2026 half year results

Lloyds Bank plc

2026 half year results

30 July 2026

Member of the Lloyds Banking Group

CONTENTS

FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and section 27A of the US Securities Act of 1933, as amended, with respect to the business, strategy, plans and/or results of Lloyds Bank plc together with its subsidiaries (the Lloyds Bank Group) and its current goals and expectations. Statements that are not historical or current facts, including statements about the Lloyds Bank Group's or its directors' and/or management's beliefs and expectations, are forward-looking statements. Words such as, without limitation, 'believes', 'achieves', 'anticipates', 'estimates', 'expects', 'targets', 'should', 'intends', 'aims', 'projects', 'plans', 'potential', 'will', 'would', 'could', 'considered', 'likely', 'may', 'seek', 'estimate', 'probability', 'goal', 'objective', 'deliver', 'endeavour', 'prospects', 'optimistic' and similar expressions or variations on these expressions are intended to identify forward-looking statements. These statements concern or may affect future matters, including but not limited to: projections or expectations of the Lloyds Bank Group's future financial position, including profit attributable to shareholders, provisions, economic profit, dividends, capital structure, portfolios, net interest margin, capital ratios, liquidity, risk-weighted assets (RWAs), expenditures or any other financial items or ratios; litigation, regulatory and governmental investigations; the Lloyds Bank Group's future financial performance; the level and extent of future impairments and write-downs; the Lloyds Bank Group's ESG targets and/or commitments; statements of plans, objectives or goals of the Lloyds Bank Group or its management and other statements that are not historical fact and statements of assumptions underlying such statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. Factors that could cause actual business, strategy, targets, plans and/or results (including but not limited to the payment of dividends) to differ materially from forward-looking statements include, but are not limited to: general economic and business conditions in the UK and internationally (including in relation to tariffs); imposed and threatened tariffs and changes to global trade policies; acts of hostility or terrorism and responses to those acts, or other such events; geopolitical unpredictability; the war between Russia and Ukraine; the escalation of conflicts in the Middle East; the tensions between China and Taiwan; political instability including as a result of any UK general election; market related risks, trends and developments; changes in client and consumer behaviour and demand; exposure to counterparty risk; the ability to access sufficient sources of capital, liquidity and funding when required; changes to the Lloyds Bank Group's or Lloyds Banking Group plc's credit ratings; fluctuations in interest rates, inflation, exchange rates, stock markets and currencies; volatility in credit markets; volatility in the price of the Lloyds Bank Group's securities; natural pandemic and other disasters; risks concerning borrower and counterparty credit quality; risks affecting defined benefit pension schemes; changes in laws, regulations, practices and accounting standards or taxation; changes to regulatory capital or liquidity requirements and similar contingencies; the policies and actions of governmental or regulatory authorities or courts together with any resulting impact on the future structure of the Lloyds Bank Group; risks associated with the Lloyds Bank Group's compliance with a wide range of laws and regulations; assessment related to resolution planning requirements; risks related to regulatory actions which may be taken in the event of a bank or Lloyds Bank Group or Lloyds Banking Group failure; exposure to legal, regulatory or competition proceedings, investigations or complaints; failure to comply with anti-money laundering, counter terrorist financing, anti-bribery and sanctions regulations; failure to prevent or detect any illegal or improper activities; operational risks including risks as a result of the failure of third party suppliers; conduct risk; risks related to new and emerging technologies, including artificial intelligence; technological changes and risks to the security of IT and operational infrastructure, systems, data and information resulting from increased threat of cyber and other attacks; technological failure; inadequate or failed internal or external processes or systems; risks relating to ESG matters, such as climate change (and achieving climate change ambitions) and decarbonisation, including the Lloyds Bank Group's or the Lloyds Banking Group's ability along with the government and other stakeholders to measure, manage and mitigate the impacts of climate change effectively, and human rights issues; the impact of competitive conditions; failure to attract, retain and develop high calibre talent; the ability to achieve strategic objectives; the ability to derive cost savings and other benefits including, but without limitation, as a result of any acquisitions, disposals and other strategic transactions; inability to capture accurately the expected value from acquisitions; and assumptions and estimates that form the basis of the Lloyds Bank Group's financial statements. A number of these influences and factors are beyond the Lloyds Bank Group's control. Please refer to the latest Annual Report on Form 20-F filed by Lloyds Bank plc with the US Securities and Exchange Commission (the SEC), which is available on the SEC's website at www.sec.gov, for a discussion of certain factors and risks. Lloyds Bank plc may also make or disclose written and/or oral forward-looking statements in other written materials and in oral statements made by the directors, officers or employees of Lloyds Bank plc to third parties, including financial analysts. Except as required by any applicable law or regulation, the forward-looking statements contained in this document are made as of today's date, and the Lloyds Bank Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document whether as a result of new information, future events or otherwise. The information, statements and opinions contained in this document do not constitute a public offer under any applicable law or an offer to sell any securities or financial instruments or any advice or recommendation with respect to such securities or financial instruments.

CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)

CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

FINANCIAL REVIEW

Principal activities

Lloyds Bank plc (the Bank), together with its subsidiary undertakings (the Group), provide a wide range of banking and financial services. The Group's revenue is earned through interest and fees on a broad range of financial services products including current and savings accounts, mortgages, credit cards, motor finance and unsecured loans to retail customers and loans and other products to commercial clients.

Income statement

The Group's statutory profit before tax for the first half of 2026 was £3,556 million, 29% higher than in the first half of 2025, reflecting higher total income and broadly stable operating expenses, partly offset by a higher impairment charge. Profit after tax was £2,651 million (half-year to 30 June 2025: £1,940 million).

Total income for the first half of 2026 was £9,845 million, an increase of 11% on the prior period (half-year to 30 June 2025: £8,835 million). Net interest income of £7,125 million was up 9% on the prior year (half-year to 30 June 2025: £6,546 million), driven by a higher margin, resulting from stronger structural hedge income as eligible balances were reinvested into a higher rate environment, partially offset by asset margin compression, in particular in the UK mortgages portfolio, alongside lending growth driving higher average interest-earning assets.

Other income increased by 19% to £2,720 million (half-year to 30 June 2025: £2,289 million), as a result of higher net fee and commission income, net trading income and other operating income. Net fee and commission income increased as a result of strengthening customer activity, while other operating income increased as a result of vehicle fleet growth and higher average vehicle rental values in UK Motor Finance. The higher net trading income reflected market movements in the period.

Operating expenses of £5,677 million were broadly stable, reflecting business growth costs and inflationary pressures, offset by continued cost savings, a lower severance expense and plateauing investment as this strategic cycle culminates. Within this, operating lease depreciation increased due to a charge in the second quarter for declines in used car prices alongside fleet growth and the depreciation of higher value vehicles, partially offset by continued risk mitigation.

As part of operating expenses, a remediation charge of £31 million was recognised by the Group in the first half of 2026 (half-year to 30 June 2025: £35 million) across a small number of programmes. There have been no further charges relating to motor finance commission arrangements. The FCA published policy statement PS26/3 in March 2026 with final rules for its motor finance redress schemes. Four challenges to the FCA's schemes have been raised, three by lenders and one from a consumer group and the implementation of the scheme has now been delayed, given the Upper Tribunal hearing is not expected before December 2026. The Group will closely monitor how these challenges develop and consider any potential impact to the existing provision. Despite these uncertainties, the current provision continues to represent the Group's current best estimate of the potential impact of the motor finance issue.

The impairment charge was £612 million, up from £442 million in the half-year to 30 June 2025. The higher charge includes a net charge from updated multiple economic scenarios (MES) reflecting the impact of the deterioration in economic outlook in the first quarter due to the Middle East conflict, net of modest second quarter updates. The MES impact for the half year captures a higher unemployment rate peak and softer house price outlook compared to the year end view. This is partly offset by the release of the post model adjustment for global tariff and political disruption risks within Commercial Banking in the first quarter, now considered to be adequately captured within assumptions and resulting modelled provisions. Credit performance remains strong and stable across Retail and Commercial Banking with arrears low and stable in all portfolios.

