Lloyds Banking Group (LLOY) — Company Research
Last Updated: 5 June 2026
Lloyds Banking Group plc is one of the UK's largest retail and commercial banking groups, serving around 30 million customers through brands including Lloyds Bank, Halifax, Bank of Scotland, Scottish Widows and Black Horse. Founded in 1695 and headquartered in London, it is a FTSE 100 constituent and a pure-play UK franchise, which makes it a direct read on the health of the British economy, mortgage market and interest-rate cycle. This report sets out the group's financials, segments, valuation and risks using only primary-source filings and official data.
1. Company Snapshot
| Field | Value |
|---|---|
| Company | Lloyds Banking Group plc |
| Ticker | LLOY (London, primary); LYG (NYSE ADR) |
| Exchange | London Stock Exchange — FTSE 100 |
| Sector | Finance & Banking |
| Group CEO | Charlie Nunn |
| Share price | 100.65p (4 June 2026) |
| Market capitalisation | ~£58.7bn (June 2026) |
| FY2025 revenue (statutory total income) | £19.4bn |
| FY2025 statutory profit before tax | £6.7bn |
| FY2025 profit after tax | £4.76bn |
| FY2025 basic EPS | 7.0p |
| FY2025 dividend per share | 3.65p (ordinary) |
| Total assets (31 Dec 2025) | £944bn |
| Employees | ~65,000 |
| CET1 ratio | 14.0% (13.2% pro forma after dividend and buyback) |
2. Bull and Bear Case
Bull Case
- Rising profitability and returns: Statutory profit before tax rose 12% to £6.7bn in 2025, with a return on tangible equity of 12.9% (14.8% excluding the motor finance charge) and a Q4 RoTE of 15.7%.
- Upgraded 2026 guidance: Management now targets a 2026 RoTE of greater than 16%, capital generation above 200bps and underlying net interest income of around £14.9bn, ahead of prior plans.
- Strong capital returns: A 15%-higher total ordinary dividend of 3.65p plus a buyback of up to £1.75bn took total 2025 shareholder distributions to about £3.9bn.
- Net interest margin tailwind: Banking net interest margin expanded to 3.06% for 2025 (3.10% in Q4), aided by the structural hedge and growth in interest-earning assets to £462.9bn.
- Franchise scale: Underlying loans grew 5% to £481bn and deposits reached £496bn, underlining the group's leading UK retail position.
Bear Case
- Motor finance overhang: Lloyds has provided a total of £1.95bn for motor finance commission redress through its Black Horse arm, and the ultimate cost could still differ materially as the FCA scheme is implemented.
- UK economic concentration: As a domestic bank, earnings are tied to UK growth, employment, the housing market and gilt yields, with limited geographic diversification.
- Rate-cut sensitivity: Margins benefit from higher rates; a faster fall in UK base rates would pressure net interest income over time.
- Rising impairments: The underlying impairment charge rose to £795m in 2025 from £431m in 2024, and 2026 guidance assumes an asset quality ratio of around 25bps.
3. Business Segments
Lloyds reports four divisions. The table shows 2025 net income (underlying basis) by segment.
| Segment | % of revenue | What it is |
|---|---|---|
| Retail | 59% | Mortgages, cards, loans, motor finance and current accounts for personal customers (£10.83bn net income). |
| Commercial Banking | 30% | Banking, markets and transaction services for businesses and corporates (£5.49bn). |
| Insurance, Pensions & Investments | 7% | Scottish Widows life, pensions, protection and investments (£1.28bn). |
| Equity Investments & Central Items | 4% | Equity investments (including Lloyds Development Capital) and central hedging and fair-value items (£0.71bn). |
Percentages are of the £18.3bn group net income for 2025. Explore live pricing on our Live Charts page.
4. How Lloyds Makes Money
How it works: Lloyds is overwhelmingly a UK lender. Its primary engine is net interest income — the margin between interest earned on £481bn of customer loans (dominated by mortgages) and the cost of its £496bn deposit base. Underlying net interest income was £13.6bn in 2025 at a banking net interest margin of 3.06%.
Unit economics: Other income from cards, transaction banking, motor-finance lease income and the Insurance, Pensions and Investments division (Scottish Widows) added £6.1bn, up 9%. Operating costs were £9.8bn, and the group targets a cost:income ratio below 50% for 2026.
Moat: Scale is the moat — around 30 million customers, the UK's largest deposit franchise and leading shares in mortgages and motor finance, supported by trusted brands (Lloyds, Halifax, Bank of Scotland) and a low-cost digital platform.
