Source: Sharecast
The UK's biggest mortgage provider posted pre-tax earnings of £6.7bn, beating forecasts of £6.4bn. It also lifted its performance estimates for 2026, including a return on tangible equity - a key metric - of more than 16% compared with 12.9% last year and underlying net interest income of £14.9bn.
It also announced a share buyback programme of up to £1.75bn and said it would now review excess capital distributions in addition to the ordinary dividend every half year. Shareholders will receive an extra £1.4bn as the bank lifted its final dividend to 2.43p a share, from 2.11p a year earlier.
Underlying net interest income rose £13.6bn, reflecting a net interest margin of 3.06%, up 11 basis points year-on-year, alongside higher average interest-earning banking assets of £462.9bn.
Remediation costs were £968, up from £899m in 2024 bringing the total provision recognised for motor finance to £1.95bn.
“Banks should do well when interest rates are rising so it is noteworthy that Lloyds achieved double-digit profit growth for 2025 despite rates moving lower through the course of the year," said AJ investment director Russ Mould.
“The performance is a vindication of the strategy adopted by CEO Charlie Nunn in 2022 to diversify the business and make it less reliant on the interest rate cycle. Growth in areas like insurance and wealth management are helping to achieve this goal and Lloyds’ lending is continuing to grow, helping to explain the better-than-expected performance. Returns are improving at pace and there is a sizeable increase in the dividend to cheer investors.
“That these numbers were greeted with a desultory waving of a small plastic flag rather than the presentation of an ornate garland by the market reflects the exceptional showing for the shares in recent times."
Reporting by Frank Prenesti for Sharecast.com
