Company: LLOBF
Filing Date: 2025-05-01
Form Type: 6-K
Source: 0001654954-25-004952
Chunk: 4

Company: Lloyds Banking Group plc
Filing Date: 2025-05-01
Form: 6-K
Chunk 4
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 more than offset by higher operating costs and a higher underlying impairment charge. Underlying profit was up 54% compared to the fourth quarter of last year, which included the charge for the potential impacts of motor finance commission arrangements.

Net income of £4,391 million was up 4% compared to the first quarter of 2024, driven by higher underlying net interest income and underlying other income, partly offset by an increased charge for operating lease depreciation. Net income in the first quarter was slightly up compared to the fourth quarter of 2024.

Within net income, underlying net interest income of £3,294 million was up 3% versus the prior year (three months to 31 March 2024: £3,184 million). This was supported by a banking net interest margin of 3.03% (three months to 31 March 2024: 2.95%), benefitting from strong deposit volumes and a growing structural hedge contribution as balances are reinvested in a higher rate environment, partially offset by continued asset margin compression and deposit churn headwinds. Average interest-earning banking assets in the first quarter of 2025 of £455.5 billion were higher than the first quarter of 2024 (three months to 31 March 2024: £449.1 billion). Growth in average interest-earning banking assets was primarily driven by UK mortgages, UK Retail unsecured loans and Europe, partially offset by Commercial Banking, in turn driven by continued repayments of government-backed lending in Business and Commercial Banking and lower lending to banks. Underlying net interest income in the first three months of 2025 included a non-banking net interest expense of £112 million (three months to 31 March 2024: £105 million), increasing slightly as a result of growth in the Group’s non-banking businesses.

Underlying net interest income was slightly ahead of the fourth quarter of 2024, despite a lower day count in the quarter (three months to 31 December 2024: £3,276 million). A growing structural hedge contribution and strong deposit volumes more than offset the impact of continued headwinds from deposit churn and underlying asset margin compression. Together this resulted in an increase in the banking net interest margin to 3.03% (three months to 31 December 2024: 2.97%). Average interest-earning banking assets were broadly stable versus the fourth quarter of 2024, given the timing of lending growth across the two quarters, lower bank lending and the