2025 Half-Year Results

Lloyds Bank Corporate Markets plc

2025 Half-Year Results

CONTENTS

Definitions

Lloyds Bank Corporate Markets plc (the Bank) and its subsidiary undertakings (together the Group). References within this document to LBCM refer to the Group as defined here. Lloyds and Lloyds Bank are trading names of Lloyds Bank Corporate Markets plc. Lloyds Banking Group plc is the ultimate parent company of LBCM and is also referred to as LBG in this document.

Connecting the UK and Lloyds Banking Group with the world

LBCM's purpose is Helping Britain Prosper

HALF-YEAR STRATEGIC PROGRESS

In the first 6 months of 2025, Lloyds Bank Corporate Markets group (LBCM) has delivered a solid financial performance from a business that's delivering for our customers. This is pleasing when set against the backdrop of a volatile macroeconomic and geopolitical environment and demonstrates continued business momentum and growth enabled by our strategic investment.

Total income was £513 million in the period (half-year to 30 June 2024: £529 million) and profit before tax was £266 million (half-year to 30 June 2024: £293 million). This includes the one-off charge relating to our capital restructure and is a key milestone in the growth plan of LBCM which unlocks capacity for further growth opportunities.

Our Strategy

Guided by our purpose of Helping Britain Prosper, LBCM has a well-defined strategy of investing in both our markets and international businesses which is driving sustainable income growth and returns. Core to this strategy is deepening client relationships, expanding our institutional coverage and driving collaboration opportunities across LBG.

Global Markets

We are expanding our global financial markets client proposition

and scaling our global capital markets franchise.

These businesses continued to expand their client offerings in 2025, with a market share increase of 8 percentage points year-on-year in Structured Finance and 3 percentage points in UK issuer Debt Capital markets issuance.1 This is supported by good performance in USD and EUR debt issuances. In financial markets we achieved our strategic objective of continuing to be ranked in the top 5 for sterling interest rate swaps.

We have launched a market-leading foreign exchange algorithmic execution service, further enhancing our client toolkit. LBCM also executed the first tokenised collateral transfer on a public blockchain, paving the way for the use of digital technology in the industry.

1 LSEG Workspace; Structured Finance (excluding collateralised debt obligations) - sterling, All Investment Grade bonds (excluding Sovereign, supranational and agency) - UK issuers (sterling only)

International

We are strengthening our presence in North America and Europe,

and digitising and growing our Crown Dependencies business.

In 2025 we have developed our core franchise and support to global clients through our international hubs in the Crown Dependencies, New York and Frankfurt. Ongoing multi-year investment into our technology in the Crown Dependencies business has improved the client offering and operational efficiencies, with good momentum in our new cash management and payments platform. 

In North America we are executing our strategic growth objectives, with increased activity across sponsors lending and project finance whilst growing our trading capabilities to support coverage expansion and rates proposition build out. In Frankfurt we continue to support our markets ambition in further expanding our EUR denominated issuances.

Delivering more for our clients

In June 2025, LBCM restructured its regulatory capital mix increasing the amount of additional tier 1 capital (refer to page 4 for more details). This was a key milestone in the growth plan of LBCM which unlocks capacity for further growth opportunities, enables the expansion of our client offering and our overall contribution to the Corporate & Institutional Banking (CIB) business unit of which LBCM is part.

Investment in colleagues has continued including key hires to enable growth. LBCM and its clients are also benefitting from centralisation of support activity into centres of excellence and from the ongoing significant investment into our systems which has further improved core system resilience and stability.

In supporting LBG's sustainability goals, LBCM helped facilitate a €1.75bn dual-tranche green bond in the period. We also continue to work across CIB on the voluntary carbon and nature markets along with the adoption of LBG's clean growth financing initiative - enabling our clients in the Crown Dependencies to access discounted financing for eligible green transactions.

LBCM at a glance

LBCM provides a first-class banking, financing and risk management proposition, underpinned by excellent customer service.

