REG - Lloyds Banking Group - 2026 Q1 Interim Management Statement
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RNS Number : 2942C Lloyds Banking Group PLC 29 April 2026
Lloyds Banking Group plc
Q1 2026 results
Interim management statement
29 April 2026
RESULTS FOR THE THREE MONTHS TO 31 MARCH 2026
"In the first quarter of 2026, the Group delivered sustained strength in
financial performance, growing our income, maintaining our cost discipline and
delivering strong profitability. Our differentiated business model remains
resilient in the context of the current economic uncertainties. We remain
focused on supporting UK households and businesses as they look to strengthen
their financial positions and achieve their goals.
We are building strategic momentum during the final year of our current plan,
providing innovative ways for our customers to manage their financial needs
and achieve their financial aspirations. We are confident in our delivery for
the year ahead and reiterate our guidance for 2026. We look forward to
presenting our new strategy alongside the half-year results."
Charlie Nunn, Group Chief Executive
Sustained strength in financial performance(1)
• Statutory profit before tax of £2.0 billion (three months to 31 March
2025: £1.5 billion) benefitting from higher total income. Return on tangible
equity of 17.0%
• Underlying net interest income of £3.6 billion, up 8% year-on-year.
This reflects a higher banking net interest margin of 3.17%, up 14 basis
points year-on-year (up 7 basis points compared to the fourth quarter). This
was driven by strong structural hedge income, alongside franchise led volume
growth, as illustrated by average interest-earning banking assets of £473.5
billion, up 4% year-on-year
• Underlying other income of £1.6 billion, 11% higher year-on-year driven
by growth in customer activity and the continued benefit of strategic
initiatives
• Operating lease depreciation of £389 million, up 10% following fleet
growth, the depreciation of higher value vehicles and declines in used car
prices, partially offset by risk mitigation actions
• Operating costs of £2.5 billion, down 3% reflecting higher cost savings
and a lower severance expense, partially offset by business growth costs,
inflationary pressures and the impact of Lloyds Wealth (Schroders Personal
Wealth). Remediation costs of £11 million across a small number of
pre-existing rectification programmes
• Underlying impairment charge of £295 million, giving an asset quality
ratio of 25 basis points, reflects strong and stable credit performance. This
includes a £101 million net charge from updated multiple economic scenarios
• Underlying loans and advances to customers of £486.2 billion increased
by £5.1 billion (1%) in the quarter, with growth across Retail of £3.5
billion and Commercial Banking of £2.8 billion
• Customer deposits of £495.9 billion decreased by £0.6 billion in the
quarter as fixed term deposits fell slightly given Group participation
decisions. A £3.1 billion reduction in Retail was partially offset by £2.3
billion growth in Commercial Banking
• Strong capital generation of 41 basis points, primarily reflecting
banking build offset by lending driven risk-weighted asset increases. CET1
ratio of 13.4% after the ordinary dividend accrual
• Risk-weighted assets of £240.8 billion, up £5.3 billion in the first
quarter largely from lending growth, with limited planned optimisation
• Tangible net assets per share at 31 March 2026 of 57.9 pence, up 0.9
pence in the quarter (31 December 2025: 57.0 pence)
2026 guidance
Based on the sustained strength in our financial performance and our current
macroeconomic assumptions, for 2026 the Group reiterates its guidance:
• Underlying net interest income now expected to be greater than £14.9
billion
• Cost:income ratio of less than 50% (including operating costs of less
than £9.9 billion)
• Asset quality ratio of c.25 basis points
• Return on tangible equity of greater than 16%
• 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 15.
(2) Excludes capital distributions.
INCOME STATEMENT (UNDERLYING BASIS)(A) AND KEY BALANCE SHEET METRICS
Three months ended Three months ended Change Three months ended Change
31 Mar 2026 31 Mar 2025 % 31 Dec 2025 %
£m £m £m
Underlying net interest income 3,569 3,294 8 3,529 1
Underlying other income 1,605 1,452 11 1,594 1
Operating lease depreciation (389) (355) (10) (379) (3)
Net income 4,785 4,391 9 4,744 1
Operating costs (2,474) (2,550) 3 (2,585) 4
Remediation (11) - (56) 80
Total costs (2,485) (2,550) 3 (2,641) 6
Underlying profit before impairment 2,300 1,841 25 2,103 9
Underlying impairment charge (295) (309) 5 (177) (67)
Underlying profit 2,005 1,532 31 1,926 4
Restructuring (18) (4) (30) 40
Volatility and other items 38 (11) 87 (56)
Statutory profit before tax 2,025 1,517 33 1,983 2
Tax expense (470) (383) (23) (548) 14
Statutory profit after tax 1,555 1,134 37 1,435 8
Earnings per share 2.4p 1.7p 0.7p 2.2p 0.2p
Banking net interest margin(A) 3.17% 3.03% 14bp 3.10% 7bp
Average interest-earning banking assets(A) (£bn) 473.5 455.5 4 470.3 1
Cost:income ratio(A) 51.9% 58.1% (6.2)pp 55.7% (3.8)pp
Asset quality ratio(A) 0.25% 0.27% (2)bp 0.14% 11bp
Return on tangible equity(A) 17.0% 12.6% 4.4pp 15.7% 1.3pp
At 31 Mar 2026 At 31 Mar 2025 Change At 31 Dec 2025 Change
% %
Underlying loans and advances to customers(A) (£bn) 486.2 466.2 4 481.1 1
Customer deposits (£bn) 495.9 487.7 2 496.5
Loan to deposit ratio(A) 98% 96% 2pp 97% 1pp
CET1 ratio 13.4% 13.5% (0.1)pp 14.0% (0.6)pp
Pro forma CET1 ratio(A,1) 13.4% 13.5% (0.1)pp 13.2% 0.2pp
Total capital ratio 18.2% 18.4% (0.2)pp 18.9% (0.7)pp
MREL ratio 31.7% 30.4% 1.3pp 32.2% (0.5)pp
UK leverage ratio 5.1% 5.5% (0.4)pp 5.4% (0.3)pp
Risk-weighted assets (£bn) 240.8 230.1 5 235.5 2
Wholesale funding(2) (£bn) 114.0 89.4 28 99.4 15
Liquidity coverage ratio(3) 144% 145% (1)pp 145% (1)pp
Net stable funding ratio(4) 123% 128% (5)pp 124% (1)pp
Tangible net assets per share(A) 57.9p 54.4p 3.5p 57.0p 0.9p
(A ) See page 14.
