# EDGAR Filing Document

**Accession Number:** 0001167831
**File Stem:** 0001160106-25-000030
**Filing Date:** 2025-7
**Character Count:** 155979
**Document Hash:** eb4d31134751d5180ce1bc44bade3c0d
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001160106-25-000030.hdr.sgml**: 20250724

**ACCESSION NUMBER**: 0001160106-25-000030

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 76

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250724

**DATE AS OF CHANGE**: 20250724

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Lloyds Bank plc
- **CENTRAL INDEX KEY:** 0001167831
- **STANDARD INDUSTRIAL CLASSIFICATION:** COMMERCIAL BANKS, NEC [6029]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 000000000
- **STATE OF INCORPORATION:** X0

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-35079
- **FILM NUMBER:** 251144608

**BUSINESS ADDRESS:**
- **STREET 1:** 25 GRESHAM STREET
- **STREET 2:** LONDON EC2V 7HN
- **CITY:** UNITED KINGDOM
- **STATE:** X0
- **ZIP:** 00000
- **BUSINESS PHONE:** 442076261500

**MAIL ADDRESS:**
- **STREET 1:** 25 GRESHAM STREET
- **STREET 2:** LONDON EC2V 7HN
- **CITY:** UNITED KINGDOM
- **STATE:** X0
- **ZIP:** 00000

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** LLOYDS TSB BANK PLC
- **DATE OF NAME CHANGE:** 20020220

?xml version='1.0' encoding='ASCII'? lbk-20250630

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER** 

**PURSUANT TO RULE 13a-16 OR 15d-16** 

**UNDER THE SECURITIES EXCHANGE ACT OF 1934**

24 July 2025

Commission File number 001-35079

**LLOYDS BANK plc**

(Translation of registrant's name into English)

**33 Old Broad Street**

**London**

**EC2N 1HZ**

**United Kingdom**

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1)

________.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7)

________.

This report on Form 6-K shall be deemed incorporated by reference into the company's Registration Statement on Form F-3 (File

No. 333-287829-01) and to be a part thereof from the date on which this report is filed, to the extent not superseded by

documents or reports subsequently filed or furnished.

**CONTENTS**

---

| | |
|:---|:---|
| [Forward-looking statements](#icddc7e3a435b49f28be7b5fee6e1e127_13) | [1](#icddc7e3a435b49f28be7b5fee6e1e127_13) |
| Statutory information (IFRS) |  |
| [Condensed consolidated balance sheet (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_37) | [2](#icddc7e3a435b49f28be7b5fee6e1e127_37) |
| [Condensed consolidated income statement (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_34) | [2](#icddc7e3a435b49f28be7b5fee6e1e127_34) |
| [Financial review](#icddc7e3a435b49f28be7b5fee6e1e127_19) | [3](#icddc7e3a435b49f28be7b5fee6e1e127_19) |
| **Risk management** |  |
| [Principal risks and uncertainties](#icddc7e3a435b49f28be7b5fee6e1e127_55) | [5](#icddc7e3a435b49f28be7b5fee6e1e127_55) |
| [Capital risk](#icddc7e3a435b49f28be7b5fee6e1e127_58) | [6](#icddc7e3a435b49f28be7b5fee6e1e127_58) |
| [Credit risk](#icddc7e3a435b49f28be7b5fee6e1e127_61) | [10](#icddc7e3a435b49f28be7b5fee6e1e127_61) |
| [Liquidity risk](#icddc7e3a435b49f28be7b5fee6e1e127_64) | [20](#icddc7e3a435b49f28be7b5fee6e1e127_64) |
| **Statutory information** |  |
| [Condensed consolidated half-year financial statements (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_70) | [21](#icddc7e3a435b49f28be7b5fee6e1e127_67) |
| [Condensed consolidated income statement (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_70) | [22](#icddc7e3a435b49f28be7b5fee6e1e127_70) |
| [Condensed consolidated statement of comprehensive income (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_73) | [23](#icddc7e3a435b49f28be7b5fee6e1e127_73) |
| [Condensed consolidated balance sheet (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_76) | [24](#icddc7e3a435b49f28be7b5fee6e1e127_76) |
| [Condensed consolidated statement of changes in equity (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_79) | [25](#icddc7e3a435b49f28be7b5fee6e1e127_79) |
| [Condensed consolidated cash flow statement (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_82) | [28](#icddc7e3a435b49f28be7b5fee6e1e127_82) |
| [Notes to the condensed consolidated half-year financial statements (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_85) | [29](#icddc7e3a435b49f28be7b5fee6e1e127_85) |
| [Signature](#icddc7e3a435b49f28be7b5fee6e1e127_142) | [52](#icddc7e3a435b49f28be7b5fee6e1e127_142) |

---

Page 1 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**FORWARD LOOKING STATEMENTS**

This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities

Exchange Act of 1934, as amended, and section 27A of the US Securities Act of 1933, as amended, with respect to

the business, strategy, plans and/or results of Lloyds Bank plc together with its subsidiaries (the Lloyds Bank

Group) and its current goals and expectations. Statements that are not historical or current facts, including

statements about the Lloyds Bank Group's or its directors' and/or management's beliefs and expectations, are

forward-looking statements. Words such as, without limitation, 'believes', 'achieves', 'anticipates', 'estimates',

'expects', 'targets', 'should', 'intends', 'aims', 'projects', 'plans', 'potential', 'will', 'would', 'could', 'considered',

'likely', 'may', 'seek', 'estimate', 'probability', 'goal', 'objective', 'deliver', 'endeavour', 'prospects', 'optimistic' and

similar expressions or variations on these expressions are intended to identify forward-looking statements. These

statements concern or may affect future matters, including but not limited to: projections or expectations of the

Lloyds Bank Group's future financial position, including profit attributable to shareholders, provisions, economic

profit, dividends, capital structure, portfolios, net interest margin, capital ratios, liquidity, risk-weighted assets

(RWAs), expenditures or any other financial items or ratios; litigation, regulatory and governmental investigations;

the Lloyds Bank Group's future financial performance; the level and extent of future impairments and write-

downs; the Lloyds Bank Group's ESG targets and/or commitments; statements of plans, objectives or goals of the

Lloyds Bank Group or its management and other statements that are not historical fact and statements of

assumptions underlying such statements. By their nature, forward-looking statements involve risk and uncertainty

because they relate to events and depend upon circumstances that will or may occur in the future. Factors that

could cause actual business, strategy, targets, plans and/or results (including but not limited to the payment of

dividends) to differ materially from forward-looking statements include, but are not limited to: general economic

and business conditions in the UK and internationally (including in relation to tariffs); imposed and threatened

tariffs and changes to global trade policies; acts of hostility or terrorism and responses to those acts, or other such

events; geopolitical unpredictability; the war between Russia and Ukraine; the escalation of conflicts in the Middle

East; the tensions between China and Taiwan; political instability including as a result of any UK general election;

market related risks, trends and developments; changes in client and consumer behaviour and demand; exposure

to counterparty risk; the ability to access sufficient sources of capital, liquidity and funding when required; changes

to the Lloyds Bank Group's or Lloyds Banking Group plc's credit ratings; fluctuations in interest rates, inflation,

exchange rates, stock markets and currencies; volatility in credit markets; volatility in the price of the Lloyds Bank

Group's securities; natural pandemic and other disasters; risks concerning borrower and counterparty credit

quality; risks affecting defined benefit pension schemes; changes in laws, regulations, practices and accounting

standards or taxation; changes to regulatory capital or liquidity requirements and similar contingencies; the

policies and actions of governmental or regulatory authorities or courts together with any resulting impact on the

future structure of the Lloyds Bank Group; risks associated with the Lloyds Bank Group's compliance with a wide

range of laws and regulations; assessment related to resolution planning requirements; risks related to regulatory

actions which may be taken in the event of a bank or Lloyds Bank Group or Lloyds Banking Group failure; exposure

to legal, regulatory or competition proceedings, investigations or complaints; failure to comply with anti-money

laundering, counter terrorist financing, anti-bribery and sanctions regulations; failure to prevent or detect any

illegal or improper activities; operational risks including risks as a result of the failure of third party suppliers;

conduct risk; technological changes and risks to the security of IT and operational infrastructure, systems, data and

information resulting from increased threat of cyber and other attacks; technological failure; inadequate or failed

internal or external processes or systems; risks relating to ESG matters, such as climate change (and achieving

climate change ambitions) and decarbonisation, including the Lloyds Bank Group's or the Lloyds Banking Group's

ability along with the government and other stakeholders to measure, manage and mitigate the impacts of climate

change effectively, and human rights issues; the impact of competitive conditions; failure to attract, retain and

develop high calibre talent; the ability to achieve strategic objectives; the ability to derive cost savings and other

benefits including, but without limitation, as a result of any acquisitions, disposals and other strategic transactions;

inability to capture accurately the expected value from acquisitions; and assumptions and estimates that form the

basis of the Lloyds Bank Group's financial statements. A number of these influences and factors are beyond the

Lloyds Bank Group's control. Please refer to the latest Annual Report on Form 20-F filed by Lloyds Bank plc with

the US Securities and Exchange Commission (the SEC), which is available on the SEC's website at www.sec.gov, for

a discussion of certain factors and risks. Lloyds Bank plc may also make or disclose written and/or oral forward-

looking statements in other written materials and in oral statements made by the directors, officers or employees

of Lloyds Bank plc to third parties, including financial analysts. Except as required by any applicable law or

regulation, the forward-looking statements contained in this document are made as of today's date, and the

Lloyds Bank Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to

any forward-looking statements contained in this document whether as a result of new information, future events

or otherwise. The information, statements and opinions contained in this document do not constitute a public

offer under any applicable law or an offer to sell any securities or financial instruments or any advice or

recommendation with respect to such securities or financial instruments.

**EXPLANATORY NOTE**

This report on Form 6-K contains the interim report of Lloyds Bank plc, which includes the unaudited consolidated

interim results for the half-year ended 30 June 2025 and is being incorporated by reference into the Registration

Statement with File No. 333-287829-01.

Page 2 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**STATUTORY INFORMATION (IFRS)**

**CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | At 30 Jun <br>2025<br>£m<br>| At 31 Dec <br>2024<br>£m<br>|
| Assets |  |  |
| Cash and balances at central banks | 45098 | 42396 |
| Financial assets at fair value through profit or loss | 2719 | 2321 |
| Derivative financial instruments | 3736 | 4235 |
| Financial assets at amortised cost | 509980 | 504897 |
| Financial assets at fair value through other comprehensive income | 33498 | 30344 |
| Other assets | 27526 | 27020 |
| Total assets | 622557 | 611213 |
| Liabilities |  |  |
| Deposits from banks | 5388 | 3144 |
| Customer deposits | 461771 | 451794 |
| Repurchase agreements at amortised cost | 38248 | 37760 |
| Due to fellow Lloyds Banking Group undertakings | 3804 | 4049 |
| Financial liabilities at fair value through profit or loss | 4363 | 4630 |
| Derivative financial instruments | 5170 | 5787 |
| Debt securities in issue at amortised cost | 42103 | 45281 |
| Other liabilities | 11859 | 11810 |
| Subordinated liabilities | 7842 | 7211 |
| Total liabilities | 580548 | 571466 |
| Total equity | 42009 | 39747 |
| Total equity and liabilities | 622557 | 611213 |

---

**CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)**

---

| | | | |
|:---|:---|:---|:---|
|  | Half-year <br>to 30 Jun<br>2025<br>£m<br>| Half-year <br>to 30 Jun<br>2024<br>£m<br>| Half-year <br>to 31 Dec <br>2024<br>£m<br>|
| Net interest income | 6546 | 6222 | 6370 |
| Other income | 2289 | 2154 | 2325 |
| Total income | 8835 | 8376 | 8695 |
| Operating expenses | (5635) | (5436) | (6491) |
| Impairment | (442) | (122) | (334) |
| Profit before tax | 2758 | 2818 | 1870 |
| Tax expense | (818) | (811) | (391) |
| Profit after tax | 1940 | 2007 | 1479 |
| Profit attributable to ordinary shareholders | 1709 | 1824 | 1277 |
| Profit attributable to other equity holders | 215 | 172 | 191 |
| Profit attributable to equity holders | 1924 | 1996 | 1468 |
| Profit attributable to non-controlling interests | 16 | 11 | 11 |
| Profit after tax | 1940 | 2007 | 1479 |

---

Page 3 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**FINANCIAL REVIEW**

**Principal activities**

Lloyds Bank plc (the Bank) and its subsidiary undertakings (the Group) provide a wide range of banking and

financial services through branches and offices in the UK and in certain overseas locations. The Group's revenue is

earned through interest and fees on a broad range of financial services products including current accounts,

savings, mortgages, credit cards, motor finance and unsecured loans to personal and business banking customers;

and lending, transactional banking, working capital management and risk management services to commercial

customers.

**Income statement**

The Group's statutory profit before tax for the first half of 2025 was £2,758 million, 2%lower than in the first half

of 2024. This was driven by higher operating expenses and a higher impairment charge, partly offset by higher total

income. Profit after tax was £1,940 million (half-year to 30 June 2024: £2,007 million).

Total income for the half-year of 2025 was £8,835 million, an increase of 5% on the same period in 2024 (half-year

to 30 June 2024: £8,376 million). Net interest income of £6,546 million was up 5% on the prior year (half-year to

30 June 2024: £6,222 million), driven by higher average interest-earning assets and a higher margin. Other income

increased by 6% to £2,289 million (half-year to 30 June 2024: £2,154 million). The increase in other income included

the effects of fleet growth and higher average vehicle rental valuesin UK Motor Finance within Retail as well as

current account earnings. Other income in the first half of 2024 was impacted by changes to commission

arrangements with Scottish Widows.

Operating expenses of £5,635 million were 4% higher than in the prior year. This reflects higher costs, reflecting

inflationary pressures, strategic investment including planned higher severance front-loaded into the first quarter

of 2025 and business growth costs, partly offset by cost savings and continued cost discipline alongside a lower

remediation charge. Operating lease depreciation was higher due to fleet growth, the depreciation of higher value

vehicles and declines in used electric car prices over the last 12 months. Used car price declines in the second

quarter of 2025 were offset by a number of mitigating management actions, including used car leasing and

remarketing agreements.

A remediation charge of £35 million was recognised by the Group in the first half of 2025 (half-year to 30 June

2024: £90million), across a small number of rectification programmes. There have been no further charges to the

provision relating to motor finance commission arrangements.

The impairment charge was £442 million, up from £122million in the half-year to 30 June 2024 which benefitted

from a large credit from improvements in the Group's economic outlook. The charge reflects strong performance

across Retail portfolios, more than offset by a higher charge in Commercial Banking, from a small number of

individual cases moving to default in the period.

The Group recognised a tax expense of £818 million in the first half of 2025 (half-year to 30 June 2024:

£811 million).

Page 4 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**FINANCIAL REVIEW** (continued)

**Balance sheet**

Total assets were £11,344 million higher at £622,557 million at 30 June 2025 (31 December 2024: £611,213 million).

Financial assets at amortised cost were £5,083 million higher at £509,980 million (31 December 2024:

£504,897 million) primarily due to increases in loans and advances to customers of £10,735 million. This included

growth of £5,611 million in UK mortgages and growth across UK Retail unsecured loans, credit cards, UK Motor

Finance and the European retail business. Lending balances increased by £1.2 billion in Commercial Banking, with

growth in Institutional balances partly offset by repayments of government-backed lending. The growth in loans

and advances to customers was partly offset by a £4,279 million reduction in reverse repurchase agreements, an

£804 million reduction in loans and advances to banks and a £906 million reduction in debt securities.

Financial assets held at fair value through profit or loss increased by £398 million, due to increased reverse

repurchase agreements. Derivative financial assets were £499 million lower at £3,736 million (31 December 2024:

£4,235 million), driven by interest rate movements in the period. Financial assets at fair value through other

comprehensive income of £33,498increased by £3,154 million in the period reflecting increases in liquid asset

holdings. Other assets were £506 million higher, primarily reflecting increased settlement balances.

Total liabilities were £9,082 million higher at £580,548 million (31 December 2024: £571,466 million). Customer

deposits of £461,771 million increased in the period by £9,977 million. Retail deposits increased by £3,639 million in

the period, driven by net inflows to limited withdrawal and fixed term deposits as a result of a strong performance

throughout the ISA season. Commercial Banking deposits were up £7.6 billionwith targeted growth, alongside

higher balances partly as a result of market uncertainty.

Other liabilities increased by £49 million reflecting increased settlement balances, while debt securities in issue

decreased by £3,178 million, with higher levels of maturities in the period.

Total equity was £42,009 million at 30 June 2025 (31 December 2024: £39,747 million). The movement reflected

profit for the period, the unwind of the cash flow hedging reserve and issuance of an AT1 capital instrument in

February 2025. This was partially offset by the dividend paid in May 2025, the redemption of an AT1 capital

instrument and a lower pension surplus.

**Capital**

The Group's common equity tier 1 (CET1) capital ratio reduced to 13.6% at 30 June 2025 from 13.7% at 31 December

2024. Profit for the first half of the year was more than offset by the payment of ordinary dividends, the accrual for

foreseeable ordinary dividends and an increase in risk-weighted assets.

The Group's total capital ratio increased to 20.3% at 30 June 2025 from 19.9% at 31 December 2024, reflecting the

increase in CET capital and the issuance of new AT1 and tier 2 capital instruments during the period, partly offset

by AT1 and tier 2 instrument calls, other tier 2 movements and the increase in risk-weighted assets.

Risk-weighted assets increased by £4,295 million to £191,291 million at 30 June 2025 from £186,996 million at

31 December 2024. This reflects the impact of lending growth, but also includes a temporary c.£1.2 billion increase

related to hedging activity that is expected to reverse by the third quarter. The growth in risk-weighted assets was

partly offset by continued optimisation activity.

