2025 results

Lloyds Banking Group plc

2025 results

29 January 2026

CONTENTS

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 68.

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 7 to 8 which is, unless otherwise stated, presented on an underlying basis. Further information on these measures is set out on page 62.

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 61.

²    Excludes capital distributions.

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