The Group recognised a tax expense of £905 million in the first half of 2026 (half-year to 30 June 2025: £818 million). An explanation of the relationship between the tax expense and the Group's accounting profit for the period is set out on page 27.

FINANCIAL REVIEW (continued)

Balance sheet

As at 30 June 2026, total assets were £25,044 million higher at £656,379 million (31 December 2025: £631,335 million). Financial assets at amortised cost were £16,310 million higher at £540,777 million including increases in loans and advances to customers of £8,764 million, reverse repurchase agreements of £3,253 million, debt securities of £3,145 million and loans and advances to banks of £868 million. Amounts due from fellow Lloyds Banking Group undertakings increased by £280 million.

Loans and advances to customers included growth of £1,773 million in UK mortgages, net of the impact of a securitisation of £1,841 million of primarily legacy Retail mortgages in the second quarter, alongside growth across credit cards, UK Retail unsecured loans, UK Motor Finance and the European retail business, totalling £2,923 million. Lending balances also increased in Commercial Banking by £4,458 million, reflecting growth across Corporate and Institutional Banking and Business and Commercial Banking, net of continued government-backed lending repayments. Reverse repurchase agreements and debt securities increased in response to market conditions. Cash and balances at central banks increased by £4,314 million to £42,034 million and financial assets at fair value through other comprehensive income of £40,365 million increased by £4,108 million, reflecting changes in liquidity holdings. Other assets were £1,002 million higher, largely reflecting increased settlement balances and vehicle fleet growth within UK Motor Finance.

Total liabilities were £24,126 million higher at £613,481 million (31 December 2025: £589,355 million). Deposits from banks increased by £2,189 million to £5,274 million while customer deposits of £466,996 million increased by £1,789 million in the period. Retail deposits of £321,836 million were down by £3,333 million, primarily due to disciplined pricing decisions throughout the tax year-end. Retail UK current account balances were broadly stable, supported by the strength of the Group's franchise and proposition. Commercial Banking deposits increased by £4,949 million in the period, with growth in targeted sectors.

Repurchase agreements at amortised cost increased by £7,033 million to £44,600 million. Amounts due to fellow Lloyds Banking Group undertakings increased by £1,670 million to £5,522 million. Debt securities in issue at amortised cost increased by £10,674 million, to £62,806 million due to new issuances in the period while subordinated liabilities decreased to £7,582 million as a result of redemptions in the period. Other liabilities increased by £1,108 million to £12,071 million, largely due to higher settlement balances.

Total equity was £42,898 million at 30 June 2026 (31 December 2025: £41,980 million). Profit for the period was partially offset by dividends paid and movements in the cash flow hedge reserve.

Capital

The Group's common equity tier 1 (CET1) capital ratio remained at 13.6% at 30 June 2026 (31 December 2025: 13.6%). Profit for the first half of the year was broadly offset by the payment of ordinary dividends, the accrual for foreseeable ordinary dividends, distributions on other equity instruments and an increase in risk-weighted assets.

Risk-weighted assets increased by £3,939 million to £198,239 million at 30 June 2026 (31 December 2025: £194,300 million), largely reflecting the impact of strong customer lending growth, partially offset by continued optimisation, including risk transfer and securitisation activity across Commercial Banking and Retail.

The Group's total capital ratio reduced to 19.8% at 30 June 2026 (31 December 2025: 20.1%), with the increase in CET1 capital and an AT1 instrument issuance more than offset by AT1 instrument calls and the increase in risk-weighted assets.