(1 ) 31 December 2025 pro forma CET1 ratio reflects the full impact of
the share buyback in respect of 2025, announced in January 2026.
(2) Excludes balances relating to cash collateral of £2.0 billion (31
December 2025: £1.5 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
ended ended % ended ended ended
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2026 2025 2025 2025 2025
£m £m £m £m £m
Underlying net interest income 3,569 3,529 1 3,451 3,361 3,294
Underlying other income 1,605 1,594 1 1,557 1,517 1,452
Operating lease depreciation (389) (379) (3) (365) (355) (355)
Net income 4,785 4,744 1 4,643 4,523 4,391
Operating costs (2,474) (2,585) 4 (2,302) (2,324) (2,550)
Remediation (11) (56) 80 (875) (37) -
Total costs (2,485) (2,641) 6 (3,177) (2,361) (2,550)
Underlying profit before impairment 2,300 2,103 9 1,466 2,162 1,841
Underlying impairment charge (295) (177) (67) (176) (133) (309)
Underlying profit 2,005 1,926 4 1,290 2,029 1,532
Restructuring (18) (30) 40 (7) (5) (4)
Volatility and other items 38 87 (56) (109) (37) (11)
Statutory profit before tax 2,025 1,983 2 1,174 1,987 1,517
Tax expense (470) (548) 14 (396) (577) (383)
Statutory profit after tax 1,555 1,435 8 778 1,410 1,134
Earnings per share 2.4p 2.2p 0.2p 1.0p 2.1p 1.7p
Banking net interest margin(A) 3.17% 3.10% 7bp 3.06% 3.04% 3.03%
Average interest-earning banking assets(A) (£bn) 473.5 470.3 1 465.5 460.0 455.5
Cost:income ratio(A) 51.9% 55.7% (3.8)pp 68.4% 52.2% 58.1%
Asset quality ratio(A) 0.25% 0.14% 11bp 0.15% 0.11% 0.27%
Return on tangible equity(A) 17.0% 15.7% 1.3pp 7.5% 15.5% 12.6%
At At Change At At At
31 Mar 2026 31 Dec % 30 Sep 2025 30 Jun 2025 31 Mar 2025
2025
Underlying loans and advances to customers(A) (£bn) 486.2 481.1 1 477.1 471.0 466.2
Customer deposits (£bn) 495.9 496.5 496.7 493.9 487.7
Loan to deposit ratio(A) 98% 97% 96% 95% 96%
CET1 ratio 13.4% 14.0% (0.6)pp 13.8% 13.8% 13.5%
Pro forma CET1 ratio(A,1) 13.4% 13.2% 0.2pp 13.8% 13.8% 13.5%
Total capital ratio 18.2% 18.9% (0.7)pp 18.6% 19.0% 18.4%
MREL ratio 31.7% 32.2% (0.5)pp 31.2% 31.4% 30.4%
UK leverage ratio 5.1% 5.4% (0.3)pp 5.2% 5.4% 5.5%
Risk-weighted assets (£bn) 240.8 235.5 2 232.3 231.4 230.1
Wholesale funding (£bn) 114.0 99.4 15 103.5 92.2 89.4
Liquidity coverage ratio(2) 144% 145% (1)pp 145% 145% 145%
Net stable funding ratio(3) 123% 124% (1)pp 126% 127% 128%
Tangible net assets per share(A) 57.9p 57.0p 0.9p 55.0p 54.5p 54.4p
(1 ) 31 December 2025 pro forma CET1 ratio reflects the full impact of
the share buyback in respect of 2025, announced in January 2026. 30 June 2025
pro forma CET1 ratio reflects the ordinary dividend received from the
Insurance business in July 2025.
(2) The liquidity coverage ratio is calculated as a simple average of
month-end observations over the previous 12 months.
(3) The net stable funding ratio is calculated as a simple average of
month-end observations over the previous four quarter-ends.
( )
(
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BALANCE SHEET ANALYSIS
At 31 Mar At 31 Mar 2025 Change At 31 Dec 2025 Change
2026 £bn % £bn %
£bn
UK mortgages 324.7 317.1 2 323.1
Credit cards 17.6 15.9 11 17.3 2
UK Retail unsecured loans 10.9 9.5 15 10.5 4
UK Motor Finance(1) 16.8 15.8 6 16.4 2
Overdrafts 1.3 1.2 8 1.3
Retail Europe(2) 21.1 17.8 19 20.4 3
UK private bank(3) 1.2 1.0 20 1.1 9
Retail other(2,3) 0.2 0.2 0.2
Business and Commercial Banking 28.7 29.4 (2) 28.3 1
Corporate and Institutional Banking 64.4 58.5 10 62.0 4
Central Items(4) (0.7) (0.2) 0.5
Underlying loans and advances to customers(A) 486.2 466.2 4 481.1 1
Retail UK current accounts 103.4 102.5 1 102.8 1
Retail UK savings accounts 194.1 196.5 (1) 197.2 (2)
Retail Europe(5) 15.0 13.6 10 15.3 (2)
UK private bank(6) 9.6 9.8 (2) 9.9 (3)
Commercial Banking 173.4 164.9 5 171.1 1
Central Items 0.4 0.4 0.2
Customer deposits 495.9 487.7 2 496.5
Total assets 968.1 909.9 6 944.1 3
Total liabilities 919.9 862.1 7 896.2 3
Ordinary shareholders' equity 42.1 40.7 3 41.8 1
Other equity instruments 5.9 6.9 (14) 5.9
Non-controlling interests 0.2 0.2 0.2
Total equity 48.2 47.8 1 47.9 1
Ordinary shares in issue, excluding own shares 58,518m 60,459m (3) 58,799m
(1) UK Motor Finance balances on an underlying basis(A) exclude a
finance lease gross up. See page 14.
