REG - Lloyds Banking Group - 2025 Half-Year Results
24/07/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250724:nRSX3220Sa&default-theme=true
RNS Number : 3220S Lloyds Banking Group PLC 24 July 2025
Lloyds Banking Group plc
2025 Half-Year Results
24 July 2025
CONTENTS
Results for the half-year (#Section3) 1
Income statement (underlying basis) and key balance sheet metrics (#Section4) 3
Quarterly information (#Section6) 4
Balance sheet analysis (#Section7) 5
Group results (#Section8) - (#Section4) statutory basis (#Section8) 6
Group Chief Executive's statement (#Section11) 7
Summary of Group results (#Section12) 9
Divisional results (#3073145fb2054de4afd74c20f787d3c4_31)
Segmental analysis - underlying basis (#145) 18
Retail (#Section38) 20
Commercial Banking (#Section39) 22
Insurance, Pensions and Investments (#Section40) 24
Equity Investments and Central Items (#Section41) 28
Alternative performance measures (#Section42) 29
Risk management (#Section46)
Principal risks and uncertainties (#Section47) 35
Capital risk (#Section48) 36
Credit risk (#Section55) 41
Liquidity risk (#Section68) 52
Interest rate sensitivity (#Section72) 54
Statutory information
Condensed consolidated half-year financial statements (unaudited) (#292) 55
Condensed consolidated income statement (unaudited) (#298) 56
Condensed consolidated statement of comprehensive income (unaudited) (#301) 57
Condensed consolidated balance sheet (unaudited) (#304) 58
Condensed consolidated statement of changes in equity (unaudited) (#307) 59
Condensed consolidated cash flow statement (unaudited) (#310) 62
Notes to the condensed consolidated half-year financial statements (unaudited) 63
(#313)
Statement of directors' responsibilities (#Section97) 95
Independent review report to Lloyds Banking Group plc (#Section98) 96
Key dates (#Section99) 97
Basis of presentation (#Section100) 97
Forward-looking statements (#Section101) 98
Contacts (#Section102) 99
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 29.
Forward-looking statements
This news release contains forward-looking statements. For further details,
reference should be made to page 98.
RESULTS FOR THE HALF-YEAR
"We have shown sustained strength in our financial performance in the first
half of 2025, with income growth, cost discipline and robust asset quality,
driving strong capital generation and increased shareholder distributions,
with a 15% increase in the interim ordinary dividend.
We continue to make great progress in our purpose-driven strategy, building
differentiated customer outcomes and delivering growth across our business as
we build towards our ambitious targets for 2026.
Our strategic progress and sustained strength in our financial performance
allows us to re-affirm our 2025 guidance and gives us confidence in our 2026
commitments. It also underpins our delivery of higher, more sustainable
returns for our shareholders."
Charlie Nunn, Group Chief Executive
Successfully delivering our purpose-driven strategy
• Driving growth across the business through deeper customer
relationships, focusing on high value areas, cross-Group collaboration and
building the core franchise
• Enhancing operating leverage through improving capabilities and
capitalising on scale
• Leveraging investment in technology and data to reinforce competitive
strength, with increased digital capabilities and engagement driving broader
revenue opportunities and improved productivity
• Delivered more than £1 billion annualised additional revenues from
strategic initiatives and confident in delivering more than £1.5 billion by
2026
Sustained strength in financial performance(1)
• Statutory profit after tax of £2.5 billion (half-year to 30 June 2024:
£2.4 billion) with net income up 6% year on year, partly offset by higher
operating costs and impairment charge. Robust return on tangible equity of
14.1%
• Underlying net interest income of £6.7 billion, up 5% compared to the
first half of 2024. This reflects a banking net interest margin of
3.04%, up 10 basis points year-on-year (up 1 basis point
quarter-on-quarter), alongside higher average interest-earning banking assets
of £458 billion
• Underlying other income of £3.0 billion, 9% higher than the prior year
(and 4% higher in the second quarter versus the first quarter of 2025), driven
by strengthening customer activity and the benefit of strategic initiatives
• Operating lease depreciation of £710 million, up 5% due to fleet
growth, depreciation of higher value vehicles and declines in used electric
car prices. Stable in the second quarter reflecting mitigating management
actions
• Operating costs of £4.9 billion, up 4% versus the prior year,
reflecting inflationary pressures, strategic investment and business growth
costs, partly offset by cost savings and continued cost discipline
• Robust asset quality with underlying impairment charge of £442 million
and asset quality ratio of 19 basis points
Strong growth in lending and deposits
• Underlying loans and advances to customers increased by £11.9 billion
(3%) in the first six months to £471.0 billion, with growth across Retail of
£10.1 billion, alongside an increase in Commercial Banking of £1.2 billion
• Customer deposits increased in the first half of 2025, by £11.2 billion
(2%) to £493.9 billion, with £3.7 billion growth in Retail and £7.6
billion in Commercial Banking
Strong capital generation
• Risk-weighted assets of £231.4 billion, up £6.8 billion in the first
half of 2025, reflecting lending growth and a c.£1.2 billion increase
primarily due to hedging activity expected to reverse in the third quarter
• Strong pro forma capital generation of 86 basis points; CET1 ratio of
13.8% after 50 basis points for ordinary dividend accrual
• Tangible net assets per share of 54.5 pence, up by 2.1 pence in the
first half of 2025, from attributable profit and the unwind of the cash flow
hedging reserve, partially offset by capital distributions in respect of 2024
• Interim ordinary dividend of 1.22 pence per share (equivalent to £731
million), up 15% on the prior year
RESULTS FOR THE HALF-YEAR (continued)
2025 guidance re-affirmed
Based on our current macroeconomic assumptions, for 2025 the Group continues
to expect:
• Underlying net interest income of c.£13.5 billion
• Operating costs of c.£9.7 billion
• Asset quality ratio of c.25 basis points
• Return on tangible equity of c.13.5%
• Capital generation to be c.175 basis points(2)
Confident in 2026 guidance
Based on our current macroeconomic assumptions and confidence in our strategy,
the Group is maintaining its guidance for 2026:
• Cost:income ratio of less than 50%
• Return on tangible equity of greater than 15%
• Capital generation of greater than 200 basis points(2)
• To pay down to a CET1 ratio of c.13.0%
(1) See the basis of presentation on page 97.
(2) Excludes capital distributions. Includes ordinary dividends received
from the Insurance business in February of the following year.
INCOME STATEMENT (UNDERLYING BASIS)(A) AND KEY BALANCE SHEET METRICS
Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Underlying net interest income 6,655 6,338 5 6,507 2
Underlying other income 2,969 2,734 9 2,863 4
Operating lease depreciation (710) (679) (5) (646) (10)
Net income 8,914 8,393 6 8,724 2
Operating costs (4,874) (4,700) (4) (4,742) (3)
Remediation (37) (95) 61 (804) 95
Total costs (4,911) (4,795) (2) (5,546) 11
Underlying profit before impairment 4,003 3,598 11 3,178 26
Underlying impairment charge (442) (101) (332) (33)
Underlying profit 3,561 3,497 2 2,846 25
Restructuring (9) (15) 40 (25) 64
Volatility and other items (48) (158) 70 (174) 72
Statutory profit before tax 3,504 3,324 5 2,647 32
Tax expense (960) (880) (9) (614) (56)
Statutory profit after tax 2,544 2,444 4 2,033 25
Earnings per share 3.8p 3.4p 0.4p 2.9p 0.9p
Dividends per share - ordinary 1.22p 1.06p 15 2.11p
Banking net interest margin(A) 3.04% 2.94% 10bp 2.96% 8bp
Average interest-earning banking assets(A) £457.8bn £449.2bn 2 £453.1bn 1
Cost:income ratio(A) 55.1% 57.1% (2.0)pp 63.6% (8.5)pp
Asset quality ratio(A) 0.19% 0.05% 14bp 0.15% 4bp
Return on tangible equity(A) 14.1% 13.5% 0.6pp 11.2% 2.9pp
At 30 Jun 2025 At 31 Mar 2025 Change At 31 Dec 2024 Change
% %
Underlying loans and advances to customers(A) £471.0bn £466.2bn 1 £459.1bn 3
Customer deposits £493.9bn £487.7bn 1 £482.7bn 2
Loan to deposit ratio(A) 95% 96% (1pp) 95%
CET1 ratio 13.8% 13.5% 0.3pp 14.2% (0.4)pp
Pro forma CET1 ratio(A,1) 13.8% 13.5% 0.3pp 13.5% 0.3pp
UK leverage ratio 5.4% 5.5% (0.1)pp 5.5% (0.1)pp
Risk-weighted assets £231.4bn £230.1bn 1 £224.6bn 3
Wholesale funding(2) £92.2bn £89.4bn 3 £92.5bn
Liquidity coverage ratio(3) 145% 145% 146% (1)pp
Net stable funding ratio(4) 127% 128% (1)pp 129% (2)pp
Tangible net assets per share(A) 54.5p 54.4p 0.1p 52.4p 2.1p
(A ) See page 29.
(1 ) 30 June 2025 reflects the interim ordinary dividend received from
the Insurance business in July 2025. 31 December 2024 reflects both the full
impact of the share buyback announced in respect of 2024 and the ordinary
dividend received from the Insurance business in February 2025.
(2) Excludes balances relating to margins of £1.1 billion (31 December
2024: £2.8 billion, 31 March 2025: £1.4 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 INFORMATION(A)
Quarter Quarter Change Quarter Quarter Quarter Quarter
ended ended % ended ended ended ended
30 Jun 31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2025 2025 2024 2024 2024 2024
£m £m £m £m £m £m
Underlying net interest income 3,361 3,294 2 3,276 3,231 3,154 3,184
Underlying other income 1,517 1,452 4 1,433 1,430 1,394 1,340
Operating lease depreciation (355) (355) (331) (315) (396) (283)
Net income 4,523 4,391 3 4,378 4,346 4,152 4,241
Operating costs (2,324) (2,550) 9 (2,450) (2,292) (2,298) (2,402)
Remediation (37) - (775) (29) (70) (25)
Total costs (2,361) (2,550) 7 (3,225) (2,321) (2,368) (2,427)
Underlying profit before impairment 2,162 1,841 17 1,153 2,025 1,784 1,814
Underlying impairment charge (133) (309) 57 (160) (172) (44) (57)
Underlying profit 2,029 1,532 32 993 1,853 1,740 1,757
Restructuring (5) (4) (25) (19) (6) (3) (12)
Volatility and other items (37) (11) (150) (24) (41) (117)
Statutory profit before tax 1,987 1,517 31 824 1,823 1,696 1,628
Tax expense (577) (383) (51) (124) (490) (467) (413)
Statutory profit after tax 1,410 1,134 24 700 1,333 1,229 1,215
Earnings per share 2.1p 1.7p 0.4p 1.0p 1.9p 1.7p 1.7p
Banking net interest margin(A) 3.04% 3.03% 1bp 2.97% 2.95% 2.93% 2.95%
Average interest-earning banking assets(A) £460.0bn £455.5bn 1 £455.1bn £451.1bn £449.4bn £449.1bn
Cost:income ratio(A) 52.2% 58.1% (5.9)pp 73.7% 53.4% 57.0% 57.2%
Asset quality ratio(A) 0.11% 0.27% (16)bp 0.14% 0.15% 0.05% 0.06%
Return on tangible equity(A) 15.5% 12.6% 2.9pp 7.1% 15.2% 13.6% 13.3%
At 30 Jun At 31 Mar 2025 Change At 31 Dec At 30 Sep 2024 At 30 Jun 2024 At 31 Mar 2024
2025 % 2024
Underlying loans and advances to customers(A,1) £471.0bn £466.2bn 1 £459.1bn £457.0bn £452.4bn £448.5bn
Customer deposits £493.9bn £487.7bn 1 £482.7bn £475.7bn £474.7bn £469.2bn
Loan to deposit ratio(A) 95% 96% (1) 95% 96% 95% 96%
CET1 ratio 13.8% 13.5% 0.3pp 14.2% 14.3% 14.1% 13.9%
Pro forma CET1 ratio(A,2) 13.8% 13.5% 0.3pp 13.5% 14.3% 14.1% 13.9%
UK leverage ratio 5.4% 5.5% (0.1)pp 5.5% 5.5% 5.4% 5.6%
Risk-weighted assets £231.4bn £230.1bn 1 £224.6bn £223.3bn £222.0bn £222.8bn
Wholesale funding £92.2bn £89.4bn 3 £92.5bn £93.3bn £97.6bn £99.9bn
Liquidity coverage ratio(3) 145% 145% 146% 144% 144% 143%
Net stable funding ratio(4) 127% 128% (1)pp 129% 129% 130% 130%
Tangible net assets per share(A) 54.5p 54.4p 0.1p 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 ) 30 June 2025 reflects the interim ordinary dividend received from
the Insurance business in July 2025. 31 December 2024 reflects both the full
impact of the share buyback announced in respect of 2024 and the ordinary
dividend received from the Insurance business in February 2025.
(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 30 Jun At 31 Mar 2025 Change At 31 Dec 2024 Change
2025 £bn % £bn %
£bn
UK mortgages 317.9 317.1 312.3 2
Credit cards 16.4 15.9 3 15.7 4
UK Retail unsecured loans 9.9 9.5 4 9.1 9
UK Motor Finance(1) 16.0 15.8 1 15.3 5
Overdrafts 1.2 1.2 1.2
Retail other(2) 20.2 19.0 6 17.9 13
Business and Commercial Banking 29.1 29.4 (1) 29.7 (2)
Corporate and Institutional Banking 59.7 58.5 2 57.9 3
Central Items(3) 0.6 (0.2) -
Underlying loans and advances to customers(A) 471.0 466.2 1 459.1 3
Retail current accounts 100.6 102.5 (2) 101.3 (1)
Retail savings accounts 213.1 210.1 1 208.2 2
Wealth 9.7 9.8 (1) 10.2 (5)
Commercial Banking 170.2 164.9 3 162.6 5
Central Items 0.3 0.4 (25) 0.4 (25)
Customer deposits 493.9 487.7 1 482.7 2
Total assets 919.3 909.9 1 906.7 1
Total liabilities 872.4 862.1 1 860.8 1
Ordinary shareholders' equity 40.4 40.7 (1) 39.5 2
Other equity instruments 6.3 6.9 (9) 6.2 2
Non-controlling interests 0.2 0.2 0.2
Total equity 46.9 47.8 (2) 45.9 2
Ordinary shares in issue, excluding own shares 59,938m 60,459m (1) 60,491m (1)
(1) UK Motor Finance balances on an underlying basis(A) exclude a
finance lease gross up. See page 29.
(2) Within underlying loans and advances, Retail other includes the
European and Wealth businesses.
(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 Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Net interest income 6,478 6,046 7 6,231 4
Other income(1) 2,908 2,830 3 2,896
Total income(1) 9,386 8,876 6 9,127 3
Operating expenses (5,440) (5,452) (6,149) 12
Impairment (442) (100) (331) (34)
Profit before tax 3,504 3,324 5 2,647 32
Tax expense (960) (880) (9) (614) (56)
Profit after tax 2,544 2,444 4 2,033 25
Profit attributable to ordinary shareholders 2,274 2,145 6 1,778 28
Profit attributable to other equity holders 245 269 (9) 229 7
Profit attributable to non-controlling interests 25 30 (17) 26 (4)
Profit after tax 2,544 2,444 4 2,033 25
Ordinary shares in issue (weighted-average - basic) 60,320m 63,453m (5) 61,385m (2)
Basic earnings per share 3.8p 3.4p 0.4p 2.9p 0.9p
(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 periods are represented on a consistent
basis.
Summary balance sheet At 30 Jun At 31 Mar Change At 31 Dec Change
2025 2025 % 2024 %
£m £m £m
Assets
Cash and balances at central banks 64,225 62,891 2 62,705 2
Financial assets at fair value through profit or loss 221,942 215,450 3 215,925 3
Derivative financial instruments 22,943 20,710 11 24,065 (5)
Financial assets at amortised cost 538,237 534,659 1 531,777 1
Financial assets at fair value through other comprehensive income 33,888 31,027 9 30,690 10
Other assets 38,047 45,160 (16) 41,535 (8)
Total assets 919,282 909,897 1 906,697 1
Liabilities
Deposits from banks 7,695 6,019 28 6,158 25
Customer deposits 493,932 487,691 1 482,745 2
Repurchase agreements at amortised cost 38,248 38,474 (1) 37,760 1
Financial liabilities at fair value through profit or loss 28,754 30,039 (4) 27,611 4
Derivative financial instruments 19,879 18,359 8 21,676 (8)
Debt securities in issue at amortised cost 68,301 67,823 1 70,834 (4)
Liabilities arising from insurance and participating investment contracts 124,952 120,131 4 122,064 2
Liabilities arising from non-participating investment contracts 52,285 49,829 5 51,228 2
Other liabilities 27,704 34,286 (19) 30,644 (10)
Subordinated liabilities 10,661 9,446 13 10,089 6
Total liabilities 872,411 862,097 1 860,809 1
Total equity 46,871 47,800 (2) 45,888 2
Total equity and liabilities 919,282 909,897 1 906,697 1
GROUP CHIEF EXECUTIVE'S STATEMENT
We continue to make great progress in our strategic delivery. Guided by our
purpose of Helping Britain Prosper we are building a highly differentiated
franchise that is successfully delivering for all our stakeholders.
We delivered sustained strength in our financial performance in the first half
of 2025, with good income and balance sheet growth, alongside continued cost
discipline and robust asset quality, leading to strong capital generation.
This performance has enabled the Board to announce an increased interim
dividend, up 15% year on year.
Our strategy is predicated upon a step change in capabilities, underpinning
broad-based growth and operating leverage across the business. Through our
strengthened franchise, enhanced digital capabilities and a clear focus on
execution, we are well positioned to generate higher, more sustainable
returns. Given that, we reaffirm our 2025 guidance and remain confident in our
2026 commitments.
Sustained strength in financial performance supporting higher interim dividend
Statutory profit after tax was £2.5 billion, up 4% year on year, with higher
underlying profit of £3.6 billion, driven by 6% growth in net income,
partially offset by slightly higher operating costs and impairments. Net
income of £8.9 billion benefitted from an increased banking net interest
margin of 3.04% and growth in underlying other income of 9% as we continue to
drive progress through our strategic initiatives. Operating costs of
£4.9 billion increased 4%, or 2% excluding front-loaded severance costs, in
line with expectations. This reflected inflationary pressures, strategic
investments and business growth partly offset by cost savings. Asset quality
remained robust, with a stable performance across our portfolios. Overall,
this resulted in a return on tangible equity of 14.1%.
The Group's balance sheet grew in the first six months of the year. Underlying
loans and advances to customers of £471.0 billion were up £11.9 billion
(3%). This strong performance reflected growth in Retail, led by UK mortgages,
alongside growth in Corporate and Institutional Banking. Customer deposits of
£493.9 billion also significantly increased by £11.2 billion (2%) in the
first half. This included growth in Retail of £3.7 billion, driven by
savings, and Commercial Banking of £7.6 billion, driven by growth in targeted
sectors.
The Group delivered strong capital generation of 86 basis points in the first
half of the year, in line with our full year guidance of c.175 basis points,
with a pro forma CET1 ratio of 13.8%. Given the strength of the capital
generation and CET1 position, the Board has announced an interim ordinary
dividend of 1.22 pence per share, up 15% on the prior year and equivalent to
£731 million.
Guiding purpose of Helping Britain Prosper
The fundamentals of the UK economy are robust and we welcome the ambition of
the recently launched industrial strategy and financial services reforms by
the UK government. Our purpose, embedded throughout our franchise, allows us
to play a vital role in promoting UK prosperity whilst accessing new
commercial growth opportunities for the Group, helping us build a more
resilient and profitable business.
We remain focused on helping every UK household access quality and affordable
housing. We have now lent over £100 billion to first time buyers and
supported over £20 billion of funding to the social housing sector since
2018. In the first half of 2025 we announced a partnership with the Royal
Foundation's Homewards programme and through this provided £50 million in new
lending to deliver more UK homes to help tackle homelessness.
We are continuing to drive financial empowerment for our customers. For
example, our new Ready Made Pensions product is a simple, long-term financial
planning solution that is particularly useful for those who do not benefit
from auto-enrolment. Of the more than 4,000 accounts opened since launch,
c.40% are self-employed customers.
Supporting the transition to net zero remains a key focus as well as a
significant strategic and commercial opportunity for the Group. So far in 2025
we have provided c.£9 billion of sustainable financing, taking the total to
over £57 billion since 2022. We provided £60 million of funding through our
partnership with the National Wealth Fund to support the sustainable retrofit
of thousands of social homes across London and Southeast. We also acted as
Global Co-ordinator on the first Blue Bond (water-related Green Bond) issued
by a corporate client in sterling.
Second phase of purpose-driven strategy, continued strong momentum
In 2024, we completed the first chapter of our five year strategic plan,
driving positive change at scale and returning the business to growth. We are
now accelerating our progress to drive long-term competitive advantage and
deliver on our ambitious 2026 targets. We are driving growth in high value
areas, deepening customer relationships and strengthening cross-Group
collaboration, whilst continuing to grow the core scale franchise. This
momentum underpins our confidence in generating more than £1.5 billion of
additional revenues from strategic initiatives by 2026. So far we have
generated over £1 billion in additional annualised revenues.
GROUP CHIEF EXECUTIVE'S STATEMENT (continued)
We also remain highly focused on driving operating leverage through cost and
capital efficiency. Since 2021 we have delivered around £1.5 billion of gross
cost saves through efficiency and productivity gains alongside £20 billion of
RWA optimisation through enhanced capabilities, data improvements and risk
reduction transactions.
Delivering broad-based income growth and operating leverage
We are growing our franchise through the development of innovative
propositions and enhanced capabilities. As the UK's largest digital bank, we
are committed to delivering best-in-class digital experiences to drive
engagement with 20.9 million customers actively using our app, up c.3% year to
date. We continue to target high-value consumer segments, building our Mass
Affluent current account offering with the recent launch of our exciting
Lloyds Premier proposition. We have continued to accelerate the shift to
mobile-first as a means of improving our customer proposition, with our new
digital remortgage journey driving a c.4 percentage point increase in more
valuable direct-to-bank application share to c.25% of market. Simultaneously,
we continue to enhance our distribution and optimise our cost-to-serve through
the implementation of branch co-servicing, supporting a more than 40% increase
in active customers served per distribution FTE since 2021.
In Insurance, Pensions and Investments (IP&I), we are reinforcing our
competitive position in our chosen areas of strategic focus. We now have over
550,000 customers on our core app for workplace pension customers, driving
unique digital engagement. We are continuing to embed IP&I products across
banking journeys, with protection take-up rate for mortgage customers now at
20% in the first half of 2025, up 7 percentage points year on year.
In Commercial Banking, we are building a digital-led relationship bank and
driving income diversification through capital-lite growth. In our Business
and Commercial Banking franchise, by scaling digital services, we are
improving client experience and lowering costs through streamlined journeys,
with more than 40% of key servicing interactions now digitised. In Corporate
and Institutional Banking, we are delivering on our ambition to become a
broader solution provider and meet more of our customer needs. For example we
increased foreign exchange volumes by 17% year-on-year and grew our Structured
Finance sterling market share by 8 percentage points.
Leveraging our enablers to drive long-term competitive strength
Our track record of investment in technology, data and people is underpinning
our ambitions to grow the business with sustained operating leverage. We are
driving engagement through leading experiences on our platforms, with more
than 95% of Retail sales now through digital channels. This is enabling us to
build broader revenue opportunities by deepening relationships in high-value
areas such as our Home and Travel eco-systems. At the same time we are taking
organisational and systems steps to improve productivity, with run and change
technology costs reducing more than 20% since 2021. Our technology leadership
is being reinforced with increasing numbers of technology and data colleagues
and a rapidly scaling Lloyds Technology Centre in India. Alongside we continue
to harness the power of GenAI with c.30 major live use cases, including an
award-winning app function.
We are delivering at pace. As we look forward we are confident in our 2026
ambitions to generate higher, more sustainable returns for shareholders.
2025 guidance re-affirmed
Based on our current macroeconomic assumptions, for 2025 the Group continues
to expect:
• Underlying net interest income of c.£13.5 billion
• Operating costs of c.£9.7 billion
• Asset quality ratio of c.25 basis points
• Return on tangible equity of c.13.5%
• Capital generation to be c.175 basis points(1)
Confident in 2026 guidance
Based on our current macroeconomic assumptions and confidence in our strategy,
the Group is maintaining its guidance for 2026:
• Cost:income ratio of less than 50%
• Return on tangible equity of greater than 15%
• Capital generation of greater than 200 basis points(1)
• To pay down to a CET1 ratio of c.13.0%
(1) Excludes capital distributions. Includes ordinary dividends received
from the Insurance business in February of the following year.
SUMMARY OF GROUP RESULTS
Statutory results
Income statement
The Group's statutory profit before tax for the first half of 2025 was
£3,504 million, 5% higher than in the first half of 2024. This was driven by
higher total income, partially offset by a higher impairment charge. Profit
after tax was £2,544 million and earnings per share was 3.8 pence (half-year
to 30 June 2024: £2,444 million and 3.4 pence respectively).
