# EDGAR Filing Document

**Accession Number:** 0001167831
**File Stem:** 0001167831-26-000007
**Filing Date:** 2026-2
**Character Count:** 950840
**Document Hash:** 7d30effcbb2e47b8061b146191be8bca
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001167831-26-000007.hdr.sgml**: 20260226

**ACCESSION NUMBER**: 0001167831-26-000007

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 250

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260226

**DATE AS OF CHANGE**: 20260226

**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:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-35079
- **FILM NUMBER:** 26682119

**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-20251231_d2

**As filed with the Securities and Exchange Commission on 26 February 2026**

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**Form 20-F**

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended 31 December 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**Commission file number 001-35079**

**LLOYDS BANK plc**

(Exact name of Registrant as specified in its charter)

**England**

(Jurisdiction of incorporation or organization)

**33 Old Broad Street**

**London EC2N 1HZ**

**United Kingdom**

(Address of principal executive offices)

**Kate Cheetham, Company Secretary**

**Tel +44 (0) 20 7356 2104, Fax +44 (0) 20 7356 1808**

**33 Old Broad Street**

**London EC2N 1HZ**

**United Kingdom**

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

**Securities registered or to be registered pursuant to Section 12(b) of the Act:**

None

**Securities registered or to be registered pursuant to Section 12(g) of the Act:**

None

**Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:**

None

The number of outstanding shares of each of Lloyds Bank plc's classes of capital or common stock as of 31 December 2025 was:

---

| | |
|:---|:---|
| Ordinary shares, nominal value 1 pound each | 1574285752 |
| Preference shares, nominal value 1 pound each | 100 |
| Preference shares, nominal value 25 pence each | Nil |
| Preference shares, nominal value 25 cents each | Nil |
| Preference shares, nominal value 25 Euro cents each | Nil |
| Preference shares, nominal value 25 Yen each | Nil |

---

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-Accelerated filer ☒ Emerging Growth Company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b) ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☐ U.S. GAAP

☒ International Financial Reporting Standards as issued by the International Accounting Standards Board

☐ Other

If 'Other' has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes ☐ No ☐

As a wholly-owned subsidiary of Lloyds Banking Group plc, a public company with limited liability incorporated in the United Kingdom and which has its registered office in Scotland, Lloyds Bank plc meets the conditions set forth in General Instructions I(1)(a) and I(1)(b) of Form 10-K, as applied to reports on Form 20-F, and is therefore filing its Form 20-F with a reduced disclosure format.

------

**Table of contents**

---

| | | | |
|:---|:---|:---|:---|
| Introduction | Introduction | Introduction | [1](#i0ef315f1633d489297ba47cb55a2f9b1_16) |
| Forward-looking statements | Forward-looking statements | Forward-looking statements | [2](#i0ef315f1633d489297ba47cb55a2f9b1_19) |
| Enforceability of civil liabilities | Enforceability of civil liabilities | Enforceability of civil liabilities | [2](#i0ef315f1633d489297ba47cb55a2f9b1_22) |
| Part I | Part I | Part I | [3](#i0ef315f1633d489297ba47cb55a2f9b1_28) |
| | Item 1. | Identity of Directors, Senior Management and Advisers | [3](#i0ef315f1633d489297ba47cb55a2f9b1_28) |
| | Item 2. | Offer Statistics and Expected Timetable | [3](#i0ef315f1633d489297ba47cb55a2f9b1_31) |
| | Item 3. | Key Information | [3](#i0ef315f1633d489297ba47cb55a2f9b1_34) |
| | Item 4. | Information on the Company | [4](#i0ef315f1633d489297ba47cb55a2f9b1_49) |
| | Item 4A. | Unresolved Staff Comments | [11](#i0ef315f1633d489297ba47cb55a2f9b1_106) |
| | Item 5. | Operating and Financial Review and Prospects | [12](#i0ef315f1633d489297ba47cb55a2f9b1_109) |
| | Item 6. | Directors, Senior Management and Employees | [14](#i0ef315f1633d489297ba47cb55a2f9b1_148) |
| | Item 7. | Major Shareholders and Related Party Transactions | [20](#i0ef315f1633d489297ba47cb55a2f9b1_187) |
| | Item 8. | Financial Information | [21](#i0ef315f1633d489297ba47cb55a2f9b1_199) |
| | Item 9. | The Offer and Listing | [21](#i0ef315f1633d489297ba47cb55a2f9b1_214) |
| | Item 10. | Additional Information | [21](#i0ef315f1633d489297ba47cb55a2f9b1_235) |
| | Item 11. | Qualitative and Quantitative Disclosures About Market Risk | [22](#i0ef315f1633d489297ba47cb55a2f9b1_268) |
| | Item 12. | Description of Securities Other than Equity Securities | [22](#i0ef315f1633d489297ba47cb55a2f9b1_271) |
| Part II | Part II | Part II | [23](#i0ef315f1633d489297ba47cb55a2f9b1_295) |
| | Item 13. | Defaults, Dividend Arrearages and Delinquencies | [23](#i0ef315f1633d489297ba47cb55a2f9b1_295) |
| | Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds | [23](#i0ef315f1633d489297ba47cb55a2f9b1_298) |
| | Item 15. | Controls and Procedures | [23](#i0ef315f1633d489297ba47cb55a2f9b1_301) |
| | Item 16. | [Reserved] | [24](#i0ef315f1633d489297ba47cb55a2f9b1_316) |
| | Item 16A. | Audit Committee Financial Expert | [24](#i0ef315f1633d489297ba47cb55a2f9b1_319) |
| | Item 16B. | Code of Ethics | [24](#i0ef315f1633d489297ba47cb55a2f9b1_325) |
| | Item 16C. | Principal Accountant Fees and Services | [24](#i0ef315f1633d489297ba47cb55a2f9b1_328) |
| | Item 16D. | Exemptions from the Listing Standards for Audit Committees | [24](#i0ef315f1633d489297ba47cb55a2f9b1_334) |
| | Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers | [24](#i0ef315f1633d489297ba47cb55a2f9b1_337) |
| | Item 16F. | Change in Registrant's Certifying Accountant | [24](#i0ef315f1633d489297ba47cb55a2f9b1_340) |
| | Item 16G. | Corporate Governance | [24](#i0ef315f1633d489297ba47cb55a2f9b1_343) |
| | Item 16H. | Mine Safety Disclosure | [24](#i0ef315f1633d489297ba47cb55a2f9b1_349) |
| | Item 16I. | Disclosures Regarding Foreign Jurisdictions that Prevent Inspections | [24](#i0ef315f1633d489297ba47cb55a2f9b1_352) |
| | Item 16J. | Insider Trading Policies | [24](#i0ef315f1633d489297ba47cb55a2f9b1_355) |
| | Item 16K. | Cybersecurity | [25](#i0ef315f1633d489297ba47cb55a2f9b1_358) |
| Part III | Part III | Part III | [25](#i0ef315f1633d489297ba47cb55a2f9b1_364) |
| | Item 17. | Financial Statements | [25](#i0ef315f1633d489297ba47cb55a2f9b1_364) |
| | Item 18. | Financial Statements | [25](#i0ef315f1633d489297ba47cb55a2f9b1_367) |
| | Item 19. | Exhibits | [32](#i0ef315f1633d489297ba47cb55a2f9b1_376) |

---

------

**Introduction**

In this annual report on Form 20-F (the "Annual Report on Form 20-F"), references to the "Bank" are to Lloyds Bank plc and references to "Lloyds Bank Group" or the "Group" are to Lloyds Bank plc and its subsidiary and associated undertakings. References to "Lloyds Banking Group" and "Parent Group" are to Lloyds Banking Group plc, the parent company of Lloyds Bank plc, and its subsidiaries and associated undertakings. References to "LBCM" are to Lloyds Bank Corporate Markets plc, a fellow subsidiary of Lloyds Banking Group, and its subsidiaries. References to the "Financial Conduct Authority" or "FCA" and to the "Prudential Regulation Authority" or "PRA" are to the United Kingdom (the UK) Financial Conduct Authority and the UK Prudential Regulation Authority.

Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended, certain information required to be included in this Annual Report on Form 20-F is being incorporated by reference from the Bank's statutory annual report for the year ended 31 December 2025, including the consolidated financial statements of the Group included therein (the "Annual Report 2025") as specified in this Annual Report on Form 20-F. References to the "consolidated financial statements" or "financial statements" are to the Group's consolidated financial statements incorporated by reference in this Annual Report on Form 20-F. Therefore, the information in this Annual Report on Form 20-F should be read in conjunction with the Annual Report 2025, to the extent specified (see Exhibit 15.1). Any cross-references contained within pages or sections that are incorporated by reference from the Annual Report 2025 are not also deemed incorporated by reference unless indicated otherwise. With the exception of the items and pages so specified, the Annual Report 2025 is not being, and shall not be deemed to be, filed as part of this Annual Report on Form 20-F.

The Group's consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (IASB). Certain disclosures required by IFRS Accounting Standards have been included in sections highlighted as "Audited" within Item 5 "Operating and Financial Review and Prospects" of this Annual Report on Form 20-F on **pages [12](#i0ef315f1633d489297ba47cb55a2f9b1_109) to [13](#i0ef315f1633d489297ba47cb55a2f9b1_145)**. Disclosures marked as audited indicate that they are within the scope of the audit of the financial statements taken as a whole; these disclosures are not subject to a separate opinion.

The Group publishes its consolidated financial statements expressed in British pounds ("pounds Sterling", "Sterling" or "£"), the lawful currency of the UK. In this Annual Report on Form 20-F, references to "pence" and "p" are to one-hundredth of one pound Sterling; references to "US Dollars", "US$" or "$" are to the lawful currency of the United States; references to "cent" or "c" are to one-hundredth of one US Dollar; references to "Euro" or "€" are to the lawful currency of the member states of the European Union (the "EU") that have adopted a single currency in accordance with the Treaty establishing the European Communities, as amended by the Treaty of European Union; references to "Euro cent" are to one-hundredth of one Euro; references to "Australian Dollar", "Australian $" or "A$" are to the lawful currency of Australia; references to "Singapore Dollar", "Singapore $" or "S$" are to the lawful currency of Singapore; and references to "Japanese Yen", "Japanese ¥" or "¥" are to the lawful currency of Japan. Solely for the convenience of the reader, this Annual Report on Form 20-F contains translations of certain pounds Sterling amounts into US Dollars at specified rates. These translations should not be construed as representations by the Group that the pounds Sterling amounts actually represent such US Dollar amounts or could be converted into US Dollars at the rate indicated or at any other rate. Unless otherwise stated, the translations of pounds Sterling into US Dollars have been made at the Noon Buying Rate in New York City for cable transfers in pounds Sterling as certified for customs purposes by the Federal Reserve Bank of New York (the Noon Buying Rate) in effect on 31 December 2025. The Noon Buying Rate on 31 December 2025 differs from certain of the actual rates used in the preparation of the consolidated financial statements, which are expressed in pounds Sterling, and therefore US Dollar amounts appearing in this Annual Report on Form 20-F may differ significantly from actual US Dollar amounts which were translated into pounds Sterling in the preparation of the consolidated financial statements in accordance with IFRS Accounting Standards.

Certain items in this Annual Report on Form 20-F are indicated as omitted as the Bank is a wholly owned subsidiary of Lloyds Banking Group plc, which is a reporting company under the Securities Exchange Act of 1934, and meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K, as applied to annual reports on Form 20-F, and is therefore filing this Annual Report on Form 20-F with a reduced disclosure format.

---

| | |
|:---|:---|
| **1** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

---

------

**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; risks related to new and emerging technologies, including artificial intelligence; 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.

For additional information about factors that could cause Group's results to differ materially from those described in the forward-looking statements, please see the Risk Factors for 2025 filed by the Company with the SEC on Form 6-K on 29 January 2026 (the "6-K Risk Factors") incorporated by reference in this Annual Report on Form 20-F (see Exhibit 15.2).

**Enforceability of civil liabilities**

The Bank is a public limited company incorporated under the laws of England. Most of the Bank's directors and executive officers and certain of the experts named herein are residents of the UK. A substantial portion of the assets of the Bank, its subsidiaries and such persons, are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon all such persons or to enforce against them in US courts judgments obtained in such courts, including those predicated upon the civil liability provisions of the federal securities laws of the United States. Furthermore, the Bank has been advised by its solicitors that there is doubt as to the enforceability in the UK, in original actions or in actions for enforcement of judgments of US courts, of certain civil liabilities, including those predicated solely upon the federal securities laws of the United States.

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| | |
|:---|:---|
| **2** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I**

**Item 1. Identity of Directors, Senior Management and Advisers**

Not applicable.

**Item 2. Offer Statistics and Expected Timetable**

Not applicable.

**Item 3. Key Information**

**A.&nbsp;&nbsp;&nbsp;&nbsp;[Reserved]**

**B.&nbsp;&nbsp;&nbsp;&nbsp;Capitalization and indebtedness**

Not applicable.

**C.&nbsp;&nbsp;&nbsp;&nbsp;Reason for the offer and use of proceeds**

Not applicable.

**D.&nbsp;&nbsp;&nbsp;&nbsp;Risk factors** 

Set out below is a summary of certain risk factors which could affect the Bank and Lloyds Bank Group's future results and prospects and may cause them to differ from expected results materially. The factors listed below should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties that Lloyds Bank Group's businesses face.

**Economic and financial risks**

1. Lloyds Bank Group's businesses are subject to inherent and indirect risks arising from general macroeconomic conditions in the UK in particular, but also in the Eurozone, the US, Asia and globally

2. Lloyds Bank Group's businesses are subject to inherent and perceived risks concerning liquidity and funding, particularly if the availability of traditional sources of funding such as retail deposits or access to wholesale funding markets becomes more limited

3. A reduction in Lloyds Bank Group's credit rating(s) could materially adversely affect Lloyds Bank Group's results of operations, financial condition or prospects

4. Lloyds Bank Group's businesses are inherently subject to the risk of market fluctuations, which could have a material adverse effect on the results of operations, financial condition or prospects of Lloyds Bank Group

5. Market conditions have resulted, and are expected to result in the future, in material changes to the estimated fair values of financial assets of Lloyds Bank Group, including negative fair value adjustments

6. Lloyds Bank Group's businesses are subject to inherent risks concerning borrower and counterparty credit quality which have affected and may adversely impact the recoverability and value of assets on Lloyds Bank Group's balance sheet

7. Lloyds Bank Group's defined benefit pension schemes are subject to longevity and market risks

8. Lloyds Bank Group may be required to record Credit Value Adjustments, Funding Value Adjustments and Debit Value Adjustments on its derivative portfolio, which could have a material adverse effect on its results of operations, financial condition or prospects

**Regulatory and legal risks**

1. Lloyds Bank Group and its businesses are subject to substantial regulation and oversight. Adverse legal or regulatory developments could have a material adverse effect on Lloyds Bank Group's business, results of operations, financial condition or prospects

2. The financial impact of legal or other proceedings and regulatory risks may be material and is difficult to quantify. Amounts eventually paid may materially exceed the amount of provisions set aside to cover such risks, or existing provisions may need to be materially increased in response to changing circumstances

3. Lloyds Bank Group faces risks associated with its compliance with a wide range of laws and regulations

4. Lloyds Bank Group is subject to the risk of having insufficient capital resources and/or not meeting liquidity requirements

5. Lloyds Bank Group must comply with anti-money laundering, counter terrorist financing, anti-bribery, fraud and sanctions regulations

6. Lloyds Banking Group, including Lloyds Bank Group is subject to resolution planning requirements, which could have an adverse impact on Lloyds Bank Group's business

7. Lloyds Banking Group, including Lloyds Bank Group is subject to regulatory actions which may be taken in the event of a bank or Lloyds Banking Group failure

8. Failure to manage the risks associated with changes in taxation rates or applicable tax laws, or misinterpretation of such tax laws, could materially adversely affect Lloyds Bank Group's results of operations, financial condition or prospects

**Business and operational risks**

1. Lloyds Bank Group is exposed to operational risks, including the failure to build sufficient resilience into business operations, and underlying infrastructure and controls, as well as risks which may arise as a result of the failure of third party services

2. Lloyds Bank Group is exposed to conduct risk

3. Lloyds Bank Group's business is subject to risks related to new and emerging technologies

4. Lloyds Bank Group's business is subject to risks related to cybercrime and technological failure

5. Lloyds Bank Group is subject to the financial and non-financial risks related with ESG matters, for example, climate change and human rights issues

6. Lloyds Bank Group's businesses are conducted in competitive environments, which are subject to ongoing regulatory scrutiny, and Lloyds Bank Group's financial performance depends upon management's ability to respond effectively to competitive pressures and any regulatory developments

7. Lloyds Bank Group could fail to attract, retain and develop high calibre talent

8. Lloyds Bank Group may fail to execute its ongoing strategic change initiatives, and the expected benefits of such initiatives may not be achieved on time or as planned

9. Lloyds Bank Group may be unable to fully capture the expected value from acquisitions, which could materially and adversely affect its results of operations, financial condition or prospects

10. Lloyds Bank Group's financial statements are based, in part, on assumptions and estimates

Reference is made to the 6-K Risk Factors for a description of the above risk factors which could affect Lloyds Bank Group's future results and may cause them to differ from expected results materially. The factors discussed therein should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties that Lloyds Bank Group's businesses face. The 6-K Risk Factors should be read in conjunction with the more detailed information contained in this Annual Report on Form 20-F, including as set forth in Item 4 - "Information on the Company" and Item 5 - "Operating and Financial Review and Prospects". For information on Lloyds Bank Group's risk management policies and procedures, see the section titled "Risk Management" under Item 5 - "Operating and Financial Review and Prospects".

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|:---|:---|
| **3** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Item 4. Information on the Company**

**A.&nbsp;&nbsp;&nbsp;&nbsp;History and development of Lloyds Bank Group**

Lloyds Bank plc was incorporated as a public limited company and registered in England under the UK Companies Act on 20 April 1865 with the registered number 2065. The Bank's registered office is Lloyds Bank plc, 25 Gresham Street, London, EC2V 7HN and its principal executive offices in the UK are located at 33 Old Broad Street, London EC2N 1HZ, telephone number + 44 (0) 20 7626 1500. Lloyds Bank maintains a website at **www.lloydsbank.com**.

The Bank is a wholly owned subsidiary of Lloyds Banking Group plc and is the principal operating subsidiary of Lloyds Banking Group. The Bank comprises the ring-fenced bank within Lloyds Banking Group and its main business activities are retail and commercial banking.

The Bank's origins date back to the 18th century with Taylors and Lloyds in Birmingham. Lloyds Bank Plc was incorporated in 1865 and grew through a number of mergers and acquisitions. In 1995, it acquired the Cheltenham and Gloucester Building Society.

TSB Group plc was formed in 1986 from the operations of four Trustee Savings Banks. By 1995, TSB had expanded into insurance, investment management, and vehicle leasing. In 1995, TSB merged with Lloyds Bank plc to form Lloyds TSB Group plc.

In 2000, Lloyds TSB acquired Scottish Widows, enhancing its position in long-term savings and protection products. HBOS Group was created in 2001 by merging Halifax plc and Bank of Scotland. On 18 September 2008, Lloyds TSB Group plc agreed to acquire HBOS plc, completing the acquisition on 16 January 2009 and renaming itself Lloyds Banking Group plc.

Lloyds Banking Group successfully launched its non ring-fenced bank, Lloyds Bank Corporate Markets plc in 2018, transferring in the non ring-fenced business from the rest of Lloyds Banking Group, thereby meeting its legal requirements under ring-fencing legislation. The Bank is the ring-fenced bank.

**Where you can find more information**

The SEC maintains a website at **www.sec.gov** which contains, in electronic form, each of the reports and other information that the Group has filed electronically with the SEC.

References herein to Lloyds Banking Group and Lloyds Bank Group websites are textual references only and information on or accessible through such websites does not form part of and is not incorporated into this Form 20-F.

**B.&nbsp;&nbsp;&nbsp;&nbsp;Business overview**

The Lloyds Bank Group is a leading provider of financial services to individual and business customers in the UK. At 31 December 2025, Lloyds Bank Group's total assets were £631,335 million and Lloyds Bank Group had 57,755 employees (on a full-time equivalent basis). The Group reported a profit before tax for the year ended 31 December 2025 of £5,472 million, and its capital ratios at that date were 13.6% for common equity tier 1 capital, 16.4% for tier 1 capital and 20.1% for total capital.

The Lloyds Bank Group's main business activities are retail and commercial banking and it operates primarily in the UK. Services are provided through a number of well recognised brands including Lloyds Bank, Halifax and Bank of Scotland and through a range of distribution channels, including the largest branch network and digital bank in the UK. The Lloyds Bank Group strategy is directly aligned to the strategy of its parent, Lloyds Banking Group plc.

Reference is made to the "Consolidated income statement" on **page 73 of the Annual Report 2025** for the Group's income statement for each of the last two years.

Reference is made to the section titled "Results of operations - 2023" under Item 5.A - "Operating results" on **page [12](#i0ef315f1633d489297ba47cb55a2f9b1_118)**.

**Divisional information**

At 31 December 2025, the Group's two primary operating divisions, which are also its financial reporting segments, were Retail and Commercial Banking. Retail offers a broad range of financial services products to personal customers, including current accounts, savings, mortgages, credit cards, unsecured loans, motor finance and leasing solutions. Commercial Banking serves small and medium businesses and corporate and institutional clients, providing lending, transactional banking, working capital management, debt financing and risk management services.

The results of the primary operating divisions are set out in "Note 4: Segmental analysis" **on pages 88 to 91 of the Annual Report 2025**.

**Economic environment**

Market context

• The UK economy is estimated to have grown by 1.4% in 2025, proving resilient to rising taxes, uncertainty from the shift in the global trade environment as the US introduced significant import tariffs, and to continued conflict in Ukraine and the Middle East

• The economy has not settled back to pre-pandemic norms, however. Inflation remained elevated above its 2% target, increasing from 2.5% in 2024 to 3.4% in 2025, partly a result of government policy impacts – a large rise in water bills, VAT on private school fees, Vehicle Excise Duty changes, a 6.7% rise in the National Living Wage and an increase in employer National Insurance. Consequently, households' high inflation expectations kept pay growth strong through much of the year

• As a result, the Bank of England reduced interest rates only slowly. Bank Rate was cut by 100 basis points through 2025 to end the year at 3.75%, 150 basis points lower than its 2023 to 2024 peak – a smaller reduction than the 175 basis points in the US and 200 basis points in the Eurozone. The unemployment rate rose by 0.7 percentage points in the year to November, to 5.1%

• With this backdrop, UK households raised their spending growth, but cautiously, saving a high proportion of disposable income. House prices rose by less than 1%, reflecting affordability of mortgage payments being still more of a constraint than pre-pandemic

• Nevertheless, growth in 2025 in the markets we operate in returned to rates similar to, or better than, pre-pandemic. Both households' and corporates' leverage had fallen to low levels, creating space for a pick-up in borrowing. Mortgages and household deposits benefitted from the high level of housing transactions early in the year in advance of the stamp-duty increase in April. The drag on SMEs' borrowing balances from pay-down of government-guaranteed COVID-scheme lending is now abating

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|:---|:---|
| **4** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

Our response

• In a world of heightened economic uncertainty, our purpose of Helping Britain Prosper is ever more important. Our strategy and business model position us well in both constructive and more challenging economic environments

• Our strategy is focused on faster growing, high potential sectors such as housing, pensions, investments, and infrastructure. We are already driving growth in these areas, leveraging our competitive advantage as the UK's only integrated financial services provider. As a result, we expect the Group to continue to grow faster than the wider economy over the coming years

• Our transformation allied to our strong customer franchise captures opportunity by effectively meeting evolving customer needs and demands, diversifying income streams, and also with efficiency. Our large scale and strong balance sheet, with a prudent approach to risk, provides both access to growth opportunities and resilience at times of challenging economic conditions

2026 outlook

• We forecast GDP growth of 1.2% in 2026, a little below 2025's estimated 1.4%. Although the government will continue to shrink its budget deficit via rising taxes, the resulting drag on the economy is expected to be offset by lower rates and reduced policy uncertainty, allowing the economy to grow closer to its 'potential' or 'trend' rate through the year

• Some uncertainties are expected to reduce now that the scale and impact of US tariffs has become clearer, notwithstanding likely readjustment in response to legal challenges

• More importantly, interest rates are switching from being a drag on the economy to a marginal support, as many customers refinancing mortgages will begin to obtain lower rates than their existing deals. Mortgage rates fell in late 2025 as markets priced earlier Bank Rate cuts, in response to Budget measures subtracting c.50 basis points from mid-2026 inflation forecasts

• The reduced near-term inflation outlook should lessen concern of a self-perpetuating cycle between elevated inflation and elevated pay growth that some members of the Bank of England's Monetary Policy Committee had cited as a key reason for reticence to cut rates more swiftly through 2025. We expect CPI inflation to decline to 2.6% in 2026 from 3.4% in 2025, and assume two further Bank Rate cuts to 3.25% by the third quarter of 2026

• Growth closer to the economy's 'potential' or 'trend' rate through 2026 should mean that unemployment drifts up only a little further from its level of 5.1% at November 2025

• However, we expect the lagged impact of rising unemployment to mean that pay growth falls by more than the reduction in inflation during 2026

• Households are therefore likely to maintain a cautious approach towards spending. Alongside, we expect house prices to rise by only 2%, close to the average of the past three years, lacking the benefit from elevated housing transactions early in 2025

• Growth in the markets we operate in is expected to slow slightly in comparison to 2025, for these reasons

**Competitive environment**

Market context

• Ongoing new business margin pressure across deposit and mortgage markets, driven by intense competition

• Continued disruption to the single-provider banking model, with digital onboarding and engagement channels making it easier for customers to manage relationships across multiple providers

• New, smaller entrants reshaping financial services through tightly targeted propositions supported by strong digital experiences

• Opportunity for providers with breadth of offering and personalised journeys to deepen their customer relationships

Our response

• Market-leading direct and intermediary journeys reaching customers in their preferred channel

• Relevant and differentiated cross-Group propositions meeting a wider set of financial needs

• Tailored solutions designed to simplify complex financial decisions, offer expert guidance, and provide exclusive rewards

• Empowered customers financially with up-to-date credit report insights enabling over 500,000 customers to improve their credit score each quarter

• Focus on high value areas, including our Home ecosystem which is increasing engagement and helping retain customer balances

• Successful pilot of embedded finance offering through BlackHorse Flexpay with growth in merchant sign-ups in 2025

2026 outlook

• Enhance access to relevant and tailored propositions across customer life stages, leveraging our proposition breadth

• Integrate Schroders Personal Wealth, to be rebranded as Lloyds Wealth, combining expert face to face advice with powerful digital tools to deepen our relationships in high value segments

• Leverage technology and data to deliver more compelling, personalised digital propositions to support customer goals

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|:---|:---|
| **5** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Average balance sheet and interest income and expense**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
| | **Average<br>balance<br>sheet<br>amount<br>£m** | **Interest<br>earned<br>£m** | **Average<br>yield%** | Average<br>balance<br>sheet<br>amount<br>£m | Interest<br>earned<br>£m | Average<br>yield% | Average<br>balance<br>sheet<br>amount<br>£m | Interest<br>earned<br>£m | Average<br>yield% |
| **Assets**<sup>1</sup> |  |  |  |  |  |  |  |  |  |
| Financial assets at amortised cost: |  |  |  |  |  |  |  |  |  |
| Loans and advances to banks | **48869** | **1722** | **3.52** | 54523 | 2439 | 4.47 | 78116 | 3096 | 3.96 |
| Loans and advances to customers | **454588** | **22338** | **4.91** | 439597 | 21712 | 4.94 | 433524 | 18992 | 4.38 |
| Reverse repurchase agreements | **43506** | **2198** | **5.05** | 42054 | 2441 | 5.80 | 34395 | 1866 | 5.43 |
| Debt securities | **11349** | **618** | **5.45** | 12503 | 737 | 5.89 | 9607 | 495 | 5.15 |
| Financial assets at fair value through other comprehensive income | **34226** | **1332** | **3.89** | 29214 | 1057 | 3.62 | 23712 | 851 | 3.59 |
| Total average interest-earning assets of banking book | **592538** | **28208** | **4.76** | 577891 | 28386 | 4.91 | 579354 | 25300 | 4.37 |
| Total average interest-earning financial assets at fair value through profit or loss | **2152** | **79** | **3.67** | 1850 | 60 | 3.24 | 1484 | 33 | 2.22 |
| **Total average interest-earning assets** | **594690** | **28287** | **4.76** | 579741 | 28446 | 4.91 | 580838 | 25333 | 4.36 |
| Allowance for impairment losses on financial assets held at amortised cost | **(3172)** |  |  | (3446) |  |  | (4689) |  |  |
| Non-interest earning assets | **32648** |  |  | 31950 |  |  | 33106 |  |  |
| **Total average assets and interest earned** | **624166** | **28287** | **4.53** | 608245 | 28446 | 4.68 | 609255 | 25333 | 4.16 |
| **Liabilities and shareholders' funds**<sup>1</sup> |  |  |  |  |  |  |  |  |  |
| Deposits by banks | **4723** | **144** | **3.05** | 3192 | 121 | 3.79 | 3588 | 131 | 3.65 |
| Customer deposits | **345704** | **8205** | **2.37** | 327439 | 9009 | 2.75 | 312800 | 6045 | 1.93 |
| Repurchase agreements at amortised cost | **37426** | **1980** | **5.29** | 39360 | 2390 | 6.07 | 43479 | 2397 | 5.51 |
| Debt securities in issue at amortised cost<sup>2</sup> | **47203** | **4030** | **8.54** | 49462 | 3814 | 7.71 | 54598 | 2595 | 4.75 |
| Lease liabilities | **1101** | **27** | **2.45** | 1449 | 30 | 2.07 | 1446 | 28 | 1.94 |
| Subordinated liabilities | **7532** | **459** | **6.09** | 6961 | 430 | 6.18 | 6576 | 395 | 6.01 |
| Total average interest-bearing liabilities of banking book | **443689** | **14845** | **3.35** | 427863 | 15794 | 3.69 | 422487 | 11591 | 2.74 |
| Total average interest-bearing financial liabilities at fair value through profit or loss | **4445** | **92** | **2.07** | 4900 | 92 | 1.88 | 4987 | 78 | 1.56 |
| **Total average interest-bearing liabilities** | **448134** | **14937** | **3.33** | 432763 | 15886 | 3.67 | 427474 | 11669 | 2.73 |
| Non-interest-bearing customer accounts | **115195** |  |  | 116596 |  |  | 127095 |  |  |
| Other non-interest-bearing liabilities | **19276** |  |  | 18449 |  |  | 14627 |  |  |
| **Total average non-interest-bearing liabilities** | **134471** |  |  | 135045 |  |  | 141722 |  |  |
| Non-controlling interests, other equity instruments and shareholders' funds | **41561** |  |  | 40437 |  |  | 40059 |  |  |
| **Total average liabilities, average shareholders' funds and interest expense** | **624166** | **14937** | **2.39** | 608245 | 15886 | 2.61 | 609255 | 11669 | 1.92 |

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1&nbsp;&nbsp;&nbsp;&nbsp;The line items below are based on IFRS terminology and include all major categories of average interest-earning assets and average interest-bearing liabilities.

2&nbsp;&nbsp;&nbsp;&nbsp;The impact of the Group's hedging arrangements is included on this line.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
| | **Average<br>interest-<br>earning<br>assets<br>£m** | **Net<br>interest<br>income<br>£m** | **Net<br>interest<br>yield on<br>interest-<br>earning<br>assets%** | Average<br>interest-<br>earning<br>assets<br>£m | Net<br>interest<br>income<br>£m | Net<br>interest<br>yield on<br>interest-<br>earning<br>assets% | Average<br>interest-<br>earning<br>assets<br>£m | Net<br>interest<br>income<br>£m | Net<br>interest<br>yield on<br>interest-<br>earning<br>assets% |
| **Average interest-earning assets and net interest income:** |  |  |  |  |  |  |  |  |  |
| Banking business | **592538** | **13363** | **2.26** | 577891 | 12592 | 2.18 | 579354 | 13709 | 2.37 |
| Trading securities and other financial assets at fair value through profit or loss | **2152** | **(13)** | **(0.60)** | 1850 | (32) | (1.73) | 1484 | (45) | (3.03) |
|  | **594690** | **13350** | **2.24** | 579741 | 12560 | 2.17 | 580838 | 13664 | 2.35 |

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Average balances are based on monthly averages.

The Group's operations are predominantly UK-based and as a result an analysis between domestic and foreign operations is not provided.

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|:---|:---|
| **6** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Changes in net interest income – volume and rate analysis**

The following table allocates changes in net interest income between volume, rate and their combined impact for 2025 compared with 2024 and for 2024 compared with 2023.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2025 compared with 2024<br>increase/(decrease)** | **2025 compared with 2024<br>increase/(decrease)** | **2025 compared with 2024<br>increase/(decrease)** | **2025 compared with 2024<br>increase/(decrease)** | 2024 compared with 2023<br>increase/(decrease) | 2024 compared with 2023<br>increase/(decrease) | 2024 compared with 2023<br>increase/(decrease) | 2024 compared with 2023<br>increase/(decrease) |
| | **Total<br>change<br>£m** | **Change in<br>volume<br>£m** | **Change in<br>rates<br>£m** | **Change in<br>rates and<br>volume<br>£m** | Total<br>change<br>£m | Change in<br>volume<br>£m | Change in<br>rates<br>£m | Change in<br>rates and<br>volume<br>£m |
| **Interest income** |  |  |  |  |  |  |  |  |
| Financial assets at amortised cost: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Loans and advances to banks | **(717)** | **(253)** | **(518)** | **54** | (657) | (935) | 398 | (120) |
| &nbsp;&nbsp;&nbsp;Loans and advances to customers | **626** | **741** | **(111)** | **(4)** | 2720 | 266 | 2420 | 34 |
| &nbsp;&nbsp;&nbsp;Reverse repurchase agreements | **(243)** | **84** | **(316)** | **(11)** | 575 | 416 | 130 | 29 |
| &nbsp;&nbsp;&nbsp;Debt securities | **(119)** | **(68)** | **(56)** | **5** | 242 | 150 | 71 | 21 |
| Financial assets at fair value through other comprehensive income | **275** | **181** | **80** | **14** | 206 | 197 | 7 | 2 |
| Total banking book interest income | **(178)** | **685** | **(921)** | **58** | 3086 | 94 | 3026 | (34) |
| Total interest income on financial assets at fair value through profit or loss | **19** | **10** | **8** | **1** | 27 | 8 | 15 | 4 |
| **Total interest income** | **(159)** | **695** | **(913)** | **59** | 3113 | 102 | 3041 | (30) |
| **Interest expense** |  |  |  |  |  |  |  |  |
| Deposits by banks | **23** | **58** | **(24)** | **(11)** | (10) | (14) | 5 | (1) |
| Customer deposits | **(804)** | **503** | **(1238)** | **(69)** | 2964 | 283 | 2561 | 120 |
| Repurchase agreements at amortised cost | **(410)** | **(117)** | **(308)** | **15** | (7) | (227) | 243 | (23) |
| Debt securities in issue at amortised cost | **216** | **(174)** | **409** | **(19)** | 1219 | (244) | 1615 | (152) |
| Lease liabilities | **(3)** | **(8)** | **6** | **(1)** | 2 | – | 2 | – |
| Subordinated liabilities | **29** | **35** | **(6)** | **–** | 35 | 23 | 11 | 1 |
| Total banking book interest expense | **(949)** | **297** | **(1161)** | **(85)** | 4203 | (179) | 4437 | (55) |
| Total interest expense on financial liabilities at fair value through profit or loss | **–** | **(8)** | **9** | **(1)** | 14 | (1) | 15 | – |
| **Total interest expense** | **(949)** | **289** | **(1152)** | **(86)** | 4217 | (180) | 4452 | (55) |

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**Loan portfolio**

Summary of loan loss experience

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| | | | |
|:---|:---|:---|:---|
| | **2025**<br>**£m** | 2024<br>£m | 2023<br>£m |
| Gross loans and advances to banks and customers and reverse repurchase agreements | **514304** | 495667 | 478384 |
| Allowance for impairment losses | **3002** | 3184 | 3699 |
| **Ratio of allowance for credit losses to total lending (%)** | **0.6** | 0.6 | 0.8 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Advances written off, net of recoveries** | **Advances written off, net of recoveries** | **Advances written off, net of recoveries** | **As a percentage of average lending** | **As a percentage of average lending** | **As a percentage of average lending** |
| | **2025**<br>**£m** | 2024<br>£m | 2023<br>£m | **2025%** | 2024% | 2023% |
| Loans and advances to banks | **–** | – | – | **–** | – | – |
| Loans and advances to customers | **(1094)** | (1028) | (1113) | **0.2** | 0.2 | 0.3 |
| **Total net advances written off** | **(1094)** | (1028) | (1113) | **0.2** | 0.2 | 0.2 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **As a percentage of closing lending** | **As a percentage of closing lending** | **As a percentage of closing lending** |
| | **2025**<br>**£m** | 2024<br>£m | 2023<br>£m | **2025%** | 2024% | 2023% |
| Loans and advances to banks | **1** | 1 | 6 | **–** | – | 0.1 |
| Loans and advances to customers | **3001** | 3183 | 3693 | **0.6** | 0.7 | 0.8 |
| **At 31 December** | **3002** | 3184 | 3699 | **0.6** | 0.6 | 0.8 |

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|:---|:---|
| **7** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Investment portfolio, maturities, deposits**

Maturities and weighted average yields of interest-bearing securities

*Financial assets at fair value through other comprehensive income and debt securities held at amortised cost*

The weighted average yield for each range of maturities is calculated by dividing the annualised interest income prevailing at 31 December 2025 by the book value of securities held at that date.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Maturing<br>within one year** | **Maturing<br>within one year** | **Maturing after one<br>but within five years** | **Maturing after one<br>but within five years** | **Maturing after five<br>but within ten years** | **Maturing after five<br>but within ten years** | **Maturing<br>after ten years** | **Maturing<br>after ten years** |
| | **Amount<br>£m** | **Average<br>yield%** | **Amount<br>£m** | **Average<br>yield%** | **Amount<br>£m** | **Average<br>yield%** | **Amount<br>£m** | **Average<br>yield%** |
| Financial assets at fair value through other comprehensive income | **2269** | **4.7** | **16984** | **3.3** | **14053** | **2.7** | **2951** | **2.6** |
| Debt securities held at amortised cost | **1955** | **4.5** | **3005** | **4.8** | **4383** | **4.1** | **2644** | **2.3** |

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Maturity analysis and interest rate sensitivity of loans and advances to banks and customers and reverse repurchase agreements

The following table analyses the maturity profile and interest rate sensitivity of loans by type on a contractual repayment basis at 31 December 2025. All amounts are before deduction of impairment allowances. Demand loans and overdrafts are included in the 'maturing in one year or less' category.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Maturing<br>in one<br>year<br>or less<br>£m** | **Maturing<br>after one<br>but within<br>five years<br>£m** | **Maturing<br>after five<br>but within<br> fifteen years<br>£m** | **Maturing<br>after<br> fifteen<br>years<br> £m** | **Total<br>£m** |
| Loans and advances to banks | **4780** | **1052** | **5** | **–** | **5837** |
| Loans and advances to customers: | **63710** | **100395** | **140380** | **160020** | **464505** |
| Reverse repurchase agreements | **33584** | **10378** | **–** | **–** | **43962** |
| **Total loans** | **102074** | **111825** | **140385** | **160020** | **514304** |
| *Of which:* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Fixed interest rate | **60373** | **72608** | **120720** | **134600** | **388301** |
| &nbsp;&nbsp;&nbsp;Variable interest rate | **41701** | **39217** | **19665** | **25420** | **126003** |
|  | **102074** | **111825** | **140385** | **160020** | **514304** |

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Deposits

The following tables show the details of the Group's average customer deposits in each of the past three years.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | 2024 | 2024 | 2023 | 2023 |
| | **Average<br>balance<br>£m** | **Average<br>rate%** | Average<br>balance<br>£m | Average<br>rate% | Average<br>balance<br>£m | Average<br>rate% |
| Non-interest bearing demand deposits | **115195** | **–** | 116596 | – | 127095 | – |
| Interest-bearing demand deposits | **249883** | **2.06** | 241550 | 3.01 | 247335 | 2.12 |
| Other deposits | **95821** | **3.18** | 85889 | 3.02 | 65465 | 2.14 |
| **Total customer deposits** | **460899** | **1.78** | 444035 | 2.03 | 439895 | 1.37 |

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Uninsured deposits

The following table gives details of the Group's customer deposits which were not covered by any deposit protection scheme by time remaining to maturity.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **3 months<br>or less<br>£m** | **Over 3<br>months<br>but within<br>6 months<br>£m** | **Over 6<br>months<br>but within<br>12 months<br>£m** | **Over<br>12 months<br>£m** | **Total<br>£m** |
| **At 31 December 2025** | **161093** | **4729** | **6396** | **2660** | **174878** |
| At 31 December 2024 | 160847 | 5551 | 14933 | 1881 | 183212 |

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Total uninsured customer deposits have been calculated as the aggregate carrying value of the Group's customer deposits less the insured deposit amounts as determined for regulatory purposes by the Group's licensed deposit-takers, being those deposits eligible for immediate protection under deposit protection schemes (principally the Financial Services Compensation Scheme in the UK).

The maturity analysis for uninsured deposits has been estimated using the weighted-average maturity profile of the total customer deposits of each of the Group's licensed deposit-takers.

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|:---|:---|
| **8** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Regulation**

The below sets out a brief description of the Group's primary regulators but does not include a description of all the regulations Lloyds Bank Group may be subject to.

Approach of the Financial Conduct Authority ("FCA")

Under the Financial Services and Markets Act 2000, as amended by the Financial Services Act 2012 ("FSMA"), the FCA has a strategic objective to ensure that the relevant markets function well. In support of this, the FCA has three operational objectives: to secure an appropriate degree of protection for consumers; to safeguard the stability and reputation of the UK financial system and foster a competitive financial services market that benefits consumers, alongside its secondary objective to facilitate the international competitiveness and growth of the UK economy in the medium to long term.

The FCA Handbook sets out rules and guidance across a range of conduct issues with which financial institutions are required to comply including high level principles of business and detailed conduct of business standards and reporting standards.

Approach of the Prudential Regulation Authority ("PRA")

The PRA is part of the BoE (as defined below), with responsibility for prudential regulation and supervision. In 2025, the PRA revised its strategic priorities to reflect the maturity of its policy and supervisory approaches, as well as to demonstrate its continued commitment to facilitate innovation in key areas of its work. The PRA will continue to enhance its regulatory framework to maintain and ensure the safety and soundness of the banking and insurance sectors and ensure continuing resilience. This strategy supports its statutory objectives: to promote the safety and soundness of these firms and to contribute to the securing of an appropriate degree of protection for policyholders (for insurers). The PRA also has two secondary objectives: to facilitate effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities; and to facilitate, subject to alignment with relevant international standards, the UK's international competitiveness and growth.

The PRA Rulebook sets out rules and guidance across a range of prudential matters which firms are required to comply with including areas such as fundamental rules; ring-fencing requirements; reporting and prudential treatments. The PRA will change a firm's business model if it judges that mitigating risk measures are insufficient. Further to the UK implementation of CRD V a legal requirement has been established in the FSMA that requires the PRA to authorise UK parent financial holding companies ("FHC") or mixed financial holding companies ("MFHC") that have at least one bank or designated relevant investment firm as a subsidiary. As a result, Lloyds Banking Group plc, the Bank's immediate parent, has received authorisation to be recognised as the UK parent MFHC of the Group and is therefore responsible for ensuring prudential capital requirements are applied on a consolidated basis.

Other bodies impacting the regulatory regime

*The Bank of England ("BoE")*

The BoE has specific responsibilities in relation to financial stability, including: (i) ensuring the stability of the monetary system; (ii) oversight of the financial system infrastructure, in particular payments systems in the UK and abroad; and (iii) maintaining a broad overview of the financial system through its monetary stability role. The Financial Policy Committee ("FPC") leads the BoE's work on financial stability through the identification and monitoring of risks that threaten the resilience of the UK financial system as a whole. It also has power to take action to counter those risks, an example of such is unsustainable levels of debt and credit growth.

*HM Treasury* 

HM Treasury is the government's economic and finance ministry, setting the direction of the UK's economic policy and working to achieve strong and sustainable economic growth. Its responsibilities include financial services policy such as banking and financial services regulation, financial stability, and ensuring competitiveness in the City of London financial markets; strategic oversight of the UK tax system; delivery of infrastructure projects across the public sector; and ensuring the economy is growing sustainably.

*UK Financial Ombudsman Service ("FOS")*

The FOS provides consumers with a free and independent service designed to resolve disputes where the customer is not satisfied with the response received from the regulated firm. The FOS resolves disputes for eligible persons that cover most financial products and services provided in (or from) the UK. The jurisdiction of the FOS extends to include firms conducting activities under the Consumer Credit Act 1974. Although the FOS takes account of relevant regulation and legislation, its guiding principle is to resolve cases individually on merit on the basis of what is fair and reasonable; in this regard, the FOS is not bound by law or even its own precedent. The final decisions made by the FOS are legally binding on regulated firms who also have a requirement under the FCA rules to ensure that lessons learned as a result of determinations by the FOS are effectively applied in future complaint handling.

*British Bankers Resolution Service ("BBRS")*

Lloyds Banking Group plc is also a member of the BBRS. BBRS is a non-profit organisation set up to resolve disputes between eligible larger small and medium-sized enterprises and participating banks.

*The Financial Services Compensation Scheme ("FSCS")*

The FSCS was established under the FSMA and is the UK's statutory fund of last resort for customers of authorised financial services firms. Companies within the Group are responsible for contributing to compensation schemes in respect of banks and other authorised financial services firms that are unable to meet their obligations to customers. The FSCS can pay compensation to customers if a firm is unable, or likely to be unable, to pay claims against it. The FSCS is funded by levies on firms authorised by the PRA and the FCA, including companies within the Group.

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| **9** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

*The Payment System Regulator ("PSR")*

The PSR is an economic regulator for the payment systems industry, which was launched in April 2015. Payment systems form a vital part of the UK's financial system – they underpin the services that enable funds to be transferred between people and institutions. The purpose of PSR is to make payment systems work well for those that use them. In December 2024, HM Treasury and the boards of both the FCA and PSR confirmed the joining up of the managing director of the PSR with the executive director for payments and digital assets of the FCA role to ensure both regulators collectively deliver HM Treasury's new National Payments Vision in advancing an innovative, safe and competitive UK payments sector. In September 2025, the Government consulted on its proposals to consolidate the functions of the PSR primarily into the FCA. This will help streamline the regulatory environment and improve coordination and clarity on regulatory responsibilities.

*UK Information Commissioner's Office ("ICO")*

The ICO is the UK's independent authority set up to uphold information rights in the public interest, promoting openness by public bodies and data privacy for individuals. The ICO is responsible for overseeing implementation of the Data Protection Act 2018 which enshrines the General Data Protection Regulation. This Act regulates, among other things, the lawful use of data relating to individual customers.

Competition regulation

*UK Competition and Markets Authority ("CMA")*

The objective of the CMA is to promote competition to ensure that markets work well for consumers, businesses and the economy. Through its five strategic objectives (promoting effective competition; championing consumers; helping government deploy tailored pro-competition interventions to support growth, innovation and investment-related policies; fostering a regulatory landscape that attracts investment and instils business confidence; and, prioritising UK interests) the CMA impacts the banking sector in a number of ways, including with its powers to investigate and prosecute a number of criminal offences under competition law. In addition, the CMA is the lead enforcer for unfair contract terms under the Consumer Rights Act 2015, which replaced the Unfair Terms in Consumer Contracts Regulations 1999.

The CMA has competition law powers which apply across the whole economy. Sectoral regulators such as the FCA may exercise the competition law powers to enforce the prohibitions on anti-competitive agreements and on abuse of a dominant position, and to make market investigation references, concurrently with the CMA in those sectors for which they have responsibility. In July 2019, the CMA signed a memorandum of understanding with the FCA and the PSR, which sets out the arrangements for allocating cases, sharing information, dealing with confidentiality constraints, and pooling resources in relation to their concurrent objectives to promote competition.

The CMA has launched a consultation to review existing market remedies to assess whether they remain necessary or proportionate. The scale of the review represents a material consolidation of legacy obligations. If remedies are amended or removed, this could reduce ongoing regulatory and operational burden.

The Digital Markets, Competition and Consumers Act 2024 introduced a new targeted and proportionate regulatory regime to address concerns around competition in the digital industry.