5. Financial Health
All figures below are taken from Lloyds Banking Group's annual results news releases and consolidated income statements. "Revenue" is statutory total income after net insurance finance income/expense. Lloyds reports in pounds sterling.
| Year | Revenue (total income, £m) | YoY % | GAAP EPS (p) | Adjusted EPS (p) | Dividend/share (p) | Long-term debt (subordinated liabilities, YE, £m) |
|---|---|---|---|---|---|---|
| 2021 | 15,759 | n/m | 7.5 | — | 2.00 | — |
| 2022 | 15,541 | -1.4% | 4.9 | — | 2.40 | — |
| 2023 | 18,629 | +19.9% | 7.6 | — | 2.76 | — |
| 2024 | 18,003 | -3.4% | 6.3 | — | 3.17 | 10,089 |
| 2025 | 19,422 | +7.9% | 7.0 | — | 3.65 | 9,894 |
2021 is shown on the pre-IFRS 17 basis, while 2022–2025 reflect IFRS 17; the 2021-to-2022 change is therefore marked n/m. Lloyds does not publish a separate group "adjusted EPS", so that column is left blank; the group's preferred non-statutory measure is underlying profit, which was £6.78bn in 2025. "Subordinated liabilities" is shown as the closest analogue to long-term debt for a bank; the group also carried £78.3bn of debt securities in issue at amortised cost at the end of 2025.
The quarterly trend below shows Lloyds' most recent reported quarters, most recent first, on the statutory basis.
| Quarter | Revenue (net income, £m) | Statutory PBT (£m) | Basic EPS (p) |
|---|---|---|---|
| Q4 2025 | 4,744 | 1,983 | 2.2 |
| Q3 2025 | 4,643 | 1,174 | 1.0 |
| Q2 2025 | 4,523 | 1,987 | 1.2 |
| Q1 2025 | 4,391 | 1,517 | 2.1 |
| FY 2025 | 18,301 | 6,661 | 7.0 |
The Q3 2025 dip reflects an £800m motor finance commission provision taken in that quarter. Net income in the quarterly table is shown on the underlying basis (which reconciles to the £18.3bn group total); FY2025 statutory total income was £19.4bn.
6. Valuation
Raw metrics, June 2026. Not opinions on whether the stock is cheap or expensive.
| Metric | Value |
|---|---|
| Market cap | ~£58.7bn (~58.3bn shares × 100.65p) |
| Trailing P/E (GAAP) | ~14.4x (100.65p / FY2025 basic EPS 7.0p) |
| P/E (forward) | ~11–12x (on 2026 RoTE guidance of >16% implying higher EPS) |
| P/S (TTM) | ~3.0x (market cap ~£58.7bn / FY2025 total income £19.4bn) |
| Price / tangible book | ~1.77x (100.65p / tangible net assets per share 57.0p) |
| Dividend yield | ~3.6% (FY2025 ordinary dividend 3.65p / 100.65p) |
| EV/EBITDA (TTM) | Not a meaningful metric for banks — deposits and debt securities in issue are operating liabilities, and banks do not report EBITDA. Total assets were £944bn at FY2025. |
| P/FCF | Not meaningful for a bank — free cash flow (operating cash flow minus capex) is not a relevant measure for a deposit-funded balance sheet. |
| Enterprise value | Not applicable to banks — the EV bridge (market cap + debt − cash) is not used for deposit-taking institutions whose borrowings fund lending operations. |
| 52-week high | 114.60p |
| 52-week low | 72.85p |
| CET1 ratio | 14.0% (13.2% pro forma) |
| Short interest (% of float) | — not published for this period. No aggregate net short position above the UK 0.5% disclosure threshold is listed for LLOY on the FCA short-position register; verify via the London Stock Exchange and FCA registers. |
| Days to cover | — not published for this period (see note above). |
7. Capital, Returns and Balance Sheet Strength
Lloyds ended 2025 with a CET1 ratio of 14.0% (13.2% on a pro forma basis after the increased dividend and announced buyback), risk-weighted assets of £235.5bn and a UK leverage ratio of 5.4%. Total assets were £944bn, with £481bn of customer loans and £496bn of customer deposits, a loan-to-deposit ratio of 97%. Tangible net assets per share rose to 57.0p. Capital generation was 147bps (178bps excluding the motor finance charge), and management has guided to paying down to a CET1 ratio of around 13.0% while generating more than 200bps in 2026. The group will now review excess capital distributions every half year.
8. Peer Comparison
| Peer | Market cap (June 2026) | Key 2025 metric |
|---|---|---|
| Lloyds Banking Group (LLOY) | ~£58.7bn | FY2025 statutory PBT £6.7bn; RoTE 12.9% |
| NatWest Group (NWG) | UK-listed; closest domestic peer | UK retail and commercial bank |
| Barclays (BARC) | UK-listed; diversified UK/US | Adds investment banking to UK retail |
| HSBC Holdings (HSBA) | ~£234bn | FY2025 revenue US$68.3bn; Asia-focused |
Lloyds is the UK's largest retail and motor-finance lender by balance, competing with NatWest, Barclays, Santander UK and Nationwide. Compare UK-listed financials on our Live Charts tool.
