Lloyds Annual Profits Surge 12% Despite Motor Finance Setback
Lloyds Banking Group has reported a notable increase in annual profits, despite facing substantial costs related to motor finance compensation. For the fiscal year 2025, the high street bank achieved a pre-tax profit of £6.66 billion, a 12% rise from £5.97 billion in 2024.
Financial Performance Overview
This impressive performance comes alongside significant remediation costs totaling £968 million. Among these costs, the bank allocated an additional £800 million in the third quarter to compensate customers who were unfairly sold car loans. This brings the group’s total expenses related to the situation to £1.95 billion.
Quarterly Profit Surge
The rise in annual profits was propelled by a remarkable recovery in the last quarter of 2025. Profits for that period surpassed expectations, reaching £1.98 billion, compared to £824 million during the same quarter in the previous year.
Future Projections
Lloyds has also lifted its forecasts for key financial metrics for 2026. The bank anticipates an underlying net interest income of approximately £14.9 billion, an increase from £13.6 billion in 2025.
Debt and Credit Performance
Despite the challenges faced, underlying bad debt charges nearly doubled last year, totaling £795 million, up from £433 million in 2024. However, Lloyds reassured stakeholders that the overall level of bad debt remains low and reflects a “strong and stable credit performance.”
Chief Executive Charlie Nunn emphasized the solid financial performance during 2025, particularly in the final quarter. He highlighted the bank’s growth in balance sheet and income, alongside effective cost management.
Strategic Outlook
Nunn also noted that the bank’s current momentum aligns with the strategic objectives established back in 2022. As Lloyds approaches the end of its five-year strategy, the strong business performance and continued execution of its plans have prompted an upgrade in guidance.
- Annual pre-tax profit: £6.66 billion (2025)
- Previous year’s profit: £5.97 billion (2024)
- Remediation costs: £968 million
- Compensation charge: £800 million (Q3)
- Total compensation expenses: £1.95 billion
- Quarter 4 profit: £1.98 billion (2025)
- Projected net interest income: £14.9 billion (2026)
Overall, Lloyds Banking Group has managed to navigate significant challenges while delivering strong financial results, positioning itself favorably for the future.