EU regulation

The Group maintains a deposit-taking subsidiary in Berlin, Germany and an investment firm subsidiary in Frankfurt, Germany. The Berlin-based subsidiary (Lloyds Bank GmbH) has a branch in the Netherlands. The Group also maintains a separate branch of Lloyds Bank plc in Berlin. All of these entities are subject to EU and German regulations and are supervised by Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and Deutsche Bundesbank. The Group maintains an additional entity for Scottish Widows Europe in Luxembourg, which is regulated by Commissariat aux Assurances (CAA).

See also "Regulatory and Legal Risks – Lloyds Bank Group faces risks associated with its compliance with a wide range of laws and regulations" and "Regulatory and Legal Risks – Lloyds Banking Group, including Lloyds Bank Group, is subject to resolution planning requirements, which could have an adverse impact on Lloyds Bank Group's business" on **pages 10 and 13 respectively of the Lloyds Bank plc Form 6-K - "Risk Factors"**.

US regulation

Lloyds Bank Corporate Markets plc ("LBCM") maintains a branch in the US and Lloyds Bank maintains a representative office in the US. As a result, Lloyds Banking Group plc and its subsidiaries doing business or conducting activities in the US are subject to oversight by the Federal Reserve Board. The LBCM branch is also subject to regulation by the New York State Department of Financial Services.

Lloyds Banking Group plc is treated as a bank holding company under the US Bank Holding Company Act of 1956 ("BHC Act") and has elected to be a financial holding company. Financial holding companies may engage in a broader range of financial and related activities than are permitted to bank holding companies that do not maintain financial holding company status, including underwriting and dealing in all types of securities. A financial holding company and its depository institution subsidiaries must meet certain capital ratios and be deemed to be "well managed" for purposes of the Federal Reserve Board's regulations. A financial holding company's direct and indirect activities and investments in the US are limited to those that are "financial in nature" or "incidental" or "complementary" to a financial activity, as defined in section 4(k)(4) of the BHC Act or determined by the Federal Reserve Board. The Bank, as a subsidiary of Lloyds Banking Group plc, is subject to the same restrictions.

Bank holding companies and financial holding companies are also subject to approval requirements in connection with certain acquisitions or investments. For example, the Bank, as a subsidiary of Lloyds Banking Group plc, is required to obtain the prior approval of the Federal Reserve Board before acquiring, directly or indirectly, the ownership or control of more than 5% of any class of the voting shares of any US bank or bank holding company.

A major focus of US governmental policy relating to financial institutions in recent years has been combating money laundering and terrorist financing and enforcing compliance with US economic sanctions, with serious legal and reputational consequences for any failures arising in these areas. Lloyds Bank Group engages, or has engaged, in a limited amount of business with counterparties in certain countries which the US State Department designated during the reporting period as state sponsors of terrorism, including Iran, Syria and Cuba. At 31 December 2025, Lloyds Bank Group did not believe that its business activities relating to countries designated as state sponsors of terrorism in 2025 were material to its overall business.

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| **10** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

Lloyds Bank Group estimates that the value of its business in respect of such states represented less than 0.01% of its total assets and, for the year ended December 2025, Lloyds Bank Group believes that its revenues from all activities relating to such states were less than 0.001% of its total income. This information has been compiled from various sources within Lloyds Bank Group, including information manually collected from relevant business units, and this has necessarily involved some degree of estimate and judgement.

*Disclosure pursuant to Section 219 of The Iran Threat Reduction and Syria and Human Rights Act ("ITRA")*

Since the introduction of an enhanced financial sanctions policy, Lloyds Bank Group has been proactive in reducing its dealings with Iran and Syria, and individuals and entities associated with these countries. There remain a small number of historic business activities which Lloyds Bank Group has not yet been able to terminate for legal or contractual reasons.

Pursuant to ITRA Section 219, the Group notes that during 2025, its non-US affiliates, Lloyds Bank plc and Bank of Scotland plc, received or made payments involving entities owned or controlled by the Government of Iran as defined under section 560.304 of title 31, Code of Federal Regulations, and/or designated under Executive Order 13382 or 13224. In all cases, the payment was permitted under UK sanctions legislation, specific authority was sought from and granted by HM Treasury, the UK's Competent Authority to provide such authorisations or the payment(s) were credited to a blocked account, held in the name of the entity, in accordance with UK sanctions legislation.

Gross revenues from these activities were approximately £4,900. Net profits from these activities were approximately £4,900.

Lloyds Bank Group's business activities, being reported below, are conducted in compliance with applicable laws in respect of Iran and Syria sanctions and, except as noted below, Lloyds Bank Group intends to continue these historic activities until it is able to legally terminate the contractual relationships or to maintain/ manage them in accordance with prevailing sanctions obligations. The nature of these activities is as follows:

1. Limited and infrequent payments made to and received from entities directly or indirectly linked to the Government of Iran. Such payments are only made if they comply with UK regulation and legislation and/or licence from the US Treasury Department's Office of Foreign Assets Control.

2. Payments made to a blocked account in the name of Commercial Bank of Syria related to historic guarantees, entered into by Lloyds Bank Group between 1997 and 2008, the majority of which relate to Bail Bonds for vessels. The Commercial Bank of Syria's designation under Executive Order 13382 ended on 30 June 2025.

**C.&nbsp;&nbsp;&nbsp;&nbsp;Organizational structure**

The Bank is a wholly-owned subsidiary of Lloyds Banking Group plc. Lloyds Banking Group plc is the holding company of the Lloyds Banking Group, which consists of Lloyds Banking Group plc and its subsidiaries. The following are significant subsidiaries of the Bank as at 31 December 2025.

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|:---|:---|:---|:---|:---|
| **Name of subsidiary undertaking** | **Country of<br>registration/<br>incorporation** | **Percentage of equity<br>share capital and<br>voting rights held** | **Nature of business** | **Registered office** |
| HBOS plc | Scotland | 100% | Holding company | The Mound, Edinburgh EH1 1YZ |
| Bank of Scotland plc | Scotland | 100%\* | Banking and financial services | The Mound, Edinburgh EH1 1YZ |

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\*&nbsp;&nbsp;&nbsp;&nbsp;Indirect interest

The principal area of operation for each of the above subsidiaries is the United Kingdom.

**D.&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment**

Not applicable.

**Item 4A. Unresolved Staff Comments**

Not applicable.

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| **11** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Item 5. Operating and Financial Review and Prospects**

**A.&nbsp;&nbsp;&nbsp;&nbsp;Operating results**

Reference is made to the sections titled:

• "Economic environment" and "Competitive environment" on **pages [4](#i0ef315f1633d489297ba47cb55a2f9b1_73) to 5**;

• Future developments in relation to the Group's IFRS Accounting Standard reporting are discussed in "Note 1: Basis of preparation" on **page 80 of the Annual Report 2025**;

• "Note 3: Critical accounting judgements and key sources of estimation uncertainty"on **page 88 of the Annual Report 2025**;

**• "**Note 4: Segmental analysis" on **pages 88 to 91 of the Annual Report 2025;** and

• "Note 17: Derivative financial instruments" on **pages 115 to 117 of the Annual Report 2025**.

**Results of operations – 2025 and 2024**

**Income statement**

Reference is made to the "Consolidated income statement" on **page 73 of the Annual Report 2025** for the Group's income statement for each of the last two years. Reference is also made to the "Business review" section on **page 1 of the Annual Report 2025** for a description of the Bank's results of operations.

**Balance sheet**

Reference is made to the "Consolidated balance sheet" on **page 75 of the Annual Report 2025** for the Group's balance sheet for each of the last two years. Reference is also made to the "Business review" section on **page 1 of the Annual Report 2025** for a description of material movements within the Group's consolidated balance sheet.

**Capital**

For further detail on the capital position, reference is made to "Capital risk" on **pages 22 to 26 of the Annual Report 2025.**

**Results of operations – 2023**

The Lloyds Bank Group's results for the year ended 31 December 2023, and a discussion of the results for the year ended 31 December 2024 compared to those for the year ended 31 December 2023, were included in the Annual Report on Form 20-F for the year ended 31 December 2024, filed with the SEC on 27 February 2025 ("Annual Report 2024"), the discussion for which is hereby incorporated by reference into this document.

**Environmental matters**

Lloyds Banking Group sets the environmental goals and measures the environmental achievements of the Lloyds Banking Group as a whole.

**Governmental policies**

For information regarding the effects of governmental policies and factors on the Group's operating results, please see the section titled "Regulatory and Legal Risks" under Item 3.D - "Risk Factors" on **page [3](#i0ef315f1633d489297ba47cb55a2f9b1_4398046515488)** and the section titled "Regulation" under Item 4.B - "Business Overview" on **pages [9](#i0ef315f1633d489297ba47cb55a2f9b1_94) to [11](#i605ff8c5bfc4441290e43a475d4d9346_2861)**.

**Risk management**

Reference is made to the section titled "Risk management" on **pages 17 to 62 of the Annual Report 2025** for information on the operating results. Included in this section incorporated by reference below are disclosures marked as audited. Such disclosures marked as audited form part of the audited consolidated financial statements included in Item 18.

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| **12** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Glossary**

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|:---|:---|
| **Term used** | **US equivalent or brief description** |
| Accounts | Financial statements. |
| Articles of association | Articles and bylaws. |
| Associates | Long-term equity investments accounted for by the equity method. |
| Balance sheet | Statement of financial position. |
| Building society | A building society is a mutual institution set up to lend money to its members for house purchases. |
| Buy-to-let mortgages | Buy-to-let mortgages are those mortgages offered to customers purchasing residential property as a rental investment. |
| Called-up share capital | Ordinary shares, issued and fully paid. |
| Contract hire | Leasing. |
| Creditors | Payables. |
| Debtors | Receivables. |
| Finance lease | Capital lease. |
| Freehold | Ownership with absolute rights in perpetuity. |
| Leasehold | Land or property which is rented from the owner for a specified term under a lease. At the expiry of the term the land or property reverts back to the owner. |
| Net income | Profit before tax, excluding total costs and underlying impairment |
| Nominal value | Par value. |
| Ordinary shares | Common stock. |
| Overdraft | A line of credit, contractually repayable on demand unless a fixed-term has been agreed, established through a customer's current account. |
| Preference shares | Preferred stock. |
| Premises | Real estate. |
| Profit attributable to equity shareholders | Net income. |
| Provisions | Reserves. |
| Retained profits | Retained earnings. |
| Share capital | Capital stock. |
| Shareholders' equity | Stockholders' equity. |
| Share premium account | Additional paid-in capital. |
| Shares in issue | Shares outstanding. |
| Specialist mortgages | Specialist mortgages include those mortgage loans provided to customers who have self-certified their income. New mortgage lending of this type has not been offered by the Group since early 2009. |
| Undistributable reserves | Restricted surplus. |
| Write-offs | Charge-offs. |

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Reference is made to the sections titled:

• "Regulation" section under Item 4.B - "Business overview" on **pages [9](#i0ef315f1633d489297ba47cb55a2f9b1_94) to [11](#i0ef315f1633d489297ba47cb55a2f9b1_100)**; and

• "Legal actions and regulatory matters" section under Item 8 - "Financial Information" on **page [21](#i0ef315f1633d489297ba47cb55a2f9b1_208).**

**B.&nbsp;&nbsp;&nbsp;&nbsp;Liquidity and capital resources**

Omitted.

**C.&nbsp;&nbsp;&nbsp;&nbsp;Research and development, patents and licenses etc.**

Not applicable.

**D.&nbsp;&nbsp;&nbsp;&nbsp;Trend information**

Omitted.

**E.&nbsp;&nbsp;&nbsp;&nbsp;Critical accounting estimates**

Reference is made to the section titled "Note 3: Critical accounting judgements and key sources of estimation uncertainty" on **page 88 of the Annual Report 2025** for information on critical accounting estimates.

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| **13** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Item 6. Directors, Senior Management and Employees**

**A.&nbsp;&nbsp;&nbsp;&nbsp;Directors and senior management**

Reference is made to the section titled "Corporate Governance Statement" on **pages 12 to 13 of the Annual Report 2025**.

The directors of the Bank are:

**Non-executive directors**

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| **1.Sir Robin Budenberg CBE**<br>Chair<br>Age: 66<br>Chair of the Nomination and Governance Committee and Member of the Remuneration Committee and the Responsible Business Committee<br>**Appointed:** October 2020 (Board), January 2021 (Chair)<br>**Skills, experience, and contribution:** <br>• Extensive financial services and investment banking experience <br>• Strong governance and strategic advisory skills in relation to companies and government<br>• Regulatory, public policy and stakeholder management experience <br>Robin was Chair of The Crown Estate for nine years until July 2025. He spent 25 years advising UK companies and the UK Government while working for S.G. Warburg/UBS Investment Bank and was formerly Chief Executive and Chairman of UK Financial Investments (UKFI), managing the Government's investments in UK banks following the 2008 financial crisis. He qualified as a chartered accountant.<br>**Key external appointments:**<br>None. | **2.Nigel Hinshelwood**<br>Senior Independent Director<br>Age: 60<br>Member of the Audit Committee, the Board Risk Committee, the Remuneration Committee and the Nomination and Governance Committee<br>**Appointed:** January 2019<br>**Skills, experience, and contribution:** <br>• Extensive experience in the financial services sector in the UK and worldwide <br>• Significant experience of large-scale transformation, operations and technology<br>Nigel was a partner at Ernst & Young, and also held various roles at HSBC, including Deputy CEO of HSBC Bank plc, Head of HSBC Insurance Holdings, Chief Operating Officer for EMEA and Global Head of Operations. Nigel was formerly a Non-Executive Director of Lloyd's of London, Nordea Bank and Ikano Bank.<br>**Key external appointments:**<br>Chair and Non-Executive Director of Marsh Limited, International Advisory Council Member of Adobe Systems Software Ireland Limited, Advisory Council Member of International Association of Credit Portfolio Managers, Member of the Google Cloud Advisory Board of Google Cloud EMEA and Senior Advisor to Capital.Com. |

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| **3.Sarah Bentley**<br>Independent Director<br>Age: 54<br>Member of the Remuneration Committee and the Responsible Business Committee<br>**Appointed:** January 2019<br>**Skills, experience, and contribution:**<br>• Extensive digital and digital transformation experience<br>• Strong customer and marketing skills<br>Sarah is Chair of the Gender Equality Leadership Team at Business in the Community. She was formerly Chief Executive Officer and Executive Director of Thames Water Utilities Limited and Director of Water UK, the trade association of the water and wastewater industry. Prior to those roles, Sarah was Chief Customer Officer at Severn Trent plc and a member of its Executive Committee and the Managing Partner for Accenture's Digital business unit in the UK & Ireland. She has worked internationally in a number of roles including Strategy, Marketing & Propositions for BT's Global Services division, CEO of Datapoint, and Senior Vice President of eLoyalty.<br>**Key external appointments:**<br>Director of Scanes Bentley & Associates Limited and Chair of the Gender Equality Leadership Team at Business in the Community. | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4. Nathan Bostock**<br>Independent Director and Chair of Lloyds Bank Corporate Markets plc and Lloyds Bank GmbH<br>Age: 65<br>Member of the Audit Committee and Board Risk Committee<br>**Appointed:** August 2024<br>**Skills, experience, and contribution:**<br>• A wealth of financial, risk and regulatory expertise<br>• Extensive experience in large-scale customer and corporate facing businesses<br>• Significant executive experience in the financial services industry<br>Nathan was Chief Executive Officer of Santander UK plc from 2014 until 2022 and then Head of Investment Platforms at Banco Santander S.A. until his retirement from Santander in 2023. Prior to joining Santander in 2014, Nathan was an executive director and Group Chief Financial Officer of RBS and previously held the post of Chief Risk Officer at RBS. Before joining RBS, Nathan held various senior positions at Santander UK plc between 2004 and 2009, including Executive Director, Finance Director and commercial Chief Executive Officer roles in Financial Markets and Corporate Banking and in Cards and Insurance. He is qualified as a chartered accountant.<br>**Key external appointments:**<br>Non-Executive Director of Centrica plc. |

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| **14** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

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| **5. Brendan Gilligan**<br>Independent Director<br>Age: 69<br>Member of the Audit Committee and the Board Risk Committee<br>**Appointed:** January 2019<br>**Skills, experience, and contribution:**<br>• Extensive experience in core strategic finance and controllership roles in the financial services industry<br>• Significant experience of serving on the boards of regulated financial services businesses in the UK, France, Switzerland and Poland<br>Brendan's career began in the Public Audit division of KPMG in Ireland and Canada. He subsequently worked in commercial and consumer banking services and financing with Woodchester Investments plc and, after its acquisition by General Electric Company, with GE Capital until his retirement in April 2018.<br>**Key external appointments:**<br>Non-Executive Director of Cabot Credit Management Group Limited. | **6.Sarah Legg**<br>Independent Director<br>Age: 58<br>Chair of the Audit Committee and Member of the Board Risk Committee and the Responsible Business Committee<br>**Appointed:** December 2019<br>**Skills, experience, and contribution:**<br>• Strong financial leadership and regulatory reporting skills <br>• Significant audit and risk experience in financial leadership <br>• Strong transformation programme experience<br>Sarah has spent her entire executive career in financial services with almost 30 years at HSBC. She was the Group Financial Controller, a Group General Manager and CFO for HSBC's Asia Pacific region. She also spent eight years as a Non-Executive Director of Hang Seng Bank Limited. <br>**Key external appointments**: <br>Non-Executive Director of Severn Trent plc, Non-Executive Director of Man Group plc and a Trustee of the Lloyds Bank Foundation for England and Wales. |
| **7.Amanda Mackenzie LVO OBE**<br>Independent Director<br>Age: 62<br>Chair of the Responsible Business Committee and Member of the Remuneration Committee, the Nomination and Governance Committee and the Audit Committee<br>**Appointed:** October 2018<br>**Skills, experience, and contribution:**<br>• Extensive experience in ESG matters including responsible business and sustainability <br>• Strong customer engagement and digital technology experience <br>• Significant marketing and brand background <br>Amanda was Chief Executive of Business in the Community, of which King Charles III is the Royal Founding Patron and which promotes responsible business and corporate responsibility. Prior to that role, she was a member of Aviva's Group Executive for seven years as Chief Marketing and Communications Officer and was seconded to help launch the United Nations Sustainable Development Goals. She is also a former Director of British Airways AirMiles, BT, Hewlett Packard Inc and British Gas. <br>**Key external appointments:**<br>Non-Executive Director of The British Land Company plc, Chair of The Queen's Reading Room and Chair and partner of Otherwise Partners LLP. | **8.Harmeen Mehta**<br>Independent Director<br>Age: 51<br>**Appointed:** November 2021<br>**Skills, experience, and contribution:**<br>• Over 25 years' experience leading digital, AI-driven, complex transformation<br>• Experience of building and running technology-led businesses and creating new ventures<br>• A wealth of international and financial services knowledge having lived in 11 countries and worked across 30 countries on six continents<br>Harmeen was appointed Chief Digital and Innovation Officer at Equinix in April 2025. Prior to that role, she was Chief Digital and Innovation Officer at BT, and spent seven years as Global Chief Information Officer and Head of Cyber Security and Cloud Business at Bharti Airtel, leading its cloud and security businesses. Earlier in her career, Harmeen held CIO positions at BBVA, HSBC and Bank of America Merrill Lynch. <br>**Key external appointments:** <br>Chief Digital and Innovation Officer at Equinix and Non-Executive Director, UK Parliament, Information & Digital Board. |

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| **15** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

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| **9.Cathy Turner**<br>Independent Director<br>Age: 62<br>Chair of the Remuneration Committee and Member of the Nomination and Governance Committee and Board Risk Committee<br>**Appointed:** November 2022<br>**Skills, experience, and contribution:**<br>• Significant executive and non-executive financial services experience <br>• Knowledge of complex remuneration matters <br>• Communications expertise with a broad range of stakeholders including investors, regulators, government, media and unions<br>Cathy has significant financial services experience, having worked in senior executive positions at Barclays plc and at the Group. Cathy has previously been a Non-Executive Director and Chair of the Remuneration Committee of Aldermore Group plc, Quilter plc, Spectris plc and Countrywide plc.<br>**Key external appointments:** <br>Non-Executive Director of Rentokil Initial plc and Partner on a part-time basis at Manchester Square Partners LLP. | **10. Chris Vogelzang**<br>Independent Director <br>Age: 63<br>Member of the Responsible Business Committee and, with effect from 1 April 2026, the Board Risk Committee <br>**Appointed:** June 2025<br>**Skills, experience, and contribution:**<br>• Extensive experience in retail and commercial banking <br>• Strong understanding of technology's role in financial services<br>• Track record of driving transformation within organisations<br>Chris was Chief Executive Officer of Danske Bank A/S from 2019 until 2021. Prior to that, he held a number of senior positions at ABN AMRO, including Managing Board member with responsibility for Retail and Private Banking, Chief Executive Officer of Retail Banking for The Netherlands and Chief Executive Officer of Global Private Banking.<br>**Key external appointments:**<br>Non-Executive Director of Wolters Kluwer N.V. |

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**11. Catherine Woods**<br>Independent Director<br>Age: 63<br>Chair of the Board Risk Committee and Member of the Audit Committee and the Remuneration Committee<br>**Appointed:** March 2020<br>**Skills, experience, and contribution:**<br>• Extensive executive experience of international financial institutions <br>• Deep experience of risk and transformation oversight <br>• Strong focus on culture and corporate governance <br>Catherine is a former Deputy Chair and Senior Independent Director of AIB Group plc where she also chaired the Board Audit Committee. In her executive career with J.P. Morgan Securities, she was Vice President, European Financial Institutions, Mergers and Acquisitions, and Vice President Equity Research Department, forming the European Banks Team. <br>**Key external appointments:** <br> Deputy Chair of BlackRock Asset Management Ireland Limited.<br>

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| **16** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Executive directors**

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| | |
|:---|:---|
| **1.Charlie Nunn**<br>Executive Director and Group Chief Executive<br>Age: 54<br>**Appointed:** August 2021<br>**Skills, experience, and contribution:**<br>• Extensive financial services experience including in chief executive and other leadership roles<br>• Strategic planning and implementation <br>• Extensive experience of digital transformation <br>Charlie has over 25 years' experience in the financial services sector. Prior to joining the Group, Charlie held a range of leadership positions at HSBC, including Global Chief Executive, Wealth and Personal Banking, and Group Head of Wealth Management and Digital, as well as Global Chief Operating Officer of Retail Banking and Wealth Management.<br>Charlie began his career at Accenture, where he worked for 13 years in the US, France, Switzerland and the UK before being made a Partner. He then moved to McKinsey & Co. as a Senior Partner, leading on projects for five years. <br>**External appointments:**<br>None. | **2.William Chalmers**<br>Executive Director and Chief Financial Officer<br>Age: 57<br>**Appointed:** August 2019<br>**Skills, experience, and contribution:**<br>• Significant board-level strategic and financial leadership experience <br>• Strategic planning and development, mergers and acquisitions, equity and debt capital structuring and risk management <br>William joined the Board in August 2019, when he was appointed Chief Financial Officer and was Interim Group Chief Executive from May 2021 to August 2021.<br>William has worked in financial services for over 25 years and previously held a number of senior roles at Morgan Stanley, including Co-Head of the Global Financial Institutions Group and Head of EMEA Financial Institutions Group. Before joining Morgan Stanley, William worked for J.P. Morgan, again in the Financial Institutions Group. <br>**External appointments:**<br>None. |

---

**B.&nbsp;&nbsp;&nbsp;&nbsp;Compensation**

Omitted.

**C.&nbsp;&nbsp;&nbsp;&nbsp;Board practices**

See the section titled "Item 6 - A. Directors and senior management" on **pages [14](#i0ef315f1633d489297ba47cb55a2f9b1_151) to [17](#i0ef315f1633d489297ba47cb55a2f9b1_163)** of this Annual Report on Form 20-F for information on board practices.

Please see "Item 19.C - Exhibits" for information on directors' service contracts.

**Committees of the Board**

The Board operates a number of Committees, composed of non-executive directors, with the responsibilities set out below.

Nomination and Governance Committee

Responsible for keeping the Board's governance arrangements under review, ensuring there is a formal, rigorous and transparent procedure for the appointment of new directors, ensuring Board and senior management succession plans are in place, leading the process for Board appointments and assisting the Board in ensuring its composition is regularly reviewed and refreshed.

Audit Committee

Responsibilities include monitoring and reviewing the formal arrangements established by the Board in respect of the integrity of the financial reporting and narrative reporting of Lloyds Bank Group and the Bank, the independence and effectiveness of the internal and external audit functions and the effectiveness of the internal controls and the risk management framework.

Board Risk Committee

Responsible for assisting the Board in fulfilling its risk governance and oversight responsibilities, including oversight of the development, implementation and maintenance of the Bank's risk appetite, risk principles and overall risk management and internal control framework.

Remuneration Committee

Responsibilities include reviewing and approving the remuneration policy and framework for the directors of the Group and the overall remuneration policy for the Group and overseeing the implementation of those policies.

Responsible Business Committee

Responsibilities include providing oversight of and support for the strategy and plans for delivering the Bank's aspirations to become a truly purpose-driven organisation, considering and recommending to the Board for approval the reporting relating to purpose and sustainability matters, oversight of Consumer Duty responsibilities and being the designated body for workforce engagement.

**Service Agreements**

The service contracts of all current executive directors are terminable on 12 months' notice from Lloyds Bank Group and six months' notice from the individual.

**Letters of Appointment**

The non-executive directors (including the Chair) all have letters of appointment. The Chair's engagement may be terminated on six months' notice by either party. The Chair and the independent non-executive directors are not entitled to receive any payment for loss of office (other than in the case of the Chair's fees for the six month notice period). Independent non-executive directors are appointed for an initial term of three years after which their appointment may continue subject to an annual review. Their appointment may be terminated, in accordance with statute, regulation and the articles of association, at any time with immediate effect and without compensation.

The service contracts and letters of appointment are available for inspection at the Bank's registered office.

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|:---|:---|
| **17** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Termination payments**

It is the Group's policy that where notice pay continues to be payable after termination, it should be paid on a phased basis, mitigated in the event that alternative employment is secured in line with executive directors service contracts. Where it is appropriate to make a Group Performance Share (GPS) award to the individual, this should relate to the period of actual service, rather than the full notice period. Any GPS payment will be determined on the basis of performance as for all continuing employees and will remain subject to performance adjustment (malus and clawback) and deferral.

Generally, on termination of employment, unvested GPS awards, Group Ownership Share awards, Long Term Share Plan awards, Long Term Incentive awards and other rights to payments will lapse except where termination falls within one of the reasons set out below. In the event of redundancy, the individual may receive a payment in line with statutory entitlements at that time. If an executive director is dismissed for gross misconduct, the executive director will receive normal contractual entitlements until the date of termination and all deferred GPS, Group Ownership Share, Long Term Share Plan and Long Term Incentive Plan awards will lapse.

---

| | | | |
|:---|:---|:---|:---|
| **Termination payments** | **Termination payments** | **Termination payments** | **Termination payments** |
| | **Base salary** | **Fixed share award** | **Pension, benefits and<br>other fixed remuneration** |
| **Resignation** | Entitlement to base salary continues for full notice period. If employment is terminated prior to end of notice period, balance of notice pay is paid in monthly instalments, offset by earnings from any new employment during this period. If resignation to take up a new employment, base salary would continue during any period of garden leave but may then cease if early release date agreed. | Outstanding awards continue and are released at the normal time and the number of shares subject to the award in the current year will be reduced to reflect the date of termination. | Paid until date of termination including any period of leave required by the Group (subject to individual benefit scheme rules). |
| **Redundancy or termination by mutual agreement** | Entitlement to base salary continues for full notice period. If employment is terminated prior to end of notice period, balance of notice pay is paid in monthly instalments, offset by earnings from any new employment during this period. | Outstanding awards will normally continue and be released at the normal time and the number of shares subject to the award in the current year will be reduced to reflect the date of termination unless, in the case of mutual agreement, the Committee determines that exceptional circumstances apply in which case shares may be released on termination. | Paid until date of termination including any period of leave required by the Group (subject to individual benefit scheme rules). |
| **Retirement/ill health, injury, permanent disability/death** | Paid until date of retirement/death. For ill health, injury or permanent disability which results in the loss of employment, paid for the applicable notice period (including any period of leave required by the Group). | Outstanding awards will normally continue and be released at the normal time and the number of shares subject to the award in the current year will be reduced to reflect the date of termination except for (i) death where shares are released on the date of termination; or (ii) in the case of permanent disability the Committee determines that exceptional circumstances apply in which case shares may be released on the date of termination. | Paid until date of death/ retirement (subject to individual benefit scheme rules). For ill health, injury, permanent disability, paid for the notice period including any period of leave required by the Group (subject to individual benefit scheme rules). |
| **Change of control or merger** | N/A | Outstanding awards will be payable on the date of the Change of Control and the number of shares subject to the award will be reduced to reflect the shorter accrual period. The Committee may decide that vested awards will be exchanged for (and future awards made over) shares in the acquiring company or other relevant company. | N/A |
| **Other reason where the Committee determines that the executive should be treated as a good leaver** | Entitlement to base salary continues for full notice period. If employment is terminated prior to end of notice period, balance of notice pay is paid in monthly instalments, offset by earnings from any new employment during this period. | Outstanding awards continue and are released at the normal time and the number of shares subject to the award in the current year will be reduced to reflect the date of termination. | Paid until date of termination including any period of leave required by the Group (subject to individual benefit scheme rules). |

---

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| | |
|:---|:---|
| **18** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

---

| | | | |
|:---|:---|:---|:---|
| **Termination payments** | **Termination payments** | **Termination payments** | **Termination payments** |
| | **Group Performance Share** <br>**(Annual bonus plan)** <sup>1,2,7</sup> | **Long Term Incentive Plan**<br>**(Long term variable reward plan)**<sup>2,6,7</sup> | **Chair and**<br>**Non-executive director fees**<sup>3</sup> |
| **Resignation**  | Unvested deferred GPS awards and entitlement to be considered for in-year award are forfeited on resignation<sup>5</sup>. | Unvested awards lapse on date of leaving (or on notice of leaving) unless the Committee determines otherwise in exceptional circumstances that they will vest on the original vesting date (or exceptionally on the date of leaving).<br>Where the award is to vest it will be subject to the original performance conditions and time pro-rating (for months worked in the performance period). Malus and clawback will apply.  | Paid until date of leaving Board. |
| **Redundancy or termination by mutual agreement**  | For cases of redundancy, unvested deferred GPS awards are retained and in-year GPS awards are accrued until the date of termination (or the commencement of garden leave if earlier). Such awards would be subject to deferral, malus and clawback.  | Awards vest on the original vesting date (or exceptionally on the date of leaving). Vesting is subject to the performance conditions and time pro-rating (for months worked in the performance period).<br>Malus and clawback provisions will continue to apply.  | Paid until date of leaving Board. |
| **Retirement/ill health, injury, permanent disability** | Unvested deferred GPS awards are retained and in-year GPS awards are accrued until the date of termination (or the commencement of garden leave if earlier). Such awards would be subject to deferral, malus and clawback. | Awards vest on the original vesting date (or exceptionally on the date of leaving). Vesting is subject to the performance conditions and time pro-rating (for months worked in the performance period).<br>Malus and clawback provisions will continue to apply.  | Paid until date of leaving Board. |
| **Death** | Unvested deferred GPS awards are retained and in-year GPS awards are accrued until the date of death. Deferred GPS awards vest on death in cash, unless the Committee determines otherwise. | Awards vest in full on the date of death unless in exceptional circumstances the Remuneration Committee determines that the performance against targets set do not support full vesting. | Paid until date of leaving Board. |
| **Change of control or merger**  | In-year GPS accrued up until date of change of control or merger (current year). Where there is a Corporate Event, deferred GPS awards vest to the extent and timing determined by the Committee in its absolute discretion. | Awards vest on date of event. Vesting is subject to the performance conditions and time pro-rating (for months worked in the performance period unless determined otherwise). The Committee may decide not to time pro-rate in its absolute discretion. Malus and clawback provisions will continue to apply. Instead of vesting, awards may be exchanged for equivalent awards over the shares of the acquiring company or another company or equivalent cash based awards. | Paid until date of leaving Board. |
| **Other reason where the Committee determines that the executive should be treated as a good leaver** | Unvested deferred GPS awards retained and in-year GPS awards are accrued until the date of termination (or the commencement of garden leave if earlier). Deferred GPS awards vest in line with normal timeframes and are subject to malus and clawback. The Committee may allow awards to vest early if it considers it appropriate. | Awards vest on the original vesting date (or exceptionally on the date of leaving). Vesting is subject to the performance conditions and time pro-rating (for months worked in the performance period). Malus and clawback provisions will continue to apply.  | Paid until date of leaving Board. |

---

1&nbsp;&nbsp;&nbsp;&nbsp;If any GPS is to be paid to the executive director for the current year, this will be determined on the basis of performance for the period of actual service, rather than the full notice period (and so excluding any period of leave required by the Group).

2&nbsp;&nbsp;&nbsp;&nbsp;Reference to change of control or merger includes a compromise or arrangement under section 899 of the Companies Act 2006 or equivalent. Fixed share awards may also be released/ exchanged in the event of a resolution for the voluntary winding up of the Company; a demerger, delisting, distribution (other than an ordinary dividend) or other transaction, which, in the opinion of the Committee, might affect the current or future value of any award; or a reverse takeover, merger by way of a dual listed company or other significant corporate event, as determined by the Committee. In the event of a demerger, special dividend or other transaction which would in the Committee's opinion affect the value of awards, the Committee may allow a deferred Group Performance Share award or a long term incentive award to vest to the extent relevant performance conditions are met to that date and if the Committee so determined, on a time pro-rated basis (unless determined otherwise) to reflect the number of months of the performance period worked.

3&nbsp;&nbsp;&nbsp;&nbsp;The Chair is entitled to six months' notice.

4&nbsp;&nbsp;&nbsp;&nbsp;The terms applicable on a cessation of employment to Group Ownership Share Awards are as shown on page 133 of the 2017 Remuneration Policy. The terms applicable on a cessation of employment to Long Term Share Plan awards as shown on page 141 of the 2020 Remuneration Policy.

5&nbsp;&nbsp;&nbsp;&nbsp;Clarifies that entitlement to consideration for in-year GPS award is forfeit on resignation.

6&nbsp;&nbsp;&nbsp;&nbsp;In the event that performance conditions are required to be assessed prior to the normal vesting date in connection with the leaver event, the Committee retains discretion to make such an assessment on such basis as it considers appropriate.

7&nbsp;&nbsp;&nbsp;&nbsp;Any awards which vest pursuant to a good leaver event will remain subject to any applicable post-vesting holding period.

On termination, the executive director will be entitled to payment for any accrued holiday not taken as part of any period of garden leave calculated by reference to base salary and fixed share award. The cost of legal, tax or other advice incurred by an executive director in connection with the termination of their employment and/or the cost of support in seeking alternative employment may be met up to a maximum of £100,000 (excl. VAT). Additional payments may be made where required to settle legal disputes, or as consideration for new or amended post-employment restrictions. Where an executive director is in receipt of expatriate or relocation expenses at the time of termination (as at the date of the AGM no current executive directors are in receipt of such expenses), the cost of actual expenses incurred or benefits provided may continue to be reimbursed for up to 12 months after termination or, at the Group's discretion, a one-off payment may be made to cover the costs of premature cancellation. The cost of repatriation may also be covered.

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| | |
|:---|:---|
| **19** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**D.&nbsp;&nbsp;&nbsp;&nbsp;Employees**

Omitted.

**E.&nbsp;&nbsp;&nbsp;&nbsp;Share ownership**

Omitted.

**F.&nbsp;&nbsp;&nbsp;&nbsp;Disclosure of a registrant's action to recover erroneously awarded compensation**

There was no erroneously awarded compensation to management.

In 2023, Lloyds Bank plc introduced a separate Performance Adjustment Policy which is specifically designed to comply with new US Securities and Exchange Commission (SEC) rules which require listed firms in the US (including foreign issuers such as Lloyds Bank plc) to be able to recover certain variable awards in the event of a restatement of the company's financial statements. This applies to awards made to the Group Executive Committee Members from 2 October 2023.

**Item 7. Major Shareholders and Related Party Transactions**

**A.&nbsp;&nbsp;&nbsp;&nbsp;Major shareholders**

The Bank is a wholly owned subsidiary of Lloyds Banking Group plc.

All shareholders within a class of Lloyds Banking Group plc's shares have the same voting rights. As at 5 February 2026 Lloyds Banking Group plc had received notification under the FCA Disclosure Guidance and Transparency Rules ('DTR') of the following holdings in Lloyds Banking Group plc's issued ordinary share capital.

---

| | | |
|:---|:---|:---|
| | **Interest in shares**<sup>1</sup> | **% of issued**<br>**share capital**<br>**/voting rights**<sup>2</sup> |
| BlackRock, Inc.<sup>3</sup> | 3668756765 | 5.14% |
| Norges Bank<sup>4</sup> | 1935747756 | 3.02% |

---

1&nbsp;&nbsp;&nbsp;&nbsp;On 31 October 2018, Harris Associates L.P. made a disclosure under the DTR of a decrease in its indirect holding, to 3,551,514,571 ordinary shares, representing 4.99% of that share class. On 19 May 2020, Harris Associates L.P. made a disclosure under the DTR of an increase in its holding to 3,523,149,161 ordinary shares, representing 5.00% of that share class. On 8 July 2021, Harris Associates L.P. made a disclosure under the DTR of a decrease in its holding to 3,545,505,426 ordinary shares, representing 4.99% of that share class. On 14 July 2021, Harris Associates L.P. made a disclosure under the DTR of an increase in its holding to 3,560,036,794 ordinary shares, representing 5.01% of that share class. On 19 July 2021, Harris Associates L.P. made a further disclosure under the DTR of a decrease in its holding to 3,546,216,787 ordinary shares, representing 4.99% of that share class. It is understood that Harris Associates L.P. disposed of their holding during the course of 2025.

2&nbsp;&nbsp;&nbsp;&nbsp;Percentage correct as at the date of notification. All holdings are direct unless stated to the contrary.

3&nbsp;&nbsp;&nbsp;&nbsp;The notification of 13 May 2015 provided by BlackRock, Inc. under Rule 5 of the DTR identifies (i) an indirect holding of 3,599,451,380 shares in Lloyds Banking Group plc representing 5.04% of the voting rights in Lloyds Banking Group plc as at 12 May 2015, and (ii) a holding of 69,305,385 in other financial instruments in respect of Lloyds Banking Group plc representing 0.09% of the voting rights of Lloyds Banking Group plc as at 12 May 2015. BlackRock, Inc.'s holding most recently notified to Lloyds Banking Group plc under Rule 5 of the DTR varies from the holding disclosed in BlackRock, Inc.'s Schedule 13-G filing with the SEC dated 8 February 2024, which identifies beneficial ownership of 5,352,886,800 shares in Lloyds Banking Group plc representing 8.4% of the issued share capital in Lloyds Banking Group plc. This variance is attributable to different notification and disclosure requirements between these regulatory regimes. The notifiable holding by BlackRock, Inc. received by Lloyds Banking Group plc has not changed since 31 December 2015. Prior to 31 December 2015, BlackRock, Inc.'s holding in Lloyds Banking Group plc was not required to be disclosed under the SEC rules.

4&nbsp;&nbsp;&nbsp;&nbsp;Holding is composed of 1,927,747,756 ordinary shares, and 8,000,000 American Depositary Receipts.

As at 5 February 2026, Lloyds Banking Group plc had 2,044,799 registered ordinary shareholders. The majority of Lloyds Banking Group plc's ordinary shareholders are registered in the United Kingdom. 2,400,874,341 ordinary shares, representing 4.07 per cent of Lloyds Banking Group plc's issued share capital, were held by BNY Mellon as depositary for the ordinary share American Depositary Share Programme through which there were 188 record holders.

Additionally, the majority of Lloyds Banking Group plc's preference shareholders are registered in the United Kingdom, with a further one record holder with an address in the United States registered through Lloyds Banking Group plc's preference share American Depositary Share Programme.

**B.&nbsp;&nbsp;&nbsp;&nbsp;Related party transactions**

Reference is made to the section titled "Note 32: Related party transactions" on **pages 131 to 132 of the Annual Report 2025** for information on related party transactions.

**C.&nbsp;&nbsp;&nbsp;&nbsp;Interests of experts and counsel**

Not applicable.

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|:---|:---|
| **20** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**Item 8. Financial Information**

**A.&nbsp;&nbsp;&nbsp;&nbsp;Consolidated statements and other financial information**

The Consolidated Financial Statements and Notes to the Consolidated Financial Statements, on **pages 73 to 137 of the Annual Report 2025** are incorporated herein by reference.

See also "Item 18 - Financial Statements" on **page [25](#i0ef315f1633d489297ba47cb55a2f9b1_367)**. The audit opinion of Deloitte LLP (PCAOB no. 1147) is also included in Item 18.

**Dividends**

The Bank's ability to pay dividends is restricted under UK company law. Dividends may only be paid if distributable profits are available for that purpose. In the case of a public limited company, a dividend may only be paid if the amount of net assets is not less than the aggregate of the called-up share capital and undistributable reserves and if the payment of the dividend will not reduce the amount of the net assets to less than that aggregate. In addition, as a regulated entity, the Bank cannot pay a dividend if the payment of such dividend would result in regulatory capital requirements not being met. Similar restrictions exist over the ability of the Bank's subsidiary companies to pay dividends to their immediate parent companies. Furthermore, in the case of the Bank, dividends may only be paid if sufficient distributable profits are available for distributions due in the financial year on certain preferred securities. The Board has the discretion to decide whether to pay a dividend and the amount of any dividend.

The table below sets out the interim and final dividends paid by the Bank for fiscal years 2021 through 2025.

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| | | | |
|:---|:---|:---|:---|
| | **Final<br>dividends for<br>previous year<br>paid during<br>current year<br>£m** | **Interim<br>dividends<br>£m** | **Total<br>dividends<br>£m** |
| 2021 | – | 2900 | 2900 |
| 2022 | – | – | – |
| 2023 | – | 4700 | 4700 |
| 2024 | – | 3990 | 3990 |
| **2025** | **–** | **2390** | **2390** |

---

**Legal actions and regulatory matters**

During the ordinary course of business the Group is subject to threatened or actual legal proceedings and regulatory reviews and investigations both in the UK and overseas. Further discussion on the Group's regulatory and legal provisions is set out in "Note 26: Provisions" on **pages 127 to 128 of the Annual Report 2025** and its contingent liabilities relating to other legal actions and regulatory matters is set out in "Note 33: Contingent liabilities, commitments and guarantees" on **pages 132 to 133 of the Annual Report 2025**.

**B.&nbsp;&nbsp;&nbsp;&nbsp;Significant changes**

No significant change has occurred since the date of the annual financial statements.

**Item 9. The Offer and Listing**

**A.&nbsp;&nbsp;&nbsp;&nbsp;Offer and listing details**

The ordinary shares of the Bank are not listed or traded on any stock exchange.

**B.&nbsp;&nbsp;&nbsp;&nbsp;Plan of distribution**

Not applicable.

**C.&nbsp;&nbsp;&nbsp;&nbsp;Markets**

Please refer to Item 9.A - "Offer and listing details" on **page [21](#i0ef315f1633d489297ba47cb55a2f9b1_217)**.

**D.&nbsp;&nbsp;&nbsp;&nbsp;Selling shareholders**

Not applicable.

**E.&nbsp;&nbsp;&nbsp;&nbsp;Dilution**

Not applicable.

**F.&nbsp;&nbsp;&nbsp;&nbsp;Expenses of the issue**

Not applicable.

**Item 10. Additional Information**

**A.&nbsp;&nbsp;&nbsp;&nbsp;Share capital**

Not applicable.

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| | |
|:---|:---|
| **21** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

**B.&nbsp;&nbsp;&nbsp;&nbsp;Memorandum of articles of association**

For information regarding the Articles of Association, please refer to the discussion under the corresponding section of the Annual Report on Form 20-F for the year ended 31 December 2021, filed with the SEC on 8 March 2022, which discussion is hereby incorporated by reference into this Annual Report on Form 20-F.

**C.&nbsp;&nbsp;&nbsp;&nbsp;Material contracts**

The Bank and its subsidiaries are party to various contracts in the ordinary course of business. There have been no material contracts, other than contracts entered into in the ordinary course of business, to which the Bank or any member of the Group became a party in 2025.

**D.&nbsp;&nbsp;&nbsp;&nbsp;Exchange controls**

There are no UK laws, decrees or regulations that restrict the Bank's import or export of capital, including the availability of cash and cash equivalents for use by the Lloyds Bank Group, or that affect the remittance of dividends, interest or other payments to non-UK holders of its securities.

**E.&nbsp;&nbsp;&nbsp;&nbsp;Taxation**

The Bank does not have any listed shares or American Depositary Shares (ADSs). The Bank's holding company, Lloyds Banking Group plc, has listed shares and ADSs, and includes in its Form 20-F a discussion intended as a general guide to current UK and US federal income tax considerations relevant to US holders of Lloyds Banking Group plc ordinary shares or ADSs.

**F.&nbsp;&nbsp;&nbsp;&nbsp;Dividends and paying agents**

Not applicable.

**G.&nbsp;&nbsp;&nbsp;&nbsp;Statements by experts**

Not applicable.

**H.&nbsp;&nbsp;&nbsp;&nbsp;Documents on display**

Documents referred to and filed with the SEC together with this Annual Report on Form 20-F can be read and copied at the SEC's public reference room located at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms.

Copies of this Annual Report on Form 20-F as well as the Annual Report 2025 can be downloaded from the Financial Downloads page at **www.lloydsbankinggroup.com**. The contents of this website are not incorporated by reference into this Annual Report on Form 20-F. This Annual Report on Form 20-F is also filed and can be viewed via EDGAR on **www.sec.gov**.

**I.&nbsp;&nbsp;&nbsp;&nbsp;Subsidiary information**

Reference is made to the Item 4.C - "Organisational structure" on **page [11](#i0ef315f1633d489297ba47cb55a2f9b1_100)**.

**J.&nbsp;&nbsp;&nbsp;&nbsp;Annual Report to Security Holders**

The Bank intends to submit any annual report provided to security holders in electronic format as an exhibit to a current report on Form 6-K.

**Item 11. Qualitative and Quantitative Disclosures About Market Risk**

Reference is made to the sections titled:

• "Credit Risk" on **pages 30 to 49 of the Annual Report 2025**;

• "Market Risk" on **pages 55 to 59 of the Annual Report 2025**; and

• "Note 36: Financial risk management" on **page 136 of the Annual Report 2025**

for information on market risk.

Reference is made to the "Loan portfolio" section under Item 4.B - "Business overview" on **page [7](#i0ef315f1633d489297ba47cb55a2f9b1_85)**.

**Item 12. Description of Securities Other than Equity Securities**

**A.&nbsp;&nbsp;&nbsp;&nbsp;Debt Securities**

Not applicable.

**B.&nbsp;&nbsp;&nbsp;&nbsp;Warrants and Rights**

Not applicable.

**C.&nbsp;&nbsp;&nbsp;&nbsp;Other Securities**

Not applicable.

**D.&nbsp;&nbsp;&nbsp;&nbsp;American Depositary Shares**

Not applicable.

---

| | |
|:---|:---|
| **22** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part II**

**Item 13. Defaults, Dividend Arrearages and Delinquencies**

None.

**Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds**

None.

**Item 15. Controls and Procedures**

To assist the Board in carrying out its functions and to provide independent oversight of internal control and risk management, certain responsibilities are delegated to the Board's Committees. The Board is kept up to date on the activities of the Committees through reports from each of the Committee Chairs. Terms of Reference for each of the Committees are available on the website at **www.lloydsbankinggroup.com**. Information on the role and activities of the Nomination and Governance Committee, the Audit Committee, the Board Risk Committee, the Remuneration Committee and the Responsible Business Committee can be found on **page [17](#i0ef315f1633d489297ba47cb55a2f9b1_166)**.

**Disclosure controls and procedures**

As of 31 December 2025, the Lloyds Bank Group, under the supervision and with the participation of the Lloyds Bank Group's management, including the Group Chief Executive and the Chief Financial Officer, performed an evaluation of the effectiveness of the Lloyds Bank Group's disclosure controls and procedures. Based on this evaluation, the Group Chief Executive and Chief Financial Officer concluded that the Bank's disclosure controls and procedures, at 31 December 2025, were effective for gathering, analysing and disclosing with reasonable assurance the information that the Lloyds Bank Group is required to disclose in the reports it files under the Securities Exchange Act of 1934, within the time periods specified in the SEC's rules and forms. The Lloyds Bank Group's management necessarily applied its judgement in assessing the costs and benefits of such controls and procedures, which by their nature can provide only reasonable assurance regarding management's control objectives.

