REG - Lloyds Bank Plc Lloyds Banking Group - 2026 Q1 Interim Management Statement
29/04/2026 13:00
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RNS Number : 4383C Lloyds Bank PLC 29 April 2026
Lloyds Bank plc
Q1 2026 Interim Management Statement
29 April 2026
Member of the Lloyds Banking Group
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 Bank plc together with its
subsidiaries (the Lloyds Bank Group) and its current goals and expectations.
Statements that are not historical or current facts, including statements
about the Lloyds Bank 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 Lloyds Bank 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 Lloyds
Bank Group's future financial performance; the level and extent of future
impairments and write-downs; the Lloyds Bank Group's ESG targets and/or
commitments; statements of plans, objectives or goals of the Lloyds Bank 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 Lloyds Bank Group's or
Lloyds Banking Group plc's credit ratings; fluctuations in interest rates,
inflation, exchange rates, stock markets and currencies; volatility in credit
markets; volatility in the price of the Lloyds Bank Group's securities;
natural pandemic and other disasters; risks concerning borrower and
counterparty credit quality; risks affecting 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 Lloyds Bank Group; risks associated with the Lloyds Bank
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 Lloyds Bank Group or
Lloyds Banking 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 Lloyds Bank Group's or the
Lloyds Banking 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; and assumptions and estimates that form
the basis of the Lloyds Bank Group's financial statements. A number of these
influences and factors are beyond the Lloyds Bank Group's control. Please
refer to the latest Annual Report on Form 20-F filed by Lloyds Bank 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 Bank 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 Bank 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 Lloyds Bank 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.
STATUTORY INFORMATION (IFRS)
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Three months ended Three months ended
31 Mar 31 Mar
2026 2025
£m £m
Net interest income 3,490 3,244
Other income 1,267 1,127
Total income 4,757 4,371
Operating expenses (2,840) (2,884)
Impairment (292) (310)
Profit before tax 1,625 1,177
Tax expense (383) (296)
Profit after tax 1,242 881
Profit attributable to ordinary shareholders 1,129 774
Profit attributable to other equity holders 106 98
Profit attributable to non-controlling interests 7 9
Profit after tax 1,242 881
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
At 31 Mar 2026 At 31 Dec 2025
£m £m
Assets
Cash and balances at central banks 40,517 37,720
Financial assets at fair value through profit or loss 2,404 2,279
Derivative financial instruments 3,401 3,260
Financial assets at amortised cost 535,836 524,467
Financial assets at fair value through other comprehensive income 35,379 36,257
Other assets 28,815 27,352
Total assets 646,352 631,335
Liabilities
Deposits from banks 4,753 3,085
Customer deposits 462,988 465,207
Repurchase agreements at amortised cost 40,714 37,567
Due to fellow Lloyds Banking Group undertakings 4,712 3,852
Financial liabilities at fair value through profit or loss 4,160 4,243
Derivative financial instruments 4,547 4,286
Debt securities in issue at amortised cost 62,456 52,132
Other liabilities 12,195 10,963
Subordinated liabilities 7,659 8,020
Total liabilities 604,184 589,355
Total equity 42,168 41,980
Total equity and liabilities 646,352 631,335
FINANCIAL REVIEW
Income statement
The Group's statutory profit before tax for the first three months of 2026 was
£1,625 million, 38% higher than in the first three months of 2025, reflecting
higher total income, controlled costs and benign impairments. Profit after tax
was £1,242 million (three months to 31 March 2025: £881 million).
Total income for the three months to 31 March 2026 was £4,757 million, an
increase of 9% on the prior year (three months to 31 March 2025: £4,371
million). Net interest income of £3,490 million was up 8% on the prior year
(three months to 31 March 2025: £3,244 million), driven by higher average
interest-earning assets and a higher margin. The margin benefitted from
stronger structural hedge income as eligible balances were reinvested into a
higher rate environment alongside strong customer led growth, partially offset
by asset margin compression, in particular in the UK mortgages portfolio.
Other income increased by 12% to £1,267 million (three months to 31 March
2025: £1,127 million), with higher net fee and commission income and higher
other operating income. Net fee and commission income increased as a result of
strengthening customer activity, while other operating income increased as a
result of vehicle fleet growth and higher average vehicle rental values in UK
Motor Finance within Retail.
Operating expenses of £2,840 million were 2% lower (three months to 31 March
2025: £2,884 million) reflecting increased cost savings and a lower severance
expense, partially offset by business growth costs, inflationary pressures and
higher operating lease depreciation. The increased operating lease
depreciation reflected fleet growth, the depreciation of higher value
vehicles and declines in used car prices, partially offset by risk mitigation
actions.
A remediation charge of £8 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.
The impairment charge was £292 million, down from £310 million in the three
months to 31 March 2025. The charge remains low due to continued strong and
stable credit performance across portfolios and benefits from quarterly model
calibrations reflecting this performance. The charge includes the impact of
the deterioration in economic outlook as a result of the Middle East conflict,
partly offset by the release of the post model adjustment for global tariff
and political disruption risks now considered to be adequately captured within
assumptions and resulting modelled provisions.
FINANCIAL REVIEW (continued)
Balance sheet
As at 31 March 2026, total assets were £15,017 million higher at
£646,352 million (31 December 2025: £631,335 million). Financial assets at
amortised cost were £11,369 million higher at £535,836 million (31
December 2025: £524,467 million) including increases in loans and advances to
customers of £4,022 million, reverse repurchase agreements of £4,396
million, debt securities of £1,919 million and loans and advances to banks of
£660 million. Amounts due from fellow Lloyds Banking Group undertakings
increased by £372 million.