The Group's UK leverage ratio remained at 5.4% at 30 June 2025 (31 December 2024: 5.4%), reflecting an increase

in the total tier 1 capital position, broadly offset by an increase in the leverage exposure measure. The latter

reflects increases across loans and advances and other assets, due in part to lending growth, and an increase in off-

balance sheet items. This was partially offset by a reduction in the measure for securities financing transactions.

Page 5 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**RISK MANAGEMENT**

**PRINCIPAL RISKS AND UNCERTAINTIES**

The important risks faced by the Group are detailed below. External risks may impact the success of delivering

against the Group's long-term strategic objectives. They include, but are not limited to, macroeconomic and

geopolitical uncertainties and inflation trends which could contribute to the cost of living and associated

implications for consumers and businesses.

Asset quality remains robust with stable credit performance throughout the period. The Group continues to

monitor the impacts of the economic environment closely 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.

With respect to conduct risk, there have been no further charges relating to the potential impact of the FCA

review into motor finance commission arrangements. The Supreme Court heard the appeal of the Wrench, Johnson

and Hopcraft decision in early April. The FCA has indicated that the Supreme Court decision will inform its next

steps for both the discretionary commission arrangements (DCA) review and non-DCA complaints and that it will

provide an update within six weeks of the Supreme Court decision. In establishing the provision of £1.15 billion, the

Group has considered a number of scenarios to address uncertainties around a number of key assumptions. These

include a range of potential Supreme Court outcomes, regulatory responses including steps that the FCA may take,

and outcomes in relation to redress.

The Group continues to invest in technology to strengthen its capabilities, ensuring the appropriate use of models

and artificial intelligence. Operational resilience remains a high priority area for the Group to ensure that it can

continue to effectively prevent, withstand and respond to potential cybersecurity threats and incidents such as IT

system outages, using threat intelligence and learnings from recent industry events where relevant.

The Group is transforming its approach to risk management to support its strategic ambition and purpose of

Helping Britain Prosper.Following changes to the three lines of defence model in 2024 to ensure more clearly

defined responsibilities and accountabilities across the business, further enhancements to the way the Group

delivers risk management have been made by standardising practices and streamlining processes. The Group Risk

Management Framework was enhanced during the first half of 2025, along with the approach to risk appetite and

risk governance, enabling simplification and efficiency.

The Group has 10 principal risks, which are unchanged in 2025 and are underpinned by a suite of level two risks.

These risks are reviewed and reported regularly to the Board in alignment with the enhanced Group Risk

Management Framework, and consist of capital risk, climate risk, compliance risk, conduct risk, credit risk,

economic crime risk, liquidity risk, market risk, model risk and operational risk.Further information regarding the

Group's principal risks is available on pages 21 to 62 in the Group's 2024 annual report and accounts.

Page 6 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CAPITAL RISK**

**Capital resources**

An analysis of the Group's capital position as at 30 June 2025 is presented in the following table. 31 December

2024 reflects the application of the transitional arrangements for IFRS 9.

---

| | | |
|:---|:---|:---|
|  | At 30 Jun<br>2025<br>£m<br>| At 31 Dec<br>2024<br>£m<br>|
| Common equity tier 1 |  |  |
| Shareholders' equity per balance sheet | 36175 | 33975 |
| Adjustment to retained earnings for foreseeable dividends | (1050) | – |
| Cash flow hedging reserve | 2682 | 3568 |
| Other adjustments | (61) | (15) |
|  | 37746 | 37528 |
| less: deductions from common equity tier 1 |  |  |
| Goodwill and other intangible assets | (5396) | (5494) |
| Prudent valuation adjustment | (90) | (92) |
| Excess of expected losses over impairment provisions and value adjustments | (122) | (75) |
| Removal of defined benefit pension surplus | (2158) | (2215) |
| Deferred tax assets | (3886) | (4042) |
| Common equity tier 1 capital | 26094 | 25610 |
| Additional tier 1 |  |  |
| Additional tier 1 instruments | 5758 | 5695 |
| Total tier 1 capital | 31852 | 31305 |
| Tier 2 |  |  |
| Tier 2 instruments | 7074 | 5826 |
| Eligible provisions | – | 83 |
| Total tier 2 capital | 7074 | 5909 |
| Total capital resources | 38926 | 37214 |
| Risk-weighted assets | 191291 | 186996 |
| Common equity tier 1 capital ratio | 13.6% | 13.7% |
| Tier 1 capital ratio | 16.7% | 16.7% |
| Total capital ratio | 20.3% | 19.9% |

---

Page 7 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CAPITAL RISK**(continued)

**Movements in CET1 capital** 

The key movements are set out in the table below.

---

| | |
|:---|:---|
| Common<br>equity tier 1<br>£m | Common<br>equity tier 1<br>£m |
| At 31 December 2024 | 25610 |
| Profit for the year | 1940 |
| Accrual for foreseeable ordinary dividends | (1050) |
| Dividends paid out on ordinary shares during the period | (640) |
| Fair value through other comprehensive income reserve | 143 |
| Deferred tax asset | 156 |
| Net movement in capital contributions | 102 |
| Distributions on other equity instruments | (215) |
| Other movements | 48 |
| At 30 June 2025 | 26094 |

---

CET1 capital resources increased by £484 million, with profits for the first half of the year offset by the payment of

ordinary dividends and the accrual for foreseeable ordinary dividends.

**Movements in total capital**

The Group's total capital ratio increased to 20.3% at 30 June 2025 from 19.9% at 31 December 2024, reflecting the

increase in CET capital and the issuance of new AT1 and tier 2 capital instruments during the period, partly offset

by AT1 and tier 2 instrument calls, other tier 2 movements and the increase in risk-weighted assets.

Page 8 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CAPITAL RISK** (continued)

**Risk-weighted assets**

---

| | | |
|:---|:---|:---|
|  | At 30 Jun<br>2025<br>£m<br>| At 31 Dec<br>2024<br>£m<br>|
| Foundation Internal Ratings Based (IRB) Approach | 36236 | 35359 |
| Retail IRB Approach | 91979 | 90548 |
| Other IRB Approach | 6416 | 6327 |
| IRB Approach | 134631 | 132234 |
| Standardised (STA) Approach<sup>1</sup> | 20075 | 19380 |
| Credit risk | 154706 | 151614 |
| Securitisation | 7728 | 7648 |
| Counterparty credit risk | 1082 | 1119 |
| Credit valuation adjustment risk | 325 | 244 |
| Operational risk | 26079 | 26079 |
| Market risk | 1371 | 292 |
| Risk-weighted assets | 191291 | 186996 |
| of which: threshold risk-weighted assets<sup>2</sup> | 902 | 1211 |

---

<sup>1</sup>Threshold risk-weighted assets are included within the Standardised (STA) Approach.

<sup>2</sup>Threshold risk-weighted assets reflect the element of deferred tax assets that are permitted to be risk-weighted instead of

being deducted from CET1 capital.

Risk-weighted assets increased by £4,295 million to £191,291 million at 30 June 2025 from £186,996 million at

31 December 2024. This reflects the impact of lending growth, but also includes a temporary c.£1.2 billion increase

related to hedging activity that is expected to reverse by the third quarter. The growth in risk-weighted assets was

partly offset by continued optimisation activity.

Page 9 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CAPITAL RISK** (continued)

**Leverage ratio**

The table below summarises the component parts of the Group's leverage ratio.

---

| | | |
|:---|:---|:---|
|  | At 30 Jun<br>2025<br>£m<br>| At 31 Dec<br>2024<br>£m<br>|
| Total tier 1 capital | 31852 | 31305 |
| Exposure measure |  |  |
| Statutory balance sheet assets |  |  |
| Derivative financial instruments | 3736 | 4235 |
| Securities financing transactions | 40368 | 44143 |
| Loans and advances and other assets | 578453 | 562835 |
| Total assets | 622557 | 611213 |
| Qualifying central bank claims | (44967) | (42098) |
| Derivatives adjustments | (2931) | (3648) |
| Securities financing transactions adjustments | 1617 | 1892 |
| Off-balance sheet items | 32265 | 30849 |
| Amounts already deducted from Tier 1 capital | (11601) | (11864) |
| Other regulatory adjustments<sup>1</sup> | (3032) | (4012) |
| Total exposure measure | 593908 | 582332 |
| UK leverage ratio | 5.4% | 5.4% |
| Leverage exposure measure (including central bank claims) | 638875 | 624430 |
| Leverage ratio (including central bank claims) | 5.0% | 5.0% |

---

<sup>1</sup>Includes deconsolidation adjustments that relate to the deconsolidation of certain Group entities that fall outside the scope of

the Group's regulatory capital consolidation and adjustments to exclude lending under the UK Government's Bounce Back

Loan Scheme (BBLS)

**Analysis of leverage movements**

The Group's UK leverage ratio remained at 5.4% at 30 June 2025 (31 December 2024: 5.4%), reflecting an increase

in the total tier 1 capital position, broadly offset by an increase in the leverage exposure measure. The latter

reflects increases across loans and advances and other assets, due in part to lending growth, and an increase in off-

balance sheet items. This was partially offset by a reduction in the measure for securities financing transactions.

Page 10 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**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 impairment charge in the first half of 2025 was £442million, up from £122million 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. The Group's

probability-weighted total expected credit loss (ECL) allowance was broadly stable in the first half of 2025 at

£3,374million (31 December 2024: £3,453million).

Stage 2 loans and advances to customers are slightly lower at £43,382million (31 December 2024: £44,658million)

and are at9.5% of total lending (31 December 2024: 10.0%) largely due to migrations into Stage 3 within

Commercial Banking.Stage 2 coverage remained stable at2.8% (31 December 2024: 2.9%).

Stage 3 loans and advances to customers remain stable at £6,815million (31 December 2024: £6,708million), and

as a percentage of total lending at 1.5%(31 December 2024: 1.5%). Migrations into Stage 3 from a small number of

cases within Commercial Banking are offset by continued resilient Retail performance, especially within UK

Mortgages where default rates continue to improve. This also resulted in stable Stage 3 coverage at Group level at

16.4%(31 December 2024: 16.5%).

**Prudent risk appetite and risk management**

• The Group continues to take a prudent and proactive approach to credit risk management and credit risk

appetite with robust oversight, particularly in response to recent external events. Risk appetite is in line with the

Group's strategy and helps support customers during continued economic uncertainties in both global and

domestic markets

• Sector, asset and product concentrations within the portfolios are closely monitored and controlled, with

mitigating actions taken where appropriate. Sector and product risk parameters help manage exposure to higher

risk and cyclical sectors, segments and asset classes

• The Group's effective risk management seeks to ensure early identification and management of customers and

counterparties who may be showing signs of distress

• The Group will continue to work closely with its customers to ensure that they receive the appropriate level of

support where required

Page 11 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CREDIT RISK**(continued)

**Impairment charge (credit) by division**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Half-year <br>to 30 Jun <br>2025<br>£m<br>| Half-year<br>to 30 Jun<br>2024<br>£m<br>| Change%<br>| Half-year<br>to 31 Dec<br>2024<br>£m<br>| Change%<br>|
| UK mortgages | (133) | (119) | *12* | (75) | *77* |
| Credit cards | 200 | 115 | *(74)* | 155 | *(29)* |
| UK unsecured loans and overdrafts | 163 | 140 | *(16)* | 132 | *(23)* |
| UK Motor Finance | 111 | 61 | *(82)* | 55 |  |
| Other | 1 | (3) |  | (4) |  |
| Retail | 342 | 194 | *(76)* | 263 | *(30)* |
| Business and Commercial Banking | (35) | 11 |  | 36 |  |
| Corporate and Institutional Banking | 134 | (80) |  | 35 |  |
| Commercial Banking | 99 | (69) |  | 71 | *(39)* |
| Other | 1 | (3) |  | – |  |
| Total impairment charge (credit) | 442 | 122 |  | 334 | *(32)* |

---

**Total expected credit loss allowance**

---

| | | |
|:---|:---|:---|
|  | At 30 Jun <br>2025<br>£m<br>| At 31 Dec <br>2024<br>£m<br>|
| Customer related balances |  |  |
| Drawn | 3151 | 3183 |
| Undrawn | 218 | 265 |
|  | 3369 | 3448 |
| Other assets | 5 | 5 |
| Total expected credit loss allowance | 3374 | 3453 |

---

Page 12 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CREDIT RISK**(continued)

**Total expected credit loss allowance sensitivity to economic assumptions**

The measurement of ECL reflects an unbiased probability-weighted range of possible future economic outcomes.

The Group achieves this by generating four economic scenarios to reflect the range of outcomes; the central

scenario reflects the Group's base case assumptions used for medium-term planning purposes, an upside and a

downside scenario are also selected together with a severe downside scenario. If the base case moves adversely, it

generates a new, more adverse downside and severe downside which are then incorporated into the ECL.

Consistent with prior years, the base case, upside and downside scenarios carry a 30% weighting; the severe

downside is weighted at 10%.

The following table shows the Group's ECL for the probability-weighted, upside, base case, downside and severe

downside scenarios, with the severe downside scenario incorporating adjustments made to CPI inflation and UK

Bank Rate paths. The stage allocation for an asset is based on the overall scenario probability-weighted probability

of default and hence the staging of assets is constant across all the scenarios. In each economic scenario the ECL

for individual assessments is held constant reflecting the basis on which they are evaluated. Judgemental

adjustments applied through changes to model inputs or parameters, or more qualitative post model adjustments,

are apportioned across the scenarios in proportion to modelled ECL where this better reflects the sensitivity of

these adjustments to each scenario. The probability-weighted view shows the extent to which a higher ECL

allowance has been recognised to take account of multiple economic scenarios relative to the base case; the uplift

on a statutory basis being £403 million compared to £443 million at 31 December 2024.

**Total ECL allowance by scenario**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Probability-<br>weighted<br>£m | Probability-<br>weighted<br>£m | Upside<br>£m<br>| Base case<br>£m<br>| Downside<br>£m<br>| Severe<br>downside<br>£m<br>|
| UK mortgages | 709 | 315 | 478 | 890 | 2044 |
| Credit cards | 659 | 550 | 630 | 729 | 865 |
| Other Retail | 1010 | 926 | 981 | 1057 | 1205 |
| Commercial Banking | 995 | 765 | 881 | 1123 | 1646 |
| Other | 1 | 1 | 1 | 1 | 1 |
| At 30 June 2025 | 3374 | 2557 | 2971 | 3800 | 5761 |
| UK mortgages | 852 | 345 | 567 | 1064 | 2596 |
| Credit cards | 674 | 518 | 641 | 773 | 945 |
| Other Retail | 950 | 843 | 923 | 1010 | 1172 |
| Commercial Banking | 976 | 737 | 878 | 1110 | 1586 |
| Other | 1 | 1 | 1 | 1 | 1 |
| At 31 December 2024 | 3453 | 2444 | 3010 | 3958 | 6300 |

---

Page 13 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CREDIT RISK**(continued)

**Loans and advances to customers and expected credit loss allowance**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| At 30 June 2025 | Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>| Stage 2<br>as % of<br>total<br>| Stage 3<br>as % of<br>total<br>|
| Loans and advances to customers | Loans and advances to customers | Loans and advances to customers | Loans and advances to customers | Loans and advances to customers | Loans and advances to customers | Loans and advances to customers | Loans and advances to customers |
| UK mortgages | 276759 | 32016 | 4054 | 5767 | 318596 | 10.0 | 1.3 |
| Credit cards | 14348 | 2375 | 263 | – | 16986 | 14.0 | 1.5 |
| UK unsecured loans and overdrafts | 10024 | 1348 | 180 | – | 11552 | 11.7 | 1.6 |
| UK Motor Finance | 14348 | 2488 | 133 | – | 16969 | 14.7 | 0.8 |
| Other | 19762 | 404 | 158 | – | 20324 | 2.0 | 0.8 |
| Retail | 335241 | 38631 | 4788 | 5767 | 384427 | 10.0 | 1.2 |
| Business and Commercial Banking | 25660 | 2717 | 1076 | – | 29453 | 9.2 | 3.7 |
| Corporate and Institutional Banking | 38600 | 2034 | 951 | – | 41585 | 4.9 | 2.3 |
| Commercial Banking | 64260 | 4751 | 2027 | – | 71038 | 6.7 | 2.9 |
| Other<sup>1</sup> | 327 | – | – | – | 327 |  |  |
| Total gross lending | 399828 | 43382 | 6815 | 5767 | 455792 | 9.5 | 1.5 |
| Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) |
| UK mortgages | 48 | 217 | 283 | 161 | 709 |  |  |
| Credit cards | 209 | 314 | 136 | – | 659 |  |  |
| UK unsecured loans and overdrafts | 171 | 245 | 120 | – | 536 |  |  |
| UK Motor Finance<sup>2</sup> | 200 | 132 | 75 | – | 407 |  |  |
| Other | 14 | 15 | 38 | – | 67 |  |  |
| Retail | 642 | 923 | 652 | 161 | 2378 |  |  |
| Business and Commercial Banking | 117 | 170 | 133 | – | 420 |  |  |
| Corporate and Institutional Banking | 102 | 135 | 334 | – | 571 |  |  |
| Commercial Banking | 219 | 305 | 467 | – | 991 |  |  |
| Other | – | – | – | – | – |  |  |
| Total | 861 | 1228 | 1119 | 161 | 3369 |  |  |
| Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers |
|  | Stage 1%<br>| Stage 2%<br>| Stage 3%<br>| POCI%<br>| Total%<br>|  |  |
| UK mortgages | – | 0.7 | 7.0 | 2.8 | 0.2 |  |  |
| Credit cards | 1.5 | 13.2 | 51.7 | – | 3.9 |  |  |
| UK unsecured loans and overdrafts | 1.7 | 18.2 | 66.7 | – | 4.6 |  |  |
| UK Motor Finance | 1.4 | 5.3 | 56.4 | – | 2.4 |  |  |
| Other | 0.1 | 3.7 | 24.1 | – | 0.3 |  |  |
| Retail | 0.2 | 2.4 | 13.6 | 2.8 | 0.6 |  |  |
| Business and Commercial Banking | 0.5 | 6.3 | 12.4 | – | 1.4 |  |  |
| Corporate and Institutional Banking | 0.3 | 6.6 | 35.1 | – | 1.4 |  |  |
| Commercial Banking | 0.3 | 6.4 | 23.0 | – | 1.4 |  |  |
| Other | – | – | – | – | – |  |  |
| Total | 0.2 | 2.8 | 16.4 | 2.8 | 0.7 |  |  |

---

<sup>1</sup>Contains central fair value hedge accounting adjustments.