LBCM's diversified business model supports our purpose through connecting customers (large corporates, financial institutions and commercial and retail customers in the Crown Dependencies) with a wide range of products including risk management, commercial lending, community banking, international private banking, bonds and structured finance, trade and working capital management and sustainability-linked financing. All served via hubs in the UK, Jersey, Guernsey, Isle of Man, New York USA and Frankfurt Germany.

REVIEW OF PERFORMANCE

Income statement

Net fee and commission income has remained strong in a competitive environment, generating £138 million in the period driven mainly by debt and bond issuances and fee income from our lending portfolio. Other operating losses in 2025 relate to a one off charge from the regulatory capital restructure.

LBCM has continued to demonstrate strong cost management discipline resulting in a small year on year reduction in operating expenses of £4 million to £246 million in the first 6 months. The impairment charge of £1 million reflects minor movements in our stages 1 and 2, as improving macroeconomic conditions offset the impact of growth in the lending portfolio.

A tax expense of £56 million was recorded which is analysed in note 5. 

Balance sheet assets

Total assets were £97,457 million at 30 June 2025, an increase of £2,485 million since 31 December 2024.

This is offset by a small reduction in our derivative financial instruments due to changes in the fair value of foreign exchange and interest rate contracts, and a reduction in cash and balances at central banks (being balances on deposit at the Bank of England and US Federal Reserve) reflecting evolution of our liquid asset portfolio. The increase in other assets relates to trading settlement balances falling due over the half year.

REVIEW OF PERFORMANCE (continued)

Balance sheet liabilities

Total liabilities were £90,056 million at 30 June 2025, compared to £91,143 million at 31 December 2024.

Subordinated liabilities was the Bank's tier 2 capital which has been repaid in full in the period as part of the regulatory capital restructure. The movement in other liabilities relates to trading settlement balances falling due over the half year.

Balance sheet equity

Total equity at 30 June 2025 was £7,401 million (31 December 2024: £3,829 million).

Regulatory capital

The capital position of Lloyds Bank Corporate Markets plc is presented on an unconsolidated basis.

REVIEW OF PERFORMANCE (continued)

Capital position

The Bank's capital position as at 30 June 2025 is presented in the table below.

1 A regulatory capital restructuring exercise was undertaken during the period to 30 June 2025. Further detail can be found in the review of 'Balance sheet liabilities' and 'Balance sheet equity' on page 4.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks that could impact LBCM's ability to deliver its long-term strategic objectives and the approach to managing each risk are reviewed and reported to the Board Risk Committee regularly in alignment with the risk management framework.

Our risk management framework

Lloyds Banking Group (LBG) is transforming its approach to risk management to support its strategic ambition and purpose of Helping Britain Prosper. A detailed review of the three lines of defence model was completed in 2024 to strengthen accountabilities and accelerate decision-making. Since the publication of the LBCM 2024 annual accounts this risk transformation has continued with the delivery of an enhanced risk management framework which defines a proportionate and materiality-based approach to risk management. The LBG risk management framework (RMF) applies to all LBG undertakings and has been adopted by LBCM. The RMF is the foundation for the delivery of effective and consistent risk control, providing proactive identification, active management and monitoring of LBCM's risks.

The RMF is supplemented with an LBCM Addendum set out to address LBCM-specific risk governance. The RMF and the LBCM Addendum applies to the LBCM business across all legal entities and locations.

LBCM's risk appetite, principles, policies, procedures, controls and reporting are regularly reviewed and updated to ensure they remain in line with regulation, law, corporate governance and industry good practice.

The enhanced RMF includes an evolved methodology for setting consistent board-level risk appetite metrics, providing greater clarity and visibility of risk appetite. It also enables simplification and efficiency to support LBG and LBCM in achieving their strategic objectives. Risk appetite is defined as the type and aggregate level of risk LBCM is willing to take or accept in pursuit of its strategic objectives and business plan. As a separate legal group with its own Board, LBCM maintains its own risk appetite which is aligned to the LBG approach but is adjusted to reflect the specific characteristics of LBCM's balance sheet and portfolio, including its international presence. The LBCM Board (the Board) is responsible for the annual approval of LBCM's risk appetite.