**Changes in internal control over financial reporting**

There have been no changes in the Lloyds Bank Group's internal control over financial reporting during the year ended 31 December 2025 that have materially affected, or are reasonably likely to materially affect, the Group's internal control over financial reporting.

**Management report on internal control over financial reporting**

The management of the Bank is responsible for establishing and maintaining adequate internal control over financial reporting. The Bank's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS Accounting Standards.

The Bank's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS Accounting Standards and that receipts and expenditures are being made only in accordance with authorisations of management and directors of the Bank; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Bank's assets that could have a material effect on the financial statements.

The management of the Bank assessed the effectiveness of the Bank's internal control over financial reporting at 31 December 2025 based on the criteria established in Internal Control – Integrated Framework 2013 issued by the Committee of Sponsoring Organisations of the Treadway Commission (COSO). Based on this assessment, management concluded that, as at 31 December 2025, the Bank's internal control over financial reporting was effective.

Internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

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| | |
|:---|:---|
| **23** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part II** continued

**Item 16. [Reserved]**

[Reserved]

**Item 16A. Audit Committee Financial Expert**

Omitted.

**Item 16B. Code of Ethics**

Omitted.

**Item 16C. Principal Accountant Fees and Services**

Reference is made to the section titled "Note 12: Auditors' remuneration" on **pages 102 to 103 of the Annual Report 2025** for information on principal accountant fees and services.

**Auditor independence and remuneration**

Both the Lloyds Banking Group Board and the external auditor have policies and procedures designed to protect the independence and objectivity of the external auditor for Lloyds Banking Group plc and all of its subsidiary undertakings, including those entities within the Lloyds Bank Group. To ensure that there is an appropriate level of oversight the Lloyds Banking Group Audit Committee approves the nature of services that the external auditor is permitted to perform and the policy sets a financial threshold above which it must approve in advance all non-audit engagements of the external auditor; the policy permits senior management to approve certain engagements for permitted services with fees for amounts below the threshold. The policy also details those services that the external auditor is prohibited from providing; these are consistent with the non-audit services which the FRC considers to be prohibited. The total amount of fees paid to the auditor for both audit and non-audit related services in 2025 is disclosed in note "Note 12: Auditors' remuneration" to the financial statements.

**Item 16D. Exemptions from the Listing Standards for Audit Committees**

None.

**Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

None.

**Item 16F. Change in Registrant's Certifying Accountant**

Not applicable.

**Item 16G. Corporate Governance**

Not applicable.

**Item 16H. Mine Safety Disclosure**

Not applicable.

**Item 16I. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

**Item 16J. Insider Trading Policies**

The Bank has adopted dealing policies setting out requirements in relation to dealings in the Bank's securities by the Bank's Directors, its executive committee members and attendees (in each case through the Dealing Policy for Directors, GEC Members and GEC Attendees) and other employees (through the Code of Ethics and Responsibility). The Bank believes these policies to be reasonably designed to promote compliance with applicable insider trading and market abuse regulations, in particular the UK Market Abuse Regulation, insider trading laws, rules and regulations, and the exchange listing standards. The Board recognises that it is the individual responsibility of each director and employee to ensure he or she complies with the policies and applicable insider trading laws.

The Dealing Policy for Directors, GEC Members and GEC Attendees is filed as Exhibit 11.1 to this Annual Report on Form 20-F. The Code of Ethics and Responsibility can be found at **www.lloydsbankinggroup.com/sustainability/esg-policies-downloads.html** and is filed as Exhibit 11.2 to this Annual Report on Form 20-F.

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| **24** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part II** continued

**Item 16K. Cybersecurity**

The Group adopts a risk-based approach to mitigate cyber threats it faces. The effective operation of the Group's estate is supported by an IT and Cyber Security Governance framework, guided by a threat-based strategy which underpins investment decisions. The ongoing protection of the estate and confidentiality of material information is ensured through adherence to the Lloyds Banking Group Security Policy and supporting third-party supplier security schedule, which have been aligned to industry good practice including the NIST Cyber Security Framework; and material laws and regulations. The Group's IT systems and information security risk management processes, which includes assessment, documentation and treatment have been integrated into its overall enterprise risk management framework. The Group engages a specialist third party consultancy on a periodic basis, to assess the maturity of its cyber security programme, in assessing, identifying and managing material risks from cybersecurity threats. During the handling of an incident, the Cyber Security team will continuously monitor and assess the impact to the Group.

Whilst the Group did not identify any cyber threats that materially affected its business strategy, results of operations or financial condition in 2025, the Group remains exposed to the risk of cyber threats and future interruptions that could potentially disrupt business operations and materially adversely affect the Group's performance. The Board continues to invest heavily to protect the Group from cyber-attacks. Investment continues to focus on improving the Group's approach to identity and access management, data loss prevention, improving capability to detect, respond and recover from cyber-attacks and improved ability to manage vulnerabilities across the estate.

The Board has overall oversight responsibility for the Group's IT systems and information security risk management and delegates this oversight to the Group Risk Committee ("GRC"). GRC is responsible for ensuring that management has processes in place designed to identify and evaluate information, cyber and security risks that the Group is exposed to, implementing processes and programmes to manage these risks and mitigate related incidents within appetite. The Board Risk Committee ("BRC") continues to be supported by the IT and Cyber Advisory Forum ("ITCAF"), which is attended by the BRC chair and other Board members. ITCAF dedicates time and attention to reviewing and challenging risks associated with IT infrastructure, IT strategy, IT resilience and cyber risks. Senior management is responsible for identifying, considering and assessing material IT systems and security risks on an ongoing basis, establishing processes to ensure that such potential risk exposures are monitored, putting in place appropriate mitigation measures and maintaining control improvement programmes.

To deal with cybersecurity threats, Lloyds Banking Group has a dedicated Cyber Security function led by a certified CSO with over 14 years of security experience at the UK Government, Bank of England and major financial services institutions at a leadership level. The CSO actively participates in Audit Committee and Board meetings and is responsible for offering updates on information security risks and mitigation strategies to the Board and its subcommittees. Additionally, the CSO chairs a subcommittee comprised of stakeholders including, but not limited to security representatives, risk management, compliance and Group Internal Audit. This subcommittee is focused on information security, to review major policy changes, strategies and key risk mitigations to enhance the governance of the information security strategies and policies.

**Part III**

**Item 17. Financial Statements**

See response to Item 18 - "Financial Statements".

**Item 18. Financial Statements**

The Consolidated Financial Statements and Notes to the Consolidated Financial Statements, on **pages 73 to 137 of the Annual Report 2025** are incorporated herein by reference.

**Schedule: Parent company disclosures**

**(A)&nbsp;&nbsp;&nbsp;&nbsp;Company income statement**

---

| | | | |
|:---|:---|:---|:---|
| | **2025**<br>**£m** | 2024<br>£m | 2023<br>£m |
| Net interest income | **7907** | 8311 | 10526 |
| Net fee and commission income | **782** | 547 | 914 |
| Dividends received | **1116** | 1075 | 122 |
| Net trading and other operating income | **4040** | 3530 | 2151 |
| Other income | **5938** | 5152 | 3187 |
| **Total income** | **13845** | 13463 | 13713 |
| Operating expenses | **(7975)** | (7073) | (6947) |
| Impairment charge | **(301)** | (222) | (437) |
| **Profit before tax** | **5569** | 6168 | 6329 |
| Tax expense | **(1352)** | (1271) | (1669) |
| **Profit for the year** | **4217** | 4897 | 4660 |
| Profit attributable to ordinary shareholders | **3813** | 4534 | 4326 |
| Profit attributable to other equity holders | **404** | 363 | 334 |
| **Profit for the year** | **4217** | 4897 | 4660 |

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| **25** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part III** continued

**Schedule: Parent company disclosures** continued

**(B)&nbsp;&nbsp;&nbsp;&nbsp;Company balance sheet**

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| | | |
|:---|:---|:---|
| | **2025**<br>**£m** | 2024<br>£m |
| **Assets** |  |  |
| Cash and balances at central banks | **31917** | 36838 |
| Financial assets at fair value through profit or loss | **7270** | 6746 |
| Derivative financial instruments | **5841** | 7217 |
| &nbsp;&nbsp;&nbsp;Loans and advances to banks | **5600** | 6195 |
| &nbsp;&nbsp;&nbsp;Loans and advances to customers | **108497** | 105148 |
| &nbsp;&nbsp;&nbsp;Reverse repurchase agreements | **43962** | 44143 |
| &nbsp;&nbsp;&nbsp;Debt securities | **10355** | 9945 |
| &nbsp;&nbsp;&nbsp;Due from fellow Lloyds Banking Group undertakings | **159728** | 139380 |
| Financial assets at amortised cost | **328142** | 304811 |
| Financial assets at fair value through other comprehensive income | **36085** | 30116 |
| Intangible assets | **4081** | 4177 |
| Current tax recoverable | **960** | 2 |
| Deferred tax assets | **2574** | 3139 |
| Investment in subsidiary undertakings | **32359** | 31664 |
| Retirement benefit assets | **1733** | 1827 |
| Other assets | **3135** | 3715 |
| **Total assets** | **454097** | 430252 |
| **Liabilities** |  |  |
| Deposits from banks | **2986** | 2965 |
| Customer deposits | **282295** | 273511 |
| Repurchase agreements at amortised cost | **27124** | 15593 |
| Due to fellow Lloyds Banking Group undertakings | **19717** | 21204 |
| Financial liabilities at fair value through profit or loss | **8182** | 9653 |
| Derivative financial instruments | **7234** | 9376 |
| Debt securities in issue at amortised cost | **41237** | 34169 |
| Other liabilities | **3019** | 3732 |
| Retirement benefit obligations | **48** | 48 |
| Current tax liabilities | **–** | 891 |
| Provisions | **939** | 736 |
| Subordinated liabilities | **7872** | 6686 |
| **Total liabilities** | **400653** | 378564 |
| **Equity** |  |  |
| Share capital | **1574** | 1574 |
| Share premium account | **600** | 600 |
| Other reserves | **(1115)** | (1799) |
| Retained profits | **47018** | 45621 |
| **Ordinary shareholders' equity** | **48077** | 45996 |
| Other equity instruments | **5367** | 5692 |
| **Total equity** | **53444** | 51688 |
| **Total equity and liabilities** | **454097** | 430252 |

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| **26** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part III** continued

**Schedule: Parent company disclosures** continued

**(C)&nbsp;&nbsp;&nbsp;&nbsp;Company statement of changes in equity**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | | |
| | **Share**<br>**capital**<sup>1</sup><br>**£m** | **Share**<br>**premium**<sup>1</sup><br>**£m** | **Other<br>reserves<br>£m** | **Retained<br>profits<br>£m** | **Total<br>£m** | **Other<br>equity<br>instruments<br>£m** | **Total<br>£m** |
| At 1 January 2025 | **1574** | **600** | **(1799)** | **45621** | **45996** | **5692** | **51688** |
| **Comprehensive income** |  |  |  |  |  |  |  |
| Profit for the year | **–** | **–** | **–** | **3813** | **3813** | **404** | **4217** |
| *Other comprehensive income* |  |  |  |  |  |  |  |
| Post-retirement defined benefit scheme remeasurements, net of tax | **–** | **–** | **–** | **(152)** | **(152)** | **–** | **(152)** |
| Movements in revaluation reserve in respect of FVOCI assets, net of tax: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Debt securities | **–** | **–** | **78** | **–** | **78** | **–** | **78** |
| Gains and losses attributable to own credit risk, net of tax | **–** | **–** | **–** | **(91)** | **(91)** | **–** | **(91)** |
| Movements in cash flow hedging reserve, net of tax | **–** | **–** | **610** | **–** | **610** | **–** | **610** |
| Movements in foreign currency translation reserve,<br>net of tax | **–** | **–** | **(4)** | **–** | **(4)** | **–** | **(4)** |
| **Total other comprehensive income (loss)** | **–** | **–** | **684** | **(243)** | **441** | **–** | **441** |
| **Total comprehensive income** | **–** | **–** | **684** | **3570** | **4254** | **404** | **4658** |
| Transactions with owners |  |  |  |  |  |  |  |
| Dividends | **–** | **–** | **–** | **(2390)** | **(2390)** | **–** | **(2390)** |
| Distributions on other equity instruments | **–** | **–** | **–** | **–** | **–** | **(404)** | **(404)** |
| Issue of other equity instruments | **–** | **–** | **–** | **(9)** | **(9)** | **1514** | **1505** |
| Repurchases and redemptions of other equity instruments | **–** | **–** | **–** | **76** | **76** | **(1839)** | **(1763)** |
| Capital contributions received | **–** | **–** | **–** | **151** | **151** | **–** | **151** |
| Return of capital contributions | **–** | **–** | **–** | **(1)** | **(1)** | **–** | **(1)** |
| **Total transactions with owners** | **–** | **–** | **–** | **(2173)** | **(2173)** | **(729)** | **(2902)** |
| **At 31 December 2025** | **1574** | **600** | **(1115)** | **47018** | **48077** | **5367** | **53444** |

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1 Share capital and share premium, previously presented in aggregate, are now shown separately. Comparatives have been represented on a consistent basis.

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| **27** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part III** continued

**Schedule: Parent company disclosures** continued

**(D)&nbsp;&nbsp;&nbsp;&nbsp;Company cash flow statement**

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| | | | |
|:---|:---|:---|:---|
| | **2025**<br>**£m** | 2024<br>£m | 2023<br>£m |
| **Cash flows (used in) provided by operating activities** |  |  |  |
| Profit before tax | **5569** | 6168 | 6329 |
| Adjustments for: |  |  |  |
| &nbsp;&nbsp;&nbsp;Change in operating assets | **(26276)** | (27510) | 8782 |
| &nbsp;&nbsp;&nbsp;Change in operating liabilities | **20555** | 7961 | (15938) |
| &nbsp;&nbsp;&nbsp;Non-cash and other items | **1414** | 1576 | 2422 |
| &nbsp;&nbsp;&nbsp;Tax paid | **(3010)** | (98) | (728) |
| &nbsp;&nbsp;&nbsp;Tax refunded | **200** | – | – |
| **Net cash (used in) provided by operating activities** | **(1548)** | (11903) | 867 |
| **Cash flows (used in) provided by investing activities** |  |  |  |
| Purchase of financial assets | **(19755)** | (10449) | (10293) |
| Proceeds from sale and maturity of financial assets | **14237** | 7050 | 5286 |
| Purchase of property, plant and equipment | **(381)** | (284) | (350) |
| Purchase of other intangible assets | **(1090)** | (1137) | (1381) |
| Proceeds from sale of property, plant and equipment | **38** | 27 | 11 |
| Additional capital injections to subsidiaries | **(789)** | (1250) | (350) |
| Dividends received from subsidiaries | **1116** | 1075 | 122 |
| Distributions on other equity instruments received | **241** | 210 | 191 |
| Capital repayments and redemptions | **–** | 1200 | – |
| **Net cash used in investing activities** | **(6383)** | (3558) | (6764) |
| **Cash flows used in financing activities** |  |  |  |
| Dividends paid to ordinary shareholders | **(2390)** | (3990) | (4700) |
| Distributions on other equity instruments | **(404)** | (363) | (334) |
| Return of capital contributions | **(1)** | (1) | (1) |
| Interest paid on subordinated liabilities | **(554)** | (332) | (285) |
| Proceeds from issue of subordinated liabilities | **1761** | 386 | 670 |
| Proceeds from issue of other equity instruments | **1505** | 1168 | 745 |
| Repayment of subordinated liabilities | **(533)** | – | (92) |
| Repurchases and redemptions of other equity instruments | **(1763)** | (500) | – |
| Borrowings from parent company | **4611** | 2895 | 1942 |
| Repayments of borrowings to parent company | **(3206)** | (1280) | (931) |
| Interest paid on borrowings from parent company | **(413)** | (200) | (210) |
| **Net cash used in financing activities** | **(1387)** | (2217) | (3196) |
| Effects of exchange rate changes on cash and cash equivalents | **–** | – | – |
| Change in cash and cash equivalents | **(9318)** | (17678) | (9093) |
| Cash and cash equivalents at beginning of year | **44018** | 61696 | 70789 |
| **Cash and cash equivalents at end of year** | **34700** | 44018 | 61696 |

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**(E)&nbsp;&nbsp;&nbsp;&nbsp;Interests in subsidiaries**

The principal subsidiaries, both of which have prepared accounts to 31 December 2025 and whose results are included in the consolidated accounts of Lloyds Bank plc, are:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name of subsidiary undertaking** | **Country of<br>registration/<br>incorporation** | **Percentage of equity<br>share capital and<br>voting rights held** | **Nature of business** | **Registered office** |
| HBOS plc | Scotland | 100% | Holding company | The Mound, Edinburgh EH1 1YZ |
| Bank of Scotland plc | Scotland | 100%\* | Banking and financial services | The Mound, Edinburgh EH1 1YZ |

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\*&nbsp;&nbsp;&nbsp;&nbsp;Indirect interest

The principal area of operation for each of the above subsidiaries is the United Kingdom.

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| **28** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part III** continued

**Report of independent registered public accounting firm**

To the shareholders and the Board of Directors of Lloyds Bank plc

**Opinion on the financial statements**

We have audited the accompanying consolidated balance sheets of Lloyds Bank plc and subsidiaries (the 'Group') as at 31 December 2025 and 2024, the related consolidated income statements, consolidated statements of comprehensive income, statements of changes in equity, and cash flow statements, for each of the three years in the period ended 31 December 2025, and the related notes, the disclosures marked as 'Audited' within Item 5 in the Operating and Financial Review and Prospects section on **pages [12](#i0ef315f1633d489297ba47cb55a2f9b1_109) to [13](#i0ef315f1633d489297ba47cb55a2f9b1_145)** and the schedule included in Item 18, all included in the Annual Report on Form 20-F (collectively referred to as the 'financial statements'). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended 31 December 2025, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board ('IASB').

**Basis for opinion**

These financial statements are the responsibility of the Group's management. Our responsibility is to express an opinion on the Group's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

**Expected credit losses**

Impairment of loans and advances

Refer to notes 2, 13, 18, 19 and 36 in the financial statements

*Critical Audit Matter description*

The Group has recognised £3.2 billion of expected credit losses ('ECL') as at 31 December 2025. The valuation and allocation of ECL consists of a number of assumptions that are inherently uncertain and require a high degree of complex and subjective auditor judgement, specialised skills and knowledge, and complex impairment modelling. The increasing economic uncertainty resulting from geopolitical risks and the impact of changes in the US trade tariff rates has further heightened the levels of judgement required, especially in the development of the base case economic scenario and alternative economic scenarios.

The key areas we identified as having the most significant level of management judgement were in respect of:

• Multiple economic scenarios;

• Collectively assessed ECL;

• Individually assessed ECL; and

• ECL model adjustments.

Multiple economic scenarios

The Group's economics team develops the future economic scenarios by developing a base case forecast based on a set of conditioning assumptions, with the three outer economic scenarios (upside, downside and severe downside) derived using a Monte Carlo simulation around the base case. The modelled severe downside scenario is then adjusted to capture supply-side risks not contemplated by the Monte Carlo model. The upside, the base case and the downside scenarios are weighted at a 30% probability and the severe downside at a 10% probability. The development of the base case scenario, including the conditioning assumptions, is inherently highly complex and requires significant judgement.

Collectively assessed ECL

The ECL for the Retail and Commercial Banking divisions, except for individually assessed stage 3 commercial loans, is determined on a collective basis using impairment models. These models use a number of significant judgements to calculate a probability weighted estimate by applying a probability of default, exposure at default and a loss given default, taking account of collateral held or other loss mitigants, discounted using the effective interest rate.

The key judgements and estimates in determining the collectively assessed ECL include:

• modelling approach, model assumptions and judgements, and selection of modelling data;

• credit risk ratings for the Commercial Banking division, which are performed on a counterparty basis for larger exposures by a credit officer; and

• the appropriate allocation of assets into the correct staging taking into account any significant deterioration in credit risk since inception of the loan.

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| **29** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part III** continued

Individually assessed ECL

For individual provision assessments of larger exposures in stage 3 in the Commercial Banking division, complex and subjective auditor judgement including specialised knowledge is required in evaluating the methodology, models and inputs that are inherently uncertain in determining the ECL. The significant judgements in estimating provisions are the:

• completeness and appropriateness of the potential workout scenarios identified;

• probability of default assigned to each identified potential workout scenario; and

• valuation assumptions used in determining the expected recovery strategies.

ECL model adjustments

Where impairment models do not incorporate all factors relevant to estimating the ECL, adjustments are made to address known model limitations and data limitations, emerging or non-modelled risks and the impact of economic uncertainty on different industry sectors. The identification of model limitations is highly judgemental and inherently uncertain. The adjustments made to address these limitations require specialist auditor judgement when evaluating the:

• completeness of adjustments; and

• methodology, assumptions, models and inputs.

*How the Critical Audit Matter was addressed in the audit*

Multiple economic scenarios

We performed the following procedures:

• tested the controls over the generation of the multiple economic scenarios including those over the Group's governance processes to approve the base case, different scenarios and the weightings applied to each scenario;

• working with our internal economic specialists:

–challenged and evaluated economic forecasts in the base scenario such as the unemployment rate, House Price Index, Commercial Real Estate prices, inflation and forecasted interest rates, and Gross Domestic Product through comparison to independent economic outlooks, other external analyses and market data;

–challenged and evaluated the appropriateness of changes in assumptions and/or the model including changes to the non-modelled severe downside approach;

–challenged and evaluated the appropriateness of the methodology applied to generate alternative macroeconomic scenarios, including associated weightings and assumptions within the model; and

–independently replicated the multiple economic scenario model and compared the outputs of our independent model to the Group's output to test scenario generation;

• tested the completeness and accuracy of the data used by the model;

• performed a stand back assessment of the appropriateness of the weightings applied to each of the scenarios based on publicly available data; and

• evaluated the appropriateness of disclosures in respect of significant judgements and sources of estimation uncertainty including macroeconomic scenarios.

Collectively assessed ECL

We tested controls across the process to estimate the ECL provisions including:

• model governance, including model validation and monitoring;

• model assumptions;

• allocation of assets into stages, including those to determine the credit risk rating in the Commercial Banking division; and

• completeness and accuracy of the data used by the model.

Working with our internal modelling specialists our audit procedures over the key areas of estimation in the valuation and allocation of the ECL covered the following:

• Model estimations, where we:

–evaluated the appropriateness of the modelling approach and assumptions used;

–independently replicated a sample of the models for all in-scope portfolios and compared the outputs of our independent models to the Group's outputs;

–assessed model performance by evaluating variations between observed data and model predictions;

–developed an understanding of model limitations and assessed these and remedial actions; and

–tested the completeness and accuracy of the data used in model execution and calibration.

• Allocation of assets into stages, where we:

–evaluated the appropriateness of quantitative and qualitative criteria used for allocation into IFRS 9 stages, including independently assessing the credit rating of a sample of loans in the Commercial Banking division;

–tested the appropriateness of the stage allocation for a sample of exposures; and

–tested the data used by models in assigning IFRS 9 stages and evaluated the appropriateness of the model logic used.

Individually assessed ECL

For expected credit losses assessed individually we have:

• selected senior team members with extensive IFRS 9 knowledge and expertise to design and lead the execution of the audit of ECL;

• tested the controls over individually assessed provisions including assumptions and inputs into workout and recovery scenarios, as well as valuation assumptions used; and

• evaluated the appropriateness of workout and recovery scenarios identified, including the judgements to determine the timing and value of associated cash flows as well as consideration of climate risk.

ECL model adjustments

In respect of the adjustments to models, we performed the following procedures in conjunction with our specialists:

• tested the controls over the valuation of in-model and post-model adjustments, including methodology, calculation, assumptions and the completeness and accuracy of data used;

• evaluated the methodology, rationale and assumptions in developing the adjustments, and evaluated the Group's selection of approaches;

• tested the completeness and accuracy of the data used in formulating the judgements;

• performed a recalculation of adjustments;

• evaluated the completeness of adjustments based on our understanding of both model and data limitations; and

• assessed the appropriateness of the disclosures and whether the disclosures appropriately address the uncertainty which exists in determining the ECL.

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| **30** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

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**Part III** continued

**Regulatory and legal provisions**

Provisions

Refer to notes 2 and 26 in the financial statements

*Critical Audit Matter description*

The Group operates in an environment where it is subject to regulatory investigations, litigation and customer remediation including allegations of fraud and misconduct. The Group recognised an additional £800 million provision in the year following the FCA's announcement in October 2025 that it intends to implement a motor finance commission redress scheme. As at 31 December 2025, the total motor commission review provision is £1,950 million.

Significant judgement and estimation is required by the Group to assess the best estimate to settle the obligation in respect of motor finance commission arrangements based on the information available to the Group, under IAS 37 Provisions, Contingent Liabilities and Contingent Assets as:

• the final redress scheme is not expected to be published by the Financial Conduct Authority ('FCA') until March 2026;

• there are uncertainties over the likely response rate and cost of delivery; and

• the related disclosures must accurately reflect this.

*How the Critical Audit Matter was addressed in the audit*

We performed the following audit procedures:

• tested the Group's controls over the completeness of provisions, the review of the assessment of the provision and contingent liability disclosures against the requirements of IAS 37, the review of the appropriateness of judgements used to determine a best estimate and the completeness and accuracy of data used in the process;

• tested the governance control operating over the assumptions used in the motor finance commission provision model including agreement to previous redress experience where applicable;

• inspected information, both supportive and contradictory, including the decision made by the Supreme Court in August 2025, the FCA's redress proposal in CP25/27 and the view of independent analysts, to determine whether management's approach was reasonable;

• worked with our internal modelling specialists to independently recalculate the likely cost of redress under the FCA's proposal;

• tested the methodology and assumptions applied to determine the provision;

• evaluated the mathematical accuracy of the model including the completeness and accuracy of data used in the model;

• inspected correspondence and, where appropriate, made direct inquiry with the Group's regulators and internal and external legal counsel;

• verified and evaluated whether the methodology, data, significant judgements and assumptions and calculations used in the valuation of the provisions are appropriate in the context of the applicable financial reporting framework; and

• evaluated the assessment of the provision and that the contingent liability disclosures appropriately reflect the facts and key sources of estimation uncertainty, the associated probabilities and potential outcomes in accordance with IAS 37.

**Defined benefit obligations**

Retirement benefit obligations

Refer to notes 2 and 11 in the financial statements.

*Critical Audit Matter description*

The Group operates a number of defined benefit retirement schemes, the obligations for which totalled £26.6 billion as at 31 December 2025. Their valuation is determined with reference to key actuarial assumptions including mortality assumptions, discount rates and inflation rates. Due to the size of these schemes, small changes in these assumptions can have a material impact on the value of the defined benefit obligation and therefore, the determination of these assumptions requires significant auditor judgement.

*How the Critical Audit Matter was addressed in the audit*

We performed the following audit procedures:

• tested the Group's controls over the valuation of the defined benefit obligations, including controls over the assumptions setting process; and

• challenged and evaluated the key actuarial assumptions against the compiled expected ranges, determined by our internal actuarial experts, based on observable market indices and market experience.

/s/ Deloitte LLP

London, United Kingdom

26 February 2026

We have served as the Group's auditor since 2021.

---

| | |
|:---|:---|
| **31** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

---

------

**Part III** continued

**Item 19. Exhibits**

**A.&nbsp;&nbsp;&nbsp;&nbsp;Annual Report**

The following pages from the Annual Report 2025 (see Exhibit 15.1) are incorporated by reference into this Annual Report on Form 20-F. The content of websites and other sources, reports and materials referenced on these pages are not incorporated by reference into this Annual Report on Form 20-F.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | | **Pages in the Annual Report 2025** | **Pages in the Annual Report 2025** |
| **Annual Report on Form 20-F section** | **Annual Report on Form 20-F section** | **Section in the Annual Report 2025** | **From** | **To** |
| Part 1 | Item 4. | Consolidated income statement | 73 |  |
|  |  | Note 4: Segmental analysis | 88 | 91 |
| Part 1 | Item 5. | Note 1: Basis of preparation | 80 |  |
|  |  | Note 3: Critical accounting judgements and key sources of estimation uncertainty | 88 |  |
|  |  | Note 4: Segmental analysis | 88 | 91 |
|  |  | Note 17: Derivative financial instruments | 115 | 117 |
|  |  | Consolidated income statement | 73 |  |
|  |  | Business review | 1 | 2 |
|  |  | Consolidated balance sheet | 75 |  |
|  |  | Capital risk | 22 | 26 |
|  |  | Risk management | 17 | 62 |
| Part 1 | Item 6. | Corporate Governance Statement | 12 | 13 |
| Part 1 | Item 7. | Note 32: Related party transactions | 131 | 132 |
| Part 1 | Item 8. | Consolidated Financial Statements and Notes to the Consolidated Financial Statements | 73 | 137 |
|  |  | Note 26: Provisions | 127 | 128 |
|  |  | Note 33: Contingent liabilities, commitments and guarantees | 132 | 133 |
| Part 1 | Item 11. | Credit risk | 30 | 49 |
|  |  | Market risk | 55 | 59 |
|  |  | Note 36: Financial risk management | 136 |  |
| Part 2 | Item 16C. | Note 12: Auditors' remuneration | 102 | 103 |
| Part 3 | Item 18. | Consolidated Financial Statements and Notes to the Consolidated Financial Statements | 73 | 137 |

---

**B.&nbsp;&nbsp;&nbsp;&nbsp;The 6-K Risk Factors**

The following pages from the Form 6-K filed 29 January 2026 (see Exhibit 15.2) are incorporated by reference into this Annual Report on Form 20-F. The content of websites and other sources, reports and materials referenced on these pages are not incorporated by reference into this Annual Report on Form 20-F.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | | **Pages in the Form 6-K filed 29 January 2026** | **Pages in the Form 6-K filed 29 January 2026** |
| **Annual Report on Form 20-F section** | **Annual Report on Form 20-F section** | **Section in the Form 6-K filed 29 January 2026** | **From** | **To** |
| Part 1 | Item 3. | Risk Factors | 1 | 22 |
| Part 1 | Item 4. | Regulatory and Legal Risks - Lloyds Bank Group faces risks associated with its compliance with a wide range of laws and regulations | 10 |  |
|  |  | Regulatory and Legal Risks - Lloyds Banking Group, including Lloyds Bank Group, is subject to resolution planning requirements, which could have an adverse impact on Lloyds Bank Group's business | 13 |  |

---

---

| | |
|:---|:---|
| **32** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

---

------

**Part III** continued

**C.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits**

---

| | | |
|:---|:---|:---|
| 1 | [Articles of association of the Bank](https://www.sec.gov/Archives/edgar/data/1167831/000116010622000022/lloydsbankplcexhibit12021.htm)<sup>4</sup> | [Articles of association of the Bank](https://www.sec.gov/Archives/edgar/data/1167831/000116010622000022/lloydsbankplcexhibit12021.htm)<sup>4</sup> |
| 2 | Neither the Bank nor any subsidiary is party to any single long-term debt instrument pursuant to which a total amount of securities exceeding 10% of the Lloyds Bank Group's total assets (on a consolidated basis) is authorised to be issued. The Bank hereby agrees to furnish to the SEC, upon its request, a copy of any instrument defining the rights of holders of its long-term debt or the rights of holders of the long-term debt issued by it or any subsidiary for which consolidated or unconsolidated financial statements are required to be filed with the SEC. | Neither the Bank nor any subsidiary is party to any single long-term debt instrument pursuant to which a total amount of securities exceeding 10% of the Lloyds Bank Group's total assets (on a consolidated basis) is authorised to be issued. The Bank hereby agrees to furnish to the SEC, upon its request, a copy of any instrument defining the rights of holders of its long-term debt or the rights of holders of the long-term debt issued by it or any subsidiary for which consolidated or unconsolidated financial statements are required to be filed with the SEC. |
| 4 | (i) | [Letter of appointment dated 17 April 2018 between Lloyds Banking Group plc and Amanda Mackenzie](https://www.sec.gov/Archives/edgar/data/1167831/000093041319002179/c93417_ex4bxv.htm)<sup>1</sup> |
|  | (ii) | [Supplementary letter dated 3 September 2018 to the letter of appointment dated 17 April 2018 between Lloyds Banking Group plc and Amanda Mackenzie](https://www.sec.gov/Archives/edgar/data/1167831/000093041319002179/c93417_ex4bxvi.htm)<sup>1</sup> |
|  | (iii) | [Letter of appointment dated 19 March 2018 between Lloyds Banking Group plc and Brendan Gilligan](https://www.sec.gov/Archives/edgar/data/1167831/000093041319002179/c93417_ex4bxvii.htm)<sup>1</sup> |
|  | (iv) | [Letter of appointment dated 19 March 2018 between Lloyds Banking Group plc and Nigel Hinshelwood](https://www.sec.gov/Archives/edgar/data/1167831/000093041319002179/c93417_ex4bxviii.htm)<sup>1</sup> |
|  | (v) | [Letter of appointment dated 26 April 2018 between Lloyds Banking Group plc and Sarah Bentley](https://www.sec.gov/Archives/edgar/data/1167831/000093041319002179/c93417_ex4bxix.htm)<sup>1</sup> |
|  | (vi) | [Service agreement dated 15 March 2019 between the Bank and William Chalmer](https://www.sec.gov/Archives/edgar/data/1167831/000093041320000859/c95365_ex4bxxi.htm)[s](https://www.sec.gov/Archives/edgar/data/1167831/000093041320000859/c95365_ex4bxxi.htm)<sup>2</sup> |
|  | (vii) | [Addendum to the service agreement dated 15 March 2019 between the Bank and William Chalmers](https://www.sec.gov/Archives/edgar/data/1167831/000116010621000020/lbkexhibit4bxxii.htm)<sup>3</sup> |
|  | (viii) | [Deed of variation of contract dated 22 June 2020 to the service agreement dated 15 March 2019 between the Bank and William Chalmers](https://www.sec.gov/Archives/edgar/data/1167831/000116010621000020/lbkexhibit4bxxiii.htm)<sup>3</sup> |
|  | (ix) | [Letter to William Chalmers regarding his deputisation allowance and increased fixed share award for the period he assumed the acting Group Chief Executive role](https://www.sec.gov/Archives/edgar/data/1167831/000116010622000022/lloydsbankplcex4bxxi2021.htm)<sup>4</sup> |
|  | (x) | [Letter of appointment dated 21 October 2019 between Lloyds Banking Group plc and Sarah Legg](https://www.sec.gov/Archives/edgar/data/1167831/000093041320000859/c95365_ex4bxxii.htm)<sup>2</sup> |
|  | (xi) | [Supplementary letter dated 31 October 2019 to the letter of appointment dated 21 October 2019 between Lloyds Banking Group plc and Sarah Legg](https://www.sec.gov/Archives/edgar/data/1167831/000093041320000859/c95365_ex4bxxiii.htm)<sup>2</sup> |
|  | (xii) | [Letter of Appointment dated 22 October 2019 between Lloyds Banking Group plc and Catherine Woods](https://www.sec.gov/Archives/edgar/data/1167831/000093041320000859/c95365_ex4bxxiv.htm)<sup>2</sup> |
|  | (xiii) | [Supplementary letter dated 31 October 2019 to the letter of appointment dated 22 October 2019 between Lloyds Banking Group plc and Catherine Woods](https://www.sec.gov/Archives/edgar/data/1167831/000093041320000859/c95365_ex4bxxv.htm)<sup>2</sup> |
|  | (xiv) | [Letter of appointment dated 4 July 2020 between Lloyds Banking Group plc and Robin Budenberg](https://www.sec.gov/Archives/edgar/data/1167831/000116010621000020/lbkexhibit4bxxviii.htm)<sup>3</sup> |
|  | (xv) | [Service agreement dated 29 November 2020 between the Bank and Charlie Nun](https://www.sec.gov/Archives/edgar/data/1167831/000116010622000022/lloydsbankplcex4bxxvii2021.htm)[n](https://www.sec.gov/Archives/edgar/data/1167831/000116010622000022/lloydsbankplcex4bxxvii2021.htm)<sup>4</sup> |
|  | (xvi) | [Addendum to the service agreement dated 29 November 2020 between the Bank and Charlie Nu](https://www.sec.gov/Archives/edgar/data/1167831/000116010622000022/lloydsbankplcex4bxxviii2021.htm)[nn](https://www.sec.gov/Archives/edgar/data/1167831/000116010622000022/lloydsbankplcex4bxxviii2021.htm)<sup>4</sup> |
|  | (xvii) | [Letter of appointment dated 5 October 2021 between Lloyds Banking Group plc and Harmeen Mehta](https://www.sec.gov/Archives/edgar/data/1167831/000116010622000022/lloydsbankplcex4bxxix2021.htm)<sup>4</sup> |
|  | (xviii) | [Letter of appointment dated 26 July 2022 between Lloyds Banking Group plc and Scott Wheway](https://www.sec.gov/Archives/edgar/data/1167831/000116010623000019/lloydsbankplcex4bxxii2022.htm)<sup>5</sup> |
|  | (xix) | [Supplementary letter dated 13 September 2022 to the letter of appointment dated 26 July 2022 between Lloyds Banking Group plc and Scott Wheway](https://www.sec.gov/Archives/edgar/data/1167831/000116010623000019/lloydsbankplcex4bxxiii2022.htm)<sup>5</sup> |
|  | (xx) | [Letter of appointment dated 11 October 2022 between Lloyds Banking Group plc and Cathy Turner](https://www.sec.gov/Archives/edgar/data/1167831/000116010623000019/lloydsbankplcex4bxxiv2022.htm)<sup>5</sup> |
|  | (xxi) | [Letter of appointment dated 29 July 2024 between Lloyds Banking Group plc and Nathan Bostock](https://www.sec.gov/Archives/edgar/data/1167831/000116010625000012/lloydsbankplcex4bxxiv2024.htm)<sup>6</sup> |
|  | (xxii) | [Letter of appointment dated 11 June 2025 between the Company and Chris Vogelzang](lloydsbankplcex4bxxii2025.htm) |
| 11.1 | [Dealing Policy for Directors, GEC Members and GEC Attendees](lloydsbankplcexhibit1112025.htm) | [Dealing Policy for Directors, GEC Members and GEC Attendees](lloydsbankplcexhibit1112025.htm) |
| 11.2 | [Code of Ethics and Responsibility](https://www.sec.gov/Archives/edgar/data/1167831/000116010625000012/lloydsbankplcexhibit1122.htm)<sup>6</sup> | [Code of Ethics and Responsibility](https://www.sec.gov/Archives/edgar/data/1167831/000116010625000012/lloydsbankplcexhibit1122.htm)<sup>6</sup> |
| 12.1 | [Certification of Charlie Nunn filed pursuant to 17 CFR 240.13a-14(a) and 15 U.S.C. 7241](lloydsbankplcexhibit1212025.htm) | [Certification of Charlie Nunn filed pursuant to 17 CFR 240.13a-14(a) and 15 U.S.C. 7241](lloydsbankplcexhibit1212025.htm) |
| 12.2 | [Certification of William Chalmers filed pursuant to 17 CFR 240.13a-14(a) and 15 U.S.C. 7241](lloydsbankplcexhibit1222025.htm) | [Certification of William Chalmers filed pursuant to 17 CFR 240.13a-14(a) and 15 U.S.C. 7241](lloydsbankplcexhibit1222025.htm) |
| 13.1 | [Certification of Charlie Nunn and William Chalmers furnished pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C. 1350](lloydsbankplcexhibit1312025.htm) | [Certification of Charlie Nunn and William Chalmers furnished pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C. 1350](lloydsbankplcexhibit1312025.htm) |
| 15.1 | [The Annual Report 202](lbk-20251231.htm)[5](lbk-20251231.htm)<sup>7</sup> | [The Annual Report 202](lbk-20251231.htm)[5](lbk-20251231.htm)<sup>7</sup> |
| 15.2 | [T](https://www.sec.gov/Archives/edgar/data/1167831/000116783126000002/lloydsbankplc6-kriskfactor.htm)[he 6-K Risk Factors](https://www.sec.gov/Archives/edgar/data/1167831/000116783126000002/lloydsbankplc6-kriskfactor.htm)<sup>8</sup> | [T](https://www.sec.gov/Archives/edgar/data/1167831/000116783126000002/lloydsbankplc6-kriskfactor.htm)[he 6-K Risk Factors](https://www.sec.gov/Archives/edgar/data/1167831/000116783126000002/lloydsbankplc6-kriskfactor.htm)<sup>8</sup> |
| 15.3 | [Consent of Deloitte LLP](lloydsbankplcexhibit1532025.htm) | [Consent of Deloitte LLP](lloydsbankplcexhibit1532025.htm) |
| 97 | [Lloyds Bank plc's Performance Adjustment Policy](https://www.sec.gov/Archives/edgar/data/1167831/000116010624000016/lloydsbankplcexhibit972023.htm)<sup>9</sup> | [Lloyds Bank plc's Performance Adjustment Policy](https://www.sec.gov/Archives/edgar/data/1167831/000116010624000016/lloydsbankplcexhibit972023.htm)<sup>9</sup> |
| 101 | Interactive Data File | Interactive Data File |
| 104 | Cover Page Interactive Data File | Cover Page Interactive Data File |
| <sup>1</sup> | Previously filed with the SEC on the Bank's Form 20-F filed 31 July 2019. | Previously filed with the SEC on the Bank's Form 20-F filed 31 July 2019. |
| <sup>2</sup> | Previously filed with the SEC on the Bank's Form 20-F filed 24 March 2020. | Previously filed with the SEC on the Bank's Form 20-F filed 24 March 2020. |
| <sup>3</sup> | Previously filed with the SEC on the Bank's Form 20-F filed 11 March 2021. | Previously filed with the SEC on the Bank's Form 20-F filed 11 March 2021. |
| <sup>4</sup> | Previously filed with the SEC on the Bank's Form 20-F filed 8 March 2022. | Previously filed with the SEC on the Bank's Form 20-F filed 8 March 2022. |
| <sup>5</sup> | Previously filed with the SEC on the Bank's Form 20-F filed 7 March 2023. | Previously filed with the SEC on the Bank's Form 20-F filed 7 March 2023. |
| <sup>6</sup> | Previously filed with the SEC on the Bank's Form 20-F filed 27 February 2025. | Previously filed with the SEC on the Bank's Form 20-F filed 27 February 2025. |
| <sup>7</sup> | Filed together with this Annual Report on Form 20-F. Certain of the information included within Exhibit 15.1, which is provided pursuant to Rule 12b-23(a)(3) of the Exchange Act, is incorporated by reference in this Annual Report on Form 20-F, as specified elsewhere in this Annual Report on Form 20-F. With the exception of the items and pages so specified, Exhibit 15.1 is not deemed to be filed as part of this Annual Report on Form 20-F. | Filed together with this Annual Report on Form 20-F. Certain of the information included within Exhibit 15.1, which is provided pursuant to Rule 12b-23(a)(3) of the Exchange Act, is incorporated by reference in this Annual Report on Form 20-F, as specified elsewhere in this Annual Report on Form 20-F. With the exception of the items and pages so specified, Exhibit 15.1 is not deemed to be filed as part of this Annual Report on Form 20-F. |
| <sup>8</sup> | Previously filed with the SEC on the Bank's Form 6-K filed 29 January 2026. | Previously filed with the SEC on the Bank's Form 6-K filed 29 January 2026. |
| <sup>9</sup> | Previously filed with the SEC on the Bank's Form 20-F filed 29 February 2024. | Previously filed with the SEC on the Bank's Form 20-F filed 29 February 2024. |

---

---

| | |
|:---|:---|
| **33** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

---

------

**Signature**

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.

---

| | |
|:---|:---|
| Lloyds Bank plc | Lloyds Bank plc |
| By: | /s/ William Chalmers |
| Name: | William Chalmers |
| Title: | Chief Financial Officer |
| Dated: | 26 February 2026 |

---

---

| | |
|:---|:---|
| **34** | **Lloyds Bank plc** Annual Report on Form 20-F 2025 |

---

## Ex-4

![image_2.jpg](image_2.jpg)&nbsp;&nbsp;&nbsp;&nbsp;**Exhibit 4(b)(xxii)**&nbsp;&nbsp;&nbsp;&nbsp;

Private & Confidential

****<br> Chris Vogelzang

&nbsp;&nbsp;&nbsp;&nbsp;

**Date 11 June 2025**

Dear Chris,

**Appointment as Non-Executive Director – Lloyds Banking Group**

Following our recent discussions, I am pleased to confirm that the Board of Lloyds Banking Group plc ("**LBG**") has approved your appointment as a non-executive director, subject to the conditions set out in paragraph 2 below.

All directors of LBG also serve on the subsidiary HBOS plc board as well as the two principal subsidiary "**Ring Fenced Bank**" boards of Lloyds Bank plc and Bank of Scotland plc (together with the board of Lloyds Banking Group plc, the "**Boards**"). As discussed, your proposed appointment as a non-executive director will therefore be to the Boards of LBG, HBOS plc, Lloyds Bank plc and Bank of Scotland plc (each a "**Company**" and together, the "**Companies**"). The Boards will generally meet simultaneously, or on the same date if meeting separately.

In this letter, the term "**Group**" shall have the meaning given to it in section 1261(1) of the Companies Act 2006 (the "**Act**") and shall also be deemed to include affiliates of the Companies and LBCM and subsidiary undertakings in which LBCM or any Company has a minority shareholding.

This letter sets out the terms and conditions covering your appointment.

**1Appointments**

1.1Your appointment to the Boards is subject to the provisions of the Articles of Association of the relevant company, as amended from time to time (the "**Articles**"), the Act, general law and, where applicable, the Listing Rules, the Prospectus Rules and the Disclosure Guidance & Transparency Rules of the Financial Conduct Authority (the "**FCA**").

1.2Your appointment to the Boards is to take effect on 16 June 2025. You will be obliged to retire from the LBG Board at the next Annual General Meeting of LBG ("**AGM**") (which will be held in 2026) but will be eligible for election by shareholders at that meeting. Thereafter (and despite anything to the contrary in the Articles) in line with the recommendations of Provision 18 of the UK Corporate Governance Code, your appointments will be subject to annual re-election by shareholders to the LBG Board and you will therefore be required to retire at each AGM. Subject to satisfactory performance (see paragraph 16 below) and LBG Board approval, you will be invited to stand for re-election by shareholders at the AGM in each year of your appointment.

Lloyds Banking Group plc is registered in Scotland no. 95000. Registered office: The Mound, Edinburgh, EH1 1YZ

------

![image_2.jpg](image_2.jpg)

1.3Subject to the terms set out in this letter and to the relevant Articles, non-executive directors appointed to the Boards are appointed for an initial term of three years. The Boards may invite you to serve for an additional period.

**2Conditions**

2.1The commencement of this appointment and, thereafter, the continuation of your appointment to the Boards is subject to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.1the Companies being satisfied that you are fit and proper to perform your functions and responsibilities as a non-executive director;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.2the completion, to the Companies' satisfaction, of necessary background checks in accordance with any applicable regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.3receipt by the Companies of satisfactory references, as determined in its absolute discretion, from your current and previous employers over the past six years and any organisations at which you serve or have served as a non-executive director, and such other references as may be required by the Companies and/or in order to comply with regulatory requirements in force from time to time; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.4you having any and all regulatory approvals and competencies that may be required from time to time for the role you perform as a member of the Boards.

2.2You must inform the Boards of any significant changes in your personal circumstances which may impact on your status (including but not limited to any matters relating to fitness and proprietary which may have an impact on this status or your ability to remain as a director).

2.3The continuation of your appointment to the Boards is further contingent upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3.1satisfactory performance in your role and contribution to the Boards and any Committees on which you serve (see paragraph 16 below); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3.2election and re-election to the LBG Board by shareholders at the AGM in the manner described in sub-paragraph 1.2 above.

**3Board Committees**

3.1In addition to your appointment as a non-executive director of the Companies, you will be required to serve on at least two Committees and/or forums of the Boards, which may be subject to rotation. It has been agreed that you will serve as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1.1Member, Responsible Business Committee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1.2Member, IT and Cyber Advisory Forum ("**ITCAF**").

3.2Your appointment to these Committees entails separate responsibilities as detailed in the terms of reference of the Committees, which will be provided to you separately.

3.3You may also be required to serve on sub-committees of these Committees and ad hoc Committees of the Boards established from time to time that are for specific purposes.