<sup>2</sup>UK Motor Finance includes £211 million relating to provisions against residual values of vehicles subject to finance leases.

Page 14 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CREDIT RISK**(continued)

**Loans and advances to customers and expected credit loss allowance** (continued)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| At 31 December 2024 | Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>| Stage 2<br>as % of<br>total<br>| Stage 3<br>as % of<br>total<br>|
| Loans and advances to customers |  |  |  |  |  |  |  |
| UK mortgages | 269760 | 32995 | 4166 | 6207 | 313128 | 10.5 | 1.3 |
| Credit cards | 13534 | 2441 | 265 | – | 16240 | 15.0 | 1.6 |
| UK unsecured loans and overdrafts | 9314 | 1247 | 175 | – | 10736 | 11.6 | 1.6 |
| UK Motor Finance | 13897 | 2398 | 124 | – | 16419 | 14.6 | 0.8 |
| Other | 17373 | 516 | 147 | – | 18036 | 2.9 | 0.8 |
| Retail | 323878 | 39597 | 4877 | 6207 | 374559 | 10.6 | 1.3 |
| Business and Commercial Banking | 25785 | 3172 | 1197 | – | 30154 | 10.5 | 4.0 |
| Corporate and Institutional Banking | 38176 | 1889 | 634 | – | 40699 | 4.6 | 1.6 |
| Commercial Banking | 63961 | 5061 | 1831 | – | 70853 | 7.1 | 2.6 |
| Other<sup>1</sup> | (322) | – | – | – | (322) |  |  |
| Total gross lending | 387517 | 44658 | 6708 | 6207 | 445090 | 10.0 | 1.5 |
| Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) |
| UK mortgages | 55 | 275 | 335 | 187 | 852 |  |  |
| Credit cards | 210 | 331 | 133 | – | 674 |  |  |
| UK unsecured loans and overdrafts | 170 | 235 | 118 | – | 523 |  |  |
| UK Motor Finance<sup>2</sup> | 173 | 115 | 72 | – | 360 |  |  |
| Other | 16 | 14 | 37 | – | 67 |  |  |
| Retail | 624 | 970 | 695 | 187 | 2476 |  |  |
| Business and Commercial Banking | 132 | 187 | 166 | – | 485 |  |  |
| Corporate and Institutional Banking | 112 | 127 | 248 | – | 487 |  |  |
| Commercial Banking | 244 | 314 | 414 | – | 972 |  |  |
| Other | – | – | – | – | – |  |  |
| Total | 868 | 1284 | 1109 | 187 | 3448 |  |  |
| Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers | Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers |
|  | Stage 1%<br>| Stage 2%<br>| Stage 3%<br>| POCI%<br>| Total%<br>|  |  |
| UK mortgages | – | 0.8 | 8.0 | 3.0 | 0.3 |  |  |
| Credit cards | 1.6 | 13.6 | 50.2 | – | 4.2 |  |  |
| UK unsecured loans and overdrafts | 1.8 | 18.8 | 67.4 | – | 4.9 |  |  |
| UK Motor Finance | 1.2 | 4.8 | 58.1 | – | 2.2 |  |  |
| Other | 0.1 | 2.7 | 25.2 | – | 0.4 |  |  |
| Retail | 0.2 | 2.4 | 14.3 | 3.0 | 0.7 |  |  |
| Business and Commercial Banking | 0.5 | 5.9 | 13.9 | – | 1.6 |  |  |
| Corporate and Institutional Banking | 0.3 | 6.7 | 39.1 | – | 1.2 |  |  |
| Commercial Banking | 0.4 | 6.2 | 22.6 | – | 1.4 |  |  |
| Other | – | – | – | – | – |  |  |
| Total | 0.2 | 2.9 | 16.5 | 3.0 | 0.8 |  |  |

---

<sup>1</sup>Contains central fair value hedge accounting adjustments.

<sup>2</sup>UK Motor Finance includes £178 million relating to provisions against residual values of vehicles subject to finance leases.

Page 15 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CREDIT RISK**(continued)

**Retail**

• The Retail portfolio continues to demonstrate resilience and remains well positioned despite ongoing economic

uncertainty. Consumers have shown strength in the context of inflationary pressures

• Robust risk management remains in place, with strong affordability and indebtedness controls for both new and

existing lending and a prudent risk appetite approach. Lending strategies remain under continuous review and

have been proactively managed and calibrated to the latest macroeconomic outlook

• In UK mortgages, new to arrears and flow to default rates have improved during the first half of the year,

including in the second quarter

• The unsecured portfolios continue to exhibit broadly stable new to arrears and flow to default trends

• New to arrears and flows to default in UK Motor finance have stabilised in the first half of the year versus the

modest increases observed in the second half of 2024

• The Retail impairment charge of £342million in the first half of 2025 was higher than the £194million charge for

the first half of 2024, which included a larger release from improvements to the Group's macroeconomic outlook

• All existing IFRS 9 staging rules and triggers have been maintained from the 2024 year end. Retail customer

related ECL allowance as a percentage of drawn loans and advances (coverage) is stable at 0.6% (31 December

2024:0.7%)

• Updates to the Group's macroeconomic outlook in the first half of 2025, combined with stable credit

performance and strong application volumes within UK Mortgages have reduced Stage 2 loans and advances to

10.0%of the Retail portfolio (31 December 2024: 10.6%). Stage 2 ECL coverage remains stable at 2.4%

(31 December 2024: 2.4%)

• Continued stable credit performance in addition to strong application volumes resulted in a reduction in Retail

Stage 3 loans and advances to 1.2% of total loans and advances (31 December 2024: 1.3%)

• Retail Stage 3 ECL coverage reduced to 13.6%(31 December 2024: 14.3%) largely as a result of a reduction in

coverage for UK Mortgages following improvements to the outlook for house price growth

*UK mortgages*

• The UK mortgages portfolio increased to£318.6billion (31 December 2024:£313.1billion) driven by strong

customer demand

• New to arrears in the UK mortgages portfolio have improved in the first half of 2025. The portfolio remains well

positioned with a strong loan to value (LTV) profile. The Group has actively improved the quality of the portfolio

in recent years using robust affordability and credit controls, while the balances of higher risk legacy vintages

continue to reduce

• The impairment release of £133million for the first half of 2025 is broadly in line with the release of £119million in

the first half of 2024. Underlying performance remains stable with both years also benefitting from favourable

updates to the economic outlook, with additional judgement reductions resulting in slight favourability in 2025

• Stage 2 loans and advances have reduced to 10.0% (31 December 2024: 10.5%) following updates to the Group's

macroeconomic outlook, and a combination of stable credit performance with strong application volumes

• Continued stable credit performance in addition to strong application volumes also result in stable Stage 3 loans

and advances at1.3% (31 December 2024: 1.3%), with improvements to the outlook for house price growth

resulting in a reduction in Stage 3 ECL coverage to 7.0% (31 December 2024: 8.0%)

Page 16 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CREDIT RISK**(continued)

**UK mortgages product analysis**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | At 30 June 2025 | At 30 June 2025 | At 30 June 2025 | At 30 June 2025 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 |
| Mainstream | Mainstream | Buy-to-let | Specialist | Total | Mainstream | Buy-to-let | Specialist | Total |
| UK mortgages loans and <br>advances to customers <br>(£m)<br>| 267588 | 47830 | 3178 | 318596 | 261630 | 47984 | 3514 | 313128 |
| UK mortgages greater <br>than 3 months in <br>arrears<sup>1</sup><br>|  |  |  |  |  |  |  |  |
| Number of cases | 18495 | 4075 | 2541 | 25111 | 20112 | 4511 | 2818 | 27441 |
| Total mortgages <br>accounts (%)<br>| 1.1 | 1.1 | 9.0 | 1.2 | 1.2 | 1.2 | 9.2 | 1.3 |
| Value of loans<sup>2</sup> (£m) | 2701 | 575 | 460 | 3736 | 2910 | 651 | 531 | 4092 |
| Total mortgages <br>balances (%)<br>| 1.0 | 1.2 | 14.3 | 1.2 | 1.1 | 1.4 | 14.7 | 1.3 |
| Loan to value |  |  |  |  |  |  |  |  |
| Less than 60% (%) | 54.8 | 68.0 | 90.6 | 57.1 | 55.6 | 68.5 | 89.4 | 57.9 |
| 60% to 70% (%) | 16.2 | 21.1 | 6.1 | 16.8 | 16.7 | 21.1 | 6.9 | 17.2 |
| 70% to 80% (%) | 14.7 | 10.8 | 1.7 | 14.0 | 14.1 | 10.3 | 2.0 | 13.4 |
| 80% to 90% (%) | 12.8 | 0.1 | 0.9 | 10.8 | 11.9 | 0.1 | 0.9 | 10.0 |
| 90% to 100% (%) | 1.5 | 0.0 | 0.4 | 1.3 | 1.7 | 0.0 | 0.5 | 1.5 |
| Greater than 100% (%) | 0.0 | 0.0 | 0.3 | 0.0 | 0.0 | 0.0 | 0.3 | 0.0 |
| Total (%) | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
| Average loan to value<sup>3</sup> |  |  |  |  |  |  |  |  |
| Stock of residential <br>mortgages (%)<br>| 43.4 | 47.2 | 32.2 | 43.8 | 43.2 | 47.3 | 32.9 | 43.6 |
| New residential lending <br>in the period (%)<br>| 65.0 | 57.7 | n/a | 64.3 | 64.1 | 56.4 | n/a | 63.2 |

---

<sup>1</sup>Excluding repossessions.

<sup>2</sup>Value of loans represents gross book value excluding the impact of HBOS acquisition adjustments of mortgages more than

three months in arrears. These accounts are a subset of total Stage 3 given the exclusion of accounts in possession and those

meeting other Stage 3 criteria.

<sup>3</sup>Average loan to value is calculated as total loans and advances as a percentage of the total indexed collateral of these loans

and advances.

Page 17 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CREDIT RISK**(continued)

*Credit cards*

• Credit cards balances increased to £17.0billion (31 December 2024: £16.2billion), due to higher demand for new

cards and increased customer spending

• The credit card portfolio is a prime book, with new to arrears continuing to decline and repayment rates

remaining strong

• The impairment charge of £200million for the first half of 2025, is higher than the charge of £115million in the

first half of 2024 due to upwards revisions to the unemployment forecast, compared to favourable updates in

2024, with underlying portfolio performance remaining resilient. Total ECL coverage is broadly stable at 3.9%

(31 December 2024: 4.2%)

• Resilient credit performance and higher portfolio balances result in a slight reduction in Stage 2 loans and

advances to14.0% (31 December 2024: 15.0%), with Stage 2 ECL coverage stable at 13.2% (31 December 2024:

13.6%)

• Similarly Stage 3 loans and advances reduced slightly to 1.5% (31 December 2024: 1.6%) with Stage 3 ECL

coverage increasing slightly to 51.7% (31 December 2024: 50.2%)

*UK unsecured loans and overdrafts*

• UK unsecured loans and overdraft balances increased to £11.6billion (31 December 2024: £10.7billion) driven by

organic balance growth and lower repayments

• The impairment charge of £163million for the first half of 2025 is higher than the charge of £140million in the

first half of 2024 largely due to upwards revisions to the unemployment forecast.ECL and coverage is broadly

stable at total level and across all stages

*UK Motor Finance*

• The UK Motor Finance lending portfolio (which does not include operating leases) increased to £17.0 billion

(31 December 2024: £16.4billion) driven by retail demand, alongside increased stocking

• Updates to Residual Value (RV) and Voluntary Termination (VT) provisions held against Personal Contract

Purchase (PCP) and Hire Purchase (HP) lending are included within ECL and the impairment charge. Falls in used

vehicle values have primarily driven an ECL increase to £211 million as at 30 June 2025 (31 December 2024:

£178million)

• The impairment charge of £111million for the first half of 2025 is higher than the charge of £61million for the first

half of 2024, reflecting increased RV and VT charges year-on-year

*Other*

• Other loans and advances increased to £20.3billion (31 December 2024: £18.0billion), largely driven by the

European business

• Stage 3 loans and advances remained stable at0.8% of total loans and advances (31 December 2024: 0.8%)

• There was a£1 million impairment charge in the first half of 2025, compared to a £3 million release in the first

half of 2024

Page 18 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CREDIT RISK**(continued)

**Commercial Banking**

• The Commercial portfolio credit quality remains stable, benefitting from a focused approach to credit

underwriting and monitoring standards supported by proactive management of exposures to higher risk and

cyclical sectors

• Credit strategies and policy remains robust and within our credit risk tolerances. The Group remains cognisant of

the continued relatively elevated interest rate environment especially in, but not limited to, sectors reliant upon

consumer discretionary spend

• The Group continues to review segments of our portfolios as appropriate, ensuring our credit strategies,

appetite, sensitivities and mitigation action plans are up-to-date and suitable for rapid action in response to

both risks and opportunities, whilst supporting clients in the right way and ensuring the Group is protected.

Credit Playbooks are in place to cover a number of potential credit downside scenarios and these are regularly

reassessed and updated. Affordability and interest rate sensitivity are tested at origination. Early warning

indicators and risk appetite metrics are in place to ensure the Group tracks and takes action, where appropriate

• The Group continues to provide early support to customers in difficulty through focused risk management via its

Watchlist and Business Support framework. The Group also balances prudent risk appetite with ensuring support

for financially viable clients

*Impairment* 

• The net impairment charge in the first half of 2025 was £99million, versus an impairment release of £69million

in the first half of 2024 which included a release from improvements to the Group's macroeconomic outlook

• ECL allowances increased in the year to £991 million at 30 June 2025 (31 December 2024: £972million), also as a

result of the updates to single name cases and additional judgement

• Stage 2 loans and advances reduced to £4,751 million (31 December 2024: £5,061million), largely as a result of

migrations into Stage 3. Stage 2 as a proportion of total loans and advances to customers reduced to 6.7%

(31 December 2024: 7.1%) with underlying credit performance and Stage 2 ECL coverage stable at 6.4%

(31 December 2024: 6.2%)

• Stage 3 loans and advances increased to £2,027million (31 December 2024: £1,831million) and as a proportion of

total loans and advances to customers to 2.9% (31 December 2024: 2.6%). Stage 3 ECL coverage remained

broadly stable at 23.0% (31 December 2024:22.6%)

Page 19 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

*Commercial Banking UK Real Estate analysis*

• Commercial Banking UK Real Estate committed drawn lending stood at £9.0billion at May 2025 (net of

£2.7 billion exposures subject to protection through Significant Risk Transfer (SRT) securitisations). This

compares to £9.1 billion at 31 December 2024 (net of £3.1 billion subject to SRT securitisations). In addition there

are undrawn lending facilities of £3.0 billion (31 December 2024: £2.1 billion) to predominantly investment grade

rated corporate customers

• The Group classifies Real Estate as exposure which is directly supported by cash flows from property activities

(as opposed to trading activities, such as hotels, care homes and housebuilders). Drawn lending of £6.6 billion to

social housing providers are also excluded (31 December 2024: £6.9 billion)

• Despite some headwinds, including the impact of elevated interest rates, the portfolio continues to remain well-

positioned and proactively managed with conservative LTVs, good levels of interest cover and appropriate risk

mitigants in place

• Overall performance of the portfolio has remained resilient. The Group has continued to see strong asset quality

within this sector, with a decrease in cases in its more closely monitored Watchlist category and limited flow into

Business Support

• Lending continues to be heavily weighted towards investment real estate (c.91%) rather than development. Of

these investment exposures c.94% have an LTV of less than 70%, with an average LTV of 45%. The average

interest cover ratio was 3.1times, with 75% having interest cover of above 2 times

• The portfolio is well diversified with no fully speculative commercial development lending (defined as property

not pre-sold or pre-let at a level to fully repay the debt or generate sufficient income to meet the minimum

interest cover requirements). Approximately 46% of exposures relate to commercial real estate, including c.12%

secured by office assets, c.9% by retail assets and c.13% by industrial assets. Approximately 52% of the portfolio

relates to residential lending

• Recognising this is a cyclical sector, total (gross and net) and asset type quantum caps are in place to control

origination and exposure. Focus remains on the UK market and new business has been written in line with a

prudent risk appetite criteria including conservative LTVs, strong quality of income and proven management

teams. Development lending criteria also includes maximum loan to gross development value and maximum loan

to cost

• Use of SRT securitisations also acts as a risk mitigant in this portfolio. Run-off of these is carefully managed

and sequenced to avoid concentrations

Page 20 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**LIQUIDITY RISK**

**Overview**

The Group has maintained its strong funding and liquidity position with a loan to deposit ratio of 98% as at

30 June 2025 (31 December 2024: 98%). Total wholesale funding decreased to £61.7 billion as at 30 June 2025

(31 December 2024: £62.6 billion). The Group maintains access to diverse sources and tenors of funding.

The Group's liquid assets continue to exceed the regulatory minimum and internal risk appetite, with a liquidity

coverage ratio (LCR)<sup>1</sup> of 136% (based on a monthly rolling average over the previous 12 months) as at 30 June 2025

(31 December 2024: 137%). The net stable funding ratio is strong at 122% as at 30 June 2025 (31 December 2024:

124%).