(2) From the fourth quarter of 2025, within underlying loans and
advances, Retail Europe is reported separately (previously presented within
Retail other). The comparatives are represented on a consistent basis.
(3) Within underlying loans and advances, UK private bank, previously
presented within Retail other, is reported separately. The comparatives are
represented on a consistent basis.
(4) Central Items includes central fair value hedge accounting
adjustments.
(5) Within customer deposits, Retail UK savings accounts and Retail
Europe, previously presented together as Retail savings accounts are reported
separately. The comparatives are represented on a consistent basis.
(6) Previously named Wealth.
( )
(
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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 2.
Summary income statement Three months ended Three months ended Change
31 Mar 31 Mar %
2026 2025
£m £m
Net interest income 3,483 3,204 9
Other income 1,701 1,491 14
Total income 5,184 4,695 10
Operating expenses (2,865) (2,868)
Impairment (294) (310) 5
Profit before tax 2,025 1,517 33
Tax expense (470) (383) (23)
Profit after tax 1,555 1,134 37
Profit attributable to ordinary shareholders 1,413 1,006 40
Profit attributable to other equity holders 118 115 3
Profit attributable to non-controlling interests 24 13 85
Profit after tax 1,555 1,134 37
Ordinary shares in issue (weighted-average - basic) 58,801m 60,589m (3)
Basic earnings per share 2.4p 1.7p 0.7p
Summary balance sheet At 31 Mar At 31 Dec 2025 Change
2026 £m %
£m
Assets
Cash and balances at central banks 62,128 56,661 10
Financial assets at fair value through profit or loss 238,626 240,413 (1)
Derivative financial instruments 22,307 19,727 13
Financial assets at amortised cost 565,121 553,672 2
Financial assets at fair value through other comprehensive income 35,442 36,320 (2)
Other assets 44,501 37,279 19
Total assets 968,125 944,072 3
Liabilities
Deposits from banks 7,476 5,779 29
Customer deposits 495,924 496,457
Repurchase agreements at amortised cost 41,014 38,570 6
Financial liabilities at fair value through profit or loss 31,425 27,909 13
Derivative financial instruments 19,568 16,132 21
Debt securities in issue at amortised cost 91,884 78,271 17
Liabilities arising from insurance and participating investment contracts 131,334 135,284 (3)
Liabilities arising from non-participating investment contracts 60,630 61,640 (2)
Other liabilities 31,771 26,269 21
Subordinated liabilities 8,868 9,894 (10)
Total liabilities 919,894 896,205 3
Total equity 48,231 47,867 1
Total equity and liabilities 968,125 944,072 3
REVIEW OF PERFORMANCE(A)
Income statement - underlying basis(A)
The Group's statutory profit before tax for the first three months of 2026 was
£2,025 million, 33% higher than in the first three months of 2025,
reflecting higher total income, controlled costs and benign impairments.
Profit after tax was £1,555 million and earnings per share were 2.4 pence
(three months to March 2025: £1,134 million and 1.7 pence respectively).
The Group's underlying profit was £2,005 million in the first three months
of 2026, up 31% versus the prior year (three months to 31 March 2025:
£1,532 million). The first quarter benefitted from higher underlying net
interest income, higher underlying other income and lower operating costs.
Underlying profit was up 4% versus the fourth quarter of 2025.
Net income of £4,785 million was up 9% compared to the first quarter of 2025,
driven by higher underlying net interest income and higher underlying other
income, partially offset by an increased charge for operating lease
depreciation. Net income in the first quarter was up 1% compared to the fourth
quarter of 2025.
Within net income, underlying net interest income of £3,569 million was up 8%
compared to the prior year (three months to 31 March 2025: £3,294 million).
This was supported by a banking net interest margin of 3.17% (three months to
31 March 2025: 3.03%), benefitting from stronger structural hedge income as
eligible balances were reinvested into a higher rate environment, partially
offset by asset margin compression, in particular in the UK mortgages
portfolio. Net interest income in the first quarter was also supported by
strong customer led growth. The Group delivered broad based growth across the
Retail business, led by UK mortgages and the European retail business,
alongside growth in Commercial Banking within Corporate and Institutional
Banking, partially offset by continued repayments of government-backed lending
within Business and Commercial Banking. This also resulted in increased
average interest-earning banking assets in the first quarter of
£473.5 billion (three months to 31 March 2025: £455.5 billion).
Underlying net interest income in the first quarter of 2026 included a
non-banking net interest expense of £129 million (three months to 31 March
2025: £112 million), increasing as a result of growth in the Group's other
operating income activities and the refinancing of these activities at
higher rates. Given strength in activity and particularly changes in interest
rates, the Group now expects underlying net interest income for 2026 to be
greater than £14.9 billion.