Total income for the half-year of 2025 was £9,386 million, an increase of 6%
on the same period in 2024 (half-year to 30 June 2024: £8,876 million). Net
interest income of £6,478 million was up 7% on the prior year (half-year to
30 June 2024: £6,046 million), driven by higher average interest-earning
assets and a higher margin, which benefitted from a growing structural hedge
contribution as balances have been reinvested in a higher rate environment,
partially offset by continued asset margin compression and deposit churn
headwinds.
Other income increased by 3% to £2,908 million (half-year to 30 June 2024:
£2,830 million), with higher other operating income, partly offset by lower
net fee and commission income. Other operating income increased by 12% to
£1,015 million (half-year to 30 June 2024: £907 million) as a result of
fleet growth and higher average vehicle rental values in UK Motor Finance
within Retail as well as current account earnings. Alongside Insurance,
Pensions and Investments which benefitted from higher general insurance income
net of claims and strengthening income in Workplace. Growth in Equity
Investments and Central items was driven by the Group's equity and direct
investment businesses, with strong income growth from Lloyds Living and higher
income from LDC. Net fee and commission income was £856 million (half-year to
30 June 2024: £890 million).
Total operating expenses of £5,440 million were broadly stable. Within this
were higher costs reflecting inflationary pressures, strategic investment
including planned higher severance front-loaded into the first quarter of 2025
and business growth costs, offset by cost savings and continued cost
discipline alongside a lower remediation charge. Operating lease depreciation
was higher due to fleet growth, the depreciation of higher value vehicles and
declines in used electric car prices over the last 12 months. Used car price
declines in the second quarter of 2025 were offset by a number of mitigating
management actions, including used car leasing and remarketing agreements.
A remediation charge of £37 million was recognised by the Group in the first
half of 2025 (half-year to 30 June 2024: £95 million), across a small number
of rectification programmes. There have been no further charges to the
provision relating to motor finance commission arrangements.
Asset quality remained robust in the first half of 2025. The impairment charge
was £442 million, up from £100 million in the half-year to 30 June 2024
which benefitted from a large credit from improvements in the Group's economic
outlook. The charge reflects strong performance across Retail portfolios, more
than offset by a higher charge in Commercial Banking, from a small number of
individual cases moving to default in the period.
The Group recognised a tax expense of £960 million in the first half of 2025
(half-year to 30 June 2024: £880 million), representing an effective tax
rate of 27.4%.
SUMMARY OF GROUP RESULTS (continued)
Statutory results (continued)
Balance sheet
Total assets were £12,585 million higher at £919,282 million at 30 June
2025 (31 December 2024: £906,697 million). Financial assets at amortised
cost were £6,460 million higher at £538,237 million (31 December 2024:
£531,777 million) supported by increases in loans and advances to customers.
This included growth of £5.6 billion in UK mortgages and growth across UK
Retail unsecured loans, credit cards, UK Motor Finance and the European retail
business. Lending balances increased by £1.2 billion in Commercial Banking,
with growth in Institutional balances partly offset by repayments of
government-backed lending. The growth in loans and advances to customers was
partly offset by a £3,512 million reduction in reverse repurchase
agreements, a £400 million reduction in loans and advances to banks and a
£1,369 million reduction in debt securities.
Financial assets held at fair value through profit or loss increased by
£6,017 million, with increased holdings in the Insurance business as a result
of market gains on equity investments held to back insurance and investment
contract liabilities and increased reverse repurchase agreements in the
banking business.
Derivative financial assets were £1,122 million lower at £22,943 million
(31 December 2024: £24,065 million), driven by interest rate movements in
the period. Financial assets at fair value through other comprehensive income
of £33,888 million increased by £3,198 million in the period reflecting
increases in liquid asset holdings. Other assets were £3,488 million lower,
primarily reflecting the disposal of the Group's bulk annuity business in the
second quarter.
Total liabilities were £11,602 million higher at £872,411 million
(31 December 2024: £860,809 million). Customer deposits of
£493,932 million increased in the period by £11,187 million. Retail
deposits increased £3.7 billion in the period, driven by net inflows to
limited withdrawal and fixed term deposits as a result of a strong performance
throughout the ISA season. Commercial Banking deposits were up £7.6 billion
with targeted growth, alongside higher balances partly as a result of market
uncertainty.
Financial liabilities at fair value through profit or loss increased by
£1,143 million to £28,754 million at 30 June 2025 due to increased
repurchase agreements. Derivative financial liabilities decreased by £1,797
million to £19,879 million as a result of market movements. Liabilities
arising from insurance and investment contracts increased by £3,945 million
reflecting the increase in policyholder investments. Other liabilities
decreased by £2,940 million and included the effects of the disposal of the
Group's bulk annuity business. Debt securities in issue reduced by
£2,533 million, with higher levels of maturities in the period.
Total equity of £46,871 million at 30 June 2025 increased from £45,888
million at 31 December 2024. The movement reflected profit for the period, the
unwind of the cash flow hedging reserve and issuance of an AT1 capital
instrument in February 2025. This was partially offset by the impact of the
commenced share buyback programme in respect of 2024, the dividend paid in May
2025, as well as the impact of redemption of an AT1 capital instrument in June
2025 and a lower pension surplus.
SUMMARY OF GROUP RESULTS (continued)
Income statement - underlying basis(A)
The Group's underlying profit was £3,561 million in the first half of 2025,
an increase of 2% compared to £3,497 million in the same period in 2024.
Higher net income was partly offset by slightly increased operating costs and
a higher underlying impairment charge. Underlying profit in the second quarter
of 2025 was up 32% compared to the first quarter, given strengthening income
and lower costs, including lower severance charges. The underlying impairment
charge in the second quarter was 57% lower than in the first quarter.
Net income(A) Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Underlying net interest income 6,655 6,338 5 6,507 2
Underlying other income 2,969 2,734 9 2,863 4
Operating lease depreciation(1) (710) (679) (5) (646) (10)
Net income(A) 8,914 8,393 6 8,724 2
Banking net interest margin(A) 3.04% 2.94% 10bp 2.96% 8bp
Average interest-earning banking assets(A) £457.8bn £449.2bn 2 £453.1bn 1
(1) Net of losses on disposal of operating lease assets of £3 million
(half-year to 30 June 2024: profit of £37 million, half-year to 31 December
2024: profit of £22 million).
(
)
Net income of £8,914 million was up 6% compared to the first half of 2024,
driven by higher underlying net interest income and higher underlying other
income, partly offset by an increased charge for operating lease depreciation.
Net income in the second quarter of 2025 was up 3% compared to the first
quarter, including higher underlying net interest income, higher underlying
other income and stable operating lease depreciation.
Within net income, underlying net interest income of £6,655 million was up 5%
versus the prior year (half-year to 30 June 2024: £6,338 million). This was
supported by a banking net interest margin of 3.04% (half-year to 30 June
2024: 2.94%). The net interest margin benefitted from a growing structural
hedge contribution as balances have been reinvested in a higher rate
environment, partially offset by continued asset margin compression and
deposit churn headwinds largely as expected. Average interest-earning banking
assets in the first half of 2025 of £457.8 billion were higher than the
first half of 2024 (half-year to 30 June 2024: £449.2 billion), with growth
primarily driven by UK mortgages, credit cards, UK Retail unsecured loans and
the European retail business. In Commercial Banking, growth in Institutional
balances were offset by continued repayments of government-backed lending
within Business and Commercial Banking and lower lending to banks. Underlying
net interest income in the first half of 2025 included a non-banking net
interest expense of £236 million (half-year to 30 June 2024:
£229 million), increasing slightly as a result of growth in the Group's
non-banking businesses.
Underlying net interest income of £3,361 million in the second quarter of
2025 was ahead of the first quarter (three months to 31 March 2025: £3,294
million). A growing structural hedge contribution more than offset the impact
of continued headwinds from deposit churn, Bank Base Rate reductions and
underlying asset margin compression. A strong ISA season allowed the Group to
meaningfully grow balances with strong market share, but also resulted in
deposit churn. Together this resulted in an increase in the banking net
interest margin to 3.04% (three months to 31 March 2025: 3.03%). Average
interest-earning banking assets were higher in the second quarter at £460.0
billion (three months to 31 March 2025: £455.5 billion), primarily driven by
UK mortgages, with the impact of strong lending volumes at the end of the
first quarter now being reflected in average lending, alongside growth in UK
Retail unsecured loans, credit cards and the European retail business.
The Group continues to expect the underlying net interest income for 2025 to
be c.£13.5 billion.
SUMMARY OF GROUP RESULTS (continued)
Income statement - underlying basis(A) (continued)
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 30 June 2025, the notional balance of the sterling
structural hedge increased to £244 billion (31 December 2024: £242 billion)
with a stable weighted average duration of approximately three-and-a-half
years (31 December 2024: approximately three-and-a-half years). The Group
generated £2.6 billion of total income from sterling structural hedge
balances in the first half of 2025, an increase over the prior year (half-year
to 30 June 2024: £1.9 billion). The Group continues to expect sterling
structural hedge earnings in 2025 to be £1.2 billion higher than in 2024 and
£1.5 billion higher in 2026 than in 2025.
Underlying other income of £2,969 million in the first half of 2025 grew by
9% compared to the prior year (half-year to 30 June 2024: £2,734 million),
driven by strengthening customer activity and the benefit of strategic
initiatives. This included an increase of 13% in Retail, primarily driven by
UK Motor Finance, including fleet growth and higher average vehicle rental
values as well as current account earnings. Insurance, Pensions and
Investments underlying other income was up 6% from strong business performance
including higher general insurance income net of claims and strengthening
income in Workplace. Growth in Equity Investments and Central items was driven
by the Group's equity and direct investment businesses, with strong income
growth from Lloyds Living and higher income from LDC. This was partly offset
by a 2% reduction in Commercial Banking, with higher transaction banking
income more than offset by lower loan markets activity.
Compared to the first quarter of 2025, underlying other income in the second
quarter was up 4%, supported in Retail by continued UK Motor Finance growth
and personal current account performance, in Commercial Banking primarily from
improved trading conditions and in Insurance, Pensions and Investments from
higher general insurance income including seasonally lower weather event
claims.
Operating lease depreciation of £710 million in the first half of 2025 was 5%
higher than in the prior year (half-year to 30 June 2024: £679 million),
due to fleet growth, the depreciation of higher value vehicles and declines
in used electric car prices over the last 12 months. The Group has been
progressing a number of market and customer initiatives to improve performance
and reduce volatility in operating lease depreciation, including used car
leasing and remarketing agreements. Together these measures helped to offset
used car price declines in the second quarter, resulting in stable operating
lease depreciation compared to the first quarter.
Total costs Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Operating costs(A) 4,874 4,700 (4) 4,742 (3)
Remediation 37 95 61 804 95
Total costs(A) 4,911 4,795 (2) 5,546 11
Cost:income ratio(A) 55.1% 57.1% (2.0)pp 63.6% (8.5)pp
Total costs, including remediation, of £4,911 million were 2% higher than the
prior year. Operating costs of £4,874 million were up 4% reflecting
inflationary pressures, strategic investment including planned higher
severance front-loaded into the first quarter of 2025 and business growth
costs, partly offset by cost savings and continued cost discipline. Operating
costs are still expected to be c.£9.7 billion in 2025, including the impact
of increased severance and National Insurance contribution changes (c.£0.1
billion) in year.
A remediation charge of £37 million was recognised by the Group in the first
half of 2025 (half-year to 30 June 2024: £95 million), across a small number
of rectification programmes. There have been no further charges to the
provision relating to motor finance commission arrangements. The Supreme Court
heard the appeal of the Wrench, Johnson and Hopcraft decision in early April.
The FCA has indicated that the Supreme Court decision will inform its next
steps for both the discretionary commission arrangements (DCA) review and
non-DCA complaints and that it will provide an update within six weeks of the
Supreme Court decision. In establishing the provision of £1.15 billion, the
Group has considered a number of scenarios to address uncertainties around a
number of key assumptions. These include a range of potential Supreme Court
outcomes, regulatory responses including steps that the FCA may take, and
outcomes in relation to redress.
SUMMARY OF GROUP RESULTS (continued)
Income statement - underlying basis(A) (continued)
The Group's cost:income ratio including remediation for the first half of 2025
was 55.1% (half-year to 30 June 2024: 57.1%), with net income up 6%, partly
offset by 2% higher total costs.
Underlying impairment(A)
Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Charges (credits) pre-updated MES(1)
Retail 426 463 8 326 (31)
Commercial Banking 25 (28) 76 67
Other - (10) -
451 425 (6) 402 (12)
Updated economic outlook (MES)
Retail (84) (269) (69) (63) 33
Commercial Banking 75 (55) (7)
(9) (324) (97) (70) (87)
Underlying impairment charge(A) 442 101 332 (33)
Asset quality ratio(A) 0.19% 0.05% 14bp 0.15% 4bp
(1) Impairment charges excluding the impact from updated economic
outlook (multiple economic scenarios, MES) taken each quarter.
(
)
Asset quality remained robust in the first half of 2025. The underlying
impairment charge was £442 million (half-year to 30 June
2024: £101 million), resulting in an asset quality ratio of 19 basis
points. The higher charge includes a £9 million net credit from updated
multiple economic scenarios (MES), compared to a credit of £324 million in
the prior year.
The charge in the second quarter of £133 million includes an updated MES
credit of £44 million. The central adjustment in MES recognised in the first
quarter (£100 million) to capture emerging risks to the base case from US
tariff policy announcements, has been released and a lower amount has been
integrated into the divisions, reflecting the updated economic outlook. This
reflects a modest deterioration to the economic outlook in the second quarter,
including a higher unemployment rate peak largely offset by further
improvements to house price expectations.
The pre-updated MES charge of £451 million for the first half is equivalent
to an asset quality ratio of 19 basis points. The slightly higher pre-updated
MES charge compared to prior year is driven by Commercial Banking from a small
number of individual cases moving to default in the period. These are largely
isolated to a single sector and not representative of trends seen across the
Commercial portfolio, which shows stable performance. Similarly, strong
performance across Retail portfolios has driven a lower charge year-on-year,
most notably in UK Mortgages. The Group continues to expect the asset quality
ratio to be c.25 basis points in 2025.
SUMMARY OF GROUP RESULTS (continued)
Income statement - underlying basis(A) (continued)
Restructuring, volatility and other items
Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Underlying profit 3,561 3,497 2 2,846 25
Restructuring (9) (15) 40 (25) 64
Market and other volatility 27 (65) (79)
Amortisation of purchased intangibles (40) (41) 2 (40)
Fair value unwind (35) (52) 33 (55) 36
Volatility and other items (48) (158) 70 (174) 72
Statutory profit before tax 3,504 3,324 5 2,647 32
Tax expense (960) (880) (9) (614) (56)
Statutory profit after tax 2,544 2,444 4 2,033 25
Earnings per share 3.8p 3.4p 0.4p 2.9p 0.9p
Return on tangible equity(A) 14.1% 13.5% 0.6pp 11.2% 2.9pp
At 30 Jun 2025 At 31 Mar 2025 Change At 31 Dec 2024 Change
% %
Tangible net assets per share(A) 54.5p 54.4p 0.1p 52.4p 2.1p
Restructuring costs for the first half of 2025 were £9 million (half-year to
30 June 2024: £15 million). Volatility and other items were a net loss of
£48 million for the first half of 2025 (half-year to 30 June 2024: net loss
of £158 million). This included £40 million for the amortisation of
purchased intangibles (half-year to 30 June 2024: £41 million) and
£35 million relating to the usual fair value unwind (half-year to 30 June
2024: £52 million). This was alongside a gain from market and other
volatility of £27 million (half-year to 30 June 2024: loss of
£65 million), including negative market volatility and the £120 million
gain on sale of the Group's bulk annuities portfolio to Rothesay Life plc.
The return on tangible equity for the first half of the year was 14.1%
(half-year to 30 June 2024: 13.5%). The Group continues to expect the return
on tangible equity for 2025 to be c.13.5%.
Tangible net assets per share at 30 June 2025 were 54.5 pence, up 2.1 pence in
the first half of the year (31 December 2024: 52.4 pence) and up 0.1 pence
in the second quarter. The increase resulted from attributable profit, the
unwind of the cash flow hedging reserve and a reduction in the number of
shares in issue due to the ongoing share buyback. This was partially offset by
capital distributions in respect of 2024, including the payment of the full
year ordinary dividend in the second quarter. At 30 June 2025, tangible net
assets per share were reduced by 1.0 pence as a result of a temporary accrual
for the ongoing ordinary share buyback without the corresponding reduction in
the number of shares. This will reverse in the third quarter.
Tax
The Group recognised a tax expense of £960 million in the first half of 2025
(half-year to 30 June 2024: £880 million), representing an effective tax
rate of 27.4%. 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%. An explanation of the relationship between the tax expense and the
Group's accounting profit for the period is set out on page 74.
SUMMARY OF GROUP RESULTS (continued)
Balance sheet
At 30 Jun At 31 Mar 2025 Change At 31 Dec Change
2025 % 2024 %
Underlying loans and advances to customers(A) £471.0bn £466.2bn 1 £459.1bn 3
Customer deposits £493.9bn £487.7bn 1 £482.7bn 2
Loan to deposit ratio(A) 95% 96% (1pp) 95%
Wholesale funding(1) £92.2bn £89.4bn 3 £92.5bn
Wholesale funding <1 year maturity(1) £30.7bn £29.3bn 5 £31.3bn (2)
of which: money market funding <1 year maturity(1) £22.1bn £20.3bn 9 £16.9bn 31
Liquidity coverage ratio - eligible assets(2) £131.8bn £133.1bn (1) £134.4bn (2)
Liquidity coverage ratio(3) 145% 145% 146% (1)pp
Net stable funding ratio(4) 127% 128% (1pp) 129% (2)pp
Total underlying expected credit loss allowance(A) £3,545m £3,744m (5) £3,651m (3)
(1) Excludes balances relating to margins of £1.1 billion (31 December
2024: £2.8 billion, 31 March 2025: £1.4 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 lending growth in the first half of 2025, with underlying
loans and advances to customers increasing by £11.9 billion since the end of
2024, to £471.0 billion. This included growth of £5.6 billion in UK
mortgages and growth across UK Retail unsecured loans, credit cards, UK Motor
Finance and the European retail business. Lending balances increased by £1.2
billion in Commercial Banking, with growth in Institutional balances partly
offset by repayments of £0.8 billion of government-backed lending.
Underlying loans and advances increased by £4.8 billion in the second
quarter, with growth across Retail portfolios, including UK mortgages and the
European retail business, alongside increased lending in Corporate and
Institutional Banking, reflecting growth in securitised products partially
offset by foreign exchange movements and government-backed lending repayments
within Business and Commercial Banking.
Customer deposits of £493.9 billion increased significantly in the first
half of the year, by £11.2 billion. Retail deposits were up £3.7 billion in
the period, driven by net inflows to limited withdrawal and fixed term
deposits as a result of a strong performance throughout the ISA season, with
over 375,000 cash ISA accounts opened. Commercial Banking deposits were up
£7.6 billion with targeted growth, alongside higher balances partly as a
result of market uncertainty. Customer deposits increased by £6.2 billion in
the second quarter. This included £5.3 billion in Commercial Banking driven
by growth in targeted sectors and £1.0 billion in Retail from strong
performance in UK Savings driving inflows throughout the ISA season, partially
offset by outflows from current accounts, including to UK savings.
The Group delivered £3.1 billion net new money during the first half of 2025
in Insurance, Pensions and Investments and Wealth open book assets under
administration (AuA). In total, open book AuA stand at c.£208 billion at
30 June 2025.
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% (31 December 2024: 146%) and net stable funding ratio of 127%
(31 December 2024: 129%). The loan to deposit ratio of 95%, stable compared
to 31 December 2024, continues to reflect a robust funding and liquidity
position, with significant capacity to grow lending.
The underlying expected credit loss (ECL) allowance has reduced slightly to
£3.5 billion (31 December 2024: £3.7 billion) in the period. 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 increased the ECL by £183 million (31 December 2024: £15 million
decrease to ECL). The increase in judgemental adjustments in the period was
primarily due to the removal of negative ECL adjustments previously held for
loss given default adjustments in Commercial Banking where model enhancements
have removed the need for an adjustment.
SUMMARY OF GROUP RESULTS (continued)
Capital
At 30 Jun At 31 Mar 2025 Change At 31 Dec Change
2025 % 2024 %
CET1 ratio 13.8% 13.5% 0.3pp 14.2% (0.4)pp
Pro forma CET1 ratio(A,1) 13.8% 13.5% 0.3pp 13.5% 0.3pp
UK leverage ratio 5.4% 5.5% (0.1)pp 5.5% (0.1)pp
Risk-weighted assets £231.4bn £230.1bn 1 £224.6bn 3
Capital generation
Pro forma CET1 ratio as at 31 December 2024(A,1) 13.5%
Banking build (bps)(2) 113
Insurance dividend (bps) 7
Risk-weighted assets (bps) (41)
Other movements (bps)(3) 7
Pro forma capital generation (bps) 86
Ordinary dividend accrual (bps) (50)
Pro forma CET1 ratio as at 30 June 2025(A,1) 13.8%
(1) 30 June 2025 reflects the interim ordinary dividend received from
the Insurance business in July 2025. 31 December 2024 reflects both the full
impact of the share buyback announced in respect of 2024 and the ordinary
dividend received from the Insurance business in February 2025.
(2 ) Includes impairment charge and excess regulatory expected losses.
(3) Includes share-based payments.
The Group's pro forma CET1 capital ratio at 30 June 2025 was 13.8% (31
December 2024: 13.5% pro forma). Pro forma capital generation during the first
half of the year was 86 basis points (59 basis points in the second quarter).
This reflected strong banking build and the £150 million interim dividend
received from the Insurance business in July 2025, partially offset by net
risk-weighted asset increases. The Group has accrued a foreseeable ordinary
dividend of 50 basis points, inclusive of the announced interim ordinary
dividend of 1.22 pence per share. The Group continues to expect capital
generation in 2025 to be c.175 basis points. Excluding the Insurance dividend
received in July 2025, the Group's CET1 capital ratio at 30 June 2025 was
13.8%.
Risk-weighted assets increased by £6.8 billion to £231.4 billion at 30 June
2025 (31 December 2024: £224.6 billion). This reflects the impact of strong
lending growth, but also includes a temporary c.£1.2 billion increase related
to hedging activity that is expected to reverse in the third quarter. The
growth in risk-weighted assets was partly offset by continued optimisation
activity. While no Retail secured CRD IV increases were recognised during the
first half of the year, the Group continues to expect an uplift to be
recognised against performing exposures in respect of CRD IV secured assets,
subject to finalisation with the PRA.
The Group's regulatory CET1 capital requirement remains at around 12%. This
includes the Pillar 2A CET1 capital requirement of about 1.5% 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%. In order to manage risks and distributions in an
orderly way, the Board intends to progress in stages towards paying down to
the CET1 capital target of c.13.0% by the end of 2026.
SUMMARY OF GROUP RESULTS (continued)
Dividend and share buyback
The Group has a progressive and sustainable ordinary dividend policy whilst
maintaining the flexibility to return further surplus capital through share
buybacks or special dividends. The Board has recommended an interim ordinary
dividend of 1.22 pence per share (equivalent to £731 million). This
represents an increase of 15% compared to the first half of 2024, in line with
the Board's commitment to a progressive and sustainable policy.
In February this year, the Board approved an ordinary share buyback programme
of up to £1.7 billion in respect of 2024, in line with the Group's commitment
to return surplus capital. This commenced in February 2025 and, at 30 June
2025, the programme had completed £0.7 billion of the buyback, with c.1.0
billion ordinary shares purchased.
2025 Preliminary results
Building on the significant transformation progressing within the Group and
consistent with its ambition to move at pace into the year ahead, the Group
intends to move to preliminary reporting at year-end. Accordingly the Group
intends to announce its preliminary results for the full year 2025 on
29 January 2026, with the annual report and accounts following on 18
February 2026.
DIVISIONAL RESULTS
Segmental analysis - underlying basis(A)
Half-year to 30 June 2025 Retail Commercial Insurance, Equity Group
£m Banking Pensions and Investments £m
£m Investments and Central
£m Items
£m
Underlying net interest income 4,709 1,766 (78) 258 6,655
Underlying other income 1,276 926 689 78 2,969
Operating lease depreciation (706) (4) - - (710)
Net income 5,279 2,688 611 336 8,914
Operating costs (2,922) (1,394) (466) (92) (4,874)
Remediation (41) - (2) 6 (37)
Total costs (2,963) (1,394) (468) (86) (4,911)
Underlying profit before impairment 2,316 1,294 143 250 4,003
Underlying impairment (charge) credit (342) (100) 1 (1) (442)
Underlying profit 1,974 1,194 144 249 3,561
Banking net interest margin(A,) 2.64% 4.82% 3.04%
Average interest-earning banking assets(A) £380.0bn £77.8bn £457.8bn
Asset quality ratio(A) 0.18% 0.23% 0.19%
Underlying loans and advances to customers(A,1) £381.6bn £88.8bn - £0.6bn £471.0bn
Customer deposits £323.4bn £170.2bn - £0.3bn £493.9bn
Risk-weighted assets £127.5bn £76.6bn £0.4bn £26.9bn £231.4bn
Half-year to 30 June 2024 Retail Commercial Insurance, Equity Investments and Central Group
£m Banking Pensions and Items £m
£m Investments £m
£m
Underlying net interest income 4,430 1,696 (74) 286 6,338
Underlying other income(2) 1,133 942 649 10 2,734
Operating lease depreciation (677) (2) - - (679)
Net income 4,886 2,636 575 296 8,393
Operating costs(2) (2,763) (1,358) (458) (121) (4,700)
Remediation (54) (32) (5) (4) (95)
Total costs (2,817) (1,390) (463) (125) (4,795)
Underlying profit before impairment 2,069 1,246 112 171 3,598
Underlying impairment (charge) credit (194) 83 7 3 (101)
Underlying profit 1,875 1,329 119 174 3,497
Banking net interest margin(A,3) 2.55% 4.44% 2.94%
Average interest-earning banking assets(A) £367.0bn £82.2bn £449.2bn
Asset quality ratio(A) 0.11% (0.17)% 0.05%
Underlying loans and advances to customers(A,1) £365.1bn £88.1bn - (£0.8bn) £452.4bn
Customer deposits £313.3bn £161.2bn - £0.2bn £474.7bn
Risk-weighted assets £123.3bn £73.2bn £0.2bn £25.3bn £222.0bn
(1 ) Equity Investments and Central Items includes central fair value
hedge accounting adjustments.