------

![image_2.jpg](image_2.jpg)

**4Role and Duties**

4.1**General Duties**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.1Your duties will be those normally required of a non-executive director. In particular, you should have regard to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the Financial Reporting Council's Corporate Governance Code Guidance on the role of a non-executive director as updated on 7 May 2025, of which an extract is included in Schedule 1 of this letter;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)the Prudential Regulation Authority's ("**PRA"**) Supervisory Statement 5/16 on Corporate governance: Board responsibilities in July 2018, of which an extract is included in Schedule 2 of this letter; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)the FCA's Guidance on the role and responsibilities of non-executive directors of SMCR firms, of which an extract is included in Schedule 3 of this letter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.2All directors must take decisions objectively in the interests of each Company and not do anything which is harmful to the relevant Company or its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.3Each Board is collectively responsible for promoting the success of the relevant Company by directing its affairs. All directors are required to (amongst other things):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)provide entrepreneurial leadership of each Company within a framework of prudent and effective controls which enable risk to be assessed and managed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)set each Company's strategic aims, ensure that the necessary financial and human resources are in place for the relevant Company to meet its objectives, and review management performance; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)set each Company's values and standards and ensure that its obligations to shareholders and others are understood and met.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.4In addition, as a member of the Ring Fenced Bank Boards you will have responsibility with the other directors for ensuring effective governance of the Ring Fenced Banks, including identifying and addressing any potential conflicts of interest with respect to each Ring Fenced Banks and other group entities in a way that ensures that the integrity of each Ring Fenced Bank is upheld.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.5Your more specific responsibilities and accountabilities are reflected in the Group's wider governance framework and will include, to the extent relevant, any responsibilities prescribed pursuant to UK or other applicable regulation and as notified to the FCA and/or the PRA, details of which are available from the Company Secretary upon request.

**5Time Commitment**

5.1As a non-executive director, you are required to devote such time as is necessary to effectively discharge your duties as a director. Overall, we anticipate a time commitment equivalent to approximately 35 to 40 days per annum after the induction phase, which comprises:

------

![image_2.jpg](image_2.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| 1.1Base time commitment for non-executive directors | 1.1approx. 25 to 28 days |
| 1.1Additional time for membership of Responsible Business Committee | 1.1approx. 5 to 6 days |
| 1.1Additional time for membership of ITCAF | 1.1approx. 5 to 6 days |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 5.3This will include attendance in person (where at all possible) at (and preparation for) scheduled monthly meetings of the Boards and Committees, preparation and attendance at the AGM and at strategy sessions (including a up to 2 offsite meetings a year). I have provided you with a schedule of Board and Committee meetings.

5.4The minimum time commitment outlined above is based on planned events. You will be expected to devote appropriate preparation time ahead of each meeting and such other time as is reasonably required to discharge your duties as a director (for example if one of the Companies is involved in increased activity because it is involved in a major transaction). From time to time, you may be required to attend meetings at short notice.

5.5As a director of LBG and the Ring Fenced Banks, you may also be required to attend or represent the Group at meetings with regulators, the Government, investors or other third parties as appropriate.

5.6By accepting this appointment, you confirm that you are able to allocate sufficient time to meet the expectations of your role to the satisfaction of the Boards. Notwithstanding paragraph 9 below, the agreement of the Chair must be sought before accepting additional commitments, in order to discuss whether they might affect your ability to meet the time commitments necessary to discharge your duties.

5.7The rules of the PRA and FCA require that you do not hold more than one executive director position with two non-executive director positions, or more than four non-executive directorships at the same time (including director positions held outside of financial services, but excluding director positions for organisations which do not pursue predominantly commercial objectives). However, director positions held within the same group are treated as a single directorship.

**6Fees**

6.1In consideration for your appointments, you will be paid the following fees and sub-paragraphs 6.2 to 6.5 below shall apply to your fees except where otherwise provided in, or determined in accordance with, the Articles:

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| | |
|:---|:---|
| Non-executive director base fee | £92,200 |
| Responsible Business Committee | £25,000 |
| ITCAF | £25,000 |
| Total fees payable | £142,200 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 6.3Your fee(s) will accrue on a daily basis and be payable in twelve monthly instalments on the 20<sup>th</sup> of each month, which may be subject to change, by bank transfer to a bank account held in your name, less any tax and national insurance contributions that must be deducted. Each such instalment will relate to the calendar month in which payment is made.

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6.4Your fee(s) will be subject to an annual review in accordance with the Group's policies.

6.5If for any reason related to your illness, disability or injury, you are unable to carry out your duties, payment of any fee(s) during any period of incapacity will be at the discretion of the Boards.

6.6Any specific and additional services rendered by you to the Companies will be remunerated on the basis to be agreed by the Boards at the time such services are commissioned.

**7Reimbursement of Expenses**

You will be entitled to claim for reimbursement of any reasonable expenses properly incurred in performing your duties, provided such expenses conform to the Group's expenses policy. Amounts reimbursed will be paid grossed-up for tax, where applicable, in accordance with the Non Executive Director Expenses Policy.

**8Independent Status**

8.1As an independent non-executive director it is important that you remain independent in character and judgement. The Boards of the Companies have determined you to be independent according to provision 10 of the UK Corporate Governance Code upon your appointment.

8.2You are required to inform the Company Secretary of any circumstances which are likely to affect, or could appear to affect, your judgement and therefore your status as an independent director.

**9Outside Interests**

9.1It is accepted and acknowledged that you have business interests other than those of the Group. It is a condition of your appointment commencing that you declare any such directorships, appointments and interests to the Boards in writing and obtain the Boards' approval of them.

9.2If you wish to take on any additional directorships, appointments or interests, the Boards' consent must be obtained in advance. Regardless of any approval given in relation to such directorships, appointments or interests, it is your responsibility to ensure that you can meet the time commitment required by the role.

9.3If at any time you become aware of any matter which might give rise to a conflict of interest with the Companies you must first discuss the matter with the Boards and, if necessary, obtain their consent (including, where applicable, by resolution of the directors to authorise such interest). Before doing so, it may be practicable to discuss the matter directly with the Chair.

**10Code of conduct and compliance**

10.1From the date of this letter and during the appointment, you will comply with applicable prevailing laws, regulations, codes and sanctions, as well as any dealing or other code that the Companies may establish and such other policies, codes and requirements as issued from time to time.

10.2Additionally, the rules of the PRA and FCA set out certain minimum requirements to which the Companies must contractually require you to adhere.

10.3Conduct Rules

10.4These are that you must:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.1act with integrity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.2act with due skill, care and diligence;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.3be open and co-operative with the FCA, the PRA and other regulators;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.4pay due regard to the interests of customers and treat them fairly;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.5observe proper standards of market conduct;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.6 act to deliver good outcomes for retail customers.

10.5Senior Manager Conduct Rules

10.6You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice.

**11Status of Appointment and Right to Work**

11.1You will not be an employee of any of the Companies nor any member of the Group and this letter shall not constitute a contract of employment. This letter sets out the only payments you will receive for performing your duties. Accordingly, no other remuneration or benefits will be provided and, in particular, you will not participate in any of the Companies' or Group's remuneration or benefit programmes, arrangements, schemes or plans. For the avoidance of doubt, if there is any conflict between this letter and the terms of any Group policy, staff handbook or staff manual issued to you, the terms of this letter will prevail.

11.2You are required to ensure you have the necessary permission to enter the UK to attend meetings of the Boards and Committees etc (see paragraph 5.2 above) and will notify the Company Secretary promptly if you cease to have the necessary permission. If entering the UK as a business visitor, you will ensure that any activities undertaken in the UK will be permissible under the Immigration Rules Appendix Visitor: Permitted Activities.

**12Confidentiality**

12.1Without prejudice to the terms of the confidentiality agreement dated 2 June 2025, you may have access to and have knowledge of the Group's trade secrets and confidential information. You acknowledge that the disclosure of any trade secrets and confidential information to actual or potential competitors of the Group may place the Group at a serious competitive disadvantage and may do serious financial damage, financial and/or otherwise to its or their business and business development and may cause immeasurable harm. As such, you will not use or disclose to any person, firm or organisation (except as required by law or to carry out your duties under this letter) any trade secrets, knowhow, business information or other private or confidential information relating to the business, finances or affairs of any member of the Group, or any customer of the Group, or any other information provided to you on the basis that it is confidential. You will use your best endeavours to prevent the unauthorised use or disclosure of any such information. This restriction will continue to apply after your appointment ends without limit in time but will not apply to information which becomes public, unless through unauthorised disclosure by you. After your appointments end you will return all documents and information (whether written, visual or electronic) under your possession or control which belong to any member of the Group.

12.2Your attention is also drawn to the requirements under legislation and regulation relating to the disclosure of price sensitive information. You must avoid making any statements or engaging in any dealings that might contravene these requirements. The Company Secretary can provide further information and advice on these matters upon request. The Group's policy is that all external communication regarding the Group's affairs is restricted to the Chair, Group Chief Executive and Chief Corporate Affairs Officer only.

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**13Return of Property** 

13.1Upon the termination of your appointment, you will as soon as practical return to LBG, at such place as LBG may reasonably specify:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1.1all documents and information (in whatever form, whether written, visual, or electronic), including any copies, under your possession or control which belong to, or contain any confidential information relating to, any member of the Group; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1.2all other property provided to you in connection with your appointment, in good condition (allowing for fair wear and tear).

**14Intellectual Property**

14.1From the date of this letter, you agree that any intellectual property rights which may exist or arise in any work product which you create or contribute to in your provision of services to the Companies over the course of your appointment shall subsist in the relevant Company.

**15Induction and Training**

15.1Following your appointment, we will provide a comprehensive, formal and tailored induction. We will also arrange for you to meet senior management and the Group's auditors should you wish to do so. We will also offer to major shareholders the opportunity to meet you should you wish to do so. You are also entitled to request any additional information or briefings to assist you in the execution of your duties.

15.2The Chair will also meet with you regularly to discuss and agree your training and development needs.

**16Evaluation and Review of your Performance**

The performance of individual directors and the Boards and their Committees is evaluated annually. If, in the interim, there are any matters which cause you concern about your role you should discuss them with the Chair as soon as is appropriate.

**17Termination**

17.1Once appointed, you will cease to hold the office of director of the Companies if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1.1you resign from your appointment or choose not to stand for re-election to the LBG Board at the next AGM;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1.2your appointment is terminated or LBG chooses not to propose you for re-election at the next AGM;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1.3shareholders fail to elect or re-elect you as a director of LBG at an AGM;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1.4you fail to meet, on an ongoing basis, the standards expected of a person performing your role;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1.5you are no longer regarded by the Boards as fit and proper to perform any responsibilities or functions assigned to you from time to time as determined by the Companies in their absolute discretion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1.6you cease to hold any necessary regulatory approval which the Company reasonably believes is necessary in order for you to perform your functions and responsibilities as amended from time to time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1.7you commit a serious breach of the relevant laws, or breach of the rules, requirements, regulations or codes (as amended from time to time) of any relevant listing authority, the FCA,

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the PRA or any regulatory authorities relevant to the Company or any Group company, or any rules, requirements, regulations, or codes relevant to the Company or any policy issued by the Company (as amended from time to time), or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1.8the Articles or any applicable law or regulation prevents you from continuing as a director of the Companies.

17.2In the case of sub-paragraphs 17.1.1 and 17.1.2 above, you will not be entitled to notice or compensation for loss of office. However, we will endeavour to give you reasonable notice where appropriate. You are requested to give reasonable notice of your resignation and make the Chair aware of any intention not to seek re-election so that the Boards can plan for orderly succession. In the case of sub-paragraphs 17.1.3 to 17.1.8 above, your appointment will terminate with immediate effect and without compensation.

17.3Your appointment may also be terminated in accordance with the provisions of the Articles.

**18Directors' Liability Indemnity and Insurance**

18.1To the extent permitted by law and in accordance with the relevant Articles, you are entitled to be indemnified by the Companies against all costs and liabilities incurred in the execution of your duties. A deed of indemnity is included in your appointment pack for your signature and return.

18.2The Group also has directors' and officers' liability insurance cover maintained from time to time (however, nothing in this letter shall oblige the Group to maintain any such cover on its current terms or at all). A copy of the current policy document can be provided by the Company Secretary upon request.

**19Independent Professional Advice** 

Occasions may arise when you consider that you need professional advice in the furtherance of your duties as a director and it will be appropriate for you to consult independent advisers at the Companies' expense. A copy of the Group's agreed procedure under which directors may obtain such independent advice is available upon request. The Companies will reimburse the full cost of such expenditure that is reasonably and properly incurred in accordance with the Group's policies.

**20Disclosure and Dealings in Shares**

20.1Under the Act, where a director of a company is in any way, directly or indirectly, interested in a proposed transaction or arrangement with any of the Companies or one that has been entered into by any Company, he/she must declare the nature and extent of that interest. You may give any such notice at a meeting of the directors, in writing or by general notice.

20.2During the continuance of your appointment you will be expected to comply (and to procure that your spouse, dependent children and other connected persons comply) where relevant with any rule of law or regulation of any competent authority or of any Company from time to time in force in relation to dealings in shares, debentures and other securities of any Company and unpublished price sensitive information affecting the shares, debentures and other securities of such Company. A link to a copy of the Company's Code for Directors' Dealings in Securities has been provided to you via email and a copy will also be provided in your appointment pack.

**21Companies House formalities**

AP01 Forms, prescribed by the Act, must be filed at Companies House. Please provide the relevant personal details to the Company Secretary as soon as possible, so that the Company Secretary can make the filings.

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**22Shareholdings**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.1All directors are expected to hold shares in LBG. If you would like to receive whole or part of your monthly fee in shares, we would be happy to make the necessary arrangements for you.

**23Governing Law**

This letter and any non-contractual obligations arising out of or in connection with it is governed by and will be interpreted in accordance with the laws of England and Wales. Each of the parties submits to the exclusive jurisdiction of the Courts of England and Wales as regards any claim or matter arising under this letter.

24Please acknowledge receipt and acceptance of the above terms by signing and returning the enclosed copy of this letter.

25Please do not hesitate to contact me for any assistance in any matters during the term of your appointment. I will write formally again at the time the appointment is confirmed by the Boards and look forward to welcoming you to the Group.

Yours sincerely

/s/ Robin Budenberg

**Sir Robin Budenberg**

**Group Chair**

**For and on behalf of each of Lloyds Banking Group plc, HBOS plc, Lloyds Bank plc and Bank of Scotland plc**

I hereby acknowledge receipt of and accept the terms set out in this letter and accept the proposed terms of appointment.

/s/ Chris Vogelzang

Signed &nbsp;&nbsp;&nbsp;&nbsp;……………………………….

&nbsp;&nbsp;&nbsp;&nbsp;**Chris Vogelzang**

Dated &nbsp;&nbsp;&nbsp;&nbsp;……… June 11 2025………………………..

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**Schedule 1<br>Guidance on the Role of Non-Executive Directors**<br> (extracted from sections 76 to 79 of the Financial Reporting Council's Corporate Governance Code Guidance as updated on 7 May 2025)

When appointed, non-executive directors are expected to devote time to a comprehensive, formal and tailored induction that generally extends beyond the boardroom. Initiatives such as partnering a non-executive director with an executive board member may speed up the process of them acquiring an understanding of the main areas of business activity, especially areas involving significant risk. They may visit operational sites and talk with managers and members of the workforce. A non-executive director may use these conversations to better understand the culture of the organisation and the way things are done in practice and to gain insight.

Non-executive directors need sufficient time available to discharge their responsibilities effectively. The time commitment to engage with shareholders and other key stakeholders and get to know the business can be significant. Non-executive directors assess the demands of their portfolios and other commitments carefully before accepting new appointments, devoting time to developing and refreshing their knowledge and skills, to ensure that they continue to make a positive contribution to the board.

Non-executive directors need timely, high-quality information sufficiently in advance so that there can be thorough consideration of the issues prior to, and informed debate and challenge at, board meetings. They seek clarification or amplification from management where they consider the information provided is inadequate or lacks clarity.

Non-executive directors do not operate exclusively within the confines of the boardroom but have a good understanding of the business and its relationships with significant stakeholders. Accordingly, it is advisable for them to take opportunities to meet other stakeholders from all levels of the organisation.

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**Schedule 2**

**Non-Executive Directors: guidance on their role, knowledge and experience** (extracted from PRA Supervisory Statement 5/16, dated July 2018, paragraphs 6 and 7) <br>

Unitary boards comprise a combination of executive and non-executive directors. Executive directors have specific management responsibilities for which they are accountable to the board. It is their responsibility to manage the firm's business on behalf of the board and exercise judgement in the running of the business on a day-to-day basis. They should exercise that judgement within the strategy, risk appetite and other assessment and control frameworks set and overseen by their board. Non-executive directors' responsibilities require them to both support and oversee executive management. As board members, they all share in the wider board duty to promote the success of the company and to ensure that the regulated firm for which they are responsible continues to meet the Threshold Conditions.

In discharging their responsibilities boards should act in a cooperative and collegiate manner whereby the non-executives support and encourage executive management and vice versa. But this should not inhibit the non-executive directors from challenging executive management and holding them to account effectively. The PRA expects the chair to play a pivotal role in facilitating this culture.

Executive management manage the firm's business on behalf of the board. Boards therefore delegate a wide range of duties and responsibilities to the chief executive or to executive management. The PRA expects boards to be precise over what they delegate to the executive management and the limitations and accountabilities associated with each of the matters that are delegated. In doing so the PRA expects boards to articulate clearly and unambiguously the matters reserved to the board and the manner in which executive management must report and escalate matters to them, including the exercise of judgement in escalating matters of particular significance even if within the delegated mandate.

Accordingly the board and particularly the non-executive directors on the board should hold management to account against the matters delegated and be able to challenge the executive effectively and promptly.

Between them the non-executive directors need to have sufficient current and relevant knowledge and experience, including sector experience, to understand the key activities and risks involved in the business model and to provide effective challenge across the major business lines of the firm. The PRA expects to see evidence of effective challenge, particularly in relation to key strategic decisions. It is the role of the chair to ensure that all views are heard and that the executives are not able to control the board discussion. However, board responsibility is collective and an effective board is not simply a collection of specialists. So just as the board should not delegate responsibility for major decisions to particular directors, the non-executives should not simply delegate responsibility for challenging the executives on particular issues to individuals among them who are considered specialist in the area.

Even a broadly constituted and well-experienced board cannot necessarily be expected to have expertise in every aspect of a broad and complex financial business. The point is to have the diversity of experience and capacity to provide effective challenge across the full range of the firm's business and the opportunity to

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explore key business issues rigorously. Sometimes that may require the board to understand and reach decisions on complex technical, legal, regulatory or other issues. It is the responsibility of the executives to explain such issues in clear and transparent terms that enable the board to exercise their collective judgement and, where necessary, non-executive directors should be able to call on appropriate professional advice, although the directors will always remain ultimately and collectively accountable for all the board's decisions.

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**Schedule 3**

**Guidance on the role and responsibilities of<br> non-executive directors of SMCR firms**<br> (extracted from COCON 1 Annex 1 as at the date of this letter)

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| | | |
|:---|:---|:---|
| **COCON 1**  | **Introduction**  | **Introduction**  |
| COCON 1.1 | This annex applies to non-executive directors (NEDs) of an SMCR firm.  | This annex applies to non-executive directors (NEDs) of an SMCR firm.  |
| COCON 1.2 | This annex covers the role of a NED in performing the roles in (1) to (4), below:  | This annex covers the role of a NED in performing the roles in (1) to (4), below:  |
|  | (1) | the role of chair of the board of directors; |
|  | (2) | the role of chair of the nomination committee; |
|  | (3) | the role of chair of any other committee (irrespective of whether performing that role is itself a designated senior management function); |
|  | (4) | the general NED role. |
| COCON 1.3 | The FCA's view of the role of a NED is consistent with the duties of directors included in UK company law and the description of the role of a NED in the UK Corporate Governance Code. | The FCA's view of the role of a NED is consistent with the duties of directors included in UK company law and the description of the role of a NED in the UK Corporate Governance Code. |
| **COCON 2**  | **The general role of a NED**  | **The general role of a NED**  |
| COCON 2.1 | The role of a NED performing the general NED role is to: | The role of a NED performing the general NED role is to: |
|  | (1) | provide effective oversight and challenge; and |
|  | (2) | help develop proposals on strategy. |
| COCON 2.2 | To deliver this, their responsibilities include: | To deliver this, their responsibilities include: |
|  | (1) | attending and contributing to board and committee meetings and discussions;  |
|  | (2) | taking part in collective board and committee decisions, including voting and providing input and challenge; and |
|  | (3) | ensuring they are sufficiently and appropriately informed of the relevant matters prior to taking part in board or committee discussions and decisions. |

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| | | |
|:---|:---|:---|
| COCON 2.3 | Other key roles of a NED include: | Other key roles of a NED include: |
|  | (1) | scrutinising the performance of management in meeting agreed goals and objectives;  |
|  | (2) | monitoring the reporting of performance; |
|  | (3) | satisfying themselves on the integrity of financial information;  |
|  | (4) | satisfying themselves that financial controls and systems of risk management are robust and defensible;  |
|  | (5) | scrutinising the design and implementation of the remuneration policy;  |
|  | (6) | providing objective views on resources, appointments and standards of conduct; and |
|  | (7) | being involved in succession planning. |
| **COCON 3**  | **Role of a NED as chair of the board or a committee**  | **Role of a NED as chair of the board or a committee**  |
| COCON 3.1 | Subject to any specific governance arrangements, rules or requirements applicable to the board or particular committees, a NED's responsibility as chair of the board or a committee includes: | Subject to any specific governance arrangements, rules or requirements applicable to the board or particular committees, a NED's responsibility as chair of the board or a committee includes: |
|  | (1) | ensuring that the board or committee meets with sufficient frequency; |
|  | (2) | fostering an open, inclusive discussion which challenges executives, where appropriate;  |
|  | (3) | ensuring that the board or committee devotes sufficient time and attention to the matters within its remit;  |
|  | (4) | helping to ensure that the board or committee and its members have the information necessary to its and their tasks;  |
|  | (5) | reporting to the main board on the committee's activities;  |
|  | (6) | facilitating the running of the board or committee to assist it in providing independent oversight of executive decisions; and |
|  | (7) | in relation to the nomination committee, safeguarding the independence and overseeing the performance of the nomination committee.  |
| COCON 3.2 | The chair of the nomination committee should take reasonable steps to ensure that the nomination committee complies with:  | The chair of the nomination committee should take reasonable steps to ensure that the nomination committee complies with:  |
|  | (1) | the requirements in SYSC 4.3A about the nomination committee (if that part of SYSC applies to the firm); and |

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| | | |
|:---|:---|:---|
| | (2) | any specific and relevant requirements relating to the committee or to the matters within the committee's responsibilities. |
| COCON 3.3 | Paragraph 3.2 of this annex is still relevant to a firm: | Paragraph 3.2 of this annex is still relevant to a firm: |
|  | (1) | that is not required by the FCA Handbook to have a nomination committee; or |
|  | (2) | for which being the chair of such a committee is not a controlled function; |
|  | if it has such a committee. | if it has such a committee. |
| **COCON 4**  | **General approach to the role of a NED**  | **General approach to the role of a NED**  |
| COCON 4.1 | The FCA recognises that NEDs individually do not manage a firm's business in the same way as executive directors. Therefore, the responsibilities for which NEDs are accountable are likely to be more limited. | The FCA recognises that NEDs individually do not manage a firm's business in the same way as executive directors. Therefore, the responsibilities for which NEDs are accountable are likely to be more limited. |
| COCON 4.2 | A NED is neither required nor expected to assume executive responsibilities. | A NED is neither required nor expected to assume executive responsibilities. |
| COCON 4.3 | Although NEDs who are subject to the senior management regime for SMF managers have individual duties under that regime, the FCA views the regime and its application as consistent with the principle of collective decision-making. | Although NEDs who are subject to the senior management regime for SMF managers have individual duties under that regime, the FCA views the regime and its application as consistent with the principle of collective decision-making. |
| COCON 4.4 | The standard of care, skill and diligence that the FCA would expect from a NED is the care, skill and diligence that would be exercised by a reasonably diligent person with: | The standard of care, skill and diligence that the FCA would expect from a NED is the care, skill and diligence that would be exercised by a reasonably diligent person with: |
|  | (1) | the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the NED in relation to the firm, taking into account the standards in the Handbook (especially COCON and DEPP); and |
|  | (2) | the general knowledge, skill and experience that the NED has. |

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## Ex-11

**Exhibit 11.1**

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| |
|:---|
| DEALING POLICY FOR DIRECTORS, GEC MEMBERS AND GEC ATTENDEES |
| LLOYDS BANKING GROUP PLC<br>LLOYDS BANK PLC<br>HBOS PLC<br>BANK OF SCOTLAND PLC<br>Date approved by the Boards: 8 December 2025 – effective 8 December 2025 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1

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CONTENTS

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| | |
|:---|:---|
| [1&nbsp;&nbsp;&nbsp;&nbsp;WHAT ARE THE KEY TERMS USED IN THIS POLICY?](#i42cc1db7b08f443795cbc31ce127056b) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2](#i42cc1db7b08f443795cbc31ce127056b) |
| [2&nbsp;&nbsp;&nbsp;&nbsp;DEALING AND NOTIFICATION REQUIREMENTS "AT A GLANCE"](#ibd9edf1807f843f5b9fea7cfc1e5b877) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2](#ibd9edf1807f843f5b9fea7cfc1e5b877) |
| [3&nbsp;&nbsp;&nbsp;&nbsp;DOES THIS POLICY APPLY TO ME?](#i2a60a035d02f43108bfee3d86f144299) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3](#i2a60a035d02f43108bfee3d86f144299) |
| [4&nbsp;&nbsp;&nbsp;&nbsp;WHY IS THIS POLICY IMPORTANT?](#i6af7fbb5501b44f0a215ca116ba17b87) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4](#i6af7fbb5501b44f0a215ca116ba17b87) |
| [5&nbsp;&nbsp;&nbsp;&nbsp;WHAT KINDS OF DEALINGS ARE COVERED BY THIS POLICY?](#i64c80de7c06b4abcbf6e16428448b466) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5](#i64c80de7c06b4abcbf6e16428448b466) |
| [6&nbsp;&nbsp;&nbsp;&nbsp;WHAT ARE MY OBLIGATIONS UNDER THIS POLICY?](#ibdffbcd1c67b426a908163f76bc42eee) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6](#ibdffbcd1c67b426a908163f76bc42eee) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[6.1&nbsp;&nbsp;&nbsp;&nbsp;OBLIGATIONS IN RELATION TO GROUP SECURITIES](#i6f259cdbdad04ebca32257bcd2dfbf46) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6](#i6f259cdbdad04ebca32257bcd2dfbf46) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[6.2&nbsp;&nbsp;&nbsp;&nbsp;OBLIGATIONS IN RELATION TO OTHER SECURITIES](#ib7acdb73227f41be88febe43474b6231) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7](#ib7acdb73227f41be88febe43474b6231) |
| [7&nbsp;&nbsp;&nbsp;&nbsp;HOW DO I OBTAIN CLEARANCE TO DEAL?](#i01a0ad06e422487b9531e73f2fe030c9) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7](#i01a0ad06e422487b9531e73f2fe030c9) |
| [8&nbsp;&nbsp;&nbsp;&nbsp;HOW DO I NOTIFY THE GROUP OF MY DEALINGS?](#i8ded24d068a94daf8b578cb9376c2f17) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8](#i8ded24d068a94daf8b578cb9376c2f17) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[8.1&nbsp;&nbsp;&nbsp;&nbsp;PROCEDURE FOR ALL PERSONS TO WHOM THIS DEALING POLICY APPLIES](#if99ef76a898f4fa58f9cc325a4f4ebf1) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8](#if99ef76a898f4fa58f9cc325a4f4ebf1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[8.2&nbsp;&nbsp;&nbsp;&nbsp;ADDITIONAL OBLIGATIONS FOR PDMRS AND THEIR PCAS](#idded3cde2e13441cb2b4fd9331d421a1) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8](#idded3cde2e13441cb2b4fd9331d421a1) |
| [9&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX 1 - PERSONS CLOSELY ASSOCIATED](#i145a3480988c4ab18c932cf13d3e50f4) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9](#i145a3480988c4ab18c932cf13d3e50f4) |
| [10&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX 2 – CLEARANCE AND NOTIFICATION REQUIREMENTS IN SPECIFIC DEALING SCENARIOS](#i21b1bf07faff4d39be5adcc8c8c79268) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10](#i21b1bf07faff4d39be5adcc8c8c79268) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.1&nbsp;&nbsp;&nbsp;&nbsp;CERTAIN DEALINGS ON BEHALF OF A RESTRICTED PERSON WHERE A MANAGER OR TRUSTEE HAS COMPLETE DISCRETION](#i4ad387ac595e4746b42d729d6946f6f8) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10](#i4ad387ac595e4746b42d729d6946f6f8) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.2&nbsp;&nbsp;&nbsp;&nbsp;DEALINGS IN RELATION TO THE GROUP'S SHARE PLANS](#ieed0f373589248ab8bdcb52c2a0f1091) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11](#ieed0f373589248ab8bdcb52c2a0f1091) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.3&nbsp;&nbsp;&nbsp;&nbsp;DEALINGS IN A TRUSTEE CAPACITY](#icfca907b99df4525aa1162ba921cf3f3) | [&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11](#icfca907b99df4525aa1162ba921cf3f3) |

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1WHAT ARE THE KEY TERMS USED IN THIS POLICY?

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| | |
|:---|:---|
| Board | The board of directors of any Group Company |
| Closed Period | The period in respect of a Group Company during which dealing is not permitted by Restricted Persons as described in Section 6.1  |
| Deal / dealing  | Any transaction in securities of any nature – see Section 5 for further details |
| GEC | Group Executive Committee of Lloyds Banking Group plc, Lloyds Bank plc, Bank of Scotland plc and/or HBOS plc  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2

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| | |
|:---|:---|
| Group | Lloyds Banking Group plc, Lloyds Bank plc, HBOS plc and Bank of Scotland plc |
| Group Company | Each of Lloyds Banking Group plc, Lloyds Bank plc, HBOS plc and/or Bank of Scotland plc, as appropriate |
| Group Securities | Any publicly traded or quoted shares or debt instruments, and any linked derivatives or financial instruments, issued by a Group Company |
| inside information  | Information that: (i) relates directly or indirectly to particular securities or to a particular issuer of securities; (ii) is of a precise nature; (iii) has not been made public; and (iv) if it were made public, would be likely to have a significant effect on the price of any securities. |
| IMS | Interim management statement |
| Other Securities | Any securities other than Group Securities  |
| PAD Rules | The CCOR Control Room Personal Account Dealing Rules as amended from time to time or such other rules and/or policy which may replace them in relation to inside information and personal account dealing restrictions and obligations |
| PCA | Person closely associated as described in Appendix 1 |
| PDMR | Person discharging managerial responsibilities for the purposes of UK MAR, being all Board members and all GEC members (but <u>not</u> any GEC attendees) |
| Restricted Person (*or* you) | Any person to whom this Dealing Policy applies – see Section 3 for further details |
| securities | Any shares or debt instruments (including, but not limited to, investment funds) and any linked derivatives or financial instruments, in each case whether or not publicly traded or quoted  |
| UK MAR | UK Market Abuse Regulation  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1

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2DEALING AND NOTIFICATION REQUIREMENTS "AT A GLANCE"

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted Person? | &nbsp;&nbsp;&nbsp;&nbsp;UK MAR status | Person to whom this <br>Dealing Policy applies | Dealings in Group Securities | Dealings in Group Securities | Dealings in Group Securities | Dealings in Other Securities | Dealings in Other Securities |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted Person? | &nbsp;&nbsp;&nbsp;&nbsp;UK MAR status | Person to whom this <br>Dealing Policy applies | Required to seek clearance to deal?\* | Required to notify dealings?\*  | RNS announcement to the market required?\* | Required to seek clearance to deal?  | Required to notify dealings?  |
| &nbsp;&nbsp;&nbsp;&nbsp;All Restricted Persons | &nbsp;&nbsp;&nbsp;&nbsp;PDMRs and their PCAs | Non-executive director | Yes – see 6.1 and 7 | Yes – see 6.1, 8.1 and 8.2 | Yes | No – see 6.2 | No – see 6.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;All Restricted Persons | &nbsp;&nbsp;&nbsp;&nbsp;PDMRs and their PCAs | Non-executive director's PCA | Yes – see 6.1 and 7 | Yes – see 6.1, 8.1 and 8.2 | Yes | No – see 6.2 | No – see 6.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;All Restricted Persons | &nbsp;&nbsp;&nbsp;&nbsp;PDMRs and their PCAs | Executive director | Yes – see 6.1 and 7 | Yes – see 6.1, 8.1 and 8.2 | Yes | See the PAD Rules  | See the PAD Rules  |
| &nbsp;&nbsp;&nbsp;&nbsp;All Restricted Persons | &nbsp;&nbsp;&nbsp;&nbsp;PDMRs and their PCAs | Executive director's PCA  | Yes – see 6.1 and 7 | Yes – see 6.1, 8.1 and 8.2 | Yes | See the PAD Rules  | See the PAD Rules  |
| &nbsp;&nbsp;&nbsp;&nbsp;All Restricted Persons | &nbsp;&nbsp;&nbsp;&nbsp;PDMRs and their PCAs | GEC member (excluding executive directors) | Yes – see 6.1 and 7 | Yes – see 6.1, 8.1 and 8.2 | Yes | See the PAD Rules  | See the PAD Rules  |
| &nbsp;&nbsp;&nbsp;&nbsp;All Restricted Persons | &nbsp;&nbsp;&nbsp;&nbsp;PDMRs and their PCAs | GEC member's PCA  | Yes – see 6.1 and 7 | Yes – see 6.1, 8.1 and 8.2 | Yes | See the PAD Rules  | See the PAD Rules  |
| &nbsp;&nbsp;&nbsp;&nbsp;All Restricted Persons | &nbsp;&nbsp;&nbsp;&nbsp;N/A | GEC attendee  | Yes – see 6.1 and 7 | Yes – see 6.1 and 8.1 | No | See the PAD Rules | See the PAD Rules |
| &nbsp;&nbsp;&nbsp;&nbsp;All Restricted Persons | &nbsp;&nbsp;&nbsp;&nbsp;N/A | GEC attendee's PCA  | Yes – see 6.1 and 7 | Yes – see 6.1 and 8.1 | No | See the PAD Rules  | See the PAD Rules  |

---

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| | | | |
|:---|:---|:---|:---|
| Step 1 | Step 2 | Step 3 | Step 4 |
| Check you do not have inside information in relation to any Group Securities<br>Check the Group is not in a Closed Period | Seek clearance to deal in Group Securities using the method set out in Requesting Permission To Deal Procedure document provided to you separately | Following receipt of clearance to deal, deal as soon as possible and in any event within two working days. If you fail to deal within this timeline, repeat Steps 1 and 2 | Following dealing, notify your dealing using the method set out in the Requesting Permission To Deal Procedure document provided to you separately (either providing the contract note immediately or once it becomes available or providing the specified data) |

---

****

<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2

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3DOES THIS POLICY APPLY TO ME?

This Dealing Policy applies to Restricted Persons, being:

• all **directors** on the boards of each of Lloyds Banking Group plc, Lloyds Bank plc, HBOS plc and Bank of Scotland plc;

• all **members of the Group Executive Committee** of each of Lloyds Banking Group plc, Lloyds Bank plc, Bank of Scotland plc and HBOS plc;

• all **attendees of the Group Executive Committee** of each of Lloyds Banking Group plc, Lloyds Bank plc, Bank of Scotland plc and HBOS plc; and

• all **persons closely associated** with any person falling within any of the categories set out above (see Appendix 1 for further detail).

This Dealing Policy does <u>not</u> apply to you if you are not a director, or member or attendee of the Group Executive Committee, of any of Lloyds Banking Group plc, Lloyds Bank plc, HBOS plc and Bank of Scotland plc, or a person closely associated with any of those categories of person.

**<u>It is the responsibility of Restricted Persons to be aware of their responsibilities with regard to securities dealings and to ensure they comply with this Dealing Policy.</u>**

Note that other policies, such as the PAD Rules, may apply in addition to this Dealing Policy. In the event of any inconsistency between this Dealing Policy and any other policy, this Dealing Policy shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3

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4WHY IS THIS POLICY IMPORTANT?

As companies with securities that are listed and admitted to trading on various stock exchanges, including the London Stock Exchange, the Group Companies and their respective directors and employees must comply with various important regulatory requirements relating to securities dealings, including under UK MAR. UK MAR includes provisions on inside information, dealing in listed securities and market abuse. It is enforced by the UK Financial Conduct Authority.

This Dealing Policy sets out the procedures that have been established to ensure that the Group Companies and their respective directors and specified employees can comply with their regulatory obligations under UK MAR. Additional processes or procedures may apply in relation to dealings in Group Securities listed on a stock exchange outside the UK. The Group Secretariat team should be consulted prior to any such dealings so that any additional requirements can be confirmed.

The intention of this Dealing Policy is to prevent anyone from dealing, or placing themselves under suspicion of dealing, in securities when in possession of inside information or ahead of the publication of periodic financial information and to make all individuals to whom this Dealing Policy applies aware of their responsibilities (in particular in relation to abiding by restrictions on dealings, seeking appropriate clearance to deal and, where required, making mandatory notifications following any dealing).

**<u>It is your responsibility to read and comply with this Dealing Policy</u>**. Breaches of the regulatory requirements relating to securities dealings may have serious consequences for the Group Companies and their Restricted Persons, including civil fines for market abuse dealings and criminal charges for any persons involved in insider dealing. Any breaches of this Dealing Policy will therefore be taken seriously and, in the case of employees subject to this Dealing Policy, may lead to disciplinary action being taken against the individual concerned.

GEC members and attendees should read this Dealing Policy alongside the PAD Rules, which apply to dealings in Other Securities by GEC members and attendees and their respective PCAs. In the event of any inconsistency between this Dealing Policy and any other policy (including the PAD Rules), this Dealing Policy shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4

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5WHAT KINDS OF DEALINGS ARE COVERED BY THIS POLICY?

The **definition of "dealing" for the purposes of this Dealing Policy is very wide**. The following is a non-exhaustive list of transactions in Group Securities which are dealings for the purpose of this policy:

• buying or agreeing to buy securities;

• selling or agreeing to sell securities (which includes selling or agreeing to sell shares to pay tax when receiving shares under one of the Group's share plans, unless you are otherwise told that clearance is not needed);

• being granted, accepting, acquiring, disposing of, exercising or discharging any option or warrant (whether for the call, or put or both) or any other transactions in or relating to any other type of derivative (including cash-settled transactions and phantom options);

• participating in, receiving securities or awards or options for securities under, altering, or leaving any of the Group's share plans;

• entering into or leaving any dividend re-investment plan;

• using any securities as security for a loan (whether by way of borrowing or lending or otherwise);

• transferring any securities to a spouse, civil partner or other family member;

• transferring securities between two accounts that are ultimately beneficially owned by the same person (including transferring to or from an ISA) or any other change in the legal holder of securities (even where the beneficial ownership remains the same);

• entering, amending or cancelling any trading plan or investment plan in respect of securities;

• giving or receiving a gift of securities (including by way of inheritance);

• giving instructions to the manager of a pension fund to invest in or sell securities (or a fund which includes securities);

• subscribing for or agreeing to subscribe for securities (including participating in any capital increase or debt instrument issuance, or agreeing to subscribe for securities by way of a share-for-share exchange or similar transaction);

• entering into or exercising equity swaps, a contract for difference, derivatives and financial instruments that are linked to debt instruments (including credit default swaps); and

• entering into certain transactions under a life insurance policy where (i) you are the policyholder, (ii) you bear the investment risk and (iii) you have the power or discretion to make investment decisions, or execute transactions, regarding specific instruments for that life insurance policy.

• Dealing covers circumstances where:

• you are dealing on your own behalf;

• you are dealing on behalf of someone else (e.g. if you are acting as an executor of an estate, or as trustee of a trust, that holds securities);

• someone else is dealing on your behalf (e.g. your broker, investment fund manager, pension fund or trustee of your family trust), including where that person exercises discretion;

• transactions that are conditional in some way (e.g. where execution depends on the occurrence or fulfilment of certain conditions); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5

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• there is an automatic or non-automatic conversion of one security into another (e.g. the exchange of convertible bonds for shares).

• Although "dealing" is interpreted broadly, different requirements and procedures for seeking clearance to deal and notifying any dealing may apply depending on the circumstances surrounding that dealing. See Section 6 and Appendix 2 for further details.

• **If you are in doubt, you should assume that any proposed action or decision by you, or by someone on your behalf, in relation to securities may be a "dealing" and obtain guidance from the Group Secretariat team.** 

6WHAT ARE MY OBLIGATIONS UNDER THIS POLICY?

6.1OBLIGATIONS IN RELATION TO GROUP SECURITIES

**If you wish to deal in Group Securities, you must obtain prior clearance to do so.** See Section 7 for further detail on how to seek clearance to deal in Group Securities. You must not deal in considerations of a short-term nature (i.e. with a maturity of one year or less).

You should not seek, and will not be given, clearance to deal in Group Securities of a Group Company during:

• a time when you hold inside information in relation that Group Company;

• a Closed Period in relation to that Group Company (save in exceptional circumstances in accordance with applicable regulation).

The Closed Periods for each of the Group Companies are as follows:

• <u>Year end results (</u>*<u>applicable to Lloyds Banking Group plc</u>*<u>)</u>: 30 calendar days immediately preceding the announcement of Lloyds Banking Group plc's preliminary results (the "Start Date") until 7am one clear day after the announcement of the preliminary results

• <u>Year end results (</u>*<u>applicable to HBOS plc, Lloyds Bank plc and Bank of Scotland plc</u>)*: the Start Date until 7am one clear day after the announcement of the relevant Group Company's annual report and accounts

• <u>Q1 IMS (</u>*<u>applicable to Lloyds Banking Group plc and Lloyds Bank plc only</u>*<u>)</u>: 1 April until 7am one clear day after the announcement of the Group Company's Q1 IMS

• <u>Half-year results</u>: 30 calendar days immediately preceding the announcement of the Group Company's interim results until 7am one clear day after the announcement of the Group Company's interim results

• <u>Q3 IMS (</u>*<u>applicable to Lloyds Banking Group plc and Lloyds Bank plc only</u>*<u>)</u>: 1 October until 7am one clear day after the announcement of the Group Company's Q3 IMS

• **Following any dealing in Group Securities, you must notify the Group Secretariat team so that any required announcements and notifications can be made.** See Section 8 for further detail on how to notify the Group Secretariat team of your dealings in Group Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6

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6.2OBLIGATIONS IN RELATION TO OTHER SECURITIES

If you are a GEC member or a GEC attendee, you must refer to the PAD Rules which sets out your obligations in relation to dealings by you and your PCAs in Other Securities.

If you are a non-executive director on the Board or the PCA of a non-executive director on the Board, you are not required to seek clearance to deal, or notify your dealings, in Other Securities.

Note, however, that there is a general prohibition against dealing in any company's securities at any time when you hold inside information about that company. When making a decision on whether or not to deal in Other Securities, you should be mindful of any information that has been disclosed to you (for example, to non-executive directors in the context of impairment and other credit reviews provided periodically to the Audit Committee or Board Risk Committee or in relation to contract negotiations / reviews) and if you are in any doubt, you should seek guidance on whether it is appropriate to deal in Other Securities in those circumstances from the Group Secretariat team.

7HOW DO I OBTAIN CLEARANCE TO DEAL?

If you wish to seek clearance to deal in Group Securities, you must do so using the process set out in the Requesting Permission To Deal Procedure document provided to you separately.

Note that there are a small number of dealings in Group Securities which do not require prior clearance – see Appendix 2 for further details.

Upon receipt, the request will be considered by the Control Room, the approver relevant to your role (or their alternate) and, in the case of GEC members and attendees, Reward. When considering whether to provide clearance to deal in Group Securities, consent will not be unreasonably withheld but you should note that the approver may choose to withhold consent for reputational reasons or as a result of public perception considerations.

You will generally be notified of the outcome of your request within two working days. Any clearance to deal may be provided subject to conditions, which you must comply with. A reasoned explanation for any refusal to provide clearance to deal will also be provided unless prohibited by law.

Once you receive clearance to deal in Group Securities, **you must deal as soon as possible after receiving clearance and in any event within two working days of receiving clearance**. If you do not deal in Group Securities within this time period, or there is new information which is or has the potential to become inside information, you must seek clearance to deal again using the process set out in the Requesting Permission To Deal Procedure document provided to you separately before dealing.

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8HOW DO I NOTIFY THE GROUP OF MY DEALINGS?

8.1PROCEDURE FOR ALL PERSONS TO WHOM THIS DEALING POLICY APPLIES

Once you have dealt in Group Securities, **you must notify the Group Secretariat team as soon as practicable and no later than two working days after the dealing occurred**.

You should do so following the process set out in the Requesting Permission To Deal Procedure document provided to you separately.

The following information, which is usually set out on the contract note, should be included on any notification of dealings in Group Securities:

• name of the person that dealt in Group Securities;

• name of the relevant issuer (e.g. Lloyds Banking Group plc, Lloyds Bank plc);

• description of the security (e.g. ordinary shares, debt instruments);

• nature of the transaction (e.g. acquisition, disposal, exercise of options);

• price and volume of the transaction(s);

• date of the transaction(s); and

• trading venue of the transaction(s) (e.g. London Stock Exchange).

• Note that there are a small number of dealings in Group Securities which do not require notification by you to the Group Secretariat team – see Appendix 2 for further details.

8.2ADDITIONAL OBLIGATIONS FOR PDMRS AND THEIR PCAS

Under UK MAR, PDMRs (i.e. all directors and GEC members) and their PCAs are required to notify the relevant Group Company and the FCA of their dealings in Group Securities promptly and no later than three working days after the dealing occurred. Unless instructed to the contrary by the PDMR or PCA, the relevant Group Company will notify the FCA of any dealings in Group Securities by a PDMR and their PCAs using the details provided, although the PDMR or PCA (as applicable) remains legally responsible for the notification.

Under UK MAR, the relevant Group Company is also required to announce dealings in Group Securities by PDMRs and their PCAs via regulatory information service announcement within two working days of the Group Company receiving notification of the dealing from the PDMR or PCA (as applicable).

If you are a PDMR or a PCA of a PDMR, you should be aware of the additional obligations described in this Section 8.2 and should follow the procedure described in Section 8.1 and **in particular must notify the Group Secretariat team no later than two working days after the dealing occurred** to ensure that these obligations can be complied with.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8

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9APPENDIX 1 - PERSONS CLOSELY ASSOCIATED

The checklists below are designed to help you identify whether a certain individual or legal person is your PCA for the purposes of this Dealing Policy. If you have any questions, you should contact the Group Secretariat team.

**PCA checklist – Family Members**

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| | |
|:---|:---|
| **Relationship** | **PCA** |
| Husband/wife/civil partner | ✓ |
| Husband/wife/civil partner (separated, including legally separated, but not yet divorced) | ✓ |
| Ex-husband/wife/civil partner (after divorce finalised) | ✘ |
| Live-in partner | ✓ |
| Live-out partner | ✘ |
| Child/step-child under 18 and unmarried/no civil partner | ✓ |
| Child/step-child under 18 who is married or has a civil partner and does not live at home | ✘ |
| Child/step-child over 18 and not living at home (a child/step-child attending university away from home, and only returning home during holidays is not considered to be a PCA, but will become a PCA after returning home, and remaining there for more than 12 months) | ✘ |
| Live-in relative (e.g. elderly aunt, grandchild, adult child or married child under 18) who has shared the same address for 1 year or more | ✓ |
| Live-in non-relative (e.g. au pair, lodger) | ✘ |
| Other relatives who do not share the same address as the Restricted Person (parents, siblings, in-laws etc.) | ✘ |

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**PCA checklist – Corporate Interests**

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| | |
|:---|:---|
| **Relationship** | **PCA** |
| Corporate body, trust or partnership of which you or any of your PCAs discharges the managerial responsibilities (e.g. a cross-directorship, where you or your PCA is on the board of a company outside the Group and takes part in or influences the decisions of that company in relation to transactions in Group Securities – normally a non-executive directorship position on another company will not make that company a PCA) | ✓ |
| Corporate body, trust or partnership which is directly or indirectly controlled by you or any of your PCAs | ✓ |
| Corporate body, trust or partnership set up for the benefit of you or any of your PCAs | ✓ |
| Corporate body, trust or partnership the economic interests of which are substantially equivalent to those of you or any of your PCAs | ✓ |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9

------

10APPENDIX 2 – CLEARANCE AND NOTIFICATION REQUIREMENTS IN SPECIFIC DEALING SCENARIOS

As described in Section 5, "dealing" is interpreted broadly and therefore a wide range of transactions are covered by this Dealing Policy. As a general rule, you should seek clearance to deal in Group Securities as described in Section 7 and should notify the Group Secretariat team of your dealings in Group Securities as described in Section 8.