Underlying net interest income of £3,569 million was up 1% compared to the
fourth quarter of 2025 (three months to 31 December 2025: £3,529 million). A
growing structural hedge contribution offset the impact of continued headwinds
from asset margin compression, resulting in a higher banking net interest
margin of 3.17% compared to 3.10% in the fourth quarter of 2025. Alongside,
average interest-earning banking assets grew to £473.5 billion (three months
to 31 December 2025: £470.3 billion) reflecting growth across the Retail
division, led by UK mortgages, and growth in Commercial Banking.
The Group manages the risk to earnings and capital from movements in interest
rates by hedging the net liabilities which are stable or less sensitive to
movements in rates. As at 31 March 2026, the notional balance of the sterling
structural hedge was £246 billion (31 December 2025: £244 billion) with a
weighted average life of approximately 3.75 years (31 December 2025:
approximately 3.75 years). The increase of £2 billion in the first quarter
reflects continued strong performance in hedge eligible balances, including
personal current accounts. The Group generated £1.6 billion
of total income from structural hedge balances in the first three months of
2026 (three months to 31 March 2025: £1.2 billion). Given interest rate
changes, the Group now expects structural hedge earnings to be greater than
£7.0 billion in 2026 and greater than £8.0 billion in 2027, with earnings
growth from the structural hedge expected to continue thereafter.
Underlying other income of £1,605 million in the first quarter of 2026 grew
by 11% compared to the prior year (three months to 31 March 2025:
£1,452 million), driven by strengthening customer activity and the benefit
of investments in strategic initiatives. This included an increase of 6% in
Retail, including UK Motor Finance fleet growth and higher average vehicle
rental values. Commercial Banking decreased by 5% year-on-year driven by lower
markets income in the context of recent market volatility and macroeconomic
uncertainty. Insurance, Pensions and Investments underlying other income was
up 22% following the full acquisition of Schroders Personal Wealth in the
fourth quarter of 2025 and strengthening performance in the workplace pensions
business. Equity Investments and Central Items benefitted from continued
growth in Lloyds Living and higher realisations and net valuation gains in
LDC.
REVIEW OF PERFORMANCE (continued)
Income statement - underlying basis(A) (continued)
Underlying other income in the first quarter was up 1% compared to the fourth
quarter of 2025, including continued growth in UK Motor Finance within Retail
and higher realisations and net valuation gains in LDC. This was offset by
lower markets income given market conditions in Commercial Banking, seasonally
lower spend within Retail and higher weather claims in Insurance, Pensions and
Investments.
Operating lease depreciation of £389 million in the first three months of
2026 was 10% higher than in the prior year (three months to 31 March
2025: £355 million), due to fleet growth, the depreciation of higher value
vehicles and declines in used car prices, partially offset by risk mitigation
actions. Compared to the fourth quarter of 2025, operating lease depreciation
was 3% higher, with continued growth in fleet size and higher losses on
disposals. The Group continues to mitigate the risk of used car price
movements through a number of market and customer initiatives to both improve
performance and reduce volatility, including lease extensions, used car
leasing, remarketing agreements and residual value insurance.
Operating costs of £2,474 million decreased by 3% compared to the first
quarter of 2025, reflecting increased cost savings and a lower severance
expense. These were partially offset by business growth costs, inflationary
pressures and the impact of Lloyds Wealth (Schroders Personal Wealth),
acquired in the fourth quarter of 2025. As expected, operating costs
decreased, down 4% compared to the fourth quarter of 2025, which included
payment of the Bank Levy.
A remediation charge of £11 million was recognised by the Group in the first
three months of 2026 (three months to 31 March 2025: £nil) across a small
number of pre-existing rectification programmes. There has been no change to
the provision for motor finance commission arrangements, following the
announcement of the final rules of the industry wide redress scheme. However,
there remain a number of uncertainties including response rates, operational
costs, litigation and the result of challenge from other parties which could
impact the ultimate outcome.
Total costs, including remediation, of £2,485 million were 3% lower than the
prior year, with net income up 9%. The cost:income ratio was 51.9% (three
months to 31 March 2025: 58.1%). For 2026, the Group continues to expect the
cost:income ratio to be less than 50%, with operating costs still expected to
be less than £9.9 billion.
The underlying impairment charge was £295 million (three months to 31 March
2025: £309 million), resulting in an asset quality ratio of 25 basis
points. The charge was slightly lower than prior year despite a higher charge
of £101 million from updated multiple economic scenarios (MES) (three months
to 31 March 2025: £35 million). The MES charge reflects a £151 million
impact from the deterioration in economic outlook as a result of the Middle
East conflict, partly offset by the release of the £50 million post model
adjustment for global tariff and political disruption risks now considered to
be adequately captured within assumptions and resulting modelled provisions.
The pre-updated MES charge of £194 million (three months to 31 March 2025:
£274 million) is equivalent to an asset quality ratio of 16 basis points. The
charge remains low due to continued strong and stable credit performance
across portfolios and benefits from quarterly model calibrations reflecting
this performance. In Retail, the charge is slightly higher than in the first
quarter of 2025, reflecting a more typical level of credit impairment
alongside balance sheet growth. Observed Commercial Banking charges in the
quarter have been very low, further supported by calibration releases. This
contrasts with a high prior year charge driven by a small number of defaults
within a single sector. The Group continues to expect the asset quality ratio
to be c.25 basis points in 2026.
Restructuring costs for the first quarter were £18 million (three months to
31 March 2025: £4 million). Volatility and other items were a net gain of
£38 million for the quarter (three months to 31 March 2025: net loss of
£11 million). This included a gain from market and other volatility of £76
million (three months to 31 March 2025: net gain of £30 million), as a result
of positive market volatility, primarily insurance related, partially offset
by regular charges for the amortisation of purchased intangibles of
£34 million and fair value unwind of £4 million. The increase in
amortisation of purchased intangibles includes charges from the acquisition of
Schroders Personal Wealth in the fourth quarter of 2025.