At 30 June 2025, the Group had £105.5 billion of highly liquid unencumbered LCR eligible assets, based on a

monthly rolling average over the previous 12 months post any liquidity haircuts (31 December 2024: £107.5 billion).

These assets are available to meet cash and collateral outflows and regulatory requirements.

The banking business also has a significant amount of non-LCR eligible liquid assets which are eligible for use in a

range of central bank or similar facilities. Future use of such facilities will be based on prudent liquidity

management and economic considerations, having regard for external market conditions.

The Group's credit ratings are well positioned and continue to reflect the strength of the Group's management and

franchise, along with its robust financial performance, capital and funding position.

<sup>1</sup>Based on a monthly simple average over the previous 12 months.

**Reconciliation of Group funding to the balance sheet**

---

| | | | | |
|:---|:---|:---|:---|:---|
| At 30 June 2025 | Included<br>in funding<br>analysis<br>£bn<br>| Cash <br>collateral <br>received<br>£bn<br>| Fair value<br>and other<br>accounting <br>methods<br>£bn<br>| Balance<br>sheet<br>£bn<br>|
| Deposits from banks | 4.7 | 0.2 | 0.5 | 5.4 |
| Debt securities in issue at amortised cost | 47.9 | – | (5.8) | 42.1 |
| Subordinated liabilities | 9.1 | – | (1.3) | 7.8 |
| Total wholesale funding | 61.7 | 0.2 |  |  |
| Customer deposits | 461.8 | – | – | 461.8 |
| Total | 523.5 | 0.2 |  |  |
| At 31 December 2024 |  |  |  |  |
| Deposits from banks | 2.3 | 0.6 | 0.2 | 3.1 |
| Debt securities in issue at amortised cost | 51.6 | – | (6.3) | 45.3 |
| Subordinated liabilities | 8.7 | – | (1.5) | 7.2 |
| Total wholesale funding | 62.6 | 0.6 |  |  |
| Customer deposits | 451.8 | – | – | 451.8 |
| Total | 514.4 | 0.6 |  |  |

---

**Analysis of term issuance in half-year to 30 June 2025**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Sterling<br>£bn<br>| US dollar<br>£bn<br>| Euro<br>£bn<br>| Other<br>currencies<sup>1</sup><br>£bn<br>| Total<br>£bn<br>|
| Securitisation<sup>2</sup> | 0.1 | – | 0.6 | – | 0.7 |
| Covered bonds | – | – | – | – | – |
| Senior unsecured notes | – | – | – | 0.4 | 0.4 |
| Subordinated liabilities | – | 0.9 | 0.9 | – | 1.8 |
| Additional tier 1 | 0.8 | – | – | – | 0.8 |
| Total issuance | 0.9 | 0.9 | 1.5 | 0.4 | 3.7 |

---

<sup>1</sup>Primarily Australian dollar.

<sup>2</sup>Includes significant risk transfer securitisations.

Page 21 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**STATUTORY INFORMATION**

---

| | | |
|:---|:---|:---|
| **Condensed consolidated half-year financial statements (unaudited)** | **Condensed consolidated half-year financial statements (unaudited)** |  |
| [Condensed consolidated income statement (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_70) | [Condensed consolidated income statement (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_70) | [22](#icddc7e3a435b49f28be7b5fee6e1e127_70) |
| [Condensed consolidated statement of comprehensive income (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_73) | [Condensed consolidated statement of comprehensive income (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_73) | [23](#icddc7e3a435b49f28be7b5fee6e1e127_73) |
| [Condensed consolidated balance sheet (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_76) | [Condensed consolidated balance sheet (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_76) | [24](#icddc7e3a435b49f28be7b5fee6e1e127_76) |
| [Condensed consolidated statement of changes in equity (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_79) | [Condensed consolidated statement of changes in equity (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_79) | [25](#icddc7e3a435b49f28be7b5fee6e1e127_79) |
| [Condensed consolidated cash flow statement (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_82) | [Condensed consolidated cash flow statement (unaudited)](#icddc7e3a435b49f28be7b5fee6e1e127_82) | [28](#icddc7e3a435b49f28be7b5fee6e1e127_82) |
| **Notes to the condensed consolidated half-year financial statements (unaudited)** | **Notes to the condensed consolidated half-year financial statements (unaudited)** |  |
| 1 | [Basis of preparation and accounting policies](#icddc7e3a435b49f28be7b5fee6e1e127_88) | 30 |
| 2 | [Critical accounting judgements and key sources of estimation uncertainty](#icddc7e3a435b49f28be7b5fee6e1e127_91) | [30](#icddc7e3a435b49f28be7b5fee6e1e127_91) |
| 3 | [Segmental analysis](#icddc7e3a435b49f28be7b5fee6e1e127_94) | [30](#icddc7e3a435b49f28be7b5fee6e1e127_94) |
| 4 | [Net fee and commission income](#icddc7e3a435b49f28be7b5fee6e1e127_97) | [31](#icddc7e3a435b49f28be7b5fee6e1e127_97) |
| 5 | [Operating expenses](#icddc7e3a435b49f28be7b5fee6e1e127_100) | [31](#icddc7e3a435b49f28be7b5fee6e1e127_100) |
| 6 | [Retirement benefit obligations](#icddc7e3a435b49f28be7b5fee6e1e127_103) | [32](#icddc7e3a435b49f28be7b5fee6e1e127_103) |
| 7 | [Impairment](#icddc7e3a435b49f28be7b5fee6e1e127_106) | [33](#icddc7e3a435b49f28be7b5fee6e1e127_106) |
| 8 | [Tax](#icddc7e3a435b49f28be7b5fee6e1e127_109) | [33](#icddc7e3a435b49f28be7b5fee6e1e127_109) |
| 9 | [Fair values of financial assets and liabilities](#icddc7e3a435b49f28be7b5fee6e1e127_112) | [34](#icddc7e3a435b49f28be7b5fee6e1e127_112) |
| 10 | [Allowance for expected credit losses](#icddc7e3a435b49f28be7b5fee6e1e127_121) | [39](#icddc7e3a435b49f28be7b5fee6e1e127_121) |
| 11 | [Debt securities in issue](#icddc7e3a435b49f28be7b5fee6e1e127_124) | [46](#icddc7e3a435b49f28be7b5fee6e1e127_124) |
| 12 | P[rovisions](#icddc7e3a435b49f28be7b5fee6e1e127_127) | [46](#icddc7e3a435b49f28be7b5fee6e1e127_127) |
| 13 | [Dividends on ordinary shares](#icddc7e3a435b49f28be7b5fee6e1e127_130) | [48](#icddc7e3a435b49f28be7b5fee6e1e127_130) |
| 14 | [Related party transactions](#icddc7e3a435b49f28be7b5fee6e1e127_133) | [49](#icddc7e3a435b49f28be7b5fee6e1e127_133) |
| 15 | [Contingent liabilities, commitments and guarantees](#icddc7e3a435b49f28be7b5fee6e1e127_136) | [49](#icddc7e3a435b49f28be7b5fee6e1e127_136) |

---

Page 22 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)**

---

| | | | |
|:---|:---|:---|:---|
|  | Note | Half-year<br>to 30 Jun<br>2025<br>£m<br>| Half-year<br>to 30 Jun<br>2024<br>£m<br>|
| Interest income |  | 14094 | 13980 |
| Interest expense |  | (7548) | (7758) |
| Net interest income |  | 6546 | 6222 |
| Fee and commission income |  | 1202 | 1186 |
| Fee and commission expense |  | (597) | (883) |
| Net fee and commission income | 4 | 605 | 303 |
| Net trading income |  | 150 | 331 |
| Other operating income |  | 1534 | 1520 |
| Other income |  | 2289 | 2154 |
| Total income |  | 8835 | 8376 |
| Operating expenses | 5 | (5635) | (5436) |
| Impairment | 7 | (442) | (122) |
| Profit before tax |  | 2758 | 2818 |
| Tax expense | 8 | (818) | (811) |
| Profit for the period |  | 1940 | 2007 |
| Profit attributable to ordinary shareholders |  | 1709 | 1824 |
| Profit attributable to other equity holders |  | 215 | 172 |
| Profit attributable to equity holders |  | 1924 | 1996 |
| Profit attributable to non-controlling interests |  | 16 | 11 |
| Profit for the period |  | 1940 | 2007 |

---

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

Page 23 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | Half-year<br>to 30 Jun<br>2025<br>£m<br>| Half-year<br>to 30 Jun<br>2024<br>£m<br>|
| Profit for the period | 1940 | 2007 |
| Other comprehensive income |  |  |
| *Items that will not subsequently be reclassified to profit or loss:* |  |  |
| Post-retirement defined benefit scheme remeasurements: |  |  |
| Remeasurements before tax | (168) | (351) |
| Current tax | 25 | 29 |
| Deferred tax | 18 | 64 |
|  | (125) | (258) |
| Gains and losses attributable to own credit risk: |  |  |
| Gains (losses) before tax | 62 | (86) |
| Deferred tax | (17) | 24 |
|  | 45 | (62) |
| *Items that may subsequently be reclassified to profit or loss:* |  |  |
| Movements in revaluation reserve in respect of debt securities held at fair value through other <br>comprehensive income:<br>|  |  |
| Change in fair value | 81 | 105 |
| Income statement transfers in respect of disposals | 111 | (4) |
| Income statement transfers in respect of impairment | – | (2) |
| Deferred tax | (49) | (27) |
|  | 143 | 72 |
| Movements in cash flow hedging reserve: |  |  |
| Effective portion of changes in fair value taken to other comprehensive income | 396 | (1435) |
| Net income statement transfers | 835 | 1072 |
| Deferred tax | (345) | 102 |
|  | 886 | (261) |
| Movements in foreign currency translation reserve: |  |  |
| Currency translation differences (tax: £nil) | 42 | (39) |
|  | 42 | (39) |
| Total other comprehensive income (loss) for the period, net of tax | 991 | (548) |
| Total comprehensive income for the period | 2931 | 1459 |
| Total comprehensive income attributable to ordinary shareholders | 2700 | 1276 |
| Total comprehensive income attributable to other equity holders | 215 | 172 |
| Total comprehensive income attributable to equity holders | 2915 | 1448 |
| Total comprehensive income attributable to non-controlling interests | 16 | 11 |
| Total comprehensive income for the period | 2931 | 1459 |

---

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

Page 24 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)**

---

| | | | |
|:---|:---|:---|:---|
|  | Note | At 30 Jun<br>2025<br>£m<br>| At 31 Dec<br>2024<br>£m<br>|
| Assets |  |  |  |
| Cash and balances at central banks |  | 45098 | 42396 |
| Financial assets at fair value through profit or loss | 9 | 2719 | 2321 |
| Derivative financial instruments |  | 3736 | 4235 |
| Loans and advances to banks |  | 5629 | 6433 |
| Loans and advances to customers |  | 452642 | 441907 |
| Reverse repurchase agreements |  | 39864 | 44143 |
| Debt securities |  | 10948 | 11854 |
| Due from fellow Lloyds Banking Group undertakings |  | 897 | 560 |
| Financial assets at amortised cost |  | 509980 | 504897 |
| Financial assets at fair value through other comprehensive income | 9 | 33498 | 30344 |
| Goodwill and other intangible assets |  | 5679 | 5804 |
| Current tax recoverable |  | 1042 | 338 |
| Deferred tax assets |  | 4188 | 4785 |
| Retirement benefit assets | 6 | 2953 | 3028 |
| Other assets |  | 13664 | 13065 |
| Total assets |  | 622557 | 611213 |
| Liabilities |  |  |  |
| Deposits from banks |  | 5388 | 3144 |
| Customer deposits |  | 461771 | 451794 |
| Repurchase agreements at amortised cost |  | 38248 | 37760 |
| Due to fellow Lloyds Banking Group undertakings |  | 3804 | 4049 |
| Financial liabilities at fair value through profit or loss | 9 | 4363 | 4630 |
| Derivative financial instruments |  | 5170 | 5787 |
| Notes in circulation |  | 2119 | 2121 |
| Debt securities in issue at amortised cost | 11 | 42103 | 45281 |
| Other liabilities |  | 7383 | 7211 |
| Retirement benefit obligations | 6 | 119 | 122 |
| Current tax liabilities |  | 44 | 33 |
| Deferred tax liabilities |  | 120 | 125 |
| Provisions | 12 | 2074 | 2198 |
| Subordinated liabilities |  | 7842 | 7211 |
| Total liabilities |  | 580548 | 571466 |
| Equity |  |  |  |
| Share capital |  | 1574 | 1574 |
| Share premium account |  | 600 | 600 |
| Other reserves |  | 3460 | 2389 |
| Retained profits |  | 30541 | 29412 |
| Ordinary shareholders' equity |  | 36175 | 33975 |
| Other equity instruments |  | 5758 | 5692 |
| Total equity excluding non-controlling interests |  | 41933 | 39667 |
| Non-controlling interests |  | 76 | 80 |
| Total equity |  | 42009 | 39747 |
| Total equity and liabilities |  | 622557 | 611213 |

---

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

Page 25 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders |  |  |  |
|  | Share<br>capital <br>and<br>premium<br>£m<br>| Other<br>reserves<br>£m<br>| Retained<br>profits<br>£m<br>| Total<br>£m <br>| Other<br>equity<br>instruments<br>£m | Non-<br>controlling<br>interests<br>£m | Total<br>£m<br>|
| At 1 January 2025 | 2174 | 2389 | 29412 | 33975 | 5692 | 80 | 39747 |
| Comprehensive income |  |  |  |  |  |  |  |
| Profit for the period | – | – | 1709 | 1709 | 215 | 16 | 1940 |
| *Other comprehensive income* |  |  |  |  |  |  |  |
| Post-retirement defined benefit <br>scheme remeasurements, net of tax<br>| – | – | (125) | (125) | – | – | (125) |
| Movements in revaluation reserve <br>in respect of financial assets held at <br>fair value through other <br>comprehensive income, net of tax:<br>|  |  |  |  |  |  |  |
| Debt securities | – | 143 | – | 143 | – | – | 143 |
| Gains and losses attributable to <br>own credit risk, net of tax<br>| – | – | 45 | 45 | – | – | 45 |
| Movements in cash flow hedging <br>reserve, net of tax<br>| – | 886 | – | 886 | – | – | 886 |
| Movements in foreign currency <br>translation reserve, net of tax<br>| – | 42 | – | 42 | – | – | 42 |
| Total other comprehensive loss | – | 1071 | (80) | 991 | – | – | 991 |
| Total comprehensive (loss) income<sup>1</sup> | – | 1071 | 1629 | 2700 | 215 | 16 | 2931 |
| Transactions with owners |  |  |  |  |  |  |  |
| Dividends | – | – | (640) | (640) | – | – | (640) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | (215) | – | (215) |
| Issue of other equity instruments | – | – | (9) | (9) | 753 | – | 744 |
| Redemptions of other equity <br>instruments<br>| – | – | 47 | 47 | (687) | – | (640) |
| Capital contributions received | – | – | 83 | 83 | – | – | 83 |
| Return of capital contributions | – | – | (1) | (1) | – | – | (1) |
| Changes in non-controlling <br>interests<br>| – | – | 20 | 20 | – | (20) | – |
| Total transactions with owners | – | – | (500) | (500) | (149) | (20) | (669) |
| Realised gains and losses on equity <br>shares held at fair value through <br>other comprehensive income<br>| – | – | – | – | – | – | – |
| At 30 June 2025<sup>2</sup> | 2174 | 3460 | 30541 | 36175 | 5758 | 76 | 42009 |

---

<sup>1</sup>Total comprehensive income attributable to owners of the parent was £2,915 million.

<sup>2</sup>Total equity attributable to owners of the parent was£41,933 million.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

Page 26 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)** (continued)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders |  |  |  |
|  | Share<br>capital and<br>premium<br>£m<br>| Other<br>reserves<br>£m<br>| Retained<br>profits<br>£m<br>| Total<br>£m<br>| Other<br>equity<br>instrument<br>s<br>£m<br>| Non-<br>controllin<br>g<br>interests<br>£m<br>| Total<br>£m<br>|
| At 1 January 2024 | 2174 | 2395 | 30786 | 35355 | 5018 | 58 | 40431 |
| Comprehensive income |  |  |  |  |  |  |  |
| Profit for the period | – | – | 1824 | 1824 | 172 | 11 | 2007 |
| *Other comprehensive income* |  |  |  |  |  |  |  |
| Post-retirement defined benefit <br>scheme remeasurements, net of tax<br>| – | – | (258) | (258) | – | – | (258) |
| Movements in revaluation reserve <br>in respect of financial assets held at <br>fair value through other <br>comprehensive income, net of tax:<br>|  |  |  |  |  |  |  |
| Debt securities | – | 72 | – | 72 | – | – | 72 |
| Gains and losses attributable to <br>own credit risk, net of tax<br>| – | – | (62) | (62) | – | – | (62) |
| Movements in cash flow hedging <br>reserve, net of tax<br>| – | (261) | – | (261) | – | – | (261) |
| Movements in foreign currency <br>translation reserve, net of tax<br>| – | (39) | – | (39) | – | – | (39) |
| Total other comprehensive loss | – | (228) | (320) | (548) | – | – | (548) |
| Total comprehensive (loss) income<sup>1</sup> | – | (228) | 1504 | 1276 | 172 | 11 | 1459 |
| Transactions with owners |  |  |  |  |  |  |  |
| Dividends | – | – | (2140) | (2140) | – | – | (2140) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | (172) | – | (172) |
| Capital contributions received | – | – | 61 | 61 | – | – | 61 |
| Total transactions with owners | – | – | (2079) | (2079) | (172) | – | (2251) |
| Realised gains and losses on equity <br>shares held at fair value through <br>other comprehensive income<br>| – | – | – | – | – | – | – |
| At 30 June 2024<sup>2</sup> | 2174 | 2167 | 30211 | 34552 | 5018 | 69 | 39639 |

---

<sup>1</sup>Total comprehensive income attributable to owners of the parent was£1,448 million.

