Lloyds Banking Group (LLOY) Goldman Sachs 30th Annual European Financials Conference 2026 summary

Macroeconomic and client trends

• UK macro outlook remains stable, with minor adverse revisions to inflation, GDP, and unemployment forecasts for 2026, but overall stability persists.

• Lending book grew by £5.1bn in Q1, with growth across both Retail (£3.5bn) and Commercial (£2.8bn) segments.

• Retail and Commercial lending growth expected to continue in Q2, albeit at a slightly slower pace due to rate changes and uncertainties.

• No asset quality deterioration observed; early warning indicators remain stable across portfolios.

Net interest income and margin outlook

• Net interest income projected to exceed £14.9bn in 2026, with Q1 NII at £3.6bn, up 8% year-on-year.

• Net interest margin reached 3.17% in Q1, up 7bps quarter-on-quarter, driven by structural hedge tailwinds and mortgage refinancing headwinds.

• Structural hedge expected to contribute over £7bn in 2024 and over £8bn in 2027, with refinancing into higher-yielding markets.

• Mortgage completion margins slightly stronger recently, but competition in asset and liability markets remains intense.

Lending and deposit dynamics

• Lending volumes up £5.1bn in Q1, with broad-based growth across asset classes and sectors.

• Retail lending growth in Q2 expected to slow due to front-loaded demand in March and a successful legacy mortgage securitization.

• Strategic initiatives in cards and personal loans are supporting growth, though overall lending growth in 2026 may not match 2025 levels.

• Q1 deposits declined by £0.6bn, with Retail down £3.1bn and Commercial up £2.3bn; focus remains on retaining and growing relationship balances.

• Competitive deposit market persists, with strategic focus on value delivery and retention of key customer segments.