# Lloyds Banking Group Plc reports profit falls on tariff provisions

- Link: https://www.directorstalkinterviews.com/lloyds-banking-group-plc-reports-profit-falls-on-tariff-provisions/4121194845
- Published: 2025-05-01T08:53:31+01:00
- Author: Amilia Stone

**Lloyds Banking Group plc** ([LON:LLOY](https://www.directorstalkinterviews.com/ftse-company/lloyds-banking-group-plc/lloy.l))
has announced its Q1 2025 Results.

> “In the first quarter of 2025, the Group delivered sustained strength in financial
> performance. In particular, net income continues to grow, following the upward
> trajectory established in the second half of last year. We maintained our cost
> discipline and asset quality remains resilient. 
> We continue to make good progress on our strategic transformation and deliver 
> innovative ways for our customers to manage their financial needs and achieve 
> their financial aspirations, in line with our purpose of Helping Britain Prosper.
> This supports our ambition of higher, more sustainable returns that will underpin
> delivery for all of our stakeholders. Our differentiated business model stands
> out in the context of recent market volatility and economic uncertainty and helps
> support UK households and businesses as they further strengthen their financial
> resilience. Underpinned by our financial performance, strategic execution and 
> franchise strength, we remain confident in the outlook for Lloyds Banking Group
> and in our 2025 and 2026 guidance.”
> _Charlie Nunn, Lloyds Banking Group Chief Executive_

**Sustained strength in financial performance^(1)**

•  Statutory profit after tax of £1.1 billion (three months to 31 March 2024: £1.2
billion) with net income up 4% and reduced volatility more than offset by higher
operating costs and a higher impairment charge. Robust return on tangible equity
of 12.6% (three months to 31 March 2024: 13.3%)

•  Underlying net interest income of £3.3 billion, up 3% year on year and up 1% 
versus the fourth quarter of 2024. This reflected a banking net interest margin 
of 3.03%, up 8 basis points year on year (up 6 basis points compared to the fourth
quarter of 2024), alongside higher average interest-earning banking assets of £455.5
billion

•  Underlying other income of £1.5 billion, 8% higher than the prior year and 1%
higher than the fourth quarter of 2024, driven across businesses by strengthening
customer activity and the benefit of strategic initiatives

•  Operating lease depreciation of £355 million, higher than the £283 million in
the first quarter of 2024 as a result of fleet growth, the depreciation of higher
value vehicles and declines in used electric car prices over 2024

•  Operating costs of £2.6 billion, up 6%, combining inflationary pressures, timing
of strategic investment including planned higher severance front-loaded into the
first quarter of 2025 and business growth costs, partly offset by cost savings and
continued cost discipline

•  Resilient asset quality with underlying impairment charge of £309 million and
an asset quality ratio of 27 basis points. Excluding the impact of updates to the
economic outlook, the asset quality ratio was 24 basis points. The portfolio remains
well-positioned with stable and benign credit performance in the quarter

•  Strong growth in lending and deposits. Underlying loans and advances to customers
increased by £7.1 billion in the quarter to £466.2 billion, led by UK mortgages 
growth of £4.8 billion. Customer deposits increased in the quarter by £5.0 billion
to £487.7 billion, with £2.7 billion growth in Retail and £2.3 billion in Commercial
Banking

•  Risk-weighted assets of £230.1 billion, up £5.5 billion in the quarter, reflecting
strong lending growth and a temporary c.£2.5 billion increase primarily due to hedging
activity expected to reverse by the third quarter

•  Capital generation of 27 basis points; strong underlying banking build, impacted
by front-loaded severance and temporary risk-weighted asset impacts primarily from
hedging activity. CET1 ratio of 13.5%

•  Tangible net assets per share of 54.4 pence, up by 2.0 pence in the quarter from
attributable profit alongside unwind of the cash flow hedge reserve

**2025 guidance reaffirmed**

Based on our current macroeconomic assumptions, for 2025 the Group continues to 
expect:

•  Underlying net interest income of c.£13.5 billion

•  Operating costs of c.£9.7 billion

•  Asset quality ratio of c.25 basis points

•  Return on tangible equity of c.13.5%

•  Capital generation of c.175 basis points^(2)

_^(1)  See the basis of presentation on page 14._

_^(2)  Excluding capital distributions. Inclusive of ordinary dividends received
from the Insurance business in February of the following year._

[2025-lbg-q1-presentation](https://www.directorstalkinterviews.com/wp-content/uploads/2025/05/2025-lbg-q1-presentation.pdf)
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