Business Context and Reporting Period
This Form 6-K filing presents the unaudited consolidated results for Lloyds Banking Group plc for the year ended 31 December 2025. The Group operates primarily in the UK across Retail, Commercial Banking, and Insurance, Pensions, and Investments segments. The reporting period reflects a year of strong lending growth, strategic acquisitions (including the full acquisition of Schroders Personal Wealth), and significant remediation charges related to motor finance commission arrangements.
Key Financial Metrics
| Metric | 2025 (£m) | 2024 (£m) | Change |
|---|---|---|---|
| Total Income | 19,422 | 18,003 | +8% |
| Net Interest Income | 13,230 | 12,277 | +8% |
| Operating Expenses | (11,966) | (11,601) | +3% |
| Impairment Charge | (795) | (431) | +84% |
| Profit Before Tax | 6,661 | 5,971 | +12% |
| Profit for the Year | 4,757 | 4,477 | +6% |
| Basic EPS | 7.0p | 6.3p | +11% |
| Total Assets | 944,072 | 906,697 | +4% |
| Customer Deposits | 496,457 | 482,745 | +3% |
| CET1 Ratio | 14.0% | 14.2% | -20 bps |
| Liquidity Coverage Ratio (LCR) | 145% | 146% | -1% |
Material Changes vs. Prior Period
- Profit Growth: Statutory profit before tax rose 12% to £6.66 billion, driven by an 8% increase in total income. This was partially offset by higher operating expenses and a significantly higher impairment charge.
- Remediation Charges: A total remediation charge of £968 million was recognized in 2025 (up from £899 million in 2024). This includes a £800 million provision in Q3 regarding the potential impact of motor finance commission arrangements following FCA proposals, bringing the total provision for this issue to £1.95 billion.
- Impairment: The impairment charge increased to £795 million from £431 million. While 2024 benefited from a large credit due to an improved economic outlook, 2025 included a net charge from macroeconomic updates and higher charges in Commercial Banking, though Retail impairment was mitigated by model refinements.
- Balance Sheet Expansion: Total assets increased by £37.4 billion to £944.1 billion. Loans and advances to customers grew by £21.9 billion, led by a £10.8 billion increase in UK mortgages and £7.3 billion in other retail lending.
- Capital Ratios: The Common Equity Tier 1 (CET1) ratio decreased slightly to 14.0% due to an increase in risk-weighted assets (RWAs) of £10.9 billion, driven by strong lending growth, which outpaced capital generation.
Guidance, Outlook, and Risks
- Dividends and Buybacks: The Board recommended a final ordinary dividend of 2.43 pence per share (totaling 3.65 pence for the year, a 15% increase). Additionally, a share buyback programme of up to £1.75 billion was announced, expected to complete by 31 December 2026. Total capital return for 2025 is projected at up to £3.9 billion.
- Capital Target: The Group intends to pay down to a CET1 capital target of approximately 13.0% by the end of 2026. Excess capital distributions will be reviewed every half-year.
- Strategic Progress: Key milestones include the full acquisition of Schroders Personal Wealth (rebranded Lloyds Wealth), the launch of the Lloyds Ultra credit card, and the planned acquisition of Curve. The Group also passed the Bank of England 2025 Bank Capital Stress Test.
- Risks and Contingencies:
- Motor Finance: Significant uncertainty remains regarding the final FCA redress scheme rules and customer response rates, which could materially impact the £1.95 billion provision.
- Geopolitical and Economic: Risks include global trade policies, tariffs, geopolitical conflicts (Russia-Ukraine, Middle East), and UK political instability.
- Legal/Tax: Ongoing litigation regarding interchange fees (Visa/Mastercard) and a tax dispute with HMRC regarding group relief losses (potential £980 million liability if lost).
Investor Verification Checklist
- Motor Finance Provision: Verify the final FCA scheme rules expected by March 2026 and assess if the £1.95 billion provision is sufficient given the expanded eligibility criteria.
- Capital Return Execution: Monitor the execution of the £1.75 billion share buyback and the timing of the final dividend payment in May 2026.
- Credit Quality Trends: Track Stage 2 and Stage 3 migration rates, particularly in UK Motor Finance where residual value volatility has increased provisions.
- Integration of Schroders Personal Wealth: Assess the financial performance and integration progress of the newly acquired wealth business in future quarters.
- Regulatory Stress Test Results: Review the detailed outcomes of the Bank of England 2025 stress test to confirm resilience under severe downside scenarios.