Lloyds Banking Group (LLOY) Q4 2025 earnings summary

Executive summary

• Strategic transformation accelerated in 2025, with significant digital and AI advancements, positioning for upgraded 2026 commitments and sustainable returns.

• Strong momentum and robust growth across business lines, meeting or exceeding guidance and increasing shareholder distributions.

• Upgraded 2026 guidance reflects confidence in continued income growth, operating leverage, and sustainable returns.

• Enhanced customer offerings and digital leadership, with over 9,000 technology hires since 2021.

• Strong capital generation enabled a 15% dividend increase and a £1.75bn share buyback.

Financial highlights

• Statutory profit after tax reached GBP 4.8 billion in 2025, up 6% year-on-year; RoTE was 12.9% (14.8% excluding Q3 motor provision).

• Net income for 2025 was GBP 18.3 billion, up 7% year-on-year; NII up 6%, OOI up 9%.

• Operating costs were GBP 9.76 billion, up 3% year-on-year; cost-income ratio at 58.6% (53.3% excluding remediation).

• Capital generation was 147 basis points (178 bps excluding motor provision); CET1 ratio at 13.2%.

• Impairment charge was GBP 795 million, with an asset quality ratio of 17bps, reflecting stable credit performance.

Outlook and guidance

• Upgraded 2026 RoTE target to greater than 16%.

• 2026 NII guidance set at GBP 14.9 billion, with margin expansion and continued balance sheet growth expected.

• Cost-income ratio targeted below 50% in 2026, with operating expenses under GBP 9.9 billion.

• Capital generation expected to exceed 200 basis points in 2026; CET1 ratio targeted at 13% by end of 2026.

• Basel 3.1 implementation in 2027 expected to reduce RWAs by GBP 6–8 billion.