Lloyds increases dividend as profits jump by 5%
Underlying profits for the first half of the year rose 2% to £3.56bn. Lloyds intends to pay an interim dividend of 1.22p, equivalent to £731m, representing a rise of 15% on a year ago.
Profits were helped by a smaller-than-expected impairment charge for bad loans. City analysts had forecast a £591m provision, but the actual impairment was £442m, although this was still up from £101m at the same point in 2024.
Underlying profit for the trimester rose by 32% year on year to £2bn, earnings per share landed at 2.1 pence, and the cost-to-income ratio stood at 52.2%. Return on tangible equity rose 2.9 percentage points from the previous quarter to 15.5%.
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For the first six months of 2025, the lender's net income added 6% to £8.9bn, and earnings per share stood at 3.8 pence, up from 3.4 pence reported a year earlier.
The UK's biggest mortgage lender maintained its performance targets for the year, as improved house price expectations helped offset a decline in its economic outlook including higher unemployment expectations.
Lloyds said total lending to customers increased by £11.9bn over the period, or 3%, driven by UK mortgages with some 33,000 first-time buyers borrowing on a home.
Customer deposits also grew by £11.2bn, or 2%, following a strong season for ISAs, while more people moved money out of current accounts and into savings.
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"Our strategic progress and sustained strength in our financial performance allows us to re-affirm our 2025 guidance and gives us confidence in our 2026 commitments. It also underpins our delivery of higher, more sustainable returns for our shareholders," CEO Charlie Nunn said.
Lloyds is the first major UK lender to report earnings amid intensifying competition for deposit and mortgage market share among British lenders following a round of consolidation in the sector and heightened appetite from banks to boost income as interest rates fall.
The bank's performance numbers could be overshadowed in the coming days by the outcome of a landmark Supreme Court ruling on a probe into Britain's motor finance sector.
The bank did not set aside any additional cash to cover the potential costs of the UK motor finance scandal, which hampered previous results. It currently has £1.2bn to cover potential costs and compensation related to commission arrangements.
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