Regulatory announcement (RNS) · Half-year Financial Report

2026 half year results

Lloyds Banking Group plc · published 30 July 2026 06:00 UTC · Bank of Scotland credit rating and record

RNS Number : 4556O

Lloyds Banking Group PLC

30 July 2026

Lloyds Banking Group plc

2026 half year results

30 July 2026

CONTENTS

Results for the half-year

Income statement (underlying basis)

and key balance sheet metrics

Quarterly information

Balance sheet analysis

Group results - statutory basis

Group Chief Executive's statement

Summary of Group results

Divisional results

Segmental analysis - underlying basis

Retail

Commercial Banking

Insurance, Pensions and Investments

Equity Investments and Central Items

Risk management

Principal risks and uncertainties

Capital risk

Credit risk

Liquidity risk

Interest rate sensitivity

Condensed consolidated half-year financial statements (unaudited)

Condensed consolidated income statement (unaudited)

Condensed consolidated statement of comprehensive income (unaudited)

Condensed consolidated balance sheet (unaudited)

Condensed consolidated statement of changes in equity (unaudited)

Condensed consolidated cash flow statement (unaudited)

Notes to the condensed consolidated half-year financial statements (unaudited)

Statement of directors' responsibilities

Independent review report to Lloyds Banking Group plc

Alternative performance measures

Key dates

100

Basis of presentation

100

Forward-looking statements

100

Contacts

Forward-looking statements

This news release contains forward-looking statements. Further information is set out on page 100.

Alternative performance measures

The Group uses a number of alternative performance measures, including underlying profit, in the description of its business performance and financial position. These measures are labelled with a superscript 'A' throughout this document, with the exception of content on pages 1 to 2 and pages 7 to 11 which is, unless otherwise stated, presented on an underlying basis. Further information on these measures is set out on page 94.

RESULTS FOR THE HALF-YEAR

"Lloyds Banking Group continues to deliver for customers, colleagues, communities and shareholders. Our purpose of Helping Britain Prosper has never been more important. As the UK's largest financial services provider, our purpose drives our strategy and creates opportunity for people and businesses, shaping finance as a force for good.

In the first half of 2026, we delivered sustained strength in financial performance, with continued income growth, improving operating leverage, strong credit performance, growing capital generation and increasing shareholder returns.

We are successfully completing our 2022 to 2026 strategy, focusing on customer experience, pivoting the Group to growth and laying the foundations for our exciting new strategy. We have strengthened our market leadership, built our digital and AI capabilities, and enhanced our cost and capital leadership, while remaining on track to deliver our 2026 financial targets.

This ensures the Group is well placed to launch our new strategy, Accelerate 2030, from a position of strength. Building on our leadership position we will accelerate through reimagined customer experiences, increased Group connectivity, and a productivity step-change, all enabled by pioneering technology. Our strategy will allow us to unlock the next phase of growth and sustainable value creation for our shareholders."

Charlie Nunn, Group Chief Executive

Successfully delivering our purpose-driven strategy

• Successfully delivering the 2022 to 2026 strategy; growing market share in key areas, further improving our digital and AI leadership, and disciplined cost and capital optimisation

• Continuing to transform the Group, building digital engagement, modernising our infrastructure and delivering enhanced operating leverage, while tightly managing risk

• On track for £2 billion of strategic initiative income by the end of 2026, on track to deliver an 8% compound annual growth rate in underlying other income from 2021 to 2026, and have generated more than £2 billion of gross cost savings to date

• Launching Accelerate 2030 strategy; growing in core areas, innovating to deepen and diversify our propositions and further simplifying the Group

Sustained strength in financial performance

• Statutory profit before tax of £4.3 billion (half-year to 30 June 2025: £3.5 billion) benefitting from higher total income and controlled costs, partially offset by higher charges for operating lease depreciation and impairment. Return on tangible equity of 17.1%

• Underlying net interest income of £7.3 billion, up 9% year-on-year. Reflecting a higher banking net interest margin of 3.19%, up 15 basis points (up 5 basis points in the second quarter compared to the first quarter), due to strong structural hedge income, franchise-led volume growth and average interest-earning banking asset growth of 4% to £475.7 billion, partially offset by asset margin compression

• Underlying other income of £3.3 billion, 11% higher year-on-year. Driven by strengthening customer activity and the continued benefit of investments in strategic initiatives

• Operating lease depreciation of £841 million. Up 18% due to a charge in the second quarter for declines in used car prices alongside fleet growth and the depreciation of higher value vehicles, partially offset by continued risk mitigation

• Operating costs of £4.9 billion, flat compared to the first half of 2025. This reflected business growth costs, inflationary pressures and the full acquisition of Schroders Personal Wealth (now Lloyds Wealth) in the fourth quarter of 2025, offset by continued cost savings, a lower severance expense and plateauing investment as this strategic cycle culminates. Remediation costs totaled £39 million across a small number of programmes

• Strong and stable credit performance. Underlying impairment charge of £617 million, resulting in an asset quality ratio of 25 basis points. This includes an £80 million net charge from updated multiple economic scenarios, compared to a small credit in the prior year

RESULTS FOR THE HALF-YEAR

(continued)

Continued growth in lending and deposits

• Underlying loans and advances to customers of £491.5 billion increased by £10.4 billion (2%) in the first half of 2026. Growth across Retail of £5.0 billion (net of the impact of the securitisation of £1.8 billion of primarily legacy Retail mortgages in the second quarter) and Commercial Banking of £5.9 billion

• Customer deposits of £500.9 billion increased by £4.4 billion (1%) in the first half of 2026. Growth of £7.5 billion within Commercial Banking was partially offset by a reduction in Retail of £3.4 billion (mainly in the first quarter), primarily due to disciplined pricing decisions throughout the tax year-end

Strong capital generation driving increased capital returns

• Strong capital generation of 108 basis points. Primarily reflecting banking build partially offset by risk-weighted asset increases from the growth in lending. Pro forma CET1 ratio of 13.1% after the ordinary dividend accrual, announced share buyback in respect of the first half of 2026 and the completed acquisition of Curve

• Risk weighted assets of £241.8 billion, up £6.3 billion (3%) in the first half of 2026. Largely reflecting lending growth, partially offset by ongoing optimisation activity

• Tangible net assets per share at 30 June 2026 of 57.0 pence, in line with 31 December 2025. Attributable profit and a reduction in the number of shares in issue due to the ongoing share buyback announced in January 2026 were offset by capital distributions in respect of 2025 and increased longer-term rates impacting the cash flow hedge reserve

• Interim ordinary dividend of 1.58 pence per share (equivalent to £918 million), up 30% on the prior year, reflecting the steps taken to derisk the business, our strong capital base and confidence in the future earnings trajectory of the Group

• Alongside, the Board has announced its intention to implement a further ordinary share buyback programme of up to £1.0 billion, in addition to the £1.75 billion programme announced in the full year 2025 results

2026 guidance

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 of 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%

2027 to 2030 guidance

Based on our current macroeconomic assumptions, from 2027 to 2030 the Group expects:

• Mid-single-digit net income compound annual growth rate and high-single-digit underlying other operating income compound annual growth rate

• Cost:income ratio of less than 45% in 2030, with year-on-year reductions

• Asset quality ratio of between 25 basis points and 30 basis points through the plan period

• Return on tangible equity of c.20% in 2030 and greater than 18% in 2028

• Capital generation of greater than 225 basis points in 2030

• Pro forma CET1 ratio of c.13.0%

See the basis of presentation on page

100

Excludes capital distributions.

Includes capital distributions announced in respect of the reporting period.

INCOME STATEMENT (UNDERLYING BASIS)

AND KEY BALANCE SHEET METRICS

Half-year to 30 Jun 2026

£m

Half-year to 30 Jun 2025

£m

Change

Half-year to 31 Dec 2025

£m

Change

Underlying net interest income

7,278

6,655

6,980

Underlying other income

3,310

2,969

3,151

Operating lease depreciation

(841)

(710)

(18)

(744)

(13)

Net income

9,747

8,914

9,387

Operating costs

(4,876)

(4,874)

(4,887)

Remediation

(39)

(37)

(5)

(931)

Total costs

(4,915)

(4,911)

(5,818)

Underlying profit before impairment

4,832

4,003

3,569

Underlying impairment charge

(617)

(442)

(40)

(353)

(75)

Underlying profit

4,215

3,561

3,216

Restructuring

(34)

(9)

(37)

Volatility and other items

112

(48)

(22)

Statutory profit before tax

4,293

3,504

3,157

Tax expense

(1,170)

(960)

(22)

(944)

(24)

Statutory profit after tax

3,123

2,544

2,213

Earnings per share

4.8p

3.8p

1.0p

3.2p

1.6p

Dividends per share - ordinary

1.58p

1.22p

2.43p

Share buyback value

£1.0bn

£1.75bn

Banking net interest margin

3.19%

3.04%

15bp

3.08%

11bp

Average interest-earning banking assets

(£bn)

475.7

457.8

467.9

Cost:income ratio

50.4%

55.1%

(4.7)pp

62.0%

(11.6)pp

Asset quality ratio

0.25%

0.19%

6bp

0.15%

10bp

Return on tangible equity

17.1%

14.1%

3.0pp

11.6%

5.5pp

At 30 Jun 2026

At 31 Mar 2026

Change

At 31 Dec 2025

Change

Underlying loans and advances to customers

A,1

(£bn)

491.5

486.2

481.1

Customer deposits (£bn)

500.9

495.9

496.5

Loan to deposit ratio

98%

97%

1pp

CET1 ratio

13.6%

13.4%

0.2pp

14.0%

(0.4)pp

Pro forma CET1 ratio

A,2,3

13.1%

13.4%

(0.3)pp

13.2%

(0.1)pp

UK leverage ratio

5.1%

5.4%

(0.3)pp

Risk-weighted assets (£bn)

241.8

240.8

235.5

Wholesale funding

(£bn)

107.8

108.6

(1)

95.6

Liquidity coverage ratio

144%

145%

(1)pp

Net stable funding ratio

123%

124%

(1)pp

Tangible net assets per share

57.0p

57.9p

(0.9)p

57.0p

See page 94.

The increase between 31 March 2026 and 30 June 2026 is net of the impact of the securitisation of £1.8 billion of primarily legacy Retail mortgages in April 2026.

30 June 2026 pro forma CET1 ratio reflects the full impact of the share buyback in respect of the first half of 2026, announced in July 2026.

31 December 2025 pro forma CET1 ratio reflects the full impact of the share buyback in respect of 2025, announced in January 2026.

The Group has revised its definition of wholesale funding to comprise debt securities in issue and subordinated liabilities only. Deposits from banks are no longer included, reflecting the behavioural liquidity characteristics of bank depositors. Comparatives have been represented on a consistent basis.

The liquidity coverage ratio is calculated as an average of month-end observations over the last 12 months.

The net stable funding ratio is calculated as an average of the last four quarter-end observations.

QUARTERLY INFORMATION

Quarter

ended

30 Jun

2026

£m

Quarter

ended

31 Mar

2026

£m

Change

Quarter

ended

31 Dec

2025

£m

Quarter

ended

30 Sep

2025

£m

Quarter

ended

30 Jun

2025

£m

Quarter

ended

31 Mar

2025

£m

Underlying net interest income

3,709

3,569

3,529

3,451

3,361

3,294

Underlying other income

1,705

1,605

1,594

1,557

1,517

1,452

Operating lease depreciation

(452)

(389)

(16)

(379)

(365)

(355)

Net income

4,962

4,785

4,744

4,643

4,523

4,391

Operating costs

(2,402)

(2,474)

(2,585)

(2,302)

(2,324)

(2,550)

Remediation

(28)

(11)

(56)

(875)

(37)

Total costs

(2,430)

(2,485)

(2,641)

(3,177)

(2,361)

(2,550)

Underlying profit before impairment

2,532

2,300

2,103

1,466

2,162

1,841

Underlying impairment charge

(322)

(295)

(9)

(177)

(176)

(133)

(309)

Underlying profit

2,210

2,005

1,926

1,290

2,029

1,532

Restructuring

(16)

(18)

(30)

(7)

(5)

(4)

Volatility and other items

(109)

(37)

(11)

Statutory profit before tax

2,268

2,025

1,983

1,174

1,987

1,517

Tax expense

(700)

(470)

(49)

(548)

(396)

(577)

(383)

Statutory profit after tax

1,568

1,555

1,435

778

1,410

1,134

Earnings per share

2.4p

2.2p

1.0p

2.1p

1.7p

Banking net interest margin

3.22%

3.17%

5bp

3.10%

3.06%

3.04%

3.03%

Average interest-earning banking assets

(£bn)

477.9

473.5

470.3

465.5

460.0

455.5

Cost:income ratio

49.0%

51.9%

(2.9)pp

55.7%

68.4%

52.2%

58.1%

Asset quality ratio

0.26%

0.25%

1bp

0.14%

0.15%

0.11%

0.27%

Return on tangible equity

17.0%

15.7%

7.5%

15.5%

12.6%

30 Jun

2026

31 Mar 2026

Change

31 Dec

2025

30 Sep 2025

30 Jun 2025

31 Mar 2025

Underlying loans and advances to customers

A,1

491.5

486.2

481.1

477.1

471.0

466.2

Customer deposits (£bn)

500.9

495.9

496.5

496.7

493.9

487.7

Loan to deposit ratio

98%

97%

96%

95%

96%

CET1 ratio

13.6%

13.4%

0.2pp

14.0%

13.8%

13.5%

Pro forma CET1 ratio

A,2,3

13.1%

13.4%

(0.3)pp

13.2%

13.8%

13.5%

Total capital ratio

18.4%

18.2%

0.2pp

18.9%

18.6%

19.0%

18.4%

MREL ratio

32.0%

31.7%

0.3pp

32.2%

31.2%

31.4%

30.4%

UK leverage ratio

5.1%

5.4%

5.2%

5.4%

5.5%

Risk-weighted assets (£bn)

241.8

240.8

235.5

232.3

231.4

230.1

Wholesale funding

(£bn)

107.8

108.6

(1)

95.6

96.0

86.5

85.5

Liquidity coverage ratio

144%

145%

Net stable funding ratio

123%

124%

126%

127%

128%

Tangible net assets per share

57.0p

57.9p

(0.9)p

57.0p

55.0p

54.5p

54.4p

The increase between 31 March 2026 and 30 June 2026 is net of the impact of the securitisation of £1.8 billion of primarily legacy Retail mortgages in April 2026.

30 June 2026 pro forma CET1 ratio reflects the full impact of the share buyback in respect of the first half of 2026, announced in July 2026.

31 December 2025 pro forma CET1 ratio reflects the full impact of the share buyback in respect of 2025, announced in January 2026. 30 June 2025 pro forma CET1 ratio reflects the ordinary dividend received from the Insurance business in July 2025.

The liquidity coverage ratio is calculated as an average of month-end observations over the last 12 months.

The net stable funding ratio is calculated as an average of the last four quarter-end observations.

BALANCE SHEET ANALYSIS

At 30 Jun

2026

£bn

At 31 Mar 2026

£bn

Change

At 31 Dec 2025

£bn

Change

UK mortgages

324.9

324.7

323.1

Credit cards

18.2

17.6

17.3

UK Retail unsecured loans

11.1

10.9

10.5

UK Motor Finance

17.1

16.8

16.4

Overdrafts

1.3

Retail Europe

21.3

21.1

20.4

UK private bank

1.3

1.2

1.1

Retail other

0.1

0.2

(50)

0.2

(50)

Business and Commercial Banking

28.7

28.3

Corporate and Institutional Banking

67.5

64.4

62.0

Central Items

(0.7)

0.5

Underlying loans and advances to customers

491.5

486.2

481.1

Retail UK current accounts

103.2

103.4

102.8

Retail UK savings accounts

193.9

194.1

197.2

(2)

Retail Europe

15.3

15.0

15.3

UK private bank

9.4

9.6

(2)

9.9

(5)

Commercial Banking

178.6

173.4

171.1

Central Items

0.5

0.4

0.2

Customer deposits

500.9

495.9

496.5

Total assets

994.2

968.1

944.1

Total liabilities

946.9

919.9

896.2

Ordinary shareholders' equity

41.5

42.1

(1)

41.8

(1)

Other equity instruments

5.5

5.9

(7)

5.9

(7)

Non-controlling interests

0.2

Total equity

47.2

48.2

(2)

47.9

(1)

Ordinary shares in issue, excluding own shares

58,081m

58,518m

(1)

58,799m

(1)

The increase between 31 March 2026 and 30 June 2026 is net of the impact of the securitisation of £1.8 billion of primarily legacy Retail mortgages in April 2026.

UK Motor Finance balances on an underlying basis

exclude a finance lease gross up. See page 94.

From the first quarter of 2026, within underlying loans and advances to customers, UK private bank has been presented separately (having previously been presented within Retail other). Comparatives have been represented on a consistent basis.

Includes central fair value hedge accounting adjustments.

From the first quarter of 2026, within customer deposits, Retail UK savings accounts and Retail Europe have been presented separately (having previously been presented together as Retail savings accounts). Comparatives have been represented on a consistent basis.

Renamed from the first quarter of 2026, previously Wealth.

GROUP RESULTS - STATUTORY BASIS

The results below are prepared in accordance with the recognition and measurement principles of IFRS

Accounting Standards. The underlying basis results are shown on page 3.

Summary income statement

Half-year to 30 Jun

2026

£m

Half-year to 30 Jun

2025

£m

Change

Half-year to 31 Dec

2025

£m

Change

Net interest income

7,105

6,478

6,752

Other income

3,521

2,908

3,284

Total income

10,626

9,386

10,036

Operating expenses

(5,717)

(5,440)

(5)

(6,526)

Impairment

(616)

(442)

(39)

(353)

(75)

Profit before tax

4,293

3,504

3,157

Tax expense

(1,170)

(960)

(22)

(944)

(24)

Profit after tax

3,123

2,544

2,213

Profit attributable to ordinary shareholders

2,836

2,274

1,922

Profit attributable to other equity holders

229

245

(7)

218

Profit attributable to non-controlling interests

(21)

Profit after tax

3,123

2,544

2,213

Ordinary shares in issue (weighted-average - basic)

58,504m

60,320m

(3)

59,272m

(1)

Basic earnings per share

4.8p

3.8p

1.0p

3.2p

1.6p

Summary balance sheet

At 30 Jun

2026

£m

At 31 Mar

2026

£m

Change

At 31 Dec 2025

£m

Change

Assets

Cash and balances at central banks

61,530

62,128

(1)

56,661

Financial assets at fair value through profit or loss

258,373

238,626

240,413

Derivative financial instruments

20,731

22,307

(7)

19,727

Financial assets at amortised cost

570,802

565,121

553,672

Financial assets at fair value through other comprehensive income

40,428

35,442

36,320

Other assets

42,293

44,501

(5)

37,279

Total assets

994,157

968,125

944,072

Liabilities

Deposits from banks

8,208

7,476

5,779

Customer deposits

500,859

495,924

496,457

Repurchase agreements at amortised cost

45,400

41,014

38,570

Financial liabilities at fair value through profit or loss

31,310

31,425

27,909

Derivative financial instruments

17,826

19,568

(9)

16,132

Debt securities in issue at amortised cost

90,853

91,884

(1)

78,271

Liabilities arising from insurance and participating investment contracts

143,566

131,334

135,284

Liabilities arising from non-participating investment contracts

66,639

60,630

61,640

Other liabilities

33,024

31,771

26,269

Subordinated liabilities

9,235

8,868

9,894

(7)

Total liabilities

946,920

919,894

896,205

Total equity

47,237

48,231

(2)

47,867

(1)

Total equity and liabilities

994,157

968,125

944,072

GROUP CHIEF EXECUTIVE'S STATEMENT

The first half of 2026 was a period of continued delivery for the Group, with successful strategic execution, ongoing investment in our franchise and sustained strength in financial performance. Continued income momentum, disciplined cost management and strong and stable credit performance have supported strong returns and capital generation in the period.

Given the Group's performance, robust capital position and confidence in our earnings outlook, the Board has recommended an interim ordinary dividend of 1.58 pence per share, up 30% year on year. Additionally, in line with our intention to review excess capital distributions every half-year we are today announcing our first interim share buyback of up to £1.0 billion. Given our positive progress and strong first half performance we are on track to meet our 2026 financial targets.

As the UK's largest financial services provider, serving 28 million customers and around 1 million businesses, we are ideally placed to drive opportunity for people and businesses by shaping finance as a force for good. During the first half of 2026, we continued to support households, businesses and communities across the UK, helping more people access quality homes, build financial confidence and grow their businesses. I am proud of the progress we have made and grateful to colleagues across the Group for their continued dedication, resilience and commitment to supporting our customers and delivering for all of our stakeholders.

Building on our strong foundations, distinctive competitive strengths and significant progress over the last five years, today we are launching Accelerate 2030. Our new promise to customers is to make finance simpler, smarter and more connected for every moment that matters. We will invest into the next phase of growth to deliver sustainable value creation through reimagined customer experiences, increased Group connectivity and a productivity step-change, all enabled by pioneering technology. I look forward to working with colleagues across the Group as we grow, innovate and simplify to deliver our new strategy and to drive better outcomes for our customers and shareholders.

Sustained strength in financial performance

In the first half of the year, statutory profit after tax was £3.1 billion, up 23% year-on-year, resulting in a return on tangible equity of 17.1%. Underlying profit of £4.2 billion was driven by higher net income and controlled costs, partially offset by a higher underlying impairment charge. Net income of £9.7 billion increased by 9%, supported by a higher banking net interest margin of 3.19% and growth in underlying other income of 11%, partially offset by higher operating lease depreciation. Operating costs of £4.9 billion were flat, with business growth costs, inflationary pressures and the full acquisition of Schroders Personal Wealth (now Lloyds Wealth) in the fourth quarter of 2025 offset by continued cost savings, a lower severance expense and plateauing investment as our strategic cycle culminates. The underlying impairment charge of £617 million, reflects strong and stable credit performance, albeit higher than the first half of 2025 which benefitted from improvements to the macroeconomic outlook.

The Group's franchise and balance sheet in the year-to-date continued to grow. Underlying loans and advances to customers of £491.5 billion were up 2%, or £10.4 billion, reflecting growth in both Retail and Commercial Banking. Customer deposits of £500.9 billion increased by 1%, or £4.4 billion, in the period, including growth in Commercial Banking of £7.5 billion, partially offset by a reduction in Retail of £3.4 billion (mainly in the first quarter), primarily due to disciplined pricing decisions throughout the tax year-end.

The Group delivered strong capital generation of 108 basis points in the first half of 2026, with a pro forma CET1 ratio of 13.1%. As mentioned the Board has recommended an increased interim ordinary dividend of 1.58 pence per share, equivalent to £918 million, representing an increase of 30% compared to the first half of 2025. This significant step-up reflects the actions taken to derisk the business, our strong capital position and confidence in the future earnings trajectory of the Group. We remain committed to our progressive and sustainable dividend policy. The Group is now reviewing excess capital distributions in addition to the ordinary dividend every half-year. As a result the Board has announced its intention to implement a further ordinary share buyback programme of up to £1.0 billion.

GROUP CHIEF EXECUTIVE'S STATEMENT

(continued)

Guiding purpose of Helping Britain Prosper

Helping Britain Prosper informs the role we play in the UK economy and the choices we make as we aim to shape finance for the better. This means using our scale, insight and innovation to help people access quality homes, build financial resilience, and grow their businesses, while creating sustainable, long-term value for shareholders.

Our purpose is reflected in the support we provide across the economy. Since the start of 2022, we have supported more than £10 billion of financing to the social housing sector, alongside providing more than £35 billion of new financing to small business customers. Over the same period we have supported customers with more than £80 billion of sustainable financing. We are also helping customers engage with their finances more actively, with more than 12 million customers registered to 'Your Credit Score' with 500,000 improving their score each quarter.

Successfully delivered against the 2022 to 2026 strategy

Over 2022 to 2026 we transformed the Group by building on our leading scale, breadth and connectivity. We maintained leadership and grew market shares in key products and segments, while unlocking the potential of digital and AI, and driving cost and capital efficiency.

The Group returned to growth across its leading and diversified franchises. In Retail, we are the largest UK digital bank, with around 22 million mobile app users and around 7 billion digital logons a year. Within Commercial Banking we are a leading player in key UK markets such as Debt Capital Markets (DCM), Cash Management, and Infrastructure and Project finance, helping grow Corporate and Institutional Banking income by around 70% since 2021 on an annualised basis. Insurance, Pensions and Investments (IP&I) has grown Workplace assets under administration (AuA) by more than 70% in the period. In Lloyds Living, within the Group's equity investments business, by the end of 2026 we are targeting to have exchanged on more than 10,000 homes since the business started five years ago.

These areas of progress have driven a 4% revenue compound annual growth rate (CAGR) for the Group during the period 2022 to 2026, with strategic initiative revenues in particular expected to reach c.£2 billion for 2026 and OOI growing at an 8% CAGR which has further diversified our revenue and increased the sustainability of our shareholder returns.

The Group has also maintained a clear focus on cost and capital discipline. With the benefits of investments, we have generated over £2 billion of gross cost savings between 2022 to 2026 by improving productivity and efficiency, modernising the technology estate, digitising more interactions and rationalising our office footprint. This is demonstrated by the more than 45% improvement in the number of Retail customers served per FTE and the c.35% reduction in Group run and change technology costs. We have improved capital efficiency and taken steps to derisk the Group, including achieving around £28 billion of cumulative risk-weighted asset (RWA) optimisation alongside elimination of the c.£7 billion pension deficit. This has helped support around £17 billion of shareholder distributions since 2021, with the ordinary dividend per share more than doubling since the first half of 2021.

Our progress is underpinned by a transformation in how the Group operates, radically enhancing our infrastructure, reducing data centres by more than 50% and migrating more than 60% of applications to the cloud. We have hired around 11,000 technology and data specialists to drive digital and AI leadership and recently announced that GenAI is expected to deliver over £100 million of benefit in 2026. Together, these changes create the platform to serve customers more personally, connect more of the Group's capabilities and continue improving productivity.

GROUP CHIEF EXECUTIVE'S STATEMENT

(continued)

Accelerate 2030

Our new strategy, Accelerate 2030, builds on the foundations created over 2022 to 2026. In the context of a stable UK outlook, with strong consumer and business balance sheets and a constructive regulatory environment, we are uniquely placed to address the structural growth opportunities in the UK, including housing, the digital economy, infrastructure, the energy transition, wealth and pensions.

The strategy remains rooted in our purpose of Helping Britain Prosper, the participation choices that make our current strategy successful, and our driving ambition to 'make finance simpler, smarter and more connected for every moment that matters' to our customers. The strategy is to accelerate through

reimagined customer experiences

, increased

Group connectivity

, and a

productivity step-change

, all enabled by

pioneering technology

We have three pillars in support of Accelerate 2030. Firstly, we will

'Grow the core'

by scaling our market leading businesses, accelerating in faster growing areas within our core and reimagining the customer experience including leveraging AI. This will drive growth across core markets and will deepen relationships with our customers. Key focus areas include a new, unique Group rewards offering for retail customers, a broader, transformed Homes experience, digitally enabled, full-service Business and Commercial Banking (BCB) and a focused, modern, client centric Corporate and Institutional business (CIB), as we look to reinforce and grow core market shares.

Our second pillar is

'Innovate to deepen and diversify'

, by extending propositions to unlock connected, diversified, and differentiated growth. This includes increasing cross-Group connectivity, such as our integrated bancassurance and wealth model, extending into higher-value, fee generating adjacencies, such as through our integrated digital Transport ecosystem and broadening our reach across third party and AI channels through data-led connected propositions and new wallet and payment products for our retail and commercial customers.

Our third pillar is

'Simplify to outperform'

by building future ready skills and infrastructure, delivering a digital and AI-enabled productivity step-change and maximising capital efficiency. This will include key initiatives such as extending our next-generation Retail core banking engine, accelerating speed to market of new propositions and scaling agentic AI adoption. We expect to deliver around £2 billion of gross cost savings over the plan.

Business priorities

Our Accelerate 2030 divisional strategic priorities align with these pillars and incorporate ambitious revenue and cost targets.

Retail

starts from a position of market leadership, with 28 million customers, leading positions across our own and third-party channels, and number one positions in mortgages, current accounts, cards, loans and transport. Retail's priorities are to deepen primary relationships, such as our leading PCA share, through a differentiated, personalised Group wide rewards offering, whilst scaling leadership positions (e.g. Homes and Unsecured) with broader, transformed experiences. We are also building the UK's first integrated transport ecosystem, creating a more empowering customer experience. These priorities will be enabled by scaling the next-generation core banking engine and rolling out agentic servicing solutions to improve experience and cost-to-serve. The Retail bank is targeting mid-single-digit net income CAGR and a mid-single-digit cost:income ratio reduction in 2030.

Commercial Banking

starts from a position of strength, with around one million business relationships in BCB, c.21% small business deposit market share

, around 3,000 CIB clients, including leading UK market positions such as DCM, Cash Management, and Infrastructure and Project finance. Commercial Banking priorities are to deepen BCB relationships with an enhanced, digital and AI-enabled offering. In CIB, we will enhance the cash, debt, risk offering, with focused capability enhancement and focused international expansion to support key clients. Across Commercial Banking we will embed solutions in third party customer workflows and ecosystems (e.g. the Stripe partnership in merchant acquiring announced June 2026) and connect the Group to high-growth companies, launching a comprehensive Innovation Banking proposition. We will underpin this growth with cost and capital efficiency, including AI augmented relationship manager productivity and expanded originate to distribute capabilities. Together, these actions will target a mid-single-digit net income CAGR and a low-single-digit cost:income ratio reduction in 2030.

Source: UK Finance. Deposit market share for the first quarter of 2026, versus high street banks.

GROUP CHIEF EXECUTIVE'S STATEMENT

(continued)

Insurance, Pensions and Investments (IP&I)

is a differentiated and unique business for the Group, with 10 million IP&I customers and top-three positions in Workplace, home insurance and annuities. IP&I priorities in Accelerate 2030 are to drive further growth by empowering customers, introducing ready-made, self-directed and advised propositions to Workplace customers through a Retirement ecosystem, and extending reach across businesses and employees realising cross-Group synergies. Through our distinctive, integrated bancassurance offering we will utilise tailored, accessible, AI-enabled products to meet more customer needs, building further on improvements in protection and home insurance in our Retail banking relationships. Through Lloyds Wealth we will also deliver a connected end-to-end wealth offering, helping all customers build, manage and transfer wealth with an integrated lifetime proposition from execution only D2C investments to, Invest AI (a new AI enabled service to bring simple advice to all), and full-advice financial planning. IP&I will continue to improve experience and cost to serve by automation and scaled agentic servicing solutions. Capital efficiency and returns will strengthen from the run-down of the longstanding closed book alongside growth in capital-lite areas as described above. IP&I is targeting a high-single-digit net income CAGR and a high-teens cost:income ratio reduction in 2030.

