Lloyds Banking Group(LYG) - 2025 Q3 - Quarterly Report

Financial Performance - Statutory profit after tax for the nine months ended 30 September 2025 was £3.3 billion, down 12% from £3.8 billion in the same period of 2024[4] - The Group's statutory profit before tax for the first nine months of 2025 was £4,678 million, a decrease of 9% compared to £5,147 million in the same period of 2024[27] - Profit after tax for the first nine months of 2025 was £3,322 million, down 12% from £3,777 million in the prior year[27] - Underlying profit for the first nine months of 2025 was £4,851 million, a decline from £5,350 million in the same period of 2024[28] - Profit attributable to ordinary shareholders decreased to £2,892 million for the nine months ended 30 September 2025, down from £3,355 million in the prior year, a decline of 13.8%[83] Income and Revenue - Underlying net interest income increased by 6% to £10.1 billion, with a banking net interest margin of 3.04%, up 10 basis points year-on-year[6] - Net interest income increased by 7% to £9,808 million compared to £9,125 million in the first nine months of 2024[23] - Total income from sterling structural hedge balances for the first nine months of 2025 was £4.0 billion, up £1.0 billion from the prior year (£3.0 billion)[32] - Underlying other income for the first nine months of 2025 was £4,526 million, a 9% increase compared to the prior year (£4,164 million), driven by UK Motor Finance and strategic initiatives[33] Customer Deposits and Loans - Customer deposits rose by £14.0 billion (3%) to £496.7 billion, with growth of £4.0 billion in Retail and £10.0 billion in Commercial Banking[6] - Underlying loans and advances to customers increased by £18.0 billion (4%) to £477.1 billion, with Retail growth of £15.2 billion and Commercial Banking growth of £2.5 billion[6] - Customer deposits increased by 1% to £496.7 billion from £493.9 billion in the previous quarter[18] - Loans and advances to customers increased to £477.5 billion as of 30 September 2025, compared to £457.9 billion a year earlier, reflecting a growth of 4.0%[82] Operating Costs and Efficiency - Operating costs were £7.2 billion, up 3% year-on-year, reflecting inflationary pressures and strategic investments[6] - The cost:income ratio increased to 68.4%, up from 52.2% in the previous quarter, indicating higher operating expenses[23] - Operating costs for the first nine months of 2025 were £7,176 million, up 3% year-on-year, with expected operating costs for 2025 at approximately £9.7 billion[37] Impairment and Asset Quality - The underlying impairment charge was £618 million, with an asset quality ratio of 18 basis points[6] - The underlying impairment charge for the first nine months of 2025 was £618 million, a significant increase from £273 million in the same period of 2024[63] - Retail underlying impairment charges increased to £627 million for the nine months ended September 30, 2025, compared to £592 million in the same period of 2024, reflecting a 6% increase[61] - Commercial Banking reported an underlying impairment charge of £(36) million for the nine months ended September 30, 2025, a significant change from £16 million in the same period of 2024[61] Capital and Ratios - The CET1 ratio stood at 13.8% after accounting for the interim ordinary dividend paid[8] - The CET1 ratio remained stable at 13.8%, unchanged from the previous quarter[18] - The Group's CET1 capital ratio at 30 September 2025 was 13.8%, up from 13.5% pro forma at 31 December 2024[55] - Average tangible equity increased to £32.4 billion for the nine months ended 30 September 2025, compared to £32.0 billion in the same period of 2024[83] Economic Outlook - The Group's base case economic scenario anticipates GDP growth of 0.7% in Q1 2025, declining to 0.1% by Q4 2025[75] - The unemployment rate is projected to rise from 4.5% in Q1 2025 to 5.0% by Q4 2025[75] - House price growth is expected to slow down, with a forecast of 2.9% in Q1 2025, decreasing to 0.8% by Q4 2025[75] - The UK Bank Rate is projected to decrease from 4.50% in Q1 2025 to 4.00% by Q4 2025[75] Strategic Initiatives - The Group announced the full acquisition of Schroders Personal Wealth, which supports approximately £17 billion in assets under administration[6] - The Group's strategy update focusing on Digital & AI is scheduled for 6 November 2025, indicating a commitment to innovation and market expansion[85] - The preliminary results for 2025 will be announced on 29 January 2026, providing further insights into the Group's performance[85]