The bank’s underlying profit before impairments reached £2.16bn, a 17% increase from the first quarter and comfortably ahead of the £2bn forecast. Statutory pre-tax profit also saw strong growth, rising to £1.99bn from £1.52bn in the previous quarter.

This robust performance was primarily driven by an increase in the net interest margin – the difference between what the bank earns on loans and pays on deposits – which climbed to 3.04%. The bank also demonstrated effective cost control, with operating costs of £2.32bn coming in slightly below estimates. Consequently, the return on tangible equity (ROTE) improved to a better-than-expected 14.1%.

Chief Executive Charlie Nunn credited the results to “income growth, cost discipline and robust asset quality”. This financial strength allowed the bank’s CET1 capital ratio, a key measure of stability, to improve to 13.8%.

Rewarding investors, Lloyds announced a 15% increase in its interim dividend to 1.22p per share. The bank reported no new provisions for the ongoing motor finance commission inquiry and reaffirmed its full-year guidance, expressing confidence in meeting its future profitability targets.