The return on tangible equity for the period was 17.0% (three months to 31
March 2025: 12.6%). The Group continues to expect the return on tangible
equity for 2026 to be greater than 16%.
REVIEW OF PERFORMANCE (continued)
Income statement - underlying basis(A) (continued)
Tangible net assets per share at 31 March 2026 were 57.9 pence, up 0.9 pence
in the quarter (31 December 2025: 57.0 pence). The increase resulted from
attributable profit and a higher pension surplus, partially offset by
movements in the cash flow hedge reserve and the ordinary share buyback
announced in January 2026. As at 31 March 2026, the Group had repurchased
c.0.6 billion shares at a cost of £0.7 billion and an average share price of
97.7 pence.
Balance sheet
In the first quarter, underlying loans and advances to customers increased by
£5.1 billion (or 1%) to £486.2 billion. This included net growth of £1.6
billion in UK mortgages in a period with significant maturities, alongside
growth across credit cards, UK Retail unsecured loans, UK Motor Finance and
the European retail business totalling £1.8 billion. Lending balances also
increased in Commercial Banking by £2.8 billion, reflecting growth across
Corporate and Institutional Banking and Business and Commercial Banking, net
of continued government-backed lending repayments. These increases were
partially offset by movements in the central fair value hedge resulting from
rising swap rates.
Customer deposits of £495.9 billion decreased by £0.6 billion in the
quarter. Retail deposits of £322.1 billion were down by £3.1 billion,
including a reduction in Retail UK savings account balances given Group
participation decisions in the fixed term deposit market. Retail UK current
account balances increased by £0.6 billion, supported by the strength of the
Group's franchise and proposition. Commercial Banking deposits of £173.4
billion were up £2.3 billion in the quarter, resulting from Corporate and
Institutional Banking growth, partially offset by seasonal net outflows in
Business and Commercial Banking.
The Group saw growth of £2.2 billion net new money in Insurance,
Pensions and Investments open book assets under administration (AuA), during
the first quarter of 2026. In total, open book AuA stand at £228 billion as
at 31 March 2026.
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
144% at 31 March 2026 (31 December 2025: 145%) and a net stable funding ratio
of 123% (31 December 2025: 124%). The loan to deposit ratio of 98%, slightly
up versus 31 December 2025, continues to reflect a robust funding and
liquidity position.
The underlying expected credit loss (ECL) allowance was essentially flat in
the quarter at £3,343 million (31 December 2025: £3,353 million). This
reflected an increase from the updated economic outlook offset by reductions
from quarterly model calibrations and a reduction in judgemental adjustments
which now account for approximately 5% of total ECL.
Capital
The Group's CET1 capital ratio at 31 March 2026 was 13.4% (31 December 2025:
13.2% pro forma). Capital generation during the first quarter was 41 basis
points, primarily reflecting strong banking build, partially offset by
risk-weighted asset increases. The Group has accrued a foreseeable ordinary
dividend of 24 basis points, based upon a pro-rated amount of the 2025 full
year dividend. The Group continues to expect capital generation in 2026 of
greater than 200 basis points.
Risk-weighted assets increased by £5.3 billion to £240.8 billion at 31 March
2026 (31 December 2025: £235.5 billion), largely reflecting the impact of
strong customer lending growth in a period with limited planned optimisation.
The Group's Retail secured CRD IV models remain subject to review and approval
by the PRA and therefore uncertainty remains on the final outcome. The Group
continues to expect the initial impact of Basel 3.1 implementation on
1 January 2027 to result in a Day 1 risk-weighted assets reduction in the
range of c.£6 billion to c.£8 billion.
The Group's total regulatory CET1 capital requirement remains c.12% of
risk-weighted assets. This includes the Pillar 2A CET1 capital requirement of
c.1.4% of risk-weighted assets. The Board's view of the ongoing level of total
CET1 capital required to grow the business, meet current and future regulatory
requirements and cover economic and business uncertainties remains c.13.0%.
This includes a management buffer of c.1%. The Board intends to pay down to
the CET1 capital target of c.13.0% by the end of 2026.
ADDITIONAL INFORMATION
Capital generation
Pro forma CET1 ratio as at 31 December 2025(A,1) 13.2%
Banking build (bps)(2) 60
Risk-weighted assets (bps) (31)
Other movements (bps)(3) 12
Capital generation (bps) 41
Ordinary dividend (bps) (24)
CET1 ratio as at 31 March 2026 13.4%
(1) 31 December 2025 pro forma CET1 ratio reflects the full impact of
the share buyback in respect of 2025, announced in January 2026.
(2 ) Includes impairment charge and excess regulatory expected losses.
(3) Includes share-based payments and market volatility.
Underlying impairment(A)
Three months ended Three months ended Change Three months ended Change
31 Mar 2026 31 Mar 2025 % 31 Dec 2025 %
£m £m £m
Charges (credits) pre-updated MES(1)
Retail 224 204 (10) 107
Commercial Banking (30) 71 22
Other - (1) 1
194 274 29 130 (49)
Updated economic outlook (MES)
Retail 95 (90) 42
Commercial Banking 6 25 76 5 (20)
Other - 100 -
101 35 47
Underlying impairment charge(A) 295 309 5 177 (67)
Asset quality ratio(A) 0.25% 0.27% (2)bp 0.14% 11bp
(1) Impairment charges excluding the impact from the updated economic
outlook (multiple economic scenarios, MES) taken each quarter.