Governance is maintained through delegation of authority from the Board. Senior executives are supported by a committee-based structure which is designed to ensure open challenge and enable effective Board engagement and decision-making. The Board and senior management play a vital role in shaping and embedding a supportive risk culture. Guided by the Board, the senior management articulates and role models the core risk values to which LBCM aspires.

Current thematic and emerging risks

The significant risks encountered by LBCM are detailed below. The external risks faced by LBCM may also impact the success of delivering against LBCM's long-term strategic objectives. They include, but are not limited to, the uncertainties linked to the macroeconomic and geopolitical environment, such as the conflicts in the Ukraine and Middle East, tariffs and barriers to trade, inflation, interest rates, and cost of living pressures. These could also affect the financial condition of LBCM's customers, clients and counterparties, particularly in vulnerable sectors.

In addition, LBCM continues to monitor and address current thematic risks that could have an adverse impact on its business model, financial conditions, operations and its ability to achieve financial targets. These are interconnected with potential outcomes that should one risk materialise, it could have an impact on other risks. They include, but are not limited to:

• The pace of technological advances, including failure to adopt and utilise new technology effectively, evolution of cyber threats, and system, process and third party disruption

• The evolution of data management and adoption of AI or generative AI, and the associated risks from a data ethics and data privacy perspective

• The extent and pace of regulatory changes and increased oversight, which could increase costs and prudential resource requirements for LBCM and result in changes to LBCM's legal and operating structure and create risks from non-compliance that include censure, fines and removal of business permissions to operate. Divergence of UK regulation from other jurisdictions and operations in international jurisdictions remain a risk of additional complexity for LBCM

• The ability to create an agile, high performing workforce with high quality talent in the right locations. Including timely retention of key skills in LBCM aligned to the evolving industry need

• The effectiveness of proprietary models which are at risk of being insufficiently predictive due to the limitations of historical data, extreme market volatility, and the risk of ineffectiveness in parameterisation, implementation, oversight and monitoring

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

Principal risks

LBCM has adopted the LBG event-based risk taxonomy as part of the risk management framework. There are 10 principal risks which are reviewed and reported regularly to the Board in alignment with the risk management framework.

Capital risk - The risk that an insufficient quantity or quality of capital is held to meet regulatory requirements or to support business strategy, an inefficient level of capital is held or that capital is inefficiently deployed across LBCM.

Climate risk - The risk from the impacts of climate change and the transition to net zero ('inbound risk'), or a result of LBCM's response to tackling climate change and supporting the transition to net zero ('outbound risk'). LBCM is aligned with LBG, its parent company, with the goal of reducing emissions financing by more than 50 per cent by 2030 and achieving net zero financed emissions by 2050 (refer LBG 2025 Half-Year Results and the LBG 2024 sustainability report).

Compliance risk - The risk of financial penalties, regulatory censure, criminal or civil enforcement action or customer detriment as a result of failure to identify, assess, correctly interpret, comply with, or manage regulatory and/or legal requirements.

Conduct risk - The risk of LBCM activities, behaviours, strategy or business planning, having an adverse impact on outcomes for customers, undermining the integrity of the market or distort competition, which could lead to regulatory censure, reputational damage or financial loss.

Credit risk - The risk that parties with whom LBCM has contracted fail to meet their financial obligations (on and off-balance sheet) leading to financial loss.

Economic crime risk - The risk that LBCM implements ineffective policies, systems, processes and controls to prevent, detect and respond to the risk of fraud and/or financial crime resulting in increased losses, regulatory censure/fines and/or adverse publicity in the UK or other jurisdictions in which LBCM operates.

Liquidity risk - The risk that LBCM has insufficient financial resources to meet its commitments as they fall due or can only secure them at excessive cost. Funding risk is part of liquidity risk and is defined as the risk that LBCM does not have sufficiently stable and diverse sources of funding, or the funding structure is inefficient.

Market risk - The risk that LBCM's capital or earnings profile are adversely affected by changes in market rates or prices, including but not limited to interest rates, foreign exchange, equity prices and credit spreads.