Equity Investments

brings together distinctive, growth businesses including our award-winning mid-market private equity business LDC and our growing housing rental platform Lloyds Living. LDC will consolidate its mid-market leadership position, supporting high growth businesses through the life cycle whilst building on our relationships within BCB. Lloyds Living will build value in the homes portfolio through scale, growing to more than 20,000 properties by 2030, and increasing connectivity to broader-Group solutions including in the Insurance business and shared ownership mortgages. In Lloyds Living we will improve cost-to-serve and reduce risk by scaling our high quality in-house property management operations. Equity Investments will target high-single-digit net income CAGR while maintaining a low cost:income ratio in 2030.

Accelerate 2030 aims to increase Group connectivity, bringing together our broad offering, scale, data, and digital capabilities to create more connected propositions for customers and hence new, diversified sources of growth. In this respect our investment in innovation will include the distinctive bancassurance proposition, rent-to-buy 'Pathways' in Lloyds Living, and building new revenue streams such as Connected Commerce; an innovative proposition that will connect our 28 million Retail customers with our c.1 million business clients, providing targeted merchant campaigns and cashback offers.

Alongside, we are developing digital wallet and point-of-sale financing capabilities to give customers and merchants more flexible and value added ways to pay and transact. Digital asset solutions will support tokenised deposits to enable more integrated, faster and lower-cost payments journeys and transactions across our Retail and Commercial Banking franchises, adding value to our customers' lives. Together, these propositions will deepen customer relationships, support our ambition to make finance simpler, smarter and more connected, and create value in ways that only an integrated Lloyds Banking Group can.

AI in all its forms will be a key enabler in driving this acceleration. We are starting from a position of leadership, evidenced by our position as the top UK domestic bank in the Evident AI index ranking, and we see clear opportunities to transform customer engagement including increased personalisation and conversational interactions, to further improve customer experience, unlock colleague productivity through agentic assistants and reinventing servicing and operations with always-on and voice enabled agents.

Financial outlook

Accelerate 2030 is built upon a robust

financial framework

that will generate long-term, sustainable value for our shareholders. It is built on the financial foundations of investment discipline, efficiency focus and risk management which enable

continued income growth

improved operating leverage

and

stronger returns and capital generation

. These financial outcomes build further capacity for investment and

growing, sustainable shareholder distributions

Taking these themes in turn. Our financial foundations remain critical to create the conditions necessary for long-term value creation. We will continue to

invest with discipline

, with a focus on business priorities and consistent execution underpinned by disciplined returns hurdles and continuous tracking and reprioritisation as required. Higher investment will increasingly be financed by the capacity created by the gross cost saves generated by our

continued focus on efficiency

. We are targeting around £2 billion of gross cost savings by 2030 based on extending existing levers, such as our digital transformation and tech modernisation, and leveraging new areas, in particular realising AI value to drive a productivity step-change as we deliver our strategy.

Effective risk management

will continue to be at the core of our new strategy. This is built on a prudent risk appetite, a low risk, diversified balance sheet, consistent, low risk participation choices and comprehensive data and robust underwriting.

GROUP CHIEF EXECUTIVE'S STATEMENT

(continued)

These foundations support further business transformation including new propositions, cross-Group connectivity, productivity improvements and the resilience of the Group. Higher investment supports mid-single-digit net income CAGR over the plan, with 2027 expected to exceed that level. This is driven by a combination of growing our core franchise based on measured participation choices, particularly in areas where lending growth outpaces nominal GDP, the growing structural hedge tailwind and other operating income from growth opportunities across the business.

Within this, we expect to see healthy net interest income growth during the plan period, supported by over £2 billion of additional structural hedge income and strong balance sheet expansion, which in turn will drive risk-weighted asset growth. Although Basel 3.1 implementation will result in a reduction of between £6 billion and £8 billion on 1 January 2027, from that point, risk-weighted assets will rise largely in line with lending. Alongside, business growth will modestly increase RWAs in operational risk and equity investments driving a limited increase in RWA density. The focus on OOI will drive further diversification of revenue from existing and new initiatives, which is expected to deliver high-single-digit CAGR over the plan. Income growth and continued efficiency also drives improved operating leverage. We are committed to improving our cost:income ratio every year over the plan to less than 45% in 2030.

Accelerate 2030 will drive stronger sustainable returns, with substantial earnings growth on top of a significant increase in our tangible equity base as we grow the balance sheet. We are targeting a return on tangible equity of around 20% in 2030, including a return on tangible equity of greater than 18% in 2028. Strengthening returns over the strategy will result in sustainable and growing capital generation. We will deploy this capital in a targeted way ensuring that we appropriately invest into the business alongside delivering significant, growing and sustainable capital returns for shareholders.

2026 guidance

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 of 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%

2027 to 2030 guidance

Based on our current macroeconomic assumptions, from 2027 to 2030 the Group expects:

• Mid-single-digit net income CAGR and high-single-digit underlying other operating income CAGR

• Cost:income ratio of less than 45% in 2030, with year-on-year reductions

• Asset quality ratio of between 25 basis points and 30 basis points through the plan period

• Return on tangible equity of c.20% in 2030 and greater than 18% in 2028

• Capital generation of greater than 225 basis points in 2030

• Pro forma CET1 ratio of c.13.0%

Excludes capital distributions.

Includes capital distributions announced in respect of the reporting period.

SUMMARY OF GROUP RESULTS

Statutory results

Income statement

The Group's statutory profit before tax for the first half of 2026 was £4,293 million, 23% higher than in the first half of 2025, reflecting higher total income and controlled costs, offset by higher charges for operating lease depreciation and impairment. Profit after tax was £3,123 million and earnings per share were 4.8 pence (half-year to 30 June 2025: £2,544 million and 3.8 pence respectively).

Total income for the first half of 2026 was £10,626 million, an increase of 13% on the prior period (half-year to 30 June 2025: £9,386 million). Net interest income of £7,105 million was up 10% (half-year to 30 June 2025: £6,478 million), driven by higher average interest-earning assets and a higher margin, resulting from stronger structural hedge income as eligible balances were reinvested into a higher rate environment, partially offset by asset margin compression, in particular in the UK mortgages portfolio.

Other income increased by 21% to £3,521 million (half-year to 30 June 2025: £2,908 million), with a higher net investment return and finance result in respect of insurance and investment contracts, higher net fee and commission income and higher other operating income, partially offset by a lower insurance service result. Net fee and commission income increased by 17% as a result of strengthening customer activity, while other operating income increased by 20% as a result of vehicle fleet growth and higher average vehicle rental values in UK Motor Finance within Retail and strong growth in Lloyds Living.

Total operating expenses of £5,717 million (half-year to 30 June 2025: £5,440 million) reflected business growth costs, inflationary pressures and the full acquisition of Schroders Personal Wealth (now Lloyds Wealth) in the fourth quarter of 2025, partially offset by continued cost savings, a lower severance expense and plateauing investment as this strategic cycle culminates. Alongside this, operating lease depreciation increased due to a charge in the second quarter for declines in used car prices alongside fleet growth and the depreciation of higher value vehicles, partially offset by continued risk mitigation.

The impairment charge was £616 million (half-year to 30 June 2025: £442 million). The higher charge includes a net charge from updated multiple economic scenarios (MES) reflecting the impact of the deterioration in economic outlook in the first quarter due to the Middle East conflict, net of modest second quarter updates. The multiple economic scenarios impact for the first half of 2026 captures a higher unemployment rate peak and softer house price outlook compared to the year end view. This is partly offset by the release of the £50 million post model adjustment for global tariff and political disruption risks within Commercial Banking in the first quarter, now considered to be adequately captured within assumptions and resulting modelled provisions. Credit performance remains strong and stable across Retail and Commercial Banking with arrears low and stable in all portfolios.

SUMMARY OF GROUP RESULTS

(continued)

Statutory results

(continued)

Balance sheet

As at 30 June 2026, total assets were £994.2 billion, an increase of £50.1 billion (31 December 2025: £944.1 billion).

Financial assets at amortised cost were £570.8 billion, £17.1 billion higher (31 December 2025: £553.7 billion), including increases in loans and advances to customers of £10.2 billion, reverse repurchase agreements of £3.4 billion, debt securities of £2.6 billion and loans and advances to banks of £0.9 billion. Loans and advances to customers included growth of £1.8 billion in UK mortgages, net of the impact of a securitisation of £1.8 billion of primarily legacy Retail mortgages in the second quarter, alongside growth across credit cards, UK Retail unsecured loans, UK Motor Finance and the European retail business, totalling £2.9 billion. Lending balances also increased in Commercial Banking by £5.9 billion, reflecting growth across Corporate and Institutional Banking and Business and Commercial Banking, net of continued government-backed lending repayments. Reverse repurchase agreements and debt securities increased in response to market conditions.

Financial assets held at fair value through profit or loss at £258.4 billion increased by £18.0 billion during the period, with increased assets held to back insurance and investment contract liabilities reflecting market movements, alongside an increase within the banking business.

Derivative financial assets were £1.0 billion higher at £20.7 billion, driven by market movements. Cash and balances at central banks increased by £4.9 billion to £61.5 billion and financial assets at fair value through other comprehensive income of £40.4 billion increased by £4.1 billion, reflecting changes in liquidity holdings. Other assets were £5.0 billion higher, largely reflecting increased settlement balances, vehicle fleet growth within UK Motor Finance and growth in investment properties within Lloyds Living.

Total liabilities were £946.9 billion, £50.7 billion higher over the period (31 December 2025: £896.2 billion). Customer deposits of £500.9 billion increased by £4.4 billion in the period. Retail deposits were down by £3.4 billion, driven by lower Retail UK savings account balances largely in the first quarter, primarily due to disciplined pricing decisions throughout the tax year-end. Retail UK current account balances were broadly stable, supported by the strength of the Group's franchise and proposition. Commercial Banking deposits were up £7.5 billion in the period, with growth in targeted sectors. Repurchase agreements at amortised cost increased by £6.8 billion to £45.4 billion (31 December 2025: £38.6 billion).

Financial liabilities at fair value through profit or loss increased to £31.3 billion (31 December 2025: £27.9 billion) as a result of increased trading activity and derivative financial liabilities increased by £1.7 billion to £17.8 billion given market movements. Liabilities arising from insurance and investment contracts increased by £13.3 billion, reflecting the corresponding increase in the assets held to back these liabilities. Other liabilities increased by £6.8 billion to £33.0 billion, largely due to increased settlement balances. Debt securities in issue at amortised cost increased by £12.6 billion to £90.9 billion due to new issuances in the period, while subordinated liabilities decreased to £9.2 billion as a result of redemptions in the period.

Total equity of £47.2 billion at 30 June 2026 decreased by £0.6 billion (31 December 2025: £47.9 billion). Profit for the period was more than offset by the impact of the commenced ordinary share buyback programme in respect of 2025, the dividend paid in May 2026 and movements in the cash flow hedge reserve.

SUMMARY OF GROUP RESULTS

(continued)

Income statement - underlying basis

The Group's underlying profit was £4,215 million in the first half of 2026, up 18% versus the prior year (half-year to 30 June 2025: £3,561 million). The first half benefitted from higher underlying net interest income, higher underlying other income and controlled costs, partially offset by higher charges for operating lease depreciation and impairment. Underlying profit in the second quarter was up 10% versus the first quarter of 2026.

Net income

Half-year to 30 Jun

2026

£m

Half-year to 30 Jun 2025

£m

Change

Half-year to 31 Dec

2025

£m

Change

Underlying net interest income

7,278

6,655

6,980

Underlying other income

3,310

2,969

3,151

Operating lease depreciation

(841)

(710)

(18)

(744)

(13)

Net income

9,747

8,914

9,387

Banking net interest margin

3.19%

3.04%

15bp

3.08%

11bp

Average interest-earning banking assets

£475.7bn

£457.8bn

£467.9bn

Net of losses on disposal of operating lease assets of £32 million (half-year to 30 June 2025: £3 million; half-year to 31 December 2025: £7 million).

Net income of £9,747 million was up 9% compared to the first half of 2025, with higher underlying net interest income and higher underlying other income, partially offset by an increased charge for operating lease depreciation. Net income in the second quarter of 2026 was up 4% compared to the first quarter.

Within net income, underlying net interest income of £7,278 million was up 9% compared to the prior year (half-year to 30 June 2025: £6,655 million). This was supported by a higher banking net interest margin of 3.19% (half-year to 30 June 2025: 3.04%), resulting from stronger structural hedge income as eligible balances were reinvested into a higher rate environment, partially offset by asset margin compression, in particular in the UK mortgages portfolio. Net interest income for the period was also supported by strong customer-led lending growth. The Group delivered continued, broad-based growth across the Retail business, led by UK mortgages (net of the impact of the securitisation of £1.8 billion of primarily legacy Retail mortgages in the second quarter), the unsecured lending businesses and the European retail business. The Group also saw growth in Commercial Banking within Corporate and Institutional Banking, partially offset by continued repayments of government-backed lending within Business and Commercial Banking. Together, this resulted in increased average interest-earning banking assets in the first half of £475.7 billion (half-year to 30 June 2025: £457.8 billion). Underlying net interest income in the first half of 2026 included a non-banking net interest expense of £251 million (half-year to 30 June 2025: £236 million), increasing as a result of growth in the Group's other operating income activities and the refinancing of these activities at higher rates. The Group continues to expect underlying net interest income for 2026 to be greater than £14.9 billion.

Underlying net interest income of £3,709 million was up 4% compared to the first quarter of 2026 (three months to 31 March 2026: £3,569 million). A growing structural hedge contribution offset the impact of continued headwinds from asset margin compression and some deposit pricing pressure, resulting in a higher banking net interest margin of 3.22% compared to 3.17% in the first quarter of 2026. Alongside, average interest-earning banking assets grew 1% to £477.9 billion (three months to 31 March 2026: £473.5 billion), reflecting growth across the Retail division, led by credit cards and Retail Europe, and growth in Commercial Banking.

SUMMARY OF GROUP RESULTS

(continued)

Income statement - underlying basis

(continued)

The Group manages the risk to earnings and capital from movements in interest rates by hedging the net liabilities which are stable or less sensitive to movements in rates. As at 30 June 2026, the notional balance of the sterling structural hedge was £246 billion (31 December 2025: £244 billion) with a weighted average life of approximately 3.75 years (31 December 2025: approximately 3.75 years). The £2 billion increase occurred in the first quarter, reflecting continued strong performance in hedge eligible balances, including personal current accounts. The notional balance remained stable in the second quarter. The Group generated £3.4 billion of total income from structural hedge balances in the first six months of 2026 (half-year to 30 June 2025: £2.6 billion). The Group continues to expect structural hedge earnings to be greater than £7.0 billion in 2026 and greater than £8.0 billion in 2027, with earnings growth from the structural hedge expected to continue thereafter.

Underlying other income of £3,310 million in the first half of 2026 grew by 11% compared to the prior year (half-year to 30 June 2025: £2,969 million), driven by strengthening customer activity and the continued benefit of investments in strategic initiatives. This included an increase of 10% in Retail, particularly driven by UK Motor Finance fleet growth and higher average vehicle rental values. Within Commercial Banking, underlying other income decreased by 4% year-on-year, with higher revenues from increased transaction banking and loan markets activity more than offset by the impact of continued UK market volatility and macroeconomic uncertainty, impacting the Group's UK focused trading business. Insurance, Pensions and Investments underlying other income was up 19%, driven by the full acquisition of Schroders Personal Wealth (now Lloyds Wealth) and strong performance in the Workplace business. Equity Investments and Central Items benefitted from continued growth in Lloyds Living and strong realisations and net valuation gains in LDC, with the Group's equity investment businesses up 42%.

Underlying other income in the second quarter was up 6% compared to the first quarter of 2026. This included continued growth within Retail in UK Motor Finance, higher seasonal debit card fee income, lower switcher spend in personal current accounts and a one-off gain on the securitisation of primarily legacy mortgages. This was alongside growth in markets income in Commercial Banking following a modest UK market recovery, strong performance in Workplace business and lower seasonal weather claims in Insurance, Pensions and Investments, alongside higher realisations and net valuation gains in LDC.

Operating lease depreciation of £841 million in the first half of 2026 was 18% higher than in the prior year (half-year to 30 June 2025: £710 million), due to a charge in the second quarter for declines in used car prices alongside fleet growth and the depreciation of higher value vehicles, partially offset by continued risk mitigation. Operating lease depreciation was 16% higher in the second quarter compared to the first quarter, at £452 million. This was predominantly due to continued declines in used car prices which resulted in a £41 million additional charge to reflect future expected residual values in the fleet. Going forward, the operating lease depreciation charge is expected to revert to a normalised run-rate more in line with fleet growth. The Group continues to mitigate the risk of used car price movements through a number of market and customer initiatives to both improve performance and reduce volatility.

Total costs

Half-year to 30 Jun 2026

£m

Half-year to 30 Jun 2025

£m

Change

Half-year to 31 Dec

2025

£m

Change

Operating costs

4,876

4,874

4,887

Remediation

(5)

931

Total costs

4,915

4,911

5,818

Cost:income ratio

50.4%

55.1%

(4.7)pp

62.0%

(11.6)pp

Operating costs of £4,876 million were flat compared to the first half of 2025. This reflected business growth costs, inflationary pressures and the full acquisition of Schroders Personal Wealth (now Lloyds Wealth) in the fourth quarter of 2025, offset by continued cost savings, a lower severance expense and plateauing investment as this strategic cycle culminates. Operating costs in the second quarter were 3% lower than in the first quarter, primarily due to lower severance and the Bank of England supervisory charge in the first quarter.

SUMMARY OF GROUP RESULTS

(continued)

Income statement - underlying basis

(continued)

A remediation charge of £39 million was recognised by the Group in the first half of 2026 (half-year to 30 June 2025: £37 million) across a small number of programmes. There have been no further charges relating to motor finance commission arrangements. The FCA published policy statement PS26/3 in March 2026 with final rules for its motor finance redress schemes. Four challenges to the FCA's schemes have been raised, three by lenders and one from a consumer group and the implementation of the scheme has now been delayed, given the Upper Tribunal hearing is not expected before December 2026. The Group will closely monitor how these challenges develop and consider any potential impact to the existing provision. Despite these uncertainties, the current provision continues to represent the Group's current best estimate of the potential impact of the motor finance issue.

Total costs, including remediation, of £4,915 million were flat compared with prior year, with net income up 9%. The cost:income ratio was 50.4% (half-year to 30 June 2025: 55.1%). In the second quarter the cost:income ratio was 49.0%. For 2026, the Group continues to expect the cost:income ratio to be less than 50%, with operating costs still expected to be less than £9.9 billion.

Underlying impairment

Half-year to 30 Jun 2026

£m

Half-year to 30 Jun 2025

£m

Change

Half-year to 31 Dec 2025

£m

Change

Charges (credits) pre-updated MES

Retail

488

426

(15)

308

(58)

Commercial Banking

(92)

(39)

Other

537

451

(19)

270

(99)

Updated economic outlook (MES)

Retail

(84)

Commercial Banking

(1)

(9)

Underlying impairment charge

617

442

(40)

353

(75)

Asset quality ratio

0.25%

0.19%

6bp

0.15%

10bp

Impairment charges excluding the impact from the updated economic outlook (multiple economic scenarios, MES) taken each quarter.

The underlying impairment charge in the first half of 2026 was £617 million (half-year to 30 June 2025: £442 million), resulting in an asset quality ratio of 25 basis points. The higher charge includes an £80 million net charge from updated multiple economic scenarios (MES) (half-year to 30 June 2025: £9 million credit) reflecting the impact of the deterioration in economic outlook in the first quarter due to the Middle East conflict, net of modest second quarter updates. The multiple economic scenarios impact for the first half of 2026 captures a higher unemployment rate peak and softer house price outlook compared to the year end view. This is partly offset by the release of the £50 million post model adjustment for global tariff and political disruption risks within Commercial Banking in the first quarter, now considered to be adequately captured within assumptions and resulting modelled provisions. The pre-updated MES charge of £537 million (half-year to 30 June 2025: £451 million) is equivalent to an asset quality ratio of 22 basis points. The higher pre-updated MES charge compared to prior year is driven by Retail, reflecting model updates, a more normalised level of impairment alongside balance sheet growth, and lower one-off provision releases in Commercial Banking.

The impairment charge in the second quarter of £322 million, equivalent to an asset quality ratio of 26 basis points, includes a £21 million MES release reflecting modest favourability in the unemployment outlook. The higher pre-updated MES charge compared to the first quarter reflects model updates and lower model calibration benefits, in addition to charges in Commercial Banking following the reassessment of a small number of existing cases in default. Credit performance remains strong and stable across Retail and Commercial Banking with arrears low and stable in all portfolios. The Group continues to expect the asset quality ratio to be c.25 basis points in 2026.

SUMMARY OF GROUP RESULTS

(continued)

Income statement - underlying basis

(continued)

Restructuring, volatility and other items

Half-year

to 30 Jun 2026

£m

Half-year

to 30 Jun 2025

£m

Change

Half-year to 31 Dec

2025

£m

Change

Underlying profit

4,215

3,561

3,216

Restructuring

(34)

(9)

(37)

Market and other volatility

186

Amortisation of purchased intangibles

(65)

(40)

(63)

(46)

(41)

Fair value unwind

(9)

(35)

(21)

Volatility and other items

112

(48)

(22)

Statutory profit before tax

4,293

3,504

3,157

Tax expense

(1,170)

(960)

(22)

(944)

(24)

Statutory profit after tax

3,123

2,544

2,213

Earnings per share

4.8p

3.8p

1.0p

3.2p

1.6p

Return on tangible equity

17.1%

14.1%

3.0pp

11.6%

5.5pp

At 30 Jun 2026

At 31 Mar 2026

Change

At 31 Dec 2025

Change

Tangible net assets per share

57.0p

57.9p

(0.9)p

57.0p

Restructuring costs for the first half of 2026 were £34 million (half-year to 30 June 2025: £9 million), including charges related to Lloyds Wealth (previously Schroders Personal Wealth) and Curve. Volatility and other items were a net gain of £112 million for the first half of 2026 (half-year to 30 June 2025: net loss of £48 million). This included a gain from market and other volatility of £186 million (half-year to 30 June 2025: gain of £27 million), as a result of positive market volatility, including an impact from policyholder tax which is offset within the Group's tax charge, partially offset by regular charges for the amortisation of purchased intangibles of £65 million (half-year to 30 June 2025: £40 million) and fair value unwind of £9 million (half-year to 30 June 2025: £35 million). The increase in amortisation of purchased intangibles includes charges from the full acquisition of Schroders Personal Wealth (now Lloyds Wealth) in the fourth quarter of 2025. The reduction in fair value unwind resulted from the maturity of debt instruments, fair valued as part of the HBOS acquisition and from Tusker fleet assets in the second half of 2025.

The return on tangible equity for the period was 17.1% (half-year to 30 June 2025: 14.1%) and 17.0% for the second quarter. The Group continues to expect the return on tangible equity for 2026 to be greater than 16%.

Tangible net assets per share at 30 June 2026 were 57.0 pence, in line with 31 December 2025. Attributable profit and a reduction in the number of shares in issue due to the ongoing ordinary share buyback announced in January 2026 were offset by capital distributions in respect of 2025, including the payment of the final ordinary dividend in May 2026, alongside increased longer-term rates impacting the cash flow hedge reserve. As at 30 June 2026, tangible net assets per share were reduced by 1.0 pence as a result of the usual temporary accrual for the ongoing share buyback without the corresponding reduction in the number of shares. This will reverse in the third quarter.

The Group recognised a tax expense of £1,170 million in the first half of 2026 (half-year to 30 June 2025: £960 million), representing an effective tax rate of 27%. The Group expects a medium-term effective tax rate of around 27% based on the banking surcharge rate of 3% and the corporation tax rate of 25%. The Group recognised a tax expense of £700 million in the second quarter, representing an effective tax rate of 31%. This is due to the policyholder tax charge in the quarter which is offset within profit before tax. An explanation of the relationship between the tax expense and the Group's accounting profit for the period is set out on page 69.

SUMMARY OF GROUP RESULTS

(continued)

Balance sheet

At 30 Jun

2026

At 31 Mar 2026

Change

At 31 Dec 2025

Change

Underlying loans and advances to customers

A,1

£491.5bn

£486.2bn

£481.1bn

Customer deposits

£500.9bn

£495.9bn

£496.5bn

Loan to deposit ratio

98%

97%

1pp

Wholesale funding

£107.8bn

£108.6bn

(1)

£95.6bn

Wholesale funding <1 year maturity

£42.9bn

£45.7bn

(6)

£33.2bn

of which: money market funding <1 year maturity

£30.2bn

£32.3bn

(7)

£22.8bn

Liquidity coverage ratio - eligible assets

£131.0bn

£130.6bn

£131.4bn

Liquidity coverage ratio

144%

145%

(1)pp

Net stable funding ratio

123%

124%

(1)pp

Total underlying expected credit loss allowance

£3,257m

£3,343m

(3)

£3,353m

(3)

The increase between 31 March 2026 and 30 June 2026 is net of the impact of the securitisation of £1.8 billion of primarily legacy Retail mortgages in April 2026.

Eligible assets are calculated as an average of month-end observations over the last 12 months post any liquidity haircuts.

The liquidity coverage ratio is calculated as an average of month-end observations over the last 12 months.

The net stable funding ratio is calculated as an average of the last four quarter-end observations.

In the first half of 2026, underlying loans and advances to customers increased by £10.4 billion, to £491.5 billion. This included growth within Retail, with an increase of £1.8 billion in UK mortgages, net of the impact of a securitisation of £1.8 billion of primarily legacy Retail mortgages in the second quarter, alongside growth across credit cards, UK Retail unsecured loans, UK Motor Finance and the European retail business, totalling £3.1 billion. Securitisation activity is conducted to manage risk on the balance sheet and to offset regulatory capital pressures, where market opportunities allow net present value positive transactions for the Group. In the second quarter of 2026, Retail underlying loans and advances to customers increased by £1.5 billion, net of the £1.8 billion mortgage securitisation, largely driven by growth in credit cards and UK Retail unsecured loans. Within Commercial Banking lending balances increased by £5.9 billion in the first half of 2026 (including £3.1 billion in the second quarter), reflecting growth across Corporate and Institutional Banking and Business and Commercial Banking, net of continued government-backed lending repayments.

Customer deposits of £500.9 billion increased by £4.4 billion in the first half of 2026. Retail deposits of £321.8 billion were down by £3.4 billion, driven by lower Retail UK savings account balances largely in the first quarter, primarily due to disciplined pricing decisions throughout the tax year-end. Retail UK current account balances were broadly stable, supported by the strength of the Group's franchise and proposition. In the second quarter of 2026, Retail deposits decreased by £0.3 billion. Commercial Banking deposits of £178.6 billion were up £7.5 billion in the first half of 2026 and up £5.2 billion in the second quarter, with growth in targeted sectors.

The Group saw growth of £2.7 billion net new money in Insurance, Pensions and Investments open book assets under administration (AuA) during the first half of 2026. Open book AuA stand at £251 billion as at 30 June 2026.

The Group has a large, high quality liquid asset portfolio held mainly in cash and government bonds, with all assets hedged for interest rate risk. The Group's liquid assets continue to significantly exceed regulatory requirements and internal risk appetite, with a strong, stable liquidity coverage ratio of 144% at 30 June 2026 (31 December 2025: 145%) and a net stable funding ratio of 123% (31 December 2025: 124%). The loan to deposit ratio of 98% (31 December 2025: 97%), slightly up versus 31 December 2025, continues to reflect a robust funding and liquidity position.

SUMMARY OF GROUP RESULTS

(continued)

Balance sheet

(continued)

The underlying expected credit loss (ECL) allowance reduced slightly in the first half to £3,257 million (31 December 2025: £3,353 million) following the derecognition of mortgage assets after a securitisation transaction. The uplift from base case to probability-weighted ECL is £342 million (31 December 2025: £366 million). The ECL allowance includes judgemental adjustments which increase the ECL by £153 million (31 December 2025: £242 million increase to ECL). The decrease in adjustments previously held reflects continued enhancements within models and the removal of the global tariff and political disruption risks adjustment now considered to be adequately captured within assumptions and resulting modelled provisions.

Capital

At 30 Jun

2026

At 31 Mar 2026

Change

At 31 Dec 2025

Change

CET1 ratio

13.6%

13.4%

0.2pp

14.0%

(0.4)pp

Pro forma CET1 ratio

A,1

13.1%

13.4%

(0.3)pp

13.2%

(0.1)pp

UK leverage ratio

5.1%

5.4%

(0.3)pp

Risk-weighted assets

£241.8bn

£240.8bn

£235.5bn

Capital generation

Pro forma CET1 ratio as at 31 December 2025

A,1

13.2%

Banking build (bps)

116

Insurance dividend (bps)

Risk-weighted assets (bps)

(36)

Other movements (bps)

Capital generation (bps)

108

Ordinary dividend (bps)

(61)

Share buyback accrual (bps)

(44)

Curve acquisition

(7)

Pro forma CET1 ratio as at 30 June 2026

A,4

13.1 %

31 December 2025 pro forma CET1 ratio reflects the full impact of the share buyback in respect of 2025, announced in January 2026.

Includes impairment charge and excess regulatory expected losses.

Includes share-based payments and market volatility.

30 June 2026 pro forma CET1 ratio reflects the full impact of the share buyback in respect of the first half of 2026, announced in July 2026.

The Group's pro forma CET1 capital ratio at 30 June 2026 was 13.1% (31 December 2025: 13.2% pro forma). Capital generation during the first half of the year was 108 basis points (67 basis points in the second quarter). This reflected strong banking build and the £100 million interim ordinary dividend received from the Insurance business in June 2026, partially offset by risk-weighted asset increases mainly driven by customer lending. The Group has accrued a foreseeable ordinary dividend of 61 basis points, including the announced interim ordinary dividend of 1.58 pence per share, with a further 44 basis points to cover the accrual for the announced ordinary share buyback programme of up to £1.0 billion. The acquisition of Curve, completed in May 2026, utilised 7 basis points of capital. The Group continues to expect capital generation in 2026 of greater than 200 basis points]. Excluding the full impact of the announced ordinary share buyback programme, the Group's CET1 capital ratio at 30 June 2026 was 13.6% (31 December 2025: 14.0%).

Risk-weighted assets increased by £6.3 billion to £241.8 billion at 30 June 2026 (31 December 2025: £235.5 billion), largely reflecting the impact of strong customer lending growth and other movements, partially offset by continued optimisation, including risk transfer and securitisation activity across Commercial Banking and Retail.

SUMMARY OF GROUP RESULTS

(continued)

Capital

(continued)

The Group's Retail secured CRD IV models remain subject to review and approval by the PRA and therefore uncertainty remains on the final outcome. The Group continues to expect the initial impact of Basel 3.1 implementation on 1 January 2027 to result in a Day 1 risk-weighted assets reduction in the range of c.£6 billion to c.£8 billion.