( )
(
)
ADDITIONAL INFORMATION (continued)
Loans and advances to customers and expected credit loss allowance -
underlying(A) basis
At 31 March 2026 Stage 1 Stage 2 Stage 3 Total Stage 2 Stage 3
£m £m £m £m as % of as % of
total total
Loans and advances to customers
UK mortgages(1) 288,062 31,755 5,754 325,571 9.8 1.8
Credit cards 15,598 2,267 296 18,161 12.5 1.6
UK unsecured loans and overdrafts 10,972 1,404 190 12,566 11.2 1.5
UK Motor Finance(2) 14,159 2,903 139 17,201 16.9 0.8
Other 22,099 400 134 22,633 1.8 0.6
Retail 350,890 38,729 6,513 396,132 9.8 1.6
Business and Commercial Banking 24,711 3,368 946 29,025 11.6 3.3
Corporate and Institutional Banking 62,137 1,986 748 64,871 3.1 1.2
Commercial Banking 86,848 5,354 1,694 93,896 5.7 1.8
Equity Investments and Central Items(3) (740) - - (740)
Total gross lending 436,998 44,083 8,207 489,288 9.0 1.7
Customer related ECL allowance (drawn and undrawn)
UK mortgages(1) 58 247 570 875
Credit cards 210 279 132 621
UK unsecured loans and overdrafts 175 227 106 508
UK Motor Finance(4) 200 150 78 428
Other 18 10 31 59
Retail 661 913 917 2,491
Business and Commercial Banking 80 161 117 358
Corporate and Institutional Banking 100 122 254 476
Commercial Banking 180 283 371 834
Equity Investments and Central Items 1 - - 1
Total 842 1,196 1,288 3,326
Customer related ECL allowance (drawn and undrawn) as a percentage of loans
and advances to customers(5)
Stage 1 Stage 2 Stage 3 Total
%
%
%
%
UK mortgages - 0.8 9.9 0.3
Credit cards 1.3 12.3 46.5 3.4
UK unsecured loans and overdrafts 1.6 16.2 58.6 4.0
UK Motor Finance 1.4 5.2 56.1 2.5
Other 0.1 2.5 23.1 0.3
Retail 0.2 2.4 14.1 0.6
Business and Commercial Banking 0.3 4.8 15.7 1.2
Corporate and Institutional Banking 0.2 6.1 34.0 0.7
Commercial Banking 0.2 5.3 24.9 0.9
Equity Investments and Central Items - -
Total 0.2 2.7 16.1 0.7
(1 ) UK mortgages balances on an underlying basis(A) exclude the impact
of the HBOS acquisition-related adjustments.
(2) UK Motor Finance balances on an underlying basis(A) exclude a
finance lease gross up.
(3) Contains central fair value hedge accounting adjustments.
(4) UK Motor Finance includes £242 million relating to provisions
against residual values of vehicles subject to finance leases.
(5) Stage 3 and Total exclude loans in recoveries in credit cards of
£12 million, UK unsecured loans and overdrafts of £9 million, Business and
Commercial Banking of £201 million and Corporate and Institutional Banking of
£1 million.
( )
(
)
ADDITIONAL INFORMATION (continued)
Total ECL allowance by scenario - underlying basis(A)
The following table shows the Group's ECL for the probability-weighted,
upside, base case, downside and severe downside scenarios.
Underlying basis(A) Probability- Upside Base case Downside Severe
weighted £m £m £m downside
£m £m
At 31 March 2026 3,343 2,588 2,982 3,779 5,383
At 31 December 2025 3,353 2,591 2,987 3,797 5,400
Base case and MES economic assumptions
The Group's base case economic scenario has been updated to reflect events
through to the balance sheet date, including those relating to the conflict in
the Middle East. The Group has included assumptions for energy prices and
war-related impacts in its quarter-end base case conditioning assumptions.
Reflecting the stagflationary consequences for the global and UK economies,
the Group's base case scenario is for a reduced expansion in gross domestic
product (GDP) and a rise in the unemployment rate alongside more limited gains
in residential and commercial property prices relative to the outlook as at 31
December 2025. Increases in energy prices lead to the re-emergence of
inflationary pressures, with reductions in UK Bank Rate expected to be delayed
until 2027. Risks around this base case economic view lie in both directions
and are largely captured by the generation of alternative economic scenarios.
The Group's approach to generating alternative economic scenarios is set out
in detail in note 21 to the financial statements of the Group's 2025 Annual
Report and Accounts. 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 of the first quarter of 2026. Actuals for this period, or
restatements of past data, may have since emerged prior to publication and
have not been included.
UK economic assumptions - base case scenario by quarter
Key quarterly assumptions made by the Group in the base case scenario are
shown below. GDP growth is presented quarter-on-quarter. House price growth,
commercial real estate price growth and CPI inflation are presented
year-on-year, i.e. from the equivalent quarter in the previous year.
Unemployment rate and UK Bank Rate are presented as at the end of each
quarter.
At 31 March 2026 First Second Third Fourth First Second Third Fourth
quarter quarter quarter quarter quarter quarter quarter quarter
2026 2026 2026 2026 2027 2027 2027 2027
% % % % % % % %
Gross domestic product growth 0.2 0.2 0.1 0.3 0.4 0.4 0.4 0.4
Unemployment rate 5.3 5.5 5.6 5.6 5.5 5.5 5.3 5.2
House price growth 1.0 0.5 0.2 0.7 0.3 1.1 1.4 1.4
Commercial real estate price growth 0.6 0.2 0.1 (0.3) (0.4) (0.3) (0.3) 0.4
UK Bank Rate 3.75 3.75 3.75 3.75 3.75 3.75 3.50 3.50
CPI inflation 3.2 3.1 3.5 3.9 3.5 3.1 2.1 1.8
ADDITIONAL INFORMATION (continued)
Base case and MES economic assumptions (continued)
UK economic assumptions - scenarios by year
Key annual assumptions made by the Group are shown below. GDP growth and CPI
inflation are presented as an annual change, house price growth and commercial
real estate price growth are presented as the growth in the respective indices
within the period. Unemployment rate and UK Bank Rate are averages for the
period.
