Edinburgh-registered Lloyds Banking Group (LBG) — owner of Bank of Scotland, Scottish Widows and Halifax — said its statutory profit before tax rose 33% to £2 billion in its first quarter to March 31, 2026.
LBG said Q1 underlying net interest income was £3.6 billion, up 8% year-on-year.
“This reflects a higher banking net interest margin of 3.17%, up 14 basis points year-on-year (up 7 basis points compared to the fourth quarter),” said LBG.
“This was driven by strong structural hedge income, alongside franchise led volume growth, as illustrated by average interest-earning banking assets of £473.5 billion, up 4% year-on-year.”
LBG reported Q1 underlying other income of £1.6 billion, 11% higher year-on-year “driven by growth in customer activity and the continued benefit of strategic initiatives.”
The group reported Q1 operating costs of £2.5 billion, down 3% “reflecting higher cost savings and a lower severance expense, partially offset by business growth costs, inflationary pressures and the impact of Lloyds Wealth (Schroders Personal Wealth).”
LBG said its underlying loans and advances to customers of £486.2 billion increased by £5.1 billion (1%) in the quarter “with growth across Retail of £3.5 billion and Commercial Banking of £2.8 billion.”
It said its customer deposits of £495.9 billion decreased by £0.6 billion in the quarter “as fixed term deposits fell slightly given Group participation decisions.”
A £3.1 billion reduction in retail was partially offset by £2.3 billion growth in commercial banking.
On 2026 guidance, LBG said: “Based on the sustained strength in our financial performance and our current macroeconomic assumptions, for 2026 the Group reiterates its guidance …
“Underlying net interest income now expected to be greater than £14.9 billion …
“Cost:income ratio of less than 50% (including operating costs of less than £9.9 billion) …
“Asset quality ratio of c.25 basis points …
“Return on tangible equity of greater than 16% …
“Capital generation of greater than 200 basis points…
“To pay down to a CET1 ratio of c.13.0% …”
LBG CEO Charlie Nunn said: “In the first quarter of 2026, the Group delivered sustained strength in financial performance, growing our income, maintaining our cost discipline and delivering strong profitability.
“Our differentiated business model remains resilient in the context of the current economic uncertainties. We remain focused on supporting UK households and businesses as they look to strengthen their financial positions and achieve their goals.
“We are building strategic momentum during the final year of our current plan, providing innovative ways for our customers to manage their financial needs and achieve their financial aspirations.
“We are confident in our delivery for the year ahead and reiterate our guidance for 2026. We look forward to presenting our new strategy alongside the half-year results.”