The Group's total regulatory CET1 capital requirement remains c.12% of risk-weighted assets. This includes the Pillar 2A CET1 capital requirement of c.1.4% of risk-weighted assets. The Board's view of the ongoing level of total CET1 capital required to grow the business, meet current and future regulatory requirements and cover economic and business uncertainties remains c.13.0%. This includes a management buffer of c.1%. The Board intends to pay down to the CET1 capital target of c.13.0% by the end of 2026.

Dividend and share buyback

The Group has a progressive and sustainable ordinary dividend policy whilst maintaining the flexibility to return further surplus capital through share buybacks or special dividends. The Board has recommended an interim ordinary dividend of 1.58 pence per share, equivalent to £918 million, representing an increase of 30% compared to the first half of 2025. This significant step-up reflects the actions taken to derisk the business, our strong capital position and confidence in the future earnings trajectory of the Group and is consistent with the Board's commitment to a progressive and sustainable ordinary dividend.

In January 2026, the Board decided to return surplus capital in respect of 2025 through an ordinary share buyback programme of up to £1.75 billion, which commenced on 30 January 2026. As at 30 June 2026, the Group had repurchased c.1.2 billion shares at a cost of £1.2 billion and an average share price of 98.1 pence.

As announced in the Group's full year 2025 results, given the Board's confidence in continued capital generation, the Group now reviews excess capital distributions in addition to the ordinary dividend every half-year. Given the Group's strong capital generation and capital position in the first half of the year, the Board has announced its intention to implement a further ordinary share buyback programme of up to £1.0 billion, which is expected to complete by 27 January 2027, the day before the announcement of the Group's 2026 preliminary results.

DIVISIONAL RESULTS

Segmental analysis - underlying basis

Half-year to 30 June 2026

Retail

£m

Commercial

Banking

£m

Insurance,

Pensions and

Investments

£m

Equity

Investments

and Central

Items

£m

Group

£m

Underlying net interest income

5,139

2,014

(71)

196

7,278

Underlying other income

1,406

889

818

197

3,310

Operating lease depreciation

(835)

(6)

(841)

Net income

5,710

2,897

747

393

9,747

Operating costs

(2,872)

(1,409)

(494)

(101)

(4,876)

Remediation

(17)

(12)

(7)

(3)

(39)

Total costs

(2,889)

(1,421)

(501)

(104)

(4,915)

Underlying profit before impairment

2,821

1,476

246

289

4,832

Underlying impairment charge

(565)

(51)

(1)

(617)

Underlying profit

2,256

1,425

245

289

4,215

Banking net interest margin

2.75%

5.14%

3.19%

Average interest-earning banking assets

£394.7bn

£81.0bn

£475.7bn

Asset quality ratio

0.29%

0.10%

0.25%

Underlying loans and advances to customers

A,1

£395.3bn

£96.2bn

£491.5bn

Customer deposits

£321.8bn

£178.6bn

£0.5bn

£500.9bn

Risk-weighted assets

£133.1bn

£81.3bn

£0.8bn

£26.6bn

£241.8bn

Half-year to 30 June 2025

Retail

£m

Commercial

Banking

£m

Insurance,

Pensions and

Investments

£m

Equity Investments and Central

Items

£m

Group

£m

Underlying net interest income

4,709

1,766

(78)

258

6,655

Underlying other income

1,276

926

689

2,969

Operating lease depreciation

(706)

(4)

(710)

Net income

5,279

2,688

611

336

8,914

Operating costs

(2,922)

(1,394)

(466)

(92)

(4,874)

Remediation

(41)

(2)

(37)

Total costs

(2,963)

(1,394)

(468)

(86)

(4,911)

Underlying profit before impairment

2,316

1,294

143

250

4,003

Underlying impairment (charge) credit

(342)

(100)

(1)

(442)

Underlying profit

1,974

1,194

144

249

3,561

Banking net interest margin

2.64%

4.82%

3.04%

Average interest-earning banking assets

£380.0bn

£77.8bn

£457.8bn

Asset quality ratio

0.18%

0.23%

0.19%

Underlying loans and advances to customers

A,1

£381.6bn

£88.8bn

£0.6bn

£471.0bn

Customer deposits

£323.4bn

£170.2bn

£0.3bn

£493.9bn

Risk-weighted assets

£127.5bn

£76.6bn

£0.4bn

£26.9bn

£231.4bn

Equity Investments and Central Items includes central fair value hedge accounting adjustments.

DIVISIONAL RESULTS

(continued)

Segmental analysis - underlying basis

(continued)

Half-year to 31 December 2025

Retail

£m

Commercial

Banking

£m

Insurance,

Pensions and

Investments

£m

Equity Investments and Central

Items

£m

Group

£m

Underlying net interest income

4,928

1,904

(73)

221

6,980

Underlying other income

1,360

899

742

150

3,151

Operating lease depreciation

(739)

(5)

(744)

Net income

5,549

2,798

669

371

9,387

Operating costs

(2,885)

(1,459)

(467)

(76)

(4,887)

Remediation

(890)

(27)

(13)

(1)

(931)

Total costs

(3,775)

(1,486)

(480)

(77)

(5,818)

Underlying profit before impairment

1,774

1,312

189

294

3,569

Underlying impairment (charge) credit

(392)

(3)

(353)

Underlying profit

1,382

1,352

186

296

3,216

Banking net interest margin

2.65%

5.04%

3.08%

Average interest-earning banking assets

£389.1bn

£78.8bn

£467.9bn

Asset quality ratio

0.20%

(0.09)%

0.15%

Underlying loans and advances to customers

A,1

£390.3bn

£90.3bn

£0.5bn

£481.1bn

Customer deposits

£325.2bn

£171.1bn

£0.2bn

£496.5bn

Risk-weighted assets

£130.4bn

£78.5bn

£0.5bn

£26.1bn

£235.5bn

Equity Investments and Central Items includes central fair value hedge accounting adjustments.

DIVISIONAL RESULTS

(continued)

Retail

Retail provides a broad range of financial services to UK personal customers, including current accounts, savings, mortgages, credit cards, unsecured lending and motor finance, alongside a growing European mortgages and savings business. Through market leading products and a focus on deepening customer relationships, Retail aims to meet more of its customer needs across the lifecycle, within a prudent risk appetite, while embedding consumer duty principles and delivering good customer outcomes.

Strategic progress

• UK's largest digital bank with c.22 million customers actively using the Group's mobile apps

• Since launch over 61,000 Lloyds Premier accounts opened, with more than one and a half times greater depth of relationship versus our Retail customer base with over 20% of Premier customers new to Lloyds

• Launched Lloyds rewards, a new experience with a range of offers, challenges and prize draws, with over 8 million customers visiting rewards in 2026

• Completed acquisition of Curve, a pioneering digital wallet provider, fast-tracking new customer propositions

• Tusker fleet has exceeded 100,000 vehicles for the first time with 50% growth in new vehicle orders year on year. By making EVs more accessible through Tusker, the Group is supporting the UK's net zero ambition

• Named Best Credit Card Provider at the Moneyfacts Awards, recognising commitment to offering customers good-value, easy-to-use credit card products supported by launch of Lloyds Ultra and Lloyds Advance in 2025

• Lent c.£8 billion to over 33,000 first time home buyers. £500 million additional lending recently made available through launch of £5,000 deposit mortgage scheme to support first time buyers

• Started roll out of 'Explore Your Spending', the first large scale conversational money management experience in UK banking, helping customers better manage their money with agentic AI powered insights

• Expanded the use of AI across fraud response systems, with a new agentic AI system created to support colleagues during customer journeys in real time, enabling faster, more informed decision making, alongside enhancing digital self service journeys in fraud prevention

• To accelerate to 2030, the division's priorities are to deepen primary relationships through rewards and to create customer value with innovative, data-led cross-Group propositions such as the UK's first integrated Transport ecosystem already launched in the Lloyds app

• Alongside scaling leadership positions (e.g. Homes and Unsecured) with broader, transformed experiences such as a new digital Homes journey

• Growth will be underpinned by scaling the next-generation core banking engine to significantly accelerate product-service speed to market and by scaling agentic servicing solutions to improve cost-to-serve and customer experiences

Financial performance

• Underlying net interest income increased 9%, with stronger structural hedge earnings and higher unsecured loan balances, partially offset by continued mortgage refinancing headwinds

• Underlying other income up 10% from fleet growth and higher average vehicle rental values in UK Motor Finance

• Operating lease depreciation increased 18% due to a charge in the second quarter for declines in used car prices alongside fleet growth and the depreciation of higher value vehicles, partially offset by continued risk mitigation

• Operating costs down 2%, with continued cost savings and lower severance expense, partially offset by business growth costs and inflationary pressures. Remediation costs of £17 million, across a small number of programmes

• Underlying impairment charge of £565 million, higher than the prior period which benefitted from improvements to house price expectations. The higher charge reflects model updates and a more normalised level of impairment alongside balance sheet growth. Strong and stable credit performance observed across portfolios

• Underlying loans and advances to customers of £395.3 billion, up £5.0 billion, with an increase of £1.8 billion in UK mortgages (net of the securitisation of £1.8 billion of primarily legacy balances in April 2026), alongside growth across credit cards, UK Retail unsecured loans, UK Motor Finance and the European retail business, totalling £3.1 billion

• Customer deposits of £321.8 billion, down £3.4 billion, including a reduction of £3.3 billion in Retail UK savings account balances primarily due to disciplined pricing decisions throughout tax year-end. Personal current account balances broadly in line with 31 December 2025

• Risk-weighted assets up 2%, given strong lending growth and other movements, partially offset by optimisation activity, including the £1.8 billion securitisation of primarily legacy UK mortgages

DIVISIONAL RESULTS

(continued)

Retail

(continued)

Retail performance summary

Half-year to 30 Jun 2026

£m

Half-year to 30 Jun 2025

£m

Change

Half-year to 31 Dec

2025

£m

Change

Underlying net interest income

5,139

4,709

4,928

Underlying other income

1,406

1,276

1,360

Operating lease depreciation

(835)

(706)

(18)

(739)

(13)

Net income

5,710

5,279

5,549

Operating costs

(2,872)

(2,922)

(2,885)

Remediation

(17)

(41)

(890)

Total costs

(2,889)

(2,963)

(3,775)

Underlying profit before impairment

2,821

2,316

1,774

Underlying impairment charge

(565)

(342)

(65)

(392)

(44)

Underlying profit

2,256

1,974

1,382

Banking net interest margin

2.75%

2.64%

11bp

2.65%

10bp

Average interest-earning banking assets

£394.7bn

£380.0bn

£389.1bn

Asset quality ratio

0.29%

0.18%

11bp

0.20%

9bp

At 30 Jun 2026

£bn

At 31 Mar 2026

£bn

Change

At 31 Dec 2025

£bn

Change

UK mortgages

324.9

324.7

323.1

Credit cards

18.2

17.6

17.3

UK Retail unsecured loans

11.1

10.9

10.5

UK Motor Finance

17.1

16.8

16.4

Overdrafts

1.3

Retail Europe

21.3

21.1

20.4

UK private bank

1.3

1.2

1.1

Retail other

0.1

0.2

(50)

0.2

(50)

Underlying loans and advances to customers

395.3

393.8

390.3

Operating lease assets

8.6

8.4

8.2

Total customer assets

403.9

402.2

398.5

Current accounts

103.2

103.4

102.8

Savings accounts

193.9

194.1

197.2

(2)

Retail Europe

15.3

15.0

15.3

UK private bank

9.4

9.6

(2)

9.9

(5)

Customer deposits

321.8

322.1

325.2

(1)

Risk-weighted assets

133.1

131.9

130.4

The increase between 31 March 2026 and 30 June 2026 is net of the impact of the securitisation of £1.8 billion of primarily legacy Retail mortgages in April 2026.

UK Motor Finance balances on an underlying basis

exclude a finance lease gross up. See page 94.

Operating lease assets relate to Lex Autolease and Tusker.

Renamed from the first quarter of 2026, previously Wealth.

DIVISIONAL RESULTS

(continued)

Commercial Banking

Commercial Banking serves small and medium-sized businesses and corporate and institutional clients, providing lending, transactional banking, working capital management, debt financing and risk management services, whilst connecting customers across the Group. Through investment in digitisation, product development, coverage and capabilities, Commercial Banking delivers an enhanced customer experience via a digital-first model in Business and Commercial Banking (BCB) and an expanded client proposition in Corporate and Institutional Banking (CIB).

Strategic progress

• Supporting businesses in Helping Britain Prosper through access to expertise, funding and networks. From supporting sustainability through SaveMoneyCutCarbon to championing diverse entrepreneurs through Black in Business with Channel 4, the Group is creating opportunities for businesses and communities across the UK

• First ranking for markets business in sterling Debt Capital Markets

and G3 currencies Structured Finance

. Awarded 'Best Bank in FX trading and FX service for Corporates in Europe' (UK Market) by Crisil Coalition Greenwich and delivered c23% year-on-year growth in foreign exchange volumes

• International CIB presence enhanced with US capabilities and growth, adding new clients, and launching an LBCM branch in Luxembourg to serve clients across Europe

• Awarded 'Best Bank for Digitalisation' by Global Trade Review for the third consecutive year and 'Best Cash, Liquidity and/or Risk Management provider (Europe)' by Trade Treasury and Payments

• Already achieved the three year sustainable financing commitment of £30 billion

. Partnered with the National Wealth Fund to support decarbonisation of university buildings by providing up to £500 million in financing

• Partnered with BankiFi to integrate record keeping, tax filing and payments together in Online for Business, helping customers stay on top of their finances and prepare for Making Tax Digital with confidence

• Made international payments faster and easier, with a streamlined experience and SWIFT GPI tracking, ensuring customers can track their money online and providing greater visibility when sending money overseas

• Launched Lloyds Accept with Stripe in June, with over 1,500 customer applications, enabling small businesses to accept card payments via Tap to Pay, payment links or QR codes, helping them simplify and improve cash flow

• Leading digital transformation at scale, strengthening our proposition by leveraging AI to expand our FX Convert capabilities, extended cut-off times for International Payments and a new Open Account platform

• To accelerate to 2030, the division's priorities are to broaden its reach in BCB, with strengthened propositions in a more integrated, digital-first offering alongside enhancing its cash, debt, risk capabilities within CIB, including through capability enhancement and measured international expansion

• Growth will be underpinned by investment in platforms allowing scale benefits and flexibility, more productive Relationship Managers augmented by AI, and selective expansion of originate to distribute capabilities building on strong institutional business to improve return on capital

Financial performance

• Underlying net interest income of £2,014 million, up 14% on the prior year, underpinned by strength in deposits, including structural hedge refinancing benefits

• Underlying other income decreased 4% to £889 million, with higher revenues from increased transaction banking and loan markets activity more than offset by the impact of continued UK market volatility and macroeconomic uncertainty, impacting the Group's UK focused trading business

• Operating costs up 1% with business growth costs and inflationary pressures, partially offset by continued cost savings and a lower severance expense. Remediation costs of £12 million across a small number of programmes

• Underlying impairment charge of £51 million, lower than prior year which reflected deterioration in the economic outlook. Strong and stable credit performance with continued low levels of default across the portfolio

• Customer lending 7% higher at £96.2 billion, reflecting strong growth in Corporate and Institutional balances including securitised products and corporate infrastructure, alongside growth in Business and Commercial Banking, particularly after the impact of government‑backed lending repayments

• Customer deposits 4% higher at £178.6 billion, with growth in targeted sectors

• Risk-weighted assets 4% higher at £81.3 billion, driven by lending growth in both Corporate and Institutional Banking and Business and Commercial Banking, partially offset by optimisation activity

Source: LSEG Workspace: UK issuer Debt Capital Markets; Investment-grade bonds (excluding Sovereign, supranational and agency; UK Issuer Structured Finance (excluding collateralised debt obligations).

In line with the Group's Sustainable Financing Framework: sustainable financing since 1 January 2024.

DIVISIONAL RESULTS

(continued)

Commercial Banking

(continued)

Commercial Banking performance summary

Half-year to 30 Jun 2026

£m

Half-year to 30 Jun 2025

£m

Change

Half-year to 31 Dec

2025

£m

Change

Underlying net interest income

2,014

1,766

1,904

Underlying other income

889

926

(4)

899

(1)

Operating lease depreciation

(6)

(4)

(50)

(5)

(20)

Net income

2,897

2,688

2,798

Operating costs

(1,409)

(1,394)

(1)

(1,459)

Remediation

(12)

(27)

Total costs

(1,421)

(1,394)

(2)

(1,486)

Underlying profit before impairment

1,476

1,294

1,312

Underlying impairment (charge) credit

(51)

(100)

(49)

Underlying profit

1,425

1,194

1,352

Banking net interest margin

5.14%

4.82%

32bp

5.04%

10bp

Average interest-earning banking assets

£81.0bn

£77.8bn

£78.8bn

Asset quality ratio

0.10%

0.23%

(13)bp

(0.09%)

19bp

At 30 Jun

2026

£bn

At 31 Mar 2026

£bn

Change

At 31 Dec 2025

£bn

Change

Business and Commercial Banking

28.7

28.3

Corporate and Institutional Banking

67.5

64.4

62.0

Loans and advances to customers

96.2

93.1

90.3

Customer deposits

178.6

173.4

171.1

Risk-weighted assets

81.3

81.7

(1)

78.5

DIVISIONAL RESULTS

(continued)

Insurance, Pensions and Investments

Insurance, Pensions and Investments (IP&I) serves c.10 million customers, holds a top three market share across Home, Workplace and Individual Annuities businesses and has a total of £303 billion in assets under administration. The division continues to invest significantly to enhance and innovate propositions, leverage our customer relationships across the Group and drive strong customer service.

Strategic progress

• Announced the rebranding of Schroders Personal Wealth to 'Lloyds Wealth', the Group's wealth offering, with financial advice available to existing and prospective Group customers, providing a major growth opportunity

• Growth of 21% in open book AuA to £251 billion (30 June 2025: £207 billion)

and AuA net flows of £2.7 billion, with a significant contribution from the Workplace business, direct to consumer and Lloyds Wealth

• Onboarded the Group's UK defined contribution pension provision to the Scottish Widows Master Trust (SWMT), with c.50,000 colleague contributions paid from May 2026. The phased transfer of c.£7 billion of assets to the SWMT from the Your Tomorrow pension scheme is expected to begin in the fourth quarter of 2026 and complete by the end of 2027

• Record ISA subscriptions of £1.3 billion in the 2025 to 2026 tax year across Ready-Made Investments and stockbroking, reflecting continued customer demand and engagement

• Digital adoption continues to grow strongly across Scottish Widows, with the core app now serving over 1 million users after 79% year-on-year growth

• Launched InvestAI within the Scottish Widows app, providing investment guidance to customers with planned targeted support to help us bridge the advice gap for the 90% of UK adults not able to access financial advice

• Climate-aware investment strategies of £91.7 billion, with the original target already met

• Increased Protection market share to 10.4% (31 March 2025: 7.5%) with strong intermediary and direct channel performance and, despite a smaller direct online home insurance market, experienced positive year-on-year growth (up 9%) in line with our bancassurance ambition. Amongst banking peers our share of bank online home insurance new business is now over half of the market

• Industry leading Trustpilot scores as at 30 June 2026 of 4.6 stars for Scottish Widows, 4.7 for Lloyds Insurance, and 4.9 for Lloyds Wealth driven by investment in automation, AI adoption, training, and migration of policies

• To accelerate to 2030, the division's priorities are to drive growth by building a strong Wealth ecosystem that stretches from pensions, to self-directed products and to advice integrating with opportunities from the division's other areas (for example, Workplace)

• Alongside, the ambition is to further reinforce the distinctive bancassurance approach via comprehensive and integrated life and general insurance propositions, addressing the needs of the Group's 28 million customers

• Growth will be underpinned by a scale operating model that leverages both agentic solutions and simplification to ensure a radically improved cost to serve across Insurance, Pensions and Investments

Financial performance

• Underlying profit of £245 million, up 70%. This includes underlying other income of £818 million, up 19%, driven by strong business performance in the Workplace business and the integration of Lloyds Wealth. Excluding Lloyds Wealth, underlying profit was £189 million, up 31%

• Operating costs up 6%. Excluding Lloyds Wealth operating costs were down 6% with continued cost savings, partially offset by business growth costs and inflationary pressures

• Balance of deferred profit (including the risk adjustment) stands at £5.2 billion (after release to income of £225 million), broadly flat to 31 December 2025 and includes £60 million from new business, reflecting higher annuity volumes and increased Workplace membership

• Life and pensions sales (PVNBP) up 61%, driven by a higher contribution from Workplace, Protection, Annuities and Scottish Widows Platform businesses

• Payment of a £100 million interim dividend in June 2026 to Lloyds Banking Group plc, supported by a strong capital position with an estimated pre-dividend Insurance Solvency II ratio of 150% (146% post dividend)

Comparative presented on a consistent basis to include Lloyds Wealth open book AuA of £16 billion at 30 June 2025.

Refers to funds that have a focus on investment in or tilted towards companies that are either adapting their business to reduce carbon emissions or developing solutions to address climate change. Scottish Widows Lifetime Investment has climate aware ESG-tilted indices developed in partnership with Robeco.

Home insurance Market Share information from internal analysis of eBenchmarkers data. Reflects year to date information as at 31 May 2026. Protection as per the Association of British Insurers, reflects year to date information as at 31 March 2026.

DIVISIONAL RESULTS

(continued)

Insurance, Pensions and Investments

(continued)

Insurance, Pensions and Investments performance summary

Half-year to 30 Jun 2026

£m

Half-year to 30 Jun 2025

£m

Change

Half-year to 31 Dec

2025

£m

Change

Underlying net interest income

(71)

(78)

(73)

Underlying other income

818

689

742

Net income

747

611

669

Operating costs

(494)

(466)

(6)

(467)

(6)

Remediation

(7)

(2)

(13)

Total costs

(501)

(468)

(7)

(480)

(4)

Underlying profit before impairment

246

143

189

Underlying impairment (charge) credit

(1)

(3)

Underlying profit

245

144

186

Life and pensions sales (PVNBP)

A,1

12,855

7,975

13,072

(2)

New business value of insurance and participating investment contracts recognised in the year

A,2

of which: deferred to contractual service margin and risk adjustment

of which: losses recognised on initial recognition

(6)

(5)

(20)

(8)

(25)

Assets under administration (open book net flows)

A,3

£2.7bn

£2.8bn

(4)

£5.1bn

(47)

General insurance underwritten new gross written premiums

(10)

(13)

General insurance underwritten total gross written premiums

365

367

(1)

395

(8)

General insurance combined ratio

92%

88%

4pp

91%

1pp

At 30 Jun

2026

At 31 Mar 2026

Change

At 31 Dec 2025

Change

Insurance Solvency II ratio (pre-dividend)

150%

149%

1pp

144%

6pp

Total customer assets under administration

A,3

£303.4bn

£274.0bn

£279.6bn

Present value of new business premiums can fluctuate due to timing of new schemes.

New business value represents the value added to the contractual service margin and risk adjustment at the initial recognition of new contracts, net of acquisition expenses and any loss component on onerous contracts (which is recognised directly in the income statement) but does not include existing business increments.

The movement in asset inflows and outflows driven by business activity (excluding market movements). Following the full acquisition of Schroders Personal Wealth (now Lloyds Wealth) in the fourth quarter of 2025, this presentation includes Wealth AuAs (previously reported within Retail). For the half-year to 31 December 2025, total customer assets under administration and net flows includes £18 billion and £0.5 billion respectively and the comparative period for the half-year to 30 June 2025 has been shown on a consistent basis.

Equivalent estimated regulatory view of ratio (including With-Profits funds and post dividend where applicable) was 142% post June 2026 dividend, (31 March 2026: 142%, 31 December 2025: 140%).

DIVISIONAL RESULTS

(continued)

Insurance, Pensions and Investments

(continued)

Breakdown of net income

Half-year to 30 June 2026

Half-year to 30 Jun 2025

Deferred

profit release

£m

Other in-year profit

£m

Total

£m

Deferred

profit release

£m

Other in-year profit

£m

Total

£m

Life open book (pensions, individual annuities, Wealth and protection)

191

295

486

177

169

346

Non-life (General insurance)

135

150

Other items

126

115

Net income

225

522

747

212

399

611

Total deferred profit release is represented by contractual service margin (CSM) and risk adjustment releases from holdings on the balance sheet. CSM is released as insurance contract services are provided; risk adjustment is released as uncertainty within the calculation of the liabilities diminishes. Amounts are shown net of reinsurance.

For the half-year to 30 June 2026, other in-year profit for life open book includes Lloyds Wealth.

Other items represents the income from longstanding business, return on shareholder assets and interest on subordinated debt and European business.

Movement in the deferred profit

(contractual service margin (CSM) and risk adjustment)

Life open book

£m

Other products

£m

Bulk annuities

£m

Total

£m

Deferred profit at 1 January 2026

4,449

776

5,225

New business

Release to income statement

(191)

(34)

(225)

Other movements

130

143

Deferred profit at 30 June 2026

4,448

755

5,203

Deferred profit at 1 January 2025

4,216

686

118

5,020

New business

Release to income statement

(177)

(35)

(212)

Other movements

208

(118)

138

Deferred profit at 30 June 2025

4,289

699

4,988

Deferred profit at 1 July 2025

4,289

699

4,988

New business written

Release to income statement

(169)

(32)

(201)

Other movements

278

109

387

Deferred profit at 31 December 2025

4,449

776

5,225

Total deferred profit is represented by CSM and risk adjustment, both held on the balance sheet. CSM is released as insurance contract services are provided; risk adjustment is released as uncertainty within the calculation of the liabilities diminishes. Amounts are shown net of reinsurance.

Other products includes longstanding business and European business.

The movement in bulk annuities for the first half of 2025 reflects the completion of the sale of the in-force bulk annuity portfolio to Rothesay Life plc, with the impact of the related reinsurance agreement included within Other movements.

DIVISIONAL RESULTS

(continued)

Equity Investments and Central Items

Equity Investments and Central Items includes the Group's equity investment businesses, including LDC, Lloyds Living, the Housing Growth Partnership (HGP), the Group's share of the Business Growth Fund (BGF) and the MADE Partnership joint venture. LDC is a leading private equity investor, supporting more than 90 growing SMEs across all regions and sectors of the UK economy who employ over 25,000 people combined. LDC has more than £2 billion assets under management. Lloyds Living is the Group's residential landlord business with c.8,900 homes in operation or contracted as at 30 June 2026.

Strategic progress

• Invested c.£190 million in 9 SMEs through LDC and supported companies in making 16 acquisitions, continuing the positive momentum from 2025

• LDC exited 7 investments, generating proceeds of £437 million

• Lloyds Living portfolio continued to grow strongly in the first half of 2026 with a completed portfolio of c.6,300 homes and c.2,650 additional homes under development

• Stabilised scheme occupancy in Lloyds Living remains at 95% with rental growth tracking at over 4% (annualised basis)

• Helped support transition to a low-carbon economy with a total of c.3,000 all-electric homes either operational or contracted, including over a 100-home zero bills pilot with Octopus Energy

• Began to scale in-house property management business, Lloyds Living Property Management

• Under its Pathways brand, Lloyds Living has c.350 shared ownership homes operational or contracted to date. Working closely with Corporate and Institutional Banking clients to scale further, with an ambition of delivering c.5,000 homes by 2030

• In HGP, £20 million of follow-on equity support agreed to help partners across eight sites and dedicated 115 days to senior advisor support to help advise SME's on how to deal with the challenging environment

• MADE Partnership secured revised outline planning approval for Godley Green Garden Village (for up to 2,150 homes) with the first stage of infrastructure scheduled to commence in January 2027. Secured a revision to outline planning on Handforth Garden village (for up to 1,500 homes), again with an aim to start works in 2027

• To accelerate to 2030, the division's priorities are to consolidate LDC's market leading position through closer Group collaboration with Business and Commercial Banking and supporting high growth businesses through the lifecycle

• Lloyds Living will build value, increase connectivity to broader-Group solutions and scale its homes portfolio to become the UK's leading institutional single family home private rental landlord, including growth through its Pathways brand

• Growth will be underpinned by investing in our propositions to enhance customer service, cost-to-serve and reducing risk in Lloyds Living through quality in-house property management operations

Financial performance

• Net income of £393 million, 17% higher than the first half of 2025, with higher underlying other income partially offset by lower underlying net interest income

• Underlying net interest income was lower given increased funding costs to support volume growth in the Group's equity and direct investment business, alongside lower divisional recharges from a reduction in structured medium-term note and AT1 distribution costs

• Underlying other income includes £375 million (half-year to 30 June 2025: £264 million), generated by the Group's equity and direct investment businesses, increasing 42% versus the first half of 2025 as a result of strong income growth from Lloyds Living (up £20 million) and strong realisations and net valuation gains in LDC (up £78 million)

• Total costs of £104 million in the half-year to 30 June 2026 increased 21% on the prior year, from business growth and higher remediation costs

DIVISIONAL RESULTS

(continued)

Equity Investments and Central Items

(continued)

Equity Investments and Central Items summary

Half-year to 30 Jun 2026

£m

Half-year to 30 Jun 2025

£m

Change

Half-year to 31 Dec

2025

£m

Change

Underlying net interest income

196

258

(24)

221

(11)

Underlying other income

197

150

Net income

393

336

371

Operating costs

(101)

(92)

(10)

(76)

(33)

Remediation

(3)

(1)

Total costs

(104)

(86)

(21)

(77)

(35)

Underlying profit before impairment

289

250

294

(2)

Underlying impairment (charge) credit

(1)

Underlying profit

289

249

296

(2)

Within this, the performance of the Group's equity investment businesses, including LDC, Lloyds Living, the Housing Growth Partnership (HGP), the Group's share of the Business Growth Fund (BGF) and the MADE Partnership joint venture, is summarised as follows:

Half-year to 30 Jun 2026

£m

Half-year to 30 Jun 2025

£m

Change

Half-year to 31 Dec

2025

£m

Change

Underlying net interest expense

(75)

(54)

(39)

(78)

Underlying other income

375

264

315

Net income

300

210

237

Total costs

(51)

(46)

(11)

(50)

(2)

Underlying profit

249

164

187

RISK MANAGEMENT

PRINCIPAL RISKS AND UNCERTAINTIES

The most significant risks faced by the Group are detailed below. External risks may impact delivery against the Group's recently updated long-term strategic objectives. They include, but are not limited to, macroeconomic and geopolitical uncertainties and inflation trends which could have implications for both consumers and businesses.

The Group's credit performance remains strong and stable; the portfolios are well positioned amid macroeconomic uncertainty and are proactively monitored to identify signs of stress.

Ongoing oversight of operational resilience risks and continuous enhancements to controls remains critical, particularly in relation to cybersecurity, IT stability and supplier risk. The Group remains committed to ensuring lessons are learned from internal and external events of disruption, which may have an impact on the Group's ability to continue operations.

The latest position on the motor finance commission redress scheme is detailed on page 87.

The Group remains committed to modernising its technology and strengthening capabilities to ensure safe and responsible use of models and tools such as artificial intelligence.