(2 ) In the half-year to 30 June 2025, for segment reporting, the Group
revised its allocation methodology. Certain divisional variable payment
related costs are now included within underlying other income; comparative
figures have been represented on a consistent basis. Total Group figures are
unaffected by this change.
(3) In the half-year to 30 June 2025, the Group revised its capital
transfer pricing methodology; comparative segmental banking net interest
margin has been represented on a consistent basis. The Group banking net
interest margin is unaffected by this change.
DIVISIONAL RESULTS (continued)
Segmental analysis - underlying basis(A) (continued)
Half-year to 31 December 2024 Retail Commercial Insurance, Equity Investments and Central Group
£m Banking Pensions and Items £m
£m Investments £m
£m
Underlying net interest income 4,500 1,738 (62) 331 6,507
Underlying other income(1) 1,221 873 643 126 2,863
Operating lease depreciation (642) (4) - - (646)
Net income 5,079 2,607 581 457 8,724
Operating costs(1) (2,803) (1,394) (466) (79) (4,742)
Remediation (696) (72) (14) (22) (804)
Total costs (3,499) (1,466) (480) (101) (5,546)
Underlying profit before impairment 1,580 1,141 101 356 3,178
Underlying impairment (charge) credit (263) (69) - - (332)
Underlying profit 1,317 1,072 101 356 2,846
Banking net interest margin(A,2) 2.53% 4.58% 2.96%
Average interest-earning banking assets(A) £373.2bn £79.9bn £453.1bn
Asset quality ratio(A) 0.14% 0.17% 0.15%
Underlying loans and advances to customers(3) £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 ) In the half-year to 30 June 2025, for segment reporting, the Group
revised its allocation methodology. Certain divisional variable payment
related costs are now included within underlying other income; comparative
figures have been represented on a consistent basis. Total Group figures are
unaffected by this change.
(2) In the half-year to 30 June 2025, the Group revised its capital
transfer pricing methodology; comparative segmental banking net interest
margin has been represented on a consistent basis. The Group banking net
interest margin is unaffected by this change.
(3) Equity Investments and Central Items includes central fair value
hedge accounting adjustments.
(
)
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
improve their financial resilience throughout their lifetime. Retail operates
the largest digital bank in the UK and improves digital experience through a
mobile-first strategy, delivering market-leading products and meeting consumer
duty expectations whilst working within a prudent risk appetite. Additionally,
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
• Launched Lloyds Premier to attract, retain and deepen relationships with
Mass Affluent customers; benefits include exclusive product rates and
cashback, an enhanced digital experience and digital family GP subscription
• UK's largest digital bank with 20.9 million customers actively using the
Group's mobile apps; with new GenAI assisted search in the Lloyds app, which
received an award for Best AI Use In Finance at The AI Awards
• Over 95% of sales now through digital channels. Support from
Relationship Managers now available across six product journeys in the mobile
app, with c.90,000 customers accessing live in-app connections
• Launched new digital remortgage journey, giving customers seamless
end-to-end experience; digital applications up c.6 percentage points and
valuable direct mortgage application share up c.4 percentage points
• Introduced Branch co-servicing, allowing customers to visit any Lloyds,
Halifax or Bank of Scotland branch with c.300,000 cross-brand transactions
completed. Customers served per distribution FTE up over 40% since 2021
• Launched UK banking firsts including Lloyds Travel Booking, allowing
customers to book flights and hotels in the app, alongside digital wills and
powers of attorney journeys for customers' future planning
• 12 million users registered for 'Your Credit Score', with 4.8 million
active users in the last 3 months alone, empowering our customers financially
by helping them manage their credit health
• 20%(1) of ISA market flows throughout 2025 ISA season, with over 375,000
new cash ISA accounts opened, helping customers save an additional
£6.6 billion tax free
• Making EVs more accessible through Tusker, with the fleet now exceeding
68,000 vehicles, up 41% versus the first half of 2024, supporting the UK's
ambition to transition to net zero by 2050
• Chosen as General Motors (UK) finance partner and partner to Xpeng via
our International Motors joint venture
Financial performance
• Underlying net interest income increased 6%, with stronger structural
hedge earnings and higher unsecured loan balances, partly offset by continued
mortgage margin compression and deposit churn headwinds
• Underlying other income up 13% from fleet growth and higher rental
values in Motor and current account income
• Operating lease depreciation charge increased by 4% compared to the
first half of 2024, due to fleet growth, the depreciation of higher value
vehicles and declines in used electric car prices over the last 12 months.
Used car price declines in the second quarter of 2025 were offset by a number
of mitigating management actions, including used car leasing and remarketing
agreements
• Operating costs up 6%, reflecting increases from inflationary pressures,
strategic investment including planned higher severance front-loaded into the
first quarter of 2025 and business growth costs, partially offset by cost
savings. Remediation costs of £41 million with movements across a small
number of rectification programmes
• Underlying impairment charge of £342 million, supported by strong
portfolio performance particularly in UK mortgages. The net charge is higher
than in the first half of 2024, which benefitted from an improved economic
outlook and a one-off release of judgemental adjustments for inflation and
interest rates
• Loans and advances to customers of £381.6 billion, up £10.1 billion,
with growth across Retail products including £5.6 billion in UK mortgages
driven by strong demand in the first quarter and growth across UK Retail
unsecured loans, credit cards, UK Motor Finance and the European retail
business
• Customer deposits of £323.4 billion, up £3.7 billion with inflows to
limited withdrawal and fixed term Savings products, including a strong
performance throughout the ISA season, partly offset by a reduction in current
account balances driven by continued flows to savings including ISAs
• Risk-weighted assets up 2% in the first half, given strong lending
growth, partly offset by optimisation activity
(1 ) Bank of England ISA market data and Lloyds Banking Group ISA
balance uplift March 2025 to May 2025
DIVISIONAL RESULTS (continued)
Retail (continued)
Retail performance summary(A)
Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Underlying net interest income 4,709 4,430 6 4,500 5
Underlying other income(1) 1,276 1,133 13 1,221 5
Operating lease depreciation (706) (677) (4) (642) (10)
Net income 5,279 4,886 8 5,079 4
Operating costs(1) (2,922) (2,763) (6) (2,803) (4)
Remediation (41) (54) 24 (696) 94
Total costs (2,963) (2,817) (5) (3,499) 15
Underlying profit before impairment 2,316 2,069 12 1,580 47
Underlying impairment charge (342) (194) (76) (263) (30)
Underlying profit 1,974 1,875 5 1,317 50
Banking net interest margin(A,2) 2.64% 2.55% 9bp 2.53% 11bp
Average interest-earning banking assets(A) £380.0bn £367.0bn 4 £373.2bn 2
Asset quality ratio(A) 0.18% 0.11% 7bp 0.14% 4bp
(1 ) In the half-year to 30 June 2025, for segment reporting, the Group
revised its allocation methodology. Certain divisional variable payment
related costs are now included within underlying other income; comparative
figures have been represented on a consistent basis. Total Group figures are
unaffected by this change.
(2 ) In the half-year to 30 June 2025, the Group revised its capital
transfer pricing methodology; comparative segmental banking net interest
margin has been represented on a consistent basis. The Group banking net
interest margin is unaffected by this change.
At 30 Jun At 31 Mar 2025 Change At 31 Dec 2024 Change
2025 £bn % £bn %
£bn
UK mortgages 317.9 317.1 312.3 2
Credit cards 16.4 15.9 3 15.7 4
UK Retail unsecured loans 9.9 9.5 4 9.1 9
UK Motor Finance(1) 16.0 15.8 1 15.3 5
Overdrafts 1.2 1.2 1.2
Other(2) 20.2 19.0 6 17.9 13
Underlying loans and advances to customers(A) 381.6 378.5 1 371.5 3
Operating lease assets(3) 7.6 7.4 3 7.2 6
Total customer assets 389.2 385.9 1 378.7 3
Current accounts 100.6 102.5 (2) 101.3 (1)
Savings accounts 213.1 210.1 1 208.2 2
Wealth 9.7 9.8 (1) 10.2 (5)
Customer deposits 323.4 322.4 319.7 1
Risk-weighted assets 127.5 126.7 1 125.1 2
( )
(1) UK Motor Finance balances on an underlying basis(A) exclude a
finance lease gross up. See page 29.
(2) Within underlying loans and advances, Retail other includes the
European and Wealth businesses.
(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. This is generating
diversified capital efficient growth and supporting customers in their
transition to net zero.
Strategic progress
• Launched new mobile loans journey for Business Banking clients,
transforming the customer experience; 7 out of 10 digital lending applications
now using the new mobile journey
• Increasing customer control and efficiency through enhanced
self-service. New digital journey enabling single signatory customers to view
and amend existing permissions
• Enabled eligible overdraft clients to view personalised lending limits
through digital channel, helping customers to meet short-term working capital
needs
• Received global awards for 'Best Bank for Digitalisation' for the second
year in a row and 'Best Deal' for a digital trade transaction, by Global Trade
Review
• Scaled transition loans for buildings to mid corporate customers,
supporting businesses transition to net zero, lowering energy costs and
improving long-term resilience
• Awarded 'Best Omni-Channel Payment Acceptance'(1), highlighting the
value, differentiation, and quality of the experience that the merchant
service proposition offers to clients
• Launched Exchange Market, a new finance model incentivising farmers to
prioritise environmental outcomes in their business through funding provided
by the supply chain
• Delivered £16.1bn(2) of sustainable financing towards 2026 £30 billion
target. Supported the UK's initial three major carbon capture projects
• Awarded Real Estate Capital Europe's Sustainable Finance Provider of the
Year for the third year in a row
• Increased market share year-on-year in Structured Finance by 8
percentage points and UK issuer Debt Capital Markets issuance by 3 percentage
points(3)
• Launched a market-leading foreign exchange client algorithmic solution.
Delivered a 17% year-on-year increase in foreign exchange volumes
• First tokenised collateral transfer on public blockchain in the UK,
paving the way for digitised collateral
Financial performance
• Underlying net interest income of £1,766 million, up 4% on the prior
year, reflecting strong portfolio management across both assets and
liabilities within the lower rate environment
• Underlying other income decreased 2% to £926 million, with higher
transaction banking income more than offset by lower loan markets activity
• Operating costs up 3% reflecting inflationary pressures, strategic
investment as a result of planned higher severance front-loaded into the first
quarter of 2025 and business growth costs, partly offset by cost savings. Zero
net remediation charge
• Underlying impairment charge of £100 million, higher than prior year,
reflecting higher Stage 3 charges and modest deterioration in the economic
outlook
• Customer lending 1% higher at £88.8 billion reflecting growth in
Institutional balances alongside growth in securitised products, partially
offset by foreign exchange movements and government-backed lending repayments
within Business and Commercial Banking. Business and Commercial Banking
balances grew in the year excluding government-backed lending repayments
• Customer deposits 5% higher at £170.2 billion, with growth in targeted
sectors and higher balances partly as a result of market uncertainty
• Risk-weighted assets 4% higher at £76.6 billion, reflecting lending
growth in Corporate and Institutional Banking partially offset by optimisation
activity
(1) Merchant Payments Ecosystem 2025 event in Berlin.
(2) In line with the Group's Sustainable Financing Framework;
sustainable financing since 1 January 2024.
(3 ) LSEG Workspace; Structured Finance (excluding collateralised debt
obligations) - sterling, All Investment Grade bonds (excluding Sovereign,
supranational and agency) - UK issuers (sterling only).
DIVISIONAL RESULTS (continued)
Commercial Banking (continued)
Commercial Banking performance summary(A)
Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Underlying net interest income 1,766 1,696 4 1,738 2
Underlying other income(1) 926 942 (2) 873 6
Operating lease depreciation (4) (2) (4)
Net income 2,688 2,636 2 2,607 3
Operating costs(1) (1,394) (1,358) (3) (1,394)
Remediation - (32) (72)
Total costs (1,394) (1,390) (1,466) 5
Underlying profit before impairment 1,294 1,246 4 1,141 13
Underlying impairment (charge) credit (100) 83 (69) (45)
Underlying profit 1,194 1,329 (10) 1,072 11
Banking net interest margin(A,2) 4.82% 4.44% 38bp 4.58% 24bp
Average interest-earning banking assets(A) £77.8bn £82.2bn (5) £79.9bn (3)
Asset quality ratio(A) 0.23% (0.17%) 0.17% 6bp
(1 ) In the half-year to 30 June 2025, for segment reporting, the Group
revised its allocation methodology. Certain divisional variable payment
related costs are now included within underlying other income; comparative
figures have been represented on a consistent basis. Total Group figures are
unaffected by this change.
(2 ) In the half-year to 30 June 2025, the Group revised its capital
transfer pricing methodology; comparative segmental banking net interest
margin has been represented on a consistent basis. The Group banking net
interest margin is unaffected by this change.
At 30 Jun At 31 Mar 2025 Change At 31 Dec 2024 Change
2025 £bn % £bn %
£bn
Business and Commercial Banking 29.1 29.4 (1) 29.7 (2)
Corporate and Institutional Banking 59.7 58.5 2 57.9 3
Underlying loans and advances to customers 88.8 87.9 1 87.6 1
Customer deposits 170.2 164.9 3 162.6 5
Risk-weighted assets 76.6 75.5 2 73.8 4
DIVISIONAL RESULTS (continued)
Insurance, Pensions and Investments
Insurance, Pensions and Investments (IP&I) serves over 10 million
customers and holds a top three market share position across our chosen
strategy areas of Home, Workplace and Individual Annuities businesses. With
£238 billion in assets under administration (excluding Wealth), the Group is
investing heavily 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 accelerating the transition to a low carbon
economy.
Strategic progress
• More than 1.3 million digitally registered Scottish Widows customers,
with core app for workplace pension customers growing to over 550,000 users,
c.60% of which are active users
• Launched our new default fund, 'Lifetime Investment', available to new
and existing customers and developed to maximise pension growth potential for
customers, empowering them to meet their retirement goals
• Increased product offering in Ready-Made Pensions, Self Invested
Personal Pension, Pet Insurance and relaunched the motor proposition with AXA
supporting our focus on financial empowerment. Growth in Ready-Made
Investments, with c.60,000 accounts opened to date and c.40% of customers
under the age of 35
• Market share of new home insurance policy market remains above 12.5% as
we continue to deliver volume by leveraging the Group's strong brands and
transforming customer experience through digitisation(1)
• Increased Protection market share to 7.5% and rank to 6th (31 March
2024: 5.7% and 7th)(1) supported by successful launch of our refreshed
independent financial advisor proposition. New business applications more than
double the prior year
• Continuing to drive penetration of mortgage customers, with take-up rate
of protection products (as a percentage of mortgage completions) increasing to
20.2% (31 December 2024: 15.2%)
• Growth of 3% year to date on open book AuA to £191 billion (31 December
2024: £185 billion). Net AuA flows of £2.8 billion, including a significant
contribution from the workplace pensions business, with an 5% year on year
increase in regular contributions to pensions administered and £112 billion
of AuA
• Climate-aware investments increased by £11.2 billion in 2025, bringing
overall investment to £37.1 billion, currently exceeding the target of £20
billion to £25 billion by the end of 2025(2)(.)
• Trustpilot score of 4.4 stars for Scottish Widows and 4.6 for Lloyds
Insurance, supported by a number of AI initiatives across customer services
helping to reduce complaints and call handling times
Financial performance
• Underlying other income of £689 million, up 6% from strong business
performance including higher general insurance income net of claims and
strengthening income in Workplace
• Operating costs up 2%, reflecting inflationary pressures, continued
strategic investment and business growth costs, partly offset by cost savings
• Balance of deferred profits broadly stable in the year at £5.0 billion
(after release to income of £212 million), including £42 million from new
business, reflecting value generation in the workplace pensions business
• Life and pensions sales (PVNBP) reduced by 2%, driven by lower workplace
and individual annuities sales. This was partly offset by strong performance
in the Embark business
• Positive contribution to the Group's CET1 ratio through the payment of a
£150 million interim dividend to Lloyds Banking Group, supported by a strong
capital position with an estimated pre-dividend Insurance Solvency II ratio of
160% (154% after interim dividend)(3)
• Credit asset portfolio strong, rated 'A-' on average. Diversified, with
less than 2.5% of assets backing annuities being sub-investment grade or
unrated. Strong liquidity position with c.£2.5 billion cash and cash
equivalents
(1 ) Home insurance Market Share information as per internal analysis of
eBenchmarkers data, Protection as per the ABI. Shares reflect information at
31 March 2025.
(2) Includes a range of funds with a bias towards investing in companies
that are reducing the carbon intensity of their businesses and/or are
developing climate solutions.
(3) Equivalent estimated regulatory view of ratio (including With-Profits
funds and post dividend where applicable) was 148% (31 March 2025: 150%; 31
December 2024: 148%, post-February 2025 dividend).
DIVISIONAL RESULTS (continued)
Insurance, Pensions and Investments (continued)
Insurance, Pensions and Investments performance summary(A)
Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Underlying net interest income (78) (74) (5) (62) (26)
Underlying other income 689 649 6 643 7
Net income 611 575 6 581 5
Operating costs (466) (458) (2) (466)
Remediation (2) (5) 60 (14) 86
Total costs (468) (463) (1) (480) 3
Underlying profit before impairment 143 112 28 101 42
Underlying impairment credit 1 7 (86) -
Underlying profit 144 119 21 101 43
Life and pensions sales (PVNBP)(A,1) 7,975 8,155 (2) 10,094 (21)
New business value of insurance and participating investment contracts
recognised in the year(A,2)
of which: deferred to contractual service margin and risk adjustment 42 61 (31) 65 (35)
of which: losses recognised on initial recognition (5) (10) 50 (5)
37 51 (27) 60 (38)
Assets under administration (net flows)(3) £2.8bn £2.7bn 4 £2.6bn 8
General insurance underwritten new gross written premiums(A) 86 95 (9) 102 (16)
General insurance underwritten total gross written premiums(A) 367 343 7 394 (7)
General insurance combined ratio 88% 101% (13)pp 94% (6)pp
At 30 Jun At 31 Mar 2025 Change At 31 Dec 2024 Change
2025 % %
Insurance Solvency II ratio (pre-dividend)(4) 160% 156% 4pp 158% 2pp
Total customer assets under administration £237.6bn £228.7bn 4 £231.9bn 2
(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).
(4) Equivalent estimated regulatory view of ratio (including
With-Profits funds and post dividend where applicable) was 148% (31 March
2025: 150%; 31 December 2024: 148%, post-February 2025 dividend).
( )
DIVISIONAL RESULTS (continued)
Insurance, Pensions and Investments (continued)
Breakdown of net income(A)
Half-year to 30 June 2025 Half-year to 30 June 2024
Deferred Other in-year profit Total Deferred Other in-year profit Total
profit release(1) £m £m profit release(1) £m £m
£m £m
Life open book (pensions, individual annuities, Wealth and protection) 177 169 346 162 164 326
Non-life (General insurance) - 150 150 - 111 111
Other items(2) 35 80 115 33 105 138
Net income(A) 212 399 611 195 380 575
(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 profit(1) (contractual service margin (CSM) and risk
adjustment)
Life open book Other products(2) Bulk annuities(3) Total(1)
£m £m £m £m
Deferred profit at 1 January 2025 4,216 686 118 5,020
New business written 42 - - 42
Release to income statement (177) (35) - (212)
Other movements 208 48 (118) 138
Deferred profit at 30 June 2025 4,289 699 - 4,988
Deferred profit at 1 January 2024 4,025 702 578 5,305
New business written 61 - - 61
Release to income statement (162) (33) - (195)
Other movements 265 71 (434) (98)
Deferred profit at 30 June 2024 4,189 740 144 5,073
Deferred profit at 1 July 2024 4,189 740 144 5,073
New business written 65 - - 65
Release to income statement (188) (36) - (224)
Other movements 150 (18) (26) 106
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 the first and second half of 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
Half-year to 30 Jun Half-year to 30 Jun Half-year to 31 Dec
2025 2024 2024
£m £m £m
Insurance volatility (63) (16) (40)
Policyholder interests volatility 75 112 50
Total volatility 12 96 10
Insurance hedging arrangements (57) (324) (118)
Total(1) (45) (228) (108)
(1)Total insurance volatility is included within market and other volatility,
which in total resulted in a gain of £27 million in the half-year to 30 June
2025 (half-year to 30 June 2024: loss of £65 million; half-year to 31
December 2024: loss of £79 million). See page 31.
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
£45 million (half-year to 30 June 2024: losses of £228 million; half-year
to 31 December 2024: losses of £108 million), driven by increases in interest
rates and decreases in inflation.
(
)
DIVISIONAL RESULTS (continued)
Equity Investments and Central Items
Half-year to 30 Jun Half-year to 30 Jun Change Half-year to 31 Dec Change
2025 2024 % 2024 %
£m £m £m
Underlying net interest income 258 286 (10) 331 (22)
Underlying other income(1) 78 10 126 (38)
Net income 336 296 14 457 (26)
Operating costs(1) (92) (121) 24 (79) (16)
Remediation 6 (4) (22)
Total costs (86) (125) 31 (101) 15
Underlying profit before impairment 250 171 46 356 (30)
Underlying impairment (charge) credit (1) 3 -
Underlying profit 249 174 43 356 (30)
(1)In the half-year to 30 June 2025, for segment reporting, the Group revised
its allocation methodology. Certain divisional variable payment related costs
are now included within underlying other income; comparative figures have been
represented on a consistent basis. Total Group figures are unaffected by this
change.
Equity Investments and Central Items includes the Group's equity investments
businesses, including Lloyds Development Capital (LDC), the Group's share of
the Business Growth Fund (BGF) and the Housing Growth Partnership (HGP), as
well as Lloyds Living, which together comprise LBG Investments. This division
also includes income and expenses not attributed to other divisions, including
residual underlying net interest income after transfer pricing (covering,
among other things, the recharging to other divisions of the Group's external
AT1 distributions) and the unwind of hedging costs relating to historic gilt
sales.
Net income of £336 million was 14% higher compared to the first half of 2024,
with higher underlying other income partly offset by lower underlying net
interest income. Underlying other income includes £264 million (half-year to
30 June 2024: £193 million) generated by the Group's equity and direct
investment businesses, increasing as a result of strong income growth from
Lloyds Living (up £42 million) and higher income from LDC of £195 million
(half-year to 30 June 2024: £159 million). The decline in income versus the
second half of 2024 is due to lower income from LDC of £195 million
(half-year to 31 December 2024: £266 million) and lower transfer pricing
recoveries from divisions.
Total costs of £86 million in the first half of 2025 decreased 31% on the
prior year, primarily due to one-off costs in the first half of 2024
associated with the agreed sale of the Group's in-force bulk annuity
portfolio.
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 44. 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.
Asset quality ratio The underlying impairment charge or credit for the period in respect of loans
and advances to customers, both drawn and undrawn, annualised and 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.
Banking net interest margin Banking net interest income on customer and product balances in the banking
businesses annualised as a percentage of average gross interest-earning
banking assets for the period. This measure is useful in assessing the banking
profitability.
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.
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.
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.
Loan to deposit ratio Underlying loans and advances to customers divided by customer deposits.
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.
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.
Pro forma CET1 ratio CET1 ratio adjusted for the effects of the dividend paid up by the Insurance
business in the subsequent quarter and the full impact of the announced
ordinary share buyback programme.
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.
ALTERNATIVE PERFORMANCE MEASURES (continued)
The following table reconciles the Group's income statement on a statutory
basis to its underlying basis equivalent:
Statutory basis Removal of: Underlying basis(A)
£m Restructuring, volatility Insurance £m
and other gross up(4)
items(1,2,3) £m
£m
Half-year to 30 June 2025
Net interest income 6,478 177 - 6,655 Underlying net interest income
Other income 2,908 (68) 129 2,969 Underlying other income
(710) - (710) Operating lease depreciation(5)
Total income 9,386 (601) 129 8,914 Net income
Operating expenses(5) (5,440) 658 (129) (4,911) Total costs
Impairment charge (442) - - (442) Underlying impairment charge
Profit before tax 3,504 57 - 3,561 Underlying profit
Half-year to 30 June 2024
Net interest income 6,046 300 (8) 6,338 Underlying net interest income
Other income 2,830 (208) 112 2,734 Underlying other income
(679) - (679) Operating lease depreciation(5)
Total income 8,876 (587) 104 8,393 Net income
Operating expenses(5) (5,452) 761 (104) (4,795) Total costs
Impairment charge (100) (1) - (101) Underlying impairment charge
Profit before tax 3,324 173 - 3,497 Underlying profit
Half-year to 31 December 2024
Net interest income 6,231 278 (2) 6,507 Underlying net interest income
Other income 2,896 (167) 134 2,863 Underlying other income
(646) - (646) Operating lease depreciation(5)
Total income 9,127 (535) 132 8,724 Net income
Operating expenses(5) (6,149) 735 (132) (5,546) Total costs
Impairment charge (331) (1) - (332) Underlying impairment charge
Profit before tax 2,647 199 - 2,846 Underlying profit
(1)In the half-year ended 30 June 2025 this comprised the effects of market
and other volatility (gains of £27 million); the amortisation of purchased
intangibles (£40 million); restructuring costs (£9 million); and fair value
unwind (losses of £35 million).