9. Insider and Director Dealings
Leadership: Lloyds is led by Group Chief Executive (CEO) Charlie Nunn, who set out the group's upgraded 2026 guidance at the full-year 2025 results.
No insider transactions were identified for this period (no director or PDMR dealings recorded). Lloyds director and senior-management share dealings are disclosed via Regulatory News Service (RNS) announcements on the London Stock Exchange; readers should consult the latest RNS filings for LLOY for any director transactions.
10. Key Risks
- Motor finance redress (Regulatory): A total £1.95bn provision has been taken for motor finance commission redress; the final cost depends on the FCA scheme's response rates, operating costs and any litigation, and could differ materially.
- UK economic concentration (Macro): As a domestic bank, earnings are highly geared to UK GDP, employment, the housing market and gilt yields.
- Interest-rate sensitivity (Financial): Net interest income benefits from higher rates; faster-than-expected UK base-rate cuts would compress margins.
- Credit quality (Credit): The impairment charge rose to £795m in 2025, and 2026 guidance assumes an asset quality ratio of around 25bps as credit costs normalise.
- Conduct and legacy (Regulatory): Ongoing legacy matters such as the HBOS Reading review carry residual remediation and legal cost risk.
- Capital distribution risk (Financial): Plans to pay down toward a 13.0% CET1 ratio leave less buffer if macro conditions deteriorate.
11. Recent Developments
- Late Apr 2026 — Q1 2026 trading update. Lloyds reported sustained strength in financial performance with continued income growth, cost discipline and strong asset quality, and concluded that no change to the motor finance provision was required.
- Early 2026 — FY2025 results. Statutory profit before tax of £6.7bn (up 12%), a 15%-higher total ordinary dividend of 3.65p and a share buyback of up to £1.75bn, for total 2025 distributions of about £3.9bn.
- Q3 2025 — Motor finance provision raised. The group took an additional £800m charge ahead of the FCA's redress scheme, lifting the total provision to £1.95bn.
- 14 May 2026 — AGM and dividend. Shareholders approved the final ordinary dividend of 2.43p per share, paid on 19 May 2026.
12. Key Dates to Watch
- 30 Jul 2026 — Half-year 2026 results, expected alongside a new multi-year strategy update.
- 30 Jun 2026 — FCA motor finance redress scheme implementation begins for agreements entered from 1 April 2014.
- 22 Oct 2026 — Q3 2026 interim management statement expected.
- 26 Feb 2027 — FY2026 annual results expected.
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Disclaimer: This research is produced by ChartsView for educational and informational purposes only. It does not constitute financial advice or a recommendation to buy or sell any security. All information is sourced from publicly available company filings, press releases, and official data. ChartsView does not use analyst opinions or third-party ratings. Always conduct your own due diligence and consider your personal financial situation before making investment decisions. Past performance is not indicative of future results.
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13. Thesis Verdict
The central thesis. Lloyds is a pure-play UK retail and commercial bank, making money from net interest income on £481bn of mostly mortgage lending against a £496bn deposit base, plus cards, motor finance and Scottish Widows insurance. In FY2025 it grew statutory profit before tax 12% to £6.7bn on £19.4bn of total income, delivered a 12.9% RoTE (14.8% excluding the motor finance charge), lifted the ordinary dividend 15% to 3.65p and announced a share buyback of up to £1.75bn. Management has upgraded 2026 guidance to a RoTE above 16% and capital generation above 200bps, with net-interest-margin expansion and strategic-initiative revenue as the key drivers.
What would confirm or break it. A 30 July 2026 half-year result confirming the upgraded RoTE and margin trajectory, with no further motor finance provisioning, would confirm the thesis. A materially larger motor finance redress bill than the £1.95bn provided, a sharp UK downturn hitting mortgage and consumer credit quality, or faster-than-expected base-rate cuts compressing margins would invalidate it.
Watchpoints
- ConfirmsHalf-year 2026 results (55 days) landing in line with or above management guidance.
- ConfirmsEvidence supporting the "Rising profitability and returns:" thesis continuing to build across subsequent filings.
- InvalidatesMaterialisation of the "Motor finance redress (Regulatory):" risk, or any disclosure that fundamentally alters the capital-return or growth profile stated by management.
Diagnostic grid
Generated by ChartsView research tooling. Thesis strength measures how well the evidence in this report supports the company's stated thesis — it is NOT a buy/sell rating or price target. ChartsView is not authorised by the FCA to provide regulated investment advice. Generated 5 Jun 2026.