Risk management is fundamental to our business model and strategy, and enables the Group to embrace opportunities responsibly and deliver sustainable growth. Our strong risk management culture, underpinned by the Group's risk management framework (RMF), is vital in safeguarding the Group, colleagues and customers against both existing and emerging risks.

During 2026, the Group has continued to make progress in its risk transformation journey by standardising practices and streamlining processes, enabling simplification and efficiency. The RMF ensures processes are in place to facilitate robust risk management and effective decision making to deliver good outcomes for our customers.

The Group has 12 principal risks, underpinned by a suite of level two risks which are reviewed and reported regularly to the Board. The principal risks consist of capital risk, climate risk, compliance risk, conduct risk, credit risk, direct investment risk, economic crime risk, insurance underwriting risk, liquidity risk, market risk, model risk and operational risk.

Direct investment risk is a new principal risk for 2026, covering risks associated within the Group's growing equity investments sub-group. Direct investment risk is the risk that the Group's on-balance sheet equity or real estate investments lose value or underperform resulting in a loss or a lower return than anticipated.

Further information regarding the Group's principal risks is available on pages 144 to 197 of the Group's 2025 annual report and accounts.

CAPITAL RISK

Overview

CET1 target capital ratio

The Board's view of the ongoing level of CET1 capital required by the Group to grow the business, meet current and future regulatory requirements and cover economic and business uncertainties is c.13.0%, which includes a management buffer of around 1%. This takes into account, amongst other considerations:

• The minimum Pillar 1 CET1 capital requirement of 4.5% of risk-weighted assets

• The Group's Pillar 2A CET1 capital requirement, set by the PRA, which is the equivalent of around 1.4% of risk-weighted assets

• The Group's countercyclical capital buffer (CCyB) requirement, which is around 1.8% of risk-weighted assets

• The capital conservation buffer (CCB) requirement of 2.5% of risk-weighted assets

• The Ring-Fenced Bank (RFB) sub-group's other systemically important institution (O-SII) buffer of 2.0% of risk-weighted assets, which equates to 1.6% of risk-weighted assets at Group level

• The Group's PRA Buffer, set after taking account of the results of any regulatory stress tests and other information, as well as outputs from the Group's own internal stress tests. The PRA requires this buffer to remain confidential

• The likely performance of the Group in various potential stress scenarios, ensuring capital remains resilient

• The economic outlook for the UK and business outlook for the Group

• The desire to maintain a progressive and sustainable ordinary dividend policy in the context of year-to-year earnings movements

Minimum requirement for own funds and eligible liabilities (MREL)

The Group is not classified as a global systemically important bank (G-SIB) but is subject to the Bank of England's MREL statement of policy (MREL SoP) and must therefore maintain a minimum level of MREL resources. Applying the MREL SoP to current minimum capital requirements at 30 June 2026, the Group's MREL, excluding regulatory capital and leverage buffers, is the higher of 2 times Pillar 1 plus 2 times Pillar 2A, equivalent to 21.0% of risk-weighted assets, or 6.5% of the UK leverage ratio exposure measure. In addition, CET1 capital cannot be used to meet both MREL and capital or leverage buffers.

Leverage minimum requirements

The Group is currently subject to the following minimum requirements under the UK Leverage Ratio Framework:

• A minimum tier 1 leverage ratio requirement of 3.25% of the total leverage exposure measure

• A countercyclical leverage buffer (CCLB) which is currently 0.6% of the total leverage exposure measure

• An additional leverage ratio buffer (ALRB) of 0.7% of the total leverage exposure measure applies to the RFB sub-group, which equates to 0.6% at Group level

At least 75% of the 3.25% minimum leverage ratio requirement as well as 100% of all regulatory leverage buffers must be met with CET1 capital.

Stress testing

The Group undertakes a wide-ranging programme of stress testing, providing a comprehensive view of the potential impacts arising from the risks to which the Group and its key legal entities are exposed. One of the most important uses of stress testing is to assess the resilience of the operational and strategic plans of the Group and its legal entities to adverse economic conditions and other key risks. As part of this programme the Group participated in the Bank of England 2025 Bank Capital Stress Test. The scenario tests a severe negative global aggregate supply shock, leading to deep recessions globally and in the UK. In the scenario, GDP falls 5%, unemployment and inflation rise, and central banks increase interest rates (peak of 8%). The results were published in December 2025 and the report concluded that the UK banking system remains well capitalised. The Group passed the stress test, performing strongly, and was not required to take any capital actions.

CAPITAL RISK

(continued)

Capital and MREL resources

In May 2026, the Group launched a successful consent solicitation in respect of its £750 million Fixed Rate Reset AT1 securities to align their subordination provisions with those of its other AT1 instruments. This facilitates the reclassification of the Group's existing preference shares

as Tier 2 capital from 30 July 2026 and strengthens the Group's regulatory total capital position and MREL resources by c.£400 million. As this change is effective from 30 July 2026 it will initially be reflected in the Group's Q3 2026 results. An analysis of the Group's capital position and MREL resources as at 30 June 2026 is presented in the following table.

At 30 Jun 2026

£m

At 31 Dec 2025

£m

Common equity tier 1: instruments and reserves

Share capital and share premium account

24,682

24,686

Banking retained earnings

20,864

20,671

Banking other reserves

4,186

4,374

Adjustment to retained earnings for foreseeable dividends

(1,379)

(1,429)

48,353

48,302

Common equity tier 1: regulatory adjustments

Cash flow hedge reserve

2,470

2,062

Goodwill and other intangible assets

(5,844)

(5,996)

Prudent valuation adjustment

(313)

(343)

Excess of expected losses over impairment provisions and value adjustments

(827)

(631)

Removal of defined benefit pension surplus

(2,089)

(1,968)

Significant investments

(5,277)

(4,708)

Deferred tax assets

(3,633)

(3,812)

Other regulatory adjustments

Common equity tier 1 capital

32,861

32,930

Additional tier 1: instruments

Other equity instruments

5,526

5,923

Additional tier 1: regulatory adjustments

Significant investments

(800)

Total tier 1 capital

37,587

38,053

Tier 2: instruments and provisions

Subordinated liabilities

7,973

7,489

Tier 2: regulatory adjustments

Significant investments

(963)

Total capital resources

44,597

44,579

Ineligible AT1 and tier 2 instruments

(82)

(79)

Other eligible liabilities issued by Lloyds Banking Group plc

32,780

31,232

Total MREL resources

77,295

75,732

Risk-weighted assets

241,783

235,513

Common equity tier 1 capital ratio

13.6%

14.0%

Tier 1 capital ratio

15.5%

16.2%

Total capital ratio

18.4%

18.9%

MREL ratio

32.0%

32.2%

Includes 9.25% preference shares (ISIN GB00B3KS9W93), 6.413% preference shares (ISIN USG5533WAA56/US539439AC38), 6.657% preference shares (ISIN US539439AE93/US539439AF68) and 9.75% preference shares (ISIN GB00B3KSB238).

In accordance with banking capital regulations, the Group's Insurance business is excluded from the scope of the Group's capital position. The Group's investment in the equity and other capital instruments of the Insurance business are deducted from the relevant tier of capital ('Significant investments'), subject to threshold regulations that allow a portion of the equity investment to be risk-weighted rather than deducted from capital. The risk-weighted portion forms part of threshold risk-weighted assets.

Instruments not issued out of the holding company.

Includes senior unsecured debt.

CAPITAL RISK

(continued)

Movements in CET1 capital resources

The key movements are set out in the table below.

Common

equity tier 1

£m

At 31 December 2025

32,930

Banking business profits

2,999

Movement in foreseeable dividend accrual

Dividends paid on ordinary shares during the year

(1,420)

Adjustment to reflect full impact of share buyback

(1,756)

Dividends received from the Insurance business

100

Movement in treasury shares and employee share schemes

209

Fair value through other comprehensive income reserve

103

Deferred tax asset

179

Goodwill and other intangible assets

152

Excess regulatory expected losses

(196)

Significant investments

(569)

Distributions on other equity instruments

(229)

Other movements

309

At 30 June 2026

32,861

Under banking capital regulations, profits made by Insurance are removed from CET1 capital. However, when dividends are paid to the Group by Insurance these are recognised through CET1 capital.

Reflects the reversal of the brought forward accrual for the final 2025 ordinary dividend, net of the accrual for the foreseeable 2026 ordinary dividend.

Share buyback in respect of 2025, announced in January 2026.

The increase in significant investments reflects part of the impact of the internal transfer of the ownership of Lloyds Wealth Management Holdings Limited and subsidiaries to Scottish Widows Group Limited. The overall impact on CET1 capital was broadly neutral.

The Group's CET1 capital ratio reduced to 13.6% at 30 June 2026 (31 December 2025: 14.0%) reflecting the reduction in CET1 capital resources and the increase in risk-weighted assets during the period.

CET1 capital resources reduced by £69 million, with banking business profits for the first half of the year and the receipt of the dividend paid up by the Insurance business more than offset by:

• The accrual for foreseeable ordinary dividends in respect of the first half of 2026, inclusive of the announced interim ordinary dividend of 1.58 pence per share, and distributions on other equity instruments

• The recognition of the full capital impact of the ordinary share buyback programme announced as part of the Group's 2025 year end results, which commenced in January 2026

The full capital impact of the ordinary share buyback programme announced as part of the Group's 2026 half-year results is reflected through the Group's pro forma CET1 capital ratio of 13.1% at 30 June 2026.

CAPITAL RISK

(continued)

Movements in total capital and MREL

The Group's total capital ratio reduced to 18.4% at 30 June 2026 (31 December 2025: 18.9%) predominantly reflecting the decrease in CET1 capital, an AT1 instrument call and the increase in risk-weighted assets. This was partly offset by tier 2 issuance during the period.

The MREL ratio reduced to 32.0% at 30 June 2026 (31 December 2025: 32.2%) with the increase in MREL resources, reflecting the increase in other eligible liabilities, more than offset by the increase in risk-weighted assets.

Risk-weighted assets

At 30 Jun 2026

£m

At 31 Dec 2025

£m

Foundation Internal Ratings Based (IRB) Approach

47,848

47,782

Retail IRB Approach

93,812

90,354

Other IRB Approach

23,830

23,292

IRB Approach

165,490

161,428

Standardised (STA) Approach

27,840

27,166

Credit risk

193,330

188,594

Counterparty credit risk

6,837

6,835

Securitisation

9,013

8,472

Market risk

4,835

3,844

Operational risk

27,768

Risk-weighted assets

241,783

235,513

of which: threshold risk-weighted assets

10,518

10,672

Threshold risk-weighted assets are included within Other IRB Approach and Standardised (STA) Approach.

Includes credit valuation adjustment risk.

Threshold risk-weighted assets reflect the element of significant investments and deferred tax assets that are permitted to be risk-weighted instead of being deducted from CET1 capital. Significant investments primarily arise from the investment in the Group's Insurance business.

CAPITAL RISK

(continued)

Leverage ratio

The table below summarises the component parts of the Group's leverage ratio.

At 30 Jun 2026

£m

At 31 Dec 2025

£m

Total tier 1 capital

37,587

38,053

Exposure measure

Derivative financial instruments

20,731

19,727

Securities financing transactions

75,357

71,967

Loans and advances and other assets

898,069

852,378

Total statutory balance sheet assets

994,157

944,072

Qualifying central bank claims

(61,316)

(56,231)

Deconsolidation adjustments

(225,802)

(210,617)

Derivatives adjustments

(1,117)

(283)

Securities financing transactions adjustments

2,463

2,489

Off-balance sheet items

48,559

44,410

Amounts already deducted from tier 1 capital

(12,582)

(12,622)

Other regulatory adjustments

(6,243)

(2,879)

Total exposure measure

738,119

708,339

UK leverage ratio

5.1 %

5.4%

Leverage exposure measure (including central bank claims)

799,435

764,570

Leverage ratio (including central bank claims)

4.7 %

5.0%

Total MREL resources

77,295

75,732

MREL leverage ratio

10.5 %

10.7%

Deconsolidation adjustments relate to the deconsolidation of certain Group entities that fall outside the scope of the Group's regulatory capital consolidation, primarily the Group's Insurance business.

Includes adjustments to exclude lending under the UK Government's Bounce Back Loan Scheme (BBLS).

Analysis of leverage movements

The Group's UK leverage ratio reduced to 5.1% at 30 June 2026 (31 December 2025: 5.4%), reflecting the decrease in total tier 1 capital and an increase in the leverage exposure measure. The latter primarily reflects strong customer lending growth, including off-balance sheet commitments, and an increase in holdings of securities within the liquidity portfolio.

Pillar 3 disclosures

The Group will publish a condensed set of half-year Pillar 3 disclosures in the first half of August. A copy of the disclosures will be available to view at: www.lloydsbankinggroup.com/investors/financial-downloads.html.

CREDIT RISK

Overview

Credit performance has remained strong and stable in the first half of 2026, despite continued macroeconomic uncertainty. The Group maintains a prudent approach to credit risk appetite and risk management, supported by strong credit origination criteria, including affordability tests and robust LTVs within secured portfolios.

Across both the UK mortgages and unsecured portfolios, new to arrears and flows to default have remained low and stable. Credit performance in the Commercial Banking portfolio also remains strong and stable, with low levels of defaults. The Group continues to closely monitor the impacts of the economic and geopolitical environment through a comprehensive suite of early warning indicators and robust governance arrangements, alongside targeted risk mitigation action plans which are in place to support customers and protect the Group's position.

The underlying impairment charge in the first half of 2026 was £617 million, up from £442 million in the prior year, and includes a net charge from updates to the Group's macroeconomic outlook of £80 million compared to a release of £9 million in the prior year. This largely reflects the impact from the deterioration in economic outlook in the first quarter due to the Middle East conflict, net of modest second quarter updates. The MES impact for the half-year captures a higher unemployment peak and softer house price outlook compared to the position at 31 December 2025. This is partly offset by the release of the £50 million post model adjustment for global tariff and political disruption risks within Commercial Banking in the first quarter, now considered to be adequately captured within assumptions and resulting modelled provisions. Excluding macroeconomic updates, the Group's underlying impairment charge has increased compared to the prior year driven by Retail, reflecting model updates, a more normalised level of impairment alongside balance sheet growth, and lower one-off provision releases in Commercial Banking. The total underlying expected credit loss (ECL) allowance was lower in the first half of 2026 at £3,257 million (31 December 2025: £3,353 million), following the securitisation of primarily legacy Retail mortgages in the second quarter.

Stage 2 underlying loans and advances to customers are lower at £43,339 million compared to the end of 2025 (31 December 2025: £45,413 million) following securitisation activity and strong credit performance. Securitisation activity and an increase in new lending also resulted in the proportion of Stage 2 loans and advances being diluted to 8.8% of total lending (31 December 2025: 9.4%), with stable Stage 2 coverage at 2.6% (31 December 2025: 2.6%).

Stage 3 underlying loans and advances to customers are lower at £7,700 million versus the prior year (31 December 2025: £8,349 million), and as a percentage of total lending are lower at 1.6% (31 December 2025: 1.7%), following continued strong performance, securitisation and repayments in Commercial Banking. Stage 3 coverage increased to 16.6% (31 December 2025: 15.9%).

Prudent risk appetite and risk management

• The Group continues to take a proactive approach to credit risk management. This is driven by prudent risk appetite and robust oversight, particularly in response to the ongoing challenges within the external environment. Risk appetite firmly aligns to the Group's strategy, supporting our customers through ongoing economic uncertainties in both global and domestic markets

• Sector, asset and product concentrations within the portfolios are closely monitored and controlled, with mitigating actions in place as appropriate. Sector and product risk parameters help to manage the Group's exposure to higher risk and cyclical sectors, segments and asset classes

• The Group's effective risk management seeks to enable early identification and active management of customers and counterparties who may be showing signs of distress

• The Group continues to support its customers to ensure they receive appropriate levels of assistance as required

•

CREDIT RISK

(continued)

Impairment charge (credit) by division - statutory and underlying

basis

Half-year to 30 Jun 2026

£m

Half-year

to 30 Jun 2025

£m

Change

Half-year to 31 Dec 2025

£m

Change

UK mortgages

(133)

Credit cards

264

200

(32)

121

UK unsecured loans and overdrafts

149

163

(59)

UK Motor Finance

106

111

101

(5)

Other

Retail

565

342

(65)

392

(44)

Commercial Banking

100

(40)

Insurance, Pensions and Investments

(1)

Equity Investments and Central Items

(2)

Total impairment charge

616

442

(39)

353

(75)

Insurance, Pensions and Investments

(underlying basis)

(1)

Total impairment charge (underlying basis)

617

442

(40)

353

(75)

Asset quality ratio

0.25%

0.19%

6bp

0.15%

10bp

Credit risk balance sheet basis of presentation

The balance sheet analyses which follow have been presented on two bases; the statutory basis which is consistent with the presentation in the Group's accounts and the underlying basis which is used for internal management purposes. Further detail is included on page

Error! No bookmark name given.

Total expected credit loss allowance - statutory and underlying

basis

At 30 Jun 2026

£m

At 31 Dec 2025 £m

Customer related balances

Drawn

2,947

3,011

Undrawn

205

197

3,152

3,208

Loans and advances to banks

Debt securities

Other assets

Total expected credit loss allowance

3,172

3,228

Acquisition fair value adjustment

125

Total expected credit loss allowance (underlying basis)

3,257

3,353

of which: Customer related balances (underlying basis)

3,237

3,333

of which: Drawn (underlying basis)

3,032

3,136

CREDIT RISK

(continued)

Total expected credit loss allowance sensitivity to economic assumptions - statutory and underlying

basis

The measurement of ECL reflects an unbiased probability-weighted range of possible future economic outcomes. The Group achieves this by generating four economic scenarios to reflect the range of outcomes; the central scenario reflects the Group's base case assumptions used for medium-term planning purposes, an upside and a downside scenario are also selected together with a severe downside scenario. If the base case moves adversely, it generates a new, more adverse downside and severe downside which are then incorporated into the ECL. Consistent with prior years, the base case, upside and downside scenarios carry a 30% weighting; the severe downside is weighted at 10%.

The following table shows the Group's ECL for the probability-weighted, upside, base case, downside and severe downside scenarios. The stage allocation for an asset is based on the overall probability-weighted probability of default and hence the staging of assets is constant across all the scenarios. In each economic scenario the ECL for individual assessments is held constant reflecting the basis on which they are evaluated. Judgemental adjustments applied through changes to model inputs or parameters, or more qualitative post model adjustments, are apportioned across the scenarios in proportion to modelled ECL where this better reflects the sensitivity of these adjustments to each scenario. The probability-weighted view shows the extent to which a higher ECL allowance has been recognised to take account of multiple economic scenarios relative to the base case; the uplift on a statutory basis being £342 million compared to £366 million at 31 December 2025.

Probability-

weighted

£m

Upside

£m

Base case

£m

Downside

£m

Severe

downside

£m

UK mortgages

669

316

473

844

1,794

Credit cards

645

528

623

722

835

Other Retail

982

910

962

1,026

1,121

Commercial Banking

861

645

757

992

1,429

Other

At 30 June 2026

3,172

2,414

2,830

3,599

5,194

UK mortgages (underlying basis)

754

401

558

929

1,879

At 30 June 2026 (underlying basis)

3,257

2,499

2,915

3,684

5,279

UK mortgages

731

341

510

937

1,943

Credit cards

603

498

579

674

777

Other Retail

991

922

969

1,036

1,126

Commercial Banking

888

690

789

1,010

1,414

Other

At 31 December 2025

3,228

2,466

2,862

3,672

5,275

UK mortgages (underlying basis)

856

466

635

1,062

2,068

At 31 December 2025 (underlying basis)

3,353

2,591

2,987

3,797

5,400

The impact of isolated changes in the UK unemployment rate and House Price Index (HPI) has been assessed on a univariate basis. Although such changes would not be observed in isolation, as economic indicators tend to be correlated in a coherent scenario, this gives insight into the sensitivity of the Group's ECL to gradual changes in these two critical economic factors.

The impacts are assessed as changes to probability-weighted modelled ECL inclusive of the impacts upon staging of assets, excluding post model adjustments.

CREDIT RISK

(continued)

Total expected credit loss allowance sensitivity to economic assumptions

(continued)

The table below shows the impact on the Group's ECL resulting from a 1 percentage point increase or decrease in the UK unemployment rate. The increase or decrease is presented based on the adjustment phased evenly over the first 10 quarters of all four scenarios. A more immediate increase or decrease would drive a more material ECL impact as it would be fully reflected in both 12-month and lifetime probability of defaults.

At 30 June 2026

At 31 December 2025

1pp increase in

unemployment

£m

1pp decrease in

unemployment

£m

1pp increase in

unemployment

£m

1pp decrease in

unemployment

£m

UK mortgages

(11)

Credit cards

(53)

Other Retail

(24)

(25)

Commercial Banking

(56)

(48)

ECL impact

169

(144)

148

(137)

The table below shows the impact on the Group's ECL in respect of UK mortgages of an increase or decrease in loss given default for a 10 percentage point increase or decrease in HPI. The increase or decrease is presented based on the adjustment phased evenly over the first 10 quarters of all four scenarios.

At 30 June 2026

At 31 December 2025

10pp increase

in HPI

£m

10pp decrease

in HPI

£m

10pp increase

in HPI

£m

10pp decrease

in HPI

£m

ECL impact

(162)

245

(172)

261

Reconciliation between statutory and underlying

bases of gross loans and advances to customers and expected credit loss allowance on drawn balances

Gross loans and advances to customers

Expected credit loss allowance on drawn balances

Stage 1

£m

Stage 2

£m

Stage 3

£m

POCI

£m

Total

£m

Stage 1

£m

Stage 2

£m

Stage 3

£m

POCI

£m

Total

£m

At 30 June 2026

Underlying basis

443,526

43,339

7,700

494,565

741

1,055

1,236

3,032

POCI assets

(548)

(2,441)

(1,446)

4,435

(26)

(181)

207

Acquisition fair

value adjustment

(85)

Continuing involvement asset

145

(403)

(2,441)

(1,446)

4,350

(26)

(181)

122

(85)

Statutory basis

443,123

40,898

6,254

4,350

494,625

741

1,029

1,055

122

2,947

At 31 December 2025

Underlying basis

430,493

45,413

8,349

484,255

737

1,107

1,292

3,136

POCI assets

(644)

(2,734)

(1,823)

5,201

(30)

(254)

284

Acquisition fair

value adjustment

(125)

Continuing involvement asset

344

(300)

(2,734)

(1,823)

5,076

219

(30)

(254)

159

(125)

Statutory basis

430,193

42,679

6,526

5,076

484,474

737

1,077

1,038

159

3,011

CREDIT RISK

(continued)

Loans and advances to customers and expected credit loss allowance - statutory and underlying

basis

At 30 June 2026

Stage 1

£m

Stage 2

£m

Stage 3

£m

POCI

£m

Total

£m

Stage 2

as % of

total

Stage 3

as % of

total

Loans and advances to customers

UK mortgages

288,559

28,802

3,814

4,350

325,525

8.8

1.2

Credit cards

16,326

2,094

305

18,725

11.2

1.6

UK unsecured loans and overdrafts

11,153

1,403

209

12,765

11.0

1.6

UK Motor Finance

14,991

2,507

158

17,656

14.2

0.9

Other

22,396

411

123

22,930

1.8

0.5

Retail

353,425

35,217

4,609

4,350

397,601

8.9

1.2

Business and Commercial Banking

24,669

3,403

987

29,059

11.7

3.4

Corporate and Institutional Banking

65,010

2,278

658

67,946

3.4

1.0

Commercial Banking

89,679

5,681

1,645

97,005

5.9

1.7

Equity Investments and Central Items

Total gross lending

443,123

40,898

6,254

4,350

494,625

8.3

1.3

UK mortgages (underlying basis)

A,2

289,107

31,243

5,260

325,610

9.6

1.6

UK Motor Finance (underlying basis)

A,3

14,846

2,507

158

17,511

14.3

0.9

Retail (underlying basis)

353,828

37,658

6,055

397,541

9.5

1.5

Total gross lending (underlying basis)

443,526

43,339

7,700

494,565

8.8

1.6

Customer related ECL allowance (drawn and undrawn)

UK mortgages

199

287

122

669

Credit cards

219

280

146

645

UK unsecured loans and overdrafts

158

200

117

475

UK Motor Finance

223

143

445

Other

Retail

682

831

661

122

2,296

Business and Commercial Banking

158

138

380

Corporate and Institutional Banking

119

262

475

Commercial Banking

178

277

400

855

Equity Investments and Central Items

Total

861

1,108

1,061

122

3,152

UK mortgages (underlying basis)

A,2

226

467

754

UK Motor Finance (underlying basis)

223

143

445

Retail (underlying basis)

682

858

841

2,381

Total (underlying basis)

861

1,135

1,241

3,237

Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers

Stage 1

Stage 2

Stage 3

POCI

Total

Adjusted Stage 3

Adjusted Total

UK mortgages

0.7

7.5

2.8

0.2

Credit cards

1.3

13.4

47.9

3.4

50.3

3.4

UK unsecured loans and overdrafts

1.4

14.3

56.0

3.7

58.5

3.7

UK Motor Finance

1.5

5.7

50.0

2.5

Other

0.1

2.2

26.0

0.3

Retail

0.2

2.4

14.3

2.8

0.6

14.4

0.6

Business and Commercial Banking

0.3

4.6

14.0

1.3

17.6

1.3

Corporate and Institutional Banking

0.1

5.2

39.8

0.7

39.9

0.7

Commercial Banking

0.2

4.9

24.3

0.9

27.8

0.9

Equity Investments and Central Items

5.3

Total

0.2

2.7

17.0

2.8

0.6

17.6

0.6

UK mortgages (underlying basis)

A,2

0.7

8.9

0.2

UK Motor Finance (underlying basis)

A,3

1.5

5.7

50.0

2.5

Retail (underlying basis)

0.2

2.3

13.9

0.6

13.9

0.6

Total (underlying basis)

0.2

2.6

16.1

0.7

16.6

0.7

Contains central fair value hedge accounting adjustments.

UK mortgages balances on an underlying basis

exclude the impact of the HBOS acquisition-related adjustments.

UK Motor Finance balances on an underlying basis

exclude a finance lease gross up.

UK Motor Finance includes £250 million relating to provisions against residual values of vehicles subject to finance leases.

Stage 3 and Total exclude loans in recoveries in credit cards of £15 million, UK unsecured loans and overdrafts of £9 million, Business and Commercial Banking of £205 million and Corporate and Institutional Banking of £1 million.

CREDIT RISK

(continued)

Loans and advances to customers and expected credit loss allowance - statutory and underlying

basis

At 31 December 2025

Stage 1

£m

Stage 2

£m

Stage 3

£m

POCI

£m

Total

£m

Stage 2

as % of

total

Stage 3

as % of

total

Loans and advances to customers

UK mortgages

284,307

30,414

4,016

5,076

323,813

9.4

1.2

Credit cards

15,258

2,326

274

17,858

13.0

1.5

UK unsecured loans and overdrafts

10,601

1,397

193

12,191

11.5

1.6

UK Motor Finance

14,222

2,786

141

17,149

16.2

0.8

Other

21,245

392

145

21,782

1.8

0.7

Retail

345,633

37,315

4,769

5,076

392,793

9.5

1.2

Business and Commercial Banking

24,362

3,329

979

28,670

11.6

3.4

Corporate and Institutional Banking

59,658

2,035

778

62,471

3.3

1.2

Commercial Banking

84,020

5,364

1,757

91,141

5.9

1.9

Equity Investments and Central Items

540

Total gross lending

430,193

42,679

6,526

5,076

484,474

8.8

1.3

UK mortgages (underlying basis)

A,2

284,951

33,148

5,839

323,938

10.2

1.8

UK Motor Finance (underlying basis)

A,3

13,878

2,786

141

16,805

16.6

0.8

Retail (underlying basis)

345,933

40,049

6,592

392,574

10.2

1.7

Total gross lending (underlying basis)

430,493

45,413

8,349

484,255

9.4

1.7

Customer related ECL allowance (drawn and undrawn)

UK mortgages

208

309

159

731

Credit cards

205

277

121

603

UK unsecured loans and overdrafts

172

214

112

498

UK Motor Finance

202

149

430

Other

Retail

651

859

656

159

2,325

Business and Commercial Banking

165

120

377

Corporate and Institutional Banking

107

136

263

506

Commercial Banking

199

301

383

883

Equity Investments and Central Items

Total

850

1,160

1,039

159

3,208

UK mortgages (underlying basis)

A,2

238

563

856

UK Motor Finance (underlying basis)

202

149

430

Retail (underlying basis)

651

889

910

2,450

Total (underlying basis)

850

1,190

1,293

3,333

Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers

Stage 1

Stage 2

Stage 3

POCI

Total

Adjusted Stage 3

Adjusted Total

UK mortgages

0.7

7.7

3.1

0.2

Credit cards

1.3

11.9

44.2

3.4

45.7

3.4

UK unsecured loans and overdrafts

1.6

15.3

58.0

4.1

60.5

4.1

UK Motor Finance

1.4

5.3

56.0

2.5

Other

0.1

2.8

24.1

0.3

Retail

0.2

2.3

13.8

3.1

0.6

13.8

0.6

Business and Commercial Banking

0.4

5.0

12.3

1.3

15.7

1.3

Corporate and Institutional Banking

0.2

6.7

33.8

0.8

33.8

0.8

Commercial Banking

0.2

5.6

21.8

1.0

24.9

1.0

Equity Investments and Central Items

Total

0.2

2.7

15.9

3.1

0.7

16.5

0.7

UK mortgages (underlying basis)

A,2

0.7

9.6

0.3

UK Motor Finance (underlying basis)

A,3

1.5

5.3

56.0

2.6

Retail (underlying basis)

0.2

2.2

13.8

0.6

13.8

0.6

Total (underlying basis)

0.2

2.6

15.5

0.7

15.9

0.7

Contains central fair value hedge accounting adjustments.

UK mortgages balances on an underlying basis

exclude the impact of the HBOS acquisition-related adjustments.

UK Motor Finance balances on an underlying basis

exclude a finance lease gross up.

UK Motor Finance includes £243 million relating to provisions against residual values of vehicles subject to finance leases.

Stage 3 and Total exclude loans in recoveries in credit cards of £9 million, UK unsecured loans and overdrafts of £8 million, Business and Commercial Banking of £217 million and Corporate and Institutional Banking of £1 million.

