Lloyds shares drop on muted third quarter results as higher taxes loom (updated)

Lloyds Banking

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LONDON, Oct 29 (Reuters) - Britain's Lloyds Banking Group LLOY.L reported profit before tax for the July-September period of £2.3 billion ($3.1 billion), in line with analysts' forecasts, up from £1 billion a year ago when it took £875 million in remediation charges.
Lloyds shares fell 6% in early trading after the results, on investor disappointment at a lack of upgraded performance targets, in a similar pattern to HSBC's results earlier in the week.

The share reaction and muted outlook showed signs British banks face tougher times ahead after a run of recent record profits, with Lloyds saying competition in the deposit market in particular is starting to squeeze margins
CFO William Chalmers said "we are seeing a tighter and more competitive deposit market," citing competition from non-UK banks, albeit Q3 deposits remained "broadly stable"
Q3 net interest income up 10%, despite that margin compression in deposit market, thanks to hedging actions and growth in lending volumes
Third quarter profit doubles year-on-year as bank avoids remediation costs linked to motor finance scandal that marred Q3, 2025
Results come a day after finance minister John Healey announced higher taxes on the sector in his first budget
Banks face doubling of profit surcharge from 3% to 6%, but only for 15 months, an overall smaller and shorter-duration hike than many lenders had feared
($1 = 0.7500 pounds)

 (Reporting by Lawrence White; Editing by Tommy Reggiori Wilkes)
 ((lawrence.white@tr.com; +44 7788 366940))