<sup>2</sup>Total equity attributable to owners of the parent was£39,570 million.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

Page 27 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)** (continued)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders |  |  |  |
|  | Share<br>capital and<br>premium<br>£m<br>| Other<br>reserves<br>£m<br>| Retained<br>profits<br>£m<br>| Total<br>£m<br>| Other<br>equity<br>instrument<br>s<br>£m<br>| Non-<br>controllin<br>g<br>interests<br>£m<br>| Total<br>£m<br>|
| At 1 July 2024 | 2174 | 2167 | 30211 | 34552 | 5018 | 69 | 39639 |
| Comprehensive income |  |  |  |  |  |  |  |
| Profit for the period | – | – | 1277 | 1277 | 191 | 11 | 1479 |
| *Other comprehensive income* |  |  |  |  |  |  |  |
| Post-retirement defined benefit <br>scheme remeasurements, net of tax<br>| – | – | (306) | (306) | – | – | (306) |
| Movements in revaluation reserve <br>in respect of financial assets held at <br>fair value through other <br>comprehensive income, net of tax:<br>|  |  |  |  |  |  |  |
| Debt securities | – | 1 | – | 1 | – | – | 1 |
| Gains and losses attributable to <br>own credit risk, net of tax<br>| – | – | 6 | 6 | – | – | 6 |
| Movements in cash flow hedging <br>reserve, net of tax<br>| – | 247 | – | 247 | – | – | 247 |
| Movements in foreign currency <br>translation reserve, net of tax<br>| – | (26) | – | (26) | – | – | (26) |
| Total other comprehensive income <br>(loss)<br>| – | 222 | (300) | (78) | – | – | (78) |
| Total comprehensive income<sup>1</sup> | – | 222 | 977 | 1199 | 191 | 11 | 1401 |
| Transactions with owners |  |  |  |  |  |  |  |
| Dividends | – | – | (1850) | (1850) | – | – | (1850) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | (191) | – | (191) |
| Issue of other equity instruments | – | – | (6) | (6) | 1174 | – | 1168 |
| Repurchases and redemptions of <br>other equity instruments<br>| – | – | – | – | (500) | – | (500) |
| Capital contributions received | – | – | 81 | 81 | – | – | 81 |
| Return of capital contributions | – | – | (1) | (1) | – | – | (1) |
| Total transactions with owners | – | – | (1776) | (1776) | 483 | – | (1293) |
| Realised gains and losses on equity <br>shares held at fair value through <br>other comprehensive income<br>| – | – | – | – | – | – | – |
| At 31 December 2024<sup>2</sup> | 2174 | 2389 | 29412 | 33975 | 5692 | 80 | 39747 |

---

<sup>1</sup>Total comprehensive income attributable to owners of the parent was£1,390 million.

<sup>2</sup>Total equity attributable to owners of the parent was£39,667 million.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

Page 28 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | Half-year<br>to 30 Jun<br>2025<br>£m<br>| Half-year<br>to 30 Jun<br>2024<br>£m<br>|
| Cash flows from operating activities |  |  |
| Profit before tax | 2758 | 2818 |
| Adjustments for: |  |  |
| Change in operating assets | (6786) | (11747) |
| Change in operating liabilities | 7543 | 2077 |
| Non-cash and other items | 2282 | 2270 |
| Tax paid<sup>1</sup> | (1495) | (765) |
| Tax refunded<sup>1</sup> | 200 | 350 |
| Net cash (used in) provided by operating activities | 4502 | (4997) |
| Cash flows (used in) provided by investing activities |  |  |
| Purchase of financial assets | (7379) | (5800) |
| Proceeds from sale and maturity of financial assets | 4739 | 5261 |
| Purchase of fixed assets<sup>1</sup> | (1970) | (1989) |
| Purchase of other intangible assets<sup>1</sup> | (556) | (647) |
| Proceeds from sale of fixed assets<sup>1</sup> | 650 | 604 |
| Proceeds from sale of goodwill and other intangible assets<sup>1</sup> | 2 | – |
| Net cash used in investing activities | (4514) | (2571) |
| Cash flows used in financing activities |  |  |
| Dividends paid to ordinary shareholders | (640) | (2140) |
| Distributions on other equity instruments | (215) | (172) |
| Return of capital contributions | (1) | – |
| Interest paid on subordinated liabilities | (297) | (194) |
| Proceeds from issue of subordinated liabilities | 1761 | – |
| Proceeds from issue of other equity instruments | 744 | – |
| Repayment of subordinated liabilities | (904) | – |
| Repurchases and redemptions of other equity instruments | (640) | – |
| Borrowings from parent company | 3557 | 3168 |
| Repayments of borrowings to parent company | (2124) | (1001) |
| Interest paid on borrowings from parent company | (210) | (198) |
| Net cash used in financing activities | 1031 | (537) |
| Effects of exchange rate changes on cash and cash equivalents | 92 | (66) |
| Change in cash and cash equivalents | 1111 | (8171) |
| Cash and cash equivalents at beginning of period | 49712 | 66538 |
| Cash and cash equivalents at end of period | 50823 | 58367 |

---

<sup>1</sup>Previously presented in aggregate.

Interest received was £13,758 million (30 June 2024: £13,558 million) and interest paid was £7,585 million (30 June

2024: £6,709 million).

Cash and cash equivalents comprise cash and non-mandatory balances with central banks and amounts due from

banks with an original maturity of less than three months.

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

Page 29 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)**

**Note 1: Basis of preparation and accounting policies**

These condensed consolidated half-year financial statements as at and for the period to 30 June 2025 have been

prepared in accordance with International Accounting Standard 34 (IAS 34), *Interim Financial Reporting* as issued

by the International Accounting Standards Board (IASB) and comprise the results of Lloyds Bank plc (the Bank)

together with its subsidiaries (the Group). They do not include all of the information required for full annual

financial statements and should be read in conjunction with the Group's consolidated financial statements as at

and for the year ended 31 December 2024 which were prepared in accordance with International Financial

Reporting Standards (IFRS) as issued by the IASB. Copies of the 2024 annual report on Form 20-F are available on

the Lloyds Banking Group's website.

The directors consider that it is appropriate to continue to adopt the going concern basis in preparing these

condensed consolidated half-year financial statements. In reaching this assessment, the directors have taken into

account the uncertainties affecting the UK economy and their potential effects upon the Group's performance and

projected funding and capital position; the impact of further stress scenarios has also been considered. On this

basis, the directors are satisfied that the Group will maintain adequate levels of funding and capital for the

foreseeable future.

The Group's accounting policies are consistent with those applied by the Group in its financial statements for the

year ended 31 December 2024 and there have been no changes in the Group's methods of computation.

*Future accounting developments*

There are a number of new accounting pronouncements issued by the IASB with an effective date of

1 January 2027. This includes IFRS 18 Presentation and Disclosure in Financial Statements which replaces IAS 1

Presentation of Financial Statements and IFRS 19 Subsidiaries without Public Accountability: Disclosures. The

impact of these standards is being assessed and they have not yet been endorsed for use in the UK.

The IASB has issued its annual improvements and a number of amendments to the IFRS Accounting Standards

effective 1 January 2026, including Amendments to IFRS 9 Financial Instruments and Amendments to IFRS 7

Financial Instruments Disclosure. These improvements and amendments are not expected to have a significant

impact on the Group.

Page 30 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 2: Critical accounting judgements and key sources of estimation uncertainty**

The preparation of the Group's financial statements in accordance with IFRS requires management to make

judgements, estimates and assumptions in applying the accounting policies that affect the reported amounts of

assets, liabilities, income and expenses. Due to the inherent uncertainty in making estimates, actual results

reported in future periods may be based upon amounts which differ from these estimates. Estimates, judgements

and assumptions are continually evaluated and are based on historical experience and other factors, including

expectations of future events that are believed to be reasonable under the circumstances. In preparing the

financial statements, the Group has considered the impact of climate-related risks on its financial position and

performance. While the effects of climate change represent a source of uncertainty, the Group does not consider

there to be a material impact on its judgements and estimates from the physical, transition and other climate-

related risks in the short-term.

The Group's significant judgements, estimates and assumptions are unchanged compared to those disclosed in

note 3 of the Group's 2024 financial statements. Further information on the critical accounting judgements and

key sources of estimation uncertainty for the allowance for expected credit losses is set out in note 10.

**Note 3: Segmental analysis**

The Group provides a wide range of banking and financial services in the UK and in certain locations overseas. The

Group Executive Committee (GEC) of the Lloyds Banking Group remains the chief operating decision maker ,as

defined by IFRS 8 *Operating Segments,*for the Group.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Half-year to 30 June 2025 | Retail<br>£m<br>| Commercial<br>Banking<br>£m | Other<br>£m<br>| Total<br>£m<br>|
| Net interest income | 4710 | 1623 | 213 | 6546 |
| Other income | 1251 | 544 | 494 | 2289 |
| Total income | 5961 | 2167 | 707 | 8835 |
| Operating expenses | (3715) | (1156) | (764) | (5635) |
| Impairment (charge) credit | (342) | (99) | (1) | (442) |
| Profit before tax | 1904 | 912 | (58) | 2758 |
| External income (expense) | 7348 | 1431 | 56 | 8835 |
| Inter-segment (expense) income | (1387) | 736 | 651 | – |
| Segment income | 5961 | 2167 | 707 | 8835 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Half-year to 30 June 2024 | Retail<br>£m<br>| Commercial<br>Banking<br>£m<br>| Other<br>£m<br>| Total<br>£m<br>|
| Net interest income | 4429 | 1636 | 157 | 6222 |
| Other income | 837 | 521 | 796 | 2154 |
| Total income | 5266 | 2157 | 953 | 8376 |
| Operating expenses | (3563) | (1149) | (724) | (5436) |
| Impairment (charge) credit | (195) | 69 | 4 | (122) |
| Profit before tax | 1508 | 1077 | 233 | 2818 |
| External income (expense) | 6254 | 2829 | (707) | 8376 |
| Inter-segment (expense) income | (988) | (672) | 1660 | – |
| Segment income | 5266 | 2157 | 953 | 8376 |

---

Page 31 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 3: Segmental analysis (continued)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Retail<br>£m<br>| Commercial<br>Banking<br>£m | Other<br>£m<br>| Total<br>£m<br>|
| At 30 June 2025 |  |  |  |  |
| External assets | 396235 | 82448 | 143874 | 622557 |
| External liabilities | 329490 | 142093 | 108965 | 580548 |
| At 31 December 2024 |  |  |  |  |
| External assets | 386199 | 82731 | 142283 | 611213 |
| External liabilities | 324727 | 135396 | 111343 | 571466 |

---

**Note 4: Net fee and commission income**

---

| | | |
|:---|:---|:---|
|  | Half-year<br>to 30 Jun<br>2025<br>£m<br>| Half-year<br>to 30 Jun<br>2024<br>£m<br>|
| Fee and commission income: |  |  |
| Current accounts | 340 | 312 |
| Credit and debit card fees | 634 | 629 |
| Commercial banking and treasury fees | 94 | 92 |
| Factoring | 34 | 35 |
| Other fees and commissions | 100 | 118 |
| Total fee and commission income | 1202 | 1186 |
| Fee and commission expense | (597) | (883) |
| Net fee and commission income | 605 | 303 |

---

Current account and credit and debit card fees principally arise in Retail; commercial banking, treasury and

factoring fees arise in Commercial Banking.

**Note 5: Operating expenses**

---

| | | |
|:---|:---|:---|
|  | Half-year<br>to 30 Jun<br>2025<br>£m<br>| Half-year<br>to 30 Jun<br>2024<br>£m<br>|
| Staff costs | 2362 | 2287 |
| Premises and equipment costs | 236 | 182 |
| Depreciation and amortisation | 1722 | 1659 |
| Other | 1315 | 1308 |
| Total operating expenses | 5635 | 5436 |

---

Page 32 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 6: Retirement benefit obligations**

The Group's post-retirement defined benefit scheme obligations are comprised as follows:

---

| | | |
|:---|:---|:---|
|  | At 30 Jun<br>2025<br>£m<br>| At 31 Dec<br>2024<br>£m<br>|
| Defined benefit pension schemes: |  |  |
| Present value of funded obligations | (26310) | (27118) |
| Fair value of scheme assets | 29183 | 30063 |
| Net pension scheme asset | 2873 | 2945 |
| Other post-retirement schemes | (39) | (39) |
| Total amounts recognised in the balance sheet | 2834 | 2906 |
| Recognised on the balance sheet as: |  |  |
| Retirement benefit assets | 2953 | 3028 |
| Retirement benefit obligations | (119) | (122) |
| Total amounts recognised in the balance sheet | 2834 | 2906 |

---

Movements in the Group's net post-retirement defined benefit scheme asset during the period were as follows:

---

| | |
|:---|:---|
|  | £m |
| Asset at 1 January 2025 | 2906 |
| Income statement credit | 15 |
| Employer contributions | 81 |
| Remeasurement | (168) |
| Asset at 30 June 2025 | 2834 |

---

The principal assumptions used in the valuations of the defined benefit pension schemes were as follows:

---

| | | |
|:---|:---|:---|
|  | At 30 Jun<br>2025%<br>| At 31 Dec<br>2024%<br>|
| Discount rate | 5.61 | 5.55 |
| Rate of inflation: |  |  |
| Retail Price Index (RPI) | 2.75 | 2.97 |
| Consumer Price Index (CPI) | 2.25 | 2.52 |
| Rate of salary increases | 0.00 | 0.00 |
| Weighted-average rate of increase for pensions in payment | 2.67 | 2.69 |

---

In July 2024, the Court of Appeal handed down a judgment (Virgin Media Limited v NTL Pension Trustees Limited)

which potentially has implications for the validity of amendments made by pension schemes that were contracted

out on a salary-related basis between 6 April 1997 and the abolition of contracting-out in 2016. The Government in

June 2025, recognising that schemes and sponsoring employers need clarity around scheme liabilities, announced it

will introduce legislation to give affected pension schemes the ability to retrospectively obtain written actuarial

confirmation that historic benefit changes met the necessary standards. The Group is carrying out a review of

scheme amendments to decide whether any subsequent actions are required. The Group will continue to monitor

developments.

Page 33 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 7: Impairment**

---

| | | |
|:---|:---|:---|
|  | Half-year<br>to 30 Jun<br>2025<br>£m<br>| Half-year<br>to 30 Jun<br>2024<br>£m<br>|
| Loans and advances to banks | – | (4) |
| Loans and advances to customers | 490 | 169 |
| Debt securities | – | (1) |
| Financial assets held at amortised cost | 490 | 164 |
| Financial assets at fair value through other comprehensive income | – | (2) |
| Loan commitments and financial guarantees | (48) | (40) |
| Total impairment charge (credit) | 442 | 122 |

---

There was a £70 million charge in respect of residual value impairment and voluntary terminations within the

Group's UK Motor Finance business in the current period (half-year to 30 June 2024: £10 million).

**Note 8: Tax**

In accordance with IAS 34, the Group's income tax expense for the half-year to 30 June 2025 is based on the best

estimate of the weighted-average annual income tax rate expected for the full financial year. The tax effects of

one-off items are not included in the weighted-average annual income tax rate, but are recognised in the relevant

period.

An explanation of the relationship between tax expense and accounting profit is set out below:

---

| | | |
|:---|:---|:---|
|  | Half-year<br>to 30 Jun<br>2025<br>£m<br>| Half-year<br>to 30 Jun<br>2024<br>£m<br>|
| Profit before tax | 2758 | 2818 |
| UK corporation tax thereon at 25.0% (2024: 25.0%) | (689) | (704) |
| Impact of surcharge on banking profits | (81) | (78) |
| Non-deductible costs: conduct charges | 1 | 4 |
| Other non-deductible costs | (108) | (98) |
| Non-taxable income | – | 33 |
| Tax relief on coupons on other equity instruments | 54 | 42 |
| Tax-exempt gains on disposals | 2 | – |
| Remeasurement of deferred tax due to rate changes | – | 3 |
| Differences in overseas tax rates | 5 | (3) |
| Adjustments in respect of prior years | (2) | (10) |
| Tax expense | (818) | (811) |

---

Page 34 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 9: Fair values of financial assets and liabilities**

The valuations of financial instruments have been classified into three levels according to the quality and reliability

of information used to determine those fair values. Note 16 to the Group's financial statements for the year ended

31 December 2024 details the definitions of the three levels in the fair value hierarchy.

Financial instruments classified as financial assets at fair value through profit or loss, derivative financial

instruments, financial assets at fair value through other comprehensive income and financial liabilities at fair value

through profit or loss are recognised at fair value.

The Group manages valuation adjustments for its derivative exposures on a net basis; the Group determines their

fair values on the basis of their net exposures. In all other cases, fair values of financial assets and liabilities

measured at fair value are determined on the basis of their gross exposures.