CREDIT RISK

(continued)

Retail

• The Retail portfolio has continued to deliver strong credit performance in the first half of 2026 and remains well positioned despite ongoing macroeconomic challenges. Consumers continue to demonstrate resilience amid inflationary pressures driven by the external environment

• A robust approach to risk management is firmly embedded across the division, underpinned by strong affordability and indebtedness controls, which supports a prudent approach to risk appetite. Lending strategies are regularly reviewed and calibrated to reflect any changes in macroeconomic conditions

• In both the UK mortgages and unsecured portfolios, new to arrears and flow to default rates have remained low and stable during the first half of the year. In UK Motor Finance, new to arrears and flows to default reduced in the second quarter as the operational impacts from voluntary terminations eased

• The Retail impairment charge in the first half of 2026 was £565 million, which includes a £77 million charge from updated macroeconomic outlook. This is higher than the £342 million charge for the first half of 2025, which benefitted from a release of £84 million from improvements in the Group's macroeconomic outlook. Excluding macroeconomic updates, the impairment charge is higher than the prior year, reflecting model updates and a more normalised level of charge alongside balance sheet growth

• Retail customer related ECL allowance as a percentage of drawn loans and advances (coverage) has remained stable at 0.6% (31 December 2025: 0.6%)

• Strong credit performance, securitisation activity and higher portfolio balances have reduced Stage 2 loans and advances to 9.5% of the Retail portfolio (31 December 2025: 10.2%). Stage 2 ECL coverage is stable at 2.3% (31 December 2025: 2.2%)

• Low and stable flows to default and higher portfolio balances have also resulted in a reduction in Retail Stage 3 loans and advances to 1.5% of total loans and advances (31 December 2025: 1.7%)

• Stage 3 ECL coverage remains stable at 13.9% (31 December 2025: 13.8%)

UK mortgages

• The UK mortgages portfolio increased to £325.6 billion (31 December 2025: £323.9 billion), net of a £1.8 billion securitisation of primarily legacy balances in the second quarter of 2026. This increase was driven by sustained customer demand

• New to arrears in the UK mortgages portfolio reduced throughout the first half of 2026. The portfolio remains well positioned with a strong loan to value (LTV) profile. Portfolio quality improved during the period, supported by robust affordability and credit controls with higher risk legacy vintage balances continuing to reduce through natural attrition and securitisation activity

• The impairment charge of £39 million for the first half of 2026 is higher than the credit of £133 million in the first half of 2025, which predominately benefitted from a favourable update to house prices. Excluding macroeconomic updates, the impairment charge is higher year-on-year due to lower one-off benefits

• Stage 2 loans and advances have reduced to 9.6% of total UK mortgages balances (31 December 2025: 10.2%) following securitisation activity along with strong and stable credit performance

• Continued strong and stable credit performance and higher portfolio balances also resulted in Stage 3 loans and advances reducing to 1.6% (31 December 2025: 1.8%). Stage 3 ECL coverage decreased to 8.9% (31 December 2025: 9.6%)

•

CREDIT RISK

(continued)

UK mortgages product analysis - statutory basis

At 30 June 2026

At 31 December 2025

Mainstream

Buy-to-let

Specialist

Total

Mainstream

Buy-to-let

Specialist

Total

UK mortgages loans and advances to customers (£m)

275,760

48,114

1,651

325,525

273,106

47,858

2,849

323,813

UK mortgages greater than 3 months in arrears

Number of cases

15,727

2,591

1,463

19,781

17,070

3,351

2,208

22,629

Total mortgages accounts (%)

1.0

0.7

10.2

1.0

8.6

1.1

Value of loans

(£m)

2,298

413

258

2,969

2,518

486

397

3,401

Total mortgages balances (%)

0.8

0.9

15.6

0.9

1.0

13.9

1.1

Loan to value

Less than 60% (%)

50.1

61.1

93.2

51.9

52.0

64.1

90.0

54.2

60% to 70% (%)

15.0

21.7

4.5

15.9

15.4

21.4

6.4

16.2

70% to 80% (%)

16.3

17.1

1.6

16.4

15.5

14.4

2.0

15.2

80% to 90% (%)

15.8

0.1

0.5

13.4

14.4

0.1

0.9

12.2

90% to 100% (%)

2.8

0.1

2.4

2.7

0.4

2.2

Greater than 100% (%)

0.1

0.3

Total (%)

100.0

Average loan to value

Stock of residential mortgages (%)

45.4

48.9

31.4

45.7

44.7

48.2

32.0

45.0

New residential lending in the period (%)

66.9

61.8

n/a

66.2

64.7

58.8

n/a

64.1

Excluding repossessions.

Value of loans represents gross book value of mortgages more than three months in arrears. These accounts are a subset of total Stage 3 given the exclusion of accounts in possession and those meeting other Stage 3 criteria.

Average loan to value is calculated as total loans and advances as a percentage of the total indexed collateral of these loans and advances.

CREDIT RISK

(continued)

Credit cards

• Credit card balances increased to £18.7 billion (31 December 2025: £17.9 billion), driven by higher demand for new cards and increased customer spending

• The credit card portfolio continues to evidence a prime book. New to arrears have remained low and stable over the first half of the year and repayment rates remain strong

• The impairment charge of £264 million for the first half of 2026 is higher than the charge of £200 million in the first half of 2025, due to updates to the Group's macroeconomic outlook, notably upward revisions to the unemployment forecast, compared to favourable updates in the first half of 2025. Excluding macroeconomic updates, the higher impairment charge reflects model updates, a more normalised level of charge and the effects of an adjusted process to improve customer outcomes. Total ECL coverage is stable at 3.4% (31 December 2025: 3.4%)

• Stable credit performance and higher portfolio balances resulted in a reduction in Stage 2 loans and advances to 11.2% of total credit card balances (31 December 2025: 13.0%). Stage 2 ECL coverage increased to 13.4% (31 December 2025: 11.9%), following updates to model loss rates

• Stage 3 loans and advances remained stable at 1.6% (31 December 2025: 1.5%). Updates to model loss rates also increased Stage 3 ECL coverage to 50.3% (31 December 2025: 45.7%).

UK unsecured loans and overdrafts

• UK unsecured loans and overdraft balances increased to £12.8 billion (31 December 2025: £12.2 billion) driven by sustained customer demand

• The impairment charge of £149 million for the first half of 2026 is lower than the charge of £163 million for the first half of 2025, due to calibration benefits this year reflecting strong and stable credit performance

• Strong credit performance and higher portfolio balances within unsecured loans resulted in a reduction in Stage 2 loans and advances to 11.0% of total balances (31 December 2025: 11.5%). Stage 2 ECL coverage decreased to 14.3% (31 December 2025: 15.3%)

• Stage 3 loans and advances remained stable at 1.6% (31 December 2025: 1.6%). While Stage 3 ECL coverage reduced to 58.5% (31 December 2025: 60.5%)

UK Motor Finance

• UK Motor Finance balances (which exclude operating leases) increased to £17.5 billion (31 December 2025: £16.8 billion), driven by retail demand, alongside increased stocking

• UK Motor Finance credit performance is strong, with lower new to arrears in the second quarter reflecting a reduction in operational factors relating to voluntary terminations during the first quarter of the year. Updates to Residual Value (RV) and Voluntary Termination (VT) provisions held against Personal Contract Purchase (PCP) and Hire Purchase (HP) lending are included within ECL and the impairment charge. Declines in used car prices have primarily driven an ECL increase to £250 million as at 30 June 2026 (31 December 2025: £243 million)

• The impairment charge of £106 million for the first half of 2026 is in line with the charge of £111 million for the first half of 2025. Increased RV and VT provisions drove higher Stage 2 ECL coverage 5.7% (31 December 2025: 5.3%), with Stage 2 loans and advances reducing to 14.3% (31 December 2025: 16.6%)

• Stage 3 loans and advances remained stable at 0.9% (31 December 2025: 0.8%), with Stage 3 ECL coverage reducing to 50.0% (31 December 2025: 56.0%)

Other

• Other Retail loans and advances increased to £22.9 billion (31 December 2025: £21.8 billion), largely driven by growth in the European business

• Stage 2 loans and advances remained stable at 1.8% (31 December 2025: 1.8%), supported by higher portfolio balances, with coverage across stages also stable. Stage 3 loans and advances reduced to 0.5% of total loans and advances (31 December 2025: 0.7%)

• There was a £7 million impairment charge in the first half of 2026, compared to a £1 million charge in the first half of 2025

•

CREDIT RISK

(continued)

Commercial Banking

• Portfolio credit performance has remained strong and stable amid ongoing external headwinds, with credit strategies and policy operating within established risk appetite. The Group continues to monitor external developments and assess potential impacts on the macroeconomic environment

• The Group undertakes regular reviews of portfolio segments. Higher-risk sectors and exposures are clearly identified and actively managed, with appropriate mitigating actions in place. Credit strategies, appetite, sensitivities and mitigation plans remain up to date, enabling rapid response to emerging risks and opportunities while continuing to support clients and protect the Group

• Credit playbooks and deep dive reviews covering a range of downside scenarios are maintained and updated as conditions evolve. Early warning indicators and risk appetite metrics are actively monitored to support timely insight and proactive intervention where required

• The Group continues to provide early, targeted support to customers in difficulty through its Watchlist and Business Support framework. More vulnerable industry sectors are monitored closely, as are second and third order risks (for example, supply chain issues or input cost increases), to ensure risk appetite remains appropriate and early risk mitigating actions can be taken. This approach balances prudent risk management with support for financially viable clients, reinforcing the Group's focus on resilience and responsible client outcomes

• Commercial Banking UK Real Estate committed drawn lending increased by net £0.1 billion to £10.1 billion in the first half of 2026 (net of £2.2 billion exposures subject to protection through significant risk transfer (SRT) securitisations). Performance has remained strong and stable within the sector, with limited flow of new cases to Watchlist and BSU. The average LTV of 45% remains stable

• The net impairment charge in the first half of 2026 was £51 million, versus £100 million in the first half of 2025, which recognised deterioration in the economic outlook. Excluding macroeconomic updates, credit performance remains strong and stable with low levels of defaults. ECL allowances decreased in the year to £855 million at 30 June 2026 (31 December 2025: £883 million)

• Stage 2 loans and advances increased to £5,681 million (31 December 2025: £5,364 million) with the proportion of total loans and advances to customers remaining stable at 5.9% (31 December 2025: 5.9%), with strong and stable credit performance resulting in lower Stage 2 ECL coverage at 4.9% (31 December 2025: 5.6%)

• Stage 3 loans and advances decreased to £1,645 million (31 December 2025: £1,757 million) and as a proportion of total loans and advances to customers reduced to 1.7% (31 December 2025: 1.9%), largely driven by net repayments in the first half of 2026. Stage 3 ECL coverage increased to 27.8% (31 December 2025: 24.9%) following the reassessment of a small number of existing cases in default

Business and Commercial Banking

• Business and Commercial Banking lending increased marginally to £29.1 billion (31 December 2025: £28.7 billion), with new business partially offset by continued amortisation of the portfolio, particularly government‑backed lending

• Stage 2 loans and advances increased to £3,403 million (31 December 2025: £3,329 million). Stage 2 as a proportion of total loans and advances to customers remained stable at 11.7% (31 December 2025: 11.6%), while Stage 2 ECL coverage decreased to 4.6% (31 December 2025: 5.0%)

• Stage 3 loans and advances increased marginally to £987 million (31 December 2025: £979 million), and remained stable at 3.4% (31 December 2025: 3.4%) as a proportion of total loans and advances. Stage 3 ECL coverage increased to 17.6% (31 December 2025: 15.7%) following the reassessment of a small number of existing cases in default

Corporate and Institutional Banking

• Corporate and Institutional lending increased to £67.9 billion (31 December 2025: £62.5 billion), reflecting growth in Institutional balances including securitised products, alongside corporate infrastructure growth. Lending growth remains within risk appetite, while maintaining strong obligor and asset quality

• Stage 2 loans and advances increased to £2,278 million (31 December 2025: £2,035 million). Stage 2 as a proportion of total loans and advances to customers remained stable at 3.4% (31 December 2025: 3.3%), with Stage 2 ECL coverage reducing to 5.2% (31 December 2025: 6.7%)

• Stage 3 loans and advances decreased to £658 million (31 December 2025: £778 million) and as a proportion of total loans and advances to customers reduced to 1.0% (31 December 2025: 1.2%), driven by a small number of repayments and write offs. Stage 3 ECL coverage increased to 39.9% (31 December 2025: 33.8%) following the reassessment of a small number of existing cases in default

•

LIQUIDITY RISK

Overview

The Group's funding and liquidity position remains strong, with a loan to deposit ratio of 98% as at 30 June 2026 (31 December 2025: 97%). Total wholesale funding

has increased to £107.8 billion as at 30 June 2026 (31 December 2025: £95.6 billion). The Group maintains access to diverse sources and tenors of funding.

The Group's liquid assets continue to exceed the regulatory minimum and internal risk appetite, with a liquidity coverage ratio (LCR)

of 144% as at 30 June 2026 (31 December 2025: 145%) calculated on a Group consolidated basis based on the PRA rulebook. The decrease in the LCR resulted from a reduction in liquid assets, from repayments of Bank of England Term Funding Scheme with additional incentives for SMEs (TFSME) partially offset by an increase in customer deposits and wholesale funding. All assets within the liquid asset portfolio are hedged for interest rate risk. Liquidity risk is managed at a legal entity level with the Group consolidated LCR representing the composite of the Ring-Fenced Bank and Non-Ring-Fenced Bank entities.

LCR eligible assets

have reduced slightly to £131.0 billion (31 December 2025: £131.4 billion). In addition to the Group's reported LCR eligible assets, the Group maintains borrowing capacity at central banks which averaged £97 billion in the 12 months to 30 June 2026 (31 December 2025: £87 billion). The net stable funding ratio

remains robust at 123% as at 30 June 2026 (31 December 2025: 124%).

LCR eligible assets comprise of £125.0 billion LCR level 1 eligible assets (31 December 2025: £125.8 billion) and £6.0 billion of LCR level 2 eligible assets (31 December 2025: £5.6 billion). These assets are available to meet cash and collateral outflows and regulatory requirements. The Insurance business manages a separate liquidity portfolio to mitigate insurance liquidity risk.

The banking business also has a significant amount of non-LCR eligible liquid assets which are eligible for use in a range of central bank or similar facilities. Future use of such facilities will be guided by prudent liquidity management and economic considerations, with external market conditions factored in.

During the first half of 2026, the Group accessed wholesale funding

across a range of currencies and markets with term issuance volumes totalling £10.4 billion. The Group has increased levels of below 1-year money market wholesale funding throughout the first half of 2026, following TFSME repayments in 2025. The Group continues to manage below 1-year money market funding to support balance sheet funding needs. The total outstanding amount of drawings from the TFSME has remained stable at £8.8 billion as at 30 June 2026 (31 December 2025: £8.8 billion), with further maturities in 2027 and beyond. The repayment of TFSME maturities has been factored into the Group's funding plans.

The Group's credit ratings remain well positioned and continue to reflect the strength of the Group's management and franchise, along with its robust financial performance and capital and funding position. In May 2026, Fitch upgraded senior unsecured ratings for Lloyds Bank plc and Lloyds Bank Corporate Markets plc following a methodology update.

Based on an average of month-end observations over the last 12 months.

Based on an average of the last four quarter-end observations.

LIQUIDITY RISK

(continued)

Group funding requirements and sources and reconciliation to the balance sheet

At 30 Jun 2026

£bn

At 31 Dec 2025

£bn

Change

Group funding position

Total Group assets

994.2

944.1

Less other liabilities

(286.7)

(261.7)

(10)

Funding requirements

707.5

682.4

Deposits from banks (excluding cash collateral received)

6.2

3.8

Customer deposits

500.9

496.5

Repurchase agreements - non-trading

36.6

29.8

Term Funding Scheme with additional incentives for SMEs (TFSME)

8.8

Repurchase agreements at amortised cost

45.4

38.6

Wholesale funding

107.8

95.6

Total equity

47.2

47.9

(1)

Funding sources

707.5

682.4

At 30 June 2026

Included

in funding

analysis

£bn

Cash collateral received

£bn

Fair value

and other

accounting

methods

£bn

Balance

sheet

£bn

Deposits from banks

6.2

2.0

8.2

Customer deposits

500.9

Repurchase agreements at amortised cost

45.4

Debt securities in issue

96.7

(5.8)

90.9

Subordinated liabilities

11.1

(1.9)

9.2

Wholesale funding

107.8

Total equity

47.2

Funding sources

707.5

2.0

At 31 December 2025

Deposits from banks

3.8

2.0

5.8

Customer deposits

496.5

Repurchase agreements at amortised cost

38.6

Debt securities in issue

83.9

(5.6)

78.3

Subordinated liabilities

11.7

(1.8)

9.9

Wholesale funding

95.6

Total equity

47.9

Funding sources

682.4

2.0

Other liabilities represent balance sheet liabilities not included in funding analysis, primarily balances in the Group's Insurance business and liabilities held at fair value.

LIQUIDITY RISK

(continued)

Analysis of term issuance in the half-year to 30 June 2026

Sterling

£bn

US dollar

£bn

Euro

£bn

Other

currencies

£bn

Total

£bn

Securitisation

0.4

0.7

1.1

Covered bonds

1.5

1.7

3.2

Senior unsecured notes

0.8

2.1

2.0

0.7

5.6

Subordinated liabilities

0.5

Total issuance

3.2

2.1

4.4

0.7

10.4

Includes Australian dollar and Japanese yen.

Securitisation includes externally issued notes from significant risk transfer transactions.

INTEREST RATE SENSITIVITY

The Group manages the risk to its earnings and capital from movements in interest rates centrally by hedging the net liabilities which are stable or less sensitive to movements in rates. The notional balance of the sterling structural hedge stood at £246 billion at 30 June 2026 (31 December 2025: £244 billion).

Illustrative cumulative impact of parallel shifts in interest rate curve

The table below shows the banking book net interest income sensitivity to an instantaneous parallel shift in interest rates. Sensitivities reflect shifts in the interest rate curve. The actual impact will also depend on the prevailing regulatory and competitive environment at the time. This sensitivity is illustrative and does not reflect new business margin implications and/or pricing actions today or in future periods, other than as outlined. The sensitivity is greater on downward parallel shifts due to pricing lags on deposit accounts.

The following assumptions have been applied:

• Instantaneous parallel shift in interest rate curve, including UK Bank Rate

• Balance sheet remains constant

• Illustrative 50% pass-through on deposits and 100% pass-through on assets, which could be different in practice

Year 1

£m

Year 2

£m

Year 3

£m

+50 basis points

c.150

c.325

c.625

+25 basis points

c.75

c.175

c.300

-25 basis points

(c.100)

(c.175)

(c.300)

-50 basis points

(c.200)

(c.350)

(c.625)

Sensitivity based on modelled impact on banking book net interest income, including the future impact of structural hedge maturities. Annual impacts are presented for illustrative purposes only and are based on a number of assumptions which are subject to change. Year 1 reflects the 12 months from the 30 June 2026 balance sheet position.

CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

The half-year ended 31 December 2025 information disclosed throughout the report is presented as supplementary information and is not required to be disclosed in accordance with IAS 34.

Condensed consolidated income statement (unaudited)

Condensed consolidated statement of comprehensive income (unaudited)

Condensed consolidated balance sheet (unaudited)

Condensed consolidated statement of changes in equity (unaudited)

Condensed consolidated cash flow statement (unaudited)

Notes to the condensed consolidated half-year financial statements (unaudited)

Basis of preparation and accounting policies

Critical accounting judgements and key sources of estimation uncertainty

Segmental analysis

Net fee and commission income

Insurance business

Operating expenses

Retirement benefit obligations

Impairment

Tax

Fair values of financial assets and liabilities

Derivative financial instruments

Allowance for expected credit losses

Debt securities in issue

Provisions

Subordinated liabilities

Earnings per share

Dividends on ordinary shares and share buyback

Contingent liabilities, commitments and guarantees

CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)

Note

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Interest income

15,219

15,367

15,382

Interest expense

(8,114)

(8,889)

(8,630)

Net interest income

7,105

6,478

6,752

Fee and commission income

1,752

1,464

1,654

Fee and commission expense

(750)

(608)

(726)

Net fee and commission income

1,002

856

928

Net trading income

812

608

877

Insurance revenue

1,566

1,867

1,571

Insurance service expense

(1,251)

(1,409)

(1,134)

Net expense from reinsurance contracts held

(17)

(28)

(111)

Insurance service result

298

430

326

Net investment return on assets held to back insurance and investment contracts

16,152

5,316

18,528

Net finance expense in respect of insurance and investment contracts

(15,960)

(5,317)

(18,727)

Net investment return and finance result in respect of insurance and investment contracts

192

(1)

(199)

Other operating income

1,217

1,015

1,352

Other income

3,521

2,908

3,284

Total income

10,626

9,386

10,036

Operating expenses

(5,717)

(5,440)

(6,526)

Impairment

(616)

(442)

(353)

Profit before tax

4,293

3,504

3,157

Tax expense

(1,170)

(960)

(944)

Profit after tax

3,123

2,544

2,213

Profit attributable to ordinary shareholders

2,836

2,274

1,922

Profit attributable to other equity holders

229

245

218

Profit attributable to equity holders

3,065

2,519

2,140

Profit attributable to non-controlling interests

Profit after tax

3,123

2,544

2,213

Basic earnings per share

4.8p

3.8p

3.2p

Diluted earnings per share

4.8p

3.7p

3.2p

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Profit for the period

3,123

2,544

2,213

Other comprehensive income

Items that will not subsequently be reclassified to profit or loss:

Post-retirement defined benefit scheme remeasurements:

Remeasurements before tax

(168)

(352)

Current tax

Deferred tax

(42)

(125)

(260)

Movements in revaluation reserve in respect of equity shares held at FVOCI:

Change in fair value

(8)

Deferred tax

(8)

Gains and losses attributable to own credit risk:

(Losses) gains before tax

(4)

(188)

Deferred tax

(17)

(3)

(136)

Items that may subsequently be reclassified to profit or loss:

Movements in revaluation reserve in respect of debt securities held at FVOCI:

Change in fair value

142

(1)

Current tax

Deferred tax

(40)

(8)

102

(1)

Income statement transfers in respect of disposals

(3)

Deferred tax

(4)

(7)

Income statement transfers in respect of impairment

(1)

103

Movements in cash flow hedge reserve:

Effective portion of changes in fair value taken to other comprehensive income

(1,337)

492

(10)

Deferred tax

374

(138)

(963)

354

(8)

Net income statement transfers

771

901

968

Deferred tax

(216)

(252)

(271)

555

649

697

(408)

1,003

689

Movements in foreign currency translation reserve: Currency translation differences

(tax: £nil)

(19)

Total other comprehensive (loss) income for the period, net of tax

(261)

978

350

Total comprehensive income for the period

2,862

3,522

2,563

Total comprehensive income attributable to ordinary shareholders

2,575

3,252

2,272

Total comprehensive income attributable to other equity holders

229

245

218

Total comprehensive income attributable to equity holders

2,804

3,497

2,490

Total comprehensive income attributable to non-controlling interests

Total comprehensive income for the period

2,862

3,522

2,563

Current tax and deferred tax impacts, previously shown in aggregate for each reserve, are now presented alongside each line item. Comparatives are represented on a consistent basis.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

Note

At 30 Jun

2026

£m

At 31 Dec

2025

£m

Assets

Cash and balances at central banks

61,530

56,661

Financial assets at fair value through profit or loss

258,373

240,413

Derivative financial instruments

20,731

19,727

Loans and advances to banks

8,138

7,236

Loans and advances to customers

491,678

481,463

Reverse repurchase agreements

54,351

50,986

Debt securities

16,635

13,987

Financial assets at amortised cost

570,802

553,672

Financial assets at fair value through other comprehensive income

40,428

36,320

Goodwill and other intangible assets

8,732

8,593

Current tax recoverable

1,400

1,346

Deferred tax assets

3,704

3,990

Retirement benefit assets

2,860

2,695

Other assets

25,597

20,655

Total assets

994,157

944,072

Liabilities

Deposits from banks

8,208

5,779

Customer deposits

500,859

496,457

Repurchase agreements at amortised cost

45,400

38,570

Financial liabilities at fair value through profit or loss

31,310

27,909

Derivative financial instruments

17,826

16,132

Notes in circulation

2,177

2,118

Debt securities in issue at amortised cost

90,853

78,271

Liabilities arising from insurance and participating investment contracts

143,566

135,284

Liabilities arising from non-participating investment contracts

66,639

61,640

Other liabilities

27,764

20,945

Retirement benefit obligations

116

120

Current tax liabilities

Deferred tax liabilities

131

146

Provisions

2,801

2,888

Subordinated liabilities

9,235

9,894

Total liabilities

946,920

896,205

Equity

Share capital

5,827

5,889

Share premium account

18,855

18,797

Other reserves

10,538

10,744

Retained profits

6,241

6,291

Ordinary shareholders' equity

41,461

41,721

Other equity instruments

5,551

5,947

Total equity excluding non-controlling interests

47,012

47,668

Non-controlling interests

225

199

Total equity

47,237

47,867

Total equity and liabilities

994,157

944,072

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

Attributable to ordinary shareholders

Other

equity

instruments

£m

Non-

controlling

interests

£m

Total

£m

capital

£m

premium

£m

Other

reserves

£m

Retained

profits

£m

Total

£m

At 1 January 2026

5,889

18,797

10,744

6,291

41,721

5,947

199

47,867

Comprehensive income

Profit for the period

2,836

229

3,123

Other comprehensive income

Post-retirement defined benefit scheme remeasurements, net of tax

Movements in revaluation reserve in respect of FVOCI assets, net of tax:

Debt securities

103

Gains and losses attributable to own credit risk, net of tax

(3)

Movements in cash flow hedge reserve, net of tax

(408)

Movements in foreign currency translation reserve, net of tax

(19)

Total other comprehensive (loss) income

(324)

(261)

Total comprehensive (loss) income

(324)

2,899

2,575

229

2,862

Transactions with owners

Dividends (note 17)

(1,420)

(32)

(1,452)

Distributions on other equity instruments

(229)

Issue of ordinary shares

114

Share buyback

(118)

118

(1,756)

Repurchases and redemptions of other equity instruments

(396)

(378)

Movement in treasury shares

Value of employee services

115

Total transactions with owners

(62)

118

(2,949)

(2,835)

(625)

(32)

(3,492)

Realised gains and losses on FVOCI equity shares

At 30 June 2026

5,827

18,855

10,538

6,241

41,461

5,551

225

47,237

Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been represented on a consistent basis.

Total comprehensive income attributable to owners of the parent was £2,804 million.

Contains a closed period accrual of £580 million.

Total equity attributable to owners of the parent was £47,012 million.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

(continued)

Attributable to ordinary shareholders

Other

equity

instruments

£m

Non-

controlling

interests

£m

Total

£m

capital

£m

premium

£m

Other

reserves

£m

Retained

profits

£m

Total

£m

At 1 January 2025

6,062

18,720

8,827

5,912

39,521

6,195

172

45,888

Comprehensive income

Profit for the period

2,274

245

2,544

Other comprehensive income

Post-retirement defined benefit scheme remeasurements, net of tax

(125)

Movements in revaluation reserve in respect of FVOCI assets, net of tax:

Debt securities

Equity shares

Gains and losses attributable to own credit risk, net of tax

Movements in cash flow hedge reserve, net of tax

1,003

Movements in foreign currency translation reserve, net of tax

Total other comprehensive income (loss)

1,058

(80)

978

Total comprehensive income

1,058

2,194

3,252

245

3,522

Transactions with owners

Dividends (note 17)

(1,271)

(23)

(1,294)

Distributions on other equity instruments

(245)

Issue of ordinary shares

105

Share buyback

(103)

103

(1,357)

Issue of other equity instruments

(1)

750

749

Repurchases and redemptions of other equity instruments

(19)

(622)

(641)

Movement in treasury shares

Value of employee services

109

Changes in non-controlling interests

(20)

Total transactions with owners

(59)

103

(2,484)

(2,379)

(117)

(43)

(2,539)

Realised gains and losses on equity shares held at FVOCI

(2)

At 30 June 2025

6,003

18,781

9,986

5,624

40,394

6,323

154

46,871

Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been represented on a consistent basis.

Total comprehensive income attributable to owners of the parent was £3,497 million.

Contained a close period accrual of £622 million.

Total equity attributable to owners of the parent was £46,717 million.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

(continued)

Attributable to ordinary shareholders

Other

equity

instruments

£m

Non-

controlling

interests

£m

Total

£m

capital

£m

premium

£m

Other

reserves

£m

Retained

profits

£m

Total

£m

At 1 July 2025

6,003

18,781

9,986

5,624

40,394

6,323

154

46,871

Comprehensive income

Profit for the period

1,922

218

2,213

Other comprehensive income

Post-retirement defined benefit scheme remeasurements, net of tax

(260)

Movements in revaluation reserve in respect of FVOCI assets, net of tax:

Debt securities

Equity shares

(8)

Gains and losses attributable to own credit risk, net of tax

(136)

Movements in cash flow hedge reserve, net of tax

689

Movements in foreign currency translation reserve, net of tax

Total other comprehensive income (loss)

746

(396)

350

Total comprehensive income

746

1,526

2,272

218

2,563

Transactions with owners

Dividends (note 17)

(729)

(28)

(757)

Distributions on other equity instruments

(218)

Issue of ordinary shares

Share buyback

(117)

117

(353)

Issue of other equity instruments

(6)

761

755

Repurchases and redemptions of other equity instruments

(1,137)

(1,118)

Movement in treasury shares

Value of employee services

102

Total transactions with owners

(114)

117

(964)

(945)

(594)

(28)

(1,567)

Realised gains and losses on equity shares held at FVOCI

(105)

105

At 31 December 2025

5,889

18,797

10,744

6,291

41,721

5,947

199

47,867

Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been represented on a consistent basis.

Total comprehensive income attributable to owners of the parent was £2,490 million.

Total equity attributable to owners of the parent was £47,668 million.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Cash flows (used in) provided by operating activities

Profit before tax

4,293

3,504

3,157

Adjustments for:

Change in operating assets

(39,576)

(9,160)

(31,529)

Change in operating liabilities

51,570

12,181

23,222

Non-cash and other items

2,351

2,323

4,108

Tax paid

(968)

(1,553)

(752)

Tax refunded

150

200

Net cash provided by (used in) operating activities

17,820

7,495

(1,794)

Cash flows used in investing activities

Purchase of financial assets

(13,611)

(7,380)

(12,382)

Proceeds from sale and maturity of financial assets

9,416

4,739

9,570

Purchase of property, plant and equipment

(2,575)

(2,162)

(2,909)

Purchase of other intangible assets

(827)

(559)

(693)

Proceeds from sale of property, plant and equipment

837

620

940

Net cash provided by (used in) other investing activities

(2)

Acquisition of businesses and joint ventures, net of cash acquired

(58)

(61)

Net cash used in investing activities

(6,818)

(4,801)

(5,388)

Cash flows used in financing activities

Dividends paid to ordinary shareholders

(1,420)

(1,271)

(729)

Distributions in respect of other equity instruments

(229)

(245)

(218)

Distributions in respect of non-controlling interests

(32)

(23)

(28)

Interest paid on subordinated liabilities

(394)

(411)

(395)

Proceeds from issue of subordinated liabilities

496

1,750

Proceeds from issue of other equity instruments

749

755

Proceeds from issue of ordinary shares

Share buyback

(1,176)

(735)

(975)

Repurchases and redemptions of subordinated liabilities

(1,121)

(904)

(1,024)

Repurchases and redemptions of other equity instruments

(378)

(641)

(1,118)

Net cash used in financing activities

(4,191)

(1,650)

(3,707)

Effects of exchange rate changes on cash and cash equivalents

(696)

318

Change in cash and cash equivalents

6,858

348

(10,571)

Cash and cash equivalents at beginning of period

60,593

70,816

71,164

Cash and cash equivalents at end of period

67,451

71,164

60,593

Interest received was £14,932 million (half-year to 30 June 2025: £14,966 million; half-year to 31 December 2025: £14,877 million) and interest paid was £8,311 million (half-year to 30 June 2025: £8,784 million; half-year to 31 December 2025: £7,805 million).

