
|
1.1
|
|
|
26.9
|
|
|
1.1
|
|
|
Equity Investments and Central Items
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
Total
|
0.2
|
|
|
2.9
|
|
|
16.5
|
|
|
3.0
|
|
|
0.7
|
|
|
17.3
|
|
|
0.7
|
|
|
UK mortgages (underlying
basis)A,2
|
–
|
|
|
0.9
|
|
|
10.1
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
UK Motor Finance (underlying
basis)A,3
|
1.3
|
|
|
4.8
|
|
|
58.1
|
|
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
Retail (underlying
basis)A
|
0.2
|
|
|
2.4
|
|
|
14.1
|
|
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
Total (underlying
basis)A
|
0.2
|
|
|
2.8
|
|
|
15.8
|
|
|
|
|
|
0.8
|
|
|
16.4
|
|
|
0.8
|
|
1 Contains central fair
value hedge accounting adjustments.
2 UK mortgages balances on
an underlying basisA
exclude the impact of the HBOS
acquisition-related adjustments.
3 UK Motor Finance
balances on an underlying basisA
exclude a finance lease gross
up.
4 UK Motor Finance
includes £178 million relating to provisions against residual
values of vehicles subject to finance leases.
5 Stage 3 and Total
exclude loans in recoveries in Business and Commercial Banking of
£296 million and Corporate and Institutional Banking of
£1 million.
CREDIT RISK (continued)
Retail
●
The
Retail portfolio has continued to deliver strong credit performance
in 2025 and remains well positioned despite macroeconomic
headwinds. Consumers continue to show strength in the context of
inflationary pressures
●
Robust
risk management remains firmly embedded, underpinned by strong
affordability and indebtedness controls for lending and a prudent
risk appetite approach. Lending strategies are assessed regularly
and are calibrated to reflect the latest macroeconomic
conditions
●
In
UK mortgages, new to arrears and flow to default rates have
improved during 2025, while in the unsecured portfolios and UK
Motor Finance, new to arrears and flows to default have remained
low and stable
●
The
Retail impairment charge in 2025 was £734 million, higher than
the £457 million charge for 2024 which benefitted from a
large release of £332 million from improvements in the
Group’s macroeconomic outlook. Excluding macroeconomic
updates, the impairment charge is slightly lower than 2024 due to
continued stability in flows to default with additional write-backs
from model refinements
●
Retail
customer related ECL allowance as a percentage of drawn loans and
advances (coverage) has reduced to 0.6% (31 December 2024:
0.7%)
●
Strong
credit performance and higher portfolio balances have reduced Stage
2 loans and advances to 10.2% of the Retail portfolio (31 December
2024: 11.5%). Stage 2 ECL coverage reduced to 2.2%
(31 December 2024: 2.4%)
●
Stable
and low flows to default and higher portfolio balances have also
resulted in a reduction in Retail Stage 3 loans and advances to
1.7% of total loans and advances (31 December 2024:
1.9%)
●
Stage
3 ECL coverage reduced to 13.8% (31 December 2024: 14.1%),
largely due to continued house price increases
UK mortgages
●
The
UK mortgages portfolio increased to £323.9 billion
(31 December 2024: £313.3 billion), driven by sustained
customer demand
●
New
to arrears in the UK mortgages portfolio improved during 2025. The
portfolio remains well positioned with a strong loan to value (LTV)
profile. Portfolio quality improved during the year, supported by
robust affordability and credit controls with higher risk legacy
vintage balances continuing to reduce
●
The
impairment credit of £60 million for 2025 is lower than the
credit of £194 million in 2024. Both years included favourable
updates to the macroeconomic outlook, predominately via continued
growth in house prices, however this benefit was more material in
2024. Excluding macroeconomic updates, the impairment charge is
favourable year-on-year due to improving flow to default
rates
●
Stage
2 loans and advances have reduced to 10.2% of total UK mortgages
balances (31 December 2024: 11.6%) following the removal of
non-modelled adjustments previously applied to UK Bank Rate and CPI
inflation in the severe downside scenario, combined with strong
credit performance and higher portfolio balances
●
Continued
strong credit performance and higher portfolio balances also
resulted in a reduction in Stage 3 loans and advances to 1.8% (31
December 2024: 2.1%), with continued growth in house prices
resulting in a reduction in Stage 3 ECL coverage to 9.6% (31
December 2024: 10.1%)
CREDIT RISK (continued)
UK mortgages product analysis -
statutory basis1
|
|
At 31 December 2025
|
|
At 31 December 20241
|
||||||||||||||||||||
|
Mainstream
|
|
Buy-to-let
|
|
Specialist
|
|
Total
|
Mainstream
|
|
Buy-to-let
|
|
Specialist
|
|
Total
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK mortgages loans and advances to customers (£m)
|
273,106
|
|
|
47,858
|
|
|
2,849
|
|
|
323,813
|
|
|
261,630
|
|
|
47,984
|
|
|
3,514
|
|
|
313,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK mortgages greater than 3 months in arrears2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of cases
|
17,070
|
|
|
3,351
|
|
|
2,208
|
|
|
22,629
|
|
|
20,112
|
|
|
4,511
|
|
|
2,818
|
|
|
27,441
|
|
|
Total mortgages accounts (%)
|
1.0
|
|
|
1.0
|
|
|
8.6
|
|
|
1.1
|
|
|
1.2
|
|
|
1.2
|
|
|
9.2
|
|
|
1.3
|
|
|
Value of loans3
(£m)
|
2,518
|
|
|
486
|
|
|
397
|
|
|
3,401
|
|
|
2,850
|
|
|
623
|
|
|
504
|
|
|
3,977
|
|
|
Total mortgages balances (%)
|
0.9
|
|
|
1.0
|
|
|
13.9
|
|
|
1.1
|
|
|
1.1
|
|
|
1.3
|
|
|
14.3
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan to value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 60% (%)
|
52.0
|
|
|
64.1
|
|
|
90.0
|
|
|
54.2
|
|
|
55.6
|
|
|
68.5
|
|
|
89.4
|
|
|
57.9
|
|
|
60% to 70% (%)
|
15.4
|
|
|
21.4
|
|
|
6.4
|
|
|
16.2
|
|
|
16.7
|
|
|
21.1
|
|
|
6.9
|
|
|
17.2
|
|
|
70% to 80% (%)
|
15.5
|
|
|
14.4
|
|
|
2.0
|
|
|
15.2
|
|
|
14.1
|
|
|
10.3
|
|
|
2.0
|
|
|
13.4
|
|
|
80% to 90% (%)
|
14.4
|
|
|
0.1
|
|
|
0.9
|
|
|
12.2
|
|
|
11.9
|
|
|
0.1
|
|
|
0.9
|
|
|
10.0
|
|
|
90% to 100% (%)
|
2.7
|
|
|
0.0
|
|
|
0.4
|
|
|
2.2
|
|
|
1.7
|
|
|
0.0
|
|
|
0.5
|
|
|
1.5
|
|
|
Greater than 100% (%)
|
0.0
|
|
|
0.0
|
|
|
0.3
|
|
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.3
|
|
|
0.0
|
|
|
Total (%)
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loan to value4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock of residential mortgages (%)
|
44.7
|
|
|
48.2
|
|
|
32.0
|
|
|
45.0
|
|
|
43.2
|
|
|
47.3
|
|
|
32.9
|
|
|
43.6
|
|
|
New residential lending in the period (%)
|
64.7
|
|
|
58.8
|
|
|
n/a
|
|
|
64.1
|
|
|
64.1
|
|
|
56.4
|
|
|
n/a
|
|
|
63.2
|
|
1 This table is now
presented on a statutory basis. The comparative period has been
represented on the same basis.
2 Excluding
repossessions.
3 Value of loans
represents gross book value excluding the impact of HBOS
acquisition adjustments 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.
4 Average loan to value is
calculated as total loans and advances as a percentage of the total
indexed collateral of these loans and advances.
CREDIT RISK (continued)
Credit
cards
●
Credit
card balances increased to £17.9 billion
(2024: £16.2 billion), driven by higher demand for new
cards and increased customer spending
●
The
credit card portfolio is a prime book. New to arrears continue to
be low and repayment rates remain strong
●
The
impairment charge of £321 million for 2025 is higher than the
charge of £270 million in 2024, due to updates to the
Group’s macroeconomic outlook, notably upwards revisions to
the unemployment forecast, compared to favourable updates in 2024.
