Company: LLOBF
Filing Date: 2025-07-24
Form Type: 6-K
Source: 0001654954-25-008460
Chunk: 47

Company: Lloyds Banking Group plc
Filing Date: 2025-07-24
Form: 6-K
Chunk 47
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● Stage 3 loans and advances remained stable at 0.8% of total loans and advances (31 December 2024: 0.8%)

● There was a £1 million impairment charge in the first half of 2025, compared to a £3 million release in the first half of 2024

CREDIT RISK (continued)

#### Commercial Banking
● The Commercial portfolio credit quality remains stable, benefitting from a focused approach to credit underwriting and monitoring standards supported by proactive management of exposures to higher risk and cyclical sectors

● Credit strategies and policy remains robust and within our credit risk tolerances. The Group remains cognisant of the continued relatively elevated interest rate environment especially in, but not limited to, sectors reliant upon consumer discretionary spend

● The Group continues to review segments of our portfolios as appropriate, ensuring our credit strategies, appetite, sensitivities and mitigation action plans are up-to-date and suitable for rapid action in response to both risks and opportunities, whilst supporting clients in the right way and ensuring the Group is protected. Credit Playbooks are in place to cover a number of potential credit downside scenarios and these are regularly reassessed and updated. Affordability and interest rate sensitivity are tested at origination. Early warning indicators and risk appetite metrics are in place to ensure the Group tracks and takes action, where appropriate

● The Group continues to provide early support to customers in difficulty through focused risk management via its Watchlist and Business Support framework. The Group also balances prudent risk appetite with ensuring support for financially viable clients

Impairment

● The net impairment charge in the first half of 2025 was £100 million, versus an impairment release of £83 million in the first half of 2024 which included a £55 million release from improvements to the Group's macroeconomic outlook. A small number of material single name charges have been observed, in addition to a £75 million charge from the updated Macroeconomic outlook which included the potential impact from idiosyncratic risks to businesses arising from global tariffs and political disruption

● ECL allowances increased in the year to £1,005 million at 30 June 2025 (31 December 2024: £985 million), also as a result of the updates to single name cases and additional judgement

● Stage 2 loans and advances reduced to £4,862 million (31 December 2024: £5,168 million), largely as a result of migrations into Stage 3. Stage 2 as a proportion of total loans and