Lloyds shares fall 6% after quarterly results nearly double profit to £2.33 billion
Key Facts
Lloyds shares fell 6% in early trading on October 29 after the group reported third-quarter results, with its decision to leave performance targets unchanged disappointing investors hoping for an upgrade. Investing.com said the decline followed the results announcement, separating the share move from the announcement of Christine Lagarde’s resignation, which came on the same day. The bank reported statutory profit before tax of £2.33 billion in the third quarter of 2026. Profit was £1.17 billion in the corresponding period of 2025, meaning it nearly doubled year on year. The result was in line with analysts’ expectations, but that was not enough to prompt the bank to raise its targets. Lloyds shares closed at 5.5 on October 28, according to EL7 data.
For the first nine months of 2026, Lloyds reported net income of £14.8 billion, up 9% year on year, with a return on tangible equity of 17.9%. In the third quarter alone, underlying net interest income rose 10% from a year earlier, according to Investing.com. The report attributed the growth in interest income to higher structural hedge income and loan growth. But revenue growth did not dispel investor questions about the performance outlook, as the bank did not raise its targets for the year. Chief Executive Charlie Nunn said the group was "on track to deliver our 2026 guidance." Lloyds kept its full-year forecasts unchanged, expecting underlying net interest income of more than £14.9 billion and a return on tangible equity of more than 16%.
The group faces a more competitive deposit market, putting pressure on margins despite the increase in interest income. Chief Financial Officer William Chalmers said "competition for deposits has intensified," while third-quarter deposits were broadly stable. Deposit stability indicates that the bank maintained its funding base during the period, but did not remove the intensifying competition to attract savings. These pressures came alongside investor disappointment over unchanged guidance, at a time when profits were far higher than a year earlier. These factors put the market’s focus on Lloyds’ ability to sustain net interest income growth and meet its stated targets. The group did not raise its forecasts despite management’s confirmation that it was on track for 2026.
The British government had announced the previous day that it would raise the bank surcharge on profits from 3% to 6% for 15 months. The rate will therefore double, with the increase set for a limited period, according to coverage reported by Reuters via Euronext. The tax announcement came before the session in which Lloyds shares fell, but it does not explain the decline in the coverage of the October 29 results. Investing.com linked the share decline to the third-quarter results and investor disappointment that performance targets were not raised. The decision comes in the broader context of British bank results, while Lloyds’ figures show that profit before tax nearly doubled over the year. The cost of the new tax remains separate from the reasons for the share move cited in coverage of the results session.
In a separate development on the same day, European Central Bank President Christine Lagarde informed the bank’s Governing Council and the President of the European Council that she would step down on February 7, 2027. The available information does not link the resignation announcement to Lloyds’ share move, which followed the results announcement. European Council President Antonio Costa said the process to select the new president "will begin today and proceed without delay." The European Central Bank said the successor would be appointed by a decision of the European Council following the nomination process set out in Article 283 of the Treaty on the Functioning of the European Union. Succession procedures therefore begin on the day the departure date was announced, while Lagarde’s stated departure date remains February 7, 2027.