Portfolio performance remained stable with additional write-backs
from model refinements related to loss rates, and an unsecured debt
sale completed in the fourth quarter. Total ECL coverage is lower
at 3.4% (31 December 2024: 4.2%)
●
Stable
credit performance and higher portfolio balances resulted in a
reduction in Stage 2 loans and advances to 13.0% of total credit
card balances (31 December 2024: 15.0%), with lower Stage 2 ECL
coverage at 11.9% (31 December 2024: 13.6%)
●
Similarly,
Stage 3 loans and advances reduced slightly to 1.5% (31 December
2024: 1.6%) with model refinements also contributing to reduce
Stage 3 ECL coverage to 45.7% (31 December 2024:
50.2%)
UK unsecured loans and overdrafts
●
UK
unsecured loans and overdraft balances increased to £12.2
billion (2024: £10.7 billion) driven by organic balance growth
and lower repayments
●
The
impairment charge of £257 million for 2025 is lower than the
charge of £272 million for 2024, largely due to loss rate
model refinements. ECL and coverage are both lower at a total level
and across all stages
●
Strong
credit performance and higher portfolio balances within unsecured
loans resulted in a slight reduction in Stage 2 loans and advances
to 11.5% of total balances (31 December 2024: 11.6%), with Stage 2
ECL coverage lower at 15.3% (31 December 2024: 18.8%)
●
Similarly,
Stage 3 loans and advances remained stable at 1.6% (31 December
2024: 1.6%), with model refinements also contributing to reduce
Stage 3 ECL coverage to 60.5% (31 December 2024:
67.4%)
UK Motor Finance
●
UK
Motor Finance balances (which exclude operating leases) increased
to £16.8 billion (2024: £15.6 billion), driven by retail
demand, alongside increased stocking
●
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. Volatility in used vehicle values have
primarily driven an ECL increase to £243 million
as at 31 December 2025
(31 December 2024: £178 million)
●
The impairment charge of £212 million for
2025 is higher than the charge of £116 million for 2024,
reflecting increased RV and VT charges year-on-year. Increased RV
and VT provisions drove increases to Stage 2 ECL coverage to 5.3%
(31 December 2024: 4.8%), with Stage 2 loans and advances
increasing slightly to 16.6% (31
December 2024: 15.4%)
●
Stage
3 loans and advances remained stable at 0.8% (31 December 2024:
0.8%), with Stage 3 ECL coverage reducing slightly to 56.0% (31
December 2024: 58.1%)
Other
●
Other
Retail loans and advances increased to £21.8 billion
(31 December 2024: £18.0 billion), largely driven by
growth in the European business
●
Stage 2 loans and advances reduced to 1.8% (31
December 2024: 2.9%), due to higher portfolio balances, with
coverage across stages broadly stable. Stage 3 loans and advances
remained stable at 0.7% of total loans and advances (31 December
2024: 0.8%)
●
There
was a £4 million impairment charge in 2025, compared to a
£7 million credit in 2024
Commercial Banking
●
Portfolio
credit performance remained strong. The Group continues to monitor
external developments and their impact upon the macroeconomic
climate generally and also on specific sectors within the
portfolio
●
Credit
strategies and policy remain robust, and within risk appetite
tolerances. The Group remains focused on credit underwriting and
monitoring standards, and proactively managing higher risk and
cyclical sector exposures
CREDIT RISK (continued)
Commercial Banking (continued)
●
The
Group continues to review segments of portfolios as appropriate,
ensuring credit strategies, appetite, sensitivities and mitigation
action plans are up-to-date and suitable for rapid action in
response to both risks and opportunities, whilst supporting clients
in the right way and ensuring the Group is protected
●
Credit
playbooks, covering a range of potential credit downside scenarios,
are maintained and refreshed as conditions evolve. Early warning
indicators and risk appetite metrics are tracked and provide timely
insight to enable proactive action where appropriate
●
The
Group continues to provide early support to customers in difficulty
through focused risk management via its Watchlist and Business
Support framework. The approach balances prudent risk appetite with
ensuring support for financially viable clients, reinforcing the
Group’s commitment to resilience and responsible client
management
●
Commercial
Banking UK Real Estate committed drawn lending grew by £0.7
billion to £10.0 billion in 2025 (net of £2.6 billion
exposures subject to protection through significant risk transfer
(SRT) securitisations). Performance has remained strong and stable
within this sector, with a decrease in cases in its Watchlist
category and limited flow into Business Support
●
The
net impairment charge in 2025 was £60 million, versus a credit
of £14 million in 2024 and includes a
£74 million charge from the updated macroeconomic
outlook, including a judgemental adjustment in respect of global
tariff and geo-political disruption risks. Excluding macroeconomic
updates, a small number of single name charges were observed in the
first half of the year, largely isolated to a single sector and not
representative of trends across the portfolio. This has been offset
by releases from Stage 1 and Stage 2 provisions capturing strong
credit performance and reducing interest rates throughout the
year
●
ECL
allowances decreased in the year to £883 million in 2025 (31
December 2024: £985 million), also as a result of favourable
model updates partially offset by single name cases
●
Stage
2 loans and advances increased to £5,364 million
(31 December 2024: £5,168 million). Stage 2 as a
proportion of total loans and advances to customers is stable at
5.9% (31 December 2024: 5.8%) with stable credit performance
and model updates resulting in lower Stage 2 ECL coverage at 5.6%
(31 December 2024: 6.1%)
●
Stage
3 loans and advances decreased to £1,757 million
(31 December 2024: £1,839 million) and as a proportion of
total loans and advances to customers to 1.9% (31 December
2024: 2.1%), given movements in the first half of 2025. Stage 3 ECL
coverage is lower at 24.9% (31 December 2024: 26.9%)
Business and Commercial Banking
●
Business
and Commercial Banking lending reduced to £28.7 billion (31
December 2024: £30.2 billion), driven by government-backed
lending repayments. Excluding these, the lending portfolio grew in
the year
●
A
net impairment credit of £53 million in 2025 compares to a
charge of £47 million in 2024, driven by improved expectations
for accounts in recoveries alongside continued strong credit
performance
●
Stage
2 loans and advances increased to £3,329 million (31
December 2024: £3,172 million). Stage 2 as a proportion of
total loans and advances to customers increased to 11.6% (31
December 2024: 10.5%), while Stage 2 ECL coverage decreased to
5.0% (31 December 2024: 5.9%) following model updates
●
Stage
3 loans and advances decreased to £979 million (31 December
2024: £1,197 million), primarily driven by repayments and
reduced to 3.4% (31 December 2024: 4.0%) as a proportion of total
loans and advances. Stage 3 ECL coverage reduced to 15.7% (31
December 2024: 18.4%)
Corporate and Institutional Banking
●
Corporate
and Institutional lending grew to £62.5 billion (31 December
2024: £58.3 billion), reflecting growth in Institutional
balances including securitised products, alongside corporate
infrastructure growth
●
A
net impairment charge of £113 million in 2025 compares to an
impairment credit of £61 million in 2024, driven by a small
number of single name charges, primarily in the first half of the
year
●
Stage
2 loans and advances increased to £2,035 million (31 December
2024: £1,996 million). Stage 2 as a proportion of total loans
and advances to customers is stable at 3.3% (31 December 2024:
3.4%), with Stage 2 ECL coverage at 6.7% (31 December 2024:
6.5%)
●
Stage
3 loans and advances increased to £778 million (31 December
2024: £642 million) and as a proportion of total loans and
advances to customers to 1.2% (31 December 2024: 1.1%), driven by a
small number of single name transfers to Stage 3, mainly in the
first half of the year. Stage 3 ECL coverage decreased to 33.8% (31
December 2024: 38.8%) following the write-off of a large
longstanding case that was fully provided for
CREDIT RISK (continued)
Base case and MES economic assumptions
The Group’s base case economic scenario has been updated to
reflect global developments and changes in domestic economic
policy. The Group’s updated base case scenario has the
following conditioning assumptions. First, developments in global
conflicts, technology or financial sector issues do not cause a
significant degree of financial market volatility. Second, the US
effective tariff rate is maintained at levels prevailing at the
balance sheet date pending a switch to a sector-based tariff
framework. Third, the UK’s macroeconomic framework for
monetary and fiscal policy remains in place, alongside broader
continuity on other areas of government policy.
Based on these assumptions and incorporating the economic data
published for the third quarter of 2025, 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. With
underlying inflationary pressures expected to recede, modest
further reductions in UK Bank Rate are expected to continue in
2026. Risks around this base case economic view lie in both
directions and are largely captured by the generation of
alternative economic scenarios.
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 fourth quarter of 2025.
Actual data for this period, or restatements of past data, may have
since emerged prior to publication and have not been
included.
The Group’s approach to generating alternative economic
scenarios is set out in detail in note 21 to the financial
statements of the Group’s 2024 annual report and accounts.
Since 30 September 2025, the non-modelled adjustments previously
applied to UK Bank Rate and CPI inflation in the severe downside
scenario have been removed. This is because the incremental ECL
impact is no longer considered sufficiently material to justify
their application. Accordingly, its removal has had no material
impact on ECL.
UK economic assumptions – base case scenario by
quarter
Key quarterly assumptions made by the Group in the base case
scenario are shown below. GDP 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 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
|
0.7
|
0.3
|
0.1
|
0.3
|
0.3
|
0.3
|
0.4
|
0.4
|
|
Unemployment rate
|
4.5
|
4.7
|
5.0
|
5.1
|
5.3
|
5.3
|
5.2
|
5.1
|
|
House price growth
|
2.9
|
2.7
|
1.3
|
0.8
|
1.3
|
1.6
|
1.6
|
1.6
|
|
Commercial real estate price growth
|
2.5
|
2.6
|
2.6
|
1.2
|
0.5
|
0.2
|
0.1
|
0.6
|
|
UK Bank Rate
|
4.50
|
4.25
|
4.00
|
3.75
|
3.75
|
3.50
|
3.25
|
3.25
|
|
CPI inflation
|
2.8
|
3.5
|
3.8
|
3.7
|
3.3
|
2.6
|
2.2
|
2.2
|
|
At 31 December 2024
|
First
quarter
2024
%
|
Second
quarter
2024
%
|
Third
quarter
2024
%
|
Fourth
quarter
2024
%
|
First
quarter
2025
%
|
Second
quarter
2025
%
|
Third
quarter
2025
%
|
Fourth
quarter
2025
%
|
|
|
|
|
|
|
|
|
|
|
|
Gross domestic product growth
|
0.7
|
0.4
|
0.0
|
0.1
|
0.2
|
0.3
|
0.3
|
0.3
|
|
Unemployment rate
|
4.3
|
4.2
|
4.3
|
4.4
|
4.5
|
4.6
|
4.7
|
4.8
|
|
House price growth
|
0.4
|
1.8
|
4.6
|
3.4
|
3.6
|
4.0
|
3.0
|
2.1
|
|
Commercial real estate price growth
|
(5.3)
|
(4.7)
|
(2.8)
|
0.7
|
1.8
|
1.4
|
0.9
|
0.3
|
|
UK Bank Rate
|
5.25
|
5.25
|
5.00
|
4.75
|
4.50
|
4.25
|
4.00
|
4.00
|
|
CPI inflation
|
3.5
|
2.1
|
2.0
|
2.5
|
2.4
|
3.0
|
2.9
|
2.7
|
CREDIT RISK (continued)
Base case and MES economic assumptions (continued)
UK economic assumptions – scenarios by year
Key annual assumptions made by the Group are shown below. GDP
growth and 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 within the period.
Unemployment rate and UK Bank Rate are averages for the
period.