At 31 March 2026 2026 2027 2028 2029 2030 2026-2030
% % % % % average
%
Upside
Gross domestic product growth 1.1 2.4 1.7 1.6 1.6 1.7
Unemployment rate 4.7 3.6 3.2 3.1 3.2 3.6
House price growth 2.2 5.9 7.3 6.8 5.8 5.6
Commercial real estate price growth 5.6 5.6 3.2 1.7 0.3 3.2
UK Bank Rate 4.04 4.97 5.26 5.50 5.65 5.08
CPI inflation 3.5 2.9 2.4 3.1 3.3 3.0
Base case
Gross domestic product growth 0.5 1.2 1.5 1.6 1.7 1.3
Unemployment rate 5.5 5.4 5.0 4.7 4.5 5.0
House price growth 0.7 1.4 1.9 3.1 3.6 2.1
Commercial real estate price growth (0.3) 0.4 1.3 0.7 (0.4) 0.4
UK Bank Rate 3.75 3.63 3.50 3.50 3.50 3.58
CPI inflation 3.4 2.6 1.8 2.2 2.3 2.5
Downside
Gross domestic product growth (0.3) (0.9) 0.7 1.4 1.7 0.5
Unemployment rate 6.3 7.8 7.7 7.2 6.8 7.1
House price growth (0.5) (3.3) (5.8) (3.2) (0.7) (2.7)
Commercial real estate price growth (5.9) (7.4) (2.6) (2.3) (3.1) (4.3)
UK Bank Rate 3.43 1.80 1.00 0.69 0.50 1.48
CPI inflation 3.4 2.5 1.2 1.0 0.8 1.8
Severe downside
Gross domestic product growth (1.3) (2.8) 0.3 1.3 1.6 (0.2)
Unemployment rate 7.4 10.5 10.4 9.7 9.0 9.4
House price growth (1.6) (7.6) (12.6) (8.9) (5.0) (7.2)
Commercial real estate price growth (13.4) (13.7) (7.0) (5.7) (5.9) (9.2)
UK Bank Rate 2.96 0.34 0.06 0.02 0.00 0.68
CPI inflation 3.4 2.3 0.3 (0.3) (0.7) 1.0
Probability-weighted
Gross domestic product growth 0.3 0.5 1.2 1.5 1.7 1.0
Unemployment rate 5.7 6.1 5.8 5.4 5.2 5.7
House price growth 0.6 0.4 (0.2) 1.1 2.1 0.8
Commercial real estate price growth (1.5) (1.8) (0.1) (0.5) (1.5) (1.1)
UK Bank Rate 3.66 3.15 2.93 2.91 2.90 3.11
CPI inflation 3.4 2.7 1.7 1.9 1.9 2.3
ALTERNATIVE PERFORMANCE MEASURES
The statutory results are supplemented with a number of metrics that are used
throughout the banking and insurance industries on an underlying basis. A
description of these measures and their calculation, which remain materially
unchanged since the year-end, is set out on pages 62 to 67 of the Group's 2025
Full Year Results news release.
Three months ended Three months ended
31 Mar 31 Mar
2026 2025
Banking net interest margin(A)
Underlying net interest income(A) (£m) 3,569 3,294
Remove non-banking underlying net interest expense (£m) 129 112
Banking underlying net interest income (£m) 3,698 3,406
Loans and advances to customers (£bn) 486.4 466.9
Remove finance lease gross up(1) (£bn) (0.2) (0.7)
Underlying loans and advances to customers(A) (£bn) 486.2 466.2
Add back:
Expected credit loss allowance (drawn) (£bn) 3.0 3.3
Acquisition related fair value adjustments (£bn) 0.1 0.2
Underlying gross loans and advances to customers (£bn) 489.3 469.7
Adjustment for non-banking and other items:
Fee-based loans and advances (£bn) (12.3) (9.7)
Other (£bn) 2.0 1.3
Interest-earning banking assets (£bn) 479.0 461.3
Averaging (£bn) (5.5) (5.8)
Average interest-earning banking assets(A) (£bn) 473.5 455.5
Banking net interest margin(A) 3.17% 3.03%
(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.
Three months ended Three months ended
31 Mar 31 Mar
2026 2025
Return on tangible equity(A)
Profit attributable to ordinary shareholders (£m) 1,413 1,006
Average ordinary shareholders' equity (£bn) 41.9 40.1
Remove average goodwill and other intangible assets (£bn) (8.2) (7.8)
Average tangible equity (£bn) 33.7 32.3
Return on tangible equity(A) 17.0% 12.6%
( )
(
)
KEY DATES
Annual General Meeting 14 May 2026
Final 2025 dividend paid 19 May 2026
2026 Half-year results and strategy update 30 July 2026
Q3 2026 Interim Management Statement 29 October 2026
BASIS OF PRESENTATION
This release covers the results of Lloyds Banking Group plc together with its
subsidiaries (the Group) for the three months ended 31 March 2026. Unless
otherwise stated, income statement commentaries throughout this document
compare the three months ended 31 March 2026 to the three months ended 31
March 2025 and the balance sheet analysis compares balances at 31 March 2026
to balances at 31 December 2025. 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 page 1 is
given on an underlying basis. The Group's Q1 2026 Interim Pillar 3 disclosures
can be found at:
www.lloydsbankinggroup.com/investors/financial-downloads.html.
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements within the meaning
of Section 21E of the US Securities Exchange Act of 1934, as amended, and
section 27A of the US Securities Act of 1933, as amended, with respect to the
business, strategy, plans and/or results of Lloyds Banking Group plc together
with its subsidiaries (the Group) and its current goals and expectations.
