Lloyds Bank PLC: 2025 Q1 Interim Management Statement

Core Viewpoint - Lloyds Bank plc reported a significant decline in profit before tax for Q1 2025, primarily due to increased operating expenses and higher impairment charges compared to the same period in 2024 [5][6]. Financial Performance - Profit before tax for Q1 2025 was £1,177 million, a decrease of 26% from £1,587 million in Q1 2024 [5][20]. - Profit after tax was £881 million, down from £1,159 million in the same quarter of the previous year [5][20]. - Total income for Q1 2025 was £4,371 million, slightly lower than £4,385 million in Q1 2024, with net interest income increasing by 4% to £3,244 million [6][20]. Operating Expenses and Impairments - Total operating expenses rose to £2,884 million, a 6% increase from £2,728 million in Q1 2024, driven by inflationary pressures and strategic investments [7][20]. - The impairment charge increased significantly to £310 million from £70 million in the same quarter of 2024, reflecting a higher charge in Commercial Banking and adjustments related to potential impacts from US tariff policies [9][20]. Balance Sheet Overview - Total assets increased by 1% to £616,356 million as of March 31, 2025, compared to £611,213 million at the end of 2024 [10][21]. - Financial assets at amortised cost rose by £3,135 million to £508,032 million, with notable growth in UK mortgages and unsecured loans [11][21]. Capital and Risk Management - The common equity tier 1 (CET1) capital ratio decreased slightly to 13.6% from 13.7% at the end of 2024, influenced by profit accruals and increased risk-weighted assets [15][16]. - Risk-weighted assets increased by £3,955 million to £190,951 million, reflecting lending growth and temporary increases due to hedging activities [17][18]. Economic Assumptions - The Group's base case scenario anticipates slow GDP expansion and a modest rise in the unemployment rate, with persistent inflationary pressures [27][30]. - Key economic assumptions include a GDP growth of 0.2% for Q1 2025 and a projected UK Bank Rate decrease to 4.00% by the end of Q4 2025 [30][34].