The following tables provide an analysis of the financial assets and liabilities of the Group that are carried at fair

value in the Group's consolidated balance sheet, grouped into levels 1 to 3 based on the degree to which the fair

value is observable. There were no significant transfers between level 1 and level 2 during the period.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Financial assets | Level 1<br>£m<br>| Level 2<br>£m<br>| Level 3<br>£m<br>| Total<br>£m<br>|
| At 30 June 2025 |  |  |  |  |
| Financial assets at fair value through profit or loss: |  |  |  |  |
| Loans and advances to customers | – | 1828 | 256 | 2084 |
| Equity shares | 631 | – | 4 | 635 |
| Total financial assets at fair value through profit or loss | 631 | 1828 | 260 | 2719 |
| Financial assets at fair value through other comprehensive income: |  |  |  |  |
| Debt securities | 19284 | 14165 | 49 | 33498 |
| Equity shares | – | – | – | – |
| Total financial assets at fair value through other comprehensive income | 19284 | 14165 | 49 | 33498 |
| Derivative financial instruments | – | 3736 | – | 3736 |
| Total financial assets carried at fair value | 19915 | 19729 | 309 | 39953 |
| At 31 December 2024 |  |  |  |  |
| Financial assets at fair value through profit or loss: |  |  |  |  |
| Loans and advances to customers | – | 1813 | 276 | 2089 |
| Equity shares | 228 | – | 4 | 232 |
| Total financial assets at fair value through profit or loss | 228 | 1813 | 280 | 2321 |
| Financial assets at fair value through other comprehensive income: |  |  |  |  |
| Debt securities | 16278 | 14018 | 48 | 30344 |
| Equity shares | – | – | – | – |
| Total financial assets at fair value through other comprehensive income | 16278 | 14018 | 48 | 30344 |
| Derivative financial instruments | – | 4235 | – | 4235 |
| Total financial assets carried at fair value | 16506 | 20066 | 328 | 36900 |

---

Page 35 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 9: Fair values of financial assets and liabilities** (continued)

---

| | | | | |
|:---|:---|:---|:---|:---|
| Financial liabilities | Level 1<br>£m<br>| Level 2<br>£m<br>| Level 3<br>£m<br>| Total<br>£m<br>|
| At 30 June 2025 |  |  |  |  |
| Financial liabilities at fair value through profit or loss  | – | 4345 | 18 | 4363 |
| Derivative financial instruments | – | 5043 | 127 | 5170 |
| Total financial liabilities carried at fair value | – | 9388 | 145 | 9533 |
| At 31 December 2024 |  |  |  |  |
| Financial liabilities at fair value through profit or loss | – | 4608 | 22 | 4630 |
| Derivative financial instruments | – | 5644 | 143 | 5787 |
| Total financial liabilities carried at fair value | – | 10252 | 165 | 10417 |

---

**Valuation control framework**

Key elements of the valuation control framework include model validation (incorporating pre-trade and post-trade

testing), product implementation review and independent price verification. The framework covers processes for

all 3 levels in the fair value hierarchy. Formal committees meet quarterly to discuss and approve valuations in more

judgemental areas.

**Transfers into and out of level 3 portfolios**

Transfers out of level 3 portfolios arise when inputs that could have a significant impact on the instrument's

valuation become market observable; conversely, transfers into the portfolios arise when sources of data cease to

be observable.

**Valuation methodology**

For level 2 and level 3 portfolios, there is no significant change to the valuation methodology (techniques and

inputs) disclosed in the Group's financial statements for the year ended 31 December 2024 applied to these

portfolios.

**Movements in level 3 portfolio**

The tables below analyse movements in the level 3 financial assets portfolio.

---

| | | | |
|:---|:---|:---|:---|
|  | Financial<br>assets at<br>fair value<br>through<br>profit or loss<br>£m<br>| Financial<br>assets at<br>fair value<br>through other<br>comprehensive<br>income<br>£m<br>| Total<br>financial<br>assets<br>carried at<br>fair value<br>£m<br>|
| At 1 January 2025 | 280 | 48 | 328 |
| Exchange and other adjustments | – | 2 | 2 |
| (Losses) gains recognised in the income statement within other  | (16) | 2 | (14) |
| Losses recognised in other comprehensive income within the <br>revaluation reserve in respect of financial assets at fair value through <br>other comprehensive income<br>| – | (1) | (1) |
| Purchases/increases to customer loans | 14 | – | 14 |
| Sales/repayments of customer loans | (18) | (2) | (20) |
| At 30 June 2025 | 260 | 49 | 309 |
| (Losses) gains recognised in the income statement, within other <br>income, relating to the change in fair value of those assets held at 30 <br>June 2025<br>| (16) | 3 | (13) |

---

---

| | | | |
|:---|:---|:---|:---|
| At 1 January 2024 | 270 | 53 | 323 |
| Exchange and other adjustments | – | (1) | (1) |
| Gains recognised in the income statement within other income | 26 | – | 26 |
| Purchases/increases to customer loans | 6 | – | 6 |
| Sales/repayments of customer loans | (16) | (1) | (17) |
| At 30 June 2024 | 286 | 51 | 337 |
| Gains recognised in the income statement, within other income, <br>relating to the change in fair value of those assets held at 30 June <br>2024<br>| 26 | – | 26 |

---

Page 36 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 9: Fair values of financial assets and liabilities** (continued)

The tables below analyse movements in the level 3 financial liabilities portfolio.

---

| | | | |
|:---|:---|:---|:---|
|  | Financial<br>liabilities<br>at fair value<br>through<br>profit or loss<br>£m<br>| Derivative <br>liabilities<br>£m<br>| Total<br>financial<br>liabilities<br>carried at<br>fair value<br>£m<br>|
| At 1 January 2025 | 22 | 143 | 165 |
| Gains recognised in the income statement within other income | (2) | (4) | (6) |
| Redemptions | (2) | (12) | (14) |
| At 30 June 2025 | 18 | 127 | 145 |
| Gains recognised in the income statement, within other income,<br>relating to the change in fair value of those liabilities held at 30 June <br>2025<br>| (2) | (3) | (5) |
| At 1 January 2024 | 23 | 139 | 162 |
| Losses recognised in the income statement within other income | 2 | 19 | 21 |
| Redemptions | (2) | (10) | (12) |
| At 30 June 2024 | 23 | 148 | 171 |
| Losses (gains) recognised in the income statement, within other income, <br>relating to the change in fair value of those liabilities held at 30 June <br>2024<br>| 2 | (21) | (19) |

---

**Sensitivity of level 3 valuations**

The tables below set out the effects of reasonably possible alternative assumptions for categories of level 3

financial assets and financial liabilities.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Effect of reasonably<br>possible alternative<br>assumptions<sup>1</sup> | Effect of reasonably<br>possible alternative<br>assumptions<sup>1</sup> |
| At 30 June 2025 | Valuation<br>techniques<br>| Significant unobservable <br>inputs<sup>2</sup><br>| Carrying <br>value<br>£m<br>| Favourable <br>changes<br>£m<br>| Unfavourable<br>changes<br>£m<br>|
| *Financial assets at fair value through profit or loss* | *Financial assets at fair value through profit or loss* |  |  |  |  |
| Loans and advances to <br>customers<br>| Discounted cash flows | Interest rate spreads<br>(+/- 50bps)<br>| 256 | 19 | (18) |
| Equity investments |  | n/a | 4 | – | – |
|  |  |  | 260 |  |  |
| *Financial assets at fair value through other comprehensive income* | *Financial assets at fair value through other comprehensive income* | *Financial assets at fair value through other comprehensive income* | 49 | 2 | (2) |
| Level 3 financial assets carried at fair value | Level 3 financial assets carried at fair value |  | 309 |  |  |
| *Financial liabilities at fair value through profit or loss* | *Financial liabilities at fair value through profit or loss* | *Financial liabilities at fair value through profit or loss* | 18 | 1 | (1) |
| *Derivative financial liabilities* |  |  |  |  |  |
| Interest rate derivatives | Option pricing model | Interest rate volatility <br>(12%/171%)<br>| 5 | – | – |
| Shared appreciation rights | Market values – <br>property valuation<br>| HPI (+/- 1%) | 122 | 12 | (11) |
|  |  |  | 127 |  |  |
| Level 3 financial liabilities carried at fair value | Level 3 financial liabilities carried at fair value |  | 145 |  |  |

---

<sup>1</sup>Where the exposure to an unobservable input is managed on a net basis, only the net impact is shown in the table.

<sup>2</sup>Ranges are shown where appropriate and represent the highest and lowest inputs used in the level 3 valuations.

Page 37 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 9: Fair values of financial assets and liabilities**(continued)

**Sensitivity of level 3 valuations** (continued)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Effect of reasonably<br>possible alternative<br>assumptions<sup>1</sup> | Effect of reasonably<br>possible alternative<br>assumptions<sup>1</sup> |
| At 31 December 2024 | Valuation<br>techniques<br>| Significant<br>unobservable inputs<sup>2</sup><br>| Carrying <br>value<br>£m<br>| Favourable <br>changes<br>£m<br>| Unfavourable <br>changes<br>£m<br>|
| *Financial assets at fair value through profit or loss* | *Financial assets at fair value through profit or loss* | *Financial assets at fair value through profit or loss* |  |  |  |
| Loans and advances to <br>customers<br>| Discounted cash flows | Interest rate spreads<br>(+/- 50bps)<br>| 276 | 19 | (19) |
| Equity investments |  | n/a | 4 | 1 | (1) |
|  |  |  | 280 |  |  |
| *Financial assets at fair value through other comprehensive income* | *Financial assets at fair value through other comprehensive income* | *Financial assets at fair value through other comprehensive income* | 48 | 2 | (2) |
| Level 3 financial assets carried at fair value | Level 3 financial assets carried at fair value |  | 328 |  |  |
| *Financial liabilities at fair value through profit or loss* | *Financial liabilities at fair value through profit or loss* | *Financial liabilities at fair value through profit or loss* | 22 | 1 | (1) |
| *Derivative financial liabilities* |  |  |  |  |  |
| Interest rate derivatives | Option pricing model | Interest rate volatility <br>(11%/183%)<br>| 13 | – | – |
| Shared appreciation rights | Market values – <br>property valuation<br>| HPI (+/- 1%) | 130 | 12 | (11) |
|  |  |  | 143 |  |  |
| Level 3 financial liabilities carried at fair value | Level 3 financial liabilities carried at fair value |  | 165 |  |  |

---

<sup>1</sup>Where the exposure to an unobservable input is managed on a net basis, only the net impact is shown in the table.

<sup>2</sup>Ranges are shown where appropriate and represent the highest and lowest inputs used in the level 3 valuations.

**Unobservable inputs**

Significant unobservable inputs affecting the valuation of debt securities and derivatives are unchanged from those

described in the Group's financial statements for the year ended 31 December 2024.

**Reasonably possible alternative assumptions**

Valuation techniques applied to many of the Group's level 3 instruments often involve the use of two or more

inputs whose relationship is interdependent. The calculation of the effect of reasonably possible alternative

assumptions included in the table above reflects such relationships and is unchanged from that described in note

16 to the Group's financial statements for the year ended 31 December 2024.

Page 38 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 9: Fair values of financial assets and liabilities**(continued)

The table below summarises the carrying values of financial assets and liabilities measured at amortised cost in the

Group's consolidated balance sheet. The fair values presented in the table are at a specific date and may be

significantly different from the amounts which will actually be paid or received on the maturity or settlement date.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | At 30 June 2025 | At 30 June 2025 | At 31 December 2024 | At 31 December 2024 |
|  | Carrying<br>value<br>£m<br>| Fair<br>value<br>£m<br>| Carrying<br>value<br>£m<br>| Fair<br>value<br>£m<br>|
| Financial assets |  |  |  |  |
| Loans and advances to banks | 5629 | 5629 | 6433 | 6433 |
| Loans and advances to customers | 452642 | 448347 | 441907 | 438094 |
| Reverse repurchase agreements | 39864 | 39864 | 44143 | 44143 |
| Debt securities | 10948 | 11016 | 11854 | 11808 |
| Due from fellow Lloyds Banking Group undertakings | 897 | 897 | 560 | 560 |
| Financial liabilities |  |  |  |  |
| Deposits from banks | 5388 | 5388 | 3144 | 3144 |
| Customer deposits | 461771 | 462617 | 451794 | 452607 |
| Repurchase agreements | 38248 | 38248 | 37760 | 37760 |
| Due to fellow Lloyds Banking Group undertakings | 3804 | 3804 | 4049 | 4049 |
| Debt securities in issue | 42103 | 42213 | 45281 | 45382 |
| Subordinated liabilities  | 7842 | 8883 | 7211 | 7304 |

---

The carrying amounts of cash and balances at central banks and notes in circulation are a reasonable

approximation of their fair values.

Page 39 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 10: Allowance for expected credit losses**

The calculation of the Group's allowance for expected credit loss allowances requires the Group to make a number

of judgements, assumptions and estimates. These are set out in full in note 19 to the Group's financial statements

for the year ended 31 December 2024, with the most significant set out below.

The table below analyses total ECL allowance by portfolio, separately identifying the amounts that have been

modelled, those that have been individually assessed and those arising through the application of judgemental

adjustments.

---

| | | | | |
|:---|:---|:---|:---|:---|
| At 30 June 2025 | Modelled<br>ECL<br>£m<br>| Individually<br>assessed<br>£m<br>| Judgemental<br>adjustments<br>£m<br>| Total<br>ECL<br>£m<br>|
| UK mortgages | 611 | – | 98 | 709 |
| Credit cards | 650 | – | 9 | 659 |
| Other Retail | 908 | – | 102 | 1010 |
| Commercial Banking | 613 | 432 | (50) | 995 |
| Other | 1 | – | – | 1 |
| Total | 2783 | 432 | 159 | 3374 |
| At 31 December 2024 |  |  |  |  |
| UK mortgages | 720 | – | 132 | 852 |
| Credit cards | 681 | – | (7) | 674 |
| Other Retail | 860 | – | 90 | 950 |
| Commercial Banking | 877 | 354 | (255) | 976 |
| Other | 1 | – | – | 1 |
| Total | 3139 | 354 | (40) | 3453 |

---

**Adjustments to modelled ECL**

**UK mortgages: £98 million (31 December 2024: £132 million)**

These adjustments principally comprise:

*Repossession risk: £85 million (31 December 2024: £110 million)*

Additional ECL continues to be held judgementally to capture the potential repossession and recovery risk from

specific subsets of largely long-term defaulted cases. This is alongside an adjustment to capture a longer duration

between default and repossession than model assumptions use on existing and future defaults. The reduction in

the period reflects latest data points on the population judged at risk.

*Adjustment for specific segments: £13 million (31 December 2024: £13 million)*

The Group monitors risks across specific segments of its portfolios which may not be fully captured through

collective models. The judgement for fire safety and cladding uncertainty remains in place as the only Mortgages

segment sufficiently material to address, given evidence of cases with defective cladding, or other fire safety issues.

**Credit cards: £9 million (31 December 2024: £(7) million) and Other Retail: £102 million (31 December 2024:** 

**£90 million)**

These adjustments principally comprise:

*Lifetime extension: Credit cards: £50 million (31 December 2024: £55 million) and Other Retail: £10 million* 

*(31 December 2024: £10 million)*

An adjustment is required to extend the lifetime used for Stage 2 exposures on Retail revolving products from a

three-year modelled lifetime, which reflected the outcome data available when the ECL models were developed,

to a more representative lifetime. Incremental defaults beyond year three are calculated through the extrapolation

of the default trajectory observed throughout the three years and beyond.

Page 40 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 10: Allowance for expected credit losses** (continued)

*Adjustments to loss rates: Credit cards: £(45) million (31 December 2024: £(57) million) and Other Retail:* 

*£53million (31 December 2024: £47 million)*

A number of adjustments are made to the loss given default (LGD) assumptions used within unsecured and motor

credit models. For unsecured portfolios, the adjustments reflect the impact of changes in collection debt sale

strategy on the Group's LGD models, incorporating up to date customer performance and forward flow debt sale

pricing. For UK Motor Finance, within Other Retail, the adjustment captures the latest outlook on used car prices.

**Commercial Banking: £(50) million (31 December 2024: £(255) million)**

These adjustments principally comprise:

*Corporate insolvency rates: £(151) million (31 December 2024: £(248) million)*

The volume of UK corporate insolvencies continues to exhibit an elevated trend beyond December 2019 levels,

revealing a marked misalignment between observed UK corporate insolvencies and the Group's equivalent credit

performance. This dislocation gives rise to uncertainty over the drivers of the observed trends in the metric and the

appropriateness of the Group's Commercial Banking model response which uses observed UK corporate

insolvencies data to anchor future loss estimates to. Given the Group's asset quality remains robust with low

defaults, a negative adjustment is applied by reverting judgementally to the long-term average of the insolvency

rate. The scale of the negative adjustment reduced in the period reflecting both the reduction in observed actual

UK corporate insolvencies rates, narrowing the gap of the misalignment, as well from a one-off change due to the

interaction with the implementation of loss rate model enhancements in the period.

*Adjustments for loss given defaults (LGDs): £40 million (31 December 2024: £(80) million)*

In preceding years, adjustments have been required to mitigate limitations identified in the modelling approach

which were causing loss given defaults to be inflated. These included the lack of benefit from amortisation of

exposures relative to collateral values at default, and the need to reflect an exposure-weighted calculation. These

two adjustments have been released following respective enhancements to models. One remaining adjustment

remains for a specific segment of the SME portfolio which judgementally applies a more appropriate blended LGD

rate from credit risk profile segments more aligned to experience.

*Commercial Real Estate (CRE) price reduction: £10 million (31 December 2024: £35 million)*

This adjustment recognises the potential impact on loss rates from valuations on specific CRE sectors where

evidence suggests valuations may lag achievable levels, notably in cases of stressed sale. The reduction in the

period reflects stabilisation in valuations and improved confidence in the CRE sector.

*Corporate income gearing (CIG) adjustment: £nil (31 December 2024: £36 million)* 

An adjustment was raised at 31 December 2024, based upon the assessment of Corporate Income Gearing, a

model parameter for affordability used in Commercial Banking. This adjustment reversed the modelled ECL release

seen from updating CIG drivers (interest rates), given interest rates had merely reached a plateau which translated

into a slower year-on-year increase. This slowdown gave a modelled ECL release not judged representative of the

continued pressure on borrowers and business margins. However, the maintenance of those improvements in

drivers over the first half of 2025 (including sustained lower base rates) gives support for the modelled release to

now be recognised, removing the judgemental adjustment.

*Global tariff and geo-political disruption risks: £49 million (31 December 2024: £nil)* 

This new adjustment was raised in the first half of 2025 to recognise the potential risks to specific drivers across

various corporate sectors not reflected in broad macroeconomic model drivers. These are potential nuanced risks

to businesses inherent in the base case which could also worsen in the downside scenarios. This assessment is

judgemental and apportioned across all sectors given the uncertainty of how these risks would emerge.