(2)In the half-year ended 30 June 2024 this comprised the effects of market
and other volatility (losses of £65 million); the amortisation of purchased
intangibles (£41 million); restructuring costs (£15 million); and fair value
unwind (losses of £52 million).
(3)In the half-year ended 31 December 2024 this comprised the effects of
market and other volatility (losses of £79 million); the amortisation of
purchased intangibles (£40 million); restructuring costs (£25 million); and
fair value unwind (losses of £55 million).
(4)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.
(5)Net of losses on disposal of operating lease assets of £3 million
(half-year to 30 June 2024: profit of £37 million; half-year to 31 December
2024: profit of £22 million). Statutory operating expenses includes operating
lease depreciation. On an underlying basis operating lease depreciation is
included in net income.
ALTERNATIVE PERFORMANCE MEASURES (continued)
Half-year to 30 Jun Half-year to 30 Jun Half-year to 31 Dec
2025 2024 2024
£m £m £m
Asset quality ratio(A)
Underlying impairment (charge) credit (£m) (442) (101) (332)
Remove non-customer underlying impairment credit (£m) (1) (17) (6)
Underlying customer related impairment (charge) credit (£m) (443) (118) (338)
Loans and advances to customers (£bn) 471.6 452.4 459.9
Remove finance lease gross-up(1) (£bn) (0.6) - (0.8)
Underlying loans and advances to customers(A) (£bn) 471.0 452.4 459.1
Add back expected credit loss allowance (drawn, statutory basis) (£bn) 3.2 3.3 3.2
Add back acquisition related fair value adjustments (£bn) 0.1 0.2 0.1
Underlying gross loans and advances to customers (£bn) 474.3 455.9 462.4
Averaging (£bn) (5.6) (0.5) -
Average underlying gross loans and advances to customers (£bn) 468.7 455.4 462.4
Asset quality ratio(A) 0.19% 0.05% 0.15%
Banking net interest margin(A)
Underlying net interest income(A) (£m) 6,655 6,338 6,507
Remove non-banking underlying net interest expense (£m) 236 229 240
Banking underlying net interest income (£m) 6,891 6,567 6,747
Underlying gross loans and advances to customers (£bn) 474.3 455.9 462.4
Adjustment for non-banking and other items:
Fee-based loans and advances (£bn) (11.3) (9.9) (10.0)
Other (£bn) 0.1 5.3 2.0
Interest-earning banking assets (£bn) 463.1 451.3 454.4
Averaging (£bn) (5.3) (2.1) (1.3)
Average interest-earning banking assets(A) (£bn) 457.8 449.2 453.1
Banking net interest margin(A) 3.04% 2.94% 2.96%
Cost:income ratio(A)
Operating costs(A) (£m) 4,874 4,700 4,742
Remediation (£m) 37 95 804
Total costs (£m) 4,911 4,795 5,546
Net income (£m) 8,914 8,393 8,724
Cost:income ratio(A) 55.1% 57.1% 63.6%
(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)
Half-year to 30 Jun Half-year to 30 Jun Half-year to 31 Dec
2025 2024 2024
£m £m £m
Operating costs(A)
Operating expenses (£m) 5,440 5,452 6,149
Adjustment for:
Operating lease depreciation (£m) (710) (679) (646)
Remediation (£m) (37) (95) (804)
Restructuring (£m) (9) (15) (25)
Amortisation of purchased intangibles (£m) (40) (41) (40)
Insurance gross up (£m) 129 104 132
Other (£m) 101 (26) (24)
Operating costs(A) (£m) 4,874 4,700 4,742
Return on tangible equity(A)
Profit attributable to ordinary shareholders (£m) 2,274 2,145 1,778
Average ordinary shareholders' equity (£bn) 40.2 39.9 39.5
Remove average goodwill and other intangible assets (£bn) (7.8) (8.0) (7.9)
Average tangible equity (£bn) 32.4 31.9 31.6
Return on tangible equity(A) 14.1% 13.5% 11.2%
Underlying profit before impairment(A)
Statutory profit before tax (£m) 3,504 3,324 2,647
Remove impairment charge (£m) 442 100 331
Remove volatility and other items including restructuring (£m) 57 174 200
Underlying profit before impairment(A) (£m) 4,003 3,598 3,178
Life and pensions sales (present value of new business premiums)(A)
Premiums received (£m) 5,309 5,270 5,409
Investment sales (£m) 4,509 4,512 6,474
Effect of capitalisation factor (£m) 1,930 1,898 1,711
Effect of annualisation (£m) 331 350 51
Gross premiums from existing long-term business (£m) (4,104) (3,875) (3,551)
Life and pensions sales (present value of new business premiums)(A) (£m) 7,975 8,155 10,094
ALTERNATIVE PERFORMANCE MEASURES (continued)
Half-year to 30 Jun Half-year to 30 Jun Half-year to 31 Dec
2025 2024 2024
£m £m £m
New business value of insurance and participating investment contracts
recognised in the period(A)
Contractual service margin 13 26 35
Risk adjustment for non-financial risk 29 33 32
Losses recognised on initial recognition (36) (40) (53)
6 19 14
Impacts of reinsurance contracts recognised in the period 22 18 21
Increments, single premiums and transfers received on workplace pension 9 10 25
contracts initially recognised in the period
Amounts relating to contracts modified to add a drawdown feature and - 4 -
recognised as new contracts
New business value of insurance and participating investment contracts 37 51 60
recognised in the period(A)
( )
At 30 Jun At 31 Mar 2025 At 31 Dec 2024
2025
Loan to deposit ratio(A)
Underlying loans and advances to customers(A) (£bn) 471.0 466.2 459.1
Customer deposits (£bn) 493.9 487.7 482.7
Loan to deposit ratio(A) 95% 96% 95%
Pro forma CET1 ratio(A)
CET1 ratio 13.8% 13.5% 14.2%
Insurance dividend and share buyback accrual(1) 0.1% -% (0.7)%
Pro forma CET1 ratio(A) 13.8% 13.5% 13.5%
Tangible net assets per share(A)
Ordinary shareholders' equity (£m) 40,394 40,680 39,521
Goodwill and other intangible assets (£m) (8,042) (8,125) (8,188)
Deferred tax effects and other adjustments (£m) 322 331 350
Tangible net assets (£m) 32,674 32,886 31,683
Ordinary shares in issue, excluding own shares 59,938m 60,459m 60,491m
Tangible net assets per share(A) 54.5p 54.4p 52.4p
(1)Dividend paid up by the Insurance business in the subsequent quarter
(added) and the impact of the announced ordinary share buyback programme
(deducted).
RISK MANAGEMENT
PRINCIPAL RISKS AND UNCERTAINTIES
The 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.
Asset quality remains robust with stable credit performance throughout the
period. The Group continues to monitor the impacts of the economic environment
closely 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.
With respect to conduct risk, there have been no further charges relating to
the potential impact of the FCA review into motor finance commission
arrangements. The Supreme Court heard the appeal of the Wrench, Johnson and
Hopcraft decision in early April. The FCA has indicated that the Supreme Court
decision will inform its next steps for both the discretionary commission
arrangements (DCA) review and non-DCA complaints and that it will provide an
update within six weeks of the Supreme Court decision. In establishing the
provision of £1.15 billion, the Group has considered a number of scenarios to
address uncertainties around a number of key assumptions. These include a
range of potential Supreme Court outcomes, regulatory responses including
steps that the FCA may take, and outcomes in relation to redress.
The Group continues to invest in technology to strengthen its capabilities,
ensuring the appropriate use of models and artificial intelligence.
Operational resilience remains a high priority area for the Group to ensure
that it can continue to effectively prevent, withstand and respond to
potential cybersecurity threats and incidents such as IT system outages, using
threat intelligence and learnings from recent industry events where relevant.
The Group is transforming its approach to risk management to support its
strategic ambition and purpose of Helping Britain Prosper. Following changes
to the three lines of defence model in 2024 to ensure more clearly defined
responsibilities and accountabilities across the business, further
enhancements to the way the Group delivers risk management have been made by
standardising practices and streamlining processes. The Group Risk Management
Framework was enhanced during the first half of 2025, along with the approach
to risk appetite and risk governance, enabling simplification and efficiency.
The Group has 11 principal risks, which are unchanged in 2025 and are
underpinned by a suite of level two risks. These risks are reviewed and
reported regularly to the Board in alignment with the enhanced Group Risk
Management Framework, and 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. Further
information regarding the Group's principal risks is available on pages 144 to
198 in the Group's 2024 annual report and accounts.
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 1.5% 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
1.7% of risk-weighted assets at Group level
• The Group's PRA Buffer, set after taking account of the results of any
PRA 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 30 June 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 21.3% 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 vulnerabilities. As part of this programme the Group
is participating 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 Bank of England will publish the results of the exercise in
the fourth quarter of 2025.
CAPITAL RISK (continued)
Capital and MREL resources
An analysis of the Group's capital position and MREL resources as at 30 June
2025 is presented in the following table. 31 December 2024 reflects the
application of the transitional arrangements for IFRS 9.
At 30 Jun 2025 At 31 Dec 2024
£m £m
Common equity tier 1: instruments and reserves
Share capital and share premium account 24,784 24,782
Banking retained earnings(1) 19,443 19,582
Banking other reserves(1) 3,848 2,786
Adjustment to retained earnings for foreseeable dividends and share buyback (1,437) (1,276)
46,638 45,874
Common equity tier 1: regulatory adjustments
Cash flow hedging reserve 2,752 3,755
Goodwill and other intangible assets (5,568) (5,679)
Prudent valuation adjustment (350) (354)
Excess of expected losses over impairment provisions and value adjustments (356) (270)
Removal of defined benefit pension surplus (2,158) (2,215)
Significant investments(1) (5,070) (5,024)
Deferred tax assets (3,912) (4,025)
Other regulatory adjustments (114) (83)
Common equity tier 1 capital 31,862 31,979
Additional tier 1: instruments
Other equity instruments 6,298 6,170
Additional tier 1: regulatory adjustments
Significant investments(1) (800) (800)
Total tier 1 capital 37,360 37,349
Tier 2: instruments and provisions
Subordinated liabilities 7,559 6,366
Tier 2: regulatory adjustments
Significant investments(1) (963) (964)
Total capital resources 43,956 42,751
Ineligible AT1 and tier 2 instruments(2) (81) (94)
Amortised portion of eligible tier 2 instruments issued by Lloyds Banking - 891
Group plc
Other eligible liabilities issued by Lloyds Banking Group plc(3) 28,879 28,675
Total MREL resources 72,754 72,223
Risk-weighted assets 231,429 224,632
Common equity tier 1 capital ratio 13.8% 14.2%
Tier 1 capital ratio 16.1% 16.6%
Total capital ratio 19.0% 19.0%
MREL ratio 31.4% 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
The key movements are set out in the table below.
Common
equity tier 1
£m
At 31 December 2024 31,979
Banking business profits(1) 2,527
Movement in foreseeable dividend accrual(2) 182
Dividends paid on ordinary shares during the period (1,271)
Adjustment to reflect full impact of share buyback (1,700)
Dividends received from the Insurance business(3) 100
Movement in treasury shares and employee share schemes 144
Deferred tax asset 112
Goodwill and other intangible assets 111
Excess regulatory expected losses (86)
Distributions on other equity instruments (245)
Other movements 9
At 30 June 2025 31,862
(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 foreseeable 2025 ordinary
dividend.
(3)Received in February 2025.
The Group's CET1 capital ratio reduced to 13.8% at 30 June 2025 (31 December
2024: 14.2%) reflecting the reduction in CET1 capital resources and the
increase in risk-weighted assets.
CET1 capital resources reduced by £117 million, with banking business profits
for the first half of the year and the receipt of the dividend paid up by the
Insurance business in February 2025 more than offset by:
• The accrual for foreseeable ordinary dividends in respect of the first
half of 2025, inclusive of the announced interim ordinary dividend of 1.22
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
commenced in February 2025
The full capital impact of the Insurance dividend received in July 2025 is
reflected through the Group's pro forma CET1 capital ratio of 13.8% at 30 June
2025.
The full capital impact of the ordinary share buyback programme and the
Insurance dividend received in February 2025 were reflected through the
Group's pro forma CET1 capital ratio of 13.5% at 31 December 2024.
CAPITAL RISK (continued)
Movements in total capital and MREL
The Group's total capital ratio remained at 19.0% at 30 June 2025 (31 December
2024: 19.0%). The issuance of new AT1 and tier 2 capital instruments during
the period was broadly offset by the reduction in CET1 capital, AT1 and tier 2
instrument calls, other tier 2 movements and the increase in risk-weighted
assets.
The MREL ratio reduced to 31.4% at 30 June 2025 (31 December 2024: 32.2%) with
the increase in MREL resources, reflecting the increase in total capital
resources net of other adjustments, more than offset by the increase in
risk-weighted assets.
Risk-weighted assets
At 30 Jun 2025 At 31 Dec 2024
£m £m
Foundation Internal Ratings Based (IRB) Approach 45,604 43,366
Retail IRB Approach 91,996 90,567
Other IRB Approach(1) 22,290 21,878
IRB Approach 159,890 155,811
Standardised (STA) Approach(1) 23,690 22,532
Credit risk 183,580 178,343
Securitisation 8,439 8,346
Counterparty credit risk 7,388 6,561
Credit valuation adjustment risk 511 485
Operational risk 27,183 27,183
Market risk 4,328 3,714
Risk-weighted assets 231,429 224,632
of which: threshold risk-weighted assets(2) 10,571 10,738
(1)Threshold risk-weighted assets are included within Other IRB Approach and
Standardised (STA) Approach.
(2)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 £6.8 billion to £231.4 billion at 30 June
2025 (31 December 2024: £224.6 billion). This reflects the impact of strong
lending growth, but also includes a temporary c.£1.2 billion increase related
to hedging activity that is expected to reverse in the third quarter. The
growth in risk-weighted assets was partly offset by continued optimisation
activity.
CAPITAL RISK (continued)
Leverage ratio
The table below summarises the component parts of the Group's leverage ratio.
At 30 Jun 2025 At 31 Dec 2024
£m £m
Total tier 1 capital 37,360 37,349
Exposure measure
Derivative financial instruments 22,943 24,065
Securities financing transactions 66,619 69,941
Loans and advances and other assets 829,720 812,691
Total statutory balance sheet assets 919,282 906,697
Qualifying central bank claims (64,079) (62,396)
Deconsolidation adjustments(1) (190,563) (190,988)
Derivatives adjustments (3,403) (6,254)
Securities financing transactions adjustments 2,863 3,351
Off-balance sheet items 42,804 40,186
Amounts already deducted from tier 1 capital (12,207) (12,395)
Other regulatory adjustments(2) (4,512) (4,127)
Total exposure measure 690,185 674,074
UK leverage ratio 5.4% 5.5%
Leverage exposure measure (including central bank claims) 754,264 736,470
Leverage ratio (including central bank claims) 5.0% 5.1%
Total MREL resources 72,754 72,223
MREL leverage ratio 10.5% 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 30 June 2025 (31 December
2024: 5.5%). The increase in the leverage exposure measure primarily reflects
increases across loans and advances and other assets, due in part to strong
lending growth, and an increase in off-balance sheet items. This was partially
offset by a reduction in the measure for securities financing transactions.
(
)
Pillar 3 disclosures
The Group will publish a condensed set of half-year Pillar 3 disclosures in
the second half of August. A copy of the disclosures will be available to view
at: www.lloydsbankinggroup.com/investors/financial-downloads.html.
CREDIT RISK
Overview
The Group's portfolios continue to demonstrate resilience amid ongoing
macroeconomic uncertainty. The Group maintains a prudent approach to credit
risk appetite and risk management, with strong credit origination criteria
including evidence of affordability and robust LTVs in the secured portfolios.
Asset quality remains robust with stable credit performance during the first
half of the year. In UK mortgages, reductions in new to arrears and flows to
default have been observed over the period, whilst unsecured portfolios
continue to exhibit stable arrears trends. Credit quality also remains stable
in Commercial Banking. The Group continues to monitor the impacts of the
economic 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 the first half of 2025 was £442 million,
up from £101 million in the first half of 2024 which benefitted from a large
release from improvements to the Group's economic outlook. The charge for the
first half of 2025 includes a small net release from updates in the Group's
macroeconomic outlook of £9 million (half-year to 30 June 2024: a release of
£324 million), as well as a higher charge in Commercial Banking. The Group's
underlying probability-weighted total expected credit loss (ECL) allowance was
broadly stable in the first half of 2025 at £3,545 million (31 December
2024: £3,651 million).
Stage 2 underlying loans and advances to customers are slightly lower at
£46,599 million (31 December 2024: £48,075 million) and are 9.8% of total
lending (31 December 2024: 10.4%) largely due to migrations into Stage 3
within Commercial Banking. Stage 2 coverage remained stable at 2.7%
(31 December 2024: 2.8%).
Stage 3 underlying loans and advances to customers remain stable at £8,943
million (31 December 2024: £9,021 million), and as a percentage of total
lending at 1.9% (31 December 2024: 2.0%). Migrations into Stage 3 from a
small number of cases within Commercial Banking are offset by continued
resilient Retail performance, especially within UK Mortgages where default
rates continue to improve. This also resulted in stable Stage 3 coverage at
Group level at 16.0% (31 December 2024: 16.4%).
Prudent risk appetite and risk management
• The Group continues to take a prudent and proactive approach to credit
risk management and credit risk appetite with robust oversight, particularly
in response to recent external events. Risk appetite is in line with the
Group's strategy and helps support customers during 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 underlying(A) basis
Half-year to 30 Jun 2025 Half-year Change Half-year Change
£m
to 30 Jun 2024 % to 31 Dec %
£m 2024
£m
UK mortgages (133) (119) 12 (75) 77
Credit cards 200 115 (74) 155 (29)
UK unsecured loans and overdrafts 163 140 (16) 132 (23)
UK Motor Finance 111 61 (82) 55
Other 1 (3) (4)
Retail 342 194 (76) 263 (30)
Business and Commercial Banking (35) 11 36
Corporate and Institutional Banking 135 (94) 33
Commercial Banking 100 (83) 69 (45)
Insurance, Pensions and Investments (1) (8) (88) (1)
Equity Investments and Central Items 1 (3) -
Total impairment charge (credit) 442 100 331 (34)
Insurance, Pensions and Investments (underlying basis)(A) (1) (7) (86) -
Total impairment charge (credit) (underlying basis)(A) 442 101 332 (33)
Asset quality ratio(A) 0.19% 0.05% 14bp 0.15% 4bp
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 29.
CREDIT RISK (continued)
Total expected credit loss allowance - statutory and underlying(A) basis
At 30 Jun 2025 At 31 Dec 2024 £m
£m
Customer related balances
Drawn 3,161 3,191
Undrawn 222 270
3,383 3,461
Loans and advances to banks 1 1
Debt securities 4 4
Other assets 14 15
Total expected credit loss allowance 3,402 3,481
Acquisition fair value adjustment 143 170
Total expected credit loss allowance (underlying basis)(A) 3,545 3,651
of which: Customer related balances (underlying basis)(A) 3,526 3,631
of which: Drawn (underlying basis)(A) 3,304 3,361
Total expected credit loss allowance sensitivity to economic assumptions -
statutory and underlying(A) 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, with the severe
downside scenario incorporating adjustments made to CPI inflation and UK Bank
Rate paths. The stage allocation for an asset is based on the overall scenario
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 £407 million compared to £445 million at
31 December 2024.
CREDIT RISK (continued)
Total expected credit loss allowance sensitivity to economic assumptions -
statutory and underlying(A) basis (continued)
Probability- Upside Base case Downside Severe
weighted £m £m £m downside
£m £m
UK mortgages 709 315 478 890 2,044
Credit cards 659 550 630 729 865
Other Retail 1,010 926 981 1,057 1,205
Commercial Banking 1,009 772 891 1,140 1,678
Other 15 15 15 15 15
At 30 June 2025 3,402 2,578 2,995 3,831 5,807
UK mortgages (underlying basis)(A) 852 458 621 1,033 2,187
At 30 June 2025 (underlying basis)(A) 3,545 2,721 3,138 3,974 5,950
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
Reconciliation between statutory and underlying(A) 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 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total
£m £m £m £m £m £m £m £m £m £m
At 30 June 2025
Underlying basis(A) 418,794 46,599 8,943 - 474,336 748 1,161 1,395 - 3,304
POCI assets (683) (3,106) (2,121) 5,910 - - (28) (276) 304 -
Acquisition fair - - - (143) (143) - - - (143) (143)
value adjustment
Continuing involvement asset 567 - - - 567 - - - - -
(116) (3,106) (2,121) 5,767 424 - (28) (276) 161 (143)
Statutory basis 418,678 43,493 6,822 5,767 474,760 748 1,133 1,119 161 3,161
At 31 December 2024
Underlying basis(A) 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 fair - - - (170) (170) - - - (170) (170)
value adjustment
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 underlying(A) basis
At 30 June 2025 Stage 1 Stage 2 Stage 3 POCI Total Stage 2 Stage 3
£m £m £m £m £m as % of as % of
total total
Loans and advances to customers
UK mortgages 276,759 32,016 4,054 5,767 318,596 10.0 1.3
Credit cards 14,348 2,375 263 - 16,986 14.0 1.5
UK unsecured loans and overdrafts 10,024 1,348 180 - 11,552 11.7 1.6
UK Motor Finance 14,348 2,488 133 - 16,969 14.7 0.8
Other 19,762 404 158 - 20,324 2.0 0.8
Retail 335,241 38,631 4,788 5,767 384,427 10.0 1.2
Business and Commercial Banking 25,660 2,717 1,076 - 29,453 9.2 3.7
Corporate and Institutional Banking 57,106 2,145 958 - 60,209 3.6 1.6
Commercial Banking 82,766 4,862 2,034 - 89,662 5.4 2.3
Equity Investments and Central Items(1) 671 - - - 671
Total gross lending 418,678 43,493 6,822 5,767 474,760 9.2 1.4
UK mortgages (underlying basis)(A,2) 277,442 35,122 6,175 318,739 11.0 1.9
UK Motor Finance (underlying basis)(A,3) 13,781 2,488 133 16,402 15.2 0.8
Retail (underlying basis)(A) 335,357 41,737 6,909 384,003 10.9 1.8
Total gross lending (underlying basis)(A) 418,794 46,599 8,943 474,336 9.8 1.9
Customer related ECL allowance (drawn and undrawn)
UK mortgages 48 217 283 161 709
Credit cards 209 314 136 - 659
UK unsecured loans and overdrafts 171 245 120 - 536
UK Motor Finance(4) 200 132 75 - 407
Other 14 15 38 - 67
Retail 642 923 652 161 2,378
Business and Commercial Banking 117 170 133 - 420
Corporate and Institutional Banking 110 139 336 - 585
Commercial Banking 227 309 469 - 1,005
Equity Investments and Central Items - - - - -
Total 869 1,232 1,121 161 3,383
UK mortgages (underlying basis)(A,2) 48 245 559 852
UK Motor Finance (underlying basis)(A) 200 132 75 407
Retail (underlying basis)(A) 642 951 928 2,521
Total (underlying basis)(A) 869 1,260 1,397 3,526
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 3(5) Adjusted Total(5)
%
%
%
%
%
% %
UK mortgages - 0.7 7.0 2.8 0.2
Credit cards 1.5 13.2 51.7 - 3.9
UK unsecured loans and overdrafts 1.7 18.2 66.7 - 4.6
UK Motor Finance 1.4 5.3 56.4 - 2.4
Other 0.1 3.7 24.1 - 0.3
Retail 0.2 2.4 13.6 2.8 0.6
Business and Commercial Banking 0.5 6.3 12.4 - 1.4 15.1 1.4
Corporate and Institutional Banking 0.2 6.5 35.1 - 1.0 35.1 1.0
Commercial Banking 0.3 6.4 23.1 - 1.1 25.6 1.1
Equity Investments and Central Items - - - - -
Total 0.2 2.8 16.4 2.8 0.7 16.9 0.7
UK mortgages (underlying basis)(A,2) - 0.7 9.1 0.3
UK Motor Finance (underlying basis)(A,3) 1.5 5.3 56.4 2.5
Retail (underlying basis)(A) 0.2 2.3 13.4 0.7
Total (underlying basis)(A) 0.2 2.7 15.6 0.7 16.0 0.7
(1)Contains central fair value hedge accounting adjustments.