|
At 31 December 2025
|
2025
%
|
2026
%
|
2027
%
|
2028
%
|
2029
%
|
2025-2029
average
%
|
|
|
|
|
|
|
|
|
|
Upside
|
|
|
|
|
|
|
|
Gross domestic product growth
|
1.4
|
2.0
|
2.3
|
1.6
|
1.6
|
1.8
|
|
Unemployment rate
|
4.8
|
4.2
|
3.2
|
3.1
|
3.2
|
3.7
|
|
House price growth
|
0.8
|
3.5
|
7.1
|
6.9
|
6.0
|
4.8
|
|
Commercial real estate price growth
|
1.2
|
7.9
|
4.9
|
1.7
|
0.8
|
3.2
|
|
UK Bank Rate
|
4.13
|
3.94
|
4.59
|
5.07
|
5.33
|
4.61
|
|
CPI inflation
|
3.4
|
2.6
|
2.4
|
2.8
|
3.1
|
2.9
|
|
|
|
|
|
|
|
|
|
Base case
|
|
|
|
|
|
|
|
Gross domestic product growth
|
1.4
|
1.2
|
1.4
|
1.5
|
1.6
|
1.4
|
|
Unemployment rate
|
4.8
|
5.2
|
4.8
|
4.6
|
4.5
|
4.8
|
|
House price growth
|
0.8
|
1.6
|
1.9
|
2.2
|
3.1
|
1.9
|
|
Commercial real estate price growth
|
1.2
|
0.6
|
1.7
|
0.5
|
0.2
|
0.9
|
|
UK Bank Rate
|
4.13
|
3.44
|
3.25
|
3.44
|
3.50
|
3.55
|
|
CPI inflation
|
3.4
|
2.6
|
2.2
|
2.2
|
2.3
|
2.6
|
|
|
|
|
|
|
|
|
|
Downside
|
|
|
|
|
|
|
|
Gross domestic product growth
|
1.4
|
(0.3)
|
(0.5)
|
1.1
|
1.6
|
0.7
|
|
Unemployment rate
|
4.8
|
6.6
|
7.5
|
7.4
|
7.0
|
6.7
|
|
House price growth
|
0.8
|
(0.2)
|
(4.7)
|
(5.7)
|
(2.8)
|
(2.6)
|
|
Commercial real estate price growth
|
1.2
|
(7.1)
|
(4.2)
|
(2.7)
|
(2.3)
|
(3.1)
|
|
UK Bank Rate
|
4.13
|
2.74
|
1.09
|
0.75
|
0.52
|
1.85
|
|
CPI inflation
|
3.4
|
2.6
|
2.0
|
1.4
|
1.0
|
2.1
|
|
|
|
|
|
|
|
|
|
Severe downside
|
|
|
|
|
|
|
|
Gross domestic product growth
|
1.4
|
(1.9)
|
(1.8)
|
0.7
|
1.4
|
0.0
|
|
Unemployment rate
|
4.8
|
8.3
|
10.2
|
9.9
|
9.4
|
8.5
|
|
House price growth
|
0.8
|
(1.2)
|
(11.1)
|
(12.2)
|
(7.8)
|
(6.5)
|
|
Commercial real estate price growth
|
1.2
|
(17.4)
|
(9.8)
|
(7.4)
|
(5.4)
|
(8.0)
|
|
UK Bank Rate
|
4.13
|
1.91
|
0.10
|
0.03
|
0.01
|
1.24
|
|
CPI inflation
|
3.4
|
2.6
|
1.7
|
0.5
|
(0.4)
|
1.6
|
|
|
|
|
|
|
|
|
|
Probability-weighted
|
|
|
|
|
|
|
|
Gross domestic product growth
|
1.4
|
0.7
|
0.8
|
1.3
|
1.6
|
1.2
|
|
Unemployment rate
|
4.8
|
5.6
|
5.7
|
5.5
|
5.4
|
5.4
|
|
House price growth
|
0.8
|
1.3
|
0.2
|
(0.2)
|
1.1
|
0.6
|
|
Commercial real estate price growth
|
1.2
|
(1.3)
|
(0.3)
|
(0.9)
|
(0.9)
|
(0.4)
|
|
UK Bank Rate
|
4.13
|
3.23
|
2.69
|
2.78
|
2.81
|
3.13
|
|
CPI inflation
|
3.4
|
2.6
|
2.2
|
2.0
|
1.9
|
2.4
|
CREDIT RISK (continued)
Base case and MES economic assumptions (continued)
|
At 31 December 2024
|
2024
%
|
2025
%
|
2026
%
|
2027
%
|
2028
%
|
2024-2028
average
%
|
|
|
|
|
|
|
|
|
|
Upside
|
|
|
|
|
|
|
|
Gross domestic product growth
|
0.8
|
1.9
|
2.2
|
1.5
|
1.4
|
1.6
|
|
Unemployment rate
|
4.3
|
3.5
|
2.8
|
2.7
|
2.8
|
3.2
|
|
House price growth
|
3.4
|
3.7
|
6.5
|
6.6
|
5.4
|
5.1
|
|
Commercial real estate price growth
|
0.7
|
7.8
|
6.7
|
3.2
|
0.5
|
3.7
|
|
UK Bank Rate
|
5.06
|
4.71
|
5.02
|
5.19
|
5.42
|
5.08
|
|
CPI inflation
|
2.6
|
2.8
|
2.6
|
2.9
|
3.0
|
2.8
|
|
|
|
|
|
|
|
|
|
Base case
|
|
|
|
|
|
|
|
Gross domestic product growth
|
0.8
|
1.0
|
1.4
|
1.5
|
1.5
|
1.2
|
|
Unemployment rate
|
4.3
|
4.7
|
4.7
|
4.5
|
4.5
|
4.5
|
|
House price growth
|
3.4
|
2.1
|
1.0
|
1.4
|
2.4
|
2.0
|
|
Commercial real estate price growth
|
0.7
|
0.3
|
2.5
|
1.9
|
0.0
|
1.1
|
|
UK Bank Rate
|
5.06
|
4.19
|
3.63
|
3.50
|
3.50
|
3.98
|
|
CPI inflation
|
2.6
|
2.8
|
2.4
|
2.4
|
2.2
|
2.5
|
|
|
|
|
|
|
|
|
|
Downside
|
|
|
|
|
|
|
|
Gross domestic product growth
|
0.8
|
(0.5)
|
(0.4)
|
1.0
|
1.5
|
0.5
|
|
Unemployment rate
|
4.3
|
6.0
|
7.4
|
7.4
|
7.1
|
6.4
|
|
House price growth
|
3.4
|
0.6
|
(5.5)
|
(6.6)
|
(3.4)
|
(2.4)
|
|
Commercial real estate price growth
|
0.7
|
(7.8)
|
(3.1)
|
(0.9)
|
(2.3)
|
(2.7)
|
|
UK Bank Rate
|
5.06
|
3.53
|
1.56
|
0.96
|
0.68
|
2.36
|
|
CPI inflation
|
2.6
|
2.8
|
2.3
|
1.8
|
1.2
|
2.1
|
|
|
|
|
|
|
|
|
|
Severe downside
|
|
|
|
|
|
|
|
Gross domestic product growth
|
0.8
|
(1.9)
|
(1.5)
|
0.7
|
1.3
|
(0.1)
|
|
Unemployment rate
|
4.3
|
7.7
|
10.0
|
10.0
|
9.7
|
8.4
|
|
House price growth
|
3.4
|
(0.8)
|
(12.4)
|
(13.6)
|
(8.8)
|
(6.7)
|
|
Commercial real estate price growth
|
0.7
|
(17.4)
|
(8.5)
|
(5.5)
|
(5.7)
|
(7.5)
|
|
UK Bank Rate – modelled
|
5.06
|
2.68
|
0.28
|
0.08
|
0.02
|
1.62
|
|
UK Bank Rate – adjusted1
|
5.06
|
4.03
|
2.70
|
2.23
|
1.95
|
3.19
|
|
CPI inflation – modelled
|
2.6
|
2.8
|
1.9
|
1.0
|
0.1
|
1.7
|
|
CPI inflation – adjusted1
|
2.6
|
3.6
|
2.1
|
1.4
|
0.8
|
2.1
|
|
|
|
|
|
|
|
|
|
Probability-weighted
|
|
|
|
|
|
|
|
Gross domestic product growth
|
0.8
|
0.5
|
0.8
|
1.2
|
1.4
|
1.0
|
|
Unemployment rate
|
4.3
|
5.0
|
5.5
|
5.4
|
5.3
|
5.1
|
|
House price growth
|
3.4
|
1.8
|
(0.7)
|
(1.0)
|
0.4
|
0.8
|
|
Commercial real estate price growth
|
0.7
|
(1.7)
|
1.0
|
0.7
|
(1.1)
|
(0.1)
|
|
UK Bank Rate – modelled
|
5.06
|
4.00
|
3.09
|
2.90
|
2.88
|
3.59
|
|
UK Bank Rate – adjusted1
|
5.06
|
4.13
|
3.33
|
3.12
|
3.08
|
3.74
|
|
CPI inflation – modelled
|
2.6
|
2.8
|
2.4
|
2.2
|
1.9
|
2.4
|
|
CPI inflation – adjusted1
|
2.6
|
2.9
|
2.4
|
2.3
|
2.0
|
2.4
|
1 The adjustment to UK
Bank Rate and CPI inflation in the severe downside was considered
to better reflect the risks around the Group’s base case view
in an economic environment where the risks of supply and demand
shocks are more balanced.
LIQUIDITY RISK
Overview
The Group has maintained its strong funding and liquidity position
with a loan to deposit ratio of 97% as at
31 December 2025 (31 December 2024: 95%). Total wholesale
funding has increased to £99.4 billion as at
31 December 2025 (31 December 2024: £92.5 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)1
of 145% as at 31 December 2025 (31
December 2024: 146%) calculated on a Group consolidated basis based
on the PRA rulebook. The decrease in the LCR resulted from a
reduction in liquid assets, from an increase in lending and
repayments of Bank of England Term Funding Scheme with additional
incentives for SMEs (TFSME) partially offset by an increase in
customer deposits, and a decrease in net cash outflows, primarily
from a reduction in outflows related to derivative exposures
arising from historic market volatility. All assets within the
liquid asset portfolio are hedged for interest rate risk. Following
the implementation of structural reform, 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 assets1
have reduced to £131.4 billion
(31 December 2024: £134.4 billion), primarily driven by an
increase in lending and TFSME repayments, partially offset by an
increase in customer deposits. In addition to the Group’s
reported LCR eligible assets, the Group maintains borrowing
capacity at central banks which averaged £87 billion in
the year to 31 December 2025 (31 December 2024: £72 billion).
The net stable funding ratio remains strong at 124% (calculated as
a quarterly simple average over the previous four quarters) as at
31 December 2025 (31 December 2024: 129%).
LCR eligible assets comprise £125.8 billion LCR level 1
eligible assets (31 December 2024: £128.5 billion) and
£5.6 billion LCR level 2 eligible assets (31 December
2024: £5.9 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 based on prudent liquidity management and economic
considerations, having regard to external market
conditions.
During 2025, the Group accessed wholesale funding across a range of
currencies and markets with term issuance volumes totalling
£13.8 billion. The total outstanding amount of drawings from
the TFSME has reduced to £8.8 billion as at
31 December 2025 (31 December 2024:
£21.9 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 are well positioned and continue
to reflect the strength of the Group’s management and
franchise, along with its robust financial performance, capital and
funding position. In September 2025, S&P upgraded the
Group’s issuer credit rating by one notch.
1 Based on a monthly
simple average over the previous 12 months.
LIQUIDITY RISK (continued)
Group funding requirements and sources
|
|
At 31 Dec 2025£bn
|
|
|
At 31 Dec 2024£bn
|
|
|
Change%
|
|
|
|
|
|
|
|
|
|
|
Group funding position
|
|
|
|
|
|
|
|
|
Total Group assets
|
944.1
|
|
|
906.7
|
|
|
4
|
|
Less other liabilities1
|
(261.7)
|
|
|
(247.8)
|
|
|
(6)
|
|
Funding requirements
|
682.4
|
|
|
658.9
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Customer deposits
|
496.5
|
|
|
482.7
|
|
|
3
|
|
Wholesale funding2
|
99.4
|
|
|
92.5
|
|
|
7
|
|
Repurchase agreements – non-trading
|
29.8
|
|
|
15.9
|
|
|
87
|
|
Term Funding Scheme with additional incentives for SMEs
(TFSME)
|
8.8
|
|
|
21.9
|
|
|
(60)
|
|
Repurchase agreements at amortised cost
|
38.6
|
|
|
37.8
|
|
|
2
|
|
Total equity
|
47.9
|
|
|
45.9
|
|
|
4
|
|
Funding sources
|
682.4
|
|
|
658.9
|
|
|
4
|
1 Other assets and other
liabilities primarily include balances in the Group’s
Insurance business and the fair value of derivative assets and
liabilities.
2 The Group’s
definition of wholesale funding aligns with that used by other
international market participants; including bank deposits, debt
securities in issue and subordinated liabilities. Excludes balances
relating to cash collateral of £1.5 billion
(31 December 2024:
£2.8 billion).
Reconciliation of Group funding to the balance sheet
|
At 31 December 2025
|
Included
in funding
analysis
£bn
|
|
|
Cash collateral received1
£bn
|
|
Fair value
and other
accounting
methods
£bn
|
|
|
Balance
sheet
£bn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits from banks
|
3.8
|
|
|
2.0
|
|
|
–
|
|
|
5.8
|
|
|
Debt securities in issue
|
83.9
|
|
|
–
|
|
|
(5.6)
|
|
|
78.3
|
|
|
Subordinated liabilities
|
11.7
|
|
|
–
|
|
|
(1.8)
|
|
|
9.9
|
|
|
Total wholesale funding
|
99.4
|
|
|
2.0
|
|
|
|
|
|
|
|
|
Customer deposits
|
496.5
|
|
|
–
|
|
|
–
|
|
|
496.5
|
|
|
Repurchase agreements at amortised cost
|
38.6
|
|
|
–
|
|
|
–
|
|
|
38.6
|
|
|
Total equity
|
47.9
|
|
|
–
|
|
|
–
|
|
|
47.9
|
|
|
Funding sources
|
682.4
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits from banks
|
3.1
|
|
|
3.2
|
|
|
(0.1)
|
|
|
6.2
|
|
|
Debt securities in issue
|
77.2
|
|
|
–
|
|
|
(6.4)
|
|
|
70.8
|
|
|
Subordinated liabilities
|
12.2
|
|
|
–
|
|
|
(2.1)
|
|
|
10.1
|
|
|
Total wholesale funding
|
92.5
|
|
|
3.2
|
|
|
|
|
|
|
|
|
Customer deposits
|
482.7
|
|
|
–
|
|
|
–
|
|
|
482.7
|
|
|
Repurchase agreements at amortised cost
|
37.8
|
|
|
–
|
|
|
–
|
|
|
37.8
|
|
|
Total equity
|
45.9
|
|
|
–
|
|
|
–
|
|
|
45.9
|
|
|
Funding sources
|
658.9
|
|
|
3.2
|
|
|
|
|
|
|
|
1 The Group enters into
derivatives and repurchase and reverse repurchase agreements with
various counterparties which are governed by industry standard
master netting agreements. The Group holds cash collateral on its
balance sheet in respect of these agreements. At 31 December 2025,
£2.0 billion (31 December 2024: £3.2 billion) was
with bank counterparties, of which £1.5 billion (31 December
2024: £2.8 billion) relates primarily to the Global Markets
business of Lloyds Bank Corporate Markets plc, whilst
£0.5 billion (31 December 2024: £0.4 billion)
relates to the Insurance business.