Page 41 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 10: Allowance for expected credit losses** (continued)

*Base case and MES economic assumptions*

The Group's base case economic scenario has been updated to reflect ongoing geopolitical developments and

changes in domestic economic policy. The Group's updated base case scenario has three conditioning assumptions.

First, global conflicts do not lead to major discontinuities in commodity prices or global trade. Second, the US will

impose tariffs on countries with a bilateral trade deficit after the Liberation Day 90 day pause expires, resulting in

an increased effective tariff rate relative to prior assumptions. Third, the UK Industrial Strategy and Spending

Review are not assumed to substantially change the UK fiscal outlook.

Based on these assumptions and incorporating the economic data published in the second quarter of 2025, the

Group's base case scenario is for a slow expansion in gross domestic product (GDP) and a further rise in the

unemployment rate alongside small gains in residential and commercial property prices. With underlying

inflationary pressures expected to recede, gradual cuts in UK Bank Rate are expected to continue during 2025,

reaching a 'neutral' policy stance in 2026. Risks around this base case economic view lie in both directions and are

largely captured by the generation of alternative economic scenarios.

The Group has taken into account the latest available information at the reporting date in defining its base case

scenario and generating alternative economic scenarios. The scenarios include forecasts for key variables as at the

second quarter of 2025. Actuals for this period, or restatements of past data, may have since emerged prior to

publication and have not been included.

The Group's approach to generating alternative economic scenarios is set out in detail in note 19 to the financial

statements for the year ended 31 December 2024. For June 2025, the Group continues to judge it appropriate to

include a non-modelled severe downside scenario for Group ECL calculations. The scenario is now generated as a

simple average of a fully modelled severe scenario, better representing shocks to demand, and a scenario with

higher paths for UK Bank Rate and CPI inflation, as a representation of shocks to supply. The combined 'adjusted'

scenario used in ECL modelling is considered to better reflect the risks around the Group's base case view in an

economic environment where demand and supply shocks are more balanced.

*Scenarios by year*

The key UK economic assumptions made by the Group are shown in the following tables across a number of

measures explained below.

Annual assumptions

Gross domestic product (GDP) growth and Consumer Price Index (CPI) inflation are presented as an annual

change, house price growth and commercial real estate price growth are presented as the growth in the respective

indices over each year. Unemployment rate and UK Bank Rate are averages over the year.

Five-year average

The five-year average reflects the average annual growth rate, or level, over the five-year period. It includes

movements within the current reporting year, such that the position as of 30 June 2025 covers the five years 2025

to 2029. The inclusion of the reporting year within the five-year period reflects the need to predict variables which

remain unpublished at the reporting date and recognises that credit models utilise both level and annual changes.

The use of calendar years maintains a comparability between the annual assumptions presented.

Page 42 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 10: Allowance for expected credit losses**(continued)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| At 30 June 2025 | 2025%<br>| 2026%<br>| 2027%<br>| 2028%<br>| 2029%<br>| 2025<br>to 2029 <br>average%<br>|
| Upside |  |  |  |  |  |  |
| Gross domestic product growth | 1.2 | 2.0 | 1.8 | 1.4 | 1.4 | 1.6 |
| Unemployment rate | 4.4 | 3.5 | 3.1 | 3.1 | 3.2 | 3.5 |
| House price growth | 3.6 | 6.5 | 7.9 | 6.2 | 4.8 | 5.8 |
| Commercial real estate price growth | 5.1 | 8.1 | 3.8 | 1.1 | 0.4 | 3.6 |
| UK Bank Rate | 4.21 | 4.50 | 4.84 | 5.05 | 5.21 | 4.76 |
| CPI inflation | 3.3 | 2.5 | 2.7 | 3.1 | 3.1 | 2.9 |
| Base case |  |  |  |  |  |  |
| Gross domestic product growth | 1.0 | 1.0 | 1.5 | 1.5 | 1.5 | 1.3 |
| Unemployment rate | 4.8 | 5.0 | 4.7 | 4.5 | 4.5 | 4.7 |
| House price growth | 2.6 | 3.0 | 2.3 | 2.5 | 2.8 | 2.6 |
| Commercial real estate price growth | 1.6 | 1.1 | 1.3 | 0.3 | 0.0 | 0.9 |
| UK Bank Rate | 4.13 | 3.56 | 3.50 | 3.50 | 3.50 | 3.64 |
| CPI inflation | 3.3 | 2.7 | 2.4 | 2.5 | 2.4 | 2.7 |
| Downside |  |  |  |  |  |  |
| Gross domestic product growth | 0.6 | (1.2) | 0.6 | 1.3 | 1.5 | 0.5 |
| Unemployment rate | 5.2 | 7.2 | 7.5 | 7.2 | 7.0 | 6.8 |
| House price growth | 1.6 | (0.8) | (5.9) | (4.7) | (1.8) | (2.4) |
| Commercial real estate price growth | (1.6) | (6.8) | (1.6) | (2.3) | (2.7) | (3.0) |
| UK Bank Rate | 4.02 | 1.90 | 0.99 | 0.68 | 0.46 | 1.61 |
| CPI inflation | 3.3 | 2.5 | 1.9 | 1.5 | 1.1 | 2.1 |
| Severe downside |  |  |  |  |  |  |
| Gross domestic product growth | 0.1 | (3.0) | 0.0 | 1.2 | 1.4 | (0.1) |
| Unemployment rate | 5.8 | 9.7 | 10.2 | 9.8 | 9.4 | 9.0 |
| House price growth | 0.8 | (3.9) | (13.4) | (10.9) | (6.3) | (6.9) |
| Commercial real estate price growth | (6.5) | (16.0) | (7.4) | (6.7) | (5.7) | (8.6) |
| UK Bank Rate – modelled | 3.88 | 0.68 | 0.11 | 0.03 | 0.01 | 0.94 |
| UK Bank Rate – adjusted<sup>1</sup> | 4.34 | 3.09 | 2.80 | 2.77 | 2.76 | 3.15 |
| CPI inflation – modelled | 3.3 | 2.5 | 1.4 | 0.5 | (0.1) | 1.5 |
| CPI inflation – adjusted<sup>1</sup> | 3.5 | 3.8 | 3.2 | 2.8 | 2.4 | 3.1 |
| Probability-weighted |  |  |  |  |  |  |
| Gross domestic product growth | 0.9 | 0.2 | 1.1 | 1.4 | 1.4 | 1.0 |
| Unemployment rate | 4.9 | 5.7 | 5.6 | 5.4 | 5.4 | 5.4 |
| House price growth | 2.4 | 2.2 | 0.0 | 0.1 | 1.1 | 1.2 |
| Commercial real estate price growth | 0.9 | (0.9) | 0.3 | (1.0) | (1.2) | (0.4) |
| UK Bank Rate – modelled | 4.09 | 3.06 | 2.81 | 2.77 | 2.75 | 3.10 |
| UK Bank Rate – adjusted<sup>1</sup> | 4.14 | 3.30 | 3.08 | 3.04 | 3.03 | 3.32 |
| CPI inflation – modelled | 3.3 | 2.5 | 2.2 | 2.2 | 2.0 | 2.4 |
| CPI inflation – adjusted<sup>1</sup> | 3.3 | 2.7 | 2.4 | 2.4 | 2.2 | 2.6 |

---

<sup>1</sup>The adjustment to UK Bank Rate and CPI inflation in the severe downside is considered to better reflect the risks to the

Group's base case view in an economic environment where the risks of supply and demand shocks are seen as more balanced.

Page 43 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 10: Allowance for expected credit losses** (continued)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| At 31 December 2024 | 2024%<br>| 2025%<br>| 2026%<br>| 2027%<br>| 2028%<br>| 2024<br>to 2028 <br>average%<br>|
| Upside |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | 1.9 | 2.2 | 1.5 | 1.4 | 1.6 |
| Unemployment rate | 4.3 | 3.5 | 2.8 | 2.7 | 2.8 | 3.2 |
| House price growth | 3.4 | 3.7 | 6.5 | 6.6 | 5.4 | 5.1 |
| Commercial real estate price growth | 0.7 | 7.8 | 6.7 | 3.2 | 0.5 | 3.7 |
| UK Bank Rate | 5.06 | 4.71 | 5.02 | 5.19 | 5.42 | 5.08 |
| CPI inflation | 2.6 | 2.8 | 2.6 | 2.9 | 3.0 | 2.8 |
| Base case |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | 1.0 | 1.4 | 1.5 | 1.5 | 1.2 |
| Unemployment rate | 4.3 | 4.7 | 4.7 | 4.5 | 4.5 | 4.5 |
| House price growth | 3.4 | 2.1 | 1.0 | 1.4 | 2.4 | 2.0 |
| Commercial real estate price growth | 0.7 | 0.3 | 2.5 | 1.9 | 0.0 | 1.1 |
| UK Bank Rate | 5.06 | 4.19 | 3.63 | 3.50 | 3.50 | 3.98 |
| CPI inflation | 2.6 | 2.8 | 2.4 | 2.4 | 2.2 | 2.5 |
| Downside |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | (0.5) | (0.4) | 1.0 | 1.5 | 0.5 |
| Unemployment rate | 4.3 | 6.0 | 7.4 | 7.4 | 7.1 | 6.4 |
| House price growth | 3.4 | 0.6 | (5.5) | (6.6) | (3.4) | (2.4) |
| Commercial real estate price growth | 0.7 | (7.8) | (3.1) | (0.9) | (2.3) | (2.7) |
| UK Bank Rate | 5.06 | 3.53 | 1.56 | 0.96 | 0.68 | 2.36 |
| CPI inflation | 2.6 | 2.8 | 2.3 | 1.8 | 1.2 | 2.1 |
| Severe downside |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | (1.9) | (1.5) | 0.7 | 1.3 | (0.1) |
| Unemployment rate | 4.3 | 7.7 | 10.0 | 10.0 | 9.7 | 8.4 |
| House price growth | 3.4 | (0.8) | (12.4) | (13.6) | (8.8) | (6.7) |
| Commercial real estate price growth | 0.7 | (17.4) | (8.5) | (5.5) | (5.7) | (7.5) |
| UK Bank Rate – modelled | 5.06 | 2.68 | 0.28 | 0.08 | 0.02 | 1.62 |
| UK Bank Rate – adjusted<sup>1</sup> | 5.06 | 4.03 | 2.70 | 2.23 | 1.95 | 3.19 |
| CPI inflation – modelled | 2.6 | 2.8 | 1.9 | 1.0 | 0.1 | 1.7 |
| CPI inflation – adjusted<sup>1</sup> | 2.6 | 3.6 | 2.1 | 1.4 | 0.8 | 2.1 |
| Probability-weighted |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | 0.5 | 0.8 | 1.2 | 1.4 | 1.0 |
| Unemployment rate | 4.3 | 5.0 | 5.5 | 5.4 | 5.3 | 5.1 |
| House price growth | 3.4 | 1.8 | (0.7) | (1.0) | 0.4 | 0.8 |
| Commercial real estate price growth | 0.7 | (1.7) | 1.0 | 0.7 | (1.1) | (0.1) |
| UK Bank Rate – modelled | 5.06 | 4.00 | 3.09 | 2.90 | 2.88 | 3.59 |
| UK Bank Rate – adjusted<sup>1</sup> | 5.06 | 4.13 | 3.33 | 3.12 | 3.08 | 3.74 |
| CPI inflation – modelled | 2.6 | 2.8 | 2.4 | 2.2 | 1.9 | 2.4 |
| CPI inflation – adjusted<sup>1</sup> | 2.6 | 2.9 | 2.4 | 2.3 | 2.0 | 2.4 |

---

<sup>1</sup>The adjustment to UK Bank Rate and CPI inflation in the severe downside is considered to better reflect the risks to the

Group's base case view in an economic environment where the risks of supply and demand shocks are seen as more balanced.

Page 44 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 10: Allowance for expected credit losses** (continued)

*Base case scenario by quarter*

Gross domestic product growth is presented quarter-on-quarter. House price growth, commercial real estate price

growth and CPI inflation are presented year-on-year, i.e. from the equivalent quarter in the previous year.

Unemployment rate and UK Bank Rate are presented as at the end of each quarter.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| At 30 June 2025 | First<br>quarter<br>2025%<br>| Second<br>quarter<br>2025%<br>| Third<br>quarter<br>2025%<br>| Fourth<br>quarter<br>2025%<br>| First<br>quarter<br>2026%<br>| Second<br>quarter<br>2026%<br>| Third<br>quarter<br>2026%<br>| Fourth<br>quarter<br>2026%<br>|
| Gross domestic product growth | 0.7 | 0.0 | 0.1 | 0.2 | 0.3 | 0.3 | 0.4 | 0.4 |
| Unemployment rate | 4.5 | 4.7 | 4.9 | 5.0 | 5.0 | 5.0 | 4.9 | 4.9 |
| House price growth | 2.9 | 3.1 | 2.7 | 2.6 | 3.7 | 4.0 | 3.5 | 3.0 |
| Commercial real estate price growth | 2.5 | 2.7 | 2.6 | 1.6 | 1.2 | 1.0 | 1.0 | 1.1 |
| UK Bank Rate | 4.50 | 4.25 | 4.00 | 3.75 | 3.75 | 3.50 | 3.50 | 3.50 |
| CPI inflation | 2.8 | 3.6 | 3.4 | 3.5 | 3.0 | 2.6 | 2.6 | 2.4 |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| At 31 December 2024 | First<br>quarter<br>2024%<br>| Second<br>quarter<br>2024%<br>| Third<br>quarter<br>2024%<br>| Fourth<br>quarter<br>2024%<br>| First<br>quarter<br>2025%<br>| Second<br>quarter<br>2025%<br>| Third<br>quarter<br>2025%<br>| Fourth<br>quarter<br>2025%<br>|
| Gross domestic product growth | 0.7 | 0.4 | 0.0 | 0.1 | 0.2 | 0.3 | 0.3 | 0.3 |
| Unemployment rate | 4.3 | 4.2 | 4.3 | 4.4 | 4.5 | 4.6 | 4.7 | 4.8 |
| House price growth | 0.4 | 1.8 | 4.6 | 3.4 | 3.6 | 4.0 | 3.0 | 2.1 |
| Commercial real estate price growth | (5.3) | (4.7) | (2.8) | 0.7 | 1.8 | 1.4 | 0.9 | 0.3 |
| UK Bank Rate | 5.25 | 5.25 | 5.00 | 4.75 | 4.50 | 4.25 | 4.00 | 4.00 |
| CPI inflation | 3.5 | 2.1 | 2.0 | 2.5 | 2.4 | 3.0 | 2.9 | 2.7 |

---

Page 45 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 10: Allowance for expected credit losses**(continued)

**Movement in expected credit loss allowance**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Opening <br>ECL at<br>31 Dec<br>2024<br>£m<br>| Write-offs<br>and other<sup>1</sup><br>£m<br>| Income<br>statement<br>charge <br>(credit)<br>£m<br>| Net ECL<br>increase<br>(decrease)<br>£m<br>| Closing <br>ECL at<br>30 Jun<br>2025<br>£m<br>|
| UK mortgages | 852 | (10) | (133) | (143) | 709 |
| Credit cards | 674 | (215) | 200 | (15) | 659 |
| Other Retail | 950 | (215) | 275 | 60 | 1010 |
| Retail | 2476 | (440) | 342 | (98) | 2378 |
| Commercial Banking | 976 | (80) | 99 | 19 | 995 |
| Other | 1 | (1) | 1 | – | 1 |
| Total | 3453 | (521) | 442 | (79) | 3374 |
|  | Opening <br>ECL at<br>31 Dec<br>2023<br>£m<br>| Write-offs<br>and other<sup>1</sup><br>£m<br>| Income<br>statement<br>charge <br>(credit)<br>£m<br>| Net ECL<br>increase<br>(decrease)<br>£m<br>| Closing <br>ECL at<br>30 Jun<br>2024<br>£m<br>|
| UK mortgages<sup>2</sup> | 1115 | (25) | (119) | (144) | 971 |
| Credit cards | 810 | (225) | 115 | (110) | 700 |
| Other Retail | 945 | (201) | 198 | (3) | 942 |
| Retail | 2870 | (451) | 194 | (257) | 2613 |
| Commercial Banking | 1150 | (99) | (69) | (168) | 982 |
| Other | 1 | 3 | (3) | – | 1 |
| Total | 4021 | (547) | 122 | (425) | 3596 |
|  | Opening <br>ECL at<br>30 Jun<br>2024<br>£m<br>| Write-offs<br>and other<sup>1</sup><br>£m<br>| Income<br>statement<br>charge <br>(credit)<br>£m<br>| Net ECL<br>increase<br>(decrease)<br>£m<br>| Closing <br>ECL at<br>31 Dec<br>2024<br>£m<br>|
| UK mortgages<sup>3</sup> | 971 | (44) | (75) | (119) | 852 |
| Credit cards | 700 | (181) | 155 | (26) | 674 |
| Other Retail | 942 | (175) | 183 | 8 | 950 |
| Retail | 2613 | (400) | 263 | (137) | 2476 |
| Commercial Banking | 982 | (77) | 71 | (6) | 976 |
| Other | 1 | – | – | – | 1 |
| Total | 3596 | (477) | 334 | (143) | 3453 |

---

<sup>1</sup>Contains adjustments in respect of purchased or originated credit-impaired financial assets.

<sup>2</sup>Includes £20 million within write-offs and other relating to the securitisation of primarily legacy Retail mortgages, totalling £1.0

billion of gross loans and advances to customers.

<sup>3</sup>Includes £33 million within write-offs and other relating to the securitisation of primarily legacy Retail mortgages, totalling £1.0

billion of gross loans and advances to customers.

