2026 Q3 Interim Management Statement

Lloyds delivered strong profit growth, improved efficiency, and robust capital in Q3 2026.

What the company is saying

Lloyds Banking Group plc reports sustained financial strength for the nine months to 30 September 2026, highlighting a statutory profit before tax of £6.6 billion, up from £4.7 billion in the prior year. The company emphasizes continued income growth, with underlying net interest income rising 10% to £11,084 million and underlying other income up 10% to £4,996 million. Management, led by Group Chief Executive Charlie Nunn, frames the narrative around operational resilience, improved operating leverage, and stable credit performance, while noting a sharp reduction in remediation charges to £61 million from £912 million. The announcement stresses that the business model is performing well, operating costs are largely contained (up just 1% to £7,246 million), and strategic delivery is on track. Lloyds positions itself as nearing completion of its current strategic chapter, preparing to launch its new 'Accelerate 2030' strategy. The company reiterates confidence in meeting 2026 full-year guidance, citing strong capital generation and a CET1 ratio of 13.3% after dividends, buybacks, and the completed Curve acquisition.

What the data suggests

The disclosed figures show clear year-on-year improvement across all major financial metrics. Statutory profit before tax rose to £6,625 million from £4,678 million, and statutory profit after tax increased to £4,835 million from £3,322 million. Underlying net interest income grew by 10% to £11,084 million, with a banking net interest margin of 3.21%, up 17 basis points. Underlying other income also rose 10% to £4,996 million. Net income reached £14,819 million, up from £13,557 million, while the cost:income ratio improved sharply to 49.3% from 59.7%, reflecting better operational efficiency. Total costs fell to £7,307 million from £8,088 million, mainly due to lower remediation charges, even as operating costs edged up 1%. The asset quality ratio increased to 0.25% from 0.18%, indicating a modest rise in credit risk, but arrears remain low and stable. Customer deposits grew to £502.8 billion, and underlying loans and advances to customers increased to £495.5 billion. Capital strength remains robust, with a CET1 ratio of 13.3% and a total capital ratio of 17.9%. Tangible net assets per share declined slightly to 55.4p, down 1.6p, mainly due to capital distributions and hedge reserve movements. The evidence supports management’s claims of improved profitability, efficiency, and capital, with all headline metrics moving in a positive direction.

Analysis

The announcement is highly factual and supported by comprehensive, detailed financial disclosures for both the nine-month and third-quarter periods. All key profitability metrics (statutory and underlying profit, net income, EPS), operational figures (net interest income, cost:income ratio, asset quality, capital ratios), and balance sheet data are provided, with clear year-on-year and quarter-on-quarter comparisons. The only forward-looking claim is the reiteration of full-year 2026 guidance, which is proportionate and supported by the year-to-date results. There is no evidence of narrative inflation or overstatement; the tone is positive but justified by the strong improvement in profits, efficiency, and capital strength. No large capital outlay or long-dated, uncertain returns are highlighted, and the acquisition of Curve is referenced as completed, not aspirational.

Risk flags

• ●The asset quality ratio increased to 0.25% from 0.18%, reflecting a modest rise in credit risk. While management states arrears remain low and stable, any deterioration in macroeconomic conditions could pressure loan performance.
• ●Operating costs rose 1% year-on-year to £7,246 million, and total costs remain substantial. Inflationary pressures and business growth costs could challenge further efficiency gains.
• ●Tangible net assets per share declined by 1.6p to 55.4p, due to capital distributions and changes in the cash flow hedge reserve. Continued capital returns could further erode book value if not offset by profit growth.
• ●The company’s full-year 2026 guidance relies on continued income growth and stable credit conditions. Any adverse economic shocks or competitive pressures in the deposit market could impact delivery of these targets.

Bottom line

Lloyds Banking Group’s Q3 2026 results show strong profit growth, improved efficiency, and robust capital ratios, with statutory profit before tax up 42% to £6.6 billion and earnings per share up to 7.6p. The sharp reduction in remediation charges and higher net interest income drove much of the improvement, while operating costs were largely contained. Asset quality remains strong, though the rising asset quality ratio warrants monitoring. The CET1 ratio of 13.3% and total capital ratio of 17.9% provide a solid buffer for future capital returns. The company’s narrative is credible, with all key metrics trending positively and guidance for the full year 2026 appearing achievable based on year-to-date results. Investors should focus on credit trends, cost discipline, and the impact of the new 'Accelerate 2030' strategy in upcoming quarters. The main takeaway is that Lloyds is delivering on profitability and efficiency, with limited execution risk remaining for its 2026 targets.

Announcement summary

(LSE:LLOY) Lloyds Banking Group plc reported statutory profit before tax of £6.6 billion for the nine months ended 30 September 2026, up from £4.7 billion in the prior year period, reflecting higher total income and a lower remediation charge, partially offset by higher charges for operating lease depreciation and impairment. Return on tangible equity was 17.9%. Underlying net interest income was £11,084 million, a 10% increase year-on-year, with a banking net interest margin of 3.21%, up 17 basis points. Underlying other income was £4,996 million, up 10% year-on-year. Operating lease depreciation rose to £1,261 million, up 17%. Net income for the period was £14,819 million, up from £13,557 million. Operating costs increased to £7,246 million, up 1% year-on-year. Remediation costs were £61 million, down from £912 million. Total costs were £7,307 million, down from £8,088 million. Underlying profit before impairment was £7,512 million, up from £5,469 million. The underlying impairment charge was £930 million, up from £618 million. Underlying profit was £6,582 million, up from £4,851 million. Statutory profit after tax was £4,835 million, up from £3,322 million. Earnings per share were 7.6p, compared to 4.8p. Average interest-earning banking assets were £477.5 billion, up 4%. The cost:income ratio improved to 49.3% from 59.7%. The asset quality ratio was 0.25%, up from 0.18%. Customer deposits were £502.8 billion, up from £496.5 billion at year-end 2025. Underlying loans and advances to customers were £495.5 billion, up from £481.1 billion at year-end 2025. The loan to deposit ratio was 99%. The CET1 ratio was 13.3%. The total capital ratio was 17.9%. The MREL ratio was 31.2%. The UK leverage ratio was 5.0%. Risk-weighted assets were £247.4 billion, up from £235.5 billion. Wholesale funding was £109.9 billion. The liquidity coverage ratio was 143%. The net stable funding ratio was 123%. Tangible net assets per share were 55.4p, down 1.6p. For the third quarter of 2026, underlying net interest income was £3,806 million, underlying other income was £1,686 million, operating lease depreciation was £420 million, net income was £5,072 million, operating costs were £2,370 million, remediation was £22 million, total costs were £2,392 million, underlying profit before impairment was £2,680 million, underlying impairment charge was £313 million, underlying profit was £2,367 million, statutory profit before tax was £2,332 million, tax expense was £620 million, and statutory profit after tax was £1,712 million. The Group remains on track to deliver its full year 2026 guidance, including underlying net interest income of greater than £14.9 billion, cost:income ratio of less than 50%, asset quality ratio of c.25 basis points, return on tangible equity of greater than 16%, capital generation of greater than 200 basis points, and a CET1 ratio of c.13.0%.

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