Highlights

  • FY25 profit before tax increased to GBP 6.7 billion with higher income across core banking activities.
  • Shareholder returns for 2025 are expected to total up to GBP 3.9 billion through dividends and buybacks.
  • 2026 guidance targets higher net interest income, improved returns, and continued capital generation.

In 2025, Lloyds Banking Group plc (LSE:LLOY) entered the second phase of its five-year strategy, continuing to deliver for customers, shareholders, and wider stakeholders. The full-year results highlighted revenue growth, increased profitability, capital generation, and shareholder returns of up to GBP 3.9 billion through dividends and buybacks. CEO Charlie Nunn emphasized that the Group’s ongoing strategic execution and business momentum have enabled an upgraded guidance for 2026, positioning Lloyds to build on its performance and further advance its long-term strategy. Shares responded positively, trading 0.36% higher at GBX 104.88 on 29 January 2026 following the update.

Revenue Growth and Profit Performance in FY25

For the year ended 31 December 2025, Lloyds Banking Group delivered statutory profit before tax of GBP 6.7 billion, compared with GBP 6.0 billion in 2024. Higher total income supported the result, partially offset by increased operating expenses and a higher impairment charge. Return on tangible equity stood at 12.9%, rising to 14.8% when excluding a third-quarter charge related to motor finance commission arrangements.

Underlying net interest income increased 6% year on year to GBP 13.6 billion, supported by a banking net interest margin of 3.06% and higher average interest-earning assets of GBP 462.9 billion. Underlying other income rose 9% to GBP 6.1 billion, driven by increased customer activity and contributions from strategic initiatives.

Costs, Impairments and Operational Metrics

Operating costs for FY25 totalled GBP 9.8 billion, up 3% year on year, reflecting strategic investments, business growth costs and inflationary pressures, partially offset by savings initiatives. Since 2021, the Group has delivered GBP 1.9 billion of gross cost savings through operating leverage and transformation programmes.

The underlying impairment charge stood at GBP 795 million, with an asset quality ratio of 17 basis points. Remediation costs totalled GBP 968 million, including GBP 800 million related to potential motor finance commission arrangements recognised in the third quarter.

Customer Lending and Deposit Trends

Underlying loans and advances to customers increased by GBP 22.0 billion to GBP 481.1 billion, with growth across Retail and Commercial Banking. Customer deposits rose GBP 13.8 billion to GBP 496.5 billion during the year, reflecting increases across both segments despite a modest reduction in balances during the fourth quarter.

Capital Position and Shareholder Returns

Lloyds generated 147 basis points of capital in FY25, or 178 basis points excluding the third-quarter charge. The pro forma CET1 ratio stood at 13.2% after dividends and share buybacks. Tangible net assets per share increased to 57.0 pence.

The Board recommended a final dividend of 2.43 pence per share, taking the total ordinary dividend for 2025 to 3.65 pence per share, up 15% year on year. A share buyback programme of up to GBP 1.75 billion was also announced, taking total capital returns for 2025 to up to GBP 3.9 billion.

2026 Financial Guidance

For 2026, Lloyds expects underlying net interest income of around GBP 14.9 billion and a cost-to-income ratio below 50%. The Group targets a return on tangible equity above 16%, capital generation above 200 basis points, and a CET1 ratio of approximately 13.0%.