23rd Oct 2025 09:06
(Alliance News) - Lloyds Banking Group PLC on Thursday said it continues to perform well, with growth in income and flat underlying costs, although profit was knocked by charges related to motor finance mis-selling.
The Edinburgh-based lender said pretax profit plunged 36% to GBP1.17 billion in the three months to September 30 from GBP1.82 billion a year earlier, after booking a previously flagged extra GBP800 million charge related to motor finance commission arrangements, which took its total provision to GBP1.95 billion.
The lender increased its provision earlier in October after the Financial Conduct Authority unveiled details of a proposed redress scheme for impacted customers.
Underlying profit fell 30% to GBP1.29 billion from GBP1.85 billion, beating Visible Alpha consensus of GBP1.10 billion.
Net income rose 6.7% to GBP4.64 billion from GBP4.35 billion, with underlying net interest income up 6.8% to GBP3.45 billion from GBP3.23 billion.
The banking net interest margin improved to 3.06% from 2.95%.
Operating costs edged up to GBP2.30 billion from GBP2.29 billion, while remediation costs surged to GBP875 million from GBP29 million due to the motor finance provision. Impairment charges were little changed at GBP176 million compared to GBP172 million.
The cost income ratio jumped to 68.4% from 53.4%.
The return on tangible equity fell to 7.5% from 15.2%, but excluding the motor finance charge, Lloyds estimates it would be around 14%.
The lender revised its 2025 guidance, and now expects underlying net interest income of about GBP13.6 billion, up from GBP13.5 billion previously, and a return on tangible equity of 12% (or 14% excluding the car finance charge) compared to 13.5% before.
Operating costs guidance was left unchanged at GBP9.7 billion, excluding the acquisition of Schroders Personal Wealth.
Chief Executive Charlie Nunn said the group continues to perform well, demonstrating "robust financial performance alongside strategic progress".
This "gives us confidence in our performance for the year and our 2026 guidance," he added.
Shares in Lloyds Banking Group were marginally lower at 84.46 pence in London on Thursday morning. The wider FTSE 100 index was up 0.1%.
Underlying loans and advances to customers increased by GBP6.1 billion in the quarter, with growth in Retail and Corporate and Institutional Banking.
Customer deposits grew by GBP2.8 billion in the quarter, largely within Commercial Banking.
The CET1 capital ratio stood at 13.8% at September 30, unchanged quarter-on-quarter, and down from 14.2% at the end of 2024.
By Jeremy Cutler, Alliance News reporter
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