Model risk - The risk of adverse consequences from model errors or the inappropriate use of modelled outputs to inform business decisions.

Operational risk - The risk of actual or potential impact to LBCM (financial and/or non-financial) resulting from inadequate or failed internal processes, people, and systems or from external events. Resilience is core to the management of operational risk within LBCM to ensure that business processes (including those that are outsourced) can withstand operational risks and can respond to and meet customer and stakeholder needs when continuity of operations is compromised.

This includes the provision of services to LBCM (including people, systems and processes) outsourced to Lloyds Bank plc via a shared service provision model or by external providers via Lloyds Bank plc. The Shared Service Model creates internal service provision risk and may be elevated in situations where LBCM's priorities are not wholly aligned with those of the wider Lloyds Banking Group.

STATUTORY INFORMATION

CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

1 Total comprehensive income attributable to owners of the parent was £266 million.

2 Total equity attributable to owners of the parent was £7,401 million.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (continued)

1 Total comprehensive income attributable to owners of the parent for the half-year to 30 June 2024 was £248 million (half-year to 31 December 2024: £233 million).

2 Total equity attributable to owners of the parent at 30 June 2024 was £3,634 million (31 December 2024: £3,829 million).

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

Interest received was £1,191 million (half year to 30 June 2024: £1,150 million) and interest paid was £971 million (half year to 30 June 2024: £1,153 million).

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

Cash and cash equivalents comprise cash and non-mandatory balances with central banks and amounts due from banks with an original maturity of less than three months.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

Note 1: Basis of preparation and accounting policies

These condensed consolidated half-year financial statements as at and for the period to 30 June 2025 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority (FCA) and with International Accounting Standard 34 (IAS 34), Interim Financial Reporting as adopted by the United Kingdom and comprise the results of Lloyds Bank Corporate Markets plc (the Bank) together with its subsidiaries (the Group). References within this document to LBCM refer to the Group as defined here. Lloyds Banking Group plc is the ultimate parent company of LBCM and is also referred to as LBG in this document. Lloyds and Lloyds Bank are trading names of Lloyds Bank Corporate Markets plc.

These statements do not include all of the information required for full annual financial statements and should be read in conjunction with LBCM's consolidated financial statements as at and for the year ended 31 December 2024 which complied with international accounting standards in conformity with the requirements of the Companies Act 2006 and were prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (IASB). Copies of the 2024 annual report and accounts are available at www.lloydsbankinggroup.com and are also available upon request from Investor Relations, Lloyds Banking Group plc, 33 Old Broad Street, London EC2N 1HZ.

The directors consider that it is appropriate to continue to adopt the going concern basis in preparing these condensed consolidated half-year financial statements. In reaching this assessment, the directors have taken into account the uncertainties affecting the UK economy and their potential effects upon LBCM's performance and projected funding and capital position; the impact of further stress scenarios has also been considered. On this basis, the directors are satisfied that LBCM will maintain adequate levels of funding and capital for the foreseeable future.

LBCM's accounting policies are consistent with those applied by LBCM in its financial statements for the year ended 31 December 2024 and there have been no changes in LBCM's methods of computation.

The IASB has issued an amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates, effective 1 January 2025. This amendment has not had a significant impact on LBCM.

Future accounting developments

There are a number of new accounting pronouncements issued by the IASB with an effective date of 1 January 2027. This includes IFRS 18 Presentation and Disclosure in Financial Statements which replaces IAS 1 Presentation of Financial Statements and IFRS 19 Subsidiaries without Public Accountability: Disclosures. The impact of these standards is being assessed and they have not yet been endorsed for use in the UK.

The IASB has issued its annual improvements and a number of amendments to the IFRS Accounting Standards effective 1 January 2026, including Amendments to IFRS 9 Financial Instruments and Amendments to IFRS 7 Financial Instruments Disclosure. These improvements and amendments are not expected to have a significant impact on LBCM.