This Appendix describes a number of dealings that deviate from this general rule, where clearance to deal or notification (or both) is not required. Further guidance can be obtained from the Group Secretariat team.

10.1CERTAIN DEALINGS ON BEHALF OF A RESTRICTED PERSON WHERE A MANAGER OR TRUSTEE HAS COMPLETE DISCRETION

You are <u>not</u> required to seek clearance to deal, or to notify the Group Secretariat team of your dealings in Group Securities, where you (or someone on your behalf) buys or sells an investment product which is known to hold an interest not exceeding 20% in Group Securities <u>and</u> it is not possible for you to determine or influence the investment strategy or dealings carried out, such that the manager or trustee has complete discretion.

The manager or trustee would have complete discretion, for example, in most mutual funds, index trackers or other retail investment products (so there would be no need to apply for clearance for dealings by those funds). Before buying or selling, you should take reasonable steps to find out if the investment product includes an exposure to Group Securities.

Where you can determine or influence the investment strategy or dealings carried out by someone else on your behalf, or the exposure to Group Securities exceeds 20%, you should seek clearance to deal and notify the Group Secretariat team of your dealings in the usual way.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10

------

10.2DEALINGS IN RELATION TO THE GROUP'S SHARE PLANS

<u>Actions that do not require clearance or notification</u>

The following specific actions in relation to the Group's share plans do not require you to seek clearance and do not require you to notify the Group Secretariat team of your dealings:

• you being granted an option or award under one of the Group's share plans (*but, as set out below, you <u>do</u> have to seek clearance to accept an invitation to participate in the Group's Sharesave Scheme or to join a Group share plan or to leave a Group share plan e.g. Sharesave or Sharematch*);

• you receiving a normal quarterly allocation of Group Securities as a Fixed Share Award;

• where you already participate in the Group's *Sharematch* offering, you receiving a normal monthly allocation of partnership and/or matching shares;

• you being notified of the vesting of an award under any of the Group's share plans; and

• you receiving Group Securities (or cash payment) in settlement of vesting (*but, as set out below, you <u>do</u> have to seek clearance for any election that you make in connection with vesting of any award unless you are specifically told otherwise at the time*); and

• any other instance where you are specifically informed by a formal share plan communication or the Group Secretariat team that clearance to deal and notification of your dealings are not required.

<u>Actions that require clearance and notification to Group Secretariat</u>

You should seek clearance and notify the Group Secretariat team of your dealings in relation to any other action under any of the Group's share plans unless you are specifically told otherwise in the formal share plan communication at the time. Without limitation, this includes:

• you joining or leaving any of the Group's share plans;

• you stopping, starting or changing contributions under the Group's *Sharematch* plan (i.e. *Partnership and Matching Shares*);

• you opting out of receiving a *Colleague Group Ownership Share* award;

• you making an application to participate in the Group's *Sharesave Scheme*, or you withdrawing from the scheme or changing or cancelling your monthly savings contract;

• you exercising any option or award under the Group's share plans;

• you making any election in relation to the vesting of an award or option (such as electing to sell Group Securities or cash out an award to pay tax); and

• you transferring Group Securities out of a Group share plan to your own share account, into an ISA, or to any other person.

10.3DEALINGS IN A TRUSTEE CAPACITY

If you act as the trustee of a trust, you should speak to the Group Secretariat team about your obligations in respect of any dealings in Group Securities carried out by the trustees of that trust.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11

## Ex-12

**EXHIBIT 12.1**

**CERTIFICATIONS REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT**

I, Charlie Nunn, certify that:

1. I have reviewed this annual report on Form 20-F of Lloyds Bank plc (the "Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and we have:

&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarise and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

---

| |
|:---|
| /s/ Charlie Nunn |
| Charlie Nunn, Group Chief Executive |
| Date: 26 February 2026 |

---

## Ex-12

**EXHIBIT 12.2**

**CERTIFICATIONS REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT**

I, William Chalmers, certify that:

1. I have reviewed this annual report on Form 20-F of Lloyds Bank plc (the "Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and we have:

&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarise and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

---

| |
|:---|
| /s/ William Chalmers |
| William Chalmers, Chief Financial Officer |
| Date: 26 February 2026 |

---

## Ex-13

**EXHIBIT 13.1**

**CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

**(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)**

This certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended 31 December 2025 (the "Report") for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Charlie Nunn, the Group Chief Executive, and William Chalmers, the Chief Financial Officer, of Lloyds Bank plc, each certifies that, to the best of his knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Lloyds Bank plc.

---

| |
|:---|
| 26 February 2026 |
| /s/ Charlie Nunn |
| Charlie Nunn |
| Group Chief Executive |
| /s/ William Chalmers |
| William Chalmers |
| Chief Financial Officer |

---

## Ex-15

?xml version='1.0' encoding='ASCII'? lbk-20251231

**Member of Lloyds Banking Group**

**Lloyds Bank plc**

**Annual Report and Accounts 2025**

**Member of Lloyds Banking Group**

---

| | |
|:---|:---|
| [Strategic report](#iddf3b01e92c34e0691e008ab468ef39d_16) | [1](#iddf3b01e92c34e0691e008ab468ef39d_16) |
| [Directors' report](#iddf3b01e92c34e0691e008ab468ef39d_22) | [12](#iddf3b01e92c34e0691e008ab468ef39d_22) |
| [Current directors](#iddf3b01e92c34e0691e008ab468ef39d_25) | [16](#iddf3b01e92c34e0691e008ab468ef39d_25) |
| [Risk management](#iddf3b01e92c34e0691e008ab468ef39d_28) | [17](#iddf3b01e92c34e0691e008ab468ef39d_28) |
| [Forward looking statements](#iddf3b01e92c34e0691e008ab468ef39d_82) | [63](#iddf3b01e92c34e0691e008ab468ef39d_82) |
| [Intentionally left blank] | 64 |
| [Consolidated income statement](#iddf3b01e92c34e0691e008ab468ef39d_97) | [73](#iddf3b01e92c34e0691e008ab468ef39d_97) |
| [Consolidated statement of comprehensive income](#iddf3b01e92c34e0691e008ab468ef39d_100) | [74](#iddf3b01e92c34e0691e008ab468ef39d_100) |
| [Consolidated balance sheet](#iddf3b01e92c34e0691e008ab468ef39d_103) | [75](#iddf3b01e92c34e0691e008ab468ef39d_103) |
| [Consolidated statement of changes in equity](#iddf3b01e92c34e0691e008ab468ef39d_106) | [76](#iddf3b01e92c34e0691e008ab468ef39d_106) |
| [Consolidated cash flow statement](#iddf3b01e92c34e0691e008ab468ef39d_109) | [79](#iddf3b01e92c34e0691e008ab468ef39d_109) |
| [Notes to the consolidated financial statements](#iddf3b01e92c34e0691e008ab468ef39d_112) | [80](#iddf3b01e92c34e0691e008ab468ef39d_115) |
| [Intentionally left blank] | 138 |
| [Intentionally left blank] | 139 |
| [Intentionally left blank] | 140 |
| [Intentionally left blank] | 141 |
| [Intentionally left blank] | 143 |
| [Intentionally left blank] | 144 |
| [Subsidiaries and related undertakings](#iddf3b01e92c34e0691e008ab468ef39d_436) | [171](#iddf3b01e92c34e0691e008ab468ef39d_439) |

---

---

| | |
|:---|:---|
| **1** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Strategic report**

**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 locations overseas.

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, risk management and debt capital markets services to commercial customers.

**Business review**

**Income statement**

The Group's statutory profit before tax for 2025 was £5,472 million (2024: £4,688 million). This included higher total income, partially offset by

higher operating expenses and a higher impairment charge. Profit after tax was £3,856 million (2024: £3,486 million).

Total income for 2025 was £18,429 million, an increase of 8% (2024: £17,071 million). Within this, net interest income of £13,363 million was up

6% on the prior year (2024: £12,592 million), driven by higher average interest-earning assets and a higher margin. Other income of

£5,066 million was 13% higher (2024: £4,479 million), reflecting improved performance in UK Motor Finance within Retail from fleet growth

and higher average vehicle rental values, as well as higher net fee and commission income. Other income in the prior year was impacted by a

write off relating to changes in commission arrangements with Scottish Widows.

Total operating expenses of £12,165 million were 2% higher (2024: £11,927 million), reflecting strategic investment (including planned higher

severance), business growth costs and inflationary pressures. This was partially mitigated by cost savings from investment and continued

business-as-usual cost discipline. Operating expenses include operating lease depreciation which increased due to fleet growth,

the depreciation of higher value vehicles and declines in used electric car prices, partly mitigated through lease extensions, used car leasing and

remarketing agreements.

A remediation charge of £953 million was recognised by the Group in 2025 (2024: £880 million), including £800 million in relation to the

potential impact of motor finance commission arrangements taken in the third quarter, bringing the total provision recognised for motor

finance to £1,950 million.

The impairment charge was £792 million compared to a £456 million charge in 2024, which benefitted from a large credit from improvements

in the Group's economic outlook. In Retail, the charge for 2025 reflected both strong performance alongside the benefits from calibrations and

model refinements and a debt sale. In Commercial Banking, higher charges in the first half of the year driven by a small number of individual

cases were more than offset by releases from Stage 1 and Stage 2 model calibrations capturing strong credit performance and reducing interest

rates throughout the year.

The Lloyds Bank Group's post-tax return on average total assets increased to 0.62% compared to 0.57% in the year ended 31 December 2024.

**Balance sheet**

Total assets were £20,122 million higher at £631,335 million at 31 December 2025 (31 December 2024: £611,213 million). Financial assets at

amortised cost were £19,570 million higher at £524,467 million, supported by increases in loans and advances to customers of £19,597 million.

This included growth of £10,806 million in UK mortgages, alongside growth across UK Retail unsecured loans, credit cards, UK Motor Finance

and the European retail business totalling £7,307 million. Lending balances increased by £664 million in Commercial Banking, with higher

Institutional balances alongside growth in securitised products, partially offset by repayments of government-backed lending. The £5,913

million increase in financial assets at fair value through other comprehensive income and the £4,676 million decrease in cash and balances at

central banks reflected a change in the mix of liquid asset holdings. This was accompanied by other assets which increased £720 million driven

by operating lease assets resulting from fleet growth and higher value vehicles in UK Motor Finance. Derivative financial assets decreased by

£975 million due to market movements in the year.

Total liabilities were £17,889 million higher at £589,355 million (31 December 2024: £571,466 million). Customer deposits increased by

£13,413 million to £465,207 million. Retail deposits increased £5,442 million in the year, including growth in Retail savings accounts, as a result

of net inflows to limited withdrawal and fixed term deposits particularly through increased ISA balances, and growth in European retail

balances. This was alongside strength in current account balances. Commercial Banking deposits were up £8,116 million, resulting from growth

in targeted sectors. Debt securities in issue at amortised cost increased by £6,851 million to £52,132 million, with new issuances in the year.

Subordinated liabilities increased by £809 million largely due to new issuances in the year, partly offset by redemptions and provisions

increased by £574 million reflective of the motor finance commission arrangements. Amounts due to fellow Lloyds Banking Group undertakings

decreased by £197 million to £3,852 million. Derivative financial liabilities decreased by £1,501 million, due to market movements in the year,

while other liabilities decreased by £1,439 million.

Total equity was £41,980 million at 31 December 2025, higher compared to £39,747 million at 31 December 2024, with the profit for the year,

the issuance of other equity instruments and movements in the cash flow hedge reserve partly offset by dividends paid of £2.4 billion, lower

pension surplus and redemptions of other equity instruments.

---

| | |
|:---|:---|
| **2** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Strategic report** continued

**Capital** 

The Group's common equity tier 1 (CET1) capital ratio decreased to 13.6% at 31 December 2025 from 13.7% at 31 December 2024. Profit for the

year, after the charge for motor finance commission arrangements, was more than offset by the payment of ordinary dividends, the accrual for

foreseeable ordinary dividends, distributions on other equity instruments and an increase in risk-weighted assets.

Risk-weighted assets increased by £7,304 million to £194,300 million at 31 December 2025 from £186,996 million at 31 December 2024. This

includes the impact of lending growth and Retail secured CRD IV increases, partly offset by continued optimisation activity.

The Group's total capital ratio increased to 20.1% at 31 December 2025 from 19.9% at 31 December 2024 reflecting the increase in CET1 capital

and the issuance of new AT1 and tier 2 capital instruments during the year. This was partly offset by AT1 and tier 2 instrument calls, other tier 2

movements and the increase in risk-weighted assets.

The Group's UK leverage ratio reduced to 5.2% at 31 December 2025 from 5.4% at 31 December 2024, reflecting an increase in the leverage

exposure measure following increases across loans and advances and other assets, largely due to lending growth, and an increase in off-balance

sheet items. This was partly offset by an increase in the total tier 1 capital position.

**Future developments**

Information about future developments is provided within the Principal risks and uncertainties section below.

**Section 172(1) Statement**

This section (**pages 2 to 4**) is our Section 172(1) statement for the purposes of the Companies Act 2006 (the Act), describing how the directors

have had regard to the matters set out in section 172(1) (a) to (f) of the Act when performing their duty to promote the success of the Bank

under section 172. Further detail on key stakeholder interaction is also contained within the directors' report on **pages 12 to 16**.

The directors remain mindful in all their deliberations of the long-term consequences of their decisions, as well as the importance of the Bank

maintaining a reputation for high standards of business conduct and the Board engaging with, and taking account of the interests of,

stakeholders.

**Stakeholder Engagement**

The Board recognises the fundamental importance of engaging with its stakeholders, gaining a deeper understanding of their views, and the

importance of this understanding in informing their discussions and decision-making. During the year, key stakeholders included customers,

clients, colleagues, shareholders, communities, regulators and suppliers.

The Group's Closer to Customers, Clients and Colleagues programme remains a key method by which non-executive directors hear directly

from the Board's stakeholders.

The programme helps the directors better understand the important issues for the Group's stakeholders, the role the Group plays in supporting

them, and how the Group is performing.

Activity under the programme, along with other forms of director engagement, is described below. Examples of decision making by the Board

which had particular relevance to their stakeholder engagement can be found on **page 4**.

**Our Stakeholders**

**Customers and clients**

Why does the Board engage?

The Board's engagement with customers is central to the Bank's customer-centric approach, including the Bank's ability to evolve to meet

changing customer needs, and support our customers in achieving their financial ambitions.

How did the Board engage?

• Sessions providing deeper insight into the issues faced by specific customer groups, including single person households, small businesses and

later life, including retirement

• Holding events with clients in Edinburgh, Manchester and London to hear directly from them on the issues their businesses are facing

• Regular updates to the Board by the executive team gave insight into the Bank's performance in delivering on its customer and client-

related objectives, including customer insight sessions and ongoing consideration of the Group customer dashboard

• Concerns relevant to customers and clients were identified for consideration in wider proposals put to the Board

How does that engagement impact Board decisions?

• Hearing directly from customers and clients helps better determine the action the Bank takes now and in the future to best support our

customers' needs

• Direct engagement helps the Board in ensuring the Bank can best meet its Consumer Duty obligations

• Regular updates from the executive team help to identify opportunities for innovation and improvement to better support our customers

and clients

• Review of the Group Customer Dashboard gives the Board the opportunity to ensure meaningful changes are delivered to further improve

customer outcomes

**Shareholders**

The Bank is a wholly owned subsidiary within the Lloyds Banking Group group of companies. The directors ensure that the strategy, priorities,

processes and practices of the Bank are fully aligned where required to those of Lloyds Banking Group, ensuring that the interests of Lloyds

Banking Group plc as the Bank's sole shareholder are duly acknowledged. Further information in respect of the relationship of Lloyds Banking

Group plc with its shareholders is included within the Lloyds Banking Group plc Annual Report and Accounts for 2025, available on the Lloyds

Banking Group website.

---

| | |
|:---|:---|
| **3** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Strategic report** continued

**Colleagues**

Why does the Board engage?

The Board's ambition is that the Bank continues to be a place where people who are passionate about our purpose wish to work. Engagement

with colleagues helps to understand better how they remain motivated to achieve our purpose, with the skills needed to deliver on the Bank's

wider strategic objectives.

How did the Board engage?

• Held a number of colleague engagement and recognition events, with the opportunity to hear directly from colleagues and recognise their

achievements in supporting our customers

• Considered reports on key themes raised during colleague engagement activity, including the work of the People Forum, the People

Consultation Forum and the Management Advisory Forum

• Review by its Responsible Business Committee of findings from surveys of colleague sentiment and other colleague engagement reports

How does that engagement impact Board decisions?

• Allows the Board to understand directly colleague views on the Bank's progress against its strategy, including what could improve this

progress, and colleague observations from interacting with customers, further informing wider Board decision making

• Helps the Board gain additional insight on matters which colleagues have raised as part of wider engagement activity and allows progress

against matters raised to be monitored

During the year Lloyds Banking Group communicated directly with colleagues detailing Bank performance, changes in the economic and

financial environment and updates on key strategic initiatives. Meetings were held throughout the year with our recognised unions.

For 2025, the Remuneration Committee approved the overall Group Performance Share pool for colleagues. Colleagues are eligible to

participate in HMRC approved share plans which promote share ownership by giving employees an opportunity to invest in Lloyds Banking

Group plc shares. The vast majority of colleagues hold shares in Lloyds Banking Group plc.

The Board's Responsible Business Committee is the designated body for workforce engagement, providing focus, but with the Board retaining a

commitment for individual Board members to engage with colleagues directly throughout the year. The Responsible Business Committee

reports regularly to the Board on its colleague engagement agenda. The Board considers these arrangements to be effective as the work of the

Responsible Business Committee combined with the other colleague engagement methods in this section allows engagement with diverse

colleague groups.

Engagement in action: Pension engagement

During the year, the Board and its Remuneration Committee consulted with colleagues on proposals to move UK defined contribution pension

provision from Your Tomorrow and Your Retirement Plan to the Scottish Widows Master Trust. The Board engaged with colleagues to

understand their views through a comprehensive digital first consultation process. This included around 1,800 items of feedback formally

submitted by colleagues across all grades, business units and age groups. Trade union partners, including Accord and Unite, were also

consulted, along with the People Consultation Forum, allowing collective consultation and a number of relevant questions to be raised,

resulting in no formal objections or requests for further action. The Board was pleased to have the opportunity to hear from colleagues and

representatives so as to be able to take their views into account prior to making the decision to transfer the future pension provision of UK

colleagues to the Scottish Widows Master Trust from 2026.

**Communities and environment**

Why does the Board engage?

The Bank's presence in a large number of communities across the UK continues to reinforce the importance of engagement and action to help

these communities prosper, while also helping to build a more sustainable and inclusive future.

How did the Board engage?

• Members of the Board met with representatives of charities and community groups supported by Lloyds Banking Group's charitable

foundations

• The Board continues to be supported in environmental matters by its Responsible Business Committee, which considers stakeholder views

on matters relating to the Bank's ambition to be a trusted, sustainable, inclusive and responsible business

How does that engagement impact Board decisions?

• Engagement with the charitable partners of Lloyds Banking Group allowed the Board to better understand the Bank's impact within local

communities

• The work of the Responsible Business Committee gives the Board deeper insight into its role as both an employer and a collaborator within

the communities in which the Bank is present

**Regulators and government**

Why does the Board engage?

The Board recognises the importance of its ongoing constructive relationships and dialogue with both government and the regulatory

authorities in markets in which the Bank operates, in particular in achieving the Bank's strategic ambitions, and continuing to deliver for the

Bank's wider stakeholders

How did the Board engage?

• Directors held ongoing discussions with the FCA and PRA on various aspects of the regulatory agenda

• Discussions included the Board's role in oversight of the Bank's key risks and execution of strategy

• The PRA and FCA attended a meeting of the Board during which progress against actions from their Periodic Summary Meeting and Firm

Evaluation letters were discussed

• Directors engaged with the Government during the year on matters relating to the impact of policy on the financial services sector

How does that engagement impact Board decisions?

• Ongoing direct discussions allow the Board to better understand the regulators' and the Government's priorities and how these are best

acknowledged in the Board's wider decision making

---

| | |
|:---|:---|
| **4** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Strategic report** continued

**Suppliers**

Why does the Board engage?

The Board recognises the importance of the partners the Bank relies on for key aspects of its operations and strengthening these relationships

to achieve both the Bank's and its suppliers' wider ambitions.

How did the Board engage?

• The Audit Committee considered reports from Sourcing and Finance teams on the efficiency of supplier payment practices, including those

relating to the Bank's key suppliers

• The Board continued to oversee resilience in the supply chain, ensuring the Bank's most important supplier relationships were not impacted

by potential material events

How does that engagement impact Board decisions?

• Ensures the Bank's approach continues to meet wider industry standards on supplier management, in particular supplier payment practices

• Allows a deeper understanding of our supply chain and the degree to which our suppliers' operations align to the strategy and purpose of

the Bank

**Key Decisions**

Considering stakeholder interests is key to decision-making by the Board. To better understand their interests, the Board receives feedback

from stakeholders through engagement both inside and outside of the board room, including at specific events and through the Group's Closer

to Customers, Clients and Colleagues programme.

Senior management supports Board decision-making by addressing stakeholder implications in proposals submitted to the Board for

consideration and providing the Board with details of stakeholder interactions.

An example of a Board decision outlined below illustrates this in practice.

**Empowering customers through technology and innovation**

Customers & Clients, Communities & Environment, Shareholders, Suppliers, Colleagues, Regulators & Government

Board considerations:

In 2025, in line with the Group's customer-focused strategy, the Board considered initiatives aimed at accelerating and broadening the Bank's

digital transformation and deepening customer relationships as well as simplifying customer interactions.

Board initiatives:

• In June, the Board approved the Consumer Duty annual report and considered how good customer outcomes remain critical as the Bank

focuses on customer experience and differentiation. Throughout 2025, the Board received updates on co-servicing which enables customers

to service products across our brands seamlessly – whether in branch, online, or when they need extra support

• Customer differentiation was also the focus of executive briefings to the Board in June and November on the Group's proposed acquisition

of Curve, a London based fintech operating an innovative digital wallet platform, with a view to accelerating the Group's digital wallet

strategy and differentiate customer experience

Future focus:

The Board is committed to supporting the Group's strategy to deliver market-leading digital experiences and empower its customers.

---

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|:---|:---|
| **5** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Strategic report** continued

**Risk overview**

**Lloyds Bank Group's approach to risk**

Risk management is essential to our business model and strategy,

helping us to embrace opportunities responsibly and drive sustainable

growth for the Group. Our strong risk management culture,

underpinned by Lloyds Banking Group's enhanced risk management

framework (RMF), is vital in safeguarding the Group, colleagues and

customers against both existing and emerging risks.

**Risk profile and performance in 2025**

The Group's credit performance remains strong and stable; the loan

portfolio remains well positioned amid macroeconomic uncertainty

and is closely monitored to proactively identify signs of stress.

Operational resilience remains crucial, enabling the Group to prevent,

withstand and respond to cybersecurity threats and IT outages, using

intelligence and learnings from recent global events.

The Group continues to modernise its technology and strengthen

capabilities and ensure the safe, responsible use of models and tools

such as artificial intelligence.

The latest position regarding motor finance commission arrangements

and the potential impact is provided on **page [128](#i301ee39a87e74ee1844a006296c215a2_192).**

The Risk overview provides a summary of performance for each of the

Group's principal risks, along with emerging and topical risks.

**Resetting Risk** 

During 2025, the Group has continued to make progress in its risk

transformation journey, allowing us to further evolve our risk

management approach to deliver good outcomes for our customers.

This has included the consistent implementation of the RMF

requirements for all of Lloyds Banking Group's legal entities including

Lloyds Bank plc, business units and functions.

The RMF ensures processes are in place to facilitate robust risk

management and effective decision making.

Lloyds Banking Group's risk policies are supported by risk toolkits,

which set out clear guidance and minimum standards for proactive

identification and effective risk management, fostering a strong risk

management culture across the Group. Further information about the

RMF and the Resetting Risk programme can be found on **pages [17](#i7771757d291b40b1af968d8201e355f5_21523) to** 

**[18](#i7771757d291b40b1af968d8201e355f5_21516)**.

**Our approach**

"We're on an exciting transformation journey through our Resetting

Risk programme, allowing us to further evolve our risk management

approach and accelerate decision-making to achieve improved

outcomes for our customers."

**Stephen Shelley**

Chief Risk Officer

**Risk management framework**

---

| |
|:---|
| **Group and risk management strategies**<br>•The Group strategy is driven by strategic priorities and informed <br>by the Group's risk profile, considering external economic, <br>political and regulatory threats. This shapes risk appetite <br>and risk management practices <br>•The risk management strategy supports delivery of the Group <br>strategy by ensuring principal risks are managed consistently <br>within appetite and the target control environment<br>|
| **Culture, values and behaviours**<br>•The RMF provides tools for colleagues to make the right <br>decisions, balancing stakeholder needs, risks and trade-offs and <br>encouraging a culture of intellectual curiosity, innovation and <br>proactive risk management<br>|
| **Risk governance**<br>•Designed to enable sound decision-making in line with good <br>corporate governance standards across all legal entities. Board <br>and executive committees hold key decision-making authority, <br>with clear responsibilities for risk management, delegated <br>powers and reporting requirements<br>|
| **Three lines of defence**<br>•Aligned with industry best practice, the Group applies a three <br>lines of defence model, with all colleagues accountable for <br>managing risk in daily activities and demonstrating behaviours <br>consistent with Lloyds Banking Group's purpose, values and <br>culture<br>|
| **Risk function mandate**<br>•Clarifies Risk's role as an oversight and control function within <br>the three lines of defence, supporting the Chief Risk Officer in <br>fulfilling accountabilities defined in their role profile and <br>delegated by the Group Chief Executive and the Board<br>|
| **Risk appetite**<br>•The type and level of risk the Group is willing to accept in pursuit <br>of its strategic objectives, which must operate within Board-<br>approved parameters. Set annually for the Group and its legal <br>entities<br>|
| **Risk architecture and approach**<br>•The Group's risk architecture defines a consistent, unified <br>approach and a common language for all principal risks. Risk <br>principles and policies translate risk appetite into actionable risk <br>management<br>|

---

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| **6** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Strategic report** continued

**Principal risks**

The risks outlined in this section are used to monitor and report the risk exposures posing the greatest potential impact to the Group. All

principal risks are reported regularly to the Board Risk Committee and Board, and are reviewed at least annually to ensure they remain fit for

purpose.

The risk management section on **pages [17](#i7771757d291b40b1af968d8201e355f5_22189) to [62](#i12306a0431d340fa89ea3a0ef764ebd2_26738)** provides a detailed review of these risks, including definitions and how they are identified,

assessed, managed, mitigated, monitored and reported.

**Risk trends:** ⏵ Stable risk ⏷ Improving risk ⏶ Elevated risk

**Capital risk** ⏵

**Link to strategy: Focus**

---

| | |
|:---|:---|
| The Group continued to maintain its strong capital position in 2025 with a <br>CET1 capital ratio of 13.6% (2024: 13.7%). This remains ahead of regulatory <br>requirements. Profit for the year, partially offset by risk-weighted asset <br>(RWA) increases and regulatory headwinds, has continued to enable <br>capacity for the payment of dividends during the year.<br>Downside risks and uncertainties arising from economic and regulatory <br>headwinds, including in relation to Retail secured CRD IV RWA increases, <br>continue to be closely monitored.<br>| **Mitigating actions**<br>•Capital management framework is in place, including the <br>setting of capital risk appetite, capital planning and <br>stress testing activities<br>•Regular refresh and monitoring of early warning <br>indicators and maintenance of a contingency framework <br>to address emerging capital concerns<br>•Robust risk management through prudent underwriting <br>standards, balance sheet and portfolio management and <br>capital optimisation <br>|

---

**Climate risk** ⏵

**Link to strategy: Grow, Focus, Change**

---

| | |
|:---|:---|
| Climate risk remains stable, with no material adjustments to the Group's <br>financial statements required for the impact from physical and transition <br>risks, and ongoing monitoring of potential reputational impacts, including <br>performance of emission reduction targets against broader UK progress.<br>The Group has refined how it reflects the cross-cutting impacts of climate <br>risk with other principal risks. Focus remains on embedding consideration <br>of climate-related risks and enhancing capabilities for measuring and <br>managing these, in line with evolving external expectations.<br>| **Mitigating actions**<br>•Guidance outlines the impacts of climate risk across <br>other principal risks, supporting embedding within Lloyds <br>Banking Group's policies and procedures<br>•This informs suitable consideration within the <br>management of other principal risks, including client <br>engagement, assessment informed by scenario analysis <br>and relevant case management<br>|

---

**Compliance risk** ⏵

**Link to strategy: Focus**

---

| | |
|:---|:---|
| The compliance risk profile remains stable. The Group continues <br>to monitor compliance risk closely given the pace of regulatory and <br>legislative change, a continued volume of regulatory data requests and to <br>enable strategic business growth within risk appetite.<br>| **Mitigating actions**<br>•Policies and standards setting out clear requirements and <br>controls that apply across the business, aligned to the <br>Group's risk appetite <br>•Identification, assessment and implementation of <br>regulatory and legal requirements by risk specialists and <br>legal colleagues as needed <br>•Local controls, processes, procedures and resources to <br>ensure appropriate governance and compliance by <br>business units<br>|

---

**Conduct risk** ⏶

**Link to strategy: Grow, Focus**

---

| | |
|:---|:---|
| Conduct risk remained elevated in 2025, recognising areas of <br>ongoing focus driven by legal decisions, regulatory changes and complaint <br>trends.<br>The Group continues to monitor the evolving situation in relation to motor <br>finance commission arrangements and potential impacts to customers and <br>its risk and control profile, liaising closely with regulatory bodies.<br>Enhancements continue to be made to the Group's control environment, <br>with mitigating actions and controls in place to deliver good outcomes for <br>customers, protect market integrity, prevent colleague misconduct and <br>ensure effective management of concerns raised through whistleblowing.<br>The Group remains focused on the treatment of vulnerable customers and <br>complaints performance.<br>| **Mitigating actions**<br>•Policies and strategies are in place to prevent colleague <br>misconduct and support good customer outcomes with <br>ongoing focus on utilising root cause insights to support <br>the management and mitigation of complaint volumes <br>•Active engagement with regulatory bodies and key <br>stakeholders to ensure that the Group's strategic <br>conduct focus continues to meet evolving stakeholder <br>expectations <br>•Strengthening policies, controls and reporting <br>capabilities to demonstrate good outcomes for <br>customers and markets <br>|

---

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| **7** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Strategic report** continued

**Credit risk** ⏵

**Link to strategy: Grow, Focus**

---

| | |
|:---|:---|
| Credit performance has remained strong and stable in 2025.<br>In the Group's retail portfolios, low and stable arrears have been observed. <br>The Group's commercial portfolio remains strong.<br>The impairment charge in 2025 was £792 million, up from £456 million in <br>2024, and includes a net charge from updates to the Group's <br>macroeconomic outlook. Excluding macroeconomic updates, the Group's <br>impairment charge remains low and similar to 2024. <br>The total probability-weighted expected credit loss (ECL) allowance was <br>lower in 2025 at £3,201 million (31 December 2024: £3,453 million).<br>| **Mitigating actions**<br>•Robust credit processes, strategies and controls to <br>ensure effective risk identification, management and <br>oversight<br>•Significant monitoring in place, including early warning <br>indicators <br>•Selective credit tightening reflective of forecast changes <br>in the macroeconomic environment, including updates to <br>affordability lending controls for cost of living changes<br>|

---

**Economic crime risk** ⏷

**Link to strategy: Focus**

---

| | |
|:---|:---|
| Economic crime remains a principal risk for the Group, reflecting the <br>inherent risks within the external environment, driven by geopolitical <br>instability and an evolving economic crime threat landscape. <br>Controls are in place to address bribery and corruption, fraud, money <br>laundering and sanction risks. In 2025, business units continued to deliver <br>against action plans, which strengthened the control environment, <br>reduced residual risk and responded to changing regulatory expectations. <br>During the year, two new Board-level risk appetite metrics were <br>introduced to further enhance oversight of sanctions and fraud. <br>Protecting customers remains a key priority, with ongoing consideration of <br>regulatory developments, data-sharing capabilities, and interventions <br>across the economic crime lifecycle.<br>| **Mitigating actions**<br>•Robust economic crime policy and standards<br>•Delivery of Group-wide Economic Crime Prevention <br>Strategy, supported by periodic reviews to address <br>emerging risks and regulatory developments<br>•Sustained progress in remediation activities to <br>strengthen the control environment and reduce residual <br>risk<br>•Continued enhancements of our industry-leading fraud <br>detection capabilities to respond to evolving threats<br>|

---

**Liquidity risk** ⏵

**Link to strategy: Focus**

---

| | |
|:---|:---|
| The Group maintained its strong liquidity and funding position with a loan <br>to deposit ratio of 99% (2024: 98%). <br>The Group's liquid assets continue to exceed the regulatory minimum and <br>internal risk appetite, with a monthly simple average over the previous 12-<br>months' liquidity coverage ratio (LCR) of 135% (2024: 137%). <br>The Group maintains access to diverse sources and tenors of funding.<br>| **Mitigating actions**<br>•Maintenance of a portfolio of unencumbered high quality <br>liquid assets in excess of regulatory requirements<br>•Robust management and monitoring of liquidity risks to <br> ensure systems and arrangements are adequate with <br>regard to internal risk appetite, Group strategy <br>and regulatory requirements<br>•Significant customer deposit base, driven by inflows to <br>trusted brands<br>•Participation in term issuance programmes<br>|

---

**Market risk** ⏵

**Link to strategy: Focus**

---

| | |
|:---|:---|
| Market conditions have remained stable in 2025. The Group remains well <br>hedged, ensuring near-term interest rate exposure is appropriately <br>managed. The Group's structural hedge has increased to £239 billion in <br>2025 (2024: £237 billion) due to strong deposit growth.<br>Following the agreements made as part of the Group's main defined <br>benefit pension schemes triennial valuations at 31 December 2022, there <br>are no further deficit contributions payable for this triennial period (to 31 <br>December 2025). The IAS 19 accounting surplus has reduced to £2.6 billion <br>at 31 December 2025 (2024: £2.9 billion).<br>| **Mitigating actions**<br>•Structural hedge programmes to stabilise earnings<br>•Close monitoring of market risks and where appropriate, <br>all asset and liability matching and hedging<br>•Monitoring of the credit allocation in the defined benefit <br>pension schemes, as well as the hedges in place against <br>adverse movements in nominal rates, inflation <br>and longevity<br>|

---

**Model risk** ⏷

**Link to strategy: Focus, Change**

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|:---|:---|
| **8** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Strategic report** continued

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| | |
|:---|:---|
| In 2025, the Group has made significant progress in strengthening its <br>model risk management. <br>The Group's model risk operating framework continues to improve with <br>investment in training and resources to support framework adoption and <br>further development of our CRD IV models. The Group continues to <br>anticipate and address regulatory requirements, embedding SS1/23 <br>principles into our day-to-day risk management, including proactive <br>engagement with regulators.<br>The control environment for model risk continues to be enhanced, meeting <br>both internal and regulatory requirements to support the safe and <br>strategic development of AI and machine learning applications within the <br>Group. <br>Investment in model risk management remains a priority for the Group to <br>further improve risk management and as an enabler to drive strategic <br>developments.<br>| **Mitigating actions**<br>•Continued enhancement and embedding of the model <br>risk management framework for managing and mitigating <br>model risk<br>•The Group's independent model validation process <br>provides ongoing, independent, and effective challenge <br>to model development and use<br>•Establishment of a governance framework for the <br>management of AI model risks across principal risk <br>categories<br>•Introduction of a wider range of model status categories <br>to provide more transparent and informative reporting of <br>model risk<br>|

---

**Operational risk** ⏵

**Link to strategy: Focus, Change**

---

| | |
|:---|:---|
| Operational risk remained stable in 2025, with key risks relating to change <br>execution risk, data and privacy, supplier risk, IT systems and information, <br>cyber and physical security. Operational loss event volumes continue to be <br>low, primarily relating to transaction and data processing, IT systems and <br>change execution.<br>The Group continues to demonstrate resilience in delivering strategic <br>change safely, despite some IT outages occurring during the year. <br>No material security breaches took place in 2025, though some <br>events at third-party suppliers reinforced the need for vigilance and robust <br>oversight.<br>The Group places a strong emphasis on analysing progress against its <br>strategic transformation delivery, using learnings to drive improvements <br>and ensure effective management of change execution risk.<br>| **Mitigating actions**<br>•Deployment of a range of risk management strategies, <br>such as avoidance, mitigation, transfer (including <br>insurance) and acceptance<br>•Ongoing focus on people risk measures including culture, <br>capability and capacity to support strategic growth plans<br>•The Group continues to invest strategically to mitigate <br>operational risks, strengthen controls and to meet <br>operational resilience regulatory requirements <br>•Internal reviews and industry engagement on IT outages <br>to drive control improvement and ensure effective <br>supplier assurance<br>|

---

**Emerging and topical risks**

Emerging and topical risks are a key component of Lloyds Banking

Group's approach to risk management, adopted by Lloyds Bank

Group.

Emerging and topical risks remain an area of ongoing focus for the

Group's Board and senior management. During 2025, the Group has

continued to strengthen its approach to identifying, assessing and

prioritising emerging risks, recognising the continued complexity and

interdependence of global and sector-specific challenges.

The Group's emerging and topical risk themes have been refined in

2025, reflecting developments in geopolitical uncertainty,

technological disruption, climate transition and regulatory change.

These themes have been subject to reviews at executive and Board-

level committees, including the Board Risk Committee, with actions

agreed to strengthen monitoring and mitigation strategies.

Particular attention has been given to drivers of the emerging and

topical risk themes, such as supply chain fragility and evolving

customer behaviours.

Building on the foundations established in prior years, the Group's

methodology now places greater emphasis on forward-looking,

scenario-based exercises to anticipate potential shifts in the emerging

risk landscape. These exercises explore how emerging risks could

materialise and interact under plausible conditions, leveraging insights

from senior leaders and subject matter experts to test critical

assumptions, examine interdependencies and identify potential

second-order impacts across the business.

Looking ahead to 2026, horizon scanning and thematic analysis will

continue as a key risk management tool to anticipate future trends,

ensuring preparedness for both risks and opportunities arising from an

increasingly volatile environment while safeguarding customers,

colleagues and shareholders.

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| **9** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Strategic report** continued

![Emerging risk 04.02.jpg](lbk-20251231_g1.jpg)

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| **10** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Strategic report** continued

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| | | |
|:---|:---|:---|
| **Emerging and topical risk theme** | **Drivers** | **Key mitigating actions** |
| **Consumer and market** <br>**dynamics** <br>| •Ageing population<br>•Changing and expanding <br>customer base<br>•Data ethics and privacy<br>•Disinformation and social media<br>•Market dynamics<br>•Non-traditional competitive <br>landscape<br>•Societal expectations of financial <br>services institutions<br>•Societal polarisation<br>| •Review of customer propositions, participation choices <br>by business area. Continued focus on consumer duty, <br>environmental, social and governance (ESG) and vulnerability <br>•Periodic review of the Group's strategy, including review <br>of performance, key risks and external environment<br>•Ongoing assessment of the impact of customer sentiment, <br>complaint volumes and media coverage<br>•Regular customer insight analysis and risk assessments <br>undertaken to understand impacts of changing demographics<br>|
| **Evolution of** <br>**technology, AI and** <br>**cybercrime**<br>| •Blockchain and tokenisation<br>•Cloud vulnerabilities<br>•Digital currencies and payments<br>•Digital sovereignty <br>•Emerging technologies<br>•Evolution and scaling of AI<br>•Evolution of cybercrime<br>| •Regular updates on data and technology strategy, and deep <br>dives completed on generative AI, cyber risk, technology risk <br>and economic crime prevention at relevant committees<br>•Partnership with Cambridge Spark to deliver "Leading with <br>AI" programme to over 200 senior leaders<br>•Implemented a data ethics framework and Ethical AI <br>framework within Lloyds Banking Group data and model risk <br>policies<br>•Establishing feature teams focused on emerging technology <br>trends such as tokenisation and exploring new partnerships to <br>deliver new capabilities<br>|
| **Geopolitical and** <br>**economic environment**<br>| •Extreme weather events<br>•Financial market volatility<br>•Geopolitical influences<br>•Quantitative tightening and fiscal <br>restraints<br>| •Quarterly review of the Group's economic assumptions in <br>response to the macroeconomic environment<br>•Periodic intelligence scanning to detect and identify triggers <br>and events which may impact the Group and its operations<br>•Undertake stress testing to analyse the impact of different <br>economic scenarios on the Group's performance<br>|
| **Regulatory agenda and** <br>**expectations**<br>| •Compliance and legal integrity<br>•Failing to ensure ethical <br>corporate behaviour<br>•Necessary regulatory reform<br>•Regulatory disclosures and <br>external disclosures<br>| •Ongoing monitoring of regulatory developments through <br>horizon scanning activity<br>•Regular engagement by senior management and Board <br>members with regulators on key topics and specific areas of <br>regulatory focus, including responses to consultations<br>•Legal and regulatory lens applied to cost and investment <br>prioritisation <br>•Organisational focus on meeting all relevant regulatory <br>requirements and expectations<br>|
| **Strategic and** <br>**operational** <br>**adaptability**<br>| •Business model evolution<br>•Colleague conduct and wellbeing<br>•Network and infrastructure <br>blackouts<br>•Operational efficiency challenges<br>•Organisational culture and <br>mindset<br>•Physical and mental health <br>impacts<br>•Skills of the future<br>•Strategic transformation<br>•Supplier challenges and <br>dependencies<br>•Talent attraction and retention <br>| •The Group implements playbooks if significant disruptive <br>events occur, such as another pandemic or system outages, <br>and these are refreshed at least annually to prepare for <br>such events<br>•The Group has strengthened measures to ensure that we are <br>more prepared for significant disruption to supply chains<br>•Enhanced business continuity plans to enable the majority of <br>our colleagues to work remotely where possible, supported by <br>ongoing cloud migration of applications<br>•Regular reviews of the Group's strategic workforce planning <br>focused on short- medium- and long-term view of the skills <br>composition required, alongside our culture, inclusion and <br>diversity goals<br>|

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|:---|:---|
| **11** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Strategic report** continued

**Financial risk management objectives and policies**

Information regarding the financial risk management objectives and policies of the Group, in relation to the use of financial instruments, is

given in notes 15, 16 and 36 to the accounts. The Group's approach to risk management including risk policies, risk appetite, measurement

bases and sensitivities, in particular for credit risk, market risk and liquidity risk, is aligned to those of Lloyds Banking Group plc, the Bank's

ultimate parent. Further information can be found in the Lloyds Banking Group plc Annual Report and Accounts.

The Group maintains risk management systems and internal controls relating to the financial reporting processes designed to:

• ensure that accounting policies are appropriately and consistently applied;

• enable the calculation, preparation and reporting of financial outcomes in line with applicable standards; and

• ensure that disclosures are made on a timely basis in accordance with statutory and regulatory requirements.

The 2025 Strategic report has been approved by the Board of Directors.

On behalf of the Board

![1.8.3 43795_Signature_RobinBudenberg-2.jpg](lbk-20251231_g2.jpg)

**Sir Robin Budenberg**

Chair

Lloyds Bank plc

26 February 2026

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|:---|:---|
| **12** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Directors' report**

**Results**

The consolidated income statement on **page 73** shows a statutory profit before tax for the year ended 31 December 2025 of £5,472 million

(year ended 31 December 2024: £4,688 million).

**Dividends**

During the year the Bank paid cumulative interim dividends of £2,390 million (2024: £3,990 million). The directors have not recommended a

final dividend for the year ended 31 December 2025 (2024: £nil). In February 2026, the directors approved the payment of an interim dividend

of £480 million, which was paid on 16 February 2026.

**Post balance sheet events**

There were no material post balance sheet events.

**Going concern**

The going concern of the Bank and the Group is dependent on successfully funding their respective balance sheets and maintaining adequate

levels of capital.

In order to satisfy themselves that the Bank and the Group have adequate resources to continue to operate for the foreseeable future, the

directors have reviewed the Bank and the Group's operating plan and its funding and capital positions, including a consideration of the

implications of climate change. The directors have also taken into account the impact of further stress scenarios.

Accordingly, the directors conclude that the Bank and the Group have adequate resources to continue in operational existence for a period of

at least 12 months from the date of the approval of the financial statements and therefore it is appropriate to continue to adopt the going

concern basis in preparing the accounts.

**Corporate Governance Statement**

In accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended by the

Companies (Miscellaneous Reporting) Regulations 2018) (the Regulations), for the year ended 31 December 2025, the Bank has in its corporate

governance arrangements applied the Wates Corporate Governance Principles for Large Private Companies (the Principles), which are available

at **www.frc.org.uk**. The following section explains the Bank's approach to corporate governance, and its application of the Principles.

High standards of corporate governance are central to achieving the strategy which has been set for the Bank. To this end a Corporate

Governance Framework is in place for Lloyds Banking Group plc, the Bank, HBOS plc and Bank of Scotland plc, with all four companies sharing

a common approach to governance. The framework is designed to meet the specific needs of each company, setting the approach and

standards in respect of the Bank's corporate governance practices, including addressing the matters set out in the Principles and the

governance requirements of the operation of the Bank as part of Lloyds Banking Group's Ring-Fenced Bank.

This includes the matters reserved to the Board, and the matters the Board has chosen to delegate to management. The Board delegates

responsibilities to the Group Chief Executive, who is supported by the Group Executive Committee, the composition of which is detailed on

**page 71** of the Lloyds Banking Group plc Annual Report and Accounts for 2025. The Corporate Governance Framework of the Bank further

addresses the requirements of the Principles as discussed on **pages 12 to 13.**

**Principle One – Purpose and Leadership**

The Board is collectively responsible for the long-term success of the Bank. It achieves this by agreeing the Bank's strategy, within the wider

strategy of Lloyds Banking Group, and overseeing delivery against it. The Bank's strategy is discussed further in the Strategic Report on **pages 1** 

**to 11**. The Board also assumes responsibility for the management of the culture, values and wider standards of the Bank, within the equivalent

standards set by Lloyds Banking Group. The Board's understanding of stakeholders' interests is central to these responsibilities and informs key

aspects of Board decision making, as discussed within the statement on **page 4**.

Acknowledging the needs of all stakeholders is fundamental to the way the Bank operates, as is maintaining the highest standards of business

conduct, which is a vital part of the corporate culture. The Bank's approach is further influenced by our ambition to provide not only

outstanding service to our customers, but also responding to the UK's social and economic issues. To this end, the Board plays a lead role in

establishing, promoting, and monitoring the Bank's corporate culture and values, with the Corporate Governance Framework ensuring such

matters receive the level of prominence in Board and Executive decision making which they require. The Bank's corporate culture and values

align to those of Lloyds Banking Group, which are discussed in more detail within the Strategic and Directors' Reports of the Lloyds Banking

Group plc Annual Report and Accounts for 2025.

**Principle Two – Board Composition**

The Bank is led by a Board comprising a non-executive Chair, independent non-executive directors and executive directors, further details of

the directors can be found on **page 16**. The Board reviews its size and composition regularly and is committed to ensuring it has the right

balance of skills and experience. The Board considers its current size and composition is appropriate to the Bank's circumstances. New

appointments are made on merit, taking account of the specific skills and experience, independence and knowledge needed to ensure a

rounded board and the diversity benefits each candidate can bring overall.

The Board is supported by its committees, the operation of which are discussed below, which make recommendations to the Board on matters

delegated to them. Each committee has written terms of reference setting out its delegated responsibilities. Each committee comprises non-

executive directors with appropriate skills and experience and is chaired by an experienced chair. The committee Chairs report to the Board at

the next Board meeting. The Board undertakes an annual review of its effectiveness, which provides an opportunity to consider ways of

identifying greater efficiencies, ways to maximise strengths and highlights areas of further development. An externally facilitated evaluation of

the Board's effectiveness was undertaken during the course of the year, which concluded that the Board is continuing to operate effectively.

