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Lloyds Banking Group has notched up a higher-than-expected annual profit haul despite significant provisions for motor finance compensation.
The high street lending giant reported a 12% jump in pre-tax profits to £6.66 billion for 2025, up from £5.97 billion in 2024 – and upped its outlook for key performance measures in 2026.
This came in spite of £968 million in so-called remediation costs, including another £800 million charge set aside in the bank’s third quarter to compensate customers unfairly sold a car loan, bringing the group’s total bill so far for the saga to £1.95 billion.
The annual profit rise followed a bounce back in the final three months of 2025, with profits more than doubling to a higher-than-forecast £1.98 billion from £824 million a year earlier.
Lloyds said it now expects underlying net interest income of around £14.9 billion for 2026, up from £13.6 billion in 2025.
The lender revealed underlying bad debt charges almost doubled last year to £795 million, up from £433 million in 2024 – though it said the total remained low and reflected a “strong and stable credit performance”.
Chief executive Charlie Nunn said: “The group demonstrated sustained strength in financial performance in 2025, including in the final quarter, with continued balance sheet and income growth, as well as strong cost discipline and credit performance.”
“Looking ahead to 2026 and the culmination of the five-year strategy we set out in 2022, our continued business momentum and strategic delivery enable us to upgrade guidance,” he added.
