Lloyds Banking Group has notched up a higher-than-expected annual profit haul despite significant provisions for motor finance compensation.<\/p>\n
The high street lending giant reported a 12% jump in pre-tax profits to \u00a36.66 billion for 2025, up from \u00a35.97 billion in 2024 \u2013 and upped its outlook for key performance measures in 2026.<\/p>\n
This came in spite of \u00a3968 million in so-called remediation costs, including another \u00a3800 million charge set aside in the bank\u2019s third quarter to compensate customers unfairly sold a car loan, bringing the group\u2019s total bill so far for the saga to \u00a31.95 billion.<\/p>\n
The annual profit rise followed a bounce back in the final three months of 2025, with profits more than doubling to a higher-than-forecast \u00a31.98 billion from \u00a3824 million a year earlier.<\/p>\n
Lloyds said it now expects underlying net interest income of around \u00a314.9 billion for 2026, up from \u00a313.6 billion in 2025.<\/p>\n
The lender revealed underlying bad debt charges almost doubled last year to \u00a3795 million, up from \u00a3433 million in 2024 \u2013 though it said the total remained low and reflected a \u201cstrong and stable credit performance\u201d.<\/p>\n
Chief executive Charlie Nunn said: \u201cThe group demonstrated sustained strength in financial performance in 2025, including in the final quarter, with continued balance sheet and income growth, as well as strong cost discipline and credit performance.\u201d<\/p>\n
\u201cLooking ahead to 2026 and the culmination of the five-year strategy we set out in 2022, our continued business momentum and strategic delivery enable us to upgrade guidance,\u201d he added.<\/p>\n
Chancellor Rachel Reeves talks with Lloyds Banking Group CEO Charlie Nunn (Oli Scarff\/PA) \u00b7 Oli Scarff <\/p>\n
The group said it would increase returns for shareholders, with plans for up to another \u00a31.75 billion in share buybacks, on top of a 15% increase in the dividend for 2025.<\/p>\n
It also revealed it would share out a \u00a3405 million share bonus pool among workers, up 10% on 2024, \u201creflecting financial performance and delivery against the strategy\u201d.<\/p>\n
Lloyds slightly upgraded its outlook for the wider economy in 2026, saying it now expects the gross domestic product to rise by 1.2% over the year and is forecasting house price growth to pick up to 1.6%, boosted by an expected two interest rate cuts this year.<\/p>\n
But it also predicts unemployment to pick up to 5.3% in the first half of the year.<\/p>\n
Mr Nunn said the group was doubling down on investment in generative artificial intelligence (AI), which he said had directly provided a \u00a350 million profit boost last year through both revenue gains and cost savings.<\/p>\n
He expects this benefit to double to around \u00a3100 million in 2026, with the group currently running 800 AI models across its operations to boost revenues, staff productivity and help cut costs.<\/p>\n
He said rather than cutting jobs in response to the AI rollout, the firm was looking to reskill its 64,0000 workers, though he admitted the group would \u201creduce some jobs in some areas\u201d amid the digital push.<\/p>\n
On motor finance, the group said it is expecting the results of the Financial Conduct Authority (FCA) consultation into its proposed compensation scheme in March.<\/p>\n
Under the current proposals, about 14 million car finance deals could be eligible for compensation, with people estimated to get an average of \u00a3700 per agreement.<\/p>\n
But the regulator\u2019s plans have been met with significant pushback from lenders.<\/p>\n
Mr Nunn said Lloyds has set out suggestions for reform of the scheme, including linking it more closely to harm suffered by consumers, adding \u201cwe didn\u2019t think the way the compensation was set out was the right way to go about it\u201d.<\/p>\n
Gary Greenwood, banking expert at Shore Capital, said while the annual figures beat expectations, \u201cthe key uncertainty remains the outcome of the FCA\u2019s review into motor finance commission\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"Lloyds Banking Group has notched up a higher-than-expected annual profit haul despite significant provisions for motor finance compensation.…\n","protected":false},"author":2,"featured_media":728556,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[51,163771,46560,114729,16,15],"class_list":{"0":"post-728555","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-business","9":"tag-charlie-nunn","10":"tag-lloyds-banking-group","11":"tag-motor-finance","12":"tag-uk","13":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115978411140056479","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/728555","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=728555"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/728555\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/728556"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=728555"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=728555"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=728555"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}