Loans and advances to customers included growth of £1,614 million 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 £1,751 million. Lending balances also increased in
Commercial Banking by £1,885 million, 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.
Cash and balances at central banks increased by £2,797 million to £40,517
million (31 December 2025: £37,720 million and financial assets at fair
value through other comprehensive income of £35,379 million decreased by
£878 million, reflecting changes in liquidity holdings.
Total liabilities were £14,829 million higher at £604,184 million
(31 December 2025: £589,355 million). Customer deposits of
£462,988 million decreased by £2,219 million in the quarter. Retail
deposits of £322,131 million were down by £3,037 million, 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 £616 million, supported by the strength of the Group's franchise
and proposition. Commercial Banking deposits of £140,578 million were up
£763 million in the quarter, resulting from Corporate and Institutional
Banking growth, partially offset by seasonal net outflows in Business and
Commercial Banking.
Repurchase agreements at amortised cost increased by £3,147 million to
£40,714 million (31 December 2025: £37,567 million). Debt securities in
issue at amortised cost increased by £10,324 million in the quarter, to
£62,456 million (31 December 2025: £52,132 million), due to new issuances
in the period, while subordinated liabilities decreased to £7,659 million as
a result of redemptions in the period.
Total equity was £42,168 million at 31 March 2026 (31 December 2025: £41,980
million). Profit for the period and a higher pension surplus were partially
offset by dividends paid and the unwind of the cash flow hedge reserve.
Capital
The Group's common equity tier 1 (CET1) capital ratio remains at 13.6% at 31
March 2026 (31 December 2025: 13.6%). Profit for the first three months of the
year was broadly offset by the accrual for the foreseeable ordinary dividend
and an increase in risk-weighted assets.
Risk-weighted assets increased by £4,115 million to £198,415 million at
31 March 2026 (31 December 2025: £194,300 million), largely reflecting the
impact of strong customer lending growth in a period with limited planned
optimisation.
The Group's total capital ratio reduced to 19.9% at 31 March 2026 (31 December
2025: 20.1%), with the increase in total capital resources through CET1
capital more than offset by the increase in risk-weighted assets.
The Group's UK leverage ratio remains at 5.2% at 31 March 2026 (31 December
2025: 5.2%). The increase in total tier 1 capital was broadly offset by an
increase in the leverage exposure measure. The latter primarily reflects
increases across securities financing transactions, loans and advances, other
assets and off-balance sheet items, due in part to strong customer lending
growth.
ADDITIONAL FINANCIAL INFORMATION
1. Basis of presentation
This release covers the results of Lloyds Bank plc together with its
subsidiaries (the Group) for the three months ended 31 March 2026.
The Group's Q1 2026 Interim Pillar 3 Disclosures can be found at:
www.lloydsbankinggroup.com/investors/financial-downloads.html.
Accounting policies
The accounting policies are consistent with those applied by the Group in its
2025 Annual Report and Accounts.
2. Loans and advances to customers and expected credit loss allowance
At 31 March 2026 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 287,440 29,116 4,010 4,885 325,451 8.9 1.2
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 14,401 2,903 139 - 17,443 16.6 0.8
Other 22,099 400 134 - 22,633 1.8 0.6
Retail 350,510 36,090 4,769 4,885 396,254 9.1 1.2
Business and Commercial Banking 24,711 3,368 946 - 29,025 11.6 3.3
Corporate and Institutional Banking 41,649 1,876 742 - 44,267 4.2 1.7
Commercial Banking 66,360 5,244 1,688 - 73,292 7.2 2.3
Other(1) (1,034) - - - (1,034)
Total gross lending 415,836 41,334 6,457 4,885 468,512 8.8 1.4
Customer related ECL allowance (drawn and undrawn)
UK mortgages 58 217 320 160 755
Credit cards 210 279 132 - 621
UK unsecured loans and overdrafts 175 227 106 - 508
UK Motor Finance(2) 200 150 78 - 428
Other 18 10 31 - 59
Retail 661 883 667 160 2,371
Business and Commercial Banking 80 161 117 - 358
Corporate and Institutional Banking 92 118 253 - 463
Commercial Banking 172 279 370 - 821
Other - - - - -
Total 833 1,162 1,037 160 3,192
Customer related ECL allowance (drawn and undrawn) as a percentage of loans
and advances to customers
Stage 1 Stage 2 Stage 3 POCI Total
%
%
%
%
%
UK mortgages - 0.7 8.0 3.3 0.2
Credit cards 1.3 12.3 44.6 - 3.4
UK unsecured loans and overdrafts 1.6 16.2 55.8 - 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 14.0 3.3 0.6
Business and Commercial Banking 0.3 4.8 12.4 - 1.2
Corporate and Institutional Banking 0.2 6.3 34.1 - 1.0
Commercial Banking 0.3 5.3 21.9 - 1.1
Other - - -
Total 0.2 2.8 16.1 3.3 0.7
(1) Contains central fair value hedge accounting adjustments.
(2) UK Motor Finance includes £242 million relating to provisions against
residual values of vehicles subject to finance leases.
ADDITIONAL FINANCIAL INFORMATION (continued)
3. UK economic assumptions
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 19 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 FINANCIAL INFORMATION (continued)
3. UK 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
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 Bank plc, 25 Gresham Street, London, EC2V 7HN
Registered in England No. 2065
LEI H7FNTJ4851HG0EXQ1Z70
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