The total allowance for expected credit losses includes £211 million (30 June 2024: £185 million; 31 December 2024:

£178 million) in respect of residual value impairment and voluntary terminations within the Group's UK Motor

Finance business.

Page 46 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 11: Debt securities in issue**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | At 30 June 2025 | At 30 June 2025 | At 30 June 2025 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 |
|  | At<br>fair value<br>through<br>profit<br>or loss<br>£m<br>| At<br>amortised<br>cost<br>£m<br>| Total<br>£m<br>| At<br>fair value<br>through<br>profit<br>or loss<br>£m<br>| At<br>amortised<br>cost<br>£m<br>| Total<br>£m<br>|
| Senior unsecured notes issued | 4344 | 18877 | 23221 | 4608 | 22902 | 27510 |
| Covered bonds | – | 9674 | 9674 | – | 11800 | 11800 |
| Commercial paper | – | 6758 | 6758 | – | 4797 | 4797 |
| Securitisation notes | 18 | 5745 | 5763 | 22 | 5185 | 5207 |
| Certificates of deposit issued | – | 1049 | 1049 | – | 597 | 597 |
|  | 4362 | 42103 | 46465 | 4630 | 45281 | 49911 |

---

*Covered bonds and securitisation programmes*

At 30 June 2025, the covered bonds held by external parties and those held internally, were secured on certain

loans and advances to customers amounting to £24,510 million (31 December 2024: £26,202 million) which have

been assigned to bankruptcy remote limited liability partnerships to provide security for issues of covered bonds by

the Group. The Group retains all of the risks and rewards associated with these loans and the partnerships are

consolidated fully with the loans retained on the Group's balance sheet.

The Group's securitisation vehicles issue notes that are held both externally and internally, and are secured on

loans and advances to customers amounting to £27,826 millionat 30 June 2025(31 December 2024: £27,284

million), the majority of which have been sold to bankruptcy remote structured entities.As the structured entities

are funded by the issue of debt on terms whereby the majority of the risks and rewards of the portfolio are

retained by the subsidiary, the structured entities are consolidated fully and all of these loans are retained on the

Group's balance sheet.

Cash deposits of £3,040 million (31 December 2024: £3,225 million) which support the debt securities issued by

the structured entities, the term advances related to covered bonds and other legal obligations, are held by the

Group.

**Note 12: Provisions**

---

| | | | | |
|:---|:---|:---|:---|:---|
| Provisions<br>for financial<br>commitments<br>and guarantees<sup>1</sup><br>£m | Provisions<br>for financial<br>commitments<br>and guarantees<sup>1</sup><br>£m | Regulatory<br>and legal<br>provisions<br>£m<br>| Other<br>£m<br>| Total<br>£m<br>|
| At 1 January 2025 | 265 | 1516 | 417 | 2198 |
| Exchange and other adjustments | 1 | – | – | 1 |
| Provisions applied | – | (171) | (271) | (442) |
| (Credit) charge for the period | (48) | 35 | 330 | 317 |
| At 30 June 2025 | 218 | 1380 | 476 | 2074 |

---

<sup>1</sup>In respect of loans and advances to customers.

Page 47 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 12: Provisions** (continued)

**Regulatory and legal provisions** 

In the course of its business, the Group is engaged on a regular basis in discussions with UK and overseas regulators

and other governmental authorities on a range of matters, including legal and regulatory reviews and, from time to

time, enforcement investigations (including in relation to compliance with applicable laws and regulations, such as

those relating to prudential regulation, consumer protection, investment advice, employment, business conduct,

systems and controls, environmental, sustainability, competition/anti-trust, tax, anti-bribery, anti-money

laundering and sanctions). Any matters discussed or identified during such discussions and inquiries may result in,

among other things, further inquiry or investigation, other action being taken by governmental and/or regulatory

authorities, increased costs being incurred by the Group, remediation of systems and controls, public or private

censure, restriction of the Group's business activities and/or fines. The Group also receives complaints in

connection with its past conduct and claims brought by or on behalf of current and former employees, customers

(including their appointed representatives), investors and other third parties and is subject to legal proceedings

and other legal actions from time to time. Any events or circumstances disclosed could have a material adverse

effect on the Group's financial position, operations or cash flows. Provisions are held where the Group can reliably

estimate a probable outflow of economic resources. The ultimate liability of the Group may be significantly more,

or less, than the amount of any provision recognised. If the Group is unable to determine a reliable estimate, a

contingent liability is disclosed. The recognition of a provision does not amount to an admission of liability or

wrongdoing on the part of the Group. During the half-year to 30 June 2025 the Group charged a further £35 million

in respect of legal actions and other regulatory matters and the unutilised balance at 30 June 2025 was £1,380

million (31 December 2024: £1,516 million). The most significant items are outlined below.

*Motor commission review*

The Group recognised a £450 million provision in 2023 for the potential impact of the FCA review into historical

motor finance commission arrangements and sales announced in January 2024. In the fourth quarter of 2024, a

further £700 million provision was recognised in relation to motor finance commission arrangements, in light of the

Court of Appeal (CoA) decisions handed down in their judgment in Wrench, Johnson and Hopcraft (WJH) in

October 2024, which goes beyond the scope of the original FCA motor finance commissions review.

The CoA judgment in WJH determined that motor dealers acting as credit brokers owe certain duties to disclose to

their customers commission payable to them by lenders, and that lenders will be liable for dealers' non-disclosures.

This sets a higher bar for the disclosure of and consent to the existence, nature, and quantum of any commission

paid than had been understood to be required or applied across the motor finance industry prior to the decision.

The Group's understanding of compliant disclosure was built on FCA and other regulatory guidance and previous

legal authorities. These CoA decisions relate to commission disclosure and consent obligations which go beyond

the scope of the current FCA motor finance commissions review. The Supreme Court granted the relevant lenders

permission to appeal the WJH judgment and the substantive hearing concluded on 3 April 2025. As of 23 July 2025,

the judgment is still pending.

Following the WJH decision delivered by the CoA, the FCA extended its temporary complaint handling rules in

relation to discretionary commission arrangements (DCA) complaints to include non-DCA commission complaints

until December 2025. In June 2025, the FCA announced that it will confirm within six weeks of the Supreme Court

decision whether it intends to propose a redress scheme and its timeframe for consultation on that scheme. In

addition, there are a number of other relevant judicial proceedings which may influence the eventual outcome,

including a judicial review (which is now subject to appeal) of a final decision by the Financial Ombudsman Service

(FOS) against another lender that was heard in October 2024.

Page 48 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 12: Provisions** (continued)

The Group continues to receive complaints as well as claims in the County Courts in respect of motor finance

commissions. A large number of those claims have been stayed, as has a claim in the Competition Appeal Tribunal.

In establishing the provision estimate, the Group has considered a number of scenarios to address uncertainties

around a number of key assumptions. These include a range of potential Supreme Court outcomes, regulatory

responses including steps that the FCA may take, and outcomes in relation to redress. Other key assumptions

include applicable commission models, commission rates, time periods, response rates, uphold rates, levels of

redress / interest applied and costs to deliver. The Group will continue to assess developments and potential

impacts, including the outcome of the appeals, any announcement by the FCA of their next steps, and any action

by other regulators or government bodies. The ultimate financial impact will be determined by a number of factors

still to be resolved, in particular the FCA response and any potential redress as well as any broader implications of

the judgment, and accordingly could materially differ from the amount provided.

*HBOS Reading – review*

The Group continues to apply the recommendations from Sir Ross Cranston's review, issued in December 2019,

including a reassessment of direct and consequential losses by an independent panel (the Foskett Panel), an

extension of debt relief and a wider definition of de facto directors. The Foskett Panel's full scope and

methodology was published on 7 July 2020. The Foskett Panel's stated objective is to consider cases via a non-

legalistic and fair process and to make its decisions in a generous, fair and common sense manner, assessing claims

against an expanded definition of the fraud and on a lower evidential basis.

In June 2022, the Foskett Panel announced an alternative option, in the form of a fixed sum award which could be

accepted as an alternative to participation in the full re-review process, to support earlier resolution of claims for

those deemed by the Foskett Panel to be victims of the fraud.

Virtually all of the population have now had decisions via the Fixed Sum Award process, with operational costs,

redress and tax costs associated with the re-reviews recognised within the amount provided.

Notwithstanding the settled claims and the increase in outcomes which builds confidence in the full estimated

cost, uncertainties remain and the final outcome could be different. There is no confirmed timeline for the

completion of the re-review process nor the review by Dame Linda Dobbs. The Group remains committed to

implementing the recommendations in full.

*Payment protection insurance (PPI)*

The Group continues to challenge PPI litigation cases, with mainly operational costs and legal fees associated with

litigation activity recognised within regulatory and legal provisions.

**Other**

The Group carries provisions of £123 million (31 December 2024: £153 million) in respect of dilapidations, rent

reviews and other property-related matters.

Provisions are also made for staff and other costs related to Group restructuring initiatives at the point at which

the Group becomes committed to the expenditure; at 30 June 2025 provisions of £210 million (31 December 2024:

£130 million) were held.

The Group carries provisions of £37 million (31 December 2024: £35 million) for indemnities and other matters

relating to legacy business disposals in prior years. Whilst there remains significant uncertainty as to the timing of

the utilisation of the provisions, the Group expects the majority of the remaining provisions to have been utilised

by 31 December 2026.

**Note 13: Dividends on ordinary shares**

The Bank paid dividends of £640 million on 15 May 2025 (£2,140 million was paid during the half-year to 30 June

2024).

Page 49 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 14: Related party transactions**

**Balances and transactions with fellow Lloyds Banking Group undertakings**

The Bank and its subsidiaries have balances due to and from the Bank's parent company, Lloyds Banking Group

plc, and fellow Group undertakings. These are included on the balance sheet as follows:

---

| | | |
|:---|:---|:---|
|  | At 30 Jun<br>2025<br>£m<br>| At 31 Dec<br>2024<br>£m<br>|
| Assets, included within: |  |  |
| Derivative financial instruments | 912 | 807 |
| Financial assets at amortised cost: due from fellow Lloyds Banking Group undertakings | 897 | 560 |
| Liabilities, included within: |  |  |
| Due to fellow Lloyds Banking Group undertakings | 3804 | 4049 |
| Derivative financial instruments | 890 | 687 |
| Debt securities in issue at amortised cost | 16301 | 19198 |
| Subordinated liabilities | 8417 | 7336 |

---

During the half-year to 30 June 2025 the Group earned £9 million (half-year to 30 June 2024: £7 million) of interest

income and incurred £643 million (half-year to 30 June 2024: £684 million) of interest expense and recognised net

fee and commission expense of £47 million (half year to 30 June 2024: net fee and commission expense of £367

million) on balances and transactions with Lloyds Banking Group plc and fellow Group undertakings.

*Other related party transactions*

Other related party transactions for the half-year to 30 June 2025 are similar in nature to those for the year ended

31 December 2024.

**Note 15: Contingent liabilities, commitments and guarantees**

**Contingent liabilities, commitments and guarantees arising from the banking business**

At 30 June 2025 contingent liabilities, such as performance bonds and letters of credit, arising from the banking

business were £2,668 million (31 December 2024: £2,523 million).

The contingent liabilities of the Group arise in the normal course of its banking business and it is not practicable to

quantify their future financial effect. Total commitments and guarantees were £133,844 million (31 December

2024: £128,947 million), of which in respect of undrawn formal standby facilities, credit lines and other

commitments to lend, £64,203 million (31 December 2024: £59,143 million) was irrevocable.

**Capital commitments**

Capital expenditure contracted but not provided for at 30 June 2025 amounted to £733 million (31 December

2024: £640 million) and related to assets to be leased to customers under operating leases. The Group's

management is confident that future net revenues and funding will be sufficient to cover these commitments.

Page 50 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 15: Contingent liabilities, commitments and guarantees** (continued)

**Interchange fees**

With respect to multi-lateral interchange fees (MIFs), the Lloyds Banking Group is not a party in the ongoing or

threatened litigation which involves the card schemes Visa and Mastercard or any settlements of such litigation.

However, the Group is a member/licensee of Visa and Mastercard and other card schemes. The litigation in

question is as follows:

• Litigation brought by or on behalf of retailers against both Visa and Mastercard in the English Courts, in which

retailers are seeking damages on grounds that Visa and Mastercard's MIFs breached competition law (this

includes a final judgment of the Supreme Court in 2020 upholding the Court of Appeal's finding in 2018 that

certain historic interchange arrangements of Mastercard and Visa infringed competition law and a subsequent

judgment of the Competition Appeal Tribunal in June 2025 finding that all default interchange fee rules of

Mastercard and Visa (including after the Interchange Fee Regulation), infringed competition law)

• Litigation brought on behalf of UK consumers in the English Courts against Mastercard (settlement of which was

approved by the Competition Appeal Tribunal in the first half of 2025)

Any impact on the Group of the litigation against Visa and Mastercard remains uncertain at this time, such that it is

not practicable for the Group to provide an estimate of any potential financial effect. Insofar as Visa is required to

pay damages to retailers for interchange fees set prior to June 2016, contractual arrangements to allocate liability

have been agreed between various UK banks (including the Lloyds Banking Group) and Visa Inc, as part of Visa Inc's

acquisition of Visa Europe in 2016. These arrangements cap the maximum amount of liability to which the Lloyds

Banking Group may be subject and this cap is set at the cash consideration received by the Lloyds Banking Group

for the sale of its stake in Visa Europe to Visa Inc in 2016. In 2016, the Lloyds Banking Group received Visa

preference shares as part of the consideration for the sale of its shares in Visa Europe. A release assessment is

carried out by Visa on certain anniversaries of the sale (in line with the Visa Europe sale documentation) and as a

result, some Visa preference shares may be converted into Visa Inc Class A common stock from time to time. Any

such release and any subsequent sale of Visa common stock does not impact the contingent liability.

**LIBOR and other trading rates** 

Certain Lloyds Banking Group companies, together with other panel banks, have been named as defendants in

ongoing private lawsuits, including purported class action suits, in the US in connection with their roles as panel

banks contributing to the setting of US dollar, Japanese yen and Sterling London Interbank Offered Rate.

Certain Lloyds Banking Group companies are also named as defendants in (i) UK-based claims, and (ii) two Dutch

class actions, raising LIBOR manipulation allegations. A number of claims against the Lloyds Banking Group in the

UK relating to the alleged mis-sale of interest rate hedging products also include allegations of LIBOR

manipulation.

It is currently not possible to predict the scope and ultimate outcome on the Lloyds Banking Group of any private

lawsuits or ongoing related challenges to the interpretation or validity of any of the Lloyds Banking Group's

contractual arrangements, including their timing and scale. As such, it is not practicable to provide an estimate of

any potential financial effect.

Page 51 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED)** (continued)

**Note 15: Contingent liabilities, commitments and guarantees** (continued)

**Tax authorities**

The Group has an open matter in relation to a claim for group relief of losses incurred in its former Irish banking

subsidiary, which ceased trading on 31 December 2010. In 2020, HMRC concluded its enquiry into the matter and

issued a closure notice denying the group relief claim. The Group appealed to the First Tier Tax Tribunal. The

hearing took place in May 2023. In January 2025, the First Tier Tribunal concluded in favour of HMRC. The Group

believes it has applied the rules correctly and that the claim for group relief is correct. Having reviewed the

Tribunal's conclusions and having taken appropriate advice the Group has appealed to the Upper Tier Tax

Tribunal, and does not consider this to be a case where an additional tax liability will ultimately fall due. If the final

determination of the matter by the judicial process is that HMRC's position is correct, management believes that

this would result in an increase in current tax liabilities of approximately £850 million (including interest) and a

reduction in the Group's deferred tax asset of approximately £275 million. Following the First Tier Tax Tribunal

outcome, the tax has been paid to HMRC and recognised as a current tax asset, given the Group's view that the

tax liability will not ultimately fall due. It is unlikely that any appeal hearing will be held before 2026, and final

conclusion of the judicial process may not be for several years.

There are a number of other open matters on which the Group is in discussions with HMRC (including the tax

treatment of costs relating to HBOS Reading), none of which is expected to have a material impact on the

financial position of the Group.

**Arena and Sentinel litigation claims**

The Group is facing claims alleging breach of duty and/or mandate in the context of an underlying external fraud

matter involving Arena Television. The Group is defending the claims, which are at an early stage. As such, it is not

practicable to estimate the final outcome of the matter and its financial impact (if any) to the Group.

**Other legal actions and regulatory matters**

In addition, in the course of its business the Group is subject to other complaints and threatened or actual legal

proceedings (including class or group action claims) brought by or on behalf of current or former employees,

customers (including their appointed representatives), investors or other third parties, as well as legal and

regulatory reviews, enquiries and examinations, requests for information, audits, challenges, investigations and

enforcement actions, which could relate to a number of issues. This includes matters in relation to compliance with

applicable laws and regulations, such as those relating to prudential regulation, employment, consumer protection,

investment advice, business conduct, systems and controls, environmental, sustainability, competition/anti-trust,

tax, anti-bribery, anti-money laundering and sanctions, some of which may be beyond the Group's control, both in

the UK and overseas. Where material, such matters are periodically reassessed, with the assistance of external

professional advisers where appropriate, to determine the likelihood of the Group incurring a liability. The Group

does not currently expect the final outcome of any such case to have a material adverse effect on its financial

position, operations or cash flows. Where there is a contingent liability related to an existing provision the relevant

disclosures are included within note 12.

Page 52 of [52](#icddc7e3a435b49f28be7b5fee6e1e127_142)<br>

**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to

be signed on its behalf by the undersigned, thereunto duly authorised.

---

| | |
|:---|:---|
| LLOYDS BANK plc | LLOYDS BANK plc |
| By: | /s/ William Chalmers |
| Name: | William Chalmers |
| Title: | Chief Financial Officer |
| Dated: | 24 July 2025 |

---