Cash and cash equivalents comprise cash and non-mandatory balances with central banks and amounts due from banks with an original maturity of less than three months. Included within cash and cash equivalents at 30 June 2026 is £14 million (30 June 2025: £19 million; 31 December 2025: £16 million) held within the Group's long-term insurance and investments operations, which is not immediately available for use in the business.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

Note 1: Basis of preparation and accounting policies

These condensed consolidated half-year financial statements as at and for the period to 30 June 2026 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority (FCA) and with International Accounting Standard 34 (IAS 34),

Interim Financial Reporting

as adopted by the United Kingdom and issued by the International Accounting Standards Board (IASB) and comprise the results of Lloyds Banking Group plc (the Company) together with its subsidiaries (the Group). They do not include all of the information required for full annual financial statements and should be read in conjunction with the Group's consolidated financial statements as at and for the year ended 31 December 2025 which complied with international accounting standards in conformity with the requirements of the Companies Act 2006 and were prepared in accordance with IFRS® Accounting Standards as issued by the IASB. Copies of the 2025 annual report and accounts are available on the Group's website and are also available upon request from Investor Relations, Lloyds Banking Group plc, 33 Old Broad Street, London, EC2N 1HZ.

The UK Finance Code for Financial Reporting Disclosure (the Disclosure Code) sets out disclosure principles together with supporting guidance in respect of the financial statements of UK banks. The Group has adopted the Disclosure Code and these condensed consolidated half-year financial statements have been prepared in compliance with the Disclosure Code's principles. Terminology used in these condensed consolidated half-year financial statements is consistent with that used in the Group's 2025 annual report and accounts.

The directors consider that it is appropriate to continue to adopt the going concern basis in preparing these condensed consolidated half-year financial statements. In reaching this assessment, the directors have taken into account the uncertainties affecting the UK economy and their potential effects upon the Group's performance and projected funding and capital position; the impact of further stress scenarios has also been considered. On this basis, the directors are satisfied that the Group will maintain adequate levels of funding and capital for the foreseeable future.

The Group's accounting policies are consistent with those applied by the Group in its financial statements for the year ended 31 December 2025 and there have been no changes in the Group's methods of computation.

The IASB has issued its annual improvements and a number of amendments to the IFRS Accounting Standards effective 1 January 2026, including Amendments to IFRS 9 Financial Instruments and Amendments to IFRS 7 Financial Instruments Disclosure. These improvements and amendments have not had a significant impact on the Group.

Future accounting developments

There are a number of new accounting pronouncements issued by the IASB with an effective date of 1 January 2027, including IFRS 18 Presentation and Disclosure in Financial Statements which replaces IAS 1 Presentation of Financial Statements. While many of the existing requirements of IAS 1 Presentation of Financial Statements are retained, IFRS 18 Presentation and Disclosure in Financial Statements introduces additional disclosure obligations in relation to the structure of the income statement, management-defined performance measures, and the aggregation and disaggregation of financial information. IFRS 18 will have no impact on the Group's net profit as it impacts neither recognition nor measurement. The new standard will impact the presentation of the Group's results as it requires that operating, investing and financing activities are presented separately. There will also be a change in the Group's cash flow statement as IFRS 18 requires that the first line of the cash flow statement is operating profit rather than profit before tax.

Related party transactions

The Group has had no significant related party transactions during the half-year to 30 June 2026. Related party transactions for the half-year to 30 June 2026 are similar in nature to those for the year ended 31 December 2025. Full details of the Group's related party transactions for the year ended 31 December 2025 can be found in the Group's 2025 annual report and accounts.

Other information

The financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 (the Act). The statutory accounts for the year ended 31 December 2025 were approved by the directors on 13 February 2026 and were delivered to the Registrar of Companies on 25 February 2026. The independent auditors' report on those accounts was unqualified and did not include a statement under sections 498(2) (accounting records or returns inadequate or accounts not agreeing with records and returns) or 498(3) (failure to obtain necessary information and explanations) of the Act.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 2: Critical accounting judgements and key sources of estimation uncertainty

The preparation of the Group's financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions in applying the accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Due to the inherent uncertainty in making estimates, actual results reported in future periods may be based upon amounts which differ from these estimates. Estimates, judgements and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In preparing the financial statements, the Group has considered the impact of climate-related risks on its financial position and performance. While the effects of climate change represent a source of uncertainty, the Group does not consider there to be a material impact on its judgements and estimates from the physical, transition and other climate-related risks in the short-term.

The Group's significant judgements, estimates and assumptions are unchanged compared to those disclosed in note 3 of the Group's 2025 financial statements. Further information on the critical accounting judgements and key sources of estimation uncertainty for the allowance for expected credit losses is set out in note 12.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 3: Segmental analysis

Lloyds Banking Group provides a wide range of banking and financial services in the UK and in certain locations overseas. The Group Executive Committee (GEC) remains the chief operating decision maker, as defined by IFRS 8

Operating Segments,

for the Group.

The segmental results and comparatives are presented on an underlying basis (pre-tax), the basis reviewed by the chief operating decision-maker. The underlying basis is derived from the recognition and measurement principles of the IFRS Accounting Standards with the effects of the following excluded in arriving at underlying profit:

• Restructuring costs relating to merger, acquisition, integration and disposal activities

• Volatility and other items, which includes the effects of certain market volatility including that relating to the Group's hedging arrangements, the amortisation of purchased intangible assets and the unwind of acquisition-related fair value adjustments

For the purposes of the underlying income statement, operating lease depreciation (net of gains on disposal of operating lease assets) is shown as an adjustment to total underlying income.

There has been no change to the descriptions of the segments as provided in note 4 to the Group's financial statements for the year ended 31 December 2025.

Half-year to 30 June 2026

Retail

£m

Commercial

Banking

£m

Insurance, Pensions and Investments

£m

Other

£m

Total

£m

Underlying net interest income

5,139

2,014

(71)

196

7,278

Underlying other income

1,406

889

818

197

3,310

Total underlying income

6,545

2,903

747

393

10,588

Operating lease depreciation

(835)

(6)

(841)

Net income

5,710

2,897

747

393

9,747

Operating costs

(2,872)

(1,409)

(494)

(101)

(4,876)

Remediation

(17)

(12)

(7)

(3)

(39)

Total costs

(2,889)

(1,421)

(501)

(104)

(4,915)

Underlying impairment charge

(565)

(51)

(1)

(617)

Underlying profit before tax

2,256

1,425

245

289

4,215

External income

8,339

1,855

829

(435)

10,588

External operating lease depreciation

(835)

(6)

(841)

Inter-segment (expense) income

(1,794)

1,048

(82)

828

Net income

5,710

2,897

747

393

9,747

Loans and advances to customers

395,450

96,211

491,678

External assets

410,016

162,481

233,494

188,166

994,157

Customer deposits

321,836

178,623

400

500,859

External liabilities

328,921

228,374

228,282

161,343

946,920

Net of losses on disposal of operating lease assets of £32 million.

Other includes central fair value hedge accounting adjustments.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 3: Segmental analysis

(continued)

Half-year to 30 June 2025

Retail

£m

Commercial

Banking

£m

Insurance, Pensions and Investments

£m

Other

£m

Total

£m

Underlying net interest income

4,709

1,766

(78)

258

6,655

Underlying other income

1,276

926

689

2,969

Total underlying income

5,985

2,692

611

336

9,624

Operating lease depreciation

(706)

(4)

(710)

Net income

5,279

2,688

611

336

8,914

Operating costs

(2,922)

(1,394)

(466)

(92)

(4,874)

Remediation

(41)

(2)

(37)

Total costs

(2,963)

(1,394)

(468)

(86)

(4,911)

Underlying impairment (charge) credit

(342)

(100)

(1)

(442)

Underlying profit before tax

1,974

1,194

144

249

3,561

External income

7,377

1,767

690

(210)

9,624

External operating lease depreciation

(706)

(4)

(710)

Inter-segment (expense) income

(1,392)

925

(79)

546

Net income

5,279

2,688

611

336

8,914

Loans and advances to customers

382,211

88,716

671

471,598

External assets

396,606

151,336

197,520

173,820

919,282

Customer deposits

323,365

170,217

350

493,932

External liabilities

329,493

215,329

192,760

134,829

872,411

Half-year to 31 December 2025

Underlying net interest income

4,928

1,904

(73)

221

6,980

Underlying other income

1,360

899

742

150

3,151

Total underlying income

6,288

2,803

669

371

10,131

Operating lease depreciation

(739)

(5)

(744)

Net income

5,549

2,798

669

371

9,387

Operating costs

(2,885)

(1,459)

(467)

(76)

(4,887)

Remediation

(890)

(27)

(13)

(1)

(931)

Total costs

(3,775)

(1,486)

(480)

(77)

(5,818)

Underlying impairment (charge) credit

(392)

(3)

(353)

Underlying profit before tax

1,382

1,352

186

296

3,216

External income

8,006

1,732

746

(353)

10,131

External operating lease depreciation

(739)

(5)

(744)

Inter-segment (expense) income

(1,718)

1,071

(77)

724

Net income

5,549

2,798

669

371

9,387

Loans and advances to customers

390,616

90,307

540

481,463

External assets

404,882

147,186

218,137

173,867

944,072

Customer deposits

325,169

171,063

225

496,457

External liabilities

331,244

211,175

213,520

140,266

896,205

Net of losses on disposal of operating lease assets of £3 million in the half-year to 30 June 2025 and £7 million in the half-year to 31 December 2025.

Other includes central fair value hedge accounting adjustments.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 3: Segmental analysis

(continued)

The table below reconciles the statutory results to the underlying basis.

Group statutory basis

Removal of:

Total of segments' amounts

£m

Restructuring

£m

Volatility and other items

2,3,4

£m

Insurance

gross up

£m

Half-year to 30 June 2026

Net interest income

7,105

172

7,278

Underlying net interest income

Other income

3,521

(334)

123

3,310

Underlying other income

(841)

Operating lease depreciation

Total income

10,626

(1,003)

124

9,747

Net income

Operating expenses

(5,717)

891

(123)

(4,915)

Total costs

Impairment charge

(616)

(1)

(617)

Underlying impairment charge

Profit before tax

4,293

(112)

4,215

Underlying profit before tax

Half-year to 30 June 2025

Net interest income

6,478

177

6,655

Underlying net interest income

Other income

2,908

(68)

129

2,969

Underlying other income

(710)

Operating lease depreciation

Total income

9,386

(601)

129

8,914

Net income

Operating expenses

(5,440)

649

(129)

(4,911)

Total costs

Impairment charge

(442)

Underlying impairment charge

Profit before tax

3,504

3,561

Underlying profit before tax

Half-year to 31 December 2025

Net interest income

6,752

226

6,980

Underlying net interest income

Other income

3,284

(258)

125

3,151

Underlying other income

(744)

Operating lease depreciation

Total income

10,036

(776)

127

9,387

Net income

Operating expenses

(6,526)

798

(127)

(5,818)

Total costs

Impairment charge

(353)

Underlying impairment charge

Profit before tax

3,157

3,216

Underlying profit before tax

Restructuring, previously presented within volatility and other items, is now shown separately. Comparative periods are represented on a consistent basis.

In the half-year ended 30 June 2026 this comprised the effects of market and other volatility (gains of £186 million); the amortisation of purchased intangibles (£65 million); and fair value unwind (losses of £9 million).

In the half-year ended 30 June 2025 this comprised the effects of market and other volatility (gains of £27 million); the amortisation of purchased intangibles (£40 million); and fair value unwind (losses of £35 million).

In the half-year ended 31 December 2025 this comprised the effects of market and other volatility (gains of £45 million); the amortisation of purchased intangibles (£46 million); and fair value unwind (losses of £21 million).

Under IFRS 17, expenses which are directly associated with the fulfilment of insurance contracts are reported as part of the insurance service result within statutory other income. On an underlying basis these expenses remain within costs.

Net of losses on disposal of operating lease assets of £32 million (half-year to 30 June 2025: £3 million; half-year to 31 December 2025: £7 million). Statutory operating expenses includes operating lease depreciation. On an underlying basis operating lease depreciation is included in net income.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 4: Net fee and commission income

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Fee and commission income:

Current accounts

354

341

332

Credit and debit card fees

690

636

688

Commercial banking and treasury fees

250

183

251

Unit trust and insurance broking

Factoring

Other fees and commissions

343

239

317

Total fee and commission income

1,752

1,464

1,654

Fee and commission expense

(750)

(608)

(726)

Net fee and commission income

1,002

856

928

Current account and credit and debit card fees principally arise in Retail; commercial banking and treasury fees and factoring arise in Commercial Banking; and unit trust and insurance broking arise in Insurance, Pensions and Investments.

Note 5: Insurance business

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Insurance revenue

Amounts relating to the changes in liabilities for remaining coverage:

CSM recognised for services provided

196

392

198

Change in risk adjustments for non-financial risk for risk expired

Expected claims and other insurance services expenses

795

959

771

Charges to funds in respect of policyholder tax and other

104

134

1,122

1,441

1,128

Recovery of insurance acquisition cash flows

Total life

1,189

1,497

1,189

Total non-life

377

370

382

Total Insurance revenue

1,566

1,867

1,571

Insurance service expense

Incurred claims and other directly attributable expenses

(791)

(977)

(772)

Changes that relate to past service: adjustment to liabilities for incurred claims

(2)

(1)

Changes that relate to future service: (losses) reversal of losses on onerous contracts

(72)

(86)

Amortisation of insurance acquisition cash flows

(67)

(56)

(61)

Total life

(932)

(1,118)

(832)

Total non-life

(319)

(291)

(302)

Total Insurance service expense

(1,251)

(1,409)

(1,134)

Net expense from reinsurance contracts held

(17)

(28)

(111)

Insurance service result

298

430

326

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 5: Insurance business

(continued)

Half-year to 30 June 2026

Life

£m

Non-life

£m

Total

£m

Net gains on financial assets and liabilities at fair value through profit or loss

9,670

9,687

Foreign exchange

201

Investment property gains

Net investment return on assets held to back insurance and participating investment contracts

9,871

9,888

Net investment return on assets held to back third party interests in consolidated funds

1,165

Net investment return on assets held to back non-participating investment contracts

5,099

Net investment return on assets held to back insurance and investment contracts

16,152

Net finance expense from insurance and participating investment contracts

(9,429)

(2)

(9,431)

Net finance expense from reinsurance contracts held

(2)

Net finance expense from insurance, participating investment and reinsurance contracts

(9,431)

(2)

(9,433)

Movement in third party interests in consolidated funds

(1,124)

Change in non-participating investment contracts

(5,403)

Net finance expense in respect of insurance and investment contracts

(15,960)

Net investment return and finance result in respect of insurance and investment contracts

192

Half-year to 30 June 2025

Life

£m

Non-life

£m

Total

£m

Net gains on financial assets and liabilities at fair value through profit or loss

3,520

3,537

Foreign exchange

140

Investment property gains

Net investment return on assets held to back insurance and participating investment contracts

3,661

3,678

Net investment return on assets held to back third party interests in consolidated funds

703

Net investment return on assets held to back non-participating investment contracts

935

Net investment return on assets held to back insurance and investment contracts

5,316

Net finance expense from insurance and participating investment contracts

(3,532)

(3)

(3,535)

Net finance income from reinsurance contracts held

Net finance expense from insurance, participating investment and reinsurance

contracts

(3,509)

(3)

(3,512)

Movement in third party interests in consolidated funds

(634)

Change in non-participating investment contracts

(1,171)

Net finance expense in respect of insurance and investment contracts

(5,317)

Net investment return and finance result in respect of insurance and investment contracts

(1)

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 5: Insurance business

(continued)

Half-year to 31 December 2025

Life

£m

Non-life

£m

Total

£m

Net gains on financial assets and liabilities at fair value through profit or loss

11,888

11,905

Foreign exchange

(182)

Investment property losses

(5)

Net investment return on assets held to back insurance and participating investment contracts

11,701

11,718

Net investment return on assets held to back third party interests in consolidated funds

1,351

Net investment return on assets held to back non-participating investment contracts

5,459

Net investment return on assets held to back insurance and investment contracts

18,528

Net finance expense from insurance and participating investment contracts

(11,805)

(11)

(11,816)

Net finance expense from reinsurance contracts held

Net finance expense from insurance, participating investment and reinsurance

contracts

(11,774)

(11)

(11,785)

Movement in third party interests in consolidated funds

(1,320)

Change in non-participating investment contracts

(5,622)

Net finance expense in respect of insurance and investment contracts

(18,727)

Net investment return and finance result in respect of insurance and investment contracts

(199)

Includes income of £9,890 million (half-year to 30 June 2025: £3,426 million; half-year to 31 December 2025: £11,583 million) in respect of unit-linked and with-profit contracts measured applying the variable fee approach. The assets generating the investment return held to back insurance contracts and participating investment contracts are carried at fair value on the Group's balance sheet.

At 30 June 2026

Present value

of future

cash flows

£m

Risk

adjustment

£m

Contractual

service

margin

£m

Other

£m

Total

£m

Insurance contract assets

290

(66)

(83)

141

Liabilities arising from insurance contracts and participating investment contracts

(138,407)

(949)

(4,245)

(143,601)

Net liability

(138,117)

(1,015)

(4,328)

(143,460)

Insurance acquisition assets

Insurance and participating investment contracts net liability

(138,117)

(1,015)

(4,328)

(143,425)

At 31 December 2025

Insurance contract assets

248

(59)

(76)

113

Liabilities arising from insurance contracts and participating investment contracts

(130,099)

(910)

(4,309)

(135,318)

Net liability

(129,851)

(969)

(4,385)

(135,205)

Insurance acquisition assets

Insurance and participating investment contracts net liability

(129,851)

(969)

(4,385)

(135,171)

Excluding insurance acquisition assets.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 6: Operating expenses

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Staff costs:

Salaries and social security costs

1,989

1,908

1,938

Pensions and other post-retirement benefit schemes (note 7)

276

270

257

Restructuring and other staff costs

122

294

2,387

2,472

2,235

Premises and equipment costs

289

260

243

Depreciation and amortisation

1,787

1,748

1,729

UK bank levy

130

Regulatory and legal provisions (note 14)

931

Other

1,504

1,228

1,558

Operating expenses before adjustment for:

6,006

5,745

6,826

Amounts attributable to the acquisition of insurance and participating investment contracts

(79)

(89)

(102)

Amounts reported within insurance service expenses

(210)

(216)

(198)

Total operating expenses

5,717

5,440

6,526

Net of losses on disposal of operating lease assets of £32 million (half-year to 30 June 2025: losses of £3 million; half-year to 31 December 2025: losses of £7 million).

Note 7: Retirement benefit obligations

The Group's post-retirement defined benefit scheme obligations are comprised as follows:

At 30 Jun

2026

£m

At 31 Dec 2025

£m

Defined benefit pension schemes:

Present value of funded obligations

(25,483)

(26,571)

Fair value of scheme assets

28,262

29,183

Net pension scheme asset

2,779

2,612

Other post-retirement schemes

(35)

(37)

Total amounts recognised in the balance sheet

2,744

2,575

Recognised on the balance sheet as:

Retirement benefit assets

2,860

2,695

Retirement benefit obligations

(116)

(120)

Total amounts recognised in the balance sheet

2,744

2,575

Movements in the Group's net post-retirement defined benefit scheme asset during the period were as follows:

£m

Asset at 1 January 2026

2,575

Income statement credit

Employer contributions

Remeasurement

Asset at 30 June 2026

2,744

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 7: Retirement benefit obligations

(continued)

The charge to the income statement in respect of pensions and other post-retirement benefit schemes is comprised as follows:

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Defined benefit schemes

(15)

(22)

Defined contribution schemes

291

285

279

Total charge to the income statement

276

270

257

The principal assumptions used in the valuations of the defined benefit pension schemes were as follows:

At 30 Jun

2026

At 31 Dec 2025

Discount rate

6.03

5.57

Rate of inflation:

Retail Price Index (RPI)

2.77

2.65

Consumer Price Index (CPI)

2.33

2.13

Rate of salary increases

0.00

Weighted-average rate of increase for pensions in payment

2.61

2.52

In July 2024, the Court of Appeal handed down a judgment (Virgin Media Limited v NTL Pension Trustees Limited) which potentially has implications for the validity of amendments made by pension schemes that were contracted out on a salary-related basis between 6 April 1997 and the abolition of contracting-out in 2016. The Pension Schemes Act 2026 gives affected pension schemes the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards. The Group has not made any allowance for the possible impact of the ruling as it is currently unclear whether any additional liabilities might arise, and if they were to arise, how they would be reliably measured. The Group is continuing to review scheme amendments to decide whether any subsequent actions are required and will continue to monitor developments.

Note 8: Impairment

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Loans and advances to customers

604

492

375

Debt securities

Financial assets held at amortised cost

606

492

375

Financial assets at fair value through other comprehensive income

(1)

Other assets

(1)

Loan commitments and financial guarantees

(49)

(24)

Total impairment charge

616

442

353

There was a £78 million charge in respect of residual value impairment and voluntary terminations within the Group's UK Motor Finance business in the current period (half-year to 30 June 2025: £70 million; half-year to 31 December 2025: £67 million).

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 9: Tax

In accordance with IAS 34, the Group's income tax expense for the half-year to 30 June 2026 is based on the best estimate of the weighted-average annual income tax rate expected for the full financial year. The tax effects of one-off items are not included in the weighted-average annual income tax rate, but are recognised in the relevant period. An explanation of the relationship between tax expense and accounting profit is set out below:

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Profit before tax

4,293

3,504

3,157

UK corporation tax thereon at 25.0% (2025: 25.0%)

(1,073)

(876)

(789)

Impact of surcharge on banking profits

(94)

(86)

(81)

Non-deductible costs: conduct charges

(71)

Non-deductible costs: bank levy

(33)

Other non-deductible costs

(43)

(68)

(4)

Non-taxable income

Tax relief on coupons on other equity instruments

Non-taxable (non-deductible) foreign exchange gains (losses)

(74)

(1)

Tax-exempt gains on disposals

Tax losses where no deferred tax recognised

(4)

(3)

Differences in overseas tax rates

(2)

(12)

Policyholder tax in respect of the life assurance business

(18)

(35)

(36)

Deferred tax in respect of life assurance policyholder tax

(106)

(40)

(79)

Adjustments in respect of prior years

(6)

Tax effect of share of results of joint ventures

(3)

Provision for Pillar 2 current income taxes

Tax expense

(1,170)

(960)

(944)

Non-taxable (non-deductible) foreign exchange gains (losses) on non-sterling denominated other equity instruments and on net investment hedging of subsidiaries, previously shown in aggregate within other non-deductible costs and non-taxable income, are now presented as an individual line item. Comparatives are represented on a consistent basis.

The Group, as a proxy for policyholders in the UK, is required to record taxes on investment income and gains. This policyholder tax is levied on the Group, but is then recharged to the policyholder as part of the charge to funds. Although the net impact on the Group's profit after tax is £nil, IFRS requires the policyholder tax to be included in tax expense and the offsetting income to be included within profit before tax. The impact of this grossing up on the effective tax rate can be seen in the reconciliation of tax expense above.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 10: Fair values of financial assets and liabilities

The valuations of financial instruments have been classified into three levels according to the quality and reliability of information used to determine those fair values. Note 17 to the Group's financial statements for the year ended 31 December 2025 details the definitions of the three levels in the fair value hierarchy.

Financial instruments classified as financial assets at fair value through profit or loss, derivative financial instruments, financial assets at fair value through other comprehensive income and financial liabilities at fair value through profit or loss are recognised at fair value.

The Group manages valuation adjustments for its derivative exposures on a net basis; the Group determines their fair values on the basis of their net exposures. In all other cases, fair values of financial assets and liabilities measured at fair value are determined on the basis of their gross exposures.

The following tables provide an analysis of the financial assets and liabilities of the Group that are carried at fair value in the Group's consolidated balance sheet, grouped into levels 1 to 3 based on the degree to which the fair value is observable. There were no significant transfers between level 1 and level 2 during the period.

Financial assets

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

At 30 June 2026

Financial assets at fair value through profit or loss:

Loans and advances to banks

3,915

Loans and advances to customers

2,346

5,913

8,259

Reverse repurchase agreements

21,006

Debt securities

23,171

32,680

2,704

58,555

Treasury and other bills

Contracts held with reinsurers

8,013

Equity shares

157,368

1,253

158,621

Total financial assets at fair value through profit or loss

180,543

67,960

9,870

258,373

Financial assets at fair value through other comprehensive income:

Debt securities

25,363

14,964

40,376

Equity shares

Total financial assets at fair value through other comprehensive income

25,363

14,964

101

40,428

Derivative financial instruments

105

20,145

481

20,731

Total financial assets carried at fair value

206,011

103,069

10,452

319,532

Other financial assets mandatorily at fair value through profit or loss include assets backing insurance contracts and investment contracts of £224,952 million.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 10: Fair values of financial assets and liabilities

(continued)

Financial assets

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

At 31 December 2025

Financial assets at fair value through profit or loss:

Loans and advances to banks

2,851

Loans and advances to customers

2,943

6,058

9,001

Reverse repurchase agreements

20,981

Debt securities

19,496

31,548

2,758

53,802

Treasury and other bills

Contracts held with reinsurers

8,168

Equity shares

144,164

1,435

145,599

Total financial assets at fair value through profit or loss

163,671

66,491

10,251

240,413

Financial assets at fair value through other comprehensive income:

Debt securities

24,151

12,068

36,269

Equity shares

Total financial assets at fair value through other comprehensive income

24,151

12,068

101

36,320

Derivative financial instruments

19,206

464

19,727

Total financial assets carried at fair value

187,879

97,765

10,816

296,460

Other financial assets mandatorily at fair value through profit or loss include assets backing insurance contracts and investment contracts of £209,545 million.

Financial liabilities

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

At 30 June 2026

Financial liabilities at fair value through profit or loss:

Debt securities in issue

4,221

4,238

Liabilities in respect of securities sold under repurchase agreements

24,682

Short positions in securities

2,317

2,336

Deposits and other

Total financial liabilities at fair value through profit or loss

2,317

28,976

31,310

Derivative financial instruments

145

17,477

204

17,826

Liabilities arising from non-participating investment contracts

66,639

Total financial liabilities carried at fair value

2,462

113,092

221

115,775

At 31 December 2025

Financial liabilities at fair value through profit or loss:

Debt securities in issue

4,226

4,243

Liabilities in respect of securities sold under repurchase agreements

21,710

Short positions in securities

1,722

234

1,956

Deposits and other

Total financial liabilities at fair value through profit or loss

1,722

26,170

27,909

Derivative financial instruments

15,879

224

16,132

Liabilities arising from non-participating investment contracts

61,640

Total financial liabilities carried at fair value

1,751

103,689

241

105,681

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 10: Fair values of financial assets and liabilities

(continued)

Valuation control framework

Key elements of the valuation control framework include model validation (incorporating pre-trade and post-trade testing), product implementation review and independent price verification. The framework covers processes for all 3 levels in the fair value hierarchy. Formal committees meet quarterly to discuss and approve valuations in more judgemental areas.

Transfers into and out of level 3 portfolios

Transfers out of level 3 portfolios arise when inputs that could have a significant impact on the instrument's valuation become market observable; conversely, transfers into the portfolios arise when sources of data cease to be observable.

Valuation methodology

For level 2 and level 3 portfolios, there is no significant change to the valuation methodology (techniques and inputs) disclosed in the Group's financial statements for the year ended 31 December 2025 applied to these portfolios.

Movements in level 3 portfolio

The tables below analyse movements in the level 3 financial assets portfolio.

Financial

assets at

fair value

through

profit or loss

£m

Financial

assets at

fair value

through other

comprehensive

income

£m

Derivative

assets

£m

Total

financial

assets

carried at

fair value

£m

At 1 January 2026

10,251

101

464

10,816

Exchange and other adjustments

(2)

Gains recognised in the income statement within other income

191

221

Gains recognised in other comprehensive income within the revaluation reserve in respect of financial assets at FVOCI

Purchases/increases

522

525

Sales/repayments

(1,096)

(3)

(12)

(1,111)

Transfers into the level 3 portfolio

Transfers out of the level 3 portfolio

(14)

At 30 June 2026

9,870

101

481

10,452

Gains recognised in the income statement, within other income, relating to the change in fair

value of those assets held at 30 June 2026

147

192

At 1 January 2025

9,889

373

741

11,003

Exchange and other adjustments

(1)

Gains (losses) recognised in the income statement within other income

213

(154)

Gains recognised in other comprehensive income

within the revaluation reserve in respect of financial assets at FVOCI

Purchases/increases

137

145

Sales/repayments

(482)

(2)

(4)

(488)

Transfers into the level 3 portfolio

Transfers out of the level 3 portfolio

(68)

(65)

(133)

At 30 June 2025

9,700

417

539

10,656

Gains (losses) recognised in the income statement, within other income, relating to the change in fair

value of those assets held at 30 June 2025

120

(124)

(1)

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 10: Fair values of financial assets and liabilities

(continued)

The tables below analyse movements in the level 3 financial liabilities portfolio.

Financial

liabilities

at fair value

through

profit or loss

£m

Derivative

liabilities

£m

Total

financial

liabilities

carried at

fair value

£m

At 1 January 2026

224

241

Exchange and other adjustments

(1)

Losses (gains) recognised in the income statement within other income

(7)

(6)

Additions

Redemptions

(1)

(13)

(14)

At 30 June 2026

204

221

Losses recognised in the income statement, within other income,

relating to the change in fair value of those liabilities held at 30 June 2026

At 1 January 2025

422

444

Exchange and other adjustments

Gains recognised in the income statement within other income

(2)

(134)

(136)

Additions

Redemptions

(2)

(16)

(18)

At 30 June 2025

287

305

Gains recognised in the income statement, within other income,

relating to the change in fair value of those liabilities held at 30 June 2025

(2)

(108)

(110)

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 10: Fair values of financial assets and liabilities

(continued)

Significant unobservable inputs in level 3 valuations

The following tables disclose the valuation techniques and key unobservable inputs for instruments recognised at fair value and classified as level 3 and provides the range of those inputs at the balance sheet date.

For each portfolio, the minimum and maximum significant unobservable inputs that are used in the balance sheet valuation are shown.

