Lloyds Reports 6% Net Income Rise, 3% Loan Growth in H1 2025

Sustained Financial Strength and Dividend Growth

Lloyds Banking Group plc has delivered a solid financial performance in the first half of 2025, underscoring its strategic progress and operational resilience. The Group reported a 6% increase in underlying net income to £8.9 billion, driven by a 5% rise in net interest income and a 9% uplift in other income, reflecting strengthening customer activity and benefits from strategic initiatives.

Importantly for shareholders, the Board announced a 15% increase in the interim ordinary dividend to 1.22 pence per share, amounting to £731 million. This dividend growth aligns with Lloyds’ commitment to a progressive and sustainable dividend policy, supported by strong capital generation and robust earnings.

Loan and Deposit Growth Amid Robust Asset Quality

The Group’s lending book expanded by £11.9 billion (3%) to £471 billion, with growth across retail mortgages, unsecured loans, credit cards, and commercial banking portfolios. Customer deposits also rose by £11.2 billion (2%) to nearly £494 billion, driven by inflows into savings products and targeted commercial banking sectors.

Asset quality remained resilient, with an underlying impairment charge of £442 million, up from £101 million in the prior year which had benefited from a large credit. The increase primarily reflects a modest deterioration in the economic outlook and a small number of defaults in commercial banking, while retail portfolios continued to perform strongly.

Capital and Liquidity Positions Remain Strong

Lloyds maintained a solid capital position, with a Common Equity Tier 1 (CET1) ratio of 13.8% and pro forma capital generation of 86 basis points in the first half. The Group reaffirmed its 2025 guidance for capital generation of approximately 175 basis points and expressed confidence in achieving over 200 basis points in 2026, alongside a CET1 target of around 13% by the end of 2026.

Liquidity metrics also remain robust, with a liquidity coverage ratio of 145% and a loan-to-deposit ratio stable at 95%, reflecting prudent funding and liquidity management.

Strategic Initiatives and Digital Transformation

The Group continues to advance its purpose-driven strategy, focusing on deepening customer relationships, enhancing digital capabilities, and driving sustainable financing. Notably, Lloyds’ digital bank now serves 20.9 million active app users, with innovations such as the Lloyds Premier proposition targeting mass affluent customers and new digital mortgage journeys improving customer experience.

Sustainable financing reached approximately £9 billion in 2025, contributing to a total of over £57 billion since 2022. Partnerships supporting social housing and green bonds highlight Lloyds’ commitment to environmental goals and social impact.

Regulatory and Legal Risks Under Close Watch

The Group continues to monitor regulatory risks, particularly the ongoing uncertainty surrounding motor finance commission arrangements. The Supreme Court’s pending judgment on related appeals and the Financial Conduct Authority’s forthcoming decisions could influence future provisions and redress obligations.

Additionally, Lloyds is engaged in various legal and regulatory matters, including tax disputes and litigation related to LIBOR and interchange fees, which remain areas of potential financial impact but are currently not expected to materially affect the Group’s financial position.

Outlook and Market Position

Reaffirming its 2025 guidance, Lloyds projects underlying net interest income of around £13.5 billion, operating costs near £9.7 billion, and an asset quality ratio of approximately 25 basis points. The Group also maintains its 2026 targets of a cost-to-income ratio below 50%, return on tangible equity above 15%, and strong capital generation.

With a strong balance sheet, ongoing digital transformation, and a clear strategic focus, Lloyds Banking Group is well positioned to deliver sustainable growth and shareholder value in a challenging economic environment.