Further information on conclusions of the evaluation can be found on **page 82** of the Lloyds Banking Group plc Annual Report and Accounts for

2025. ---

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| **13** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Directors' report** continued

**Principle Three – Director Responsibilities**

The directors assume ultimate responsibility for all matters, and along with senior management are committed to maintaining a robust control

framework as the foundation for the delivery of good governance, including the effective management of delegation through the Corporate

Governance Framework. Policies are also in place in relation to potential conflicts of interest which may arise. All directors have access to the

services of the Company Secretary, and independent professional advice is available to the directors at the expense of Lloyds Banking Group,

where they judge it necessary to discharge their duties as directors.

The Board is supported by its committees which make recommendations on matters delegated to them under the Corporate Governance

Framework. The management of all committees is in keeping with the basis on which meetings of the Board are managed, with open debate,

and adequate time for members to consider proposals which are put forward. The Chair of the Board and each Board committee assumes

responsibility with support from the Company Secretary for the provision to each meeting of accurate and timely information.

**Principle Four – Opportunity and Risk**

The Board oversees the development and implementation of the Bank's strategy, within the context of the wider strategy of Lloyds Banking

Group, which includes consideration of all strategic opportunities. The Board is also responsible for the long term sustainable success of the

Bank, generating value for its shareholder and ensuring a positive contribution to society. The Board agrees the Bank's culture, purpose, values

and strategy, within that of Lloyds Banking Group, and agrees the related standards of the Bank, again within the relevant standards of Lloyds

Banking Group. Further specific aims and objectives of the Board are formalised within the Corporate Governance Framework, which also sets

out the matters reserved for the Board.

Strong risk management is central to the strategy of the Bank, which along with a robust risk control framework acts as the foundation for the

delivery of effective management of risk. The Board agrees the Bank's risk appetite and ensures the Bank manages risk effectively, delegating

related authorities to individuals through the Corporate Governance Framework and the further management hierarchy. Board level

engagement coupled with the direct involvement of senior management in risk issues ensures that escalated issues are promptly addressed,

and remediation plans are initiated where required. The Bank's risk appetite, principles, policies, procedures, controls and reporting are

managed in conjunction with those of Lloyds Banking Group, and as such are regularly reviewed to ensure they remain fully in line with

regulations, law, corporate governance and industry best practice. The Bank's principal risks are discussed further on **pages 6 to 8**.

**Principle Five – Remuneration**

The Remuneration Committee of the Board, in conjunction with the Remuneration Committee of Lloyds Banking Group (the Remuneration

Committees), assume responsibility for the Bank's approach to remuneration. This includes reviewing and making recommendations on

remuneration policy as relevant to the Bank, ranging from the remuneration of directors and members of the Executive to that of all other

colleagues employed by the Bank. This includes colleagues where the regulators require the Bank to implement a specific approach to their

remuneration, such as Senior Managers and other material risk takers. The activities of the Remuneration Committees extend to matters of

remuneration relevant to subsidiaries of the Bank, where such subsidiary does not have its own remuneration committee.

**Principle Six – Stakeholders**

The Bank as part of Lloyds Banking Group operates under Lloyds Banking Group's wider approach to responsible business, which acknowledges

that the Bank has a responsibility to help address the economic, social and environmental challenges which the UK faces, and as part of this

understand the needs of the Bank's external stakeholders, including in the development and implementation of strategy. During the year the

directors took a number of decisions with the Bank's purpose and specific stakeholder interest in mind, which are discussed further on **page 4**.

In 2025 the Responsible Business Committee provided further oversight and support of Lloyds Banking Group's and the Bank's plans for

embedding responsible business in the Bank's core purpose. The approach of the Board in respect of its key stakeholders is described further in

a separate statement made in compliance with the Regulations on **pages 2 to 4.**

**Directors**

The names of the current directors are shown on **page [16](#iddf3b01e92c34e0691e008ab468ef39d_25)**. Changes to the composition of the Board since 1 January 2025 up to the date of this

report are shown in the table below.

---

| | | |
|:---|:---|:---|
|  | **Joined the Board** | **Left the Board** |
| Chris Vogelzang | 16 June 2025 |  |
| Scott Wheway |  | 31 October 2025 |

---

**Directors' indemnities**

The directors of the Bank have entered into individual deeds of indemnity with Lloyds Banking Group which constitute 'qualifying third party

indemnity provisions' for the purposes of the Companies Act 2006. The deeds indemnify the directors to the maximum extent permitted by

law and remain in force. The deeds were in force during the whole of the financial year, or from the date of appointment for any director

appointed during the course of the year. In addition, Lloyds Banking Group had appropriate Directors' and Officers' liability insurance cover in

place throughout 2025. Deeds for existing directors are available for inspection at the Bank's registered office.

Lloyds Banking Group has also granted deeds of indemnity by deed poll and by way of entering into individual deeds, which constitute

'qualifying third party indemnity provisions' to the directors of the Group's subsidiary companies, including former directors who retired during

the year, and to colleagues subject to the provisions of the Senior Managers and Certification Regime. Such deeds were in force during the

financial year ended 31 December 2025 and remain in force as at the date of this report. Qualifying pension scheme indemnities have also been

granted to the Trustees of Lloyds Banking Group's Pension Schemes, including those schemes relevant to the Bank, which were in force for the

whole of the financial year and remain in force as at the date of this report.

---

| | |
|:---|:---|
| **14** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Directors' report** continued

**Information required under DTR 7.2**

Certain information is incorporated into this report by reference. Information about internal control and risk management systems relating to

the financial reporting process can be found on **page 11**.

Information about share capital is shown in note 28 on **page 129**. The Bank is a wholly owned subsidiary of Lloyds Banking Group plc, which

holds all of the Bank's issued ordinary share capital.

The directors manage the business of the Bank under the powers set out in the Companies Act 2006 and the Bank's articles of association,

these powers include those in relation to the issue or buy back of the Bank's shares.

The appointment and retirement of directors is governed by the Bank's articles of association and the Companies Act 2006. The Bank's articles

of association may only be amended by a special resolution of the shareholders in a general meeting.

**Conflicts of interest**

The Board has a comprehensive procedure for reviewing, and as permitted by the Companies Act 2006 and the Bank's articles of association,

approving actual and potential conflicts of interest. Directors have a duty to notify the Chair and Company Secretary as soon as they become

aware of actual or potential conflict situations. Changes to commitments of all directors are reported to the Board and a register of directors'

interests is regularly reviewed and authorised by the Board to ensure the authorisation status remains appropriate.

**Branches, future developments and financial risk management objectives and policies**

The Bank provides a wide range of banking and financial services through branches and offices in the UK and overseas. Information regarding

future developments and financial risk management objectives and policies of the Group in relation to the use of financial instruments that

would otherwise be required to be disclosed in the directors' report, and which is incorporated into this report by reference, can be found in

the strategic report.

**Share capital**

Information about share capital is shown in note 28 on **page 129**. This information is incorporated into this report by reference. The Bank did

not repurchase any of its shares during 2025 (2024: none). There are no restrictions on the transfer of shares in the Bank other than as set out

in the articles of association and certain restrictions which may from time to time be imposed by law and regulations.

**Change of control**

The Bank is not party to any significant agreements which take effect, alter or terminate upon a change of control of the Bank following a

takeover bid. There are no agreements between the Bank and its directors or employees providing compensation for loss of office or

employment that occurs because of a takeover bid.

**Research and development activities**

During the ordinary course of business the Bank develops new products and services within the business units.

**Supporting disability**

The Bank aspires to be a best-in-class leader in disability and neuro-inclusion. Last year, the Group publicly launched its Blueprint for Disability

and Neuro-inclusion, sharing its commitments. Alongside that ambition, the Group committed to making recruitment more inclusive,

supporting career development, improving accessibility in workspaces and technology, upskilling colleagues to reduce stigma, and championing

the disability community beyond our organisation. In 2025, the Group held a facilitated workshop for all talent acquisition managers, which

tangibly increased their confidence in supporting hiring managers and candidates with disabilities and neurodivergent conditions, throughout

the recruitment process.

**Information incorporated by reference**

The following additional information forms part of the directors' report, and is incorporated by reference.

---

| | | |
|:---|:---|:---|
| **Content**  |  | **Pages** |
| Disclosures required under the Large and Medium-sized Companies and <br>Groups (Accounts and Reports) Regulations 2008 | Statement of employee engagement | 2 to 4 |
| Disclosures required under the Large and Medium-sized Companies and <br>Groups (Accounts and Reports) Regulations 2008 | Statement of other stakeholder engagement | 2 to 4 |

---

**Significant contracts**

Details of related party transactions are set out in note 32 on **pages 131 to 132**.

**Streamlined Energy and Carbon Reporting**

The Bank has taken advantage of the exemption from Streamlined Energy and Carbon Reporting (SECR) reporting requirements in its own

directors' report as it is covered by the Lloyds Banking Group SECR report given in the Lloyds Banking Group plc 2025 Annual Report and

Accounts, available at **www.lloydsbankinggroup.com/investors/financial-downloads.html**.

---

| | |
|:---|:---|
| **15** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Directors' report** continued

**Statement of directors' responsibilities**

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors are required to

prepare the Bank's and the Group's financial statements in accordance with international accounting standards in conformity with the

requirements of the Companies Act 2006. Under company law, the directors must not approve the financial statements unless they are

satisfied that they give a true and fair view of the state of affairs of the Bank and the Group, and of the profit or loss of the Bank and the Group

for that period. In preparing these financial statements, the directors are required to properly select and apply accounting policies; present

information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide

additional disclosures when compliance with the specific requirements in international accounting standards in conformity with the

requirements of the Companies Act 2006 are insufficient to enable users to understand the impact of particular transactions, other events and

conditions on the entity's financial position and financial performance; and make an assessment of the Bank's ability to continue as a going

concern. The financial statements also comply with International Financial Reporting Standards as issued by the IASB.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Bank's transactions and

disclose with reasonable accuracy at any time the financial position of the Bank and the Group, and enable them to ensure that the financial

statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Bank and the Group, and hence

for taking reasonable steps for the prevention and detection of fraud and other irregularities. A copy of the financial statements is placed on

the website **www.lloydsbankinggroup.com/investors/financial-downloads.html**. The directors are responsible for the maintenance and

integrity of all information relating to the Bank on that website. Legislation in the UK governing the preparation and dissemination of financial

statements may differ from legislation in other jurisdictions.

Each of the current directors who are in office as at the date of this report, and whose names and functions are listed on **page 16** of this annual

report, confirm that, to the best of his or her knowledge:

• The Bank's and the Group's financial statements, which have been prepared in accordance with international accounting standards in

conformity with the requirements of the Companies Act 2006 give a true and fair view of the assets, liabilities, financial position and profit

or loss of the Bank and the undertakings included in the consolidation taken as a whole

• The strategic report and directors' report includes a fair review of the development and performance of the business and the position of the

Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and

uncertainties they face; and

• The Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provides the information necessary for

shareholders to assess the Bank's and the Group's position, performance, business model and strategy.

This responsibility statement was approved by the Board of directors on 26 February 2026.

**Independent auditor and audit information**

Each person who is a director at the date of approval of this report confirms that, so far as the director is aware, there is no relevant audit

information of which the Bank's auditor is unaware and each director has taken all the steps that he or she ought to have taken as a director to

make himself or herself aware of any relevant audit information and to establish that the Bank's auditor is aware of that information. This

confirmation is given and should be interpreted in accordance with the provisions of the Companies Act 2006.

On behalf of the Board

![Kate Cheetham.jpg](lbk-20251231_g3.jpg)

**Kate Cheetham**

Company Secretary

26 February 2026

Lloyds Bank plc

Registered in England & Wales

Company Number 2065

---

| | |
|:---|:---|
| **16** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Current directors**

**Executive directors:**

Charlie Nunn, *Group Chief Executive*

William Chalmers, *Chief Financial Officer* 

**Non-executive directors:**

Sir Robin Budenberg CBE, *Chair*

Sarah Bentley

Nathan Bostock

Brendan Gilligan

Nigel Hinshelwood, *Senior Independent Director*

Sarah Legg

Amanda Mackenzie LVO OBE

Harmeen Mehta

Cathy Turner

Chris Vogelzang

Catherine Woods

---

| | |
|:---|:---|
| **17** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management**

**Risk management is at the heart of Helping** 

**Britain Prosper and creating a more** 

**sustainable and inclusive future for people** 

**and businesses.**

Our mission is to protect our customers,

shareholders, colleagues and the Group, while

enabling sustainable growth. This is achieved

through informed risk decisions and robust risk

management, supported by a consistent risk-

focused culture.

The Risk overview (**pages [5](#i50da067574354549a782044fe1ba4dde_23219) to [8](#if1bfd1765cbf4bb39f34b03e44bf9d6d_0-2-1-1-4877190)**) provides a summary of risk

management within the Group and the key focus areas for 2025.

This full risk management section provides a more in-depth view of

how risk is managed within the Group including key developments in

2025, and the framework by which risks are identified, assessed,

managed, mitigated, monitored and reported.

All narrative and quantitative tables within the risk management

section are unaudited unless otherwise stated. The audited

information is required to comply with the requirements of relevant

IFRS Accounting Standards.

**Lloyds Bank Group's approach to risk**

The Group operates a prudent approach to risk, with rigorous

controls, supporting sustainable business growth within the

Group's risk appetite and minimising losses. Through a strong and

independent risk function, a robust control framework is maintained

to identify and escalate current and emerging risks, and drive good

risk-reward decision making.

To comply with UK-specific ring-fencing requirements, core banking

services are ring-fenced from other activities within the overall Lloyds

Banking Group. The Group has adopted the risk management

framework (RMF) of Lloyds Banking Group and supplemented with

additional tailored practices to address the ring-fencing requirements.

Lloyds Banking Group's Risk Management Framework was enhanced

in 2025 and is structured to align with the industry-accepted internal

control framework standards and applies to every area of the

business, covering all types of risk. The framework defines a

proportionate, materiality-based approach to risk management.

The Group's RMF also includes an evolved approach to risk appetite,

which introduces a consistent and top-down approach to the setting

of Board risk appetite. This provides greater clarity and visibility of the

Group's risk appetite, demonstrating the significance of risk appetite

for the Group in achieving its strategic objectives.

The RMF provides the Group with an effective mechanism for

developing and embedding risk policies and risk management

strategies which are aligned with the risks faced by its businesses.

Risk policies have been updated during 2025, setting out mandatory

requirements, limits, parameters and controls to ensure each of the

Group's risks remain within appetite.

Key enhancements to the RMF have been delivered through the

Resetting Risk programme. The Risk function's focus is now on

supporting the embedding of the enhanced framework across the

Group to ensure consistent application, maturity, and sustained

effectiveness.

**The Group's risk management framework** 

Lloyds Banking Group's RMF has connectivity across its component

parts, ensuring processes are in place to facilitate risk management

and decision-making across the organisation.

![LB RMF visual.jpg](lbk-20251231_g4.jpg)

![Risk_Button_Number1_Black.gif](lbk-20251231_g5.gif)

**Group strategy and the risk management strategy**

The Group strategy is underpinned by clear strategic priorities and

financial targets designed to create value and deliver sustainable

returns. It is shaped by an understanding of the Group's risk profile,

considering economic, political and regulatory uncertainties. This

informs risk appetite and risk management practices.

All risk-taking activities are aligned to the Group's strategy and

purpose, aiming to generate sustainable outcomes and shareholder

value. The Chief Risk Officer (CRO) plays a critical role by challenging

proposals, reconciling risk appetite, and ensuring adherence through

ongoing oversight.

The risk management strategy enables consistent management of

principal risks within appetite and the target control environment.

It draws on risk and control improvement plans, which outline actions

to strengthen capabilities over a defined period.

The Risk function oversees and challenges the business, combining

these plans with regular reporting to ensure operations remain within

appetite and improvements are delivered as planned. It also

maintains its own plan to enhance the RMF and achieve the target

state for risk management.

![Risk_Button_Number2_Black.gif](lbk-20251231_g6.gif)

**Culture, values and behaviours**

The Group's culture, guided by the Group's values, is fundamental to

Lloyds Banking Group's purpose of Helping Britain Prosper and its

strategic objectives.

Leaders shape and embed a supportive risk culture of accountability,

strong customer focus, intellectual curiosity, innovation and proactive

risk management. The RMF, Code of Ethics and Responsibility and

Colleague Conduct Policy give guidance and tools for working

responsibly and making the right decisions. Speak Up, Lloyds Banking

Group's whistleblowing programme, ensures colleagues' concerns are

taken seriously and treated sensitively.

---

| | |
|:---|:---|
| **18** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

To support a strong risk culture across the Group, all colleagues

complete risk training as part of their annual mandatory training.

A library of risk management learning resources is available, which

all colleagues who have specific risk management roles can access

to build their skills and capabilities.

There is ongoing investment in risk systems and models alongside the

Group's focus on customer and product systems and processes. This

drives improvements in risk data quality, aggregation and reporting,

enabling effective and efficient risk decisions.

![Risk_Button_Number3_Black.gif](lbk-20251231_g7.gif)

**Risk governance**

The Group's approach to risk is based on a robust control framework

and strong risk management culture, enabling the delivery of effective

risk management, guiding the way all employees approach their work,

behave and make decisions.

Authority is delegated from the Board to individuals through the

management hierarchy. Senior management are supported by a

committee-based structure, ensuring open challenge and effective

decision making.

The Group's risk appetite, principles, policies, procedures, controls,

and reporting are regularly reviewed and updated as required, to

ensure they remain in line with evolving regulation, law, corporate

governance and industry good practice.

The Board and senior management encourage a culture of

transparency which supports the interaction of the executive and

non-executive governance structure.

Board-level engagement, combined with senior management in risk

issues at Lloyds Banking Group and Ring-Fenced Banks Executive

Committee, ensure that any escalated issues are addressed promptly

and that necessary remediation plans are initiated as required.

Line managers are accountable for identifying and managing risks in

their individual businesses, ensuring that business decisions balance

risk and reward, and are consistent with the Group's risk appetite.

The risk governance structure is explained on **page 19**.

![Risk_Button_Number4_Black.gif](lbk-20251231_g8.gif)

**Three lines of defence**

In line with industry best practice, Lloyds Banking Group adopts a

three lines of defence model of risk governance, implemented on a

functional, rather than activity basis. This model is reviewed annually

by the Board as part of its RMF approval.

All colleagues are responsible for the management of risk in day-to-

day activities, demonstrating risk practices and behaviours that are

consistent with the Group's purpose, values and culture. The Group

Chief Executive (GCE) leads on all aspects of executive governance as

part of the execution of the Board-approved strategy, business and

operating plan and ensures the efficient use of resources. The

effective management of risks as defined within the RMF, however is

considered to be outside of the three lines of defence. The Board also

sits above the three lines of defence.

The first line of defence (1LOD) and second line of defence (2LOD) are

considered as management and operate the control environment.

Independence must be maintained through clear boundaries of

accountability, however a service may be provided from one line to

another, for example the provision of subject matter expertise.

In line with the functional approach, control activities undertaken by

specific functions within 1LOD, such as Group Finance and Group

Legal, do not result in these functions being part of 2LOD. Further,

risk management activities and approvals performed within the Risk

function, including reporting and model development, do not result in

these functions being considered as 1LOD.

The roles and responsibilities of each of the three lines of defence are

outlined on **page [19](#i7771757d291b40b1af968d8201e355f5_23829)**.

![Risk_Button_Number5_Black.gif](lbk-20251231_g9.gif)

**Risk function mandate**

The Risk function mandate expands on the requirements for Risk as

an oversight and control function that are set out in the three lines of

defence. It sets out the role of the CRO, including their

accountabilities, and the key outcomes expected of the Risk function

in relation to oversight and challenge, control and culture.

This section sets the high-level mandate for the Risk function to

perform oversight and challenge activities across the Group and will

support the development of a consistent, proportionate and

materiality-based approach to risk oversight for all legal entities,

business units and Group functions.

![Risk_Button_Number6_Black.gif](lbk-20251231_g10.gif)

**Risk appetite**

The Group's approach to setting and the ongoing management of risk

appetite is an integral component of Lloyds Banking Group's RMF.

The Group defines risk appetite as the type and aggregate level of risk

it is willing to take or accept in pursuit of its strategic objectives and

business plans.

The Board is responsible for approving the Group's Board risk appetite

at least annually. Group Board-level risk appetite metrics are

augmented further by lower-level measures to facilitate the

management of Board risk appetite. The performance of Board risk

appetite metrics and management measures across risk types is

reported regularly to Board Risk Committee and the Lloyds Banking

Group and Ring-Fenced Banks Risk Committee.

The Group's risk appetite statement is articulated through qualitative

statements of risk appetite and quantitative risk appetite metrics.

These are defined for all principal risks as appropriate, setting clear

boundaries and expectations under both business-as-usual and stress

conditions.

The Group's strategy and risk management strategy operate in

tandem with risk appetite. It reinforces the Group's purpose, strategy

and objectives by driving behaviour and setting boundaries around

risk taking, to monitor changes in risk exposure, enabling the delivery

of its strategic aims.

![Risk_Button_Number7_Black.gif](lbk-20251231_g11.gif)

**Risk architecture and approach**

This sets out a common language and standard definitions to

facilitate consistency and clarity in risk management terminology

and how risks should be managed. Policy architecture for all

principal risks ensures a consistent approach to the management of

risk across the Group. High-level risk principles and detailed risk

policies explain the requirements, controls, limits and parameters

that must be implemented to manage risk, and the risk

management tools and processes to be used across the Group.

Lloyds Banking Group's events-based risk management framework is

comprised of principal risks, underpinned by a second and third risk

level as appropriate. This brings consistency and clarity of the risks

that the Group faces, aligning to industry best practice and regulatory

expectations.

Additionally, the Group identifies emerging and topical risks by

proactive horizon scanning and assessment of the potential impact of

a future internal or external event of trend, which could have a

materially positive or adverse impact on the Group and its customers,

but where the probability, timescale and/or materiality may be

difficult to accurately assess. These will be added to the events-based

risk management framework as appropriate.

---

| | |
|:---|:---|
| **19** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Risk governance structure**

The risk governance structure below is integral to effective risk management across Lloyds Banking Group, including Lloyds Bank Group. To

meet ring-fencing requirements, the Boards and Board Committees of Lloyds Banking Group, and the Ring-Fenced Banks as well as relevant

Committees of Lloyds Banking Group, and the Ring-Fenced Banks (Lloyds Bank plc and Bank of Scotland plc) will sit concurrently and are

referred to as the Aligned Board Model.

![Risk governance 05.02.jpg](lbk-20251231_g12.jpg)

**Board and executive committees with risk management responsibilities**

Assisted by the Board Risk and Audit Committees, the Board approves the Bank's overall governance, risk and control frameworks and risk

appetite.

The governance structure includes several committees with defined roles and responsibilities, summarised below:

---

| | |
|:---|:---|
| Board committees | **Risk focus** |
| Board | Approves risk appetite and the RMF, identifies and <br>monitors exposures including principal risks and <br>emerging risks, reviews internal controls and the <br>cascade of delegated authority<br>|
| Board Risk <br>Committee<br>| Oversees the RMF, its effectiveness, and that of <br>internal controls; risk appetite, risk principles, <br>stress testing, and approves Internal Capital <br>Adequacy Assessment Process (ICAAP) and Internal <br>Liquidity Adequacy Assessment Process (ILAAP). <br>Inputs into remuneration decisions<br>|
| Audit Committee | Oversees financial reporting, internal audit and <br>whistleblowing<br>|
| Executive committees |  |
| Group Executive <br>Committee<br>| Supports the Group Chief Executive with risk, <br>strategy, customer, colleague and operational <br>matters, culture change and succession planning<br>|
| Lloyds Banking Group <br>and Ring-Fenced <br>Banks Risk <br>Committee<br>| Develops and monitors the RMF and material risk <br>and control matters. Supported by business unit <br>risk committees<br>|

---

The Group Chief Executive is supported by the following committees,

operated concurrently under the aligned model:

• Asset and Liability Committee

• Strategic Delivery Committee

• Disclosure Committee

• Sustainability Committee

• Conduct Investigations Committee

• Cost Management Committee

• Contentious Regulatory Committee

The Lloyds Banking Group and Ring-Fenced Banks Risk Committee is

supported by business unit risk committees, cross-business unit

committees addressing specific matters of Bank-wide significance,

and second line of defence Risk committees ensuring oversight of risk

management. These include:

• Capital Risk Committee

• Financial Risk Committee

• Economic Crime Prevention Committee

• Liquidity Risk Committee

• Market Risk Committee

• Model Governance Committee

---

| | |
|:---|:---|
| **20** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Risk decision making and reporting**

Risk analysis and reporting enables better understanding of risks and

returns, supporting the identification of opportunities as well as

better management of risks.

An aggregate view of the Group's overall risk profile, key risks

and management actions, and performance against risk appetite,

including the Enterprise-Wide Risk Management report, is reported to

and discussed regularly at the Lloyds Banking Group and Ring-Fenced

Banks Risk Committee and Board Risk Committee.

**Risk and control cycle from identification to reporting**

To allow senior management to make informed risk decisions, the

business follows a continuous risk management approach. This risk

and control cycle, from identification to reporting, ensures that there

is consistency in the approach to managing and mitigating risks

impacting the Group.

The risk and control self-assessment (RCSA) process is used to

identify, measure and manage operational risks across the Group.

Risks are identified and measured on an inherent basis, using a

consistent quantification methodology.

![Risk and control 02.02.jpg](lbk-20251231_g13.jpg)

**Financial reporting and tax risk management systems and internal** 

**controls**

The Audit Committee reviews the quality and acceptability of Lloyds

Bank Group's financial disclosures. In addition, the Lloyds Banking

Group Disclosure Committee assists the Lloyds Bank Group Chief

Executive and Chief Financial Officer in fulfilling their disclosure

responsibilities under relevant listing and other regulatory and legal

requirements.

---

| | |
|:---|:---|
| **21** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Stress testing**

**Overview**

Stress testing is recognised as a key risk management tool by the

Boards, senior management, the businesses and the Risk and Finance

functions of all parts of the Group and its legal entities. It is fully

embedded in the planning process of the Group and its key legal

entities as a key activity in medium-term planning, and senior

management is actively involved in stress testing activities.

Scenario stress testing is used to support:

Risk identification:

• Understanding key vulnerabilities of the Group and its key legal

entities under adverse economic conditions

Risk appetite:

• Assessing the results of the stress test against the risk appetite of

all parts of the Group to ensure the Group and its legal entities are

managed within their risk parameters

• Setting of risk appetite by assessing the underlying risks under

stress conditions

Strategic and capital planning:

• Senior management and the Boards of the Group and its key legal

entities to adjust strategies if the plan does not meet risk appetite

in a stressed scenario

• The ICAAP, by demonstrating capital adequacy and informing the

setting of management buffers (see capital risk on **pages [22](#if1728b9a28ac41dc9d52c17cefe56bd6_14086) to [26](#if1728b9a28ac41dc9d52c17cefe56bd6_47106)**)

of the Group and its separately regulated legal entities

• The capital allocation process which feeds into business unit

performance management

Risk mitigation:

• The development of potential actions and contingency plans to

mitigate the impact of adverse scenarios. Stress testing also links

directly to the recovery and resolution planning process of the

Group and its legal entities

**Internal stress tests**

On at least an annual basis, the Group conducts macroeconomic

stress tests to highlight and understand the key vulnerabilities of the

Group's and its legal entities' business plans to adverse changes in the

economic environment, to evaluate mitigating actions and ensure

that there are adequate financial resources in the event of a

downturn.

**Reverse stress testing**

Reverse stress testing is used to explore the vulnerabilities of the

Group's and its key legal entities' strategies and plans for extreme

adverse events that would cause the businesses to fail. Where this

identifies plausible scenarios with an unacceptably high risk, the

Group or its entities will adopt measures to prevent or mitigate that

and reflect these in strategic plans.

**Other stress testing activity**

The Group's stress testing programme also involves undertaking

assessments of liquidity scenarios, market risk sensitivities and

scenarios, and business-specific scenarios. If required, ad hoc stress

testing exercises are also undertaken to assess emerging risks, as well

as in response to regulatory requests. This wide-ranging programme

provides a comprehensive view of the potential impacts arising from

the risks to which the Group is exposed and reflects the nature, scale

and complexity of the Group. Lloyds Banking Group continues to

participate in the Bank of England's System-wide exploratory

scenarios (SWES).

Detailed stress testing information can be found within each relevant

risk in the Risk management section (capital risk **page [22](#if1728b9a28ac41dc9d52c17cefe56bd6_14086)**, liquidity risk

**page [51](#id2f67d241a204968942100c81e4b6848_7314)** and market risk **page [55](#i4d5fd362bb1e4752bdcbb63785bcfb27_9860)**).

**Methodology**

The stress tests process must comply with all regulatory requirements,

which is achieved through comprehensive scenarios and a rigorous

divisional, functional, risk and executive review and challenge process,

supported by analysis and insight into impacts on customers and

business drivers.

All relevant business, Risk and Finance teams are involved in the

delivery of analysis, and ensure the sensitivity of the business plan

to each risk is well understood. The methodologies and modelling

approach used for stress testing embed direct links between the

macroeconomic scenarios and the drivers for each business area to

give appropriate stress sensitivities. All material assumptions used in

modelling are documented and justified, with a clearly

communicated review and sign-off process. Modelling is supported

by expert judgement and is subject to Lloyds Banking Group's model

governance policy.

**Governance**

Clear accountabilities and responsibilities for stress testing are

assigned to senior management and the Risk and Finance functions

throughout the Group and its key legal entities. This is formalised

through Lloyds Banking Group policy and related documentation,

which is reviewed at least annually.

The Financial Risk Committee (FRC), chaired by the Chief Risk Officer

and attended by the Chief Financial Officer and other senior Risk and

Finance colleagues, has primary responsibility for overseeing the

development and execution of the Group's stress tests.

The review and challenge of the Group's detailed stress forecasts, the

key assumptions behind these, and the methodology used to translate

the economic assumptions into stressed outputs conclude with the

appropriate Finance and Risk sign-off. The outputs are then presented

to the FRC and the Board Risk Committee for review and challenge.

With regulatory exercises being approved at Board Risk Committee

and Board where appropriate.

---

| | |
|:---|:---|
| **22** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Full analysis of principal risk categories**

The Group's risk framework covers all types of risk which affect the

Group and could impact on the achievement of its strategic

objectives.

Detailed information relating to each principal risk is included over

the following **pages [22](#if1728b9a28ac41dc9d52c17cefe56bd6_14086) to [62](#i12306a0431d340fa89ea3a0ef764ebd2_26738).**

**Capital risk**

**Definition**

Capital risk is defined as the risk that an insufficient quantity or

quality of capital is held to meet regulatory requirements or to

support business strategy, an inefficient level of capital is held or that

capital is inefficiently deployed across the Group.

The Risk overview, on **page [6](#i50da067574354549a782044fe1ba4dde_60595)**, contains a summary of capital risk

performance and key mitigating actions.

**Risk appetite**

The Group manages its capital above regulatory requirements to

support the achievement of its business strategy and to continue to

serve customers in a macroeconomic downturn.

For the Group, capital risk appetite is set to remain above current

regulatory requirements in a business-as-usual environment and

above defined regulatory thresholds in a mild or severe stress.

Risk appetite for the Group is expressed through the CET1 capital

ratio and Tier 1 leverage ratio.

**Identification and assessment**

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lbk-20251231_g14.gif) | ![LightGrey_topright7.gif](lbk-20251231_g15.gif) |
| ![LightGrey_top left7.gif](lbk-20251231_g14.gif) | ![LightGrey_topright7.gif](lbk-20251231_g15.gif) |

---

The minimum amount of total capital, under Pillar 1 of the regulatory

capital framework, is set at 8% of total risk-weighted assets (RWAs).

At least 4.5% of RWAs are required to be met with common equity

tier 1 (CET1) capital and at least 6% of RWAs are required to be met

with tier 1 capital. Minimum Pillar 1 requirements are supplemented by

additional minimum requirements under Pillar 2A of the regulatory

capital framework, the aggregate of which is referred to as the

Group's Total Capital Requirement (TCR).

Additional minimum capital requirements under Pillar 2A are set

by the PRA as a firm-specific Individual Capital Requirement (ICR)

reflecting a point in time estimate, which may change over time,

of the minimum amount of capital to cover risks that are not fully

covered by Pillar 1, such as concentration risk, residual value risk and

operational risk, and those risks not covered at all by Pillar 1, such

as pension obligation risk and interest rate risk in the banking book

(IRRBB). This is set as a variable amount for Pillar 2A (being a set

percentage of RWAs), with fixed add-ons for certain risk types. The

Group's Pillar 2A capital requirement at 31 December 2025 is the

equivalent of around 2.9% of RWAs, of which the minimum amount to

be met by CET1 capital is the equivalent of around 1.6% of RWAs.

The Group is also required to hold a number of regulatory capital

buffers which must be met with CET1 capital. In addition, the Group is

also subject to minimum capital requirements under the UK Leverage

Ratio Framework, where at least 75% of the 3.25% minimum leverage

ratio requirement as well as the full amount of regulatory leverage

buffers must be met with CET1 capital. Further information regarding

capital and leverage buffers is provided in the Group's Pillar 3

disclosures.

A capital risk event arises when the Group has insufficient capital

resources to support its strategic objectives and plans, and potentially

fails to meet both regulatory and external stakeholder requirements

and expectations. This could arise due to a depletion of the Group's

capital resources as a result of risks being realised, or through a

significant increase in RWAs as a result of rule changes or economic

deterioration. Alternatively, a shortage of capital could arise from an

increase in the minimum requirements for capital or leverage, or the

minimum requirement for own funds and eligible liabilities (MREL)

either at Group level or regulated entity level.

In accordance with UK ring-fencing legislation, the Group was

appointed as the Ring-Fenced Bank sub-group ('RFB sub-group')

under Lloyds Banking Group plc. As a result the Group is subject to

separate supervision by the UK Prudential Regulation Authority (PRA)

on a sub-consolidated basis (as the RFB sub-group) in addition to the

supervision applied to Lloyds Bank plc on an individual basis.

ICAAP is a key mechanism for assessing the Group's capital risks,

ensuring that the Group has robust strategies, processes and systems

in place to support the identification and measurement of Pillar 2

risks.

Emerging and topical risk assessments are regularly conducted to

identify and assess any emerging capital risks, for example, from

market conditions, regulatory changes, reputational issues, and

includes consideration of issues emerging in the wider Group risk

landscape with potential capital consequences. Assessment outputs

are used to inform stress testing activities and risk appetite setting.

Scenario analysis and stress testing, including reverse stress testing,

are used to identify sources of potential capital risk, and highlight

vulnerabilities along with potential mitigating actions.

Board-level capital risk appetite is proposed and reviewed at least

annually and approved by the Board. It comprises a capital risk

appetite statement and set of quantitative metrics. This is supported

by a suite of management measures and operational limits.

**Management and mitigation**

![AuditedLozenge.gif](lbk-20251231_g16.gif)

The Group maintains capital levels across all regulated entities

commensurate with a prudent level of solvency to achieve financial

resilience and market confidence. To support this, capital risk appetite

is calibrated by taking into consideration both an internal view of the

amount of capital to hold as well as external regulatory requirements.

The Group assesses both its regulatory capital requirements and the

quantity and quality of capital resources it holds to meet those

requirements in accordance with the relevant provisions of the Capital

Requirements Directive (CRD V) and Capital Requirements Regulation

(UK CRR). This is supplemented through additional regulation set out

under the PRA Rulebook and through associated statements of policy,

supervisory statements and other regulatory guidance.

The Group has a capital management framework that is part of a

comprehensive framework within Lloyds Banking Group that includes

the setting of capital risk appetite and capital planning and stress

testing activities. Close monitoring of capital, leverage and MREL

ratios is undertaken to ensure the Group meets regulatory

requirements and risk appetite levels and deploys its capital resources

efficiently.

A capital contingency framework is defined as part of the Group

Recovery Plan, setting out trigger levels at which mitigating actions

should be considered. Supporting this is a suite of internal and

external early warning indicators (EWIs), to ensure timely escalation

of emerging concerns. The Group is able to accumulate additional

capital through the retention of profits over time, which can be

enhanced through reducing or cancelling dividend payments

upstreamed to its parent (Lloyds Banking Group plc), by raising new

equity via an injection of capital from its parent and by issuing

additional tier 1 or tier 2 capital securities to its parent. The cost and

availability of additional capital from its parent is dependent upon

market conditions and perceptions at the time.

The Group is also able to manage the demand for capital through

management actions including adjusting its lending strategy, business

disposals and through the efficient use of securitisations and other

optimisation activity.

---

| | |
|:---|:---|
| **23** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

A capital plan and periodic re-forecasting, ensures that business

strategy can be delivered within capital risk appetite. The capital plan

provides visibility of key risks and assumptions, along with

appropriate sensitivities, to inform executive decision making.

The internal stress of the capital plan reviews ratios against

appropriate thresholds in stress conditions to inform strategic

decision making and any potential mitigating actions.

**Monitoring**

The Group regularly monitors capital positions against risk appetite

and regulatory requirements.

EWIs are monitored regularly for early signs of capital risk, with the

Capital Contingency Level (CCL) reviewed and agreed each month,

taking account of the latest capital position and risk profile as part of

the capital contingency framework.

The Group's capital performance (including capital returns) is

monitored against the capital plan and latest forecast. Appropriate

capital monitoring activity is in place to support early identification of

deterioration in outlook or deviation from capital plans.

The regulatory capital framework within which the Group operates

continues to evolve and further detail on this is provided in the

Group's Pillar 3 disclosures. The Group continues to monitor

prudential developments closely, analysing the potential capital

impacts to ensure that, through organic capital generation and

management actions, it continues to maintain a strong capital

position that exceeds both minimum regulatory requirements and its

risk appetite, maintaining consistency with market expectations.

**Reporting**

Capital risk appetite metrics and a set of management measures are

reported to relevant Asset Liability Committees (ALCOs) and Board as

required.

Operational limits are reported to the relevant committee, forum or

individual as required.

Regular and periodic reporting to executive and Board-level

committees provide sufficient information on the current and forward

view of the capital position, and risk profile to enable effective capital

management decision making, including visibility of key assumptions

and judgements.

Regular reporting includes monthly capital performance updates to

Group Executive Committee (GEC), updates on capital management

and monitoring activity to Group Asset Liability Committee (GALCO),

as well as escalation of matters to GALCO, GEC, Risk Committees and

Board-level committees as required.

Periodic reporting includes capital plans, distribution decisions,

regulatory stress tests and ICAAP, requiring executive and/or Board

approval.

Regulatory reports required by the PRA and other regulatory bodies

are submitted within mandated timelines.

**Minimum requirement for own funds and** 

**eligible liabilities (MREL)**

Global systemically important banks (G-SIBs) are subject to an

international standard on total loss absorbing capacity (TLAC). The

standard is designed to enhance the resilience of the global financial

system by ensuring that failing G-SIBs have sufficient capital to absorb

losses and recapitalise under resolution, whilst continuing to provide

critical banking services.

In the UK, the Bank of England has implemented the requirements of

the international TLAC standard through the establishment of a

framework which sets out MREL. The purpose of MREL is to require

firms to maintain sufficient own funds and eligible liabilities that are

capable of credibly bearing losses or recapitalising a bank whilst in

resolution. MREL can be satisfied by a combination of regulatory

capital and certain unsecured liabilities (which must be subordinate

to a firm's operating liabilities).

The Bank of England's MREL statement of policy (MREL SoP) sets out

its approach to setting external MREL and the distribution of MREL

resources internally within groups. Internal MREL resources are

intended to enable a material subsidiary to be recapitalised as part of

a group resolution strategy without the need for the Bank of England

to apply its resolution powers directly to the subsidiary itself.

The Group's parent, Lloyds Banking Group plc, is subject to the Bank

of England's MREL SoP and must therefore maintain a minimum level

of external MREL resources. Lloyds Banking Group plc operates a

single point of entry (SPE) resolution strategy, with Lloyds Banking

Group plc as the designated resolution entity. Under this strategy, the

Group has been identified as a material subsidiary of Lloyds Banking

Group plc and must therefore maintain a minimum level of internal

MREL resources. As at 31 December 2025, the Group's internal MREL

resources exceeded the minimum required.

**Analysis of CET1 capital position**

The Group's common equity tier 1 (CET1) capital ratio decreased to

13.6% at 31 December 2025 from 13.7% at 31 December 2024. Profit

for the year, after the charge for motor finance commission

arrangements, was more than offset by the payment of ordinary

dividends, the accrual for foreseeable ordinary dividends, distributions

on other equity instruments and an increase in risk-weighted assets.

---

| | |
|:---|:---|
| **24** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Capital resources (audited)**

An analysis of the Group's capital position as at 31 December 2025 is presented in the following table. 31 December 2024 reflects the

application of the transitional arrangements for IFRS 9. The Group's Pillar 3 disclosures provide a comprehensive analysis of the own funds of

the Group.

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>**£m**<br>| At 31 Dec<br>2024<br>£m<br>|
| **Common equity tier 1** |  |  |
| Shareholders' equity per balance sheet | **36542** | 33975 |
| Adjustment to retained earnings for foreseeable dividends | **(480)** | – |
| Cash flow hedging reserve | **2027** | 3568 |
| Other adjustments | **74** | (15) |
|  | **38163** | 37528 |
| **less: deductions from common equity tier 1** |  |  |
| Goodwill and other intangible assets | **(5433)** | (5494) |
| Prudent valuation adjustment | **(87)** | (92) |
| Excess of expected losses over impairment provisions and value adjustments | **(421)** | (75) |
| Removal of defined benefit pension surplus | **(1968)** | (2215) |
| Deferred tax assets | **(3786)** | (4042) |
| **Common equity tier 1 capital** | **26468** | 25610 |
| **Additional tier 1** |  |  |
| Additional tier 1 instruments | **5367** | 5695 |
| **Total tier 1 capital** | **31835** | 31305 |
| **Tier 2** |  |  |
| Tier 2 instruments | **7160** | 5826 |
| Eligible provisions | **–** | 83 |
| **Total tier 2 capital** | **7160** | 5909 |
| **Total capital resources (audited)** | **38995** | 37214 |
| **Risk-weighted assets (unaudited)** | **194300** | 186996 |
| **Common equity tier 1 capital ratio (unaudited)** | **13.6%** | 13.7% |
| **Tier 1 capital ratio (unaudited)** | **16.4%** | 16.7% |
| **Total capital ratio (unaudited)** | **20.1%** | 19.9% |

---

**Total capital requirement**

The Group's total capital requirement (TCR) as at 31 December 2025, being the aggregate of the Group's Pillar 1 and Pillar 2A capital

requirements, was £21,137 million (31 December 2024: £20,479 million).

---

| | |
|:---|:---|
| **25** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Movements in CET1 capital resources**

The key movements are set out in the table below.

---

| | |
|:---|:---|
|  | **Common**<br>**equity**<br>**tier 1**<br>**£m**<br>|
| At 31 December 2024 | 25610 |
| Profit for the year | **3856** |
| Accrual for foreseeable ordinary dividends<sup>1</sup> | **(480)** |
| Dividends paid out on ordinary shares during the year | **(2390)** |
| Fair value through other comprehensive income reserve | **160** |
| Deferred tax asset | **256** |
| Excess regulatory expected losses | **(346)** |
| Net movement in capital contributions | **151** |
| Distributions on other equity instruments | **(404)** |
| Other movements | **55** |
| **At 31 December 2025** | **26468** |

---

1Reflects the accrual recognised at 31 December 2025.

CET1 capital resources have increased by £858 million during the year, with profit for the year partly offset by the payment of ordinary

dividends during the year, the accrual for foreseeable dividends and distributions on other equity instruments.

**Movements in total capital**

The Group's total capital ratio increased to 20.1% at 31 December 2025 from 19.9% at 31 December 2024. reflecting the increase in CET1 capital

and the issuance of new AT1 and tier 2 capital instruments during the year. This was partly offset by AT1 and tier 2 instrument calls, other tier 2

movements and the increase in risk-weighted assets.

**Risk-weighted assets**

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>**£m**<br>| At 31 Dec<br>2024<br>£m<br>|
| Foundation Internal Ratings Based (IRB) Approach | **38027** | 35359 |
| Retail IRB Approach | **90339** | 90548 |
| Other IRB Approach | **6953** | 6327 |
| **IRB Approach** | **135319** | 132234 |
| Standardised (STA) Approach<sup>1</sup> | **23603** | 19380 |
| **Credit risk** | **158922** | 151614 |
| Counterparty credit risk<sup>2</sup> | **1386** | 1363 |
| Securitisation | **7777** | 7648 |
| Market risk | **177** | 292 |
| Operational risk | **26038** | 26079 |
| **Risk-weighted assets** | **194300** | 186996 |
| of which: threshold risk-weighted assets<sup>3</sup> | **747** | 1211 |

---

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

2Includes credit valuation adjustment risk.

3Threshold 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 £7.3 billion to £194.3 billion at 31 December 2025 from £187.0 billion at 31 December 2024. This includes the

impact of lending growth and Retail secured CRD IV increases, partly offset by continued optimisation activity.

---

| | |
|:---|:---|
| **26** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Leverage ratio**

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

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>**£m**<br>| At 31 Dec<br>2024<br>£m<br>|
| **Total tier 1 capital**  | **31835** | 31305 |
| **Exposure measure** |  |  |
| **Statutory balance sheet assets** |  |  |
| Derivative financial instruments | **3260** | 4235 |
| Securities financing transactions | **43962** | 44143 |
| Loans and advances and other assets | **584113** | 562835 |
| **Total assets** | **631335** | 611213 |
| Qualifying central bank claims | **(37298)** | (42098) |
| Derivatives adjustments | **(2063)** | (3648) |
| Securities financing transactions adjustments | **1267** | 1892 |
| Off-balance sheet items | **33292** | 30849 |
| Amounts already deducted from Tier 1 capital | **(11642)** | (11864) |
| Other regulatory adjustments<sup>1</sup> | **(2161)** | (4012) |
| **Total exposure measure** | **612730** | 582332 |
| **Average exposure measure**<sup>2</sup> | **620362** |  |
| **UK leverage ratio** | **5.2%** | 5.4% |
| **Average UK leverage ratio**<sup>2</sup> | **5.1%** |  |
| **Leverage exposure measure (including central bank claims)** | **650028** | 624430 |
| **Leverage ratio (including central bank claims)** | **4.9%** | 5.0% |

---

1Includes 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).

2The average UK leverage ratio is based on the average of the month end tier 1 capital position and average exposure measure over the quarter (1 October 2025 to 31 December

2025). The average of 5.1% compares to 5.0% at the start and 5.2% at the end of the quarter.

Analysis of leverage movements

The Group's UK leverage ratio reduced to 5.2% at 31 December 2025 from 5.4% at 31 December 2024, reflecting an increase in the leverage

exposure measure following increases across loans and advances and other assets, largely due to lending growth, and an increase in off-balance

sheet items. This was partly offset by an increase in the total tier 1 capital position. The average leverage ratio reflected the issuance of a new

AT1 capital instrument during the last quarter of 2025.

---

| | |
|:---|:---|
| **27** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Climate risk**

**Definition**

The Group defines climate risk as the risk from the impacts of climate

change and the transition to net zero ('inbound risk'), or a result of

the Group's response to tackling climate change and supporting the

transition to net zero ('outbound risk').

The Risk overview, on **page [6](#i50da067574354549a782044fe1ba4dde_60596)**, contains a summary of climate risk

performance and key mitigating actions.

**Risk appetite**

The Group manages climate risk in line with our strategy and targets

to support the UK's transition to net zero by 2050, while operating

within the risk appetite for other applicable risks, such as credit risk.

The Group recognises that there are external dependencies outside of

our control for certain sectors which may have implications for the

Group's wider strategy, however, the Group endeavours to keep pace

with the UK's wider progress. The Group also ensures robust

management of potential impacts from physical risks or greenwashing

and has no tolerance for non-compliance with regulatory

requirements.

**Identification and assessment**

Climate risk is a principal risk within the Lloyds Banking Group's RMF,

recognising the importance of the topic. This approach provides an

overall view of the climate-related risks which may impact the Group

and aims to ensure suitable consistency in the approach to managing

these risks. However, the cross-cutting impacts from climate risk

manifest through other risk types. As part of embedding climate risk

within the Lloyds Banking Group's RMF, there is clear documentation

of the cross-cutting impacts to be considered as part of managing

other principal risks, with ongoing activity to ensure the Group's

principles are suitably considered within this.

Identification of climate risk draws upon consideration of the

potential drivers of climate risk, either physical risk, resulting from

changes in climate or weather patterns, such as floods or rising sea

levels; or transition risk, resulting from changes to progress towards a

low carbon economy, such as government policy and technological

developments.

