Lloyds profit slides 36 per cent after hiking motor finance provisions
Lloyds Banking Group recorded a major hit to profit in the third quarter after the group was forced to nearly-double its provisions for the motor finance scandal.
The bank posted a third-quarter profit before tax of £1.2bn, falling 36 per cent from the £1.8bn recorded in 2024.
For the year-to-date the FTSE 100 titan has pocketed £4.7bn, down nine per cent from £5.1bn for the same period last year.
The results come just two weeks after Lloyds raised its provisions for the car mis-selling scandal to £2bn with an extra £800m set aside.
Lloyds’ return on tangible equity, a key profit metric, came in at 7.5 per cent for the third quarter, slicing more than half from the 15.2 per cent recorded in 2024.
Still, the group’s net interest income swelled seven per cent in the quarter to £3.5bn.
Customer deposits increased by three per cent for the year to date to £496.7bn, marking a £14bn rise.
The banking giant revised its 2025 guidance with underlying net interest income expected to come in at £13.6bn. This was a modest increase from previous expectations of £13.5bn.
Operating costs are expected to come in at near £9.7bn.
Earlier this month, Lloyds acquired the remaining 49.9 per cent of Schroders Personal Wealth (SPW) from the asset manager, handing the bank sole control of the business.
The group serves around 60,000 with near £17bn in assets and comes as part of Lloyds’ plan to beef up its wealth offering.
Jonathan Pierce, banking analyst at Jefferies, said: “A slight beat on income and pre-provision profit which is welcome, but ultimately these numbers were very in-line, clearing the way for what we expect to be a much more exciting update early next year.
“However, the balance sheet momentum cannot be ignored with loans up another 1.3 per cent in the quarter and deposits continuing to increase.”
Lloyds boss takes aim at FCA
Charlie Nunn, the bank’s chief executive, said: “Strong capital generation was supported by income growth, cost discipline and strong asset quality in the first nine months of 2025, despite the impact of the additional motor finance charge in the third quarter
“Our strategic progress combined with this financial performance gives us confidence in our performance for the year and our 2026 guidance.”
Nunn has taken swipes at the Financial Conduct Authority over the last week following the hefty additional provision.
The banking chief has claimed: “When you look at the implication of what’s been proposed by the FCA, it’s going to potentially take 20 years of profitability off the car finance industry.”
He also warned the consequences of the scheme could hamper the “investability of the UK”.
In May, Nunn told the Treasury Committee in May there was “no evidence of harm” in the firm’s operations in the car financing market as he faced pressing questions from MPs.
The sentiment from Lloyds was echoed across the firm’s banking peers with Barclays and FTSE 250 lender Close Brothers each taking a jab at the FCA after raising provisions.