(2)UK mortgages balances on an underlying basis(A) exclude the impact of the
HBOS acquisition-related adjustments.
(3)UK Motor Finance balances on an underlying basis(A) exclude a finance lease
gross up.
(4)UK Motor Finance includes £211 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 £198 million and Corporate and Institutional Banking of £1
million.
CREDIT RISK (continued)
Loans and advances to customers and expected credit loss allowance - statutory
and underlying(A) basis
At 31 December 2024 Stage 1 Stage 2 Stage 3 POCI Total Stage 2 Stage 3
£m £m £m £m £m as % of as % of
total 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 Items(1) 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 Finance(4) 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 3(5) Adjusted Total(5)
%
%
%
%
%
% %
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 basis(A) exclude the impact of the
HBOS acquisition-related adjustments.
(3)UK Motor Finance balances on an underlying basis(A) 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 continues to demonstrate resilience and remains
well positioned despite ongoing economic uncertainty. Consumers have shown
strength in the context of inflationary pressures
• Robust risk management remains in place, with strong affordability and
indebtedness controls for both new and existing lending and a prudent risk
appetite approach. Lending strategies remain under continuous review and have
been proactively managed and calibrated to the latest macroeconomic outlook
• In UK mortgages, new to arrears and flow to default rates have improved
during the first half of the year, including in the second quarter
• The unsecured portfolios continue to exhibit broadly stable new to
arrears and flow to default trends
• New to arrears and flows to default in UK Motor finance have stabilised
in the first half of the year versus the modest increases observed in the
second half of 2024
• The Retail impairment charge of £342 million in the first half of 2025
was higher than the £194 million charge for the first half of 2024, which
included a larger release from improvements to the Group's macroeconomic
outlook
• All existing IFRS 9 staging rules and triggers have been maintained from
the 2024 year end. Retail customer related ECL allowance as a percentage of
drawn loans and advances (coverage) is stable at 0.7% (31 December 2024:
0.7%)
• Updates to the Group's macroeconomic outlook in the first half of 2025,
combined with stable credit performance and strong application volumes within
UK Mortgages have reduced Stage 2 loans and advances to 10.9% of the Retail
portfolio (31 December 2024: 11.5%). Stage 2 ECL coverage remains stable at
2.3% (31 December 2024: 2.4%)
• Continued stable credit performance in addition to strong application
volumes resulted in a reduction in Retail Stage 3 loans and advances to 1.8%
of total loans and advances (31 December 2024: 1.9%)
• Retail Stage 3 ECL coverage reduced to 13.4% (31 December 2024: 14.1%)
largely as a result of a reduction in coverage for UK Mortgages following
improvements to the outlook for house price growth
UK mortgages
• The UK mortgages portfolio increased to £318.7 billion (31 December
2024: £313.3 billion) driven by strong customer demand
• New to arrears in the UK mortgages portfolio have improved in the first
half of 2025. The portfolio remains well positioned with a strong loan to
value (LTV) profile. The Group has actively improved the quality of the
portfolio in recent years using robust affordability and credit controls,
while the balances of higher risk legacy vintages continue to reduce
• The impairment release of £133 million for the first half of 2025 is
broadly in line with the release of £119 million in the first half of 2024.
Underlying performance remains stable with both years also benefitting from
favourable updates to the economic outlook, with additional judgement
reductions resulting in slight favourability in 2025
• Stage 2 loans and advances have reduced to 11.0% (31 December 2024:
11.6%) following updates to the Group's macroeconomic outlook, and a
combination of stable credit performance with strong application volumes
• Continued stable credit performance in addition to strong application
volumes also resulted in a reduction in Stage 3 loans and advances to 1.9% (31
December 2024: 2.1%), with improvements to the outlook for house price growth
resulting in a reduction in Stage 3 ECL coverage to 9.1% (31 December 2024:
10.1%)
CREDIT RISK (continued)
UK mortgages product analysis - statutory basis
At 30 June 2025 At 31 December 2024
Mainstream Buy-to-let Specialist Total Mainstream Buy-to-let Specialist Total
UK mortgages loans and advances to customers (£m) 267,588 47,830 3,178 318,596 261,630 47,984 3,514 313,128
UK mortgages greater than 3 months in arrears(1)
Number of cases 18,495 4,075 2,541 25,111 20,112 4,511 2,818 27,441
Total mortgages accounts (%) 1.1 1.1 9.0 1.2 1.2 1.2 9.2 1.3
Value of loans(2) (£m) 2,701 575 460 3,736 2,910 651 531 4,092
Total mortgages balances (%) 1.0 1.2 14.3 1.2 1.1 1.4 14.7 1.3
Loan to value
Less than 60% (%) 54.8 68.0 90.6 57.1 55.6 68.5 89.4 57.9
60% to 70% (%) 16.2 21.1 6.1 16.8 16.7 21.1 6.9 17.2
70% to 80% (%) 14.7 10.8 1.7 14.0 14.1 10.3 2.0 13.4
80% to 90% (%) 12.8 0.1 0.9 10.8 11.9 0.1 0.9 10.0
90% to 100% (%) 1.5 0.0 0.4 1.3 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 value(3)
Stock of residential mortgages (%) 43.4 47.2 32.2 43.8 43.2 47.3 32.9 43.6
New residential lending in the period (%) 65.0 57.7 n/a 64.3 64.1 56.4 n/a 63.2
(1)Excluding repossessions.
(2)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.
(3)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 cards balances increased to £17.0 billion (31 December 2024:
£16.2 billion), due to higher demand for new cards and increased customer
spending
• The credit card portfolio is a prime book, with new to arrears
continuing to decline and repayment rates remaining strong
• The impairment charge of £200 million for the first half of 2025, is
higher than the charge of £115 million in the first half of 2024 due to
upwards revisions to the unemployment forecast, compared to favourable updates
in 2024, with underlying portfolio performance remaining resilient. Total ECL
coverage is broadly stable at 3.9% (31 December 2024: 4.2%)
• Resilient credit performance and higher portfolio balances result in a
slight reduction in Stage 2 loans and advances to 14.0% (31 December 2024:
15.0%), with Stage 2 ECL coverage stable at 13.2% (31 December 2024: 13.6%)
• Similarly Stage 3 loans and advances reduced slightly to 1.5% (31
December 2024: 1.6%) with Stage 3 ECL coverage increasing slightly to 51.7%
(31 December 2024: 50.2%)
UK unsecured loans and overdrafts
• UK unsecured loans and overdraft balances increased to £11.6 billion
(31 December 2024: £10.7 billion) driven by organic balance growth and lower
repayments
• The impairment charge of £163 million for the first half of 2025 is
higher than the charge of £140 million in the first half of 2024 largely due
to upwards revisions to the unemployment forecast. ECL and coverage is broadly
stable at total level and across all stages
UK Motor Finance
• The UK Motor Finance lending portfolio (which does not include operating
leases) increased to £16.4 billion (31 December 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. Falls in used vehicle
values have primarily driven an ECL increase to £211 million as at 30 June
2025 (31 December 2024: £178 million)
• The impairment charge of £111 million for the first half of 2025 is
higher than the charge of £61 million for the first half of 2024, reflecting
increased RV and VT charges year-on-year
Other
• Other loans and advances increased to £20.3 billion (31 December 2024:
£18.0 billion), largely driven by the European business
• Stage 3 loans and advances remained stable at 0.8% of total loans and
advances (31 December 2024: 0.8%)
• There was a £1 million impairment charge in the first half of 2025,
compared to a £3 million release in the first half of 2024
CREDIT RISK (continued)
Commercial Banking
• The Commercial portfolio credit quality remains stable, benefitting from
a focused approach to credit underwriting and monitoring standards supported
by proactive management of exposures to higher risk and cyclical sectors
• Credit strategies and policy remains robust and within our credit risk
tolerances. The Group remains cognisant of the continued relatively elevated
interest rate environment especially in, but not limited to, sectors reliant
upon consumer discretionary spend
• The Group continues to review segments of our portfolios as appropriate,
ensuring our 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 are in place to cover a number of
potential credit downside scenarios and these are regularly reassessed and
updated. Affordability and interest rate sensitivity are tested at
origination. Early warning indicators and risk appetite metrics are in place
to ensure the Group tracks and takes 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 Group also balances prudent risk appetite with ensuring support
for financially viable clients
Impairment
• The net impairment charge in the first half of 2025 was £100 million,
versus an impairment release of £83 million in the first half of 2024 which
included a £55 million release from improvements to the Group's macroeconomic
outlook. A small number of material single name charges have been observed, in
addition to a £75 million charge from the updated Macroeconomic outlook which
included the potential impact from idiosyncratic risks to businesses arising
from global tariffs and political disruption
• ECL allowances increased in the year to £1,005 million at 30 June 2025
(31 December 2024: £985 million), also as a result of the updates to single
name cases and additional judgement
• Stage 2 loans and advances reduced to £4,862 million (31 December
2024: £5,168 million), largely as a result of migrations into Stage 3. Stage
2 as a proportion of total loans and advances to customers reduced to 5.4%
(31 December 2024: 5.8%) with underlying credit performance and Stage 2 ECL
coverage stable at 6.4% (31 December 2024: 6.1%)
• Stage 3 loans and advances increased to £2,034 million (31 December
2024: £1,839 million) and as a proportion of total loans and advances to
customers to 2.3% (31 December 2024: 2.1%). Stage 3 ECL coverage remained
broadly stable at 23.1% (31 December 2024: 22.6%)
CREDIT RISK (continued)
Commercial Banking UK Real Estate analysis
• Commercial Banking UK Real Estate committed drawn lending stood at £9.3
billion at May 2025 (net of £2.7 billion exposures subject to protection
through Significant Risk Transfer (SRT) securitisations). This compares to
£9.3 billion at 31 December 2024 (net of £3.1 billion subject to SRT
securitisations). In addition there are undrawn lending facilities of £3.7
billion (31 December 2024: £2.8 billion) to predominantly investment grade
rated corporate customers
• The Group classifies Real Estate as exposure which is directly supported
by cash flows from property activities (as opposed to trading activities, such
as hotels, care homes and housebuilders). Drawn lending of £6.8 billion to
social housing providers are also excluded (31 December 2024: £7.2 billion)
• Despite some headwinds, including the impact of elevated interest rates,
the portfolio continues to remain well-positioned and proactively managed with
conservative LTVs, good levels of interest cover and appropriate risk
mitigants in place
• Overall performance of the portfolio has remained resilient. The Group
has continued to see strong asset quality within this sector, with a decrease
in cases in its more closely monitored Watchlist category and limited flow
into Business Support
• Lending continues to be heavily weighted towards investment real estate
(c.94%) rather than development. Of these investment exposures c.93% have an
LTV of less than 70%, with an average LTV of 45%. The average interest cover
ratio was 3.1 times, with 75% having interest cover of above 2 times
• The portfolio is well diversified with no fully speculative commercial
development lending (defined as property not pre-sold or pre-let at a level to
fully repay the debt or generate sufficient income to meet the minimum
interest cover requirements). Approximately 47% of exposures relate to
commercial real estate, including c.13% secured by office assets, c.9% by
retail assets and c.12% by industrial assets. Approximately 51% of the
portfolio relates to residential lending
• Recognising this is a cyclical sector, total (gross and net) and asset
type quantum caps are in place to control origination and exposure. Focus
remains on the UK market and new business has been written in line with a
prudent risk appetite criteria including conservative LTVs, strong quality of
income and proven management teams. Development lending criteria also includes
maximum loan to gross development value and maximum loan to cost
• Use of SRT securitisations also acts as a risk mitigant in this
portfolio. Run-off of these is carefully managed and sequenced to avoid
concentrations
LIQUIDITY RISK
Overview
The Group has maintained its strong funding and liquidity position with a loan
to deposit ratio of 95% as at 30 June 2025 (31 December 2024: 95%). Total
wholesale funding was stable at £92.2 billion as at 30 June 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
30 June 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, primarily driven by an increase in lending, offset
by an increase in customer deposits. 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 assets(1) have reduced to £131.8 billion (31 December 2024:
£134.4 billion), primarily driven by an increase in lending, 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 £73 billion in the 12 months to 30 June 2025. The net stable
funding ratio remains strong at 127% (based on a quarterly simple average over
the previous four quarters) as at 30 June 2025 (31 December 2024: 129%).
LCR eligible assets comprise £126.3 billion LCR level 1 eligible assets (31
December 2024: £128.5 billion) and £5.5 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 for external market
conditions.
During the first half of 2025, the Group accessed wholesale funding across a
range of currencies and markets with term issuance volumes totalling £8.0
billion. The Group expects full-year wholesale issuance requirements of around
£10.0 billion for 2025. The total outstanding amount of drawings from the
Bank of England's Term Funding Scheme with additional incentives for SMEs
(TFSME) is £21.9 billion as at 30 June 2025 (31 December 2024:
£21.9 billion), with maturities in 2025, 2027 and beyond. The repayment of
TFSME 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.
(1)Based on a monthly simple average over the previous 12 months.
LIQUIDITY RISK (continued)
Group funding requirements and sources
At 30 Jun 2025 At 31 Dec 2024 Change
£bn
£bn
%
Group funding position
Total Group assets 919.3 906.7 1
Less other liabilities(1) (248.1) (247.8)
Funding requirements 671.2 658.9 2
Customer deposits 493.9 482.7 2
Wholesale funding(2) 92.2 92.5
Repurchase agreements - non-trading 16.3 15.9 3
Term Funding Scheme with additional incentives for SMEs (TFSME) 21.9 21.9
Total equity 46.9 45.9 2
Funding sources 671.2 658.9 2
(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 margins of
£1.1 billion (31 December 2024: £2.8 billion).
Reconciliation of Group funding to the balance sheet
At 30 June 2025 Included Cash collateral received Fair value Balance
in funding £bn and other sheet
analysis accounting £bn
£bn methods
£bn
Deposits from banks 5.6 1.6 0.5 7.7
Debt securities in issue 74.1 - (5.8) 68.3
Subordinated liabilities 12.5 - (1.8) 10.7
Total wholesale funding 92.2 1.6
Customer deposits 493.9 - - 493.9
Total 586.1 1.6
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
Total 575.2 3.2
( )
(
)
LIQUIDITY RISK (continued)
Analysis of term issuance in half-year to 30 June 2025
Sterling US dollar Euro Other Total
£bn £bn £bn currencies(1) £bn
£bn
Securitisation(2) 0.1 - 0.6 - 0.7
Covered bonds - - - - -
Senior unsecured notes 0.8 1.3 2.1 0.6 4.8
Subordinated liabilities - 0.9 0.8 - 1.7
Additional tier 1 0.8 - - - 0.8
Total issuance 1.7 2.2 3.5 0.6 8.0
(1)Primarily Australian dollar, Japanese yen and Singapore dollar.
(2)Includes significant risk transfer securitisations.
(
)
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 increased to £244 billion at 30 June 2025 (31 December 2024:
£242 billion).
Illustrative cumulative impact of parallel shifts in interest rate curve(1)
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 Year 2 Year 3
£m
£m
£m
+50 basis points c.150 c.350 c.600
+25 basis points c.75 c.175 c.300
-25 basis points (c.100) (c.175) (c.300)
-50 basis points (c.200) (c.350) (c.600)
(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 30 June 2025 balance sheet position.
STATUTORY INFORMATION
The half-year ended 31 December 2024 information disclosed throughout the
report is presented as supplementary information and is not required to be
disclosed in accordance with IAS 34.
Condensed consolidated half-year financial statements (unaudited)
Condensed consolidated income statement (unaudited) (#Section74) 56
Condensed consolidated statement of comprehensive income (unaudited) 57
(#Section75)
Condensed consolidated balance sheet (unaudited) (#Section76) 58
Condensed consolidated statement of changes in equity (unaudited) (#Section77) 59
Condensed consolidated cash flow statement (unaudited) (#Section78) 62
Notes to the condensed consolidated half-year financial statements (unaudited)
1 Basis of preparation and accounting policies (#Section80) 63
2 Critical accounting judgements and key sources of estimation uncertainty 64
(#Section81)
3 Segmental analysis (#Section82) 64
4 Net fee and commission income (#Section83) 68
5 Insurance business (#Section84) 68
6 Operating expenses (#Section85) 72
7 Retirement benefit obligations (#Section86) 72
8 Impairment (#Section87) 73
9 Tax (#Section88) 74
10 Fair values of financial assets and liabilities (#Section89) 74
11 Derivative financial instruments (#Section90) 81
12 Allowance for expected credit losses (#Section91) 82
13 Debt securities in issue (#Section92) 89
14 Provisions (#Section93) 89
15 Earnings per share (#Section94) 92
16 Dividends on ordinary shares and share buyback (#Section95) 92
17 Contingent liabilities, commitments and guarantees (#Section96) 92
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Note Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024(1) 2024(1)
£m £m £m
Interest income 15,367 15,435 15,853
Interest expense (8,889) (9,389) (9,622)
Net interest income 6,478 6,046 6,231
Fee and commission income 1,464 1,458 1,485
Fee and commission expense (608) (568) (616)
Net fee and commission income 4 856 890 869
Net trading income 608 934 878
Insurance revenue 1,867 1,650 1,641
Insurance service expense (1,409) (1,339) (1,394)
Net expense from reinsurance contracts held (28) (23) (49)
Insurance service result 5 430 288 198
Net investment return on assets held to back insurance and investment 5,316 9,824 6,189
contracts(1)
Net finance expense in respect of insurance and investment contracts(1) (5,317) (10,013) (6,265)
Net investment return and finance result in respect of insurance and 5 (1) (189) (76)
investment contracts
Other operating income 1,015 907 1,027
Other income 2,908 2,830 2,896
Total income 9,386 8,876 9,127
Operating expenses 6 (5,440) (5,452) (6,149)
Impairment 8 (442) (100) (331)
Profit before tax 3,504 3,324 2,647
Tax expense 9 (960) (880) (614)
Profit after tax 2,544 2,444 2,033
Profit attributable to ordinary shareholders 2,274 2,145 1,778
Profit attributable to other equity holders 245 269 229
Profit attributable to equity holders 2,519 2,414 2,007
Profit attributable to non-controlling interests 25 30 26
Profit after tax 2,544 2,444 2,033
Basic earnings per share 15 3.8p 3.4p 2.9p
Diluted earnings per share 15 3.7p 3.3p 2.9p
The accompanying notes are an integral part of the condensed consolidated
half-year financial statements.
(1)Comparative periods have been represented for presentational changes. See
note 1.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
£m £m £m
Profit for the period 2,544 2,444 2,033
Other comprehensive income
Items that will not subsequently be reclassified to profit or loss:
Post-retirement defined benefit scheme remeasurements:
Remeasurements before tax (168) (351) (417)
Current tax 25 29 21
Deferred tax 18 64 90
(125) (258) (306)
Movements in revaluation reserve in respect of equity shares held at fair
value through other comprehensive income:
Change in fair value 42 72 21
Deferred tax - - -
42 72 21
Gains and losses attributable to own credit risk:
Gains (losses) before tax 62 (86) 8
Deferred tax (17) 24 (2)
45 (62) 6
Items that may subsequently be reclassified to profit or loss:
Movements in revaluation reserve in respect of debt securities held at fair
value through other comprehensive income:
Change in fair value (1) 105 (158)
Income statement transfers in respect of disposals - (4) (3)
Income statement transfers in respect of impairment - (2) (1)
Current tax - - 1
Deferred tax 5 (27) 43
4 72 (118)
Movements in cash flow hedging reserve:
Effective portion of changes in fair value taken to other comprehensive income 492 (1,601) (976)
Net income statement transfers 901 1,238 1,359
Deferred tax (390) 101 (110)
1,003 (262) 273
Movements in foreign currency translation reserve:
Currency translation differences (tax: £nil) 9 (39) (34)
Transfers to income statement (tax: £nil) - - -
9 (39) (34)
Total other comprehensive income (loss) for the period, net of tax 978 (477) (158)
Total comprehensive income for the period 3,522 1,967 1,875
Total comprehensive income attributable to ordinary shareholders 3,252 1,668 1,620
Total comprehensive income attributable to other equity holders 245 269 229
Total comprehensive income attributable to equity holders 3,497 1,937 1,849
Total comprehensive income attributable to non-controlling interests 25 30 26
Total comprehensive income for the period 3,522 1,967 1,875
The accompanying notes are an integral part of the condensed consolidated
half-year financial statements.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
Note At 30 Jun At 31 Dec
2025 2024
£m £m
Assets
Cash and balances at central banks 64,225 62,705
Financial assets at fair value through profit or loss 10 221,942 215,925
Derivative financial instruments 11 22,943 24,065
Loans and advances to banks 7,500 7,900
Loans and advances to customers 471,598 459,857
Reverse repurchase agreements 45,964 49,476
Debt securities 13,175 14,544
Financial assets at amortised cost 538,237 531,777
Financial assets at fair value through other comprehensive income 10 33,888 30,690
Goodwill and other intangible assets 8,042 8,188
Current tax recoverable 1,227 526
Deferred tax assets 4,428 5,005
Retirement benefit assets 7 2,953 3,028
Other assets 21,397 24,788
Total assets 919,282 906,697
Liabilities
Deposits from banks 7,695 6,158
Customer deposits 493,932 482,745
Repurchase agreements at amortised cost 38,248 37,760
Financial liabilities at fair value through profit or loss 10 28,754 27,611
Derivative financial instruments 11 19,879 21,676
Notes in circulation 2,119 2,121
Debt securities in issue at amortised cost 13 68,301 70,834
Liabilities arising from insurance and participating investment contracts 5 124,952 122,064
Liabilities arising from non-participating investment contracts 52,285 51,228
Other liabilities 23,107 25,918
Retirement benefit obligations 7 119 122
Current tax liabilities 63 45
Deferred tax liabilities 120 125
Provisions 14 2,176 2,313
Subordinated liabilities 10,661 10,089
Total liabilities 872,411 860,809
Equity
Share capital 6,003 6,062
Share premium account 18,781 18,720
Other reserves 9,986 8,827
Retained profits 5,624 5,912
Ordinary shareholders' equity 40,394 39,521
Other equity instruments 6,323 6,195
Total equity excluding non-controlling interests 46,717 45,716
Non-controlling interests 154 172
Total equity 46,871 45,888
Total equity and liabilities 919,282 906,697
The accompanying notes are an integral part of the condensed consolidated
half-year financial statements.
( )
(
)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Attributable to ordinary shareholders
Share Other Retained Total Other Non- Total
capital and reserves profits £m equity controlling £m
premium £m £m instruments interests
£m £m £m
At 1 January 2025 24,782 8,827 5,912 39,521 6,195 172 45,888
Comprehensive income
Profit for the period - - 2,274 2,274 245 25 2,544
Other comprehensive income
Post-retirement defined benefit scheme remeasurements, net of tax - - (125) (125) - - (125)
Movements in revaluation reserve in respect of financial assets held at fair
value through other comprehensive income, net of tax:
Debt securities - 4 - 4 - - 4
Equity shares - 42 - 42 - - 42
Gains and losses attributable to own credit risk, net of tax - - 45 45 - - 45
Movements in cash flow hedging reserve, net of tax - 1,003 - 1,003 - - 1,003
Movements in foreign currency translation reserve, net of tax - 9 - 9 - - 9
Total other comprehensive income (loss) - 1,058 (80) 978 - - 978
Total comprehensive income(1) - 1,058 2,194 3,252 245 25 3,522
Transactions with owners
Dividends - - (1,271) (1,271) - (23) (1,294)
Distributions on other equity instruments - - - - (245) - (245)
Issue of ordinary shares 105 - - 105 - - 105
Share buyback(2) (103) 103 (1,357) (1,357) - - (1,357)
Issue of other equity instruments - - (1) (1) 750 - 749
Repurchases and redemptions of other equity instruments - - (19) (19) (622) - (641)
Movement in treasury shares - - 35 35 - - 35
Value of employee services
Share option schemes - - 44 44 - - 44
Other employee award schemes - - 65 65 - - 65
Changes in non-controlling interests - - 20 20 - (20) -
Total transactions with owners 2 103 (2,484) (2,379) (117) (43) (2,539)
Realised gains and losses on equity shares held at fair value through other - (2) 2 - - - -
comprehensive income
At 30 June 2025(3) 24,784 9,986 5,624 40,394 6,323 154 46,871
(1)Total comprehensive income attributable to owners of the parent was £3,497
million.
(2)Contains a closed period accrual of £622 million.
(3)Total equity attributable to owners of the parent was £46,717 million.
