Company: LLOBF
Filing Date: 2025-07-24
Form Type: 6-K
Source: 0001654954-25-008460
Chunk: 39

Company: Lloyds Banking Group plc
Filing Date: 2025-07-24
Form: 6-K
Chunk 39
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 increase in off-balance sheet items. This was partially offset by a reduction in the measure for securities financing transactions.

#### Pillar 3 disclosures
The Group will publish a condensed set of half-year Pillar 3 disclosures in the second half of August. A copy of the disclosures will be available to view at: www.lloydsbankinggroup.com/investors/financial-downloads.html.

### CREDIT RISK

#### Overview
The Group's portfolios continue to demonstrate resilience amid ongoing macroeconomic uncertainty. The Group maintains a prudent approach to credit risk appetite and risk management, with strong credit origination criteria including evidence of affordability and robust LTVs in the secured portfolios.

Asset quality remains robust with stable credit performance during the first half of the year. In UK mortgages, reductions in new to arrears and flows to default have been observed over the period, whilst unsecured portfolios continue to exhibit stable arrears trends. Credit quality also remains stable in Commercial Banking. The Group continues to monitor the impacts of the economic environment carefully through a suite of early warning indicators and governance arrangements that ensure risk mitigating action plans are in place to support customers and protect the Group's positions.

The underlying impairment charge in the first half of 2025 was £442 million, up from £101 million in the first half of 2024 which benefitted from a large release from improvements to the Group's economic outlook. The charge for the first half of 2025 includes a small net release from updates in the Group's macroeconomic outlook of £9 million (half-year to 30 June 2024: a release of £324 million), as well as a higher charge in Commercial Banking. The Group's underlying probability-weighted total expected credit loss (ECL) allowance was broadly stable in the first half of 2025 at £3,545 million (31 December 2024: £3,651 million).

Stage 2 underlying loans and advances to customers are slightly lower at £46,599 million (31 December 2024: £48,075 million) and are 9.8% of total lending (31 December 2024: 10.4%) largely due to migrations into Stage 3 within Commercial Banking. Stage 2 coverage remained stable at 2.7% (31 December 2024: 2.8%).

Stage 3 underlying loans and advances to customers remain stable at £8,943 million (31 December 2024: £9,021 million), and as a percentage of