Statements that are not historical or current facts, including statements
about the Group's or its directors' and/or management's beliefs and
expectations, are forward-looking statements. Words such as, without
limitation, 'believes', 'achieves', 'anticipates', 'estimates', 'expects',
'targets', 'should', 'intends', 'aims', 'projects', 'plans', 'potential',
'will', 'would', 'could', 'considered', 'likely', 'may', 'seek', 'estimate',
'probability', 'goal', 'objective', 'deliver', 'endeavour', 'prospects',
'optimistic' and similar expressions or variations on these expressions are
intended to identify forward-looking statements. These statements concern or
may affect future matters, including but not limited to: projections or
expectations of the Group's future financial position, including profit
attributable to shareholders, provisions, economic profit, dividends, capital
structure, portfolios, net interest margin, capital ratios, liquidity,
risk-weighted assets (RWAs), expenditures or any other financial items or
ratios; litigation, regulatory and governmental investigations; the Group's
future financial performance; the level and extent of future impairments and
write-downs; the Group's ESG targets and/or commitments; statements of plans,
objectives or goals of the Group or its management and other statements that
are not historical fact and statements of assumptions underlying such
statements. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend upon circumstances that
will or may occur in the future. Factors that could cause actual business,
strategy, targets, plans and/or results (including but not limited to the
payment of dividends) to differ materially from forward-looking statements
include, but are not limited to: general economic and business conditions in
the UK and internationally (including in relation to tariffs); imposed and
threatened tariffs and changes to global trade policies; acts of hostility or
terrorism and responses to those acts, or other such events; geopolitical
unpredictability; the war between Russia and Ukraine; the escalation of
conflicts in the Middle East; the tensions between China and Taiwan; political
instability including as a result of any UK general election; market related
risks, trends and developments; changes in client and consumer behaviour and
demand; exposure to counterparty risk; the ability to access sufficient
sources of capital, liquidity and funding when required; changes to the
Group's credit ratings; fluctuations in interest rates, inflation, exchange
rates, stock markets and currencies; volatility in credit markets; volatility
in the price of the Group's securities; natural pandemic and other disasters;
risks concerning borrower and counterparty credit quality; risks affecting
insurance business and defined benefit pension schemes; changes in laws,
regulations, practices and accounting standards or taxation; changes to
regulatory capital or liquidity requirements and similar contingencies; the
policies and actions of governmental or regulatory authorities or courts
together with any resulting impact on the future structure of the Group; risks
associated with the Group's compliance with a wide range of laws and
regulations; assessment related to resolution planning requirements; risks
related to regulatory actions which may be taken in the event of a bank or
Group failure; exposure to legal, regulatory or competition proceedings,
investigations or complaints; failure to comply with anti-money laundering,
counter terrorist financing, anti-bribery and sanctions regulations; failure
to prevent or detect any illegal or improper activities; operational risks
including risks as a result of the failure of third party suppliers; conduct
risk; risks related to new and emerging technologies, including artificial
intelligence; technological changes and risks to the security of IT and
operational infrastructure, systems, data and information resulting from
increased threat of cyber and other attacks; technological failure; inadequate
or failed internal or external processes or systems; risks relating to ESG
matters, such as climate change (and achieving climate change ambitions) and
decarbonisation, including the Group's ability along with the government and
other stakeholders to measure, manage and mitigate the impacts of climate
change effectively, and human rights issues; the impact of competitive
conditions; failure to attract, retain and develop high calibre talent; the
ability to achieve strategic objectives; the ability to derive cost savings
and other benefits including, but without limitation, as a result of any
acquisitions, disposals and other strategic transactions; inability to capture
accurately the expected value from acquisitions; assumptions and estimates
that form the basis of the Group's financial statements; and potential changes
in dividend policy. A number of these influences and factors are beyond the
Group's control. Please refer to the latest Annual Report on Form 20-F filed
by Lloyds Banking Group plc with the US Securities and Exchange Commission
(the SEC), which is available on the SEC's website at www.sec.gov, for a
discussion of certain factors and risks. Lloyds Banking Group plc may also
make or disclose written and/or oral forward-looking statements in other
written materials and in oral statements made by the directors, officers or
employees of Lloyds Banking Group plc to third parties, including financial
analysts. Except as required by any applicable law or regulation, the
forward-looking statements contained in this document are made as of today's
date, and the Group expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements
contained in this document whether as a result of new information, future
events or otherwise. The information, statements and opinions contained in
this document do not constitute a public offer under any applicable law or an
offer to sell any securities or financial instruments or any advice or
recommendation with respect to such securities or financial instruments.
CONTACTS
For further information please contact:
INVESTORS AND ANALYSTS
Douglas Radcliffe
Group Investor Relations Director
douglas.radcliffe@lloydsbanking.com
Rohith Chandra-Rajan
Director of Investor Relations
rohith.chandra-rajan@lloydsbanking.com
Nora Thoden
Director of Investor Relations - ESG
nora.thoden@lloydsbanking.com
Tom Grantham
Investor Relations Senior Manager
thomas.grantham@lloydsbanking.com
CORPORATE AFFAIRS
Matt Smith
Head of Media Relations
matt.smith@lloydsbanking.com
Emma Fairhurst
Media Relations Senior Manager
emma.fairhurst@lloydsbanking.com
Copies of this Interim Management Statement may be obtained from:
Investor Relations, Lloyds Banking Group plc, 33 Old Broad Street, London,
EC2N 1HZ
The statement can also be found on the Group's website -
www.lloydsbankinggroup.com
Registered office: Lloyds Banking Group plc, The Mound, Edinburgh, EH1 1YZ
Registered in Scotland No. SC095000
LEI 549300PPXHEU2JF0AM85
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