The Bank's ultimate parent undertaking and controlling party is Lloyds Banking Group plc which is incorporated in Scotland. Lloyds Banking Group plc has published consolidated accounts for the year to 31 December 2024 and copies may be obtained from Investor Relations, Lloyds Banking Group, 33 Old Broad Street, London EC2N 1HZ and are available for download from www.lloydsbankinggroup.com.

The financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 (the Act). The statutory accounts for the year ended 31 December 2024 were approved by the directors on 26 February 2025 and were delivered to the Registrar of Companies on 10 March 2025. The independent auditors' report on those accounts was unqualified and did not include a statement under sections 498(2) (accounting records or returns inadequate or accounts not agreeing with records and returns) or 498(3) (failure to obtain necessary information and explanations) of the Act.

Note 2: Critical accounting judgements and key sources of estimation uncertainty

The preparation of LBCM's financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions in applying the accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Due to the inherent uncertainty in making estimates, actual results reported in future periods may be based upon amounts which differ from these estimates. Estimates, judgements and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

LBCM's significant judgements, estimates and assumptions are unchanged compared to those disclosed in note 3 of LBCM's 2024 financial statements. Further information on the critical accounting judgements and key sources of estimation uncertainty for the allowance for expected credit losses is set out in note 7.

Note 3: Operating expenses

Note 4: Impairment

Note 5: Tax

In accordance with IAS 34, LBCM's income tax expense for the half-year to 30 June 2025 is based on the best estimate of the weighted-average annual income tax rate expected for the full financial year. The tax effects of one-off items are not included in the weighted-average annual income tax rate, but are recognised in the relevant period.

An explanation of the relationship between tax expense and accounting profit is set out below:

Note 6: Fair values of financial assets and liabilities

The valuations of financial instruments have been classified into three levels according to the quality and reliability of information used to determine those fair values. Note 12 to LBCM's financial statements for the year ended 31 December 2024 details the definitions of the three levels in the fair value hierarchy.

Financial instruments classified as financial assets at fair value through profit or loss, derivative financial instruments, financial assets at fair value through other comprehensive income and financial liabilities at fair value through profit or loss are recognised at fair value.

LBCM manages valuation adjustments for its derivative exposures on a net basis; LBCM determines their fair values on the basis of their net exposures. In all other cases, fair values of financial assets and liabilities measured at fair value are determined on the basis of their gross exposures.

Note 6: Fair values of financial assets and liabilities (continued)

The following tables provide an analysis of the financial assets and liabilities of LBCM that are carried at fair value in LBCM's consolidated balance sheet, grouped into levels 1 to 3 based on the degree to which the fair value is observable. There were no significant transfers between level 1 and level 2 during the period.

Note 6: Fair values of financial assets and liabilities (continued)

Valuation control framework

Key elements of the valuation control framework include model validation (incorporating pre-trade and post-trade testing), product implementation review and independent price verification. The framework covers processes for all 3 levels in the fair value hierarchy. Formal committees meet quarterly to discuss and approve valuations in more judgemental areas.

Transfers into and out of level 3 portfolios

Transfers out of level 3 portfolios arise when inputs that could have a significant impact on the instrument's valuation become market observable; conversely, transfers into the portfolios arise when sources of data cease to be observable.

Valuation methodology

For level 2 and level 3 portfolios, there is no significant change to the valuation methodology (techniques and inputs) disclosed in LBCM's financial statements for the year ended 31 December 2024 applied to these portfolios.

Movements in level 3 portfolio

The tables below analyse movements in the level 3 financial assets portfolio.

Note 6: Fair values of financial assets and liabilities (continued)

The tables below analyse movements in the level 3 financial liabilities portfolio.

Note 6: Fair values of financial assets and liabilities (continued)

Sensitivity of level 3 valuations

The tables below set out the effects of reasonably possible alternative assumptions for categories of level 3 financial assets and financial liabilities.

1 Where the exposure to an unobservable input is managed on a net basis, only the net impact is shown in the table.

2 Ranges are shown where appropriate and represent the highest and lowest inputs used in the level 3 valuations.

Note 6: Fair values of financial assets and liabilities (continued)