The Group's UK leverage ratio reduced to 5.1% at 30 June 2026 (31 December 2025: 5.2%). The increase in total tier 1 capital was more than offset by an increase in the leverage exposure measure. The latter primarily reflects strong customer lending growth, including off-balance sheet commitments, and an increase in holdings of securities within the liquidity portfolio.

Reporting dates

Going forwards, Lloyds Bank plc will announce its results at the half-year and the full year only, with the next results announcement for the Group being for the full year 2026.

RISK MANAGEMENT

PRINCIPAL RISKS AND UNCERTAINTIES

The most significant risks faced by the Group are detailed below. External risks may impact delivery against the Group's recently updated long-term strategic objectives. They include, but are not limited to, macroeconomic and geopolitical uncertainties and inflation trends which could have implications for both consumers and businesses.

The Group's credit performance remains strong and stable; the portfolios are well positioned amid macroeconomic uncertainty and are proactively monitored to identify signs of stress.

Ongoing oversight of operational resilience risks and continuous enhancements to controls remains critical, particularly in relation to cybersecurity, IT stability and supplier risk. The Group remains committed to ensuring lessons are learned from internal and external events of disruption, which may have an impact on the Group's ability to continue operations.

The latest position on the motor finance commission redress scheme is detailed on page 41.

The Group remains committed to modernising its technology and strengthening capabilities to ensure safe and responsible use of models and tools such as artificial intelligence.

Risk management is fundamental to our business model and strategy, and enables the Group to embrace opportunities responsibly and deliver sustainable growth. Our strong risk management culture, underpinned by Lloyds Banking Group's risk management framework (RMF), is vital in safeguarding the Group, colleagues and customers against both existing and emerging risks.

During 2026, the Group has continued to make progress in its risk transformation journey by standardising practices and streamlining processes, enabling simplification and efficiency. The RMF ensures processes are in place to facilitate robust risk management and effective decision making to deliver good outcomes for our customers.

The Group has 10 principal risks, underpinned by a suite of level two risks which are reviewed and reported regularly to the Board. The principal risks consist of capital risk, climate risk, compliance risk, conduct risk, credit risk, economic crime risk, liquidity risk, market risk, model risk and operational risk.

Further information regarding the Group's principal risks is available on pages 22 to 62 of the Group's 2025 annual report and accounts.

CAPITAL RISK

Capital resources

An analysis of the Group's capital position as at 30 June 2026 is presented in the following table.

CAPITAL RISK (continued)

Movements in CET1 capital resources

The key movements are set out in the table below.

¹    Reflects the reversal of the brought forward accrual for the interim ordinary dividend at 31 December 2025, net of the accrual recognised at 30 June 2026.

CET1 capital resources increased by £493 million during the period, with profit for the first half of the year largely offset by the payment of ordinary dividends, the accrual for foreseeable ordinary dividends and distributions on other equity instruments.

Movements in total capital

The Group's total capital ratio reduced to 19.8% at 30 June 2026 (31 December 2025: 20.1%), with the increase in CET1 capital and an AT1 instrument issuance more than offset by AT1 instrument calls and the increase in risk-weighted assets.

Risk-weighted assets

¹    Threshold risk-weighted assets are included within the Standardised (STA) Approach.

²    Threshold risk-weighted assets reflect the element of deferred tax assets that are permitted to be risk-weighted instead of being deducted from CET1 capital.

Risk-weighted assets increased by £3.9 billion to £198.2 billion at 30 June 2026 (31 December 2025: £194.3 billion), largely reflecting the impact of strong customer lending growth, partially offset by continued optimisation, including risk transfer and securitisation activity across Commercial Banking and Retail.

CAPITAL RISK (continued)

Leverage ratio

The table below summarises the component parts of the Group's leverage ratio.

¹    Includes deconsolidation adjustments that relate to the deconsolidation of certain Group entities that fall outside the scope of the Group's regulatory capital consolidation and adjustments to exclude lending under the UK Government's Bounce Back Loan Scheme (BBLS).

