Lloyds reports strong growth as UK economic conditions improve
Lloyds bank has reported a strong financial performance in the first half of the year, achieving income growth and showing continued momentum across the business.
The FTSE 100 giant, which includes Lloyd’s, Halifax and Bank of Scotland recorded a statutory profit after tax increase of £2.5bn, up 4 per cent year on year, with a high underlying profit of £3.6bn. The bank cited the surge in growth to strategic initiatives and enhanced digital capabilities as well improving UK economic conditions.
Strengthening household finances and returning business confidence created favourable conditions for growth across the bank’s business lines, with a net income of £8.9bn.
Increase in lending
Lloyd’s saw strong growth in lendings and deposits as underlying loans and advances to customers increased by £11.9bn in the first six months to £471bn, while growth across retail rose by £10.1bn. Commercial banking recorded a rise of £1.2bn.
Customer deposits also increased by 2 per cent to £493.9bn, while risk-weighted assets increased to £231.4bn, reflecting the impact of strong lending growth.
Net interest income remained steady, increasing by 5 per cent to £6.7bn, however operating costs rose by 4 per cent to £4.9bn due to inflationary pressures as well as business growth costs. Further increases were offset by cost savings and continuing cost discipline.
Returns for shareholders
Group chief executive Charlie Nunn said, “We have shown sustained strength in our financial performance in the first half of 2025, with income growth, cost discipline and robust asset quality, driving strong capital generation and increased shareholder distributions, with a 15% increase in the interim ordinary dividend,”
“Our strategic progress and sustained strength in our financial performance allows us to re-affirm our 2025 guidance and gives us confidence in our 2026 commitments. It also underpins our delivery of higher, more sustainable returns for our shareholders.”
Despite beating analyst expectations, analysts did not change their recommendation, citing the upcoming the upcoming outcome of the Supreme Court hearing into motor finance, with the group putting aside £1,150m to cover remediation costs to date.
Zoe Gillespie, wealth manager at RBC Brewin Dolphin, said, “Lloyds has delivered another strong set of results, with profits and income beating expectations. Despite interest rates being on a downward trajectory, the bank has also managed to strengthen its net interest margin and secure more customer deposits in a competitive UK banking environment,”
“That said, the big unknown remains the enquiry into mis-sold car financing products, and Lloyds is one of the most exposed financial institutions.”
Lloyds reaffirmed its 2025 guidance, and announced an increase to its interim dividend, up 15 per cent year on year, while expressing confidence in its 2026 target of delivering more than £1.5bn.