Lloyds’ pre-tax profit jumps 99% to £2.332 billion in third quarter
Key Facts
Lloyds Banking Group said statutory profit before tax was £2.332 billion in the third quarter of 2026, up 99% from £1.174 billion in the same period of 2025. The group also reported underlying profit before impairment of £2.680 billion, an annual increase of 83%. The results reflect broader underlying income growth during the quarter, alongside higher credit provisions than a year earlier. On October 28, the British government announced a temporary increase in the bank surcharge, putting higher tax costs among the considerations for banks in the period ahead. The planned increase begins on January 1, 2027, and lasts 15 months.
Lloyds’ underlying net interest income rose to £3.806 billion in the third quarter, up 10% from £3.451 billion a year earlier. Other underlying income also climbed 8% to £1.686 billion, from £1.557 billion in the third quarter of 2025. In the first nine months of 2026, other underlying income was £5.0 billion, up 10% year on year. The group attributed the growth to improved customer activity, continued benefits from investment in strategic initiatives, and the addition of Lloyds Wealth. Income performance over both periods shows that growth extended beyond interest income to other sources.
Lloyds said higher net interest income was linked to improved structural hedge income and business volume growth, alongside a 4% increase in average interest-earning banking assets to £477.5 billion in the first nine months of 2026 compared with the corresponding period. The banking net interest margin was 3.21%, up 17 basis points, and increased 3 basis points in the third quarter compared with the second. The group said activity growth partly offset pressure on asset margins and deposit competition. The banking net interest margin was 3.06% in financial year 2025, when the group posted statutory profit before tax of £6.7 billion, up 12% from 2024. This comparison puts the current margin improvement in the context of an earlier year of profit growth as well.
Credit provisions in the third quarter rose to £313 million, compared with £176 million in the same period of 2025, an increase of 78%, according to the group’s results. For the first nine months, underlying loan impairment charges were £930 million, resulting in an asset quality ratio of 25 basis points. Lloyds said arrears remained low and stable, despite higher underlying provisions year on year. This charge compares with underlying profit before impairment of £2.680 billion for the quarter, making the path of credit costs an important factor in reading the quarterly figures. The reported figures show provisions rising alongside income, without the group providing additional guidance on their future path in these results.
The group maintained its guidance for financial year 2026, saying it remained on track to deliver underlying net interest income of more than £14.9 billion. It is targeting a cost-to-income ratio below 50%, with operating costs of less than £9.9 billion. It also expects a return on tangible equity above 16% for the year. These thresholds provide a measure against which annual results will be assessed, while the third-quarter results show underlying net interest income up 10% year on year. Lloyds is scheduled to announce its full-year 2026 results on January 28, 2027.
The British government raised the bank surcharge from 3% to 6% for a temporary period of 15 months, beginning on January 1, 2027, and ending on March 31, 2028, according to a memorandum from HM Revenue & Customs published on October 28, 2026. The rate is due to return to 3% from April 1, 2028, after remaining at 3% through the end of 2026. The decision sets the timing and duration of the increase, but the reported facts do not include an estimate of its specific financial impact on Lloyds. The full-year results scheduled for January 28, 2027, will come after the new rate takes effect, giving investors access to the group’s financial-year performance and further details.