Analysis of leverage movements

The Group's UK leverage ratio reduced to 5.1% at 30 June 2026 (31 December 2025: 5.2%). The increase in total tier 1 capital was more than offset by an increase in the leverage exposure measure. The latter primarily reflects strong customer lending growth, including off-balance sheet commitments, and an increase in holdings of securities within the liquidity portfolio.

Pillar 3 disclosures

The Group will publish a condensed set of half-year Pillar 3 disclosures in the first half of August. A copy of the disclosures will be available to view at: www.lloydsbankinggroup.com/investors/financial-downloads.html.

CREDIT RISK

Overview

Credit performance has remained strong and stable in the first half of 2026, despite continued macroeconomic uncertainty. The Group maintains a prudent approach to credit risk appetite and risk management, supported by strong credit origination criteria, including affordability tests and robust LTVs within secured portfolios.

Across both the UK mortgages and unsecured portfolios, new to arrears and flows to default have remained low and stable. Credit performance in the Commercial Banking portfolio also remains strong and stable, with low levels of defaults. The Group continues to closely monitor the impacts of the economic and geopolitical environment through a comprehensive suite of early warning indicators and robust governance arrangements, alongside targeted risk mitigation action plans which are in place to support customers and protect the Group's position.

The impairment charge in the first half of 2026 was £612 million, up from £442 million in the prior year, and includes a net charge from updates to the Group's macroeconomic outlook. This largely reflects the impact from the deterioration in economic outlook in the first quarter due to the Middle East conflict, net of modest second quarter updates. The MES impact for the half-year captures a higher unemployment peak and softer house price outlook compared to the position at 31 December 2025. This is partly offset by the release of the post model adjustment for global tariff and political disruption risks within Commercial Banking in the first quarter, now considered to be adequately captured within assumptions and resulting modelled provisions. Excluding macroeconomic updates, the Group's impairment charge has increased compared to the prior year driven by Retail, reflecting model updates, a more normalised level of impairment alongside balance sheet growth, and lower one-off provision releases in Commercial Banking. The total expected credit loss (ECL) allowance was lower in the first half of 2026 at £3,147 million (31 December 2025: £3,201 million), following the securitisation of primarily legacy Retail mortgages in the second quarter.

Stage 2 loans and advances to customers are lower at £40,793 million compared to the end of 2025 (31 December 2025: £42,482 million) following securitisation activity and strong credit performance. Securitisation activity and an increase in new lending also resulted in the proportion of Stage 2 loans and advances being diluted to 8.6% of total lending (31 December 2025: 9.1%), with stable Stage 2 coverage at 2.7% (31 December 2025: 2.7%).

Stage 3 loans and advances to customers are lower at £6,250 million versus the prior year (31 December 2025: £6,519 million), and as a percentage of total lending are lower at 1.3% (31 December 2025: 1.4%), following continued strong performance, securitisation and repayments in Commercial Banking. Stage 3 coverage increased to 17.0% (31 December 2025: 15.9%).

Prudent risk appetite and risk management

•  The Group continues to take a proactive approach to credit risk management. This is driven by prudent risk appetite and robust oversight, particularly in response to the ongoing challenges within the external environment. Risk appetite firmly aligns to the Group's strategy, supporting our customers through ongoing economic uncertainties in both global and domestic markets

•  Sector, asset and product concentrations within the portfolios are closely monitored and controlled, with mitigating actions in place as appropriate. Sector and product risk parameters help to manage the Group's exposure to higher risk and cyclical sectors, segments and asset classes

•  The Group's effective risk management seeks to enable early identification and active management of customers and counterparties who may be showing signs of distress

•  The Group continues to support its customers to ensure they receive appropriate levels of assistance as required

• 

CREDIT RISK (continued)

Impairment charge (credit) by division

Total expected credit loss allowance

CREDIT RISK (continued)

Total expected credit loss allowance sensitivity to economic assumptions

The measurement of ECL reflects an unbiased probability-weighted range of possible future economic outcomes. The Group achieves this by generating four economic scenarios to reflect the range of outcomes; the central scenario reflects the Group's base case assumptions used for medium-term planning purposes, an upside and a downside scenario are also selected together with a severe downside scenario. If the base case moves adversely, it generates a new, more adverse downside and severe downside which are then incorporated into the ECL. Consistent with prior years, the base case, upside and downside scenarios carry a 30% weighting; the severe downside is weighted at 10%.

