Company: LLOBF
Filing Date: 2025-07-24
Form Type: 6-K
Source: 0001654954-25-008460
Chunk: 13

Company: Lloyds Banking Group plc
Filing Date: 2025-07-24
Form: 6-K
Chunk 13
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 net interest income of £3,361 million in the second quarter of 2025 was ahead of the first quarter (three months to 31 March 2025: £3,294 million). A growing structural hedge contribution more than offset the impact of continued headwinds from deposit churn, Bank Base Rate reductions and underlying asset margin compression. A strong ISA season allowed the Group to meaningfully grow balances with strong market share, but also resulted in deposit churn. Together this resulted in an increase in the banking net interest margin to 3.04% (three months to 31 March 2025: 3.03%). Average interest-earning banking assets were higher in the second quarter at £460.0 billion (three months to 31 March 2025: £455.5 billion), primarily driven by UK mortgages, with the impact of strong lending volumes at the end of the first quarter now being reflected in average lending, alongside growth in UK Retail unsecured loans, credit cards and the European retail business.

The Group continues to expect the underlying net interest income for 2025 to be c.£13.5 billion.

SUMMARY OF GROUP RESULTS (continued)

Income statement - underlying basis A (continued)

The Group manages the risk to earnings and capital from movements in interest rates by hedging the net liabilities which are stable or less sensitive to movements in rates. As at 30 June 2025, the notional balance of the sterling structural hedge increased to £244 billion (31 December 2024: £242 billion) with a stable weighted average duration of approximately three-and-a-half years (31 December 2024: approximately three-and-a-half years). The Group generated £2.6 billion of total income from sterling structural hedge balances in the first half of 2025, an increase over the prior year (half-year to 30 June 2024: £1.9 billion). The Group continues to expect sterling structural hedge earnings in 2025 to be £1.2 billion higher than in 2024 and £1.5 billion higher in 2026 than in 2025.

Underlying other income of £2,969 million in the first half of 2025 grew by 9% compared to the prior year (half-year to 30 June 2024: £2,734 million), driven by strengthening customer activity and the benefit of strategic initiatives. This included an increase of 13% in Retail, primarily driven by UK Motor Finance, including fleet growth and higher average vehicle