The key risks facing the Group are grouped into four components:

failure to deliver on net zero ambitions; the impact from physical and

transition risks; deficiencies in external disclosures; and greenwashing.

The potential impacts from these risks are then mapped against the

other principal risks that these manifest in or are managed through,

with climate-related factors considered as part of assessment of these

risks. The Group looks to update its assessments of material risks at

least annually, with materiality considered in line with the thresholds

used for other financial and non-financial risks within Lloyds Banking

Group's RMF.

Initial understanding of the potential risks facing the Group is

informed by key data points, particularly in relation to the impact

from physical and transition risks.

Transition risk varies significantly both across and within sectors.

Identification of potential risks is based on the relative emissions at

sector level, which have also informed the Group's transition plan,

and supported by specific customer-level information. For corporate

lending, the Group's ESG tool assesses exposure to the impact of

climate risk for specific clients as part of the credit decisioning

process. For Retail lending, risk factors such as the energy

performance certificate (EPC) profile of mortgage properties and the

power train for motor finance are considered.

Identification of physical risk requires information on the potential

hazards which could impact the relevant locations where the Group

has exposure. The Group is particularly focused on developing a clear

view of potential exposure to high risk of flooding across the

mortgage portfolio.

In general, quantifying the impact of the risks associated with climate

change requires scenario analysis, particularly given the different

potential outcomes and time horizons over which the risks may

manifest. The Group continues to develop its climate scenario analysis

capabilities to inform analysis of climate risks, as well as to help shape

the Group's strategy to reflect climate opportunities and assess its

resilience. The outputs of scenario analysis are used to support

consideration of potential impacts of climate risk within key

processes, including credit, capital and liquidity assessments.

Several examples of where scenario analysis is used to assess climate

risk are outlined below.

The impacts of climate-related change on credit quality in expected

credit losses (ECL) were assessed for retail and commercial loan

portfolios for both transition and physical risks.

The Group has assessed the risks transmitted via traded assets across

three climate scenarios, to understand the high-level impact of short-

term market risk factor shocks stemming from physical and transition

risk narratives. Resulting stressed valuations fell within existing stress

test framework outcomes demonstrating the resilience of existing risk

management approaches.

To support assessment of potential greenwashing risks, the Group has

repeated a scenario exercise focussed on Commercial Banking lending

activities. This looked at the effects of policy tightening leading to

significant increases in expectations for managing sustainability and

identified actions to further enhance the robustness of internal

controls to mitigate the risks of greenwashing.

Lloyds Banking Group's sustainability report provides further details

on several aspects of the identification and assessment processes

highlighted, including: exposure to increased climate risk sectors on

**page 78**; and developments in climate scenario analysis, including

assessment of flood risk on **page 124**.

**Management and mitigation**

**Failure to deliver on net zero ambitions**

The Group has continued to develop action plans across its systems-

led approach for supporting the UK's transition. Lloyds Banking

Group's climate transition plan sets out the steps it will take to

reduce emissions for its own operations and supply chain, as well as

the emissions associated with its lending and investments portfolios.

Delivery against the Group's net zero ambitions is considered within

the Regulatory Compliance Risk Policy, in relation to voluntary

commitments and frameworks Lloyds Banking Group has signed up to.

This includes requirements to support measurement of emissions and

suitable monitoring of progress informing discussions at Group

Sustainability Committee on direction of the Group's strategy.

**Impact from physical and transition risks** 

Physical and transition risks impact various other principal risks in

different ways, with several approaches in place to support mitigation

of these risks outlined below.

Credit

For commercial lending, the Group continues to embed climate and

broader ESG-related risks into credit processes through a targeted,

risk-based approach. ESG factors including climate, environmental,

nature-related, social, and governance risks are systematically

assessed using an enhanced ESG Credit Risk Indicator Framework.

This framework informs sector-level strategy supporting alignment

with the Group's risk appetite.

ESG Credit Risk Assessments evaluate a client's or transaction's

exposure to ESG-related risks, such as operational resilience and the

credibility of transition plans. Clients identified with elevated ESG-

related risks are subject to enhanced due diligence as part of the

credit decision-making process.

Within Retail, the Group adopts a measured approach to managing

climate risk. In transport, the transition to low-carbon system is

closely managed, while EPC controls and physical risks such as

flooding are embedded within mortgage credit decisioning.

Further detail on management of climate-related and ESG credit risks

is provided on **page 128** of Lloyds Banking Group's sustainability

report.

---

| | |
|:---|:---|
| **28** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

Operational

Climate-related impacts could affect operational resilience through

properties, IT systems, people and third-party suppliers and create

disruption to services. The Group has processes in place to consider

the resilience of its property in relation to physical risks, particularly

focused on its offices, data centres and branch network, to minimise

the risk of service disruption.

The Lloyds Banking Group Code of Supplier Responsibility outlines the

minimum standards and advanced expectations of third-party

suppliers. Suppliers are required to proactively identify, manage and

reduce their environmental impact across their operations, products,

and services. The Code specifies that suppliers must comply with all

applicable environmental legislation and regulation, including climate-

related disclosures and transition plans where relevant. For further

information, refer to the Group's Code of Supplier Responsibility.

**Deficiencies in external disclosures**

The Group's external disclosures are subject to a robust governance

process, including appropriate legal review. This provides an

assessment of the relevant reporting requirements, such as the

Climate-related Financial Disclosures requirements (CFD) and Task

Force on Climate-related Financial Disclosures (TCFD)

recommendations.

**Greenwashing** 

The Group has established measures to manage conduct risk and

mitigate greenwashing, reinforcing transparency and accuracy in

communications and disclosures. These measures include reviewing

ESG-related content prior to publication, providing dedicated

guidance and training to support product governance and content

creation and external legal review of sustainability-related content

within the annual report and other disclosures. Together, these

actions complement climate-related risk reporting obligations

and demonstrate the Group's commitment to responsible

communication. Looking ahead, the Group will continue to enhance

its approach, as well as investigating any challenges or suggestions of

greenwashing and embedding learnings into future improvements.

**Monitoring**

The Group ensures visibility and awareness of climate risks across its

risk profile, with management information across a range of themes

regularly assessed across the relevant business units. This is in addition

to quarterly monitoring of the Group's progress against its net zero

ambitions through the Group Sustainability Committee, as well as

consideration within the Group's operating plan process.

The Group also closely monitors climate-related regulatory

developments to ensure its approach meets current requirements and

progress towards meeting evolving expectations is tracked.

This includes understanding developments in sustainability reporting

and prudential supervision. Further detail on these is provided on

**page 141** of the Group's sustainability report.

**Reporting**

The Group's climate risk profile is regularly reviewed, with an overview

provided as part of the Group's risk reporting. Additional

management information on climate risk is included within reporting

to the Lloyds Banking Group and Ring-Fenced Banks Risk Committee

and Board Risk Committee, providing visibility of potential exposure

to physical and transition risks across key areas of the Group.

**Compliance risk**

**Definition**

The risk of financial penalties, regulatory censure, criminal or civil

enforcement action or customer detriment as a result of failure to

identify, assess, correctly interpret, comply with, or manage

regulatory and/or legal requirements.

**Level two risks**

Legal; Regulatory.

The Risk overview, on **page [6](#i50da067574354549a782044fe1ba4dde_60597)**, contains a summary of compliance risk

performance and key mitigating actions.

**Risk appetite**

The Group does not tolerate non-adherence to regulatory and legal

requirements and all colleagues employed by the Group are expected

to comply with legal and regulatory obligations, requirements,

statutes and permissions.

Where inadvertent instances of non-compliance occur, these are

promptly addressed with corrective action to minimise exposure and

avoid recurrence.

**Identification and assessment**

Compliance risk is measured against defined risk appetite metrics,

which assess material regulatory breaches and material legal

incidents.

The Group Legal function provides legal advice and together with the

Risk function, delivers oversight, proactive support and constructive

challenge to the wider business in identifying and managing regulatory

and legal issues.

The Group engages with regulatory authorities and industry bodies on

forthcoming regulatory changes, market reviews and investigations,

ensuring programmes are established to deliver new regulation and

legislation.

Horizon scanning is used to identify both medium- and long-term

compliance risks that could affect the ability to achieve strategic

objectives. This includes but is not limited to new or updated

regulations, legislations, guidance and updates. Similarly, the Group's

emerging and topical risks provide a forward-looking view of themes,

with the potential to alter execution of strategy or operations in the

medium to long term.

**Management and mitigation**

The Group's strategy supports a continued focus on proactive

identification, management and mitigation of compliance risk,

embedded through colleague recruitment, training, performance

management and clear accountabilities.

Permissions, licences, waivers, modifications and authorisations are in

place and maintained to ensure that appropriate approvals have been

sought to carry out regulated activities.

Compliance policies and standards are in place, setting out clear

requirements and controls that apply across the business, aligned to

the Group's risk appetite.

The Senior Managers and Certification Regime (SMCR) is used to

ensure that accountabilities are clearly allocated to and from senior

managers, with expectation that all Senior Manager Function (SMF)

and Material Risk Takers (MRT) colleagues deliver compliant

outcomes in line with regulatory expectations.

**Monitoring**

Compliance with relevant laws and regulations is supported by risk

oversight and monitoring activity. The Group continues to evolve its

approach to traceability of regulatory obligations as part of the risk

management framework.

Regulatory and legal breaches are escalated and recorded, with

regulators notified of material breaches in line with expected

timescales. Breaches are used as a trigger to consider the compliance

risk profile.

Changes to the internal and external environment are regularly

monitored to ensure there is an accurate and up-to-date view of the

risk profile. This includes but is not limited to:

• Using key risk, control and performance indicators as relevant to

monitor the risk profile

• Monitoring relevant risk appetite metrics against agreed

thresholds, including the escalation of breaches

• Understanding the impact of change activity on the risk and

control environment

**Reporting**

Reporting ensures that senior management have visibility of the

Group's compliance risk exposure to enable informed decision

making.

Data for risk profiles, events and issues is reported to the relevant risk

committee(s) by all appropriate business units, Group functions and

regulated entities.

Regulatory reporting is submitted to regulators as required.

---

| | |
|:---|:---|
| **29** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Conduct risk**

**Definition**

The risk of the Group's activities, behaviours, strategy or business

planning, having an adverse impact on outcomes for customers,

undermining the integrity of the market or distort competition, which

could lead to regulatory censure, reputational damage or financial

loss.

**Level two risks**

Colleague; Customer; Market.

The Risk overview, on **page [6](#i50da067574354549a782044fe1ba4dde_60598)**, contains a summary of conduct risk

performance and key mitigating actions.

**Risk appetite**

The Group is committed to maintaining a strong conduct and

customer focused culture that minimises customer harm and

maintains good customer outcomes. The Group manages conduct risk

to ensure that the actions and behaviours of the Group and its

colleagues do not:

• Negatively impact the delivery of good customer outcomes at all

stages of the customer journey

• Have an adverse effect on the markets in which it operates

• Conflict with the Group's purpose and values or expose it to

negative reputational impact

The Group does not tolerate deliberately or negligently causing

detriment to customers.

**Identification and assessment**

Conduct risks are identified through day-to-day business

management, with product owners accountable for current and

emerging risks.

Horizon scanning for regulatory and market developments is used to

identify both medium- and long-term conduct risks that could affect

the ability to achieve strategic objectives.

Customer outcomes are monitored and assessed in line with the

Group's regulatory requirements, including Consumer Duty, and to

mitigate the customer conduct risks the Group faces.

There are monitoring systems in place to detect instances of market

abuse alongside procedures to ensure that any detected instances are

dealt with swiftly and effectively. This includes procedures to identify

and report suspicious transactions where relevant. The Group

implements and monitors adherence with market abuse and personal

account dealing procedures that are aligned with the UK's market

abuse legislation.

**Management and mitigation**

The Group's strategy supports a continued focus on proactive

identification and mitigation of conduct risk, embedded through

colleague recruitment, training, performance management and clear

accountabilities.

Conduct risk appetite is established at Group and divisional level,

with metrics supporting the Group risk appetite to ensure ongoing

focus and escalation via appropriate governance procedures.

Conduct policies and procedures are in place to ensure appropriate

controls and processes to deliver good customer outcomes, including

fair value and meeting customer needs, and support market integrity

and competition requirements.

Complaints are managed through responding to, and learning from,

root causes of complaint volumes and Financial Ombudsman Service

(FOS) change rates.

The Group actively engages with regulatory bodies and other

stakeholders to develop understanding of concerns related to

customer treatment, colleague behaviours, effective competition and

market integrity, to ensure that the Group's strategic conduct focus

continues to meet evolving stakeholder expectations. Ongoing

engagement with any third parties involved in serving the Group's

customers ensures consistent delivery in line with the Group's own

standards and expectations.

In respect of the motor finance commissions review, the Group will

continue to assess developments and potential impacts following the

announcement by the FCA of the final scheme rules, which are

expected by the end of March 2026. Further details are provided on

**page [128](#i301ee39a87e74ee1844a006296c215a2_192)**.

Market conduct remains an area of focus with ongoing enhancements

to our surveillance and control environment. The Group is a member

of the Fixed Income, Currencies and Commodities Markets Standard

Board and is committed to conducting its market activities in line

with the principles of the UK Money Markets Code, the Global

Precious Metals Code and the FX Global Code.

**Monitoring**

The Group maintains comprehensive monitoring activities to ensure

the effective management of conduct risk, including:

• Conduct Risk Appetite Metrics (CRAMs), with escalation to the

Board where required

• Oversight across the three lines of defence, ensuring accountability

and robust governance

• Data-driven insights into customer outcomes, including monitoring

aligned to Consumer Duty requirements

• Tracking risk appetite metrics and management measures against

agreed thresholds, with prompt escalation of any breaches

• Use of key risk, control, and performance indicators to monitor the

overall risk profile

• Assessment of the impact of change and transformation initiatives

on the risk and control environment

• Monitoring strategic changes and new product offerings, ensuring

associated risks are understood and managed

• Identification, escalation, and recording of events in line with

operational risk protocols, including immediate regulatory

notification where required. Effective root cause analysis is

undertaken to address issues, strengthen the control environment

(including resilience), and inform capital requirements for

unexpected severe losses

The Group continues to refine its approach to data-led monitoring as

part of Lloyds Banking Group's data strategy.

**Reporting**

Conduct risk is governed through divisional risk committees, with

significant issues escalated to the Lloyds Banking Group and Ring-

Fenced Banks Risk Committee in accordance with Lloyds Banking

Group's risk management framework. Risk profiles, events, and issues

at all organisational levels are reported to the relevant committees to

ensure full visibility and informed decision making.

---

| | |
|:---|:---|
| **30** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Credit risk**

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lbk-20251231_g14.gif) | ![LightGrey_topright7.gif](lbk-20251231_g15.gif) |

---

**Definition**

Credit risk is defined as the risk that parties with whom the Group has

contracted fail to meet their financial obligations (on- and off-

balance sheet).

**Level two risks**

Retail credit **(page [43](#i699a03b3579a4d1ba970905a768d5368_45385))**; Commercial credit **(page [47](#i699a03b3579a4d1ba970905a768d5368_45386))**.

The Risk overview, on **page [7](#i50da067574354549a782044fe1ba4dde_60599)**, contains a summary of credit risk

performance and key mitigating actions.

**Risk appetite**

The Group is commercially required to take credit risk to support the

strategy of the business and maintain underwriting standards to

enable safe and sustainable growth. The Group maintains a well-

balanced credit portfolio through the economic cycle, considering

stressed losses and aligned with the Group's target return on equity.

Risk appetite is expressed primarily through origination quality

metrics, designed to ensure quality of new business written is within

acceptable tolerances and stress loss outcomes.

**Identification and assessment**

The principal sources of credit risk within the Group where financial

loss may occur arise from loans and advances (for example mortgages,

term loans and overdrafts), contingent guarantees (for example,

credit instruments such as guarantees or letters of credit),

commitments, debt securities, derivatives to customers, financial

institutions and sovereigns, and leasing arrangements where the

Group is the lessor. These also expose the Group to refinance risk in

the event the Group does not wish to refinance an exposure at its

contractual maturity date and the obligor is unable to repay by

securing alternative finance.

The investments held in the Group's defined benefit pension schemes

also expose the Group to credit risk. Note 11 to the consolidated

financial statements on **page [97](#iddf3b01e92c34e0691e008ab468ef39d_148)** provides further information on the

defined benefit pension schemes' assets and liabilities.

---

| | |
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---

![AuditedLozenge.gif](lbk-20251231_g16.gif)

The maximum credit risk exposure of the Group in the event of other

parties failing to perform their obligations is considered to be the

balance sheet carrying amount or, for non-derivative off-balance sheet

transactions and financial guarantees, their contractual nominal

amounts (not taking into account any collateral held).

Further details can be seen in note 15 to the consolidated financial

statements on **page [106](#idee5c7a553fb4d1fafd8fc982e1fe28d_142)** and note 33 to the consolidated financial

statements on **page [132](#i197c6a774a1c45d3a462ce4744808061_1334)**.

Credit risk is identified through relationship and portfolio

management, credit stewardship and/or through automated decision

processes for portfolios or individual customers. Risks are assessed

against the capacity of the customer to repay the debt and expected

returns to determine whether, and on what terms, to grant credit.

Individual credit assessments are controlled via approved limits and

parameters which are formally delegated to approved individuals with

appropriate level of skill and judgement.

Models provide a way of objectively assessing credit risk and a range

of approaches are used to ensure a clear understanding of the risk

profile including, but not limited to, Probability of Default (PD),

Exposure at Default (EAD) and Loss Given Default (LGD) models.

Horizon scanning is used to identify credit risks arising from changing

market and economic conditions and changes to regulatory

requirements.

![AuditedLozenge.gif](lbk-20251231_g16.gif)

The process for credit risk identification, measurement and control is

integrated into the Board-approved framework for credit risk appetite

and governance.

Credit risk is measured from different perspectives using a range of

appropriate modelling and scoring techniques at a number of levels of

granularity, including total balance sheet, individual portfolio, pertinent

concentrations and individual customer – for both new business and

existing exposure. Key metrics, which may include but are not limited

to, total exposure, ECL, risk-weighted assets, new business quality,

concentration risk and portfolio performance, are reported monthly to

risk committees and forums.

Measures such as ECL, risk-weighted assets, observed credit

performance, predicted credit quality (usually from predictive credit

scoring models), collateral cover and quality, and other credit drivers

(such as cash flow, affordability, leverage and indebtedness) have been

incorporated into the Group's credit risk management practices to

enable effective risk measurement across the Group.

**Management and mitigation**

The Group uses a range of approaches to mitigate credit risk.

**Credit risk management**

Prudent credit principles, risk policies, standards and appetite

statements

The independent Risk function sets out the credit principles, credit

risk policies, credit standards and credit risk appetite statements.

![AuditedLozenge.gif](lbk-20251231_g16.gif)

---

| | | |
|:---|:---|:---|
| ![LightGrey_top left7.gif](lbk-20251231_g14.gif) |  | ![LightGrey_topright7.gif](lbk-20251231_g15.gif) |
|  | Credit risk appetite is set at Board level and is described and reported <br>through a suite of metrics devised from a combination of accounting <br>and credit portfolio performance measures, which include the use of <br>various credit risk rating systems as inputs and assess credit risk at a <br>counterparty level using three components: (i) the probability of <br>default by the counterparty on its contractual obligations; (ii) the <br>current exposures to the counterparty and their likely future <br>development, from which the Group derives the exposure at default; <br>and (iii) the likely loss ratio on the defaulted obligations, the loss given <br>default. <br>|  |

---

• Credit authorities are delegated by relevant Boards to Chief Risk

Officers, with subsequent delegation to enable colleagues to make

credit decisions

• Credit risk management is undertaken at a customer, portfolio and

macro level. Portfolios are monitored and actions taken to ensure

they remain within risk appetite and approved limits

• Periodic reviews of specific business, sector and portfolio

strategies are undertaken to assess the risk return profile and

ensure risk is being managed, sustainable returns optimised, and

that quality is not sacrificed for growth

• The ratio of risk to reward influences pricing decisions with PD,

LGD and EAD acting as key drivers to assess the potential

profitability of deals and portfolios, and to facilitate risk-adjusted

pricing and strategy decisions

• Repayment from cash flows is the primary form of risk mitigation

the Group seeks to ensure that customers can meet their

obligations

• To mitigate the risk of loss due to insufficient cash flows,

mitigation is also managed where appropriate through taking

security, collateral, credit default swaps, credit risk insurance,

financial covenants, significant risk transactions, risk netting,

guarantees, credit linked debt instruments and operational/

contractual rights to offset mutual obligations

• The Group supports and works with customers to return them to

performing and forbearance may be provided for customers when

an unexpected change in circumstances impacts their ability to

meet financial obligations. If a return to performing status is not

possible, the Group will seek to recover monies owed

---

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|:---|:---|
| **31** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

---

| | |
|:---|:---|
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---

![AuditedLozenge.gif](lbk-20251231_g16.gif)

Limitations on concentration risk

There are portfolio controls on certain industries, sectors and products

to reflect risk appetite as well as individual, customer and bank limit risk

tolerances. Credit standards, appetite statements and mandates are

aligned to the Group's risk appetite and restrict exposure to higher risk

countries and potentially vulnerable sectors and asset classes.

Exposures are monitored to prevent both an excessive concentration of

risk and single name concentrations. These concentration risk controls

are not necessarily in the form of a maximum limit on exposure, but

may instead require new business in concentrated sectors to fulfil

additional minimum standards and/or guideline requirements. The

Group's largest credit limits are regularly monitored by the Board Risk

Committee and reported in accordance with regulatory requirements.

Defined country risk management framework

The Group sets a maximum country risk appetite for countries based

on economic, financial, political and social factors as well as the

approved business and strategic plans of the Group. Risk-based

appetite for all countries is set within the independent Risk function.

Specialist expertise

Credit quality is managed and controlled by a number of specialist

units within the business and Risk function, which provide for

example: intensive management and control; security perfection;

maintenance of customer and facility records; expertise in

documentation for lending and associated products; sector-specific

expertise; and legal services applicable to the particular market

segments and product ranges offered by the Group.

Frequent and robust credit risk assurance

An independent department within the Risk function provides

oversight that credit risk is effectively managed and to ensure

appropriate controls are in place and adhered to. Group Audit

conducts assurance on the effectiveness of credit risk management.

**Collateral**

The principal types of acceptable collateral include: residential

and commercial properties; charges over business assets such

as inventory and accounts receivable; financial instruments such

as debt securities; vehicles; cash; and guarantees received from

third parties.

The Group maintains credit standards on the acceptability of specific

classes of collateral.

For non-mortgage retail lending to small businesses, collateral may

include second charges over residential property and the assignment

of life cover.

Collateral held as security for financial assets other than loans and

advances is determined by the nature of the underlying exposure.

Debt securities, including treasury and other bills, are generally

unsecured, with the exception of asset-backed securities and similar

instruments such as covered bonds, which are secured by portfolios of

financial assets. Collateral is generally not held against loans and

advances to financial institutions and debt securities. Debt securities

are classified as financial assets held at amortised cost.

Securities are held as part of reverse repurchase or securities

borrowing transactions or where a collateral agreement has been

entered into under a master netting agreement. Derivative

transactions with financial institutions are typically collateralised

under a Credit Support Annex (CSA) in conjunction with the

International Swaps and Derivatives Association (ISDA) Master

Agreement. Derivative transactions with non-financial customers are

not usually supported by a CSA.

Collateral requirements at origination depend on the transaction's

nature and the borrower's credit quality, size and structure. For non-

retail exposures, the Group may seek:

• A first charge over land and buildings owned and occupied by

the business

• A debenture over the assets of a company or limited liability

partnerships

• Limited personal guarantees from directors of a company or

limited liability partnership

• Key man insurance

The Group has standards on acceptable collateral valuations,

maximum loan-to-value (LTV) ratios, and other criteria for application

reviews. The customer or counterparty must demonstrate its ability to

generate funds from normal operations to repay a customer or

counterparty's financial commitments, rather than relying on the

disposal of collateral.

Although lending decisions are primarily based on expected cash

flows, any collateral provided may impact the pricing and other terms

of a loan or facility granted. This will have a financial impact on the

amount of net interest income recognised and on internal loss given

default estimates that contribute to the determination of asset

quality and returns.

![AuditedLozenge.gif](lbk-20251231_g16.gif)

---

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|:---|:---|
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---

The Group requires collateral to be valued by a qualified, independent

source at the time of borrowing, where appropriate. For retail

residential mortgages and limited residential assets in Commercial,

automated valuation models may be used, subject to accuracy and LTV

limits. Third-party valuations are regularly monitored and reviewed.

Collateral values are reviewed based on lending type, collateral and

account performance to ensure they remain appropriate. If collateral

value declines, the Group may seek additional collateral or amend

facility terms. The Group adjusts estimated market values to take

account of the costs of realisation and any discount associated with the

realisation of the collateral when estimating credit losses.

In some circumstances, where the discounted value of the estimated

net proceeds from the liquidation of collateral (i.e. net of costs,

expected haircuts and anticipated changes in the value of the collateral

to the point of sale) is greater than the estimated exposure at default,

no credit losses are expected and no ECL allowance is recognised.

The Group considers risk concentrations by collateral providers and

collateral type with a view to ensuring that any potential undue

concentrations of risk are identified and suitably managed by changes

to strategy, standards and/or business plans.

The Group seeks to avoid correlation or wrong-way risk where

possible. Under the Group's repurchase (repo) policy, the issuer of the

collateral and the repo counterparty should be neither the same nor

connected. The same rule applies for derivatives. The Risk function

has the necessary discretion to extend this rule to other cases where

there is significant correlation, or agree exceptions, for example,

countries with a rating equivalent to AA- or better may be considered

to have no adverse correlation between a counterparty domiciled in

that country and the country of risk (issuer of securities), or for short-

dated transactions with counterparties with certain specific Sovereign

issues.

---

| | | |
|:---|:---|:---|
| ![LightGrey_top left7.gif](lbk-20251231_g14.gif) |  | ![LightGrey_topright7.gif](lbk-20251231_g15.gif) |
|  | The Group's credit risk disclosures for unimpaired other retail lending <br>show assets gross of collateral and therefore disclose the maximum <br>loss exposure.<br>During the year, £394 million of collateral was repossessed <br>(2024: £285 million), consisting primarily of residential property.<br>|  |

---

![AuditedLozenge.gif](lbk-20251231_g16.gif)

Forbearance

The Group's aim in offering forbearance and other assistance to

customers in financial distress is to benefit both the customer and the

Group by supporting its customers and acting in their best interests

by, where possible, bringing customer facilities back into a sustainable

position.

The Group offers a range of tools and assistance to support customers

who are encountering financial difficulties. Cases are managed on an

individual basis, with the circumstances of each customer considered

separately and the action taken judged as being appropriate and

sustainable for both the customer and the Group.

---

| | |
|:---|:---|
| **32** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

Forbearance measures consist of concessions towards a debtor that is

experiencing or about to experience difficulties in meeting its financial

commitments. This can include modification of the previous terms

and conditions of a contract or a total or partial refinancing of a

troubled debt contract, either of which would not have been required

had the debtor not been experiencing financial difficulties.

The provision and review of such assistance is controlled through the

application of an appropriate framework and associated controls.

Regular review of the assistance offered to customers is undertaken

to confirm that it remains appropriate, alongside monitoring of

customers' performance and the level of payments received.

The Group classifies accounts as forborne at the time a customer in

financial difficulty is granted a concession.

Balances in default or classified as Stage 3 are always considered to

be non-performing. Balances may be non-performing but not in

default or Stage 3, where for example they are within their non-

performing forbearance cure period.

Non-performing exposures can be reclassified as performing forborne

after a minimum 12-month cure period, providing there are no past

due amounts or concerns regarding the full repayment of the

exposure. A minimum of a further 24 months must pass from the date

the forborne exposure was reclassified as performing forborne before

the account can exit forbearance. If conditions to exit forbearance

are not met at the end of this probation period, the exposure shall

continue to be identified as forborne until all the conditions are met.

The Group's treatment of loan renegotiations is included in the

impairment policy in note 2(H) to the consolidated financial

statements on **page [84](#if76155e699734666975e7cdf72a8df75_1290)**.

**Additional mitigation for Retail customers**

The Group uses a variety of lending criteria when assessing

applications for mortgages and unsecured lending. The general

approval process uses credit acceptance scorecards and involves a

review of an applicant's previous credit history using internal data and

information held by Credit Reference Agencies (CRA).

The Group also assesses the affordability and sustainability of lending

for each borrower. For secured lending this includes use of an

appropriate stressed interest rate scenario. Affordability assessments

for all lending are compliant with relevant regulatory and conduct

guidelines. The Group takes reasonable steps to validate information

used in the assessment of a customer's income and expenditure.

In addition, the Group has in place quantitative limits such as

maximum limits for individual customer products, the level of

borrowing to income and the ratio of borrowing to collateral. Some of

these limits relate to internal approval levels and others are policy

limits above which the Group will typically reject borrowing

applications. The Group also applies certain criteria that are

applicable to specific products, for example applications for buy-to-

let mortgages.

For UK mortgages, the Group's credit standard permits owner

occupier applications with a maximum LTV of 95%. This can increase

to 100% for specific products where additional security is provided by

a supporter of the applicant and held on deposit by the Group.

Applications with an LTV above 90% are subject to enhanced

underwriting criteria, including higher scorecard cut-offs and loan size

restrictions.

Buy-to-let mortgages within Retail are limited to a maximum loan size

of £2,000,000 and 80% LTV for a single property. Buy-to-let

applications must pass a minimum rental cover ratio of 125% under

stressed interest rates, after applicable tax liabilities. Portfolio

landlords (customers with four or more mortgaged buy-to-let

properties) are subject to additional controls including evaluation of

overall portfolio resilience.

The Group's credit standard is to reject any application for a lending

product where a customer is registered as bankrupt or insolvent, or

has a recent County Court Judgment or financial default registered at

a CRA used by the Group above de minimis thresholds. In addition,

the Group typically rejects applicants where total unsecured debt,

debt-to-income ratios, or other indicators of financial difficulty

exceed credit standard limits.

Where credit acceptance scorecards are used, new models, model

changes and monitoring of model effectiveness are independently

reviewed and approved in accordance with the governance

framework set by the Group Model Governance Committee.

---

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![AuditedLozenge.gif](lbk-20251231_g16.gif)

The Group generally does not take physical possession of

properties or other assets held as collateral and uses external agents to

realise the value as soon as practicable, generally at auction, to settle

indebtedness. Any surplus funds are returned to the borrower or are

otherwise dealt with in accordance with appropriate insolvency

regulations. In certain circumstances the Group takes physical

possession of assets held as collateral against commercial lending. In

such cases, the assets are carried on the Group's balance sheet and are

classified according to the Group's accounting policies.

**Additional mitigation for Commercial Banking customers**

**I**ndividual credit assessment and independent sanction of customer

and bank limits

With the exception of small exposures to small to medium-sized

enterprises (SME) customers where certain relationship managers

have limited delegated credit approval authority, credit risk in

commercial customer portfolios is subject to approval by the

independent Risk function, which considers the strengths and

weaknesses of individual transactions, the balance of risk and reward,

and how credit risk aligns to risk appetite and the Group's strategy.

Credit facilities provided are subject to an Annual Credit Review

(ACR) in line with Credit Standards, to confirm appetite for ongoing

provision of existing facilities.

Exposure to individual counterparties, groups of counterparties or

customer risk segments is controlled through a tiered hierarchy of

credit authority delegations and risk-based credit limit guidances per

client group for larger exposures. Approval requirements for each

decision are based on a number of factors including, but not limited

to, the transaction amount, the customer's aggregate facilities, any

risk mitigation in place, credit standards, risk appetite, credit risk

ratings and the nature and term of the risk. The Group's credit risk

appetite criteria for counterparty and customer loan underwriting is

generally the same as that for loans intended to be held to maturity.

All hard loan/bond underwriting must be approved by the Risk

function. A pre-approved credit matrix may be used for 'best efforts'

underwriting.

Counterparty credit limits

Limits are set against all types of exposure in a counterparty name, in

accordance with an agreed methodology for each exposure type. This

includes credit risk exposure on individual derivatives and securities

financing transactions, which incorporates potential future exposures

from market movements against agreed confidence intervals.

Aggregate facility levels by counterparty are set and limit breaches are

subject to escalation procedures.

Daily settlement limits

Settlement risk arises in any situation where a payment in cash,

securities or equities is made in the expectation of a corresponding

receipt in cash, securities or equities. Daily settlement limits are

established for each relevant counterparty to cover the aggregate of

all settlement risk arising from the Group's market transactions on any

single day. Where possible, the Group uses Continuous Linked

Settlement in order to reduce foreign exchange (FX) settlement risk.

---

| | |
|:---|:---|
| **33** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Master netting agreements**

It is a credit requirement that a Group-approved master

netting agreement must be used for all derivative and traded product

transactions and must be in place prior to trading, with

separate documentation required for each Group entity providing

facilities. This requirement extends to trades with clients and the

counterparties used for the Group's own hedging activities, which

may also include clearing trades with Central Counterparties (CCPs).

Any exceptions must be approved by the appropriate credit approver.

Master netting agreements do not generally result in an offset of

balance sheet assets and liabilities for accounting purposes, as

transactions are usually settled on a gross basis. However, within

relevant jurisdictions and for appropriate counterparty types, master

netting agreements do reduce the credit risk to the extent that, if an

event of default occurs, all trades with the counterparty may be

terminated and settled on a net basis. The Group's overall exposure

to credit risk on derivative instruments subject to master netting

agreements can change substantially within a short period, since this

is the net position of all trades under the master netting agreement.

**Other credit risk transfers**

The Group also undertakes asset sales, credit derivative based

transactions, securitisations (including significant risk transfer

transactions), purchases of credit default swaps and purchase of

credit risk insurance as a means of mitigating or reducing credit risk

and/or risk concentration, taking into account the Group's credit risk

appetite, the nature of assets and the prevailing market conditions.

**Monitoring**

Credit risk exposure is monitored using various internal risk

management measures against limits approved by automated

decision tools, or individuals with set delegated authorities.

Portfolios are monitored to evaluate trends in credit risk measures

including PD, EAD, LGD, Expected Credit Loss (ECL), Expected Loss

(EL) and Risk-Weighted Assets (RWA), and ensure that the overall

composition of the lending portfolios remains consistent with Board

approved risk appetite.

Early Warning Indicators are used to detect early signs of a

deterioration in credit quality.

**Reporting**

Credit Risk Appetite Metrics and a set of management measures are

reported to relevant Boards, Risk Committees and Forums as

required.

Operational limits are reported to the relevant committees, forums or

individuals as required.

Robust insight, analytical, and reporting capabilities are in place to

produce timely and reliable risk data and management information to

meet internal and external reporting requirements.

**Lloyds Bank Group credit risk portfolio in 2025**

**Overview**

Credit performance has remained strong and stable in 2025. The

Group maintains a measured approach to credit risk appetite and risk

management with strong credit origination criteria embedded,

including affordability tests and robust LTVs in the secured portfolios.

In UK mortgages, reductions in new to arrears and flows to default

have been observed, whilst unsecured portfolios continue to exhibit

low and stable arrears trends. Credit performance also remains strong

in Commercial Banking. The Group continues to assess the impacts of

the economic and geopolitical 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 2025 was £792 million, up from £456 million

in 2024, and includes a net charge from updates to the Group's

macroeconomic outlook. Excluding macroeconomic updates, the

Group's impairment charge remains low and similar to 2024. The total

probability-weighted ECL allowance was lower in 2025 at £3,201

million (31 December 2024: £3,453 million) following strong credit

performance and additional benefits from model refinements.

Stage 2 loans and advances to customers are lower at £42,482 million

versus the prior year (31 December 2024: £44,658 million) following

strong credit performance particularly within UK mortgages.

Additionally, growth in lending from new business inflows dilute the

proportion of Stage 2 loans and advances to 9.1% of total lending (31

December 2024: 10.0%) with Stage 2 coverage reducing slightly at

2.7% (31 December 2024: 2.9%).

Stage 3 loans and advances to customers are lower at £6,519 million

versus the prior year (31 December 2024: £6,708 million), and as a

percentage of total lending at 1.4% (31 December 2024: 1.5%).

Migrations into Stage 3 from a small number of cases within

Commercial Banking were offset by continued strong performance,

especially following improving default rates within UK mortgages.

Growth in house prices combined with strong credit performance

across Retail also reduced the total Group Stage 3 coverage to

15.9% (31 December 2024: 16.5%).

---

| | |
|:---|:---|
| **34** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Total Group assets**

**Impairment charge (credit) by division**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Loans and** <br>**advances to** <br>**customers**<br>**£m**<br>| **Loans and** <br>**advances to** <br>**banks**<br>**£m**<br>| **Debt securities**<br>**£m**<br>| **Financial**<br>**assets at**<br>**fair value**<br>**through other**<br>**comprehensive**<br>**income**<br>**£m** | **Undrawn** <br>**balances**<br>**£m**<br>| **2025**<br>**£m**<br>| 2024<br>£m<br>|
| UK mortgages | **(59)** | **–** | **–** | **–** | **(1)** | **(60)** | (194) |
| Credit cards | **327** | **–** | **–** | **–** | **(6)** | **321** | 270 |
| UK unsecured loans and <br>overdrafts<br>| **269** | **–** | **–** | **–** | **(12)** | **257** | 272 |
| UK Motor Finance | **214** | **–** | **–** | **–** | **(2)** | **212** | 116 |
| Other | **3** | **–** | **–** | **–** | **1** | **4** | (7) |
| Retail | **754** | **–** | **–** | **–** | **(20)** | **734** | 457 |
| Business and Commercial Banking | **(53)** | **–** | **–** | **–** | **–** | **(53)** | 47 |
| Corporate and Institutional <br>Banking<br>| **163** | **–** | **–** | **–** | **(51)** | **112** | (45) |
| Commercial Banking | **110** | **–** | **–** | **–** | **(51)** | **59** | 2 |
| Other | **–** | **–** | **–** | **(1)** | **–** | **(1)** | (3) |
| **Total impairment charge (credit)** | **864** | **–** | **–** | **(1)** | **(71)** | **792** | 456 |

---

**Total expected credit loss allowance**

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>**£m**<br>| At 31 Dec<br>2024<br>£m<br>|
| Customer related balances |  |  |
| Drawn | **3001** | 3183 |
| Undrawn | **195** | 265 |
|  | **3196** | 3448 |
| Loans and advances to banks | **1** | 1 |
| Debt securities | **4** | 4 |
| **Total expected credit loss allowance** | **3201** | 3453 |

---

**Movements in total expected credit loss allowance**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Opening ECL at <br>31 Dec 2024<br>£m<br>| **Write-offs**<br>**and other**<sup>1</sup><br>**£m**<br>| **Income**<br>**statement**<br>**charge (credit)**<br>**£m**<br>| **Net ECL** <br>**increase**<br>**(decrease)**<br>**£m**<br>| **Closing ECL at** <br>**31 Dec 2025**<br>**£m**<br>|
| UK mortgages | 852 | **(61)** | **(60)** | **(121)** | **731** |
| Credit cards | 674 | **(392)** | **321** | **(71)** | **603** |
| UK unsecured loans and overdrafts | 523 | **(282)** | **257** | **(25)** | **498** |
| UK Motor Finance | 360 | **(142)** | **212** | **70** | **430** |
| Other | 67 | **(8)** | **4** | **(4)** | **63** |
| Retail | 2476 | **(885)** | **734** | **(151)** | **2325** |
| Business and Commercial Banking | 485 | **(55)** | **(53)** | **(108)** | **377** |
| Corporate and Institutional Banking | 491 | **(105)** | **112** | **7** | **498** |
| Commercial Banking | 976 | **(160)** | **59** | **(101)** | **875** |
| Other | 1 | **1** | **(1)** | **–** | **1** |
| **Total**<sup>2</sup> | 3453 | **(1044)** | **792** | **(252)** | **3201** |

---

1Contains adjustments in respect of purchased or originated credit-impaired financial assets.

2Total ECL includes £5 million relating to other non-customer-related assets (31 December 2024: £5 million).

---

| | |
|:---|:---|
| **35** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Group loans and advances to customers**

The following pages contain analysis of the Group's loans and advances to customers by sub-portfolio. Loans and advances to customers are

categorised into the following stages:

• Stage 1 assets comprise of newly originated assets (unless purchased or originated credit-impaired), as well as those which have not

experienced a significant increase in credit risk. These assets carry an expected credit loss allowance equivalent to the expected credit

losses that result from those default events that are possible within 12 months of the reporting date (12 month expected credit losses)

• Stage 2 assets are those which have experienced a significant increase in credit risk since origination. These assets carry an expected credit

loss allowance equivalent to the expected credit losses arising over the lifetime of the asset (lifetime expected credit losses)

• Stage 3 assets have either defaulted or are otherwise considered to be credit-impaired. These assets carry a lifetime expected credit loss

• Purchased or originated credit-impaired assets (POCI) are those that have been originated or acquired in a credit-impaired state. This

includes within the definition of credit-impaired the purchase of a financial asset at a deep discount that reflects impaired credit losses

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

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **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>|
| **At 31 December 2025** |  |  |  |  |  |  |  |
| **Loans and advances to customers** |  |  |  |  |  |  |  |
| UK mortgages | **284307** | **30414** | **4016** | **5076** | **323813** | **9.4** | **1.2** |
| Credit cards | **15258** | **2326** | **274** | **–** | **17858** | **13.0** | **1.5** |
| UK unsecured loans and overdrafts | **10601** | **1397** | **193** | **–** | **12191** | **11.5** | **1.6** |
| UK Motor Finance | **14222** | **2786** | **141** | **–** | **17149** | **16.2** | **0.8** |
| Other | **21245** | **392** | **145** | **–** | **21782** | **1.8** | **0.7** |
| Retail | **345633** | **37315** | **4769** | **5076** | **392793** | **9.5** | **1.2** |
| Business and Commercial Banking | **24362** | **3329** | **979** | **–** | **28670** | **11.6** | **3.4** |
| Corporate and Institutional Banking | **40188** | **1838** | **771** | **–** | **42797** | **4.3** | **1.8** |
| Commercial Banking | **64550** | **5167** | **1750** | **–** | **71467** | **7.2** | **2.4** |
| Other<sup>1</sup> | **245** | **–** | **–** | **–** | **245** | **–** | **–** |
| **Total gross lending** | **410428** | **42482** | **6519** | **5076** | **464505** | **9.1** | **1.4** |
| ECL allowance on drawn balances | **(729)** | **(1076)** | **(1037)** | **(159)** | **(3001)** |  |  |
| **Net balance sheet carrying value** | **409699** | **41406** | **5482** | **4917** | **461504** |  |  |
| **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** | **208** | **309** | **159** | **731** |  |  |
| Credit cards | **205** | **277** | **121** | **–** | **603** |  |  |
| UK unsecured loans and overdrafts | **172** | **214** | **112** | **–** | **498** |  |  |
| UK Motor Finance<sup>2</sup> | **202** | **149** | **79** | **–** | **430** |  |  |
| Other | **17** | **11** | **35** | **–** | **63** |  |  |
| Retail | **651** | **859** | **656** | **159** | **2325** |  |  |
| Business and Commercial Banking | **92** | **165** | **120** | **–** | **377** |  |  |
| Corporate and Institutional Banking | **98** | **134** | **262** | **–** | **494** |  |  |
| Commercial Banking | **190** | **299** | **382** | **–** | **871** |  |  |
| Other | **–** | **–** | **–** | **–** | **–** |  |  |
| **Total** | **841** | **1158** | **1038** | **159** | **3196** |  |  |
| **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** | **7.7** | **3.1** | **0.2** |  |  |
| Credit cards | **1.3** | **11.9** | **44.2** | **–** | **3.4** |  |  |
| UK unsecured loans and overdrafts | **1.6** | **15.3** | **58.0** | **–** | **4.1** |  |  |
| UK Motor Finance | **1.4** | **5.3** | **56.0** | **–** | **2.5** |  |  |
| Other | **0.1** | **2.8** | **24.1** | **–** | **0.3** |  |  |
| Retail | **0.2** | **2.3** | **13.8** | **3.1** | **0.6** |  |  |
| Business and Commercial Banking | **0.4** | **5.0** | **12.3** | **–** | **1.3** |  |  |
| Corporate and Institutional Banking | **0.2** | **7.3** | **34.0** | **–** | **1.2** |  |  |
| Commercial Banking | **0.3** | **5.8** | **21.8** | **–** | **1.2** |  |  |
| Other | **–** | **–** | **–** | **–** | **–** |  |  |
| **Total** | **0.2** | **2.7** | **15.9** | **3.1** | **0.7** |  |  |

---

1Contains central fair value hedge accounting adjustments.

2UK Motor Finance includes £243 million relating to provisions against residual values of vehicles subject to finance leases.

---

| | |
|:---|:---|
| **36** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | 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>|
| At 31 December 2024 |  |  |  |  |  |  |  |
| 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 |
| ECL allowance on drawn balances | (730) | (1159) | (1107) | (187) | (3183) |  |  |
| Net balance sheet carrying value | 386787 | 43499 | 5601 | 6020 | 441907 |  |  |
| 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 |  |  |

---

1Contains central fair value hedge accounting adjustments.

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

---

| | |
|:---|:---|
| **37** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Stage 2 loans and advances to customers and expected credit loss allowance**

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Up-to-date** | **Up-to-date** | **Up-to-date** | **Up-to-date** | **Up-to-date** | **Up-to-date** | **1-30 days past due**<sup>2</sup> | **1-30 days past due**<sup>2</sup> | **1-30 days past due**<sup>2</sup> | **Over 30 days past due** | **Over 30 days past due** | **Over 30 days past due** |
|  | **PD movements** | **PD movements** | **PD movements** | **Other**<sup>1</sup> | **Other**<sup>1</sup> | **Other**<sup>1</sup> | **1-30 days past due**<sup>2</sup> | **1-30 days past due**<sup>2</sup> | **1-30 days past due**<sup>2</sup> | **Over 30 days past due** | **Over 30 days past due** | **Over 30 days past due** |
| **Gross**<br>**lending**<br>**£m** | **Gross**<br>**lending**<br>**£m** | **ECL**<sup>3</sup><br>**£m**<br>| **As % of**<br>**gross**<br>**lending** | **Gross**<br>**lending**<br>**£m** | **ECL**<sup>3</sup><br>**£m**<br>| **As % of**<br>**gross**<br>**lending** | **Gross**<br>**lending**<br>**£m** | **ECL**<sup>3</sup><br>**£m**<br>| **As % of**<br>**gross**<br>**lending** | **Gross**<br>**lending**<br>**£m** | **ECL**<sup>3</sup><br>**£m**<br>| **As % of**<br>**gross**<br>**lending** |
| **At 31 December 2025** | **At 31 December 2025** |  |  |  |  |  |  |  |  |  |  |  |
| UK mortgages | **26298** | **155** | **0.6** | **2032** | **13** | **0.6** | **1130** | **18** | **1.6** | **954** | **22** | **2.3** |
| Credit cards | **2048** | **202** | **9.9** | **144** | **36** | **25.0** | **94** | **23** | **24.5** | **40** | **16** | **40.0** |
| UK unsecured loans <br>and overdrafts<br>| **666** | **116** | **17.4** | **559** | **53** | **9.5** | **129** | **31** | **24.0** | **43** | **14** | **32.6** |
| UK Motor Finance | **1325** | **69** | **5.2** | **1293** | **40** | **3.1** | **136** | **29** | **21.3** | **32** | **11** | **34.4** |
| Other | **62** | **2** | **3.2** | **305** | **6** | **2.0** | **11** | **1** | **9.1** | **14** | **2** | **14.3** |
| Retail | **30399** | **544** | **1.8** | **4333** | **148** | **3.4** | **1500** | **102** | **6.8** | **1083** | **65** | **6.0** |
| Business and <br>Commercial Banking<br>| **2767** | **133** | **4.8** | **258** | **15** | **5.8** | **213** | **12** | **5.6** | **91** | **5** | **5.5** |
| Corporate and <br>Institutional Banking<br>| **1820** | **133** | **7.3** | **14** | **–** | **–** | **4** | **1** | **25.0** | **–** | **–** | **–** |
| Commercial Banking | **4587** | **266** | **5.8** | **272** | **15** | **5.5** | **217** | **13** | **6.0** | **91** | **5** | **5.5** |
| **Total** | **34986** | **810** | **2.3** | **4605** | **163** | **3.5** | **1717** | **115** | **6.7** | **1174** | **70** | **6.0** |
| At 31 December 2024 | At 31 December 2024 |  |  |  |  |  |  |  |  |  |  |  |
| UK mortgages | 28909 | 191 | 0.7 | 1869 | 38 | 2.0 | 1240 | 22 | 1.8 | 977 | 24 | 2.5 |
| Credit cards | 2174 | 248 | 11.4 | 149 | 43 | 28.9 | 83 | 24 | 28.9 | 35 | 16 | 45.7 |
| UK unsecured loans <br>and overdrafts<br>| 630 | 129 | 20.5 | 439 | 52 | 11.8 | 131 | 36 | 27.5 | 47 | 18 | 38.3 |
| UK Motor Finance | 1192 | 49 | 4.1 | 1029 | 30 | 2.9 | 141 | 25 | 17.7 | 36 | 11 | 30.6 |
| Other | 103 | 3 | 2.9 | 321 | 7 | 2.2 | 37 | 2 | 5.4 | 55 | 2 | 3.6 |
| Retail | 33008 | 620 | 1.9 | 3807 | 170 | 4.5 | 1632 | 109 | 6.7 | 1150 | 71 | 6.2 |
| Business and <br>Commercial Banking<br>| 2445 | 154 | 6.3 | 426 | 18 | 4.2 | 176 | 10 | 5.7 | 125 | 5 | 4.0 |
| Corporate and <br>Institutional Banking<br>| 1818 | 123 | 6.8 | 23 | 1 | 4.3 | 6 | – | – | 42 | 3 | 7.1 |
| Commercial Banking | 4263 | 277 | 6.5 | 449 | 19 | 4.2 | 182 | 10 | 5.5 | 167 | 8 | 4.8 |
| Total | 37271 | 897 | 2.4 | 4256 | 189 | 4.4 | 1814 | 119 | 6.6 | 1317 | 79 | 6.0 |

---

1Includes forbearance, client and product-specific indicators not reflected within quantitative PD assessments.

