Company: LLOBF
Filing Date: 2025-10-23
Form Type: 6-K
Source: 0001654954-25-012079
Chunk: 12

Company: Lloyds Banking Group plc
Filing Date: 2025-10-23
Form: 6-K
Chunk 12
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 quarter of 2025, 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. With underlying inflationary pressures expected to recede slowly, modest reductions in UK Bank Rate are expected to continue in 2026, reaching a ‘neutral’ policy stance around the middle of the year. Risks around this base case economic view lie in both directions and are largely captured by the generation of alternative economic scenarios.

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 third quarter of 2025. Actual data for this period, or restatements of past data, may have since emerged prior to publication and have not been included.

The Group’s approach to generating alternative economic scenarios is set out in detail in note 21 to the financial statements of the Group’s 2024 annual report and accounts. As at 30 September 2025, the non-modelled adjustments previously applied to UK Bank Rate and CPI inflation in the severe downside scenario have been removed. This is because the incremental ECL impact is no longer considered sufficiently material to justify their application. Accordingly, its removal has had no material impact on ECL.

UK economic assumptions – base case scenario by quarter

Key quarterly assumptions made by the Group in the base case scenario are shown below. GDP 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 September 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 |     0.2 |     0.1 |     0.2 |     0.3