The accompanying notes are an integral part of the condensed consolidated
half-year financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (continued)
Attributable to ordinary shareholders
Share Other Retained Total Other Non- Total
capital and reserves profits £m equity controlling £m
premium £m £m instruments interests
£m £m £m
At 1 January 2024 24,926 8,508 6,790 40,224 6,940 201 47,365
Comprehensive income
Profit for the period - - 2,145 2,145 269 30 2,444
Other comprehensive income
Post-retirement defined benefit scheme remeasurements, net of tax - - (258) (258) - - (258)
Movements in revaluation reserve in respect of financial assets held at fair
value through other comprehensive income, net of tax:
Debt securities - 72 - 72 - - 72
Equity shares - 72 - 72 - - 72
Gains and losses attributable to own credit risk, net of tax - - (62) (62) - - (62)
Movements in cash flow hedging reserve, net of tax - (262) - (262) - - (262)
Movements in foreign currency translation reserve, net of tax - (39) - (39) - - (39)
Total other comprehensive loss - (157) (320) (477) - - (477)
Total comprehensive (loss) income(1) - (157) 1,825 1,668 269 30 1,967
Transactions with owners
Dividends - - (1,169) (1,169) - (3) (1,172)
Distributions on other equity instruments - - - - (269) - (269)
Issue of ordinary shares 171 - - 171 - - 171
Share buyback(2) (174) 174 (1,553) (1,553) - - (1,553)
Repurchases and redemptions of other equity instruments - - (316) (316) (1,008) - (1,324)
Movement in treasury shares - - (136) (136) - - (136)
Value of employee services:
Share option schemes - - 24 24 - - 24
Other employee award schemes - - 46 46 - - 46
Changes in non-controlling interests - - - - - (2) (2)
Total transactions with owners (3) 174 (3,104) (2,933) (1,277) (5) (4,215)
Realised gains and losses on equity shares held at fair value through other - - - - - - -
comprehensive income
At 30 June 2024(3) 24,923 8,525 5,511 38,959 5,932 226 45,117
(1)Total comprehensive income attributable to owners of the parent was £1,937
million.
(2)Contains a closed period accrual of £630 million.
(3)Total equity attributable to owners of the parent was £44,891 million.
The accompanying notes are an integral part of the condensed consolidated
half-year financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (continued)
Attributable to ordinary shareholders
Share Other Retained Total Other Non- Total
capital and reserves profits £m equity controlling £m
premium £m £m instruments interests
£m £m £m
At 1 July 2024 24,923 8,525 5,511 38,959 5,932 226 45,117
Comprehensive income
Profit for the period - - 1,778 1,778 229 26 2,033
Other comprehensive income
Post-retirement defined benefit scheme remeasurements, net of tax - - (306) (306) - - (306)
Movements in revaluation reserve in respect of financial assets held at fair
value through other comprehensive income, net of tax:
Debt securities - (118) - (118) - - (118)
Equity shares - 21 - 21 - - 21
Gains and losses attributable to own credit risk, net of tax - - 6 6 - - 6
Movements in cash flow hedging reserve, net of tax - 273 - 273 - - 273
Movements in foreign currency translation reserve, net of tax - (34) - (34) - - (34)
Total other comprehensive income (loss) - 142 (300) (158) - - (158)
Total comprehensive income(1) - 142 1,478 1,620 229 26 1,875
Transactions with owners
Dividends - - (659) (659) - (80) (739)
Distributions on other equity instruments - - - - (229) - (229)
Issue of ordinary shares 19 - - 19 - - 19
Share buyback (195) 195 (458) (458) - - (458)
Redemption of preference shares 35 (35) - - - - -
Issue of other equity instruments - - (6) (6) 763 - 757
Repurchases and redemptions of other equity instruments - - - - (500) - (500)
Movement in treasury shares - - (37) (37) - - (37)
Value of employee services:
Share option schemes - - 19 19 - - 19
Other employee award schemes - - 64 64 - - 64
Total transactions with owners (141) 160 (1,077) (1,058) 34 (80) (1,104)
Realised gains and losses on equity shares held at fair value through other - - - - - - -
comprehensive income
At 31 December 2024(2) 24,782 8,827 5,912 39,521 6,195 172 45,888
(1)Total comprehensive income attributable to owners of the parent was £1,849
million.
(2)Total equity attributable to owners of the parent was £45,716 million.
The accompanying notes are an integral part of the condensed consolidated
half-year financial statements.
(
)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
£m £m £m
Cash flows (used in) provided by operating activities
Profit before tax 3,504 3,324 2,647
Adjustments for:
Change in operating assets (9,160) (21,509) (18,113)
Change in operating liabilities 12,181 14,032 9,571
Non-cash and other items 2,323 1,671 4,319
Tax paid(1) (1,553) (748) (557)
Tax refunded(1) 200 350 620
Net cash provided by (used in) operating activities 7,495 (2,880) (1,513)
Cash flows (used in) provided by investing activities
Purchase of financial assets (7,380) (5,809) (4,709)
Proceeds from sale and maturity of financial assets 4,739 5,269 1,793
Purchase of fixed assets(1) (2,162) (2,234) (2,130)
Purchase of other intangible assets(1) (559) (650) (609)
Proceeds from sale of fixed assets(1) 620 636 869
Proceeds from sale of goodwill and other intangible assets(1) 2 6 56
Acquisition of businesses and joint ventures, net of cash acquired (61) (63) (116)
Net cash used in investing activities (4,801) (2,845) (4,846)
Cash flows used in financing activities
Dividends paid to ordinary shareholders (1,271) (1,169) (659)
Distributions in respect of other equity instruments (245) (269) (229)
Distributions in respect of non-controlling interests (23) (3) (80)
Interest paid on subordinated liabilities (411) (350) (272)
Proceeds from issue of subordinated liabilities 1,750 427 385
Proceeds from issue of other equity instruments 749 - 757
Proceeds from issue of ordinary shares 81 170 17
Share buyback (735) (923) (1,088)
Repayment of subordinated liabilities (904) - (819)
Repurchases and redemptions of other equity instruments (641) (1,324) (500)
Change in stake of non-controlling interests - (2) -
Net cash used in financing activities (1,650) (3,443) (2,488)
Effects of exchange rate changes on cash and cash equivalents (696) (17) 10
Change in cash and cash equivalents 348 (9,185) (8,837)
Cash and cash equivalents at beginning of period 70,816 88,838 79,653
Cash and cash equivalents at end of period 71,164 79,653 70,816
(1)Previously presented in aggregate.
Interest received was £14,966 million (half year to 30 June 2024: £14,652
million; half year to 31 December 2024: £15,069 million) and interest paid
was £8,784 million (half year to 30 June 2024: £8,472 million; half year to
31 December 2024: £9,368 million).
Cash and cash equivalents comprise cash and non-mandatory balances with
central banks and amounts due from banks with an original maturity of less
than three months. Included within cash and cash equivalents at 30 June 2025
is £19 million (30 June 2024: £35 million; 31 December 2024:
£23 million) held within the Group's long-term insurance and investments
operations, which is not immediately available for use in the business.
The accompanying notes are an integral part of the condensed consolidated
half-year financial statements.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
Note 1: Basis of preparation and accounting policies
These condensed consolidated half-year financial statements as at and for the
period to 30 June 2025 have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority (FCA) and
with International Accounting Standard 34 (IAS 34), Interim Financial
Reporting as adopted by the United Kingdom and comprise the results of Lloyds
Banking Group plc (the Company) together with its subsidiaries (the Group).
They do not include all of the information required for full annual financial
statements and should be read in conjunction with the Group's consolidated
financial statements as at and for the year ended 31 December 2024 which
complied with international accounting standards in conformity with the
requirements of the Companies Act 2006 and were prepared in accordance with
IFRS® Accounting Standards as issued by the International Accounting
Standards Board (IASB). Copies of the 2024 annual report and accounts are
available on the Group's website and are also available upon request from
Investor Relations, Lloyds Banking Group plc, 33 Old Broad Street, London,
EC2N 1HZ.
The UK Finance Code for Financial Reporting Disclosure (the Disclosure Code)
sets out disclosure principles together with supporting guidance in respect of
the financial statements of UK banks. The Group has adopted the Disclosure
Code and these condensed consolidated half-year financial statements have been
prepared in compliance with the Disclosure Code's principles. Terminology used
in these condensed consolidated half-year financial statements is consistent
with that used in the Group's 2024 annual report and accounts.
The directors consider that it is appropriate to continue to adopt the going
concern basis in preparing these condensed consolidated half-year financial
statements. In reaching this assessment, the directors have taken into account
the uncertainties affecting the UK economy and their potential effects upon
the Group's performance and projected funding and capital position; the impact
of further stress scenarios has also been considered. On this basis, the
directors are satisfied that the Group will maintain adequate levels of
funding and capital for the foreseeable future.
The Group's accounting policies are consistent with those applied by the Group
in its financial statements for the year ended 31 December 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 now 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 now 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 IASB has issued an amendment to IAS 21 The Effects of Changes in Foreign
Exchange Rates, effective 1 January 2025. This amendment has not had a
significant impact on the Group.
Future accounting developments
There are a number of new accounting pronouncements issued by the IASB with an
effective date of 1 January 2027. This includes IFRS 18 Presentation and
Disclosure in Financial Statements which replaces IAS 1 Presentation of
Financial Statements and IFRS 19 Subsidiaries without Public Accountability:
Disclosures. The impact of these standards is being assessed and they have not
yet been endorsed for use in the UK.
The IASB has issued its annual improvements and a number of amendments to the
IFRS Accounting Standards effective 1 January 2026, including Amendments to
IFRS 9 Financial Instruments and Amendments to IFRS 7 Financial Instruments
Disclosure. These improvements and amendments are not expected to have a
significant impact on the Group.
Related party transactions
The Group has had no significant related party transactions during the
half-year to 30 June 2025. Related party transactions for the half-year to 30
June 2025 are similar in nature to those for the year ended 31 December 2024.
Full details of the Group's related party transactions for the year ended 31
December 2024 can be found in the Group's 2024 annual report and accounts.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
Note 1: Basis of preparation and accounting policies (continued)
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 2024
were approved by the directors on 19 February 2025 and were delivered to the
Registrar of Companies on 1 April 2025. 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.
Note 2: Critical accounting judgements and key sources of estimation
uncertainty
The preparation of the Group's financial statements in accordance with IFRS
requires management to make judgements, estimates and assumptions in applying
the accounting policies that affect the reported amounts of assets,
liabilities, income and expenses. Due to the inherent uncertainty in making
estimates, actual results reported in future periods may be based upon amounts
which differ from these estimates. Estimates, judgements and assumptions are
continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. In preparing the financial statements, the
Group has considered the impact of climate-related risks on its financial
position and performance. While the effects of climate change represent a
source of uncertainty, the Group does not consider there to be a material
impact on its judgements and estimates from the physical, transition and other
climate-related risks in the short-term.
The Group's significant judgements, estimates and assumptions are unchanged
compared to those disclosed in note 3 of the Group's 2024 financial
statements. Further information on the critical accounting judgements and key
sources of estimation uncertainty for the allowance for expected credit losses
is set out in note 12.
Note 3: Segmental analysis
Lloyds Banking Group provides a wide range of banking and financial services
in the UK and in certain locations overseas. The Group Executive Committee
(GEC) remains the chief operating decision maker, as defined by IFRS 8
Operating Segments, for the Group.
The segmental results and comparatives are presented on an underlying basis
(pre-tax), the basis reviewed by the chief operating decision maker. The
underlying basis is derived from the recognition and measurement principles of
IFRS Accounting Standards with the effects of the following excluded in
arriving at underlying profit:
• Restructuring costs relating to merger, acquisition, integration and
disposal activities
• Volatility and other items, which includes the effects of certain asset
sales, the volatility relating to the Group's hedging arrangements and that
arising in the insurance businesses, the unwind of acquisition-related fair
value adjustments and the amortisation of purchased intangible assets
For the purposes of the underlying income statement, operating lease
depreciation (net of gains on disposal of operating lease assets) is shown as
an adjustment to total income.
There has been no change to the descriptions of these segments as provided in
note 4 to the Group's financial statements for the year ended 31 December
2024.
In the half-year to 30 June 2025, the Group revised its treatment of certain
divisional variable payment related costs. Previously reported within
divisional operating costs, these are now included within underlying other
income. Comparatives have been represented on a consistent basis in respect of
these changes.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 3: Segmental analysis (continued)
The table below analyses the Group's income and profit by segment on an
underlying basis. Net income is also analysed between external and
inter-segment income.
Half-year to 30 June 2025 Retail Commercial Insurance, Pensions and Investments Other Total
£m Banking £m £m £m
£m
Underlying net interest income 4,709 1,766 (78) 258 6,655
Underlying other income 1,276 926 689 78 2,969
Total underlying income 5,985 2,692 611 336 9,624
Operating lease depreciation(1) (706) (4) - - (710)
Net income 5,279 2,688 611 336 8,914
Operating costs (2,922) (1,394) (466) (92) (4,874)
Remediation (41) - (2) 6 (37)
Total costs (2,963) (1,394) (468) (86) (4,911)
Underlying impairment (charge) credit (342) (100) 1 (1) (442)
Underlying profit before tax 1,974 1,194 144 249 3,561
External income 7,377 1,767 690 (210) 9,624
External operating lease depreciation(1) (706) (4) - - (710)
Inter-segment (expense) income (1,392) 925 (79) 546 -
Net income 5,279 2,688 611 336 8,914
Loans and advances to customers(2) 382,211 88,716 - 671 471,598
External assets 396,606 151,336 197,520 173,820 919,282
Customer deposits 323,365 170,217 - 350 493,932
External liabilities 329,493 215,329 192,760 134,829 872,411
(1)Net of losses on disposal of operating lease assets of £3 million.
(2)Other includes centralised fair value hedge accounting adjustments.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 3: Segmental analysis (continued)
Half-year to 30 June 2024 Retail Commercial Insurance, Pensions and Investments Other Total
£m Banking £m £m £m
£m
Underlying net interest income 4,430 1,696 (74) 286 6,338
Underlying other income(1) 1,133 942 649 10 2,734
Total underlying income 5,563 2,638 575 296 9,072
Operating lease depreciation(2) (677) (2) - - (679)
Net income 4,886 2,636 575 296 8,393
Operating costs(1) (2,763) (1,358) (458) (121) (4,700)
Remediation (54) (32) (5) (4) (95)
Total costs (2,817) (1,390) (463) (125) (4,795)
Underlying impairment (charge) credit (194) 83 7 3 (101)
Underlying profit before tax 1,875 1,329 119 174 3,497
External income 6,551 2,083 649 (211) 9,072
External operating lease depreciation(2) (677) (2) - - (679)
Inter-segment (expense) income (988) 555 (74) 507 -
Net income 4,886 2,636 575 296 8,393
Loans and advances to customers(3) 365,055 88,069 - (716) 452,408
External assets 380,919 148,736 191,796 171,476 892,927
Customer deposits 313,339 161,159 - 195 474,693
External liabilities 319,066 202,358 187,673 138,713 847,810
Half-year to 31 December 2024
Underlying net interest income 4,500 1,738 (62) 331 6,507
Underlying other income(1) 1,221 873 643 126 2,863
Total underlying income 5,721 2,611 581 457 9,370
Operating lease depreciation(2) (642) (4) - - (646)
Net income 5,079 2,607 581 457 8,724
Operating costs(1) (2,803) (1,394) (466) (79) (4,742)
Remediation (696) (72) (14) (22) (804)
Total costs (3,499) (1,466) (480) (101) (5,546)
Underlying impairment (charge) credit (263) (69) - - (332)
Underlying profit before tax 1,317 1,072 101 356 2,846
External income 7,015 1,898 643 (186) 9,370
External operating lease depreciation(2) (642) (4) - - (646)
Inter-segment (expense) income (1,294) 713 (62) 643 -
Net income 5,079 2,607 581 457 8,724
Loans and advances to customers(3) 372,250 87,602 - 5 459,857
External assets(4) 387,322 148,548 197,309 173,518 906,697
Customer deposits 319,726 162,645 - 374 482,745
External liabilities(4) 324,730 207,066 193,519 135,494 860,809
(1)In the half-year to 30 June 2025, for segment reporting, the Group revised
its allocation methodology. Certain divisional variable payment related costs
are now included within underlying other income; comparative figures have been
represented on a consistent basis. Total Group figures are unaffected by this
change.
(2)Net of profits on disposal of operating lease assets of £37 million in the
half-year to 30 June 2024 and £22 million in the half-year to 31 December
2024.
(3)Other includes centralised fair value hedge accounting adjustments.
(4)The Insurance, Pensions and Investments operating segment external assets
included £5,122 million at 31 December 2024 within disposal group assets and
external liabilities included £5,268 million at 31 December 2024 in disposal
group liabilities.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 3: Segmental analysis (continued)
The table below reconciles the statutory results to the underlying basis.
Statutory basis Removal of: Underlying basis(A)
£m Volatility Insurance £m
and other gross up(4)
items(1,2,3) £m
£m
Half-year to 30 June 2025
Net interest income 6,478 177 - 6,655 Underlying net interest income
Other income 2,908 (68) 129 2,969 Underlying other income
(710) - (710) Operating lease depreciation(5)
Total income 9,386 (601) 129 8,914 Net income
Operating expenses(5) (5,440) 658 (129) (4,911) Total costs
Impairment charge (442) - - (442) Underlying impairment charge
Profit before tax 3,504 57 - 3,561 Underlying profit
Half-year to 30 June 2024
Net interest income 6,046 300 (8) 6,338 Underlying net interest income
Other income 2,830 (208) 112 2,734 Underlying other income
(679) - (679) Operating lease depreciation(5)
Total income 8,876 (587) 104 8,393 Net income
Operating expenses(5) (5,452) 761 (104) (4,795) Total costs
Impairment charge (100) (1) - (101) Underlying impairment charge
Profit before tax 3,324 173 - 3,497 Underlying profit
Half-year to 31 December 2024
Net interest income 6,231 278 (2) 6,507 Underlying net interest income
Other income 2,896 (167) 134 2,863 Underlying other income
(646) - (646) Operating lease depreciation(5)
Total income 9,127 (535) 132 8,724 Net income
Operating expenses(5) (6,149) 735 (132) (5,546) Total costs
Impairment credit (331) (1) - (332) Underlying impairment credit
Profit before tax 2,647 199 - 2,846 Underlying profit
(1)In the half-year ended 30 June 2025 this comprised the effects of market
and other volatility (gains of £27 million); the amortisation of purchased
intangibles (£40 million); restructuring costs (£9 million); and fair value
unwind (losses of £35 million).
(2)In the half-year ended 30 June 2024 this comprised the effects of market
and other volatility (losses of £65 million); the amortisation of purchased
intangibles (£41 million); restructuring costs (£15 million); and fair value
unwind (losses of £52 million).
(3)In the half-year ended 31 December 2024 this comprised the effects of
market and other volatility (losses of £79 million); the amortisation of
purchased intangibles (£40 million); restructuring costs (£25 million); and
fair value unwind (losses of £55 million).
(4)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.
(5)Net of losses on disposal of operating lease assets of £3 million
(half-year to 30 June 2024; profit of £37 million; half-year to 31 December
2024: profit of £22 million). Statutory operating expenses includes operating
lease depreciation. On an underlying basis operating lease depreciation is
included in net income.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 4: Net fee and commission income
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
£m £m £m
Fee and commission income:
Current accounts 341 314 330
Credit and debit card fees 636 631 655
Commercial banking and treasury fees 183 188 185
Unit trust and insurance broking 31 32 39
Factoring 34 35 34
Other fees and commissions 239 258 242
Total fee and commission income 1,464 1,458 1,485
Fee and commission expense (608) (568) (616)
Net fee and commission income 856 890 869
Current account and credit and debit card fees principally arise in Retail;
commercial banking, treasury and factoring fees arise in Commercial Banking;
and unit trust and insurance broking fees arise in Insurance, Pensions and
Investments.
(
)
Note 5: Insurance business
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
£m £m £m
Insurance revenue
Amounts relating to the changes in liabilities for remaining coverage:
Contractual service margin recognised for services provided 392 216 233
Change in risk adjustments for non-financial risk for risk expired 24 27 31
Expected incurred claims and other insurance services expenses 959 977 939
Charges to funds in respect of policyholder tax and other 66 68 40
1,441 1,288 1,243
Recovery of insurance acquisition cash flows 56 56 49
Total life 1,497 1,344 1,292
Total non-life 370 306 349
Insurance revenue 1,867 1,650 1,641
Insurance service expense
Incurred claims and other directly attributable expenses (977) (961) (1,017)
Changes that relate to past service: adjustment to liabilities for incurred 1 3 (7)
claims
Changes that relate to future service: losses and reversal of losses on (86) (46) (26)
onerous contracts
Amortisation of insurance acquisition cash flows (56) (56) (49)
Net impairment loss on insurance acquisition assets - (8) (1)
Total life (1,118) (1,068) (1,100)
Total non-life (291) (271) (294)
Insurance service expense (1,409) (1,339) (1,394)
Net expense from reinsurance contracts held (28) (23) (49)
Insurance service result 430 288 198
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 5: Insurance business (continued)
Half-year to 30 June 2025
Life Non-life Total
£m £m £m
Net gains on financial assets and liabilities at fair value through profit or 3,520 17 3,537
loss
Foreign exchange 140 - 140
Investment property gains 1 - 1
Net investment return on assets held to back insurance and participating 3,661 17 3,678
investment contracts(1)
Net investment return on assets held to back third party interests in 703
consolidated funds
Net investment return on assets held to back non-participating investment 935
contracts
Net investment return on assets held to back insurance and investment 5,316
contracts
Net finance expense from insurance and participating investment contracts (3,532) (3) (3,535)
Net finance income from reinsurance contracts held 23 - 23
Net finance expense from insurance, participating investment and reinsurance (3,509) (3) (3,512)
contracts
Movement in third party interests in consolidated funds (634)
Change in non-participating investment contracts (1,171)
Net finance expense in respect of insurance and investment contracts (5,317)
Half-year to 30 June 2024
Life Non-life Total
£m £m £m
Net gains on financial assets and liabilities at fair value through profit or 6,263 20 6,283
loss
Foreign exchange 221 - 221
Investment property losses (2) - (2)
Net investment return on assets held to back insurance and participating 6,482 20 6,502
investment contracts(1)
Net investment return on assets held to back third party interests in 830
consolidated funds
Net investment return on assets held to back non-participating investment 2,492
contracts
Net investment return on assets held to back insurance and investment contract 9,824
Net finance expense from insurance and participating investment contracts (6,555) (3) (6,558)
Net finance income from reinsurance contracts held 81 - 81
Net finance expense from insurance, participating investment and reinsurance (6,474) (3) (6,477)
contracts
Movement in third party interests in consolidated funds (802)
Change in non-participating investment contracts (2,734)
Net finance expense in respect of insurance and investment contracts (10,013)
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 5: Insurance business (continued)
Half-year to 31 December 2024
Life Non-life Total
£m £m £m
Net gains on financial assets and liabilities at fair value through profit or 3,984 18 4,002
loss
Foreign exchange (25) - (25)
Investment property losses (2) - (2)
Net investment return on assets held to back insurance and participating 3,957 18 3,975
investment contracts(1)
Net investment return on assets held to back third party interests in 275
consolidated funds
Net investment return on assets held to back non-participating investment 1,939
contracts
Net investment return on assets held to back insurance and investment 6,189
contracts
Net finance expense from insurance and participating investment contracts (3,826) (4) (3,830)
Net finance expense from reinsurance contracts held (34) - (34)
Net finance expense from insurance, participating investment and reinsurance (3,860) (4) (3,864)
contracts
Movement in third party interests in consolidated funds (257)
Change in non-participating investment contracts (2,144)
Net finance expense in respect of insurance and investment contracts (6,265)
(1)Includes income of £3,426 million (half-year to 30 June 2024:
£6,951 million; half-year to 31 December 2024: £3,737 million) in respect
of unit-linked and with-profit contracts measured applying the variable fee
approach. The assets generating the investment return held to back insurance
contracts and participating investment contracts are carried at fair value on
the Group's balance sheet.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 5: Insurance business (continued)
At 30 June 2025 Present value Risk Contractual Other Total
of future adjustment service £m £m
cash flows £m margin
£m £m
Insurance contract assets 136 (53) (81) - 2
Liabilities arising from insurance contracts and participating investment (120,037) (834) (4,110) - (124,981)
contracts(1)
Other liabilities(2) - - - - -
Net liability (119,901) (887) (4,191) - (124,979)
Insurance acquisition assets - - - 29 29
Insurance and participating investment contracts net liability (119,901) (887) (4,191) 29 (124,950)
At 31 December 2024
Insurance contract assets - - - - -
Liabilities arising from insurance contracts and participating investment (117,111) (874) (4,102) - (122,087)
contracts(1)
Other liabilities(2) (5,268) - - - (5,268)
Net liability (122,379) (874) (4,102) - (127,355)
Insurance acquisition assets - - - 23 23
Insurance and participating investment contracts net liability (122,379) (874) (4,102) 23 (127,332)
(1)Excluding insurance acquisition assets.
(2)Liabilities arising from insurance contracts relating to the disposal of
the Group's bulk annuity business have been classified as disposal group
liabilities.
On 13 March 2024, the Group entered into a business transfer agreement with
Rothesay Life plc for the sale of the Group's bulk annuity business and to
pursue the transfer of associated business assets and assumed liabilities
under Part VII of the Financial Services and Markets Act 2000. A reinsurance
agreement between the Group and Rothesay Life plc was signed on 30 April 2024
to materially de-risk the Group's bulk annuity portfolio. The Part VII
transfer was completed on 11 June 2025.
At 31 December 2024, the Group presented the assets and liabilities relating
to the bulk annuity business, including the reinsurance contract assets
arising from the agreement between the Group and Rothesay Life plc, as a
disposal group.
At the Part VII transfer date, the Group derecognised the assets and
liabilities of the disposal group, comprising £4.9 billion of reinsurance
contract assets, £5.1 billion of insurance contract liabilities, £50 million
of goodwill and a £9 million deferred tax asset. Following the derecognition
requirements in IFRS 17 for transfers of contracts to a third party, the Group
recognised £179 million in insurance revenue, representing the release of CSM
for future service at the transfer date. The derecognition of the goodwill and
deferred tax asset was charged to other operating income. The overall pre-tax
gain on derecognition of the disposal group was £120 million.