2Includes assets that have triggered PD movements, or other rules, given that being 1 to 29 days in arrears in and of itself is not a Stage 2 trigger.

3Expected credit loss allowance on loans and advances to customers (drawn and undrawn).

The Group's assessment of a significant increase in credit risk, and resulting categorisation of Stage 2, includes customers moving into early

arrears as well as a broader assessment that an up-to-date customer has experienced a level of deterioration in credit risk since origination. A

more sophisticated assessment is required for up-to-date customers, which varies across divisions and product type. This assessment

incorporates specific triggers such as a significant proportionate increase in probability of default relative to that at origination, recent arrears,

forbearance activity, internal watch lists and external bureau flags. Up to date exposures in Stage 2 are likely to show lower levels of expected

credit loss (ECL) allowance relative to those that have already moved into arrears given that an arrears status typically reflects a stronger

indication of future default and greater likelihood of credit losses.

---

| | |
|:---|:---|
| **38** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Movements in balances for the year ended 31 December 2025 (audited)**

The movement tables below are compiled by comparing the position at the end of the period to that at the beginning of the year. Transfers

between stages are deemed to have taken place at the start of the reporting period, with all other movements shown in the stage in which the

asset is held at the end of the period. Purchased or originated credit-impaired are not transferable.

Additions and repayments comprise new loans originated and repayments of outstanding balances throughout the reporting period.

The Group's impairment charge comprises impact of transfers between stages, other changes in credit quality and additions and repayments.

Advances written off have first been transferred to Stage 3 and then acquired a full allowance through other changes in credit quality.

Recoveries of amounts previously written off are shown at the full recovered value, with a corresponding entry in repayments and release of

allowance through other changes in credit quality.

Movements in the gross carrying amount for loans and advances to customers and for allowance for expected credit losses were as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** |
|  | **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **POCI**<br>**£m**<br>| **Total**<br>**£m**<br>| **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **POCI**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2025 | **387517** | **44658** | **6708** | **6207** | **445090** | **730** | **1159** | **1107** | **187** | **3183** |
| Exchange and other adjustments<sup>1</sup> | **1330** | **(16)** | **2** | **8** | **1324** | **(14)** | **(2)** | **19** | **45** | **48** |
| Transfers to Stage 1 | **7085** | **(6942)** | **(143)** |  | **–** | **239** | **(220)** | **(19)** |  | **–** |
| Transfers to Stage 2 | **(10398)** | **11182** | **(784)** |  | **–** | **(53)** | **114** | **(61)** |  | **–** |
| Transfers to Stage 3 | **(1556)** | **(1871)** | **3427** |  | **–** | **(35)** | **(157)** | **192** |  | **–** |
| Net change in ECL due to transfers |  |  |  |  |  | **(153)** | **257** | **350** |  | **454** |
| Impact of transfers between stages<sup>2</sup> | **(4869)** | **2369** | **2500** |  | **–** | **(2)** | **(6)** | **462** |  | **454** |
| Other changes in credit quality<sup>2</sup> |  |  |  |  |  | **27** | **(46)** | **675** | **11** | **667** |
| Additions and repayments | **26450** | **(4529)** | **(1606)** | **(1130)** | **19185** | **(12)** | **(29)** | **(141)** | **(75)** | **(257)** |
| Charge (credit) to the income <br>statement<br>|  |  |  |  |  | **13** | **(81)** | **996** | **(64)** | **864** |
| Disposals and derecognition | **–** | **–** | **–** | **–** | **–** | **–** | **–** | **–** | **–** | **–** |
| Advances written off |  |  | **(1294)** | **(9)** | **(1303)** |  |  | **(1294)** | **(9)** | **(1303)** |
| Recoveries of amounts previously <br>written off<br>|  |  | **209** | **–** | **209** |  |  | **209** | **–** | **209** |
| **At 31 December 2025** | **410428** | **42482** | **6519** | **5076** | **464505** | **729** | **1076** | **1037** | **159** | **3001** |
| **Allowance for**<br>**expected credit losses**<br>| **(729)** | **(1076)** | **(1037)** | **(159)** | **(3001)** |  |  |  |  |  |
| **Net carrying amount** | **409699** | **41406** | **5482** | **4917** | **461504** |  |  |  |  |  |
| *Drawn ECL coverage*<sup>3</sup> *(%)* | **0.2** | **2.5** | **15.9** | **3.1** | **0.6** |  |  |  |  |  |

---

1Exchange and other adjustments includes the impact of movements in exchange rates, discount unwind, derecognising assets as a result of modifications and adjustments in

respect of purchased or originated credit-impaired financial assets (POCI). Where a POCI asset's expected credit loss is less than its expected credit loss on purchase or origination,

the increase in its carrying value is recognised within gross loans, rather than as a negative impairment allowance.

2Includes a credit for methodology and model changes of £136 million, split by stage as £41 million credit for Stage 1, £47 million credit for Stage 2, £52 million credit for Stage 3 and

£4 million charge for POCI.

3Allowance for expected credit losses on loans and advances to customers as a percentage of gross loans and advances to customers.

The total allowance for expected credit losses includes £243 million (2024: £178 million) in respect of residual value impairment and voluntary

terminations within the Group's UK Motor Finance business.

---

| | |
|:---|:---|
| **39** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Movements in balances for the year ended 31 December 2024 (audited)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Gross carrying amount | Gross carrying amount | Gross carrying amount | Gross carrying amount | Gross carrying amount | Allowance for expected credit losses | Allowance for expected credit losses | Allowance for expected credit losses | Allowance for expected credit losses | Allowance for expected credit losses |
|  | Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>| Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>|
| At 1 January 2024 | 368859 | 52973 | 7131 | 7854 | 436817 | 885 | 1462 | 1133 | 213 | 3693 |
| Exchange and other adjustments<sup>1</sup> | (801) | (19) | (67) | 11 | (876) | (11) | (5) | 26 | 52 | 62 |
| Transfers to Stage 1 | 25616 | (25566) | (50) |  | – | 413 | (404) | (9) |  | – |
| Transfers to Stage 2 | (25376) | 25950 | (574) |  | – | (66) | 126 | (60) |  | – |
| Transfers to Stage 3 | (1102) | (2102) | 3204 |  | – | (20) | (177) | 197 |  | – |
| Net change in ECL due to transfers |  |  |  |  |  | (292) | 339 | 303 |  | 350 |
| Impact of transfers between stages<sup>2</sup> | (862) | (1718) | 2580 |  | – | 35 | (116) | 431 |  | 350 |
| Other changes in credit quality<sup>2</sup> |  |  |  |  |  | (127) | (65) | 708 | 66 | 582 |
| Additions and repayments | 21038 | (6098) | (1597) | (909) | 12434 | (47) | (105) | (193) | (71) | (416) |
| Charge (credit) to the income <br>statement<br>|  |  |  |  |  | (139) | (286) | 946 | (5) | 516 |
| Disposals and derecognition<sup>3</sup> | (717) | (480) | (366) | (694) | (2257) | (5) | (12) | (25) | (18) | (60) |
| Advances written off |  |  | (1173) | (55) | (1228) |  |  | (1173) | (55) | (1228) |
| Recoveries of amounts previously <br>written off<br>|  |  | 200 | – | 200 |  |  | 200 | – | 200 |
| At 31 December 2024 | 387517 | 44658 | 6708 | 6207 | 445090 | 730 | 1159 | 1107 | 187 | 3183 |
| Allowance for<br>expected credit losses<br>| (730) | (1159) | (1107) | (187) | (3183) |  |  |  |  |  |
| Net carrying amount | 386787 | 43499 | 5601 | 6020 | 441907 |  |  |  |  |  |
| Drawn ECL coverage<sup>4</sup> (%) | 0.2 | 2.6 | 16.5 | 3.0 | 0.7 |  |  |  |  |  |

---

1Exchange and other adjustments includes the impact of movements in exchange rates, discount unwind, derecognising assets as a result of modifications and adjustments in

respect of purchased or originated credit-impaired financial assets (POCI). Where a POCI asset's expected credit loss is less than its expected credit loss on purchase or origination,

the increase in its carrying value is recognised within gross loans, rather than as a negative impairment allowance.

2Includes a credit for methodology and model changes of £24 million, split by stage as £20 million credit for Stage 1, £2 million charge for Stage 2, £15 million charge for Stage 3 and

£21 million credit for POCI.

3Relates to the securitisations of primarily legacy Retail mortgages

4Allowance for expected credit losses on loans and advances to customers as a percentage of gross loans and advances to customers.

**Concentrations of exposure (audited)**

The Group's management of concentration risk includes portfolio controls on certain industries, sectors and products to reflect risk appetite as

well as individual, customer and bank limit risk tolerances. Credit policies and appetite statements are aligned to the Group's risk appetite and

restrict exposure to higher risk countries and potentially vulnerable sectors and asset classes. Exposures are monitored to prevent both an

excessive concentration of risk and single name concentrations. The Group's largest credit limits are regularly monitored by the Board Risk

Committee and reported in accordance with regulatory requirements. As part of its credit risk policy, the Group considers sustainability risk

(which incorporates environmental (including climate), social and governance) in the assessment of Commercial Banking facilities.

At 31 December 2025 the most significant concentrations of exposure were in mortgages.

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Agriculture, forestry and fishing | **5864** | 6424 |
| Construction | **3154** | 3366 |
| Energy and water supply | **5347** | 4694 |
| Financial, business and other services | **23508** | 23123 |
| Manufacturing | **5053** | 4469 |
| Mining and Quarrying | **314** | 205 |
| Personal: |  |  |
| Mortgages<sup>1</sup> | **344361** | 329270 |
| Lease financing<sup>2</sup> | **13909** | 13171 |
| Other | **31101** | 27966 |
| Postal and telecommunications | **3018** | 3081 |
| Property companies | **18630** | 18866 |
| Transport, distribution and hotels | **10246** | 10455 |
| **Total loans and advances to customers before allowance for impairment losses** | **464505** | 445090 |
| Allowance for impairment losses (note 19 to the consolidated financial statements, page 117) | **(3001)** | (3183) |
| **Total loans and advances to customers** | **461504** | 441907 |

---

1Includes both UK and overseas mortgage balances.

2Lease financing, previously reported in aggregate, is presented separately according to whether the lending is personal or non-personal. Non-personal lease financing is allocated to

the industries or sectors relevant to the exposure. Comparatives are represented on a consistent basis.

---

| | |
|:---|:---|
| **40** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Forbearance**

The basis of disclosure for forbearance is the CRR Article 47b definition. On a statutory basis, forbearance for the major retail portfolios

increased by £122 million to £3,672 million in 2025 (2024: £3,550 million).

Commercial Banking forborne loans and advances increased by £243 million to £2,453 million in 2025 (2024: £2,210 million), of which

£1,846 million were in Stage 3 (2024: £1,776 million). For information on customer treatments, see **page [31](#i699a03b3579a4d1ba970905a768d5368_50227)**.

**Credit quality of loans and advances to customers (audited)**

The analysis of lending has been prepared based on the division in which the asset is held, with the business segment in which the exposure is

recorded reflected in the ratings system applied. The internal credit ratings systems used by the Group differ between Retail and Commercial,

reflecting the characteristics of these exposures and the way that they are managed internally; these credit ratings are set out below. All

probabilities of default (PDs) include forward-looking information and are based on 12-month values, with the exception of credit-impaired.

---

| | | | |
|:---|:---|:---|:---|
| **Retail** |  | **Commercial** |  |
| **Quality classification** | **IFRS 9 PD range** | **Quality classification** | **IFRS 9 PD range** |
| RMS 1–3 | 0.00–0.80% | CMS 1–5 | 0.000–0.100% |
| RMS 4–6 | 0.81–4.50% | CMS 6–10 | 0.101–0.500% |
| RMS 7–9 | 4.51–14.00% | CMS 11–14 | 0.501–3.000% |
| RMS 10 | 14.01–20.00% | CMS 15–18 | 3.001–20.000% |
| RMS 11–13 | 20.01–99.99% | CMS 19 | 20.001–99.999% |
| RMS 14 | 100.00% | CMS 20–23 | 100.000% |

---

Stage 3 assets include balances of £235 million (2024: £297 million) (with outstanding amounts due of £992 million (2024: £971 million)) which

have been subject to a partial write-off and where the Group continues to enforce recovery action.

There were no modifications of Stage 2 and Stage 3 assets during the year (2024: none). No material gain or loss was recognised by the Group.

As at 31 December 2025 there were no (2024: none) significant assets that had been previously modified while classified as Stage 2 or Stage 3

and were classified as Stage 1.

---

| | |
|:---|:---|
| **41** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Drawn exposures** | **Drawn exposures** | **Drawn exposures** | **Drawn exposures** | **Drawn exposures** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** |
| **Gross drawn exposures and expected credit** <br>**loss allowance (audited)**<br>| **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **POCI**<br>**£m**<br>| **Total**<br>**£m**<br>| **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **POCI**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |  |  |  |  |  |  |
| *Retail – UK mortgages* |  |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | **276020** | **19717** | **–** | **–** | **295737** | **43** | **99** | **–** | **–** | **142** |
| RMS 4–6 | **8034** | **6274** | **–** | **–** | **14308** | **6** | **34** | **–** | **–** | **40** |
| RMS 7–9 | **154** | **1193** | **–** | **–** | **1347** | **1** | **12** | **–** | **–** | **13** |
| RMS 10 | **23** | **338** | **–** | **–** | **361** | **–** | **5** | **–** | **–** | **5** |
| RMS 11–13 | **76** | **2892** | **–** | **–** | **2968** | **1** | **57** | **–** | **–** | **58** |
| RMS 14 | **–** | **–** | **4016** | **5076** | **9092** | **–** | **–** | **309** | **159** | **468** |
|  | **284307** | **30414** | **4016** | **5076** | **323813** | **51** | **207** | **309** | **159** | **726** |
| *Retail – credit cards* |  |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | **5708** | **6** | **–** | **–** | **5714** | **11** | **–** | **–** | **–** | **11** |
| RMS 4–6 | **8221** | **1108** | **–** | **–** | **9329** | **85** | **44** | **–** | **–** | **129** |
| RMS 7–9 | **1321** | **793** | **–** | **–** | **2114** | **48** | **87** | **–** | **–** | **135** |
| RMS 10 | **8** | **140** | **–** | **–** | **148** | **1** | **26** | **–** | **–** | **27** |
| RMS 11–13 | **–** | **279** | **–** | **–** | **279** | **–** | **91** | **–** | **–** | **91** |
| RMS 14 | **–** | **–** | **274** | **–** | **274** | **–** | **–** | **121** | **–** | **121** |
|  | **15258** | **2326** | **274** | **–** | **17858** | **145** | **248** | **121** | **–** | **514** |
| *Retail – UK unsecured loans and overdrafts* | *Retail – UK unsecured loans and overdrafts* |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | **1376** | **2** | **–** | **–** | **1378** | **4** | **–** | **–** | **–** | **4** |
| RMS 4–6 | **8130** | **624** | **–** | **–** | **8754** | **106** | **34** | **–** | **–** | **140** |
| RMS 7–9 | **1062** | **324** | **–** | **–** | **1386** | **37** | **33** | **–** | **–** | **70** |
| RMS 10 | **26** | **110** | **–** | **–** | **136** | **2** | **19** | **–** | **–** | **21** |
| RMS 11–13 | **7** | **337** | **–** | **–** | **344** | **1** | **99** | **–** | **–** | **100** |
| RMS 14 | **–** | **–** | **193** | **–** | **193** | **–** | **–** | **112** | **–** | **112** |
|  | **10601** | **1397** | **193** | **–** | **12191** | **150** | **185** | **112** | **–** | **447** |
| *Retail – UK Motor Finance* |  |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | **8531** | **910** | **–** | **–** | **9441** | **135** | **22** | **–** | **–** | **157** |
| RMS 4–6 | **5083** | **1275** | **–** | **–** | **6358** | **63** | **52** | **–** | **–** | **115** |
| RMS 7–9 | **606** | **359** | **–** | **–** | **965** | **3** | **25** | **–** | **–** | **28** |
| RMS 10 | **–** | **77** | **–** | **–** | **77** | **–** | **10** | **–** | **–** | **10** |
| RMS 11–13 | **2** | **165** | **–** | **–** | **167** | **–** | **39** | **–** | **–** | **39** |
| RMS 14 | **–** | **–** | **141** | **–** | **141** | **–** | **–** | **79** | **–** | **79** |
|  | **14222** | **2786** | **141** | **–** | **17149** | **201** | **148** | **79** | **–** | **428** |
| *Retail – other* |  |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | **18554** | **3** | **–** | **–** | **18557** | **7** | **–** | **–** | **–** | **7** |
| RMS 4–6 | **2616** | **213** | **–** | **–** | **2829** | **10** | **7** | **–** | **–** | **17** |
| RMS 7–9 | **75** | **86** | **–** | **–** | **161** | **–** | **1** | **–** | **–** | **1** |
| RMS 10 | **–** | **57** | **–** | **–** | **57** | **–** | **1** | **–** | **–** | **1** |
| RMS 11–13 | **–** | **33** | **–** | **–** | **33** | **–** | **1** | **–** | **–** | **1** |
| RMS 14 | **–** | **–** | **145** | **–** | **145** | **–** | **–** | **35** | **–** | **35** |
|  | **21245** | **392** | **145** | **–** | **21782** | **17** | **10** | **35** | **–** | **62** |
| *Total Retail* | **345633** | **37315** | **4769** | **5076** | **392793** | **564** | **798** | **656** | **159** | **2177** |
| *Commercial Banking* |  |  |  |  |  |  |  |  |  |  |
| CMS 1–5 | **17263** | **1** | **–** | **–** | **17264** | **3** | **–** | **–** | **–** | **3** |
| CMS 6–10 | **13805** | **34** | **–** | **–** | **13839** | **16** | **–** | **–** | **–** | **16** |
| CMS 11–14 | **31164** | **1948** | **–** | **–** | **33112** | **107** | **41** | **–** | **–** | **148** |
| CMS 15–18 | **2318** | **2479** | **–** | **–** | **4797** | **39** | **144** | **–** | **–** | **183** |
| CMS 19 | **–** | **705** | **–** | **–** | **705** | **–** | **93** | **–** | **–** | **93** |
| CMS 20–23 | **–** | **–** | **1750** | **–** | **1750** | **–** | **–** | **381** | **–** | **381** |
|  | **64550** | **5167** | **1750** | **–** | **71467** | **165** | **278** | **381** | **–** | **824** |
| *Other*<sup>1</sup> | **245** | **–** | **–** | **–** | **245** | **–** | **–** | **–** | **–** | **–** |
| **Total loans and advances to** <br>**customers**<br>| **410428** | **42482** | **6519** | **5076** | **464505** | **729** | **1076** | **1037** | **159** | **3001** |

---

1Drawn exposures include centralised fair value hedge accounting adjustments.

---

| | |
|:---|:---|
| **42** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Drawn exposures | Drawn exposures | Drawn exposures | Drawn exposures | Drawn exposures | Allowance for expected credit losses | Allowance for expected credit losses | Allowance for expected credit losses | Allowance for expected credit losses | Allowance for expected credit losses |
| Gross drawn exposures and expected credit <br>loss allowance (audited)<br>| Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>| Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>|
| At 31 December 2024 |  |  |  |  |  |  |  |  |  |  |
| *Retail – UK mortgages* |  |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | 261101 | 21213 | – | – | 282314 | 46 | 143 | – | – | 189 |
| RMS 4–6 | 8487 | 7384 | – | – | 15871 | 6 | 51 | – | – | 57 |
| RMS 7–9 | 112 | 1296 | – | – | 1408 | – | 15 | – | – | 15 |
| RMS 10 | 17 | 273 | – | – | 290 | – | 5 | – | – | 5 |
| RMS 11–13 | 43 | 2829 | – | – | 2872 | 1 | 59 | – | – | 60 |
| RMS 14 | – | – | 4166 | 6207 | 10373 | – | – | 335 | 187 | 522 |
|  | 269760 | 32995 | 4166 | 6207 | 313128 | 53 | 273 | 335 | 187 | 848 |
| *Retail – credit cards* |  |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | 5058 | 10 | – | – | 5068 | 11 | 1 | – | – | 12 |
| RMS 4–6 | 7231 | 1129 | – | – | 8360 | 87 | 52 | – | – | 139 |
| RMS 7–9 | 1242 | 859 | – | – | 2101 | 51 | 107 | – | – | 158 |
| RMS 10 | 3 | 149 | – | – | 152 | – | 31 | – | – | 31 |
| RMS 11–13 | – | 294 | – | – | 294 | – | 106 | – | – | 106 |
| RMS 14 | – | – | 265 | – | 265 | – | – | 133 | – | 133 |
|  | 13534 | 2441 | 265 | – | 16240 | 149 | 297 | 133 | – | 579 |
| *Retail – UK unsecured loans and overdrafts* | *Retail – UK unsecured loans and overdrafts* |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | 1207 | 2 | – | – | 1209 | 3 | – | – | – | 3 |
| RMS 4–6 | 7020 | 484 | – | – | 7504 | 98 | 27 | – | – | 125 |
| RMS 7–9 | 1047 | 307 | – | – | 1354 | 40 | 36 | – | – | 76 |
| RMS 10 | 31 | 111 | – | – | 142 | 3 | 22 | – | – | 25 |
| RMS 11–13 | 9 | 343 | – | – | 352 | 1 | 112 | – | – | 113 |
| RMS 14 | – | – | 175 | – | 175 | – | – | 118 | – | 118 |
|  | 9314 | 1247 | 175 | – | 10736 | 145 | 197 | 118 | – | 460 |
| *Retail – UK Motor Finance* |  |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | 8967 | 760 | – | – | 9727 | 112 | 16 | – | – | 128 |
| RMS 4–6 | 4487 | 1169 | – | – | 5656 | 55 | 40 | – | – | 95 |
| RMS 7–9 | 440 | 247 | – | – | 687 | 2 | 17 | – | – | 19 |
| RMS 10 | – | 46 | – | – | 46 | – | 6 | – | – | 6 |
| RMS 11–13 | 3 | 176 | – | – | 179 | – | 36 | – | – | 36 |
| RMS 14 | – | – | 124 | – | 124 | – | – | 72 | – | 72 |
|  | 13897 | 2398 | 124 | – | 16419 | 169 | 115 | 72 | – | 356 |
| *Retail – other* |  |  |  |  |  |  |  |  |  |  |
| RMS 1–3 | 15163 | 238 | – | – | 15401 | 4 | 4 | – | – | 8 |
| RMS 4–6 | 2132 | 190 | – | – | 2322 | 11 | 7 | – | – | 18 |
| RMS 7–9 | 78 | 72 | – | – | 150 | – | 3 | – | – | 3 |
| RMS 10 | – | 7 | – | – | 7 | – | – | – | – | – |
| RMS 11–13 | – | 9 | – | – | 9 | – | – | – | – | – |
| RMS 14 | – | – | 147 | – | 147 | – | – | 37 | – | 37 |
|  | 17373 | 516 | 147 | – | 18036 | 15 | 14 | 37 | – | 66 |
| *Total Retail* | 323878 | 39597 | 4877 | 6207 | 374559 | 531 | 896 | 695 | 187 | 2309 |
| *Commercial Banking* |  |  |  |  |  |  |  |  |  |  |
| CMS 1–5 | 13611 | – | – | – | 13611 | 1 | – | – | – | 1 |
| CMS 6–10 | 13819 | 53 | – | – | 13872 | 11 | – | – | – | 11 |
| CMS 11–14 | 31534 | 1052 | – | – | 32586 | 121 | 21 | – | – | 142 |
| CMS 15–18 | 4997 | 3234 | – | – | 8231 | 66 | 165 | – | – | 231 |
| CMS 19 | – | 722 | – | – | 722 | – | 77 | – | – | 77 |
| CMS 20–23 | – | – | 1831 | – | 1831 | – | – | 412 | – | 412 |
|  | 63961 | 5061 | 1831 | – | 70853 | 199 | 263 | 412 | – | 874 |
| *Other*<sup>1</sup> | (322) | – | – | – | (322) | – | – | – | – | – |
| Total loans and advances to customers | 387517 | 44658 | 6708 | 6207 | 445090 | 730 | 1159 | 1107 | 187 | 3183 |

---

1Drawn exposures include centralised fair value hedge accounting adjustments.

---

| | |
|:---|:---|
| **43** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Retail credit performance**

Portfolio overview

• The Retail portfolio has continued to deliver strong credit

performance in 2025 and remains well positioned despite

macroeconomic headwinds. Consumers continue to show strength

in the context of inflationary pressures

• Robust risk management remains firmly embedded, underpinned

by strong affordability and indebtedness controls for lending and a

prudent risk appetite approach. Lending strategies are assessed

regularly and are calibrated to reflect the latest macroeconomic

conditions

• In UK mortgages, new to arrears and flow to default rates have

improved during 2025, while in the unsecured portfolios and UK

Motor Finance, new to arrears and flows to default have remained

low and stable

• The Retail impairment charge in 2025 was £734 million, higher

than the £457 million charge for 2024 which benefitted from a

large release from improvements in the Group's macroeconomic

outlook. Excluding macroeconomic updates, the impairment

charge is slightly lower than 2024 due to continued stability in

flows to default with additional write-backs from model

refinements

• Retail customer related ECL allowance as a percentage of drawn

loans and advances (coverage) has reduced to 0.6% (31 December

2024: 0.7%)

• Strong credit performance and higher portfolio balances have

reduced Stage 2 loans and advances to 9.5% of the Retail portfolio

(31 December 2024: 10.6%). Stage 2 ECL coverage reduced to 2.3%

(31 December 2024: 2.4%)

• Stable and low flows to default and higher portfolio balances have

also resulted in a reduction in Retail Stage 3 loans and advances to

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

• Stage 3 ECL coverage reduced to 13.8% (31 December 2024:

14.3%), largely due to continued house price increases

UK mortgages

• The UK mortgages portfolio increased to £323.8 billion

(31 December 2024: £313.1 billion), driven by sustained customer

demand

• New to arrears in the UK mortgages portfolio improved during

2025. The portfolio remains well positioned with a strong loan to

value (LTV) profile. Portfolio quality improved during the year,

supported by robust affordability and credit controls with higher

risk legacy vintage balances continuing to reduce

• The impairment credit of £60 million for 2025 is lower than the

credit of £194 million in 2024. Both years included favourable

updates to the macroeconomic outlook, predominantly via

continued growth in house prices, however this benefit was more

material in 2024. Excluding macroeconomic updates, the

impairment charge is favourable year-on-year due to improving

flow to default rates

• Stage 2 loans and advances have reduced to 9.4% of total UK

mortgages balances (31 December 2024: 10.5%) following the

removal of non-modelled adjustments previously applied to UK

Bank Rate and CPI inflation in the severe downside scenario,

combined with strong credit performance and higher portfolio

balances

• Continued strong credit performance and higher portfolio balances

also resulted in a reduction in Stage 3 loans and advances to 1.2%

(31 December 2024: 1.3%), with continued growth in house prices

resulting in a reduction in Stage 3 ECL coverage to 7.7% (31

December 2024: 8.0%)

Credit cards

• Credit card balances increased to £17.9 billion (2024: £16.2 billion),

driven by higher demand for new cards and increased customer

spending

• The credit card portfolio is a prime book. New to arrears continue

to be low and repayment rates remain strong

• The impairment charge of £321 million for 2025 is higher than the

charge of £270 million in 2024, due to updates to the Group's

macroeconomic outlook, notably upwards revisions to the

unemployment forecast, compared to favourable updates in 2024.

Portfolio performance remained stable with additional write-backs

from model refinements related to loss rates, and an unsecured

debt sale completed in the fourth quarter. Total ECL coverage is

lower at 3.4% (31 December 2024: 4.2%)

• Stable credit performance and higher portfolio balances resulted

in a reduction in Stage 2 loans and advances to 13.0% of total

credit card balances (31 December 2024: 15.0%), with lower Stage

2 ECL coverage at 11.9% (31 December 2024: 13.6%)

• Similarly, Stage 3 loans and advances reduced slightly to 1.5%

(31 December 2024: 1.6%) with model refinements also

contributing to reduce Stage 3 ECL coverage to 44.2%

(31 December 2024: 50.2%)

UK unsecured loans and overdrafts

• UK unsecured loans and overdraft balances increased to £12.2

billion (2024: £10.7 billion) driven by organic balance growth and

lower repayments

• The impairment charge of £257 million for 2025 is lower than the

charge of £272 million for 2024, largely due to loss rate model

refinements. ECL and coverage are both lower at a total level and

across all stages

• Strong credit performance and higher portfolio balances within

unsecured loans resulted in a slight reduction in Stage 2 loans and

advances to 11.5% of total balances (31 December 2024: 11.6%),

with Stage 2 ECL coverage lower at 15.3% (31 December 2024:

18.8%)

• Similarly, Stage 3 loans and advances remained stable at 1.6%

(31 December 2024: 1.6%), with model refinements also

contributing to reduce Stage 3 ECL coverage to 58.0%

(31 December 2024: 67.4%)

UK Motor Finance

• UK Motor Finance balances (which exclude operating leases)

increased to £17.1 billion (2024: £16.4 billion), 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. Volatility in used vehicle values have primarily driven an

ECL increase to £243 million as at 31 December 2025 (31 December

2024: £178 million)

• The impairment charge of £212 million for 2025 is higher than the

charge of £116 million for 2024, reflecting increased RV and VT

charges year-on-year. Increased RV and VT provisions drove

increases to Stage 2 ECL coverage to 5.3% (31 December 2024:

4.8%), with Stage 2 loans and advances increasing slightly to 16.2%

(31 December 2024: 14.6%)

• Stage 3 loans and advances remained stable at 0.8% (31 December

2024: 0.8%), with Stage 3 ECL coverage reducing slightly to 56.0%

(31 December 2024: 58.1%)

Other

• Other Retail loans and advances increased to £21.8 billion

(31 December 2024: £18.0 billion), largely driven by growth in the

European business

• Stage 2 loans and advances reduced to 1.8% (31 December 2024:

2.9%), due to higher portfolio balances, with coverage across

stages broadly stable. Stage 3 loans and advances remained stable

at 0.7% of total loans and advances (31 December 2024: 0.8%)

• There was a £4 million impairment charge in 2025, compared to a

£7 million credit in 2024

---

| | |
|:---|:---|
| **44** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

Retail UK mortgage balance movements (audited)

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Gross carrying amount** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** | **Allowance for expected credit losses** |
|  | **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **POCI**<br>**£m**<br>| **Total**<br>**£m**<br>| **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **POCI**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **Retail – UK mortgages** |  |  |  |  |  |  |  |  |  |  |
| At 1 January 2025 | **269760** | **32995** | **4166** | **6207** | **313128** | **53** | **273** | **335** | **187** | **848** |
| Exchange and other adjustments<sup>1</sup> | **–** | **–** | **–** | **7** | **7** | **(1)** | **(1)** | **36** | **45** | **79** |
| Transfers to Stage 1 | **3892** | **(3850)** | **(42)** |  | **–** | **29** | **(27)** | **(2)** |  | **–** |
| Transfers to Stage 2 | **(5474)** | **6053** | **(579)** |  | **–** | **(2)** | **25** | **(23)** |  | **–** |
| Transfers to Stage 3 | **(399)** | **(999)** | **1398** |  | **–** | **–** | **(19)** | **19** |  | **–** |
| Net change in ECL due to transfers |  |  |  |  |  | **(29)** | **27** | **60** |  | **58** |
| Impact of transfers between stages<sup>2</sup> | **(1981)** | **1204** | **777** |  | **–** | **(2)** | **6** | **54** |  | **58** |
| Other changes in credit quality<sup>2</sup> |  |  |  |  |  | **(6)** | **(33)** | **89** | **11** | **61** |
| Additions and repayments | **16528** | **(3785)** | **(794)** | **(1129)** | **10820** | **7** | **(38)** | **(72)** | **(75)** | **(178)** |
| Charge (credit) to the income <br>statement<br>|  |  |  |  |  | **(1)** | **(65)** | **71** | **(64)** | **(59)** |
| Advances written off |  |  | **(139)** | **(9)** | **(148)** |  |  | **(139)** | **(9)** | **(148)** |
| Recoveries of amounts previously <br>written off<br>|  |  | **6** | **–** | **6** |  |  | **6** | **–** | **6** |
| **At 31 December 2025** | **284307** | **30414** | **4016** | **5076** | **323813** | **51** | **207** | **309** | **159** | **726** |
| **Allowance for expected credit losses** | **(51)** | **(207)** | **(309)** | **(159)** | **(726)** |  |  |  |  |  |
| **Net carrying amount** | **284256** | **30207** | **3707** | **4917** | **323087** |  |  |  |  |  |
| *Drawn ECL coverage*<sup>3</sup> *(%)* | **–** | **0.7** | **7.7** | **3.1** | **0.2** |  |  |  |  |  |

---

1Exchange and other adjustments includes the impact of movements in exchange rates, discount unwind, derecognising assets as a result of modifications and adjustments in

respect of purchased or originated credit-impaired financial assets (POCI). Where a POCI asset's expected credit loss is less than its expected credit loss on purchase or origination,

the increase in its carrying value is recognised within gross loans, rather than as a negative impairment allowance.

2Includes a credit for methodology and model changes of £12 million, split by stage as £22 million credit for Stage 2, £6 million charge for Stage 3 and £4million charge for POCI.

3Allowance for expected credit losses on loans and advances to customers as a percentage of gross loans and advances to customers.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Gross carrying amount | Gross carrying amount | Gross carrying amount | Gross carrying amount | Gross carrying amount | Allowance for expected credit losses | Allowance for expected credit losses | Allowance for expected credit losses | Allowance for expected credit losses | Allowance for expected credit losses |
|  | Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>| Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>|
| **Retail – UK mortgages** |  |  |  |  |  |  |  |  |  |  |
| At 1 January 2024 | 256596 | 38533 | 4337 | 7854 | 307320 | 161 | 374 | 357 | 213 | 1105 |
| Exchange and other adjustments<sup>1</sup> | – | – | – | 12 | 12 | 1 | – | 50 | 53 | 104 |
| Transfers to Stage 1 | 21133 | (21105) | (28) |  | – | 135 | (132) | (3) |  | – |
| Transfers to Stage 2 | (21077) | 21473 | (396) |  | – | (11) | 32 | (21) |  | – |
| Transfers to Stage 3 | (299) | (1341) | 1640 |  | – | – | (39) | 39 |  | – |
| Net change in ECL due to transfers |  |  |  |  |  | (122) | 114 | 56 |  | 48 |
| Impact of transfers between stages<sup>2</sup> | (243) | (973) | 1216 |  | – | 2 | (25) | 71 |  | 48 |
| Other changes in credit quality<sup>2</sup> |  |  |  |  |  | (94) | (19) | 26 | 66 | (21) |
| Additions and repayments | 13901 | (4143) | (956) | (910) | 7892 | (16) | (48) | (79) | (72) | (215) |
| Charge (credit) to the income <br>statement<br>|  |  |  |  |  | (108) | (92) | 18 | (6) | (188) |
| Disposals and derecognition<sup>3</sup> | (494) | (422) | (366) | (694) | (1976) | (1) | (9) | (25) | (18) | (53) |
| Advances written off |  |  | (70) | (55) | (125) |  |  | (70) | (55) | (125) |
| Recoveries of amounts previously <br>written off<br>|  |  | 5 | – | 5 |  |  | 5 | – | 5 |
| At 31 December 2024 | 269760 | 32995 | 4166 | 6207 | 313128 | 53 | 273 | 335 | 187 | 848 |
| Allowance for expected credit losses | (53) | (273) | (335) | (187) | (848) |  |  |  |  |  |
| Net carrying amount | 269707 | 32722 | 3831 | 6020 | 312280 |  |  |  |  |  |
| *Drawn ECL coverage*<sup>4</sup> *(%)* | – | 0.8 | 8.0 | 3.0 | 0.3 |  |  |  |  |  |

---

1Exchange and other adjustments includes the impact of movements in exchange rates, discount unwind, derecognising assets as a result of modifications and adjustments in

respect of purchased or originated credit-impaired financial assets (POCI). Where a POCI asset's expected credit loss is less than its expected credit loss on purchase or origination,

the increase in its carrying value is recognised within gross loans, rather than as a negative impairment allowance.

2Includes a charge for methodology and model changes of £7 million, split by stage as £1 million charge for Stage 1, £9 million charge for Stage 2, £18 million charge for Stage 3 and

£21 million credit for POCI.

3Relates to the securitisations of primarily legacy Retail mortgages.

4Allowance for expected credit losses on loans and advances to customers as a percentage of gross loans and advances to customers.

---

| | |
|:---|:---|
| **45** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

UK mortgages product analysis (statutory basis)<sup>1</sup>

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | At 31 December 2024<sup>1</sup> | At 31 December 2024<sup>1</sup> | At 31 December 2024<sup>1</sup> | At 31 December 2024<sup>1</sup> |
|  | **Mainstream** | **Buy-to-let** | **Specialist** | **Total** | Mainstream | Buy-to-let | Specialist | Total |
| **UK mortgages loans and advances to customers** <br>**(£m)**<br>| **273106** | **47858** | **2849** | **323813** | 261630 | 47984 | 3514 | 313128 |
| **UK mortgages greater than 3 months in arrears**<sup>2</sup> |  |  |  |  |  |  |  |  |
| Number of cases | **17070** | **3351** | **2208** | **22629** | 20112 | 4511 | 2818 | 27441 |
| Total mortgages accounts (%) | **1.0** | **1.0** | **8.6** | **1.1** | 1.2 | 1.2 | 9.2 | 1.3 |
| Value of loans<sup>3</sup> (£m) | **2518** | **486** | **397** | **3401** | 2850 | 623 | 504 | 3977 |
| Total mortgage balances (%) | **0.9** | **1.0** | **13.9** | **1.1** | 1.1 | 1.3 | 14.3 | 1.3 |
| **Loan to value**  |  |  |  |  |  |  |  |  |
| Less than 60% | **52.0** | **64.1** | **90.0** | **54.2** | 55.6 | 68.5 | 89.4 | 57.9 |
| 60% to 70% | **15.4** | **21.4** | **6.4** | **16.2** | 16.7 | 21.1 | 6.9 | 17.2 |
| 70% to 80% | **15.5** | **14.4** | **2.0** | **15.2** | 14.1 | 10.3 | 2.0 | 13.4 |
| 80% to 90% | **14.4** | **0.1** | **0.9** | **12.2** | 11.9 | 0.1 | 0.9 | 10.0 |
| 90% to 100% | **2.7** | **–** | **0.4** | **2.2** | 1.7 | – | 0.5 | 1.5 |
| Greater than 100% | **–** | **–** | **0.3** | **–** | – | – | 0.3 | – |
| Total (%) | **100.0** | **100.0** | **100.0** | **100.0** | 100.0 | 100.0 | 100.0 | 100.0 |
| **Average loan to value**<sup>4</sup> | **Average loan to value**<sup>4</sup> | **Average loan to value**<sup>4</sup> | **Average loan to value**<sup>4</sup> | **Average loan to value**<sup>4</sup> |  |  |  |  |
| Stock of residential mortgages (%) | **44.7** | **48.2** | **32.0** | **45.0** | 43.2 | 47.3 | 32.9 | 43.6 |
| New residential lending in the period (%) | **64.7** | **58.8** | **n/a** | **64.1** | 64.1 | 56.4 | n/a | 63.2 |

---

1This table is now presented on a statutory basis. The comparative period has been represented on the same basis.

2Excluding repossessions.

3Value 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.

4Average loan to value is calculated as total loans and advances as a percentage of the total indexed collateral of these loans and advances.

Interest-only UK mortgages

The Group provides interest-only mortgages to owner occupier mortgage customers whereby only payments of interest are made for the term

of the mortgage with the customer responsible for repaying the principal outstanding at the end of the loan term. At 31 December 2025, owner

occupier interest-only balances as a proportion of total owner occupier balances had reduced to 11.4% (31 December 2024: 12.5%). The average

loan to value remained low at 37.5% (31 December 2024: 36.5%).

For existing interest-only mortgages, a contact strategy is in place during the term of the mortgage to ensure that customers are aware of their

obligations to repay the principal upon maturity of the loan. Treatment strategies are in place to help customers anticipate and plan for

repayment of capital at maturity and support those who may have difficulty in repaying the principal amount. A dedicated specialist team

supports customers who have passed their contractual maturity date and are unable to fully repay the principal. A range of treatments are

offered to customers based on their individual circumstances to create fair and sustainable outcomes.

**Analysis of owner occupier interest-only UK mortgages**

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec 2025** | At 31 Dec 2024 |
| **Interest-only balances (£m)** | **31319** | 33023 |
| Stage 1 (%) | **46.8** | 39.4 |
| Stage 2 (%)<sup>1</sup> | **39.0** | 44.5 |
| Stage 3 (%) | **5.2** | 5.5 |
| Purchased or originated credit-impaired (%) | **9.0** | 10.6 |
| Average loan to value (%) | **37.5** | 36.5 |
| **Maturity profile (£m)** |  |  |
| Due | **1198** | 1541 |
| Within 1 year | **970** | 1012 |
| 2 to 5 years | **7740** | 8209 |
| 6 to 10 years | **9085** | 10772 |
| Greater than 10 years | **12326** | 11489 |
| **Past term interest-only balances (£m)**<sup>2</sup> | **1196** | 1490 |
| Stage 1 (%) | **0.5** | 0.3 |
| Stage 2 (%) | **8.4** | 8.6 |
| Stage 3 (%) | **52.2** | 51.8 |
| Purchased or originated credit-impaired (%) | **38.9** | 39.3 |
| Average loan to value (%) | **36.9** | 35.2 |
| Negative equity (%) | **2.2** | 2.5 |

---

1Includes adoption of a new ECL model, where the significant increase in credit risk (SICR) quantitative Stage 2 trigger is now defined as a doubling of an account's PD since

origination.

2 Balances where all interest-only elements have moved past term. Some may subsequently have had a term extension, so are no longer classed as due.

---

| | |
|:---|:---|
| **46** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Collateral held as security for Retail loans and advances to customers (audited)**

UK mortgages

An analysis by loan-to-value ratio of the Group's UK residential mortgage lending is provided below. The value of collateral used in determining

the loan-to-value ratios has been estimated based upon the last actual valuation, adjusted to take into account subsequent movements in

house prices. The market takes into account many factors, including environmental considerations such as flood risk and energy efficient

additions, in arriving at the value of a home.

In some circumstances, where the discounted value of the estimated net proceeds from the liquidation of collateral (i.e. net of costs, expected

haircuts and anticipated changes in the value of the collateral to the point of sale) is greater than the estimated exposure at default, no credit

losses are expected and no ECL allowance is recognised.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | 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 1** <br>**(£m)**<br>| **Stage 2** <br>**(£m)**<br>| **Stage 3** <br>**(£m)**<br>| **POCI** <br>**(£m)**<br>| **Total** <br>**(£m)**<br>|
| **Gross drawn exposures** |  |  |  |  |  |  |  |  |  |  |
| Less than 60% | **142960** | **25099** | **2811** | **4343** | **175213** | 145055 | 27851 | 3014 | 5066 | 180986 |
| 60% to 70% | **48852** | **2647** | **620** | **451** | **52570** | 49746 | 2954 | 643 | 638 | 53981 |
| 70% to 80% | **47327** | **1324** | **321** | **158** | **49130** | 40292 | 1168 | 307 | 232 | 41999 |
| 80% to 90% | **38070** | **1181** | **165** | **62** | **39478** | 30215 | 898 | 123 | 109 | 31345 |
| 90% to 100% | **7053** | **156** | **46** | **22** | **7277** | 4420 | 109 | 36 | 63 | 4628 |
| Greater than 100% | **45** | **7** | **53** | **40** | **145** | 32 | 15 | 43 | 99 | 189 |
| **Total** | **284307** | **30414** | **4016** | **5076** | **323813** | 269760 | 32995 | 4166 | 6207 | 313128 |
| **Allowance for expected** <br>**credit losses**<br>|  |  |  |  |  |  |  |  |  |  |
| Less than 60% | **11** | **128** | **105** | **62** | **306** | 14 | 165 | 130 | 66 | 375 |
| 60% to 70% | **10** | **36** | **69** | **34** | **149** | 11 | 51 | 77 | 36 | 175 |
| 70% to 80% | **15** | **20** | **56** | **23** | **114** | 13 | 30 | 59 | 27 | 129 |
| 80% to 90% | **16** | **19** | **37** | **15** | **87** | 13 | 23 | 32 | 17 | 85 |
| 90% to 100% | **3** | **4** | **14** | **6** | **27** | 2 | 3 | 13 | 10 | 28 |
| Greater than 100% | **–** | **1** | **28** | **19** | **48** | – | 1 | 24 | 31 | 56 |
| **Total** | **55** | **208** | **309** | **159** | **731** | 53 | 273 | 335 | 187 | 848 |

---

UK mortgages energy performance certificate analysis

The energy performance certificate (EPC) profile of the security associated with the Group's UK mortgage portfolio is shown below:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **EPC profile** | **A**<br>**£m**<br>| **B**<br>**£m**<br>| **C**<br>**£m**<br>| **D**<br>**£m**<br>| **E**<br>**£m**<br>| **F**<br>**£m**<br>| **G**<br>**£m**<br>| **Unrated** <br>**properties**<br>**£m**<br>| **Total** |
| **At 31 December 2025** | **2087** | **47170** | **77625** | **102066** | **32690** | **6124** | **1361** | **54690** | **323813** |
| At 31 December 2024 | 1113 | 40469 | 68128 | 97392 | 33021 | 6293 | 1370 | 65342 | 313128 |

---

The above data is sourced using the latest available government EPC information. The Group has no EPC data available for 16.9% (2024:

20.9%) of the UK mortgage portfolio; this portion is classified as unrated properties.

EPC ratings are not considered to be a material credit risk factor, and do not form part of the Group's credit risk calculations.

Other Retail lending

At 31 December 2025, Stage 1 and Stage 2 other retail gross lending amounted to £68,227 million (2024: £60,720 million). Stage 3 other retail

lending amounted to £406 million, net of an impairment allowance of £347 million (2024: £351 million, net of an impairment allowance of £360

million).

Lending decisions are predominantly based on an obligor's ability to repay rather than reliance on the disposal of any security provided. Where

the lending is secured, collateral values are rigorously assessed at the time of loan origination and are thereafter monitored in accordance with

business unit credit policy.

The Group's credit risk disclosures for unimpaired other retail lending show assets gross of collateral and therefore disclose the maximum loss

exposure.

---

| | |
|:---|:---|
| **47** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Commercial Banking credit performance**

Portfolio overview

• Portfolio credit performance remained strong. The Group

continues to monitor external developments and their impact

upon the macroeconomic climate generally