Significant unobservable inputs affecting the valuations are unchanged from those described in the Group's financial statements for the year ended 31 December 2025.

At 30 June 2026

Valuation technique

Significant unobservable input

Minimum

Maximum

Carrying value

£m

Financial assets at fair value through profit or loss

Loans and advances to customers

Discounted cash flows

Credit spreads

84bps

407bps

5,790

Market values - property valuation

HPI growth

123

5,913

Debt securities

Discounted cash flows

Credit spreads

112bps

650bps

780

Market approach

Earnings multiple

28x

1,924

2,704

Equity shares

Underlying asset/net asset fair value (incl. property prices)

Price

n/a

874

Market approach

Earnings multiple

28x

379

1,253

9,870

Financial assets at fair value through other comprehensive income

Debt securities

Discounted cash flows

Credit spreads

287bps

308bps

Equity shares

Underlying asset/net asset fair value (incl. property prices)

Price

n/a

101

Derivative financial assets

Interest rate derivatives

Option pricing model

Interest rate ATM volatility

56bps

93bps

202

Discounted cash flows

Uncertainty of recovery rates

40%

90%

279

481

582

Level 3 financial assets carried at fair value

10,452

Financial liabilities at fair value through profit or loss

Securitisation notes and other

Discounted cash flows

Credit spreads

349bps

Derivative financial liabilities

Interest rate derivatives

Option pricing model

Interest rate ATM volatility

56bps

93bps

103

Shared appreciation rights

Market values - property valuation

HPI growth

101

204

Level 3 financial liabilities carried at fair value

221

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 10: Fair values of financial assets and liabilities

(continued)

Significant unobservable inputs in level 3 valuations

(continued)

At 31 December 2025

Valuation technique

Significant unobservable input

Minimum

Maximum

Carrying value

£m

Financial assets at fair value through profit or loss

Loans and advances to customers

Discounted cash flows

Credit spreads

80bps

853bps

5,923

Market values - property valuation

HPI growth

135

6,058

Debt securities

Discounted cash flows

Credit spreads

113bps

925bps

869

Market approach

Earnings multiple

16x

1,889

2,758

Equity shares

Underlying asset/net asset fair value (incl. property prices)

Price

n/a

1,057

Market approach

Earnings multiple

16x

378

1,435

10,251

Financial assets at fair value through other comprehensive income

Debt securities

Discounted cash flows

Credit spreads

287bps

308bps

Equity shares

Underlying asset/net asset fair value (incl. property prices)

Price

n/a

101

Derivative financial assets

Interest rate derivatives

Option pricing model

Interest rate ATM volatility

38bps

82bps

202

Discounted cash flows

Uncertainty of recovery rates

40%

90%

262

464

565

Level 3 financial assets carried at fair value

10,816

Financial liabilities at fair value through profit or loss

Securitisation notes and other

Discounted cash flows

Credit spreads

349bps

Derivative financial liabilities

Interest rate derivatives

Option pricing model

Interest rate ATM volatility

38bps

82bps

113

Shared appreciation rights

Market values - property valuation

HPI growth

111

224

Level 3 financial liabilities carried at fair value

241

Reasonably possible alternative assumptions

Valuation techniques applied to the Group's level 3 instruments involve the use of unobservable inputs. The calculation of the effect of reasonably possible alternative assumptions for those inputs are included in the tables and is unchanged from that described in note 17 to the Group's financial statements for the year ended 31 December 2025.

For each portfolio, the maximum and minimum changes presented reflect the difference between the significant unobservable inputs used in the balance sheet valuation and those used when applying reasonably possible alternative assumptions.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 10: Fair values of financial assets and liabilities

(continued)

Sensitivity of level 3 valuations

The tables below set out the effects of reasonably possible alternative assumptions for categories of level 3 financial assets and financial liabilities.

At 30 June 2026

Significant unobservable input

Max up

Max down

Favourable

changes

£m

Unfavourable

changes

£m

Financial assets at fair value through profit or loss

Loans and advances to customers

Credit spreads

150bps

(115)bps

110

(114)

HPI growth

(1)%

(10)

Debt securities

Credit spreads

52bps

(85)bps

(27)

Earnings multiple

10%

(10)%

(36)

Equity shares

Price

46%

(46)%

(89)

Earnings multiple

10%

(10)%

(7)

Financial assets at fair value through other comprehensive income

Debt securities

Credit spreads

75bps

(75)bps

(1)

Equity shares

Price

20%

(20)%

(5)

Derivative financial assets

Interest rate derivatives

Interest rate ATM volatility

4bps

(4)bps

(5)

Uncertainty of recovery rates

(8)%

(21)

Financial liabilities at fair value through profit or loss

Securitisation notes and other

Credit spreads

50bps

(50)bps

(1)

Derivative financial liabilities

Interest rate derivatives

Interest rate ATM volatility

4bps

(4)bps

(5)

Shared appreciation rights

HPI growth

(1)%

(8)

Where the exposure to a significant unobservable input is managed on a net basis, only the net impact is shown in the table.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 10: Fair values of financial assets and liabilities

(continued)

Sensitivity of level 3 valuations

(continued)

At 31 December 2025

Significant unobservable input

Max up

Max down

Favourable

changes

£m

Unfavourable

changes

£m

Financial assets at fair value through profit or loss

Loans and advances to customers

Credit spreads

150bps

(115)bps

155

(147)

HPI growth

(1)%

(12)

Debt securities

Credit spreads

210bps

(50)bps

(53)

Earnings multiple

10%

(10)%

(86)

Equity shares

Price

31%

(31)%

(89)

Earnings multiple

10%

(10)%

(17)

Financial assets at fair value through other comprehensive income

Debt securities

Credit spreads

75bps

(75)bps

(2)

Equity shares

Price

20%

(20)%

(3)

Derivative financial assets

Interest rate derivatives

Interest rate ATM volatility

4bps

(4)bps

(4)

Uncertainty of recovery rates

(8)%

(21)

Financial liabilities at fair value through profit or loss

Securitisation notes and other

Credit spreads

50bps

(50)bps

(1)

Derivative financial liabilities

Interest rate derivatives

Interest rate ATM volatility

4bps

(4)bps

(3)

Shared appreciation rights

HPI growth

(1)%

(10)

Where the exposure to a significant unobservable input is managed on a net basis, only the net impact is shown in the table.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 10: Fair values of financial assets and liabilities

(continued)

The table below summarises the carrying values of financial assets and liabilities measured at amortised cost in the Group's consolidated balance sheet. The fair values presented in the table are at a specific date and may be significantly different from the amounts which will actually be paid or received on the maturity or settlement date.

At 30 June 2026

At 31 December 2025

Carrying

value

£m

Fair

value

£m

Carrying

value

£m

Fair

value

£m

Financial assets

Loans and advances to banks

8,138

8,137

7,236

7,235

Loans and advances to customers

491,678

487,031

481,463

480,703

Reverse repurchase agreements

54,351

50,986

Debt securities

16,635

16,567

13,987

14,082

Financial liabilities

Deposits from banks

8,208

5,779

Customer deposits

500,859

501,324

496,457

497,849

Repurchase agreements at amortised cost

45,400

38,570

Debt securities in issue

90,853

91,190

78,271

78,900

Subordinated liabilities

9,235

10,731

9,894

11,475

The carrying amounts of cash and balances at central banks and notes in circulation are a reasonable approximation of their fair values.

Note 11: Derivative financial instruments

At 30 June 2026

At 31 December 2025

Fair value

of assets

£m

Fair value

of liabilities

£m

Fair value

of assets

£m

Fair value

of liabilities

£m

Trading and other

Exchange rate contracts

7,976

7,244

7,594

6,454

Interest rate contracts

12,215

9,538

11,797

8,924

Credit derivatives

194

170

Equity, commodity and other contracts

461

586

236

294

20,717

17,562

19,702

15,842

Hedging

Derivatives designated as fair value hedges

244

253

Derivatives designated as cash flow hedges

264

290

Total recognised derivative assets/liabilities

20,731

17,826

19,727

16,132

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 12: Allowance for expected credit losses

The calculation of the Group's allowance for expected credit losses requires the Group to make a number of judgements, assumptions and estimates. These are set out in full in note 21 to the Group's financial statements for the year ended 31 December 2025, with the most significant set out below.

The table below analyses total ECL allowance by portfolio, separately identifying the amounts that have been modelled, those that have been individually assessed and those arising through the application of judgemental adjustments.

At 30 June 2026

Modelled

ECL

£m

Individually

assessed

£m

Judgemental

adjustments

£m

Total

ECL

£m

UK mortgages

602

669

Credit cards

589

645

Other Retail

909

982

Commercial Banking

547

370

(56)

861

Other

Total

2,662

370

140

3,172

At 31 December 2025

UK mortgages

623

108

731

Credit cards

540

603

Other Retail

916

991

Commercial Banking

555

355

(22)

888

Other

Total

2,649

355

224

3,228

Adjustments to modelled ECL

UK mortgages: £67 million (31 December 2025: £108 million)

These adjustments principally comprise:

Repossession risk: £67 million (31 December 2025: £85 million)

Additional ECL continues to be held judgementally to capture the potential repossession and recovery risk from specific subsets of largely long-term defaulted cases. The reduction in the adjustment comes from the reclassification of one part previously needed to set an anticipated longer duration between default and repossession than was observable at the time. Having now seen that elongation emerge and subsequently normalise there is now sufficient observable behaviour to return to a data driven approach.

Adjustment for specific segments: £nil (31 December 2025: £13 million)

An adjustment was previously required to address fire safety and cladding uncertainty as not fully captured through collective models. This adjustment has been fully released as the risk is now deemed immaterial following reduction in exposure to these properties.

Credit cards: £56 million (31 December 2025: £63 million) and Other Retail: £73 million (31 December 2025: £75 million)

These adjustments principally comprise:

Lifetime extension: Credit cards: £49 million (31 December 2025: £49 million) and Other Retail: £9 million (31 December 2025: £9 million)

An adjustment is required to extend the lifetime used for Stage 2 exposures on Retail revolving products from a three-year modelled lifetime, which reflected the outcome data available when the ECL models were developed, to a more representative lifetime. Incremental defaults beyond year three are calculated through the extrapolation of the default trajectory observed throughout the three years and beyond.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 12: Allowance for expected credit losses

(continued)

Adjustments to loss rates: Other Retail: £37 million (31 December 2025: £25 million)

An adjustment is made to the loss given default (LGD) assumptions within the motor credit model to capture observed loss rates and the latest outlook on used car prices. The increase in the period reflects both the further adjustment required as the model now captures distorted historical loss-data from the Covid-period, as well as a small expected deterioration in loss rates.

Commercial Banking: £(56) million (31 December 2025: £(22) million)

These adjustments principally comprise:

Corporate insolvency rates: £(106) million (31 December 2025: £(122) million)

The volume of UK corporate insolvencies continues to exhibit an elevated trend beyond December 2019 levels, revealing a marked misalignment between observed UK corporate insolvencies and the Group's equivalent credit performance. This dislocation gives rise to uncertainty over the drivers of the observed trends in the metric and the appropriateness of the Group's Commercial Banking model response which uses observed UK corporate insolvencies data to anchor future loss estimates to. Given the Group's stable credit performance, a negative adjustment is applied by reverting judgementally to the long-term average of the insolvency rate. The scale of the negative adjustment reduced in the period reflecting the reduction in observed actual UK corporate insolvency rates, narrowing the gap of the misalignment.

Adjustments for loss given defaults (LGDs): £50 million (31 December 2025: £50 million)

An adjustment is required for a specific segment of the SME portfolio which judgementally applies a more appropriate blended LGD rate from credit risk profile segments more aligned to experience.

Global tariff and political disruption risks: £nil (31 December 2025: £50 million)

An adjustment was previously held to recognise the potential risks to specific drivers across various corporate sectors not reflected in broad macroeconomic model drivers. These were in relation to potential nuanced risks to businesses inherent in the base case which could also worsen in the downside scenarios. This adjustment has been fully released as these risks are considered to be adequately captured within assumptions and resulting modelled provisions.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 12: Allowance for expected credit losses

(continued)

Base case and MES economic assumptions

The Group's base case economic scenario has been updated to reflect ongoing geopolitical developments and conditions in financial and commodity markets through to the balance sheet date. The Group's updated base case scenario has four conditioning assumptions. First, developments in global conflicts, technology or financial sector issues do not cause a significant degree of financial market volatility. Second, a drift towards further deglobalisation and financial market fragmentation continues as part of a reordering of global economic relations, adding to economic frictions. Third, the UK's existing macroeconomic framework for monetary and fiscal policy remains in place, alongside broader continuity on other areas of government policy. Fourth, advancements in AI begin to boost UK productivity growth but worsen the employment outlook in a 'transitional' phase around the turn of the decade.

Based on these assumptions and incorporating the economic data published in the second quarter of 2026, the Group's base case scenario is for a slow expansion in gross domestic product (GDP) and a further rise in the unemployment rate alongside small gains in residential and commercial property prices. Although inflationary pressures attributable to the conflict in the Middle East are yet to peak, UK Bank Rate is expected to remain on hold during 2026, before reaching a 'neutral' policy stance in 2027. Risks around this base case economic view lie in both directions and are largely captured by the generation of alternative economic scenarios.

The Group's approach to generating alternative economic scenarios is set out in detail in note 21 to the financial statements for the year ended 31 December 2025. The Group has taken into account the latest available information at the reporting date in defining its base case scenario and generating alternative economic scenarios. The scenarios include forecasts for key variables as at the second quarter of 2026. Actuals for this period, or restatements of past data, may have since emerged prior to publication and have not been included.

Scenarios by year

The key UK economic assumptions made by the Group are shown in the following tables across a number of measures explained below.

Annual assumptions

Gross domestic product (GDP) growth and Consumer Price Index (CPI) inflation are presented as an annual change, house price growth and commercial real estate price growth are presented as the growth in the respective indices over each year. Unemployment rate and UK Bank Rate are averages over the year.

Five-year average

The five-year average reflects the average annual growth rate, or level, over the five-year period. It includes movements within the current reporting year, such that the position as of 30 June 2026 covers the five years 2026 to 2030. The inclusion of the reporting year within the five-year period reflects the need to predict variables which remain unpublished at the reporting date and recognises that credit models utilise both level and annual changes. The use of calendar years maintains a comparability between the annual assumptions presented.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 12: Allowance for expected credit losses

(continued)

At 30 June 2026

2026

2027

2028

2029

2030

2026

to 2030 average

Upside

Gross domestic product growth

1.4

2.4

1.9

1.6

1.8

Unemployment rate

4.8

3.7

3.1

3.3

3.6

House price growth

1.8

4.5

7.7

7.5

6.0

5.5

Commercial real estate price growth

3.3

6.6

3.1

2.0

0.7

3.1

UK Bank Rate

3.85

4.79

5.19

5.46

5.65

4.99

CPI inflation

3.1

2.5

2.2

2.7

3.0

2.7

Base case

Gross domestic product growth

1.0

1.5

1.6

1.4

Unemployment rate

5.2

5.4

5.0

4.7

5.0

House price growth

0.9

1.2

2.0

3.4

2.2

Commercial real estate price growth

(0.3)

0.0

0.9

0.8

0.0

0.3

UK Bank Rate

3.75

3.63

3.50

3.58

CPI inflation

3.1

2.4

1.8

2.0

2.2

Downside

Gross domestic product growth

0.6

(1.2)

0.5

1.4

1.7

0.6

Unemployment rate

5.6

7.5

7.7

7.3

7.0

House price growth

0.0

(2.4)

(5.4)

(3.2)

(1.3)

(2.5)

Commercial real estate price growth

(3.5)

(8.7)

(3.2)

(2.1)

(2.7)

(4.0)

UK Bank Rate

3.65

2.04

1.04

0.71

0.49

1.59

CPI inflation

3.1

2.3

1.2

0.7

0.6

1.6

Severe downside

Gross domestic product growth

0.1

(3.3)

(0.1)

1.2

1.5

(0.1)

Unemployment rate

6.2

10.1

10.4

9.8

9.3

9.2

House price growth

(1.0)

(5.1)

(12.4)

(9.2)

(6.0)

(6.8)

Commercial real estate price growth

(8.6)

(17.8)

(8.7)

(6.5)

(6.1)

(9.6)

UK Bank Rate

3.49

0.64

0.07

0.02

0.01

0.85

CPI inflation

3.1

2.2

0.6

(0.5)

(1.0)

0.9

Probability-weighted

Gross domestic product growth

0.9

0.4

1.1

1.5

1.6

1.1

Unemployment rate

5.3

6.0

5.8

5.5

5.4

5.6

House price growth

0.7

0.5

0.0

1.4

1.8

0.9

Commercial real estate price growth

(1.0)

(2.4)

(0.6)

(0.4)

(1.2)

(1.1)

UK Bank Rate

3.72

3.20

2.93

2.90

2.89

3.13

CPI inflation

3.1

2.3

1.6

1.5

1.6

2.0

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 12: Allowance for expected credit losses

(continued)

At 31 December 2025

2025

2026

2027

2028

2029

2025

to 2029 average

Upside

Gross domestic product growth

1.4

2.0

2.3

1.6

1.8

Unemployment rate

4.8

4.2

3.2

3.1

3.2

3.7

House price growth

0.8

3.5

7.1

6.9

6.0

4.8

Commercial real estate price growth

1.2

7.9

4.9

1.7

0.8

3.2

UK Bank Rate

4.13

3.94

4.59

5.07

5.33

4.61

CPI inflation

3.4

2.6

2.4

2.8

3.1

2.9

Base case

Gross domestic product growth

1.4

1.2

1.4

1.5

1.6

1.4

Unemployment rate

4.8

5.2

4.8

4.6

4.5

4.8

House price growth

0.8

1.6

1.9

2.2

3.1

1.9

Commercial real estate price growth

1.2

0.6

1.7

0.5

0.2

0.9

UK Bank Rate

4.13

3.44

3.25

3.44

3.50

3.55

CPI inflation

3.4

2.6

2.2

2.3

2.6

Downside

Gross domestic product growth

1.4

(0.3)

(0.5)

1.1

1.6

0.7

Unemployment rate

4.8

6.6

7.5

7.4

7.0

6.7

House price growth

0.8

(0.2)

(4.7)

(5.7)

(2.8)

(2.6)

Commercial real estate price growth

1.2

(7.1)

(4.2)

(2.7)

(2.3)

(3.1)

UK Bank Rate

4.13

2.74

1.09

0.75

0.52

1.85

CPI inflation

3.4

2.6

2.0

1.4

1.0

2.1

Severe downside

Gross domestic product growth

1.4

(1.9)

(1.8)

0.7

1.4

0.0

Unemployment rate

4.8

8.3

10.2

9.9

9.4

8.5

House price growth

0.8

(1.2)

(11.1)

(12.2)

(7.8)

(6.5)

Commercial real estate price growth

1.2

(17.4)

(9.8)

(7.4)

(5.4)

(8.0)

UK Bank Rate

4.13

1.91

0.10

0.03

0.01

1.24

CPI inflation

3.4

2.6

1.7

0.5

(0.4)

1.6

Probability-weighted

Gross domestic product growth

1.4

0.7

0.8

1.3

1.6

1.2

Unemployment rate

4.8

5.6

5.7

5.5

5.4

House price growth

0.8

1.3

0.2

(0.2)

1.1

0.6

Commercial real estate price growth

1.2

(1.3)

(0.3)

(0.9)

(0.4)

UK Bank Rate

4.13

3.23

2.69

2.78

2.81

3.13

CPI inflation

3.4

2.6

2.2

2.0

1.9

2.4

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 12: Allowance for expected credit losses

(continued)

Base case scenario by quarter

Gross domestic product growth is presented quarter-on-quarter. House price growth, commercial real estate price growth and CPI inflation are presented year-on-year, i.e. from the equivalent quarter in the previous year. Unemployment rate and UK Bank Rate are presented as at the end of each quarter.

At 30 June 2026

First

quarter

2026

Second

quarter

2026

Third

quarter

2026

Fourth

quarter

2026

First

quarter

2027

Second

quarter

2027

Third

quarter

2027

Fourth

quarter

2027

Gross domestic product growth

0.6

0.1

0.2

0.3

Unemployment rate

5.0

5.2

5.4

5.5

5.4

5.3

5.2

House price growth

0.8

0.5

0.3

0.9

0.6

1.2

1.4

1.2

Commercial real estate price growth

0.8

0.3

(0.2)

(0.3)

(0.2)

(0.1)

0.0

UK Bank Rate

3.75

3.50

CPI inflation

3.1

2.8

3.0

3.3

2.9

2.5

2.0

1.9

At 31 December 2025

First

quarter

2025

Second

quarter

2025

Third

quarter

2025

Fourth

quarter

2025

First

quarter

2026

Second

quarter

2026

Third

quarter

2026

Fourth

quarter

2026

Gross domestic product growth

0.7

0.3

0.1

0.3

0.4

Unemployment rate

4.5

4.7

5.0

5.1

5.3

5.2

5.1

House price growth

2.9

2.7

1.3

0.8

1.3

1.6

Commercial real estate price growth

2.5

2.6

1.2

0.5

0.2

0.1

0.6

UK Bank Rate

4.50

4.25

4.00

3.75

3.50

3.25

CPI inflation

2.8

3.5

3.8

3.7

3.3

2.6

2.2

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 12: Allowance for expected credit losses

(continued)

Movement in expected credit loss allowance

Opening ECL at

31 Dec

2025

£m

Write-offs

and other

£m

Income

statement

charge (credit)

£m

Net ECL

increase

(decrease)

£m

Closing ECL at

30 Jun

2026

£m

UK mortgages

731

(101)

(62)

669

Credit cards

603

(222)

264

645

Other Retail

991

(271)

262

(9)

982

Retail

2,325

(594)

565

(29)

2,296

Commercial Banking

888

(78)

(27)

861

Other

Total

3,228

(672)

616

(56)

3,172

Opening ECL at

31 Dec

2024

£m

Write-offs

and other

£m

Income

statement

charge (credit)

£m

Net ECL

increase

(decrease)

£m

Closing ECL at

30 Jun

2025

£m

UK mortgages

852

(10)

(133)

(143)

709

Credit cards

674

(215)

200

(15)

659

Other Retail

950

(215)

275

1,010

Retail

2,476

(440)

342

(98)

2,378

Commercial Banking

989

(80)

100

1,009

Other

(1)

Total

3,481

(521)

442

(79)

3,402

Opening ECL at

30 Jun

2025

£m

Write-offs

and other

£m

Income

statement

charge (credit)

£m

Net ECL

increase

(decrease)

£m

Closing ECL at

31 Dec

2025

£m

UK mortgages

709

(51)

731

Credit cards

659

(177)

121

(56)

603

Other Retail

1,010

(217)

198

(19)

991

Retail

2,378

(445)

392

(53)

2,325

Commercial Banking

1,009

(81)

(40)

(121)

888

Other

(1)

Total

3,402

(527)

353

(174)

3,228

The total allowance for expected credit losses includes £250 million (30 June 2025: £211 million; 31 December 2025: £243 million) in respect of residual value impairment and voluntary terminations within the Group's UK Motor Finance business.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 13: Debt securities in issue

At 30 June 2026

At 31 December 2025

fair value

through

profit

or loss

£m

amortised

cost

£m

Total

£m

fair value

through

profit

or loss

£m

amortised cost

£m

Total

£m

Senior unsecured notes issued

4,221

40,257

44,478

4,226

37,532

41,758

Covered bonds

12,700

11,260

Certificates of deposit issued

10,040

7,333

Securitisation notes

7,036

7,053

6,325

6,342

Commercial paper

20,820

15,821

4,238

90,853

95,091

4,243

78,271

82,514

Covered bonds and securitisation programmes

At 30 June 2026, the covered bonds held by external parties and those held internally, were secured on certain loans and advances to customers amounting to £33,936 million (31 December 2025: £22,072 million) which have been assigned to bankruptcy remote limited liability partnerships to provide security for issues of covered bonds by the Group. The Group retains all of the risks and rewards associated with these loans and the partnerships are consolidated fully with the loans retained on the Group's balance sheet.

The Group's securitisation vehicles issue notes that are held both externally and internally, and are secured on loans and advances to customers amounting to £29,918 million at 30 June 2026 (31 December 2025: £27,766 million), the majority of which have been sold by subsidiary companies to bankruptcy remote structured entities. As the structured entities are funded by the issue of debt on terms whereby the majority of the risks and rewards of the portfolio are retained by the subsidiary, the structured entities are consolidated fully and all of these loans are retained on the Group's balance sheet.

Cash deposits of £3,734 million (31 December 2025: £3,359 million) which support the debt securities issued by the structured entities, the term advances related to covered bonds and other legal obligations, are held by the Group.

Note 14: Provisions

Provisions

for financial

commitments

and guarantees

£m

Regulatory

and legal

provisions

£m

Other

£m

Total

£m

At 1 January 2026

197

2,276

415

2,888

Exchange and other adjustments

(1)

(5)

(7)

Provisions applied

(126)

(144)

(270)

Charge for the period

142

190

At 30 June 2026

205

2,188

408

2,801

In respect of loans and advances to customers.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 14: Provisions

(continued)

Regulatory and legal provisions

In the course of its business, the Group is engaged on a regular basis in discussions with UK and overseas regulators and other governmental authorities on a range of matters, including legal and regulatory reviews and, from time to time, enforcement investigations (including in relation to compliance with applicable laws and regulations, such as those relating to prudential regulation, consumer protection, investment advice, employment, business conduct, systems and controls, environmental, sustainability, competition/anti-trust, tax, anti-bribery, anti-money laundering and sanctions). Any matters discussed or identified during such discussions and inquiries may result in, among other things, further inquiry or investigation, other action being taken by governmental and/or regulatory authorities, increased costs being incurred by the Group, remediation of systems and controls, public or private censure, restriction of the Group's business activities and/or fines. The Group also receives complaints and pre-action correspondence in connection with its past conduct and claims brought or threatened by or on behalf of current and former employees, customers (including their appointed representatives), investors and other third parties and is subject to legal proceedings and other legal or regulatory actions from time to time. Any such events or circumstances could have a material adverse effect on the Group's financial position, operations or cash flows. Provisions are held where the Group can reliably estimate a probable outflow of economic resources. The ultimate liability of the Group may be significantly more, or less, than the amount of any provision recognised. If the Group is unable to determine a reliable estimate, a contingent liability is disclosed. The recognition of a provision does not amount to an admission of liability or wrongdoing on the part of the Group. During the half-year to 30 June 2026 the Group charged a further £39 million in respect of legal actions and other regulatory matters and the unutilised balance at 30 June 2026 was £2,188 million (31 December 2025: £2,276 million). The most significant items are outlined below.

Motor commission review

There have been no further charges relating to motor finance commission arrangements for the period ending 30 June 2026. As at 30 June 2026, the total provision recognised is £1,950 million.

The Supreme Court judgment in Johnson v FirstRand Bank Limited in August 2025 found that there was an unfair relationship under s.140A of the Consumer Credit Act (CCA). Following that judgment, the FCA published Consultation Paper CP25/27 in October 2025 setting out detailed proposals for a scheme to redress unfair customer relationships in the context of historic motor finance agreements.

The FCA subsequently published its policy statement and final rules for its motor finance redress schemes on 30 March 2026. On 2 July 2026, the FCA stated that the schemes have been partially suspended by the Upper Tribunal, pending the outcome of challenges from a number of parties. As a result, firms are not required to calculate or pay compensation or issue compensation-related communications under the original timetable for the schemes, although they must continue preparatory activities and comply with the aspects of the schemes which have not been suspended, including communicating with customers who are not entitled to redress under the schemes. The FCA further stated that if the schemes, or parts thereof, were quashed, the FCA would need to carefully consider all options. One of these options includes a 'no scheme' scenario, and the FCA also announced that firms should plan for this scenario in the event of successful challenge.

The FCA also announced on 2 July 2026 that payments to customers will begin in 2027 if the schemes are upheld, based on Upper Tribunal hearing dates in December 2026 or the second half of February 2027. The Group will continue to consider carefully potential implications of the challenges to the schemes and any impact on the existing provision arising from any challenges succeeding (whether in full or in part) and the regulatory response to the challenge outcome (including a possible "no scheme" scenario).

The pause on motor finance complaints handling was lifted on 31 May 2026. This does not impact motor finance complaints within the scope of the FCA's redress schemes as the schemes' rules disapply complaint handling time limits for such complaints. The FCA also lifted the pause on handling motor finance complaints in respect of leasing products on 5 December 2025, such products not being within the scope of the FCA redress schemes. The Group continues to receive new complaints as well as claims in the County Courts in respect of motor finance commissions. A large number of those claims have been stayed, as has a claim in the Competition Appeal Tribunal. On 30 June 2026, the Court of Appeal determined that, in a case before it involving Black Horse Limited, a member of the Group, multiple unfair relationship claims could be dealt with via one bulk Claim Form. Leave to appeal has been sought by Black Horse Limited. It remains uncertain how many customers will pursue court action given that the schemes are intended to provide a simpler alternative for redress.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 14: Provisions

(continued)

The ultimate financial impact of this issue will be determined by a number of factors still to be resolved, in particular, challenge and litigation outcomes, customer response rates, operational costs, any further interventions and any broader implications of legal and/or regulatory developments. Given the significant level of uncertainty in terms of these factors, the ultimate financial impact on the Group could differ materially from the amount provided. The total £1,950 million provision continues to represent the Group's current best estimate of the potential impact of the motor finance issue.

HBOS Reading - review

The Group continues to apply the recommendations from Sir Ross Cranston's review, issued in December 2019, including a reassessment of direct and consequential losses by an independent panel (the Foskett Panel), an extension of debt relief and a wider definition of de facto directors. The Foskett Panel's full scope and methodology was published on 7 July 2020. The Foskett Panel's stated objective is to consider cases via a non-legalistic and fair process and to make its decisions in a generous, fair and common sense manner, assessing claims against an expanded definition of the fraud and on a lower evidential basis.

In June 2022, the Foskett Panel announced an alternative option, in the form of a fixed sum award which could be accepted as an alternative to participation in the full re-review process, to support earlier resolution of claims for those deemed by the Foskett Panel to be victims of the fraud.

All of the population have now had an initial decision, with a small number of the populations' challenges to the Panel's initial decision ongoing through the published process, with operational costs, redress and tax costs associated with the re-reviews recognised within the amount provided.

Notwithstanding the settled claims and the increase in outcomes which builds confidence in the full estimated cost, uncertainties remain and the final outcome could be different. The Group remains committed to implementing the recommendations in full. There is no confirmed timeline for the completion of the re-review process nor the separate review by Dame Linda Dobbs.

Payment protection insurance (PPI)

The Group continues to receive and challenge PPI litigation cases, with mainly operational costs and legal fees associated with litigation activity (including via bulk claims forms) recognised within regulatory and legal provisions.

