Company: LLOBF
Filing Date: 2025-02-20
Form Type: 6-K
Source: 0001654954-25-001688
Chunk: 17

Company: Lloyds Banking Group plc
Filing Date: 2025-02-20
Form: 6-K
Chunk 17
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 31 December 2024.

Operating lease depreciation of £1,325 million increased compared to the prior year (2023: £956 million), as a result of fleet growth, the depreciation of higher value vehicles and declines in used electric car prices, primarily in the first half. The increase in 2024 includes the c.£100 million additional charge taken in the second quarter to reflect revised future expected residual values. The charge in the fourth quarter was £331 million, consistent with expectations, given used car prices have performed in line with assumptions.

Total costs A

|                    |   2024 
     £m |     |  2023 
    £m |     | Change 
      % |
| Operating costsA   |  9,442 |     | 9,140 |     |     -3 |
| Remediation        |    899 |     |   675 |     |    -33 |
| Total costsA       | 10,341 |     | 9,815 |     |     -5 |
| Cost:income ratioA |  60.4% |     | 54.7% |     |  5.7pp |

Total costs, including remediation, of £10,341 million were 5 per cent higher than the prior year, with operating costs of £9,442 million up 3 per cent. Operating costs include c.£0.1 billion relating to the sector-wide change in the charging approach for the Bank of England Levy taken in the first quarter. Excluding the Levy, operating costs were up 2 per cent. The Group has maintained its cost discipline with cost efficiencies helping to partially offset inflationary pressures, business growth costs and ongoing strategic investments including severance.

Operating costs in 2025 are expected to be c.£9.7 billion, including further increased severance and the impact from National Insurance contributions changes (c.£0.1 billion).

The Group recognised remediation costs of £899 million in 2024 (2023: £675 million), with £775 million in the fourth quarter, including an additional £700 million in relation to the potential impact of motor finance commission arrangements in light of the Court of Appeal (CoA) judgment in relation to Wrench, Johnson and Hopcraft (WJH) in October 2024, which goes beyond the scope of the original FCA motor finance commissions review. The Supreme Court granted the relevant lenders permission to appeal the WJH judgment and