Company: LLOBF
Filing Date: 2025-02-20
Form Type: 6-K
Source: 0001654954-25-001688
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Company: Lloyds Banking Group plc
Filing Date: 2025-02-20
Form: 6-K
Chunk 11
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 are accelerating our technology modernisation. This transformation of capabilities is unlocking operating leverage and helped us deliver the £1.2 billion of targeted gross cost savings, including around £300 million of change efficiencies. For example, improvements in digital servicing mean that more than 70 per cent of new Business Banking and SME lending decisions are now automated. As a further example of productivity enhancement we increased the number of active customers served per FTE by more than 30 per cent.

Looking forward, we will continue to hire new engineering talent, scale cloud adoption and accelerate decommissioning activity. This will allow us to continue to adopt new technologies that deliver a step-change in our capabilities. This includes our aspirations for Gen AI, for which we have created a centre of excellence including around 200 data scientists and engineers. We are developing use cases such as our knowledge support tool currently being rolled out to 10,000 colleagues across the Group and an AI-driven money management tool for our Mass Affluent customers. These initiatives will generate further efficiencies as well as create opportunities for growth. Together, they drive operating leverage, helping towards our target of a cost:income ratio of less than 50 per cent by 2026.

We are making strong progress on our purpose-led strategy. We have generated £0.8 billion of additional revenues from strategic initiatives as we return the business to growth. We are transforming our franchise through innovative propositions and enhanced capabilities. This gives us confidence in further business growth and our ambition to generate more than £1.5 billion in additional income from our strategic initiatives by 2026 whilst remaining disciplined around costs and capital. We are progressing well towards delivering higher, more sustainable returns for shareholders.

#### 2025 guidance
Based on our current macroeconomic assumptions, for 2025 the Group expects:

● Underlying net interest income of c.£13.5 billion

● Operating costs of c.£9.7 billion

● Asset quality ratio of c.25 basis points

● Return on tangible equity of c.13.5 per cent

● Capital generation of c.175 basis points 1

#### 2026 guidance
Based on the expected macroeconomic environment and confidence in our strategy, the Group maintains its guidance for 2026:

● Cost:income ratio of less than 50 per cent

● Return on tangible equity of greater than 15 per cent

● Capital generation of greater than 200 basis points 1

● To pay down to a CET1 ratio of c.13.0 per cent

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