LIQUIDITY RISK (continued)
Analysis of term issuance in 2025
|
|
Sterling
£bn
|
|
|
US dollar
£bn
|
|
|
Euro
£bn
|
|
|
Other
currencies1
£bn
|
|
|
Total
£bn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securitisation2
|
0.8
|
|
|
–
|
|
|
0.6
|
|
|
–
|
|
|
1.4
|
|
|
Covered bonds
|
1.0
|
|
|
–
|
|
|
0.4
|
|
|
–
|
|
|
1.4
|
|
|
Senior unsecured notes
|
0.8
|
|
|
3.7
|
|
|
2.5
|
|
|
0.7
|
|
|
7.7
|
|
|
Subordinated liabilities
|
–
|
|
|
0.9
|
|
|
0.9
|
|
|
–
|
|
|
1.8
|
|
|
Additional tier 1
|
0.7
|
|
|
0.8
|
|
|
–
|
|
|
–
|
|
|
1.5
|
|
|
Total issuance
|
3.3
|
|
|
5.4
|
|
|
4.4
|
|
|
0.7
|
|
|
13.8
|
|
1 Includes Australian
dollar, Swiss franc, Hong Kong dollar and Japanese
yen.
2 Securitisation 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 £244 billion at 31 December 2025 (31 December 2024:
£242 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.225
|
|
|
c.400
|
|
|
c.675
|
|
|
+25 basis points
|
c.100
|
|
|
c.200
|
|
|
c.325
|
|
|
-25 basis points
|
(c.125)
|
|
|
(c.200)
|
|
|
(c.350)
|
|
|
-50 basis points
|
(c.275)
|
|
|
(c.400)
|
|
|
(c.675)
|
|
1 Sensitivity 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 31 December 2025 balance sheet
position.
STATUTORY INFORMATION
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
|
|
|
2025
£m
|
|
|
20241
£m
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
30,749
|
|
|
31,288
|
|
|
Interest expense
|
|
(17,519)
|
|
|
(19,011)
|
|
|
Net interest income
|
|
13,230
|
|
|
12,277
|
|
|
Fee and commission income
|
|
3,118
|
|
|
2,943
|
|
|
Fee and commission expense
|
|
(1,334)
|
|
|
(1,184)
|
|
|
Net fee and commission income
|
|
1,784
|
|
|
1,759
|
|
|
Net trading income
|
|
1,485
|
|
|
1,812
|
|
|
Insurance revenue
|
|
3,438
|
|
|
3,291
|
|
|
Insurance service expense
|
|
(2,543)
|
|
|
(2,733)
|
|
|
Net expense from reinsurance contracts held
|
|
(139)
|
|
|
(72)
|
|
|
Insurance service result
|
|
756
|
|
|
486
|
|
|
Net investment return on assets held to back insurance and
investment contracts
|
|
23,844
|
|
|
16,013
|
|
|
Net finance expense in respect of insurance and investment
contracts
|
|
(24,044)
|
|
|
(16,278)
|
|
|
Net investment return and finance result in respect of insurance
and investment contracts
|
|
(200)
|
|
|
(265)
|
|
|
Other operating income
|
|
2,367
|
|
|
1,934
|
|
|
Other income
|
|
6,192
|
|
|
5,726
|
|
|
Total income
|
|
19,422
|
|
|
18,003
|
|
|
Operating expenses
|
|
(11,966)
|
|
|
(11,601)
|
|
|
Impairment
|
|
(795)
|
|
|
(431)
|
|
|
Profit before tax
|
|
6,661
|
|
|
5,971
|
|
|
Tax expense
|
|
(1,904)
|
|
|
(1,494)
|
|
|
Profit for the year
|
|
4,757
|
|
|
4,477
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to ordinary shareholders
|
|
4,196
|
|
|
3,923
|
|
|
Profit attributable to other equity holders
|
|
463
|
|
|
498
|
|
|
Profit attributable to equity holders
|
|
4,659
|
|
|
4,421
|
|
|
Profit attributable to non-controlling interests
|
|
98
|
|
|
56
|
|
|
Profit for the year
|
|
4,757
|
|
|
4,477
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
7.0p
|
|
|
6.3p
|
|
|
Diluted earnings per share
|
|
6.9p
|
|
|
6.2p
|
|
1 Comparative periods have
been represented for presentational changes. See note
1.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
|
|
2025
£m
|
|
|
20241
£m
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
4,757
|
|
|
4,477
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
Items that will not subsequently be reclassified to profit or
loss:
|
|
|
|
|
|
|
Post-retirement defined benefit scheme remeasurements:
|
|
|
|
|
|
|
Remeasurements before tax
|
(520)
|
|
|
(768)
|
|
|
Current tax
|
50
|
|
|
50
|
|
|
Deferred tax
|
85
|
|
|
154
|
|
|
|
(385)
|
|
|
(564)
|
|
|
Movements in revaluation reserve in respect of equity shares held
at FVOCI:
|
|
||||
|
Change in fair value
|
34
|
|
|
93
|
|
|
Deferred tax
|
–
|
|
|
–
|
|
|
|
34
|
|
|
93
|
|
|
Gains and losses attributable to own credit risk:
|
|
|
|
|
|
|
Losses before tax
|
(126)
|
|
|
(78)
|
|
|
Deferred tax
|
35
|
|
|
22
|
|
|
|
(91)
|
|
|
(56)
|
|
|
|
|
|
|
|
|
|
|
(442)
|
|
|
(527)
|
|
|
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
|
34
|
|
|
(53)
|
|
|
Current tax
|
1
|
|
|
1
|
|
|
Deferred tax
|
(8)
|
|
|
14
|
|
|
|
27
|
|
|
(38)
|
|
|
Income statement transfers in respect of disposals
|
(3)
|
|
|
(7)
|
|
|
Deferred tax
|
1
|
|
|
2
|
|
|
|
(2)
|
|
|
(5)
|
|
|
Income statement transfers in respect of impairment
|
(1)
|
|
|
(3)
|
|
|
|
24
|
|
|
(46)
|
|
|
Movements in cash flow hedge reserve:
|
|
|
|
|
|
|
Effective portion of changes in fair value taken to other
comprehensive income
|
482
|
|
|
(2,577)
|
|
|
Deferred tax
|
(136)
|
|
|
719
|
|
|
|
346
|
|
|
(1,858)
|
|
|
Net income statement transfers
|
1,869
|
|
|
2,597
|
|
|
Deferred tax
|
(523)
|
|
|
(728)
|
|
|
|
1,346
|
|
|
1,869
|
|
|
|
1,692
|
|
|
11
|
|
|
|
|
|
|
|
|
|
Movements in foreign currency translation reserve: Currency
translation differences (tax: £nil)
|
54
|
|
|
(73)
|
|
|
|
|
|
|
|
|
|
|
1,770
|
|
|
(108)
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income (loss) for the year, net of
tax
|
1,328
|
|
|
(635)
|
|
|
Total comprehensive income for the year
|
6,085
|
|
|
3,842
|
|
|
|
|
|
|
|
|
|
Total comprehensive income attributable to ordinary
shareholders
|
5,524
|
|
|
3,288
|
|
|
Total comprehensive income attributable to other equity
holders
|
463
|
|
|
498
|
|
|
Total comprehensive income attributable to equity
holders
|
5,987
|
|
|
3,786
|
|
|
Total comprehensive income attributable to non-controlling
interests
|
98
|
|
|
56
|
|
|
Total comprehensive income for the year
|
6,085
|
|
|
3,842
|
|
1 Current tax and deferred
tax impacts, previously shown in aggregate for each reserve, are
now presented alongside each line item. Comparatives are
represented on a consistent basis.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
|
|
At 31 Dec
2025
£m
|
|
|
At 31 Dec
2024
£m
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash and balances at central banks
|
56,661
|
|
|
62,705
|
|
|
Financial assets at fair value through profit or loss
|
240,413
|
|
|
215,925
|
|
|
Derivative financial instruments
|
19,727
|
|
|
24,065
|
|
|
Loans and advances to banks
|
7,236
|
|
|
7,900
|
|
|
Loans and advances to customers
|
481,463
|
|
|
459,857
|
|
|
Reverse repurchase agreements
|
50,986
|
|
|
49,476
|
|
|
Debt securities
|
13,987
|
|
|
14,544
|
|
|
Financial assets at amortised cost
|
553,672
|
|
|
531,777
|
|
|
Financial assets at fair value through other comprehensive
income
|
36,320
|
|
|
30,690
|
|
|
Goodwill and other intangible assets
|
8,593
|
|
|
8,188
|
|
|
Current tax recoverable
|
1,346
|
|
|
526
|
|
|
Deferred tax assets
|
3,990
|
|
|
5,005
|
|
|
Retirement benefit assets
|
2,695
|
|
|
3,028
|
|
|
Other assets
|
20,655
|
|
|
24,788
|
|
|
Total assets
|
944,072
|
|
|
906,697
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Deposits from banks
|
5,779
|
|
|
6,158
|
|
|
Customer deposits
|
496,457
|
|
|
482,745
|
|
|
Repurchase agreements at amortised cost
|
38,570
|
|
|
37,760
|
|
|
Financial liabilities at fair value through profit or
loss
|
27,909
|
|
|
27,611
|
|
|
Derivative financial instruments
|
16,132
|
|
|
21,676
|
|
|
Notes in circulation
|
2,118
|
|
|
2,121
|
|
|
Debt securities in issue at amortised cost
|
78,271
|
|
|
70,834
|
|
|
Liabilities arising from insurance and participating investment
contracts
|
135,284
|
|
|
122,064
|
|
|
Liabilities arising from non-participating investment
contracts
|
61,640
|
|
|
51,228
|
|
|
Other liabilities
|
20,945
|
|
|
25,918
|
|
|
Retirement benefit obligations
|
120
|
|
|
122
|
|
|
Current tax liabilities
|
52
|
|
|
45
|
|
|
Deferred tax liabilities
|
146
|
|
|
125
|
|
|
Provisions
|
2,888
|
|
|
2,313
|
|
|
Subordinated liabilities
|
9,894
|
|
|
10,089
|
|
|
