30th Jul 2026 09:46
(Alliance News) - Lloyds Banking Group PLC on Thursday set out its financial ambitions to 2030 as it reported better-than-expected second-quarter results.
The Edinburgh-based bank said pretax profit increased 14% to GBP2.27 billion in the quarter ended June 30 from GBP1.99 billion a year prior, beating the GBP2.10 billion market consensus.
Net income improved 9.7% to GBP4.96 billion from GBP4.52 billion, broadly in line with GBP4.95 billion consensus. Net interest income grew 10% to GBP3.71 billion from GBP3.36 billion, also in line with consensus.
Lloyds said profit benefited from higher total income and controlled costs, partially offset by higher charges for operating lease depreciation and impairment.
Higher net interest income was driven by a higher banking net interest margin of 3.19%, up 15 basis points on-year, and 5bps from the prior quarter. This reflected strong structural hedge income, franchise-led volume growth and average interest-earning banking asset growth, the bank said.
The cost-to-income ratio was 49.0% versus 52.2% a year ago. Return on tangible equity was 17.0% compared with 15.5%. The CET1 capital ratio edged down to 13.6% from 13.8%, or to 13.1% on a pro forma basis, which reflects the full impact of the share buyback in respect of 2025.
The bank raised its interim dividend by 30% to 1.58 pence per share from 1.22p a year ago and announced a new share buyback programme of up to GBP1.0 billion, in addition to the GBP1.75 billion programme announced earlier this year with its 2025 results.
In response, shares in Lloyds Banking were up 1.8% at 113.35 pence each in London on Thursday. The stock is up 44% over the past year.
Lloyds reaffirmed financial targets for 2026 and, as expected, outlined its ambitions out to 2030, part of its "accelerate 2030" strategy.
"Our strategy will allow us to unlock the next phase of growth and sustainable value creation for our shareholders," said Chief Executive Charlie Nunn.
For 2026, Lloyds expects underlying net interest income of greater than GBP14.9 billion, a cost-to-income ratio of less than 50%, and a return on tangible equity of greater than 16%.
Looking further ahead, Lloyds is targetting a RoTE of around 20% in 2030 and 18% in 2028.
For the 2027 to 2030 period, it sizes up a "mid-single-digit net income compound annual growth rate and high-single-digit underlying other operating income compound annual growth rate".
Lloyds also eyes a cost-to-income ratio of less than 45% in 2030, and a pro forma CET1 ratio of around 13.0%.
By Jeremy Cutler, Alliance News reporter
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