The following table shows the Group's ECL for the probability-weighted, upside, base case, downside and severe downside scenarios. The stage allocation for an asset is based on the overall probability-weighted probability of default and hence the staging of assets is constant across all the scenarios. In each economic scenario the ECL for individual assessments is held constant reflecting the basis on which they are evaluated. Judgemental adjustments applied through changes to model inputs or parameters, or more qualitative post model adjustments, are apportioned across the scenarios in proportion to modelled ECL where this better reflects the sensitivity of these adjustments to each scenario. The probability-weighted view shows the extent to which a higher ECL allowance has been recognised to take account of multiple economic scenarios relative to the base case; the uplift being £339 million compared to £363 million at 31 December 2025.

Total ECL allowance by scenario

CREDIT RISK (continued)

Loans and advances to customers and expected credit loss allowance

¹    Contains central fair value hedge accounting adjustments.

²    UK Motor Finance includes £250 million relating to provisions against residual values of vehicles subject to finance leases.

CREDIT RISK (continued)

Loans and advances to customers and expected credit loss allowance (continued)

¹    Contains central fair value hedge accounting adjustments.

²    UK Motor Finance includes £243 million relating to provisions against residual values of vehicles subject to finance leases.

CREDIT RISK (continued)

UK mortgages product analysis

¹    Excluding repossessions.

²    Value of loans represents gross book value of mortgages more than three months in arrears. These accounts are a subset of total Stage 3 given the exclusion of accounts in possession and those meeting other Stage 3 criteria.

³    Average loan to value is calculated as total loans and advances as a percentage of the total indexed collateral of these loans and advances.

LIQUIDITY RISK

Overview

The Group's funding and liquidity position remains strong, with a loan to deposit ratio of 101% as at 30 June 2026 (31 December 2025: 99%). Total wholesale funding¹ increased to £77.3 billion as at 30 June 2026 (31 December 2025: £66.9 billion). The Group maintains access to diverse sources and tenors of funding.

The Group's liquid assets continue to exceed the regulatory minimum and internal risk appetite, with a liquidity coverage ratio (LCR)² of 134% as at 30 June 2026 (31 December 2025: 135%). The net stable funding ratio³ is robust at 118% (31 December 2025: 119%). At 30 June 2026, the Group had £103.8 billion of highly liquid unencumbered LCR eligible assets, based on a monthly rolling average over the last 12 months post any liquidity haircuts (31 December 2025: £104.5 billion). These assets are available to meet cash and collateral outflows and regulatory requirements.

The banking business also has a significant amount of non-LCR eligible liquid assets which are eligible for use in a range of central bank or similar facilities. Future use of such facilities will be guided by prudent liquidity management and economic considerations, with external market conditions factored in. The Group's credit ratings remain well positioned and continue to reflect the strength of the Group's management and franchise, along with its robust financial performance and capital and funding position. In May 2026, Fitch upgraded senior unsecured ratings for Lloyds Bank plc following a methodology update.

Reconciliation of Group funding to the balance sheet

¹    The Group has revised its definition of wholesale funding to comprise debt securities in issue and subordinated liabilities only. Deposits from banks are no longer included, reflecting the behavioural liquidity characteristics of bank depositors. Comparatives have been represented on a consistent basis.

²    Based on an average of month-end observations over the last 12 months.

³    Based on an average of the last four quarter-end observations.

Analysis of term issuance in the half-year to 30 June 2026

¹    Primarily Australian dollar and Japanese Yen.

²    Securitisation includes externally issued notes from significant risk transfer transactions.

CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)