Company: LLOBF
Filing Date: 2025-05-01
Form Type: 6-K
Source: 0001654954-25-004952
Chunk: 5

Company: Lloyds Banking Group plc
Filing Date: 2025-05-01
Form: 6-K
Chunk 5
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 impact of securitisation activity in the fourth quarter. The Group continues to expect the underlying net interest income for 2025 to be c.£13.5 billion.

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. At the end of the first quarter of 2025, the notional balance of the sterling structural hedge was maintained at £242 billion with a stable weighted average duration of approximately three-and-a-half years. The Group generated £1.2 billion of total income from sterling structural hedge balances in the first three months of 2025, an increase over the prior year (three months to 31 March 2024: £1.0 billion). The Group continues to expect sterling structural hedge earnings in 2025 to be £1.2 billion higher than in 2024.

Underlying other income in the first quarter of 2025 of £1,452 million grew by 8% compared to the prior year (three months to 31 March 2024: £1,340 million). In particular, this was driven by an increase of 16% in Retail, primarily due to UK Motor Finance, including fleet growth and higher average vehicle rental values, alongside Insurance, Pensions and Investments up 8% from strong trading and higher general insurance income net of claims and growth in the equity investments businesses. Compared to the fourth quarter of 2024, underlying other income was up 1%, supported by continued UK Motor Finance growth, strong markets performance in Commercial Banking and higher general insurance income in Insurance, Pensions and Investments, partially offset by the timing of exits in the Group’s equity investment businesses.

Operating lease depreciation of £355 million in the first three months of 2025 was higher than in the prior year (three months to 31 March 2024: £283 million), as a result of fleet growth, the depreciation of higher value vehicles and declines in used electric car prices over 2024.

REVIEW OF PERFORMANCE (continued)

Total costs, including remediation, of £2,550 million were 5% higher than the prior year. Operating costs of £2,550 million were up 6% combining inflationary pressures, timing of strategic investment including planned higher severance front-loaded into the first quarter of 2025 and business growth costs, partly offset by cost savings and continued cost discipline. Operating costs are still expected to be c.£9.7 billion in