2025 Q1 Interim Management Statement

Lloyds Banking Group plc

Q1 2025 Results

Interim management statement

1 May 2025

RESULTS FOR THE THREE MONTHS ENDED 31 MARCH 2025

"In the first quarter of 2025, the Group delivered sustained strength in financial performance. In particular, net income continues to grow, following the upward trajectory established in the second half of last year. We maintained our cost discipline and asset quality remains resilient. 

We continue to make good progress on our strategic transformation and deliver innovative ways for our customers to manage their financial needs and achieve their financial aspirations, in line with our purpose of Helping Britain Prosper. This supports our ambition of higher, more sustainable returns that will underpin delivery for all of our stakeholders. Our differentiated business model stands out in the context of recent market volatility and economic uncertainty and helps support UK households and businesses as they further strengthen their financial resilience. Underpinned by our financial performance, strategic execution and franchise strength, we remain confident in the outlook for Lloyds Banking Group and in our 2025 and 2026 guidance."

Charlie Nunn, Group Chief Executive

Sustained strength in financial performance¹

•  Statutory profit after tax of £1.1 billion (three months to 31 March 2024: £1.2 billion) with net income up 4% and reduced volatility more than offset by higher operating costs and a higher impairment charge. Robust return on tangible equity of 12.6% (three months to 31 March 2024: 13.3%)

•  Underlying net interest income of £3.3 billion, up 3% year on year and up 1% versus the fourth quarter of 2024. This reflected a banking net interest margin of 3.03%, up 8 basis points year on year (up 6 basis points compared to the fourth quarter of 2024), alongside higher average interest-earning banking assets of £455.5 billion

•  Underlying other income of £1.5 billion, 8% higher than the prior year and 1% higher than the fourth quarter of 2024, driven across businesses by strengthening customer activity and the benefit of strategic initiatives

•  Operating lease depreciation of £355 million, higher than the £283 million in the first quarter of 2024 as a result of fleet growth, the depreciation of higher value vehicles and declines in used electric car prices over 2024

•  Operating costs of £2.6 billion, up 6%, combining inflationary pressures, timing of strategic investment including planned higher severance front-loaded into the first quarter of 2025 and business growth costs, partly offset by cost savings and continued cost discipline

•  Resilient asset quality with underlying impairment charge of £309 million and an asset quality ratio of 27 basis points. Excluding the impact of updates to the economic outlook, the asset quality ratio was 24 basis points. The portfolio remains well-positioned with stable and benign credit performance in the quarter

•  Strong growth in lending and deposits. Underlying loans and advances to customers increased by £7.1 billion in the quarter to £466.2 billion, led by UK mortgages growth of £4.8 billion. Customer deposits increased in the quarter by £5.0 billion to £487.7 billion, with £2.7 billion growth in Retail and £2.3 billion in Commercial Banking

•  Risk-weighted assets of £230.1 billion, up £5.5 billion in the quarter, reflecting strong lending growth and a temporary c.£2.5 billion increase primarily due to hedging activity expected to reverse by the third quarter

•  Capital generation of 27 basis points; strong underlying banking build, impacted by front-loaded severance and temporary risk-weighted asset impacts primarily from hedging activity. CET1 ratio of 13.5%

•  Tangible net assets per share of 54.4 pence, up by 2.0 pence in the quarter from attributable profit alongside unwind of the cash flow hedge reserve

2025 guidance reaffirmed

Based on our current macroeconomic assumptions, for 2025 the Group continues to expect:

•  Underlying net interest income of c.£13.5 billion

•  Operating costs of c.£9.7 billion

•  Asset quality ratio of c.25 basis points

•  Return on tangible equity of c.13.5%

•  Capital generation of c.175 basis points²

¹  See the basis of presentation on page 14.

²  Excluding capital distributions. Inclusive of ordinary dividends received from the Insurance business in February of the following year.


 

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