( )
(
)
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 6: Operating expenses
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
£m £m £m
Staff costs:
Salaries and social security costs 1,908 1,914 1,905
Pensions and other post-retirement benefit schemes (note 7) 270 276 250
Restructuring and other staff costs 294 214 113
2,472 2,404 2,268
Premises and equipment costs(1) 260 196 258
Depreciation and amortisation 1,748 1,705 1,721
UK bank levy - - 147
Regulatory and legal provisions (note 14) 37 95 804
Other 1,228 1,365 1,229
Operating expenses before adjustment for: 5,745 5,765 6,427
Amounts attributable to the acquisition of insurance and participating (89) (88) (94)
investment contracts
Amounts reported within insurance service expenses (216) (225) (184)
Total operating expenses 5,440 5,452 6,149
(1)Net of losses on disposal of operating lease assets of £3 million
(half-year to 30 June 2024: profit of £37 million; half-year to 31 December
2024: profit of £22 million).
(
)
Note 7: Retirement benefit obligations
The Group's post-retirement defined benefit scheme obligations are comprised
as follows:
At 30 Jun At 31 Dec 2024
2025 £m
£m
Defined benefit pension schemes:
Present value of funded obligations (26,310) (27,118)
Fair value of scheme assets 29,183 30,063
Net pension scheme asset 2,873 2,945
Other post-retirement schemes (39) (39)
Total amounts recognised in the balance sheet 2,834 2,906
Recognised on the balance sheet as:
Retirement benefit assets 2,953 3,028
Retirement benefit obligations (119) (122)
Total amounts recognised in the balance sheet 2,834 2,906
Movements in the Group's net post-retirement defined benefit scheme asset
during the period were as follows:
£m
Asset at 1 January 2025 2,906
Income statement credit 15
Employer contributions 81
Remeasurement (168)
Asset at 30 June 2025 2,834
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 7: Retirement benefit obligations continued
The charge to the income statement in respect of pensions and other
post-retirement benefit schemes is comprised as follows:
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
£m £m £m
Defined benefit schemes (15) (21) 10
Defined contribution schemes 285 297 240
Total charge to the income statement 270 276 250
The principal assumptions used in the valuations of the defined benefit
pension schemes were as follows:
At 30 Jun At 31 Dec 2024
2025 %
%
Discount rate 5.61 5.55
Rate of inflation:
Retail Price Index (RPI) 2.75 2.97
Consumer Price Index (CPI) 2.25 2.52
Rate of salary increases 0.00 0.00
Weighted-average rate of increase for pensions in payment 2.67 2.69
In July 2024, the Court of Appeal handed down a judgment (Virgin Media Limited
v NTL Pension Trustees Limited) which potentially has implications for the
validity of amendments made by pension schemes that were contracted out on a
salary-related basis between 6 April 1997 and the abolition of contracting-out
in 2016. The Government in June 2025, recognising that schemes and sponsoring
employers need clarity around scheme liabilities, announced it will introduce
legislation to give affected pension schemes the ability to retrospectively
obtain written actuarial confirmation that historic benefit changes met the
necessary standards. The Group is carrying out a review of scheme amendments
to decide whether any subsequent actions are required. The Group will continue
to monitor developments.
Note 8: Impairment
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
£m £m £m
Loans and advances to banks - (5) (2)
Loans and advances to customers 492 161 346
Debt securities - (3) (3)
Financial assets held at amortised cost 492 153 341
Financial assets at fair value through other comprehensive income - (2) (1)
Other assets (1) (8) (1)
Loan commitments and financial guarantees (49) (43) (8)
Total impairment charge (credit) 442 100 331
There was a £70 million charge in respect of residual value impairment and
voluntary terminations within the Group's UK Motor Finance business in the
current period (half-year to 30 June 2024: £10 million; half-year to
31 December 2024: £14 million).
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 9: Tax
In accordance with IAS 34, the Group's income tax expense for the half-year to
30 June 2025 is based on the best estimate of the weighted-average annual
income tax rate expected for the full financial year. The tax effects of
one-off items are not included in the weighted-average annual income tax rate,
but are recognised in the relevant period.
An explanation of the relationship between tax expense and accounting profit
is set out below:
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
£m £m £m
Profit before tax 3,504 3,324 2,647
UK corporation tax thereon at 25.0% (2024: 25.0%) (876) (831) (662)
Impact of surcharge on banking profits (86) (83) (74)
Non-deductible costs: conduct charges 1 4 (31)
Non-deductible costs: bank levy - - (37)
Other non-deductible costs (127) (39) (34)
Non-taxable income 19 27 51
Tax relief on coupons on other equity instruments 61 67 58
Tax-exempt gains on disposals 25 33 65
Tax losses where no deferred tax recognised (4) (2) (5)
Remeasurement of deferred tax due to rate changes - 3 (3)
Differences in overseas tax rates 7 - (9)
Policyholder tax (35) (46) (29)
Deferred tax asset in respect of life assurance expenses (40) - (5)
Adjustments in respect of prior years 95 (12) 106
Tax effect of share of results of joint ventures - (1) -
Provision for Pillar 2 current income taxes - - (5)
Tax expense (960) (880) (614)
Note 10: Fair values of financial assets and liabilities
The valuations of financial instruments have been classified into three levels
according to the quality and reliability of information used to determine
those fair values. Note 17 to the Group's financial statements for the year
ended 31 December 2024 details the definitions of the three levels in the
fair value hierarchy.
Financial instruments classified as financial assets at fair value through
profit or loss, derivative financial instruments, financial assets at fair
value through other comprehensive income and financial liabilities at fair
value through profit or loss are recognised at fair value.
The Group manages valuation adjustments for its derivative exposures on a net
basis; the Group determines their fair values on the basis of their net
exposures. In all other cases, fair values of financial assets and liabilities
measured at fair value are determined on the basis of their gross exposures.
The following tables provide an analysis of the financial assets and
liabilities of the Group that are carried at fair value in the Group's
consolidated balance sheet, grouped into levels 1 to 3 based on the degree to
which the fair value is observable. There were no significant transfers
between level 1 and level 2 during the period.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 10: Fair values of financial assets and liabilities (continued)
Financial assets Level 1 Level 2 Level 3 Total
£m £m £m £m
At 30 June 2025
Financial assets at fair value through profit or loss:
Loans and advances to banks - 3,094 - 3,094
Loans and advances to customers - 3,193 5,905 9,098
Reverse repurchase agreements - 20,655 - 20,655
Debt securities 14,211 32,059 2,368 48,638
Treasury and other bills 1 - - 1
Contracts held with reinsurers - 7,573 - 7,573
Equity shares 131,456 - 1,427 132,883
Total financial assets at fair value through profit or loss(1) 145,668 66,574 9,700 221,942
Financial assets at fair value through other comprehensive income:
Debt securities 19,306 14,165 49 33,520
Equity shares - - 368 368
Total financial assets at fair value through other comprehensive income 19,306 14,165 417 33,888
Derivative financial instruments 61 22,343 539 22,943
Total financial assets carried at fair value 165,035 103,082 10,656 278,773
(1)Other financial assets mandatorily at fair value through profit or loss
include assets backing insurance contracts and investment contracts of
£189,805 million.
Financial assets Level 1 Level 2 Level 3 Total
£m £m £m £m
At 31 December 2024
Financial assets at fair value through profit or loss:
Loans and advances to banks - 2,787 - 2,787
Loans and advances to customers - 3,039 6,010 9,049
Reverse repurchase agreements - 20,466 - 20,466
Debt securities 10,564 26,854 2,528 39,946
Treasury and other bills 32 - - 32
Contracts held with reinsurers - 10,527 - 10,527
Equity shares 131,767 - 1,351 133,118
Total financial assets at fair value through profit or loss(1) 142,363 63,673 9,889 215,925
Financial assets at fair value through other comprehensive income:
Debt securities 16,298 14,019 48 30,365
Equity shares - - 325 325
Total financial assets at fair value through other comprehensive income 16,298 14,019 373 30,690
Derivative financial instruments 103 23,221 741 24,065
Total financial assets carried at fair value 158,764 100,913 11,003 270,680
(1)Other financial assets mandatorily at fair value through profit or loss
include assets backing insurance contracts and investment contracts of
£185,201 million.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 10: Fair values of financial assets and liabilities (continued)
Financial liabilities Level 1 Level 2 Level 3 Total
£m £m £m £m
At 30 June 2025
Financial liabilities at fair value through profit or loss:
Debt securities in issue - 4,344 18 4,362
Liabilities in respect of securities sold under repurchase agreements - 22,051 - 22,051
Short positions in securities 2,326 15 - 2,341
Total financial liabilities at fair value through profit or loss 2,326 26,410 18 28,754
Derivative financial instruments 82 19,510 287 19,879
Liabilities arising from non-participating investment contracts - 52,285 - 52,285
Total financial liabilities carried at fair value 2,408 98,205 305 100,918
At 31 December 2024
Financial liabilities at fair value through profit or loss:
Debt securities in issue - 4,608 22 4,630
Liabilities in respect of securities sold under repurchase agreements - 20,564 - 20,564
Short positions in securities 2,400 17 - 2,417
Total financial liabilities at fair value through profit or loss 2,400 25,189 22 27,611
Derivative financial instruments 79 21,175 422 21,676
Liabilities arising from non-participating investment contracts - 51,228 - 51,228
Total financial liabilities carried at fair value 2,479 97,592 444 100,515
Valuation control framework
Key elements of the valuation control framework include model validation
(incorporating pre-trade and post-trade testing), product implementation
review and independent price verification. The framework covers processes for
all 3 levels in the fair value hierarchy. Formal committees meet quarterly to
discuss and approve valuations in more judgemental areas.
Transfers into and out of level 3 portfolios
Transfers out of level 3 portfolios arise when inputs that could have a
significant impact on the instrument's valuation become market observable;
conversely, transfers into the portfolios arise when sources of data cease to
be observable.
Valuation methodology
For level 2 and level 3 portfolios, there is no significant change to the
valuation methodology (techniques and inputs) disclosed in the Group's
financial statements for the year ended 31 December 2024 applied to these
portfolios.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 10: Fair values of financial assets and liabilities (continued)
Movements in level 3 portfolio
The tables below analyse movements in the level 3 financial assets portfolio.
Financial Financial Derivative Total
assets at assets at assets financial
fair value fair value £m assets
through through other carried at
profit or loss comprehensive fair value
£m income £m
£m
At 1 January 2025 9,889 373 741 11,003
Exchange and other adjustments (1) 2 12 13
Gains (losses) recognised in the income statement within other income 213 2 (154) 61
Gains recognised in other comprehensive income within the revaluation reserve - 42 - 42
in respect of financial assets at fair value through other comprehensive
income
Purchases/increases to customer loans 137 - 8 145
Sales/repayments of customer loans (482) (2) (4) (488)
Transfers into the level 3 portfolio 12 - 1 13
Transfers out of the level 3 portfolio (68) - (65) (133)
At 30 June 2025 9,700 417 539 10,656
Gains (losses) recognised in the income statement, within other income, 120 3 (124) (1)
relating to the change in fair
value of those assets held at 30 June 2025
At 1 January 2024 11,681 284 422 12,387
Exchange and other adjustments 2 (1) - 1
Gains (losses) recognised in the income statement within other income 55 - (54) 1
Losses recognised in other comprehensive income - 74 - 74
within the revaluation reserve in respect of financial assets at fair value
through other comprehensive income
Purchases/increases to customer loans 335 - 6 341
Sales/repayments of customer loans (1,923) (1) (22) (1,946)
Transfers into the level 3 portfolio 32 - - 32
Transfers out of the level 3 portfolio (35) - - (35)
At 30 June 2024 10,147 356 352 10,855
Gains (losses) recognised in the income statement, within other income, 54 - (41) 13
relating to the change in fair
value of those assets held at 30 June 2024
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 10: Fair values of financial assets and liabilities (continued)
The tables below analyse movements in the level 3 financial liabilities
portfolio.
Financial Derivative Total
liabilities liabilities financial
at fair value £m liabilities
through carried at
profit or loss fair value
£m £m
At 1 January 2025 22 422 444
Exchange and other adjustments - 6 6
Gains recognised in the income statement within other income (2) (134) (136)
Additions - 9 9
Redemptions (2) (16) (18)
At 30 June 2025 18 287 305
Gains recognised in the income statement, within other income, (2) (108) (110)
relating to the change in fair value of those liabilities held at 30 June 2025
At 1 January 2024 42 444 486
Losses (gains) recognised in the income statement within other income 2 (43) (41)
Additions - 5 5
Redemptions (2) (33) (35)
Transfers out of the level 3 portfolio (19) - (19)
At 30 June 2024 23 373 396
Losses (gains) recognised in the income statement, within other income, 2 (31) (29)
relating to the change in fair value of those liabilities held at 30 June 2024
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 10: Fair values of financial assets and liabilities (continued)
Sensitivity of level 3 valuations
The tables below set out the effects of reasonably possible alternative
assumptions for categories of level 3 financial assets and financial
liabilities.
Effect of reasonably
possible alternative
assumptions(1)
At 30 June 2025 Valuation Significant Carrying value Favourable changes Unfavourable
techniques unobservable inputs(2) £m £m changes
£m
Financial assets at fair value through profit or loss
Loans and advances to customers Discounted cash flows Interest rate spreads 5,908 152 (154)
(-234bps/+167bps)
Debt securities Discounted cash flows Credit spreads (+/-13%) 538 36 (47)
Equity and venture capital investments Market approach Earnings multiple 2,273 136 (136)
(0.0/15.0)
Underlying asset/net asset value (incl. property prices)(3) n/a 794 82 (86)
Unlisted equities, debt securities and property partnerships in the life funds Underlying asset/net asset value (incl. property prices), broker quotes or n/a 187 1 (5)
discounted cash flows(3)
9,700
Financial assets at fair value through other comprehensive income
Asset-backed securities Lead manager or broker quote/consensus pricing n/a 49 2 (2)
Equity and venture capital investments Underlying asset/net asset value (incl. property prices)(3) n/a 368 40 (40)
417
Derivative financial assets
Interest rate options Option pricing model Interest rate volatility 263 6 (4)
(12%/171%)
Interest rate derivatives Discounted cash flows (+/- 8%) uncertainty of recovery rates 276 22 (22)
539
Level 3 financial assets carried at fair value 10,656
Financial liabilities at fair value through profit or loss
Securitisation notes and other Discounted cash flows Interest rate spreads (+/-50 bps) 18 1 (1)
Derivative financial liabilities
Interest rate derivatives Option pricing model Interest rate volatility 287 16 (16)
(12%/171%)
Level 3 financial liabilities carried at fair value 305
(1)Where the exposure to an unobservable input is managed on a net basis, only
the net impact is shown in the table.
(2)Ranges are shown where appropriate and represent the highest and lowest
inputs used in the level 3 valuations.
(3)Underlying asset/net asset values represent fair value.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 10: Fair values of financial assets and liabilities (continued)
Sensitivity of level 3 valuations (continued)
Effect of reasonably
possible alternative
assumptions(1)
At 31 December 2024 Valuation Significant Carrying value Favourable changes Unfavourable changes
techniques unobservable inputs(2) £m £m £m
Financial assets at fair value through profit or loss
Loans and advances to customers Discounted cash flows Interest rate spreads (-241bps/+131bps) 6,022 245 (231)
Debt securities Discounted cash flows Credit spreads (+/- 17%) 621 35 (55)
Equity and venture capital investments Market approach Earnings multiple (3.5/15.0) 2,267 150 (150)
Underlying asset/net asset value (incl. property prices)(3) n/a 773 80 (84)
Unlisted equities, debt securities and property partnerships in the life funds Underlying asset/net asset value (incl. property prices), broker quotes or n/a 206 - (7)
discounted cash flows(3)
9,889
Financial assets at fair value through other comprehensive income
Asset-backed securities Lead manager or broker quote/consensus pricing n/a 48 2 (2)
Equity and venture capital investments Underlying asset/net asset value (incl. property prices)(3) n/a 325 33 (33)
373
Derivative financial assets
Interest rate options Option pricing model Interest rate volatility (11%/183%) 394 4 (6)
Interest rate derivatives Discounted cash flows (+/-8%) uncertainty of recovery rates 347 21 (21)
741
Level 3 financial assets carried at fair value 11,003
Financial liabilities at fair value through profit or loss
Securitisation and other notes Discounted cash flows Interest rate spreads (+/- 50bps) 22 1 (1)
Derivative financial liabilities
Interest rate derivatives Option pricing model Interest rate volatility (11%/183%) 422 17 (15)
Level 3 financial liabilities carried at fair value 444
(1)Where the exposure to an unobservable input is managed on a net basis, only
the net impact is shown in the table.
(2)Ranges are shown where appropriate and represent the highest and lowest
inputs used in the level 3 valuations.
(3)Underlying asset/net asset values represent fair value.
Unobservable inputs
Significant unobservable inputs affecting the valuation of debt securities,
unlisted equity investments and derivatives are unchanged from those described
in the Group's financial statements for the year ended 31 December 2024.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 10: Fair values of financial assets and liabilities (continued)
Reasonably possible alternative assumptions
Valuation techniques applied to many of the Group's level 3 instruments often
involve the use of two or more inputs whose relationship is interdependent.
The calculation of the effect of reasonably possible alternative assumptions
included in the table above reflects such relationships and is unchanged from
that described in note 17 to the Group's financial statements for the year
ended 31 December 2024.
The table below summarises the carrying values of financial assets and
liabilities measured at amortised cost in the Group's consolidated balance
sheet. The fair values presented in the table are at a specific date and may
be significantly different from the amounts which will actually be paid or
received on the maturity or settlement date.
At 30 June 2025 At 31 December 2024
Carrying Fair Carrying Fair
value value value value
£m £m £m £m
Financial assets
Loans and advances to banks 7,500 7,500 7,900 7,892
Loans and advances to customers 471,598 467,320 459,857 455,846
Reverse repurchase agreements 45,964 45,964 49,476 49,476
Debt securities 13,175 13,180 14,544 14,380
Financial liabilities
Deposits from banks 7,695 7,695 6,158 6,158
Customer deposits 493,932 494,798 482,745 483,568
Repurchase agreements at amortised cost 38,248 38,248 37,760 37,760
Debt securities in issue 68,301 68,673 70,834 70,894
Subordinated liabilities 10,661 12,149 10,089 10,419
The carrying amounts of cash and balances at central banks and notes in
circulation are a reasonable approximation of their fair values.
Note 11: Derivative financial instruments
At 30 June 2025 At 31 December 2024
Fair value Fair value Fair value Fair value
of assets of liabilities of assets of liabilities
£m £m £m £m
Trading and other
Exchange rate contracts 9,911 9,537 10,247 9,172
Interest rate contracts 12,710 9,555 13,436 11,644
Credit derivatives 92 185 87 172
Equity and other contracts 199 299 247 333
22,912 19,576 24,017 21,321
Hedging
Derivatives designated as fair value hedges 7 300 8 337
Derivatives designated as cash flow hedges 24 3 40 18
31 303 48 355
Total recognised derivative assets/liabilities 22,943 19,879 24,065 21,676
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 12: Allowance for expected credit losses
The calculation of the Group's allowance for expected credit loss allowances
requires the Group to make a number of judgements, assumptions and estimates.
These are set out in full in note 21 to the Group's financial statements for
the year ended 31 December 2024, with the most significant set out below.
The table below analyses total ECL allowance by portfolio, separately
identifying the amounts that have been modelled, those that have been
individually assessed and those arising through the application of judgemental
adjustments.
At 30 June 2025 Modelled Individually Judgemental Total
ECL assessed adjustments ECL
£m £m £m £m
UK mortgages 611 - 98 709
Credit cards 650 - 9 659
Other Retail 908 - 102 1,010
Commercial Banking 627 433 (51) 1,009
Other 15 - - 15
Total 2,811 433 158 3,402
At 31 December 2024
UK mortgages 720 - 132 852
Credit cards 681 - (7) 674
Other Retail 860 - 90 950
Commercial Banking 894 354 (259) 989
Other 16 - - 16
Total 3,171 354 (44) 3,481
Adjustments to modelled ECL
UK mortgages: £98 million (31 December 2024: £132 million)
These adjustments principally comprise:
Repossession risk: £85 million (31 December 2024: £110 million)
Additional ECL continues to be held judgementally to capture the potential
repossession and recovery risk from specific subsets of largely long-term
defaulted cases. This is alongside an adjustment to capture a longer duration
between default and repossession than model assumptions use on existing and
future defaults. The reduction in the period reflects latest data points on
the population judged at risk.
Adjustment for specific segments: £13 million (31 December 2024: £13
million)
The Group monitors risks across specific segments of its portfolios which may
not be fully captured through collective models. The judgement for fire safety
and cladding uncertainty remains in place as the only Mortgages segment
sufficiently material to address, given evidence of cases with defective
cladding, or other fire safety issues.
Credit cards: £9 million (31 December 2024: £(7) million) and Other Retail:
£102 million (31 December 2024: £90 million)
These adjustments principally comprise:
Lifetime extension: Credit cards: £50 million (31 December 2024: £55
million) and Other Retail: £10 million (31 December 2024: £10 million)
An adjustment is required to extend the lifetime used for Stage 2 exposures on
Retail revolving products from a three-year modelled lifetime, which reflected
the outcome data available when the ECL models were developed, to a more
representative lifetime. Incremental defaults beyond year three are calculated
through the extrapolation of the default trajectory observed throughout the
three years and beyond.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 12: Allowance for expected credit losses (continued)
Adjustments to loss rates: Credit cards: £(45) million (31 December 2024:
£(57) million) and Other Retail: £53 million (31 December 2024: £47
million)
A number of adjustments are made to the loss given default (LGD) assumptions
used within unsecured and motor credit models. For unsecured portfolios, the
adjustments reflect the impact of changes in collection debt sale strategy on
the Group's LGD models, incorporating up to date customer performance and
forward flow debt sale pricing. For UK Motor Finance, within Other Retail, the
adjustment captures the latest outlook on used car prices.
Commercial Banking: £(51) million (31 December 2024: £(259) million)
These adjustments principally comprise:
Corporate insolvency rates: £(153) million (31 December 2024: £(253)
million)
The volume of UK corporate insolvencies continues to exhibit an elevated trend
beyond December 2019 levels, revealing a marked misalignment between observed
UK corporate insolvencies and the Group's equivalent credit performance. This
dislocation gives rise to uncertainty over the drivers of the observed trends
in the metric and the appropriateness of the Group's Commercial Banking model
response which uses observed UK corporate insolvencies data to anchor future
loss estimates to. Given the Group's asset quality remains robust with low
defaults, a negative adjustment is applied by reverting judgementally to the
long-term average of the insolvency rate. The scale of the negative adjustment
reduced in the period reflecting both the reduction in observed actual UK
corporate insolvencies rates, narrowing the gap of the misalignment, as well
from a one-off change due to the interaction with the implementation of loss
rate model enhancements in the period.
Adjustments for loss given defaults (LGDs): £40 million (31 December 2024:
£(80) million)
In preceding years, adjustments have been required to mitigate limitations
identified in the modelling approach which were causing loss given defaults to
be inflated. These included the lack of benefit from amortisation of exposures
relative to collateral values at default, and the need to reflect an
exposure-weighted calculation. These two adjustments have been released
following respective enhancements to models. One remaining adjustment remains
for a specific segment of the SME portfolio which judgementally applies a more
appropriate blended LGD rate from credit risk profile segments more aligned to
experience.
Commercial Real Estate (CRE) price reduction: £10 million (31 December 2024:
£35 million)
This adjustment recognises the potential impact on loss rates from valuations
on specific CRE sectors where evidence suggests valuations may lag achievable
levels, notably in cases of stressed sale. The reduction in the period
reflects stabilisation in valuations and improved confidence in the CRE
sector.
Corporate income gearing (CIG) adjustment: £nil (31 December 2024: £37
million)
An adjustment was raised at 31 December 2024, based upon the assessment of
Corporate Income Gearing, a model parameter for affordability used in
Commercial Banking. This adjustment reversed the modelled ECL release seen
from updating CIG drivers (interest rates), given interest rates had merely
reached a plateau which translated into a slower year-on-year increase. This
slowdown gave a modelled ECL release not judged representative of the
continued pressure on borrowers and business margins. However, the maintenance
of those improvements in drivers over the first half of 2025 (including
sustained lower base rates) gives support for the modelled release to now be
recognised, removing the judgemental adjustment.
Global tariff and geo-political disruption risks: £50 million (31 December
2024: £nil)
This new adjustment was raised in the first half of 2025 to recognise the
potential risks to specific drivers across various corporate sectors not
reflected in broad macroeconomic model drivers. These are potential nuanced
risks to businesses inherent in the base case which could also worsen in the
downside scenarios. This assessment is judgemental and apportioned across all
sectors given the uncertainty of how these risks would emerge.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 12: Allowance for expected credit losses (continued)
Base case and MES economic assumptions
The Group's base case economic scenario has been updated to reflect ongoing
geopolitical developments and changes in domestic economic policy. The Group's
updated base case scenario has three conditioning assumptions. First, global
conflicts do not lead to major discontinuities in commodity prices or global
trade. Second, the US will impose tariffs on countries with a bilateral trade
deficit after the Liberation Day 90 day pause expires, resulting in an
increased effective tariff rate relative to prior assumptions. Third, the UK
Industrial Strategy and Spending Review are not assumed to substantially
change the UK fiscal outlook.