Customer claims in relation to insurance branch business in Germany

The Group continues to receive claims from customers in Germany relating to policies issued by Clerical Medical Investment Group Limited (subsequently renamed Scottish Widows Limited), with smaller numbers of claims received from customers in Austria and Italy. Operational costs, redress and legal fees associated with the claims are recognised within regulatory and legal provisions.

Other

The Group carries provisions of £93 million (31 December 2025: £119 million) in respect of dilapidations, rent reviews and other property-related matters.

Provisions are also made for staff and other costs related to Group restructuring initiatives at the point at which the Group becomes committed to the expenditure; at 30 June 2026 provisions of £180 million (31 December 2025: £170 million) were held.

The Group carries provisions of £43 million (31 December 2025: £41 million) for indemnities and other matters relating to legacy business disposals in prior years. Whilst there remains significant uncertainty as to the timing of the utilisation of the provisions, the Group expects the majority of the remaining provisions to have been utilised by 31 December 2026.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 15: Subordinated liabilities

The movement in subordinated liabilities during the period was as follows:

Total

£m

At 1 January 2025

10,089

Issued during the period

1,760

Repurchases and redemptions during the period

(904)

Foreign exchange movements

(435)

Other movements (cash and non-cash)

151

At 30 June 2025

10,661

Issued during the period

Repurchases and redemptions during the period

(1,024)

Foreign exchange movements

155

Other movements (cash and non-cash)

102

At 31 December 2025

9,894

Issued during the period

496

Repurchases and redemptions during the period

(1,121)

Foreign exchange movements

Other movements (cash and non-cash)

(85)

At 30 June 2026

9,235

Note 16: Earnings per share

Half-year

to 30 Jun

2026

£m

Half-year

to 30 Jun

2025

£m

Half-year

to 31 Dec

2025

£m

Profit attributable to ordinary shareholders - basic and diluted

2,836

2,274

1,922

Half-year

to 30 Jun

2026

million

Half-year

to 30 Jun

2025

million

Half-year

to 31 Dec

2025

million

Weighted average number of ordinary shares in issue - basic

58,504

60,320

59,272

Adjustment for share options and awards

730

739

717

Weighted average number of ordinary shares in issue - diluted

59,234

61,059

59,989

Basic earnings per share

4.8p

3.8p

3.2p

Diluted earnings per share

4.8p

3.7p

3.2p

Basic earnings per share are calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year, which has been calculated after deducting ordinary shares representing the Group's holdings of own shares in respect of employee share schemes.

For the calculation of diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares that arise in respect of share options and awards granted to employees. The number of shares that could have been acquired at the annual average price of the Company's shares based on the monetary value of the subscription rights attached to outstanding share options and awards is determined. This is deducted from the number of shares issuable under such options and awards to leave a residual bonus amount of shares which are added to the weighted average number of ordinary shares in issue, but no adjustment is made to the profit or loss attributable to ordinary shareholders.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 17: Dividends on ordinary shares and share buyback

An interim dividend for 2026 of 1.58 pence per ordinary share (half-year to 30 June 2025: 1.22 pence per ordinary share) will be paid on 15 September 2026. The total amount of this dividend is £918 million, before the impact of any further cancellations of shares purchased under the Group's buyback programme (half-year to 30 June 2025: £729 million, following cancellations of shares under the Group's buyback programme up to the record date, was paid to shareholders).

On 19 May 2026, a final dividend in respect of 2025 of 2.43 pence per ordinary share, totalling £1,420 million, following cancellations of shares under the Group's buyback programme up to the record date, was paid to shareholders.

Shareholders who have joined the dividend reinvestment plan will automatically receive ordinary shares instead of the cash dividend. Key dates for the payment of the recommended dividend are outlined on page 100.

On 30 January 2026 the Group commenced an ordinary share buyback programme to purchase outstanding ordinary shares. As at 30 June 2026, the Group has purchased c.1.2 billion ordinary shares under the programme, for a total consideration of £1.2 billion. In addition, the Board has announced its intention to implement a further ordinary share buyback programme of up to £1.0 billion, which is expected to complete by 27 January 2027, the day before the announcement of the Group's 2026 preliminary results.

Note 18: Contingent liabilities, commitments and guarantees

Contingent liabilities, commitments and guarantees arising from the banking business

At 30 June 2026 contingent liabilities, such as performance bonds and letters of credit, arising from the banking business were £3,027 million (31 December 2025: £3,009 million).

The contingent liabilities of the Group arise in the normal course of its banking business and it is not practicable to quantify their future financial effect. Total commitments and financial guarantees were £169,331 million (31 December 2025: £157,574 million), of which in respect of undrawn formal standby facilities, credit lines and other commitments to lend, £97,768 million (31 December 2025: £88,135 million) was irrevocable.

Capital commitments

Excluding commitments in respect of investment property, capital expenditure contracted but not provided for at 30 June 2026 amounted to £788 million (31 December 2025: £610 million) and related to assets to be leased to customers under operating leases. Capital expenditure in respect of investment properties which had been contracted for but not recognised in the financial statements was £382 million (31 December 2025: £312 million). The Group's management is confident that future net revenues and funding will be sufficient to cover these commitments.

Interchange fees

With respect to multi-lateral interchange fees (MIFs), the Group is not a party in the ongoing or threatened litigation which involves the card schemes Visa and Mastercard or any settlements of such litigation. However, the Group is a member/licensee of Visa and Mastercard and other card schemes.

Litigation has been brought by or on behalf of retailers against both Visa and Mastercard in the English Courts, in which retailers are seeking damages on grounds that Visa and Mastercard's MIFs breached competition law. This includes a final judgment of the Supreme Court in 2020 that certain historic interchange arrangements of Mastercard and Visa infringed competition law and a subsequent judgment of the Competition Appeal Tribunal in June 2025 finding that all default interchange fee rules of Mastercard and Visa (including after the Interchange Fee Regulation) infringed competition law.

Separate litigation was brought on behalf of UK consumers in the English Courts against Mastercard (settlement of which was approved by the Competition Appeal Tribunal in the first half of 2025).

Any impact on the Group of the litigation against Visa and Mastercard remains uncertain at this time, such that it is not practicable for the Group to provide an estimate of any potential financial effect. Insofar as Visa is required to pay damages to retailers for interchange fees set prior to June 2016, contractual arrangements to allocate liability have been agreed between various UK banks (including the Group) and Visa Inc, as part of Visa Inc's acquisition of Visa Europe in 2016. These arrangements cap the maximum amount of liability to which the Group may be subject as the amount of cash consideration received by the Group in 2016 for the sale of its stake in Visa Europe.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)

(continued)

Note 18: Contingent liabilities, commitments and guarantees

(continued)

LIBOR and other trading rates

Certain Group companies, together with other panel banks, were previously named as defendants in private lawsuits in the US in connection with their roles as panel banks contributing to the setting of US dollar, Japanese yen and Sterling London Interbank Offered Rate. Certain Group company dismissals from these lawsuits remain subject to appeal.

A Group entity is also named as a defendant in a Dutch class action, raising LIBOR manipulation allegations and one English claim relating to the alleged mis-sale of interest rate hedging products which also includes an allegation of LIBOR manipulation.

It is currently not possible to predict the scope and ultimate outcome on the Group of any private lawsuits. As such, it is not practicable to provide an estimate of any potential financial effect.

Tax authorities

The Group has an open matter in relation to a claim for group relief of losses incurred in its former Irish banking subsidiary, which ceased trading on 31 December 2010. In 2020, HMRC concluded its enquiry into the matter and issued a closure notice denying the group relief claim. The Group appealed to the First Tier Tax Tribunal. The hearing took place in May 2023. In January 2025, the First Tier Tribunal concluded in favour of HMRC. The Group believes it has applied the rules correctly and that the claim for group relief is correct. Having reviewed the Tribunal's conclusions and having taken appropriate advice the Group has appealed to the Upper Tier Tax Tribunal, and does not consider this to be a case where an additional tax liability will ultimately fall due. If the final determination of the matter by the judicial process is that HMRC's position is correct, management believes that this would result in an increase in current tax liabilities of approximately £980 million (including interest) and a reduction in the Group's deferred tax asset of approximately £270 million. Following the First Tier Tax Tribunal outcome, the tax has been paid to HMRC and recognised as a current tax asset, given the Group's view that the tax liability will not ultimately fall due. The appeal has been listed for hearing in March 2027, however final conclusion of the judicial process may not be for several years.

There are a number of other open matters on which the Group is in discussions with HMRC (including the tax treatment of costs relating to HBOS Reading), none of which is expected to have a material impact on the financial position of the Group.

Arena and Sentinel litigation claims

The Group is facing claims brought by (i) Arena Television Limited and Arena Holdings Limited and (ii) Sentinel Broadcast Limited, alleging breach of duty and/or mandate in connection with an external fraud. The Group is continuing to defend the claims, which are now proceeding to trial expected in October 2028. At this stage, it is not practicable to estimate the final outcome of the matter or its financial impact (if any) to the Group.

Other legal actions and regulatory matters

In addition, in the course of its business the Group is subject to other complaints and threatened or actual legal proceedings (including class or group actions) brought by or on behalf of current or former employees, customers (including their appointed representatives), investors or other third parties, as well as legal and regulatory reviews, enquiries and examinations, requests for information, audits, challenges, investigations and enforcement actions, which could relate to a number of issues. This includes matters in relation to compliance with applicable laws and regulations, such as those relating to prudential regulation, employment, consumer protection, investment advice, business conduct, systems and controls, environmental, sustainability, competition/anti-trust, tax, anti-bribery, anti-money laundering and sanctions, some of which may be beyond the Group's control, both in the UK and overseas. Where material, such matters are periodically reassessed, with the assistance of external professional advisers where appropriate, to determine the likelihood of the Group incurring a liability. The Group does not currently expect the final outcome of any such case to have a material adverse effect on its financial position, operations or cash flows. Where there is a contingent liability related to an existing provision the relevant disclosures are included within note 14.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors listed below (being all the directors of Lloyds Banking Group plc) confirm that to the best of their knowledge these condensed consolidated half-year financial statements have been prepared in accordance with UK adopted International Accounting Standard 34,

Interim Financial Reporting

, and that the half-year management report herein includes a fair review of the information required by the United Kingdom's Financial Conduct Authority's Disclosure Guidance and Transparency Rules, DTR 4.2.7R and DTR 4.2.8R, namely:

• an indication of important events that have occurred during the six months ended 30 June 2026 and their impact on the condensed consolidated half-year financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

• material related party transactions in the six months ended 30 June 2026 and any material changes in the related party transactions described in the last annual report.

Signed on behalf of the Board by

Charlie Nunn

Group Chief Executive

29 July 2026

Lloyds Banking Group plc Board of Directors:

Executive directors:

Charlie Nunn

(Group Chief Executive)

William Chalmers

(Chief Financial Officer)

Non-executive directors:

Sir Robin Budenberg CBE

(Chair)

Sarah Legg

Amanda Mackenzie LVO OBE

Harmeen Mehta

Cathy Turner

Catherine Woods

Nathan Bostock

Chris Vogelzang

Danuta Gray

INDEPENDENT REVIEW REPORT TO LLOYDS BANKING GROUP PLC

Conclusion

We have been engaged by Lloyds Banking Group plc and its subsidiaries (the Group) to review the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 June 2026 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 18. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 June 2026 is not prepared, in all material respects, in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and United Kingdom adopted International Accounting Standard (IAS) 34.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. As disclosed in note 1, the annual financial statements of the Group will be prepared in accordance with United Kingdom adopted international accounting standards. The condensed consolidated set of financial statements included in this half-yearly financial report have been prepared in accordance with United Kingdom adopted IAS 34, "

Interim Financial Reporting

Conclusion relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the Group to cease to continue as a going concern.

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. In preparing the half-yearly financial report, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly financial report, we are responsible for expressing to the Group a conclusion on the condensed consolidated set of financial statements in the half-yearly financial report. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the basis for conclusion paragraph of this report.

Use of our report

This report is made solely to the Group in accordance with ISRE (UK) 2410. Our work has been undertaken so that we might state to the Group those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group, for our review work, for this report, or for the conclusions we have formed.

Deloitte LLP

Statutory Auditor

London, England

29 July 2026

ALTERNATIVE PERFORMANCE MEASURES

The statutory results are supplemented with those presented on an underlying basis and also with other alternative performance measures. This is to enable a comprehensive understanding of the Group and facilitate comparison with peers. The Group Executive Committee, which is the 'chief operating decision maker' (as defined by IFRS 8

Operating Segments

) for the Group, reviews the Group's results on an underlying basis in order to assess performance and allocate resources. Management uses underlying profit before tax, an alternative performance measure, as a measure of performance and believes that it provides important information for investors. This is because it allows for a comparable representation of the Group's performance by removing the impact of items such as volatility caused by market movements outside the control of management.

In arriving at underlying profit, statutory profit before tax is adjusted for the items below, to allow a comparison of the Group's underlying performance:

• Restructuring costs relating to merger, acquisition, integration and disposal activities

The analysis of lending and expected credit loss (ECL) allowances is presented on both a statutory and an underlying basis and a reconciliation between the two is shown on page 41. On a statutory basis, purchased or originated credit-impaired (POCI) assets include a fixed pool of mortgages that were purchased as part of the HBOS acquisition at a deep discount to face value reflecting credit losses incurred from the point of origination to the date of acquisition. Over time, these POCI assets will run off as the loans redeem, pay down or losses crystallise. The underlying basis assumes that the lending assets acquired as part of a business combination were originated by the Group and are classified as either Stage 1, 2 or 3 according to the change in credit risk over the period since origination. Underlying ECL allowances have been calculated accordingly. The Group uses the underlying basis to monitor the creditworthiness of the lending portfolio and related ECL allowances. The statutory basis also includes an accounting adjustment within UK Motor Finance required under IFRS 9 to recognise a continuing involvement asset following the partial derecognition of a component of the Group's finance lease book via a securitisation in the third quarter of 2024.

The Group's alternative performance measures may not be comparable with similarly titled measures used by other organisations and should not be viewed in isolation, but instead should be regarded as supplementary information alongside the statutory results. The exclusion of certain adjustments from underlying profit may result in it being materially higher or lower than statutory profit before tax, for example in the event of a large restructuring, underlying profit would be higher than statutory profit before tax.

ALTERNATIVE PERFORMANCE MEASURES

(continued)

The Group calculates a number of metrics that are used throughout the banking and insurance industries on an underlying basis. These metrics are not necessarily comparable to similarly titled measures presented by other companies and are not any more authoritative than measures presented in the financial statements, however management believes that they are useful in assessing the performance of the Group and in drawing comparisons between years. A description of these measures and their calculation, is given below. Alternative performance measures are used internally in the Group's Monthly Management Report.

Asset quality ratio

The underlying impairment charge or credit for the period in respect of loans and advances to customers, both drawn and undrawn, expressed as a percentage of average gross loans and advances to customers for the period. This measure is useful in assessing the credit quality of the loan book.

Assets under administration (AuA)

AuA represents all assets managed or administered by or on behalf of the Group's subsidiaries. It includes assets that are reported within the Group statutory balance sheet and those that are reported independently. It is a useful measure as it impacts potential earnings arising from Asset Management Charges and the relative size of the business.

Assets under administration (net flows)

AuA (net flows) measures the net position of inflows and outflows to AuAs and is a useful measure of growth in AuA. Inflows include net premiums and deposits and other funds received from customers included in AuA. Outflows include net claims, redemptions and surrenders under other funds withdrawn by customers from AuA. Net flows exclude market movements.

Banking net interest margin

Banking net interest income on customer and product balances in the banking businesses as a percentage of average gross interest-earning banking assets for the period. This measure is useful in assessing the banking profitability.

Cost:income ratio

Total costs as a percentage of net income calculated on an underlying basis. This measure is useful in assessing the profitability of the Group's operations before the effects of the underlying impairment credit or charge.

General insurance combined ratio

General insurance combined ratio is a key metric used in the insurance industry to assess an insurer's profitability and operational efficiency, with a ratio below 100% indicating profitability. It is calculated as incurred claims, and earned commission or earned expenses, expressed as a percentage of net insurance revenue.

Gross written premiums

Gross written premiums is a measure of the volume of General Insurance business written during the period. This measure is useful for assessing the growth of the General Insurance business.

Life and pensions sales (present value of new business premiums)

Present value of regular premiums plus single premiums from new business written in the current period. This measure is useful for assessing sales in the Group's life, pensions and investments insurance business.

Loan to deposit ratio

Underlying loans and advances to customers divided by customer deposits.

Operating costs

Operating expenses adjusted to remove the impact of operating lease depreciation, remediation, restructuring costs, the amortisation of purchased intangibles, the insurance gross up and other statutory items.

New business value

This represents the value added to the contractual service margin and risk adjustment at the initial recognition of new contracts, net of acquisition expenses (derived from the statutory balance sheet movements) and any loss component on onerous contracts (which is recognised directly in the income statement) but does not include existing business increments.

ALTERNATIVE PERFORMANCE MEASURES

(continued)

Pro forma CET1 ratio

CET1 ratio adjusted for the effect of the full impact of the announced ordinary share buyback programme. Where disclosed, the ratio is further adjusted for the effect of any dividend paid up by the Insurance business in the subsequent quarter prior to the publication of the financial results.

Return on tangible equity

Profit attributable to ordinary shareholders, annualised and divided by average tangible net assets. This measure is useful in providing a consistent basis with which to measure the Group's performance.

Tangible net assets per share

Net assets excluding intangible assets such as goodwill and acquisition-related intangibles divided by the number of ordinary shares in issue. This measure is useful in assessing shareholder value.

Underlying profit before impairment

Underlying profit adjusted to remove the underlying impairment credit or charge. This measure is useful in allowing for a comparable representation of the Group's performance before the effects of the forward-looking underlying impairment credit or charge.

Underlying profit

Statutory profit before tax adjusted for certain items as detailed above. This measure allows for a comparable representation of the Group's performance by removing the impact of certain items including volatility caused by market movements outside the control of management.

ALTERNATIVE PERFORMANCE MEASURES

(continued)

A reconciliation of the Group's income statement on a statutory basis to its underlying basis equivalent is set out in note 3 on page 63. The tables below provide further reconciliations of alternative performance measures.

Half-year to 30 Jun

2026

£m

Half-year to 30 Jun

2025

£m

Half-year to 31 Dec 2025

£m

Asset quality ratio

Underlying impairment charge (£m)

(617)

(442)

(353)

Remove non-customer underlying impairment charge (credit) (£m)

(1)

Underlying customer related impairment charge (£m)

(614)

(443)

(351)

Loans and advances to customers (£bn)

491.7

471.6

481.5

Remove finance lease gross-up

(£bn)

(0.1)

(0.6)

(0.4)

Underlying loans and advances to customers

(£bn)

491.5

471.0

481.1

Add back expected credit loss allowance (drawn, statutory basis) (£bn)

2.9

3.2

3.0

Add back acquisition related fair value adjustments (£bn)

0.1

Underlying gross loans and advances to customers (£bn)

494.5

474.3

484.2

Averaging (£bn)

(5.9)

(5.6)

(4.2)

Average underlying gross loans and advances to customers (£bn)

488.6

468.7

480.0

Asset quality ratio

0.25%

0.19%

0.15%

Banking net interest margin

Underlying net interest income

(£m)

7,278

6,655

6,980

Remove non-banking underlying net interest expense (£m)

251

236

279

Banking underlying net interest income (£m)

7,529

6,891

7,259

Underlying gross loans and advances to customers (£bn)

494.5

474.3

484.2

Adjustment for non-banking and other items:

Fee-based loans and advances (£bn)

(13.9)

(11.3)

Other (£bn)

0.9

0.1

(0.1)

Interest-earning banking assets (£bn)

481.5

463.1

472.8

Averaging (£bn)

(5.8)

(5.3)

(4.9)

Average interest-earning banking assets

(£bn)

475.7

457.8

467.9

Banking net interest margin

3.19%

3.04%

3.08%

Cost:income ratio

Operating costs

(£m)

4,876

4,874

4,887

Remediation (£m)

931

Total costs (£m)

4,915

4,911

5,818

Net income (£m)

9,747

8,914

9,387

Cost:income ratio

50.4%

55.1%

62.0%

The finance lease gross up represents a statutory accounting adjustment required under IFRS 9 to recognise a continuing involvement asset following the partial derecognition of a component of the Group's finance lease book via a securitisation in the third quarter of 2024.

ALTERNATIVE PERFORMANCE MEASURES

(continued)

Half-year to 30 Jun

2026

£m

Half-year to 30 Jun

2025

£m

Half-year to 31 Dec 2025

£m

General insurance combined ratio

Insurance revenue

377

370

382

Adjustment for allocation of reinsurance premiums

(25)

(23)

(26)

Net insurance revenue

352

347

356

Total incurred claims

195

177

199

Total expenses

124

114

103

Insurance service expense

319

291

302

Adjustment for amounts recoverable from reinsurers for incurred claims

(2)

Adjustment for other operating expenses

Total commission and expenses

326

305

322

General insurance combined ratio

92%

88%

91%

Operating costs

Operating expenses

5,717

5,440

6,526

Adjustment for:

Operating lease depreciation

(841)

(710)

(744)

Remediation

(39)

(37)

(931)

Restructuring

(34)

(9)

(37)

Amortisation of purchased intangibles

(65)

(40)

(46)

Insurance gross up

123

129

127

Other

101

(8)

Operating costs

4,876

4,874

4,887

Return on tangible equity

Profit attributable to ordinary shareholders (£m)

2,836

2,274

1,922

Average ordinary shareholders' equity (£bn)

41.8

40.2

40.8

Remove average goodwill and other intangible assets (£bn)

(8.3)

(7.8)

(7.9)

Average tangible equity (£bn)

33.5

32.4

32.9

Return on tangible equity

17.1%

14.1%

11.6%

Underlying profit before impairment

Statutory profit before tax (£m)

4,293

3,504

3,157

Remove impairment charge (£m)

616

442

353

Remove restructuring and volatility and other items (£m)

(78)

Remove insurance gross up

Underlying profit before impairment

(£m)

4,832

4,003

3,569

Life and pensions sales (present value of new business premiums)

Premiums received (£m)

5,827

5,309

5,311

Investment sales (£m)

9,031

4,509

9,206

Effect of capitalisation factor (£m)

2,154

1,930

2,117

Effect of annualisation (£m)

372

331

195

Gross premiums from existing long-term business (£m)

(4,529)

(4,104)

(3,757)

Life and pensions sales (present value of new business premiums)

(£m)

12,855

7,975

13,072

ALTERNATIVE PERFORMANCE MEASURES

(continued)

Half-year to 30 Jun 2026

£m

Half-year to 30 Jun 2025

£m

Half-year to 31 Dec

2025

£m

New business value of insurance and participating investment contracts recognised in the year

Contractual service margin

Risk adjustment for non-financial risk

Losses recognised on initial recognition

(34)

(36)

(56)

(20)

Impacts of reinsurance contracts recognised in the year

Roll forward of new business to end of period including increments, single premiums and transfers, of contracts initially recognised in the year

New business value of insurance and participating investment contracts recognised in the year

At 30 Jun

2026

At 31 Dec 2025

Assets under administration

Total insurance assets

232,413

217,155

Adjustment for:

Assets not backing customer products within AuA

(5,867)

(5,483)

Structured entities consolidated under IFRS 10

(14,253)

(12,756)

Assets backing Insurance and annuity products not considered AuA

(15,315)

(15,446)

Investment products and share dealing business managed by Insurance, Pensions and Investments, but not on the consolidated balance sheet

106,457

99,087

Other

(4)

(2,934)

Total customer assets under administration

303,431

279,623

Loan to deposit ratio

Underlying loans and advances to customers

(£bn)

491.5

481.1

Customer deposits (£bn)

500.9

496.5

Loan to deposit ratio

98%

97%

Pro forma CET1 ratio

CET1 ratio

13.6%

14.0%

Share buyback accrual

(0.5)%

(0.8)%

Pro forma CET1 ratio

13.1%

13.2%

Tangible net assets per share

Ordinary shareholders' equity (£m)

41,461

41,721

Goodwill and other intangible assets (£m)

(8,732)

(8,593)

Deferred tax effects and other adjustments (£m)

364

366

Tangible net assets (£m)

33,093

33,494

Ordinary shares in issue, excluding own shares

58,081m

58,799m

Tangible net assets per share

57.0p

Reflects a reduction for the impact of the announced ordinary share buyback programme.

KEY DATES

Shares quoted ex-dividend for 2026 interim dividend

6 August 2026

Record date for 2026 interim dividend

7 August 2026

Final date for joining or leaving the interim dividend reinvestment plan

24 August 2026

Interim 2026 dividend paid

15 September 2026

Q3 2026 Interim Management Statement

29 October 2026

Preliminary 2026 results

28 January 2027

2026 annual report and accounts published

4 February 2027

BASIS OF PRESENTATION

This release covers the results of Lloyds Banking Group plc together with its subsidiaries (the Group) for the half-year ended 30 June 2026. Unless otherwise stated, income statement commentaries throughout this document compare the half-year ended 30 June 2026 to the half-year ended 30 June 2025 and the balance sheet analysis compares balances at 30 June 2026 to balances at 31 December 2025. The Group uses a number of alternative performance measures, including underlying profit, in the discussion of its business performance and financial position. These measures are labelled with a superscript 'A' throughout this document. Further information on these measures is set out above. Unless otherwise stated, commentary on pages

to 2 and pages

to 11 is given on an underlying basis. The Group will publish a condensed set of half-year Pillar 3 disclosures in the first half of August. A copy of the disclosures will be available to view at: www.lloydsbankinggroup.com/investors/financial-downloads.html.

FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and section 27A of the US Securities Act of 1933, as amended, with respect to the business, strategy, plans and/or results of Lloyds Banking Group plc together with its subsidiaries (the Group) and its current goals and expectations. Statements that are not historical or current facts, including statements about the Group's or its directors' and/or management's beliefs and expectations, are forward-looking statements. Words such as, without limitation, 'believes', 'achieves', 'anticipates', 'estimates', 'expects', 'targets', 'should', 'intends', 'aims', 'projects', 'plans', 'potential', 'will', 'would', 'could', 'considered', 'likely', 'may', 'seek', 'estimate', 'probability', 'goal', 'objective', 'deliver', 'endeavour', 'prospects', 'optimistic' and similar expressions or variations on these expressions are intended to identify forward-looking statements. These statements concern or may affect future matters, including but not limited to: projections or expectations of the Group's future financial position, including profit attributable to shareholders, provisions, economic profit, dividends, capital structure, portfolios, net interest margin, capital ratios, liquidity, risk-weighted assets (RWAs), expenditures or any other financial items or ratios; litigation, regulatory and governmental investigations; the Group's future financial performance; the level and extent of future impairments and write-downs; the Group's ESG targets and/or commitments; statements of plans, objectives or goals of the Group or its management and other statements that are not historical fact and statements of assumptions underlying such statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. Factors that could cause actual business, strategy, targets, plans and/or results (including but not limited to the payment of dividends) to differ materially from forward-looking statements include, but are not limited to: general economic and business conditions in the UK and internationally (including in relation to tariffs); imposed and threatened tariffs and changes to global trade policies; acts of hostility or terrorism and responses to those acts, or other such events; geopolitical unpredictability; the war between Russia and Ukraine; the escalation of conflicts in the Middle East; the tensions between China and Taiwan; political instability including as a result of any UK general election; market related risks, trends and developments; changes in client and consumer behaviour and demand; exposure to counterparty risk; the ability to access sufficient sources of capital, liquidity and funding when required; changes to the Group's credit ratings; fluctuations in interest rates, inflation, exchange rates, stock markets and currencies; volatility in credit markets; volatility in the price of the Group's securities; natural pandemic and other disasters; risks concerning borrower and counterparty credit quality; risks affecting insurance business and defined benefit pension schemes; changes in laws, regulations, practices and accounting standards or taxation; changes to regulatory capital or liquidity requirements and similar contingencies; the policies and actions of governmental or regulatory authorities or courts together with any resulting impact on the future structure of the Group; risks associated with the Group's compliance with a wide range of laws and regulations; assessment related to resolution planning requirements; risks related to regulatory actions which may be taken in the event of a bank or Group failure; exposure to legal, regulatory or competition proceedings, investigations or complaints; failure to comply with anti-money laundering, counter terrorist financing, anti-bribery and sanctions regulations; failure to prevent or detect any illegal or improper activities; operational risks including risks as a result of the failure of third party suppliers; conduct risk; risks related to new and emerging technologies, including artificial intelligence; technological changes and risks to the security of IT and operational infrastructure, systems, data and information resulting from increased threat of cyber and other attacks; technological failure; inadequate or failed internal or external processes or systems; risks relating to ESG matters, such as climate change (and achieving climate change ambitions) and decarbonisation, including the Group's ability along with the government and other stakeholders to measure, manage and mitigate the impacts of climate change effectively, and human rights issues; the impact of competitive conditions; failure to attract, retain and develop high calibre talent; the ability to achieve strategic objectives; the ability to derive cost savings and other benefits including, but without limitation, as a result of any acquisitions, disposals and other strategic transactions; inability to capture accurately the expected value from acquisitions; assumptions and estimates that form the basis of the Group's financial statements; and potential changes in dividend policy. A number of these influences and factors are beyond the Group's control. Please refer to the latest Annual Report on Form 20-F filed by Lloyds Banking Group plc with the US Securities and Exchange Commission (the SEC), which is available on the SEC's website at www.sec.gov, for a discussion of certain factors and risks. Lloyds Banking Group plc may also make or disclose written and/or oral forward-looking statements in other written materials and in oral statements made by the directors, officers or employees of Lloyds Banking Group plc to third parties, including financial analysts. Except as required by any applicable law or regulation, the forward-looking statements contained in this document are made as of today's date, and the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document whether as a result of new information, future events or otherwise. The information, statements and opinions contained in this document do not constitute a public offer under any applicable law or an offer to sell any securities or financial instruments or any advice or recommendation with respect to such securities or financial instruments.

CONTACTS

For further information please contact:

INVESTORS AND ANALYSTS

Douglas Radcliffe

Group Investor Relations Director

[email protected]

Rohith Chandra-Rajan

Director of Investor Relations

[email protected]

Nora Thoden

Director of Investor Relations - ESG

[email protected]

Tom Grantham

Investor Relations Senior Manager

[email protected]

Stefan Tutino

Investor Relations Senior Manager

[email protected]

CORPORATE AFFAIRS

Matt Smith

Head of Media Relations

[email protected]

Emma Fairhurst

Media Relations Senior Manager

[email protected]

Copies of this News Release may be obtained from:

Investor Relations, Lloyds Banking Group plc, 33 Old Broad Street, London, EC2N 1HZ

The statement can also be found on the Group's website - www.lloydsbankinggroup.com

Registered office: Lloyds Banking Group plc, The Mound, Edinburgh, EH1 1YZ

Registered in Scotland No. SC095000

LEI 549300PPXHEU2JF0AM85

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Source: the issuer's announcement on the London Stock Exchange's Regulatory News Service, reproduced for reference. Announcement text is the issuer's; this site adds no commentary to it.