Financial Data and Key Metrics Changes - The company reported a strong performance in 2025, with total income increasing by 12% to GBP 16.4 billion, and operating profit of GBP 7.7 billion, leading to an attributable profit of GBP 5.5 billion [3][4][12] - Earnings per share grew by 27% to GBP 0.68, while dividends per share increased by 51% to GBP 0.325 [4] - The cost-income ratio improved to 48.6%, down 4.8 percentage points from the previous year, reflecting operational efficiency [3][23] Business Line Data and Key Metrics Changes - Lending grew by 5.6% to GBP 393 billion, with deposits up 2.4% to GBP 442 billion, and assets under management increasing by 20% to GBP 58.5 billion [3][18] - Retail banking saw a customer base increase of over 5%, with customer assets and liabilities growing 4% to GBP 421 billion [5][6] - In commercial and institutional banking, lending balances grew by 10% or GBP 14 billion, with significant contributions from social housing and infrastructure projects [7][18] Market Data and Key Metrics Changes - The company added one million new customers in 2025, contributing to broad-based growth across all three business segments [3] - The net interest margin increased by 21 basis points to 234 basis points, driven by deposit growth and margin expansion [13][20] - The company is the leading lender to UK infrastructure projects, delivering GBP 19 billion of climate and transition finance towards a target of GBP 200 billion by 2030 [8] Company Strategy and Development Direction - The company aims to focus on disciplined growth, simplification, and effective capital and risk management, with a target return on tangible equity greater than 18% by 2028 [42][56] - The acquisition of Evelyn Partners is expected to enhance the company's private banking and wealth management capabilities, increasing assets under management to GBP 127 billion [33][40] - The company plans to leverage technology and AI to improve customer experience and operational efficiency, aiming for a cost-income ratio below 45% by 2028 [54][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the UK macroeconomic environment, noting that consumers are managing well, with households paying down debt and savings rates remaining high [41] - The company anticipates moderate growth in the macro environment for 2026, with expectations of lower inflation and a terminal bank rate of 3.25% by the end of 2026 [25] - The management highlighted a strong track record of capital generation and risk management, with a CET1 ratio of 14% and a commitment to maintaining a robust capital position [27][30] Other Important Information - The company achieved gross cost savings of around GBP 600 million, which is over 7% of the 2024 cost base, allowing for reinvestment in business growth [8][23] - The company expects to generate around 200 basis points of capital before distributions in 2026, supporting ongoing growth and shareholder returns [30][37] Q&A Session All Questions and Answers Question: Can you discuss the sources of the GBP 600 million cost savings and expectations for 2026? - Management noted that the cost savings came from a broad range of efficiencies, including technology investments and platform consolidations, with expectations for continued cost-tight management into 2026 [60][63] Question: How will the greater than 4% customer assets and liabilities target be disaggregated across divisions? - Management expressed confidence in achieving growth across all business areas, with expectations that some areas, particularly assets under management, will grow faster than others [67][68]