Charlie Nunn

The banking giant surpassed internal expectations of £6.4bn, demonstrating resilience despite the Bank of England cutting interest rates by 1% over the last year. Net interest income rose 6% to £13.6bn, supporting a total income increase to £18.3bn. Consequently, the ordinary dividend has been hiked by 15% to 3.65p per share.

A significant portion of the bank’s strategy hinges on technological modernisation. Lloyds reported that generative AI (GenAI) delivered approximately £50 million of value in 2025. The group plans to double this to over £100m in 2026 by scaling “agentic AI” and launching an AI-powered financial assistant for customers.

Current successes include:

• Athena Knowledge Tool: Used by 20,000 staff, reducing information search times by 66%.
• GitHub Copilot: Utilised by 5,000 engineers, improving coding efficiency by 50%.
• AI HR Assistant: Resolving 90% of queries on first contact.

To support this shift, the bank is launching an AI Academy to improve digital literacy among its workforce.

Despite the profit boost, costs rose 3% to nearly £10bn, driven partly by severance expenses as the bank streamlines operations. Following reviews of tech roles and performance management, thousands of positions remain under scrutiny.

The bank is also faced with significant challenges as impairment charges rose 84% to £795m, reflecting geopolitical tensions and updated macroeconomic outlooks regarding US tariffs, and the bank’s motor finance exposure is nearly £2bn in potential costs related to the FCA’s redress scheme.

CEO Charlie Nunn said: “Looking ahead to 2026 and the culmination of the five year strategy we set out in 2022, our continued business momentum and strategic delivery enable us to upgrade guidance.”