Based on these assumptions and incorporating the economic data published in
the second 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, gradual
cuts in UK Bank Rate are expected to continue during 2025, reaching a
'neutral' policy stance 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 second quarter of 2025. Actuals 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 for the year ended 31
December 2024. For June 2025, the Group continues to judge it appropriate to
include a non-modelled severe downside scenario for Group ECL calculations.
The scenario is now generated as a simple average of a fully modelled severe
scenario, better representing shocks to demand, and a scenario with higher
paths for UK Bank Rate and CPI inflation, as a representation of shocks to
supply. The combined 'adjusted' scenario used in ECL modelling is considered
to better reflect the risks around the Group's base case view in an economic
environment where demand and supply shocks are more balanced.
Scenarios by year
The key UK economic assumptions made by the Group are shown in the following
tables across a number of measures explained below.
Annual assumptions
Gross domestic product (GDP) growth and Consumer Price Index (CPI) inflation
are presented as an annual change, house price growth and commercial real
estate price growth are presented as the growth in the respective indices over
each year. Unemployment rate and UK Bank Rate are averages over the year.
Five-year average
The five-year average reflects the average annual growth rate, or level, over
the five-year period. It includes movements within the current reporting year,
such that the position as of 30 June 2025 covers the five years 2025 to 2029.
The inclusion of the reporting year within the five-year period reflects the
need to predict variables which remain unpublished at the reporting date and
recognises that credit models utilise both level and annual changes. The use
of calendar years maintains a comparability between the annual assumptions
presented.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 12: Allowance for expected credit losses (continued)
At 30 June 2025 2025 2026 2027 2028 2029 2025
% % % % % to 2029 average
%
Upside
Gross domestic product growth 1.2 2.0 1.8 1.4 1.4 1.6
Unemployment rate 4.4 3.5 3.1 3.1 3.2 3.5
House price growth 3.6 6.5 7.9 6.2 4.8 5.8
Commercial real estate price growth 5.1 8.1 3.8 1.1 0.4 3.6
UK Bank Rate 4.21 4.50 4.84 5.05 5.21 4.76
CPI inflation 3.3 2.5 2.7 3.1 3.1 2.9
Base case
Gross domestic product growth 1.0 1.0 1.5 1.5 1.5 1.3
Unemployment rate 4.8 5.0 4.7 4.5 4.5 4.7
House price growth 2.6 3.0 2.3 2.5 2.8 2.6
Commercial real estate price growth 1.6 1.1 1.3 0.3 0.0 0.9
UK Bank Rate 4.13 3.56 3.50 3.50 3.50 3.64
CPI inflation 3.3 2.7 2.4 2.5 2.4 2.7
Downside
Gross domestic product growth 0.6 (1.2) 0.6 1.3 1.5 0.5
Unemployment rate 5.2 7.2 7.5 7.2 7.0 6.8
House price growth 1.6 (0.8) (5.9) (4.7) (1.8) (2.4)
Commercial real estate price growth (1.6) (6.8) (1.6) (2.3) (2.7) (3.0)
UK Bank Rate 4.02 1.90 0.99 0.68 0.46 1.61
CPI inflation 3.3 2.5 1.9 1.5 1.1 2.1
Severe downside
Gross domestic product growth 0.1 (3.0) 0.0 1.2 1.4 (0.1)
Unemployment rate 5.8 9.7 10.2 9.8 9.4 9.0
House price growth 0.8 (3.9) (13.4) (10.9) (6.3) (6.9)
Commercial real estate price growth (6.5) (16.0) (7.4) (6.7) (5.7) (8.6)
UK Bank Rate - modelled 3.88 0.68 0.11 0.03 0.01 0.94
UK Bank Rate - adjusted(1) 4.34 3.09 2.80 2.77 2.76 3.15
CPI inflation - modelled 3.3 2.5 1.4 0.5 (0.1) 1.5
CPI inflation - adjusted(1) 3.5 3.8 3.2 2.8 2.4 3.1
Probability-weighted
Gross domestic product growth 0.9 0.2 1.1 1.4 1.4 1.0
Unemployment rate 4.9 5.7 5.6 5.4 5.4 5.4
House price growth 2.4 2.2 0.0 0.1 1.1 1.2
Commercial real estate price growth 0.9 (0.9) 0.3 (1.0) (1.2) (0.4)
UK Bank Rate - modelled 4.09 3.06 2.81 2.77 2.75 3.10
UK Bank Rate - adjusted(1) 4.14 3.30 3.08 3.04 3.03 3.32
CPI inflation - modelled 3.3 2.5 2.2 2.2 2.0 2.4
CPI inflation - adjusted(1) 3.3 2.7 2.4 2.4 2.2 2.6
(1)The adjustment to UK Bank Rate and CPI inflation in the severe downside is
considered to better reflect the risks to the Group's base case view in an
economic environment where the risks of supply and demand shocks are seen as
more balanced.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 12: Allowance for expected credit losses (continued)
At 31 December 2024 2024 2025 2026 2027 2028 2024
% % % % % to 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 - adjusted(1) 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 - adjusted(1) 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 - adjusted(1) 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 - adjusted(1) 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 is
considered to better reflect the risks to the Group's base case view in an
economic environment where the risks of supply and demand shocks are seen as
more balanced.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 12: Allowance for expected credit losses (continued)
Base case scenario by quarter
Gross domestic product growth is presented quarter-on-quarter. House price
growth, commercial real estate price growth and CPI inflation are presented
year-on-year, i.e. from the equivalent quarter in the previous year.
Unemployment rate and UK Bank Rate are presented as at the end of each
quarter.
At 30 June 2025 First Second Third Fourth First Second Third Fourth
quarter quarter quarter quarter quarter quarter quarter quarter
2025 2025 2025 2025 2026 2026 2026 2026
% % % % % % % %
Gross domestic product growth 0.7 0.0 0.1 0.2 0.3 0.3 0.4 0.4
Unemployment rate 4.5 4.7 4.9 5.0 5.0 5.0 4.9 4.9
House price growth 2.9 3.1 2.7 2.6 3.7 4.0 3.5 3.0
Commercial real estate price growth 2.5 2.7 2.6 1.6 1.2 1.0 1.0 1.1
UK Bank Rate 4.50 4.25 4.00 3.75 3.75 3.50 3.50 3.50
CPI inflation 2.8 3.6 3.4 3.5 3.0 2.6 2.6 2.4
( )
At 31 December 2024 First Second Third Fourth First Second Third Fourth
quarter quarter quarter quarter quarter quarter quarter quarter
2024 2024 2024 2024 2025 2025 2025 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
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 12: Allowance for expected credit losses (continued)
Movement in expected credit loss allowance
Opening ECL at Write-offs Income Net ECL Closing ECL at
31 Dec and other(1) statement increase 30 Jun
2024 £m charge (credit) (decrease) 2025
£m £m £m £m
UK mortgages 852 (10) (133) (143) 709
Credit cards 674 (215) 200 (15) 659
Other Retail 950 (215) 275 60 1,010
Retail 2,476 (440) 342 (98) 2,378
Commercial Banking 989 (80) 100 20 1,009
Other 16 (1) - (1) 15
Total 3,481 (521) 442 (79) 3,402
Opening ECL at Write-offs Income Net ECL Closing ECL at
31 Dec and other(1) statement increase 30 Jun
2023 £m charge (credit) (decrease) 2024
£m £m £m £m
UK mortgages(2) 1,115 (25) (119) (144) 971
Credit cards 810 (225) 115 (110) 700
Other Retail 945 (201) 198 (3) 942
Retail 2,870 (451) 194 (257) 2,613
Commercial Banking 1,182 (100) (83) (183) 999
Other 32 (3) (11) (14) 18
Total 4,084 (554) 100 (454) 3,630
Opening ECL at Write-offs Income Net ECL Closing ECL at
30 Jun and other(1) statement increase 31 Dec
2024 £m charge (credit) (decrease) 2024
£m £m £m £m
UK mortgages(3) 971 (44) (75) (119) 852
Credit cards 700 (181) 155 (26) 674
Other Retail 942 (175) 183 8 950
Retail 2,613 (400) 263 (137) 2,476
Commercial Banking 999 (79) 69 (10) 989
Other 18 (1) (1) (2) 16
Total 3,630 (480) 331 (149) 3,481
(1)Contains adjustments in respect of purchased or originated credit-impaired
financial assets.
(2)Includes £20 million within write-offs and other relating to the
securitisation of primarily legacy Retail mortgages, totalling £1.0 billion
of gross loans and advances to customers.
(3)Includes £33 million within write-offs and other relating to the
securitisation of primarily legacy Retail mortgages, totalling £1.0 billion
of gross loans and advances to customers.
The total allowance for expected credit losses includes £211 million (30 June
2024: £185 million; 31 December 2024: £178 million) in respect of residual
value impairment and voluntary terminations within the Group's UK Motor
Finance business.
(
)
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 13: Debt securities in issue
At 30 June 2025 At 31 December 2024
At At Total At At Total
fair value amortised £m fair value amortised cost £m
through cost through £m
profit £m profit
or loss or loss
£m £m
Senior unsecured notes issued 4,344 35,920 40,264 4,608 40,019 44,627
Covered bonds - 9,676 9,676 - 11,764 11,764
Certificates of deposit issued - 5,544 5,544 - 5,776 5,776
Securitisation notes 18 5,745 5,763 22 5,185 5,207
Commercial paper - 11,416 11,416 - 8,090 8,090
4,362 68,301 72,663 4,630 70,834 75,464
Covered bonds and securitisation programmes
At 30 June 2025, the covered bonds held by external parties and those held
internally, were secured on certain loans and advances to customers amounting
to £24,510 million (31 December 2024: £26,202 million) which have been
assigned to bankruptcy remote limited liability partnerships to provide
security for issues of covered bonds by the Group. The Group retains all of
the risks and rewards associated with these loans and the partnerships are
consolidated fully with the loans retained on the Group's balance sheet.
The Group's securitisation vehicles issue notes that are held both externally
and internally, and are secured on loans and advances to customers amounting
to £28,186 million at 30 June 2025 (31 December 2024: £27,657 million), the
majority of which have been sold by subsidiary companies to bankruptcy remote
structured entities. As the structured entities are funded by the issue of
debt on terms whereby the majority of the risks and rewards of the portfolio
are retained by the subsidiary, the structured entities are consolidated fully
and all of these loans are retained on the Group's balance sheet.
Cash deposits of £3,070 million (31 December 2024: £3,256 million) which
support the debt securities issued by the structured entities, the term
advances related to covered bonds and other legal obligations, are held by the
Group.
Note 14: Provisions
Provisions Regulatory Other Total
for financial
commitments and legal £m £m
and guarantees
£m(1) provisions
£m
At 1 January 2025 270 1,600 443 2,313
Exchange and other adjustments 1 2 (2) 1
Provisions applied - (182) (278) (460)
(Credit) charge for the period (49) 37 334 322
At 30 June 2025 222 1,457 497 2,176
(1)In respect of loans and advances to customers.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 14: Provisions (continued)
Regulatory and legal provisions
In the course of its business, the Group is engaged on a regular basis in
discussions with UK and overseas regulators and other governmental authorities
on a range of matters, including legal and regulatory reviews and, from time
to time, enforcement investigations (including in relation to compliance with
applicable laws and regulations, such as those relating to prudential
regulation, consumer protection, investment advice, employment, business
conduct, systems and controls, environmental, sustainability,
competition/anti-trust, tax, anti-bribery, anti-money laundering and
sanctions). Any matters discussed or identified during such discussions and
inquiries may result in, among other things, further inquiry or investigation,
other action being taken by governmental and/or regulatory authorities,
increased costs being incurred by the Group, remediation of systems and
controls, public or private censure, restriction of the Group's business
activities and/or fines. The Group also receives complaints in connection with
its past conduct and claims brought 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 events or circumstances disclosed could have a
material adverse effect on the Group's financial position, operations or cash
flows. Provisions are held where the Group can reliably estimate a probable
outflow of economic resources. The ultimate liability of the Group may be
significantly more, or less, than the amount of any provision recognised. If
the Group is unable to determine a reliable estimate, a contingent liability
is disclosed. The recognition of a provision does not amount to an admission
of liability or wrongdoing on the part of the Group. During the half-year to
30 June 2025 the Group charged a further £37 million in respect of legal
actions and other regulatory matters and the unutilised balance at 30 June
2025 was £1,457 million (31 December 2024: £1,600 million). The most
significant items are outlined below.
Motor commission review
The Group recognised a £450 million provision in 2023 for the potential
impact of the FCA review into historical motor finance commission arrangements
and sales announced in January 2024. In the fourth quarter of 2024, a further
£700 million provision was recognised in relation to motor finance
commission arrangements, in light of the Court of Appeal (CoA) decisions
handed down in their judgment in Wrench, Johnson and Hopcraft (WJH) in October
2024, which goes beyond the scope of the original FCA motor finance
commissions review.
The CoA judgment in WJH determined that motor dealers acting as credit brokers
owe certain duties to disclose to their customers commission payable to them
by lenders, and that lenders will be liable for dealers' non-disclosures. This
sets a higher bar for the disclosure of and consent to the existence, nature,
and quantum of any commission paid than had been understood to be required or
applied across the motor finance industry prior to the decision. The Group's
understanding of compliant disclosure was built on FCA and other regulatory
guidance and previous legal authorities. These CoA decisions relate to
commission disclosure and consent obligations which go beyond the scope of the
current FCA motor finance commissions review. The Supreme Court granted the
relevant lenders permission to appeal the WJH judgment and the substantive
hearing concluded on 3 April 2025. As of 23 July 2025, the judgment is still
pending.
Following the WJH decision delivered by the CoA, the FCA extended its
temporary complaint handling rules in relation to discretionary commission
arrangements (DCA) complaints to include non-DCA commission complaints until
December 2025. In June 2025, the FCA announced that it will confirm within six
weeks of the Supreme Court decision whether it intends to propose a redress
scheme and its timeframe for consultation on that scheme. In addition, there
are a number of other relevant judicial proceedings which may influence the
eventual outcome, including a judicial review (which is now subject to appeal)
of a final decision by the Financial Ombudsman Service (FOS) against another
lender that was heard in October 2024.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 14: Provisions (continued)
The Group continues to receive 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 establishing the provision estimate, the Group has considered a number of
scenarios to address uncertainties around a number of key assumptions. These
include a range of potential Supreme Court outcomes, regulatory responses
including steps that the FCA may take, and outcomes in relation to redress.
Other key assumptions include applicable commission models, commission rates,
time periods, response rates, uphold rates, levels of redress / interest
applied and costs to deliver. The Group will continue to assess developments
and potential impacts, including the outcome of the appeals, any announcement
by the FCA of their next steps, and any action by other regulators or
government bodies. The ultimate financial impact will be determined by a
number of factors still to be resolved, in particular the FCA response and any
potential redress as well as any broader implications of the judgment, and
accordingly could materially differ from the amount provided.
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.
Virtually all of the population have now had decisions via the Fixed Sum Award
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 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.
Other
The Group carries provisions of £125 million (31 December 2024: £154
million) in respect of dilapidations, rent reviews and other property-related
matters.
Provisions are also made for staff and other costs related to Group
restructuring initiatives at the point at which the Group becomes committed to
the expenditure; at 30 June 2025 provisions of £218 million (31 December
2024: £135 million) were held.
The Group carries provisions of £37 million (31 December 2024: £35 million)
for indemnities and other matters relating to legacy business disposals in
prior years. Whilst there remains significant uncertainty as to the timing of
the utilisation of the provisions, the Group expects the majority of the
remaining provisions to have been utilised by 31 December 2026.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 15: Earnings per share
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
£m £m £m
Profit attributable to ordinary shareholders - basic and diluted 2,274 2,145 1,778
( )
Half-year Half-year Half-year
to 30 Jun to 30 Jun to 31 Dec
2025 2024 2024
million million million
Weighted average number of ordinary shares in issue - basic 60,320 63,453 61,385
Adjustment for share options and awards 739 600 329
Weighted average number of ordinary shares in issue - diluted 61,059 64,053 61,714
Basic earnings per share 3.8p 3.4p 2.9p
Diluted earnings per share 3.7p 3.3p 2.9p
( )
(
)
Note 16: Dividends on ordinary shares and share buyback
An interim dividend for 2025 of 1.22 pence per ordinary share (half-year to 30
June 2024: 1.06 pence per ordinary share) will be paid on 9 September 2025.
The total amount of this dividend is £731 million, before the impact of any
further cancellations of shares purchased under the Group's buyback programme
(half-year to 30 June 2024: £662 million, following cancellations of shares
under the Group's buyback programme up to the record date, was paid to
shareholders).
On 20 May 2025, a final dividend in respect of 2024 of 2.11 pence per ordinary
share, totalling £1,271 million, following cancellations of shares under the
Group's buyback programme up to the record date, was paid to shareholders.
Shareholders who have joined the dividend reinvestment plan will automatically
receive ordinary shares instead of the cash dividend. Key dates for the
payment of the recommended dividend are outlined on page 97.
On 21 February 2025 the Group commenced an ordinary share buyback programme to
purchase outstanding ordinary shares. As at 30 June 2025, the Group has
purchased c.1.0 billion ordinary shares under the programme, for a total
consideration of £733 million.
Note 17: Contingent liabilities, commitments and guarantees
Contingent liabilities, commitments and guarantees arising from the banking
business
At 30 June 2025 contingent liabilities, such as performance bonds and letters
of credit, arising from the banking business were £2,705 million (31
December 2024: £2,605 million).
The contingent liabilities of the Group arise in the normal course of its
banking business and it is not practicable to quantify their future financial
effect. Total commitments and guarantees were £154,136 million (31 December
2024: £148,619 million), of which in respect of undrawn formal standby
facilities, credit lines and other commitments to lend, £85,195 million (31
December 2024: £79,518 million) was irrevocable.
Capital commitments
Excluding commitments in respect of investment property, capital expenditure
contracted but not provided for at 30 June 2025 amounted to £733 million (31
December 2024: £640 million) and related to assets to be leased to customers
under operating leases. Capital expenditure in respect of investment
properties which had been contracted for but not recognised in the financial
statements was £392 million (31 December 2024: £236 million). The Group's
management is confident that future net revenues and funding will be
sufficient to cover these commitments.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 17: Contingent liabilities, commitments and guarantees (continued)
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. The
litigation in question is as follows:
• Litigation 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 upholding the Court of
Appeal's finding in 2018 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)
• Litigation 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 release and any subsequent sale of Visa common stock
does not impact the contingent liability.
LIBOR and other trading rates
Certain Group companies, together with other panel banks, have been named as
defendants in ongoing private lawsuits, including purported class action
suits, 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 companies are also named as defendants in (i) UK-based claims,
and (ii) two Dutch class actions, raising LIBOR manipulation allegations. A
number of claims against the Group in the UK relating to the alleged mis-sale
of interest rate hedging products also include allegations of LIBOR
manipulation.
It is currently not possible to predict the scope and ultimate outcome on the
Group of any private lawsuits or ongoing related challenges to the
interpretation or validity of any of the Group's contractual arrangements,
including their timing and scale. 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 £975 million (including
interest) and a reduction in the Group's deferred tax asset of approximately
£275 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. It is unlikely that
any appeal hearing will be held before 2026, and final conclusion of the
judicial process may not be for several years.
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)
(continued)
Note 17: Contingent liabilities, commitments and guarantees (continued)
There are a number of other open matters on which the Group is in discussions
with HMRC (including the tax treatment of costs relating to HBOS Reading),
none of which is expected to have a material impact on the financial position
of the Group.
Arena and Sentinel litigation claims
The Group is facing claims alleging breach of duty and/or mandate in the
context of an underlying external fraud matter involving Arena Television. The
Group is defending the claims, which are at an early stage. As such, 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 action claims) brought by or on behalf of current or former employees,
customers (including their appointed representatives), investors or other
third parties, as well as legal and regulatory reviews, enquiries and
examinations, requests for information, audits, challenges, investigations and
enforcement actions, which could relate to a number of issues. This includes
matters in relation to compliance with applicable laws and regulations, such
as those relating to prudential regulation, employment, consumer protection,
investment advice, business conduct, systems and controls, environmental,
sustainability, competition/anti-trust, tax, anti-bribery, anti-money
laundering and sanctions, some of which may be beyond the Group's control,
both in the UK and overseas. Where material, such matters are periodically
reassessed, with the assistance of external professional advisers where
appropriate, to determine the likelihood of the Group incurring a liability.
The Group does not currently expect the final outcome of any such case to have
a material adverse effect on its financial position, operations or cash flows.
Where there is a contingent liability related to an existing provision the
relevant disclosures are included within note 14.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors listed below (being all the directors of Lloyds Banking Group
plc) confirm that to the best of their knowledge these condensed consolidated
half-year financial statements have been prepared in accordance with UK
adopted International Accounting Standard 34, Interim Financial Reporting, and
that the half-year management report herein includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R, namely:
• an indication of important events that have occurred during the six
months ended 30 June 2025 and their impact on the condensed consolidated
half-year financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
• material related party transactions in the six months ended 30 June 2025
and any material changes in the related party transactions described in the
last annual report.
Signed on behalf of the Board by
Charlie Nunn
Group Chief Executive
23 July 2025
Lloyds Banking Group plc Board of Directors:
Executive directors:
Charlie Nunn (Group Chief Executive)
William Chalmers (Chief Financial Officer)
Non-executive directors:
Sir Robin Budenberg CBE (Chair)
Sarah Legg
Amanda Mackenzie LVO OBE
Harmeen Mehta
Cathy Turner
Scott Wheway
Catherine Woods
Nathan Bostock
Chris Vogelzang
INDEPENDENT REVIEW REPORT TO LLOYDS BANKING GROUP PLC
Conclusion
We have been engaged by Lloyds Banking Group plc and its subsidiaries (the
Group) to review the condensed consolidated set of financial statements in the
half-yearly financial report for the six months ended 30 June 2025 which
comprises the condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed consolidated
balance sheet, the condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement and related notes 1 to 17. Based on
our review, nothing has come to our attention that causes us to believe that
the condensed consolidated set of financial statements in the half-yearly
financial report for the six months ended 30 June 2025 is not prepared, in all
material respects, in accordance with the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority and United Kingdom
adopted International Accounting Standard (IAS) 34.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion. As disclosed in note 1, the annual
financial statements of the Group will be prepared in accordance with United
Kingdom adopted international accounting standards. The condensed consolidated
set of financial statements included in this half-yearly financial report have
been prepared in accordance with United Kingdom adopted IAS 34, "Interim
Financial Reporting".
Conclusion relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410, however future events
or conditions may cause the Group to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority. In preparing the half-yearly
financial report, the directors are responsible for assessing the Group's
ability to continue as a going concern, disclosing as applicable, matters
related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the Group a conclusion on the condensed consolidated set of
financial statements in the half-yearly financial report. Our conclusion,
including our conclusions relating to going concern, are based on procedures
that are less extensive than audit procedures, as described in the basis for
conclusion paragraph of this report.
Use of our report
This report is made solely to the Group in accordance with ISRE (UK) 2410. Our
work has been undertaken so that we might state to the Group those matters we
are required to state to it in an independent review report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Group, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, England
23 July 2025
KEY DATES
Shares quoted ex-dividend for 2025 interim dividend 31 July 2025
Record date for 2025 interim dividend 1 August 2025
Final date for joining or leaving the interim dividend reinvestment plan 18 August 2025
Interim 2025 dividend paid 9 September 2025
Q3 2025 Interim Management Statement 23 October 2025
Preliminary 2025 results 29 January 2026
2025 annual report and accounts published 18 February 2026
BASIS OF PRESENTATION
This release covers the results of Lloyds Banking Group plc together with its
subsidiaries (the Group) for the six months ended 30 June 2025. Unless
otherwise stated, income statement commentaries throughout this document
compare the six months ended 30 June 2025 to the six months ended 30 June 2024
and the balance sheet analysis compares the Group balance sheet as at 30 June
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 above. Unless otherwise stated,
commentary on pages 1 to 2 and pages 7 to 8 is given on an underlying basis.
The Group will publish a condensed set of half-year Pillar 3 disclosures in
the second half of August. A copy of the disclosures will be available to view
at: www.lloydsbankinggroup.com/investors/financialdownloads.html
Segmental information: During the first half of 2025, the Group revised its
capital transfer pricing methodology. Comparative segmental banking net
interest margin has been represented on a consistent basis. In addition, the
Group revised its treatment of certain divisional variable payments related
costs, now included within underlying other income. Comparative segmental
underlying other income and operating costs have been represented on a
consistent basis. Total Group figures are unaffected by these changes.
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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR PKNBDCBKDFOBRecent news on Lloyds Banking
See all newsREG - Lloyds Banking Group - Transaction in Own Shares
AnnouncementREG - Lloyds Banking Group - Director/PDMR Shareholding
AnnouncementREG - Lloyds Banking Group - Total Voting Rights
AnnouncementREG - Lloyds Banking Group - Transaction in Own Shares
AnnouncementREG - Lloyds Bank Plc Lloyds Banking Group - Notice to the Series 2021-1 Covered Bondholders
Announcement