Total liabilities
|
896,205
|
|
|
860,809
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Share capital
|
5,889
|
|
|
6,062
|
|
|
Share premium account
|
18,797
|
|
|
18,720
|
|
|
Other reserves
|
10,744
|
|
|
8,827
|
|
|
Retained profits
|
6,291
|
|
|
5,912
|
|
|
Ordinary shareholders’ equity
|
41,721
|
|
|
39,521
|
|
|
Other equity instruments
|
5,947
|
|
|
6,195
|
|
|
Total equity excluding non-controlling interests
|
47,668
|
|
|
45,716
|
|
|
Non-controlling interests
|
199
|
|
|
172
|
|
|
Total equity
|
47,867
|
|
|
45,888
|
|
|
Total equity and liabilities
|
944,072
|
|
|
906,697
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
|
|
|
Attributable to ordinary shareholders
|
Other
equity
instruments
£m
|
|
|
Non-
controlling
interests
£m
|
|
|
Total
£m
|
|
||||||||||||||
|
|
|
Share
capital2
£m
|
|
|
Share premium2
£m
|
|
Other
reserves
£m
|
|
Retained
profits
£m
|
|
|
Total
£m
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2025
|
|
6,062
|
|
|
18,720
|
|
|
8,827
|
|
|
5,912
|
|
|
39,521
|
|
|
6,195
|
|
|
172
|
|
|
45,888
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
–
|
|
|
–
|
|
|
–
|
|
|
4,196
|
|
|
4,196
|
|
|
463
|
|
|
98
|
|
|
4,757
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Post-retirement defined benefit scheme remeasurements, net of
tax
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(385)
|
|
|
(385)
|
|
|
–
|
|
|
–
|
|
|
(385)
|
|
|
Movements in revaluation reserve in respect of FVOCI assets, net of
tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities
|
|
–
|
|
|
–
|
|
|
24
|
|
|
–
|
|
|
24
|
|
|
–
|
|
|
–
|
|
|
24
|
|
|
Equity shares
|
|
–
|
|
|
–
|
|
|
34
|
|
|
–
|
|
|
34
|
|
|
–
|
|
|
–
|
|
|
34
|
|
|
Gains and losses attributable to own credit risk, net of
tax
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(91)
|
|
|
(91)
|
|
|
–
|
|
|
–
|
|
|
(91)
|
|
|
Movements in cash flow hedge reserve, net of tax
|
|
–
|
|
|
–
|
|
|
1,692
|
|
|
–
|
|
|
1,692
|
|
|
–
|
|
|
–
|
|
|
1,692
|
|
|
Movements in foreign currency translation reserve, net of
tax
|
|
–
|
|
|
–
|
|
|
54
|
|
|
–
|
|
|
54
|
|
|
–
|
|
|
–
|
|
|
54
|
|
|
Total other comprehensive income (loss)
|
|
–
|
|
|
–
|
|
|
1,804
|
|
|
(476)
|
|
|
1,328
|
|
|
–
|
|
|
–
|
|
|
1,328
|
|
|
Total comprehensive income1
|
|
–
|
|
|
–
|
|
|
1,804
|
|
|
3,720
|
|
|
5,524
|
|
|
463
|
|
|
98
|
|
|
6,085
|
|
|
Transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Dividends
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(2,000)
|
|
|
(2,000)
|
|
|
–
|
|
|
(51)
|
|
|
(2,051)
|
|
|
Distributions on other equity instruments
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(463)
|
|
|
–
|
|
|
(463)
|
|
|
Issue of ordinary shares
|
|
47
|
|
|
77
|
|
|
–
|
|
|
–
|
|
|
124
|
|
|
–
|
|
|
–
|
|
|
124
|
|
|
Share buyback
|
|
(220)
|
|
|
–
|
|
|
220
|
|
|
(1,710)
|
|
|
(1,710)
|
|
|
–
|
|
|
–
|
|
|
(1,710)
|
|
|
Issue of other equity instruments
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(7)
|
|
|
(7)
|
|
|
1,511
|
|
|
–
|
|
|
1,504
|
|
|
Repurchases and redemptions of other equity
instruments
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(1,759)
|
|
|
–
|
|
|
(1,759)
|
|
|
Movement in treasury shares
|
|
–
|
|
|
–
|
|
|
–
|
|
|
38
|
|
|
38
|
|
|
–
|
|
|
–
|
|
|
38
|
|
|
Value of employee services
|
|
–
|
|
|
–
|
|
|
–
|
|
|
211
|
|
|
211
|
|
|
–
|
|
|
–
|
|
|
211
|
|
|
Changes in non-controlling interests
|
|
–
|
|
|
–
|
|
|
–
|
|
|
20
|
|
|
20
|
|
|
–
|
|
|
(20)
|
|
|
–
|
|
|
Total transactions with owners
|
|
(173)
|
|
|
77
|
|
|
220
|
|
|
(3,448)
|
|
|
(3,324)
|
|
|
(711)
|
|
|
(71)
|
|
|
(4,106)
|
|
|
Realised gains and losses on FVOCI equity shares
|
|
–
|
|
|
–
|
|
|
(107)
|
|
|
107
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
At 31 December 2025
|
|
5,889
|
|
|
18,797
|
|
|
10,744
|
|
|
6,291
|
|
|
41,721
|
|
|
5,947
|
|
|
199
|
|
|
47,867
|
|
1 Total comprehensive
income attributable to owners of the parent was a surplus of
£5,987 million.
2 Share capital and share
premium, previously presented in aggregate, are shown separately.
Comparatives have been represented on a consistent
basis.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
(continued)
|
|
|
Attributable to ordinary shareholders
|
Other
equity
instruments
£m
|
|
|
Non-
controlling
interests
£m
|
|
|
Total
£m
|
|
||||||||||||||
|
|
|
Share
capital2
£m
|
|
|
Share premium2
£m
|
|
Other
reserves
£m
|
|
Retained
profits
£m
|
|
|
Total
£m
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2024
|
|
6,358
|
|
|
18,568
|
|
|
8,508
|
|
|
6,790
|
|
|
40,224
|
|
|
6,940
|
|
|
201
|
|
|
47,365
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
–
|
|
|
–
|
|
|
–
|
|
|
3,923
|
|
|
3,923
|
|
|
498
|
|
|
56
|
|
|
4,477
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Post-retirement defined benefit scheme remeasurements, net of
tax
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(564)
|
|
|
(564)
|
|
|
–
|
|
|
–
|
|
|
(564)
|
|
|
Movements in revaluation reserve in respect of FVOCI assets, net of
tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities
|
|
–
|
|
|
–
|
|
|
(46)
|
|
|
–
|
|
|
(46)
|
|
|
–
|
|
|
–
|
|
|
(46)
|
|
|
Equity shares
|
|
–
|
|
|
–
|
|
|
93
|
|
|
–
|
|
|
93
|
|
|
–
|
|
|
–
|
|
|
93
|
|
|
Gains and losses attributable to own credit risk, net of
tax
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(56)
|
|
|
(56)
|
|
|
–
|
|
|
–
|
|
|
(56)
|
|
|
Movements in cash flow hedge reserve, net of tax
|
|
–
|
|
|
–
|
|
|
11
|
|
|
–
|
|
|
11
|
|
|
–
|
|
|
–
|
|
|
11
|
|
|
Movements in foreign currency translation reserve, net of
tax
|
|
–
|
|
|
–
|
|
|
(73)
|
|
|
–
|
|
|
(73)
|
|
|
–
|
|
|
–
|
|
|
(73)
|
|
|
Total other comprehensive loss
|
|
–
|
|
|
–
|
|
|
(15)
|
|
|
(620)
|
|
|
(635)
|
|
|
–
|
|
|
–
|
|
|
(635)
|
|
|
Total comprehensive (loss) income1
|
|
–
|
|
|
–
|
|
|
(15)
|
|
|
3,303
|
|
|
3,288
|
|
|
498
|
|
|
56
|
|
|
3,842
|
|
|
Transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Dividends
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(1,828)
|
|
|
(1,828)
|
|
|
–
|
|
|
(83)
|
|
|
(1,911)
|
|
|
Distributions on other equity instruments
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(498)
|
|
|
–
|
|
|
(498)
|
|
|
Issue of ordinary shares
|
|
73
|
|
|
117
|
|
|
–
|
|
|
–
|
|
|
190
|
|
|
–
|
|
|
–
|
|
|
190
|
|
|
Share buyback
|
|
(369)
|
|
|
–
|
|
|
369
|
|
|
(2,011)
|
|
|
(2,011)
|
|
|
–
|
|
|
–
|
|
|
(2,011)
|
|
|
Redemption of preference shares
|
|
–
|
|
|
35
|
|
|
(35)
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
Issue of other equity instruments
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(6)
|
|
|
(6)
|
|
|
763
|
|
|
–
|
|
|
757
|
|
|
Repurchases and redemptions of other equity
instruments
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(316)
|
|
|
(316)
|
|
|
(1,508)
|
|
|
–
|
|
|
(1,824)
|
|
|
Movement in treasury shares
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(173)
|
|
|
(173)
|
|
|
–
|
|
|
–
|
|
|
(173)
|
|
|
Value of employee services
|
|
–
|
|
|
–
|
|
|
–
|
|
|
153
|
|
|
153
|
|
|
–
|
|
|
–
|
|
|
153
|
|
|
Changes in non-controlling interests
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(2)
|
|
|
(2)
|
|
|
Total transactions with owners
|
|
(296)
|
|
|
152
|
|
|
334
|
|
|
(4,181)
|
|
|
(3,991)
|
|
|
(1,243)
|
|
|
(85)
|
|
|
(5,319)
|
|
|
Realised gains and losses on equity shares held at
FVOCI
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
At 31 December 2024
|
|
6,062
|
|
|
18,720
|
|
|
8,827
|
|
|
5,912
|
|
|
39,521
|
|
|
6,195
|
|
|
172
|
|
|
45,888
|
|
1 Total comprehensive
income attributable to owners of the parent was a surplus of
£3,786 million.
2 Share capital and share
premium, previously presented in aggregate, are shown separately.
Comparatives have been represented on a consistent
basis.
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
|
|
2025
£m
|
|
|
2024
£m
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Profit before tax
|
6,661
|
|
|
5,971
|
|
|
Adjustments for:
|
|
|
|
|
|
|
Change in operating assets
|
(40,689)
|
|
|
(39,622)
|
|
|
Change in operating liabilities
|
35,403
|
|
|
23,603
|
|
|
Non-cash and other items
|
6,431
|
|
|
5,990
|
|
|
Tax paid
|
(2,305)
|
|
|
(1,305)
|
|
|
Tax refunded
|
200
|
|
|
970
|
|
|
Net cash provided by (used in) operating activities
|
5,701
|
|
|
(4,393)
|
|
|
Cash flows used in investing activities
|
|
|
|
|
|
|
Purchase of financial assets
|
(19,762)
|
|
|
(10,518)
|
|
|
Proceeds from sale and maturity of financial assets
|
14,309
|
|
|
7,062
|
|
|
Purchase of property, plant and equipment
|
(5,071)
|
|
|
(4,364)
|
|
|
Purchase of other intangible assets
|
(1,252)
|
|
|
(1,259)
|
|
|
Proceeds from sale of property, plant and equipment
|
1,560
|
|
|
1,505
|
|
|
Proceeds from sale of goodwill and other intangible
assets
|
–
|
|
|
62
|
|
|
Acquisition of businesses and joint ventures, net of cash
acquired
|
27
|
|
|
(179)
|
|
|
Net cash used in investing activities
|
(10,189)
|
|
|
(7,691)
|
|
|
Cash flows used in financing activities
|
|
|
|
|
|
|
Dividends paid to ordinary shareholders
|
(2,000)
|
|
|
(1,828)
|
|
|
Distributions in respect of other equity instruments
|
(463)
|
|
|
(498)
|
|
|
Distributions in respect of non-controlling interests
|
(51)
|
|
|
(83)
|
|
|
Interest paid on subordinated liabilities
|
(806)
|
|
|
(622)
|
|
|
Proceeds from issue of subordinated liabilities
|
1,757
|
|
|
812
|
|
|
Proceeds from issue of other equity instruments
|
1,504
|
|
|
757
|
|
|
Proceeds from issue of ordinary shares
|
99
|
|
|
187
|
|
|
Share buyback
|
(1,710)
|
|
|
(2,011)
|
|
|
Repayment of subordinated liabilities
|
(1,928)
|
|
|
(819)
|
|
|
Repurchases and redemptions of other equity
instruments
|
(1,759)
|
|
|
(1,824)
|
|
|
Change in stake of non-controlling interests
|
–
|
|
|
(2)
|
|
|
Net cash used in financing activities
|
(5,357)
|
|
|
(5,931)
|
|
|
Effects of exchange rate changes on cash and cash
equivalents
|
(378)
|
|
|
(7)
|
|
|
Change in cash and cash equivalents
|
(10,223)
|
|
|
(18,022)
|
|
|
Cash and cash equivalents at beginning of year
|
70,816
|
|
|
88,838
|
|
|
Cash and cash equivalents at end of year
|
60,593
|
|
|
70,816
|
|
Cash and cash equivalents comprise cash and non-mandatory balances
with central banks and amounts due from banks with a maturity of
less than three months. Included within cash and cash equivalents
at 31 December 2025 is £16 million (31 December 2024:
£23 million) of restricted cash and cash equivalents held
within the Group’s long-term insurance and investments
operations, which is not immediately available for use in the
business.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: Basis of preparation and accounting policies
These condensed consolidated financial statements as at and for the
year to 31 December 2025 have been prepared in accordance with the
Listing Rules of the Financial Conduct Authority (FCA) relating to
Preliminary Announcements 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. Copies of the 2025 annual report
and accounts will be available from 18 February 2026, via the
Group’s website and upon request from Investor Relations,
Lloyds Banking Group plc, 33 Old Broad Street, London, EC2N
1HZ.
The directors consider that it is appropriate to continue to adopt
the going concern basis in preparing the financial statements. In
reaching this assessment, the directors have considered the
Group’s capital and funding position, the impact of climate
change upon the Group’s future performance and the results
from stress testing scenarios.
The Group’s accounting policies are consistent with those
applied by the Group in its financial statements for the year ended
31 December 2024 and there have been no changes in the
Group’s methods of computation.
Net investment return on assets held to back insurance and
investment contracts, previously shown within net trading income,
is presented separately on the face of the income statement. Net
finance expense in respect of insurance and investment contracts,
previously shown outside total income in the income statement, is
included within other income as part of total income. This change
has been made to represent more clearly the impact of the
Group’s insurance business on the results. Comparative
periods are represented on a consistent basis.
The financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 (the Act). The statutory accounts for the
year ended 31 December 2025 will be published on the Group’s
website and will be delivered to the Registrar of Companies in
accordance with section 441 of the Act. The statutory accounts for
the year ended 31 December 2024 have been filed with the
Registrar of Companies. The report of the auditor on those accounts
was unqualified, did not draw attention to any matters by way of
emphasis and did not include a statement under sections 498(2) or
498(3) of the Act.
Note 2: Critical accounting judgements and key sources of
estimation uncertainty
The preparation of the Group’s financial statements in
accordance with IFRS Accounting Standards 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 these condensed consolidated 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 critical accounting judgements and key sources of estimation
uncertainty made by management in applying the Group's accounting
policies are unchanged from 31 December 2024 and are set out in
full in the Group’s 2024 annual report and
accounts.
NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
Note 3: Provisions
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 actions from time
to time. Any of these matters, 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 full year to 31 December 2025 the Group charged a
further £968 million in respect of legal actions and other
regulatory matters and the unutilised balance at 31 December
2025 was £2,276 million (31 December 2024:
£1,600 million). The most significant items are outlined
below.
Motor commission review
The Group recognised a further £800 million provision in the
third quarter of 2025 following the FCA’s announcement in
October 2025 that it intends to implement a motor finance
commission redress scheme. As at 31 December 2025, 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 the Supreme
Court judgment, the FCA published Consultation Paper CP25/27 in
October 2025 setting out detailed proposals for a scheme (including
their proposed basis) to redress unfair customer
relationships.
The increased provision reflects the increased likelihood of a
higher number of scheme cases (i.e. discretionary commission
arrangements, commercial tie or high commission arrangements) being
eligible for redress, including those dating back to 2007 and also
the likelihood of a higher level of redress than anticipated in the
previous scenario-based provision; the FCA's proposed redress
calculation approach is less closely linked to customer loss than
previously anticipated. The Group has made representations to the
FCA on a number of aspects of the proposed scheme.
On 3 December 2025, the FCA announced that the pause on motor
finance complaints handling would be lifted on 31 May 2026 for
complaints made in relation to the subject matter of the scheme,
and that this timeline may be superseded in due course by the
operational timetable to be set out in the final scheme rules. The
FCA also lifted the pause on handling motor finance complaints in
respect of leasing products on 5 December 2025. 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. In April 2026, the Court of Appeal is expected to
consider whether, in the context of motor finance claims, it is
possible for multiple unfair relationship claims to be dealt with
via one omnibus claim form.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
Note 3: Provisions (continued)
Motor commission review (continued)
In establishing the provision estimate, the Group has considered
the potential impact of the FCA’s proposed redress scheme, as
well as a number of possible modifications to the scheme which
might arise as a result of the consultation. The Group will
continue to assess developments and potential impacts following the
announcement by the FCA of the final scheme rules, which are
expected by the end of March 2026. The ultimate financial impact
will be determined by a number of factors still to be resolved, in
particular the final scheme rules, customer response rates, scheme
operating costs, any further interventions and any broader
implications of legal proceedings and complaints. Given the
significant level of uncertainty in terms of the final outcome, the
ultimate financial impact could materially differ from the amount
provided. The total £1,950 million provision represents 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. There is no
confirmed timeline for the completion of the re-review process nor
the separate review by Dame Linda Dobbs. The Group remains
committed to implementing the recommendations in full.
Payment protection insurance (PPI)
The Group continues to challenge PPI litigation cases, with mainly
operational costs and legal fees associated with litigation
activity 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.
Note 4: Dividends on ordinary shares and share buyback
The directors have recommended a final dividend, which is subject
to approval by the shareholders at the annual general meeting on
14 May 2026, of 2.43 pence per ordinary share (2024: 2.11
pence per ordinary share), equivalent to £1,429 million,
before the impact of any cancellations of shares under the
Company’s buyback programme (2024: £1,271 million,
following cancellations of shares under the Company’s 2025
buyback programme up to the record date), which will be paid on
19 May 2026. These financial statements do not reflect the
recommended dividend. Shareholders who have already joined the
dividend reinvestment plan will automatically receive shares
instead of the cash dividend. Key dates for the payment of the
recommended dividend are outlined on page 1.
Share buyback
The Board has announced its intention to implement an ordinary
share buyback of up to £1.75 billion. This represents the
return of capital, over and above the Board’s view of the
current level of capital required to grow the business, meet
current and future regulatory requirements and cover uncertainties.
The share buyback programme will commence as soon as is practicable
and is expected to be completed, subject to continued authority
from the PRA, by 31 December 2026.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) continued
Note 5: Contingent liabilities
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).
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 and this cap is set at the cash consideration received by
the Group for the sale of its stake in Visa Europe to Visa Inc in
2016. In 2016, the Group received Visa preference shares as part of
the consideration for the sale of its shares in Visa Europe. A
release assessment is carried out by Visa on certain anniversaries
of the sale (in line with the Visa Europe sale documentation) and
as a result, some Visa preference shares may be converted into Visa
Inc Class A common stock from time to time. Any such releases and
any subsequent sales of Visa common stock do not impact the
contingent liability.
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.
Certain Group companies are also named as defendants in two Dutch
class actions, 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.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) continued
Note 5: Contingent liabilities (continued)
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 and
has applied for permission to appeal the Court’s decision not
to determine a central legal issue on a summary basis. At this
stage, it is not practicable to estimate the final outcome of the
matter and 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 3 above.
KEY DATES
|
Annual Report and Accounts published
|
18 February 2026
|
|
Shares quoted ex-dividend for 2025 final dividend
|
9 April 2026
|
|
Record date for 2025 final dividend
|
10 April 2026
|
|
Final date for joining or leaving the final 2025 dividend
reinvestment plan
|
27 April 2026
|
|
Q1 2026 Interim Management Statement
|
29 April 2026
|
|
Annual General Meeting
|
14 May 2026
|
|
Final 2025 dividend paid
|
19 May 2026
|
|
2026 Half-year results
|
30 July 2026
|
|
Q3 2026 Interim Management Statement
|
29 October 2026
|
BASIS OF PRESENTATION
This release covers the results of Lloyds Banking Group plc
together with its subsidiaries (the Group) for the year ended 31
December 2025. The financial information contained in this document
is unaudited and does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006 (the Act).
The statutory accounts for the year ended 31 December 2024 were
approved by the directors on 19 February 2025 and were delivered to
the Registrar of Companies. The independent auditors’ report
on those accounts was unqualified and did not include a statement
under sections 498(2) (accounting records or returns inadequate or
accounts not agreeing with records and returns) or 498(3) (failure
to obtain necessary information and explanations) of the
Act.
Unless otherwise stated, income statement commentaries throughout
this document compare the year ended 31 December 2025 to the year
ended 31 December 2024 and the balance sheet analysis compares the
Group balance sheet as at 31 December 2025 to the Group balance
sheet as at 31 December 2024. The Group uses a number of
alternative performance measures, including underlying profit, in
the discussion of its business performance and financial position.
These measures are labelled with a superscript ‘A’
throughout this document. Further information on these measures is
set out below. Unless otherwise stated, commentary on pages
1 to 2 and pages 1 to 8 are given on an underlying
basis.
The Group will publish the 2025 annual report and accounts and
Pillar 3 disclosures on 18 February 2026. A copy of the disclosures
will be available to view at:
www.lloydsbankinggroup.com/investors/financial-downloads.html.
ALTERNATIVE PERFORMANCE MEASURES
The statutory results are supplemented with those presented on an
underlying basis and also with other alternative performance
measures. This is to enable a comprehensive understanding of the
Group and facilitate comparison with peers. The Group Executive
Committee, which is the ‘chief operating decision
maker’ (as defined by IFRS 8 Operating
Segments) for the Group,
reviews the Group’s results on an underlying basis in order
to assess performance and allocate resources. Management uses
underlying profit before tax, an alternative performance measure,
as a measure of performance and believes that it provides important
information for investors. This is because it allows for a
comparable representation of the Group’s performance by
removing the impact of items such as volatility caused by market
movements outside the control of management.
In arriving at underlying profit, statutory profit before tax is
adjusted for the items below, to allow a comparison of the
Group’s underlying performance:
●
Restructuring
costs relating to merger, acquisition, integration and disposal
activities
●
Volatility
and other items, which includes the effects of certain asset sales,
the volatility relating to the Group’s hedging arrangements
and that arising in the Insurance business, the unwind of
acquisition-related fair value adjustments and the amortisation of
purchased intangible assets
The analysis of lending and expected credit loss (ECL) allowances
is presented on both a statutory and an underlying basis and a
reconciliation between the two is shown on page 1. On a statutory basis, 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. Over time, these
POCI assets will run off as the loans redeem, pay down or losses
crystallise. The underlying basis assumes that the lending assets
acquired as part of a business combination were originated by the
Group and are classified as either Stage 1, 2 or 3 according to the
change in credit risk over the period since origination. Underlying
ECL allowances have been calculated accordingly. The Group uses the
underlying basis to monitor the creditworthiness of the lending
portfolio and related ECL allowances. The statutory basis also
includes an accounting adjustment within UK Motor Finance required
under IFRS 9 to recognise a continuing involvement asset following
the partial derecognition of a component of the Group's finance
lease book via a securitisation in the third quarter of
2024.
The Group’s alternative performance measures may not be
comparable with similarly titled measures used by other
organisations and should not be viewed in isolation, but instead
should be regarded as supplementary information alongside the
statutory results. The exclusion of certain adjustments from
underlying profit may result in it being materially higher or lower
than statutory profit before tax, for example in the event of a
large restructuring, underlying profit would be higher than
statutory profit before tax.
ALTERNATIVE PERFORMANCE MEASURES (continued)
The Group calculates a number of metrics that are used throughout
the banking and insurance industries on an underlying basis. These
metrics are not necessarily comparable to similarly titled measures
presented by other companies and are not any more authoritative
than measures presented in the financial statements, however
management believes that they are useful in assessing the
performance of the Group and in drawing comparisons between years.
A description of these measures and their calculation, is given
below. Alternative performance measures are used internally in the
Group’s Monthly Management Report.
|
|
|
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|
|
|
|
|
Asset quality ratio
|
|
|
The underlying impairment charge or credit for the period in
respect of loans and advances to customers, both drawn and undrawn,
expressed as a percentage of average gross loans and advances to
customers for the period. This measure is useful in assessing the
credit quality of the loan book.
|
|
|
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|
|
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|
|
Assets under administration (AuA)
|
|
|
AuA represents all assets managed or administered by or on behalf
of the Group’s subsidiaries. It includes assets that are
reported within the Group statutory balance sheet and those that
are reported independently. It is a useful measure as it impacts
potential earnings arising from Asset Management Charges and the
relative size of the business.
|
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|
Assets under administration (net flows)
|
|
|
AuA (net flows) measures the net position of inflows and outflows
to AuAs and is a useful measure of growth in AuA. Inflows include
net premiums and deposits and other funds received from customers
included in AuA. Outflows include net claims, redemptions and
surrenders under other funds withdrawn by customers from AuA. Net
flows exclude market movements.
|
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|
Banking net interest margin
|
|
|
Banking net interest income on customer and product balances in the
banking businesses as a percentage of average gross
interest-earning banking assets for the period. This measure is
useful in assessing the banking profitability.
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|
Cost:income ratio
|
|
|
Total costs as a percentage of net income calculated on an
underlying basis. This measure is useful in assessing the
profitability of the Group’s operations before the effects of
the underlying impairment credit or charge.
|
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|
General insurance combined ratio
|
|
|
General insurance combined ratio is a key metric used in the
insurance industry to assess an insurer's profitability and
operational efficiency, with a ratio below 100% indicating
profitability. It is calculated as incurred claims, and earned
commission or earned expenses, expressed as a percentage of net
insurance revenue.
|
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Gross written premiums
|
|
|
Gross written premiums is a measure of the volume of General
Insurance business written during the period. This measure is
useful for assessing the growth of the General Insurance
business.
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|
Life and pensions sales (present value of new business
premiums)
|
|
|
Present value of regular premiums plus single premiums from new
business written in the current period. This measure is useful for
assessing sales in the Group’s life, pensions and investments
insurance business.
|
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Loan to deposit ratio
|
|
|
Underlying loans and advances to customers divided by customer
deposits.
|
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|
Operating costs
|
|
|
Operating expenses adjusted to remove the impact of operating lease
depreciation, remediation, restructuring costs, the amortisation of
purchased intangibles, the insurance gross up and other statutory
items.
|
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New business value
|
|
|
This represents the value added to the contractual service margin
and risk adjustment at the initial recognition of new contracts,
net of acquisition expenses (derived from the statutory balance
sheet movements) and any loss component on onerous contracts (which
is recognised directly in the income statement) but does not
include existing business increments.
|
|
|
|
|
|
|
|
|
ALTERNATIVE PERFORMANCE MEASURES (continued)
|
|
|
|
|
|
|
|
|
Pro forma CET1 ratio
|
|
|
CET1 ratio adjusted for the effect of the full impact of the
announced ordinary share buyback programme. Where disclosed, the
ratio is further adjusted for the effect of any dividend paid up by
the Insurance business in the subsequent quarter prior to the
publication of the financial results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on tangible equity
|
|
|
Profit attributable to ordinary shareholders, annualised and
divided by average tangible net assets. This measure is useful in
providing a consistent basis with which to measure the
Group’s performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible net assets per share
|
|
|
Net assets excluding intangible assets such as goodwill and
acquisition-related intangibles divided by the number of ordinary
shares in issue. This measure is useful in assessing shareholder
value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before impairment
|
|
|
Underlying profit adjusted to remove the underlying impairment
credit or charge. This measure is useful in allowing for a
comparable representation of the Group’s performance before
the effects of the forward-looking underlying impairment credit or
charge.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit
|
|
|
Statutory profit before tax adjusted for certain items as detailed
above. This measure allows for a comparable representation of the
Group’s performance by removing the impact of certain items
including volatility caused by market movements outside the control
of management.
|
|
|
|
|
|
|
|
|
The following
table reconciles the Group’s income statement on a statutory
basis to its underlying basis equivalent:
|
Statutory basis
|
|
|
Removal of:
|
|
Underlying basisA
|
||||||||
|
|
£m
|
|
|
Restructuring, volatility
and other
items1,2
£m
|
|
Insurance
gross up3
£m
|
|
|
£m
|
|
|
|
|
|
2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
13,230
|
|
|
403
|
|
|
2
|
|
|
13,635
|
|
|
Underlying net interest income
|
|
Other income
|
6,192
|
|
|
(326)
|
|
|
254
|
|
|
6,120
|
|
|
Underlying other income
|
|
|
|
|
|
(1,454)
|
|
|
–
|
|
|
(1,454)
|
|
|
Operating lease depreciation4
|
|
Total income
|
19,422
|
|
|
(1,377)
|
|
|
256
|
|
|
18,301
|
|
|
Net income
|
|
Operating expenses4
|
(11,966)
|
|
|
1,493
|
|
|
(256)
|
|
|
(10,729)
|
|
|
Total costs
|
|
Impairment charge
|
(795)
|
|
|
–
|
|
|
–
|
|
|
(795)
|
|
|
Underlying impairment charge
|
|
Profit before tax
|
6,661
|
|
|
116
|
|
|
–
|
|
|
6,777
|
|
|
Underlying profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
12,277
|
|
|
578
|
|
|
(10)
|
|
|
12,845
|
|
|
Underlying net interest income
|
|
Other income
|
5,726
|
|
|
(375)
|
|
|
246
|
|
|
5,597
|
|
|
Underlying other income
|
|
|
|
|
|
(1,325)
|
|
|
–
|
|
|
(1,325)
|
|
|
Operating lease depreciation4
|
|
Total income
|
18,003
|
|
|
(1,122)
|
|
|
236
|
|
|
17,117
|
|
|
Net income
|
|
Operating expenses4
|
(11,601)
|
|
|
1,496
|
|
|
(236)
|
|
|
(10,341)
|
|
|
Total costs
|
|
Impairment charge
|
(431)
|
|
|
(2)
|
|
|
–
|
|
|
(433)
|
|
|
Underlying impairment charge
|
|
Profit before tax
|
5,971
|
|
|
372
|
|
|
–
|
|
|
6,343
|
|
|
Underlying profit
|
1 In the year ended 31
December 2025 this comprised the effects of market and other
volatility (gains of £72 million); the amortisation of
purchased intangibles (£86 million); restructuring costs
(£46 million); and fair value unwind (losses of
£56 million).
2 In the year ended 31
December 2024 this comprised the effects of market and other
volatility (losses of £144 million); the amortisation of
purchased intangibles (£81 million); restructuring costs
(£40 million); and fair value unwind (losses of
£107 million).
3 Under 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.
4 Net of losses on
disposal of operating lease assets of £10 million (2024:
profit of £59 million). Statutory operating expenses includes
operating lease depreciation. On an underlying basis operating
lease depreciation is included in net income.
ALTERNATIVE PERFORMANCE MEASURES (continued)
|
|
2025
£m
|
|
|
2024
£m
|
|
|
Asset quality ratioA
|
|
|
|
|
|
|
Underlying impairment charge (£m)
|
(795)
|
|
|
(433)
|
|
|
Remove non-customer underlying impairment charge (credit)
(£m)
|
1
|
|
|
(23)
|
|
|
Underlying customer related impairment charge
(£m)
|
(794)
|
|
|
(456)
|
|
|
|
|
|
|
|
|
|
Loans and advances to customers (£bn)
|
481.5
|
|
|
459.9
|
|
|
Remove finance lease gross-up1
(£bn)
|
(0.4)
|
|
|
(0.8)
|
|
|
Underlying loans and advances to customersA
(£bn)
|
481.1
|
|
|
459.1
|
|
|
Add back expected credit loss allowance (drawn, statutory basis)
(£bn)
|
3.0
|
|
|
3.2
|
|
|
Add back acquisition related fair value adjustments
(£bn)
|
0.1
|
|
|
0.1
|
|
|
Underlying gross loans and advances to customers
(£bn)
|
484.2
|
|
|
462.4
|
|
|
Averaging (£bn)
|
(9.8)
|
|
|
(3.5)
|
|
|
Average underlying gross loans and advances to customers
(£bn)
|
474.4
|
|
|
458.9
|
|
|
|
|
|
|
|
|
|
Asset quality ratioA
|
0.17%
|
|
|
0.10%
|
|
|
|
|
|
|
|
|
|
Banking net interest
marginA
|
|
|
|
|
|
|
Underlying net interest incomeA
(£m)
|
13,635
|
|
|
12,845
|
|
|
Remove non-banking underlying net interest expense
(£m)
|
515
|
|
|
469
|
|
|
Banking underlying net interest income (£m)
|
14,150
|
|
|
13,314
|
|
|
|
|
|
|
|
|
|
Underlying gross loans and advances to customers
(£bn)
|
484.2
|
|
|
462.4
|
|
|
Adjustment for non-banking and other items:
|
|
|
|
|
|
|
Fee-based loans and advances (£bn)
|
(11.3)
|
|
|
(10.0)
|
|
|
Other (£bn)
|
(0.1)
|
|
|
2.0
|
|
|
Interest-earning banking assets (£bn)
|
472.8
|
|
|
454.4
|
|
|
Averaging (£bn)
|
(9.9)
|
|
|
(3.2)
|
|
|
Average interest-earning banking assetsA
(£bn)
|
462.9
|
|
|
451.2
|
|
|
|
|
|
|
|
|
|
Banking net interest marginA
|
3.06%
|
|
|
2.95%
|
|
|
|
|
|
|
|
|
|
Cost:income ratioA
|
|
|
|
|
|
|
Operating costsA
(£m)
|
9,761
|
|
|
9,442
|
|
|
Remediation (£m)
|
968
|
|
|
899
|
|
|
Total costs (£m)
|
10,729
|
|
|
10,341
|
|
|
Net income (£m)
|
18,301
|
|
|
17,117
|
|
|
|
|
|
|
|
|
|
Cost:income ratioA
|
58.6%
|
|
|
60.4%
|
|
1 The finance lease gross
up represents a statutory accounting adjustment required under IFRS
9 to recognise a continuing involvement asset following the partial
derecognition of a component of the Group's finance lease book via
a securitisation in the third quarter of 2024.
ALTERNATIVE PERFORMANCE MEASURES (continued)
|
|
2025
£m
|
|
|
2024
£m
|
|
|
General insurance combined
ratioA
|
|
|
|
|
|
|
Insurance revenue
|
752
|
|
|
655
|
|
|
Adjustment for:
|
|
|
|
|
|
|
Allocation of reinsurance premiums
|
(49)
|
|
|
(47)
|
|
|
Net insurance revenue
|
703
|
|
|
608
|
|
|
|
|
|
|
|
|
|
Total incurred claims
|
376
|
|
|
344
|
|
|
Total expenses
|
217
|
|
|
221
|
|
|
Insurance service expense
|
593
|
|
|
565
|
|
|
Adjustment for:
|
|
|
|
|
|
|
Amounts recoverable from reinsurers for incurred
claims
|
(4)
|
|
|
(6)
|
|
|
Other operating expenses
|
38
|
|
|
33
|
|
|
Total commission and expenses
|
627
|
|
|
592
|
|
|
|
|
|
|
|
|
|
General insurance combined ratioA
|
89%
|
|
|
97%
|
|
|
|
|
|
|
|
|
|
Operating costsA
|
|
|
|
|
|
|
Operating expenses
|
11,966
|
|
|
11,601
|
|
|
Adjustment for:
|
|
|
|
|
|
|
Operating lease depreciation
|
(1,454)
|
|
|
(1,325)
|
|
|
Remediation
|
(968)
|
|
|
(899)
|
|
|
Restructuring
|
(46)
|
|
|
(40)
|
|
|
Amortisation of purchased intangibles
|
(86)
|
|
|
(81)
|
|
|
Insurance gross up
|
256
|
|
|
236
|
|
|
Other
|
93
|
|
|
(50)
|
|
|
Operating costsA
|
9,761
|
|
|
9,442
|
|
|
|
|
|
|
|
|
|
Return on tangible
equityA
|
|
|
|
|
|
|
Profit attributable to ordinary shareholders (£m)
|
4,196
|
|
|
3,923
|
|
|
|
|
|
|
|
|
|
Average ordinary shareholders’ equity (£bn)
|
40.5
|
|
|
40.0
|
|
|
Remove average goodwill and other intangible assets
(£bn)
|
(7.8)
|
|
|
(8.0)
|
|
|
Average tangible equity (£bn)
|
32.7
|
|
|
32.0
|
|
|
|
|
|
|
|
|
|
Return on tangible equityA
|
12.9%
|
|
|
12.3%
|
|
|
|
|
|
|
|
|
|
Underlying profit before
impairmentA
|
|
|
|
|
|
|
Statutory profit before tax (£m)
|
6,661
|
|
|
5,971
|
|
|
Remove impairment charge (£m)
|
795
|
|
|
431
|
|
|
Remove volatility and other items including restructuring
(£m)
|
116
|
|
|
374
|
|
|
Underlying profit before impairmentA
(£m)
|
7,572
|
|
|
6,776
|
|
|
|
|
|
|
|
|
|
Life and pensions sales (present value
of new business premiums)A
|
|
|
|
|
|
|
Premiums received (£m)
|
10,620
|
|
|
10,679
|
|
|
Investment sales (£m)
|
13,715
|
|
|
10,986
|
|
|
Effect of capitalisation factor (£m)
|
4,047
|
|
|
3,609
|
|
|
Effect of annualisation (£m)
|
526
|
|
|
401
|
|
|
Gross premiums from existing long-term business
(£m)
|
(7,861)
|
|
|
(7,426)
|
|
|
Life and pensions sales (present value of new business
premiums)A
(£m)
|
21,047
|
|
|
18,249
|
|
ALTERNATIVE PERFORMANCE MEASURES (continued)
|
|
|
2025
£m
|
|
|
2024
£m
|
|
|
New business value of insurance and
participating investment contracts recognised in the
yearA
|
|
|
|
|
|
|
|
Contractual service margin
|
|
18
|
|
|
61
|
|
|
Risk adjustment for non-financial risk
|
|
60
|
|
|
65
|
|
|
Losses recognised on initial recognition
|
|
(92)
|
|
|
(93)
|
|
|
|
|
(14)
|
|
|
33
|
|
|
Impacts of reinsurance contracts recognised in the
year
|
|
46
|
|
|
39
|
|
|
Roll forward of new business to end of period including increments,
single premiums and transfers, of contracts initially recognised in
the year
|
|
48
|
|
|
35
|
|
|
Amounts relating to contracts modified to add a drawdown feature
and recognised as new contracts
|
|
–
|
|
|
4
|
|
|
New business value of insurance and participating investment
contracts recognised in the yearA
|
|
80
|
|
|
111
|
|
|
|
At 31 Dec
2025
|
|
|
At 31 Dec 2024
|
|
|
Assets under
administrationA
|
|
|
|
|
|
|
Total insurance assets
|
217,155
|
|
|
197,135
|
|
|
Adjustment for:
|
|
|
|
|
|
|
Assets not backing customer products within AuA
|
(5,483)
|
|
|
(10,423)
|
|
|
Structured entities consolidated under IFRS 10
|
(12,756)
|
|
|
(11,309)
|
|
|
Assets backing Insurance and annuity products not considered
AuA
|
(15,446)
|
|
|
(14,849)
|
|
|
Investment products and share dealing business managed by
Insurance, Pensions and Investments, but not on the consolidated
balance sheet
|
99,087
|
|
|
89,858
|
|
|
Other
|
(2,934)
|
|
|
(3,281)
|
|
|
Total customer assets under administration
|
279,623
|
|
|
247,131
|
|
|
|
|
|
|
|
|
|
Loan to deposit
ratioA
|
|
|
|
|
|
|
Underlying loans and advances to customersA
(£bn)
|
481.1
|
|
|
459.1
|
|
|
Customer deposits (£bn)
|
496.5
|
|
|
482.7
|
|
|
|
|
|
|
|
|
|
Loan to deposit ratioA
|
97%
|
|
|
95%
|
|
|
|
|
|
|
|
|
|
Pro forma CET1
ratioA
|
|
|
|
|
|
|
CET1 ratio
|
14.0%
|
|
|
14.2%
|
|
|
Insurance dividend and share buyback accrual1
|
(0.8)%
|
|
|
(0.7)%
|
|
|
Pro forma CET1 ratioA
|
13.2%
|
|
|
13.5%
|
|
|
|
|
|
|
|
|
|
Tangible net assets per
shareA
|
|
|
|
|
|
|
Ordinary shareholders’ equity (£m)
|
41,721
|
|
|
39,521
|
|
|
Goodwill and other intangible assets (£m)
|
(8,593)
|
|
|
(8,188)
|
|
|
Deferred tax effects and other adjustments (£m)
|
366
|
|
|
350
|
|
|
Tangible net assets (£m)
|
33,494
|
|
|
31,683
|
|
|
|
|
|
|
|
|
|
Ordinary shares in issue, excluding own shares
|
58,799m
|
|
|
60,491m
|
|
|
|
|
|
|
|
|
|
Tangible net assets per shareA
|
57.0p
|
|
|
52.4p
|
|
1 Reflects a reduction for
the impact of the announced ordinary share buyback programme. 31
December 2024 also reflects an increase for the dividend paid up by
the Insurance business in February 2025. The CET1 and pro forma
CET1 ratios at 31 December 2025 both reflect an ordinary dividend
received from the Insurance business in December 2025, that would
previously have been received in February of the following
year.
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;
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.
CONTACTS
For further information please contact:
INVESTORS AND ANALYSTS
Douglas Radcliffe
Group Investor Relations Director
020 7356 1571
douglas.radcliffe@lloydsbanking.com
Rohith Chandra-Rajan
Director of Investor Relations
07353 885 690
rohith.chandra-rajan@lloydsbanking.com
Nora Thoden
Director of Investor Relations – ESG
020 7356 2334
nora.thoden@lloydsbanking.com
Tom Grantham
Investor Relations Senior Manager
07851 440 091
thomas.grantham@lloydsbanking.com
Sarah Robson
Investor Relations Senior Manager
07494 513 983
sarah.robson2@lloydsbanking.com
CORPORATE AFFAIRS
Matt Smith
Head of Media Relations
07788 352 487
matt.smith@lloydsbanking.com
Emma Fairhurst
Media Relations Senior Manager
07814 395 855
emma.fairhurst@lloydsbanking.com
Copies of this News Release may be obtained from:
Investor Relations, Lloyds Banking Group plc, 33 Old Broad Street,
London, EC2N 1HZ
The statement can also be found on the Group’s website
– www.lloydsbankinggroup.com
Registered office: Lloyds Banking Group plc, The Mound, Edinburgh,
EH1 1YZ
Registered in Scotland No. SC095000
LEI 549300PPXHEU2JF0AM85
Signatures
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 authorized.
LLOYDS
BANKING GROUP plc
(Registrant)
By: Douglas
Radcliffe
Name: Douglas
Radcliffe
Title: Group
Investor Relations Director
Date:
29 January 2026
FAQ
How did Lloyds Banking Group (LYG) perform financially in 2025?
Lloyds Banking Group’s 2025 performance was stronger than 2024. Statutory profit before tax rose 12% to £6.7 billion, with net income up 7% to £18.3 billion. Return on tangible equity reached 12.9%, reflecting higher net interest income and broader fee and other income growth.
What were Lloyds Banking Group (LYG) 2025 shareholder distributions?
Total 2025 capital returns are expected to reach about £3.9 billion. This includes an ordinary dividend of 3.65p per share, up 15% year-on-year, and an announced ordinary share buyback of up to £1.75 billion, reflecting strong capital generation and a solid CET1 position.
How did loans, deposits and margins evolve for Lloyds Banking Group (LYG) in 2025?
Lending and deposits both grew while margins improved. Underlying loans and advances increased 5% to £481.1 billion and customer deposits rose 3% to £496.5 billion. The banking net interest margin expanded to 3.06%, supported by structural hedge income and franchise-led volume growth.
What is Lloyds Banking Group’s (LYG) capital position and CET1 ratio?
Lloyds ended 2025 with robust capital ratios. The CET1 ratio was 14.0%, and the pro forma CET1 ratio, after allowing for the announced 2025 share buyback, was 13.2%. Risk-weighted assets rose 5% to £235.5 billion due to lending growth and model changes.
What guidance has Lloyds Banking Group (LYG) given for 2026?
Management has upgraded several 2026 targets. The Group expects underlying net interest income of about £14.9 billion, a cost-to-income ratio below 50%, asset quality ratio around 25 basis points, capital generation above 200 basis points, and return on tangible equity of more than 16%.
How are credit quality and impairments trending at Lloyds Banking Group (LYG)?
Credit quality remains strong despite a higher impairment charge. The 2025 underlying impairment was £795 million, versus a release-boosted 2024, resulting in an asset quality ratio of 0.17%. Management notes low and stable arrears across portfolios and continued strong credit performance.
Which business segments drove growth for Lloyds Banking Group (LYG) in 2025?
All major divisions contributed to profit growth. Retail underlying profit rose to £3.36 billion, Commercial Banking to £2.55 billion, and Insurance, Pensions and Investments to £330 million. Equity Investments and Central Items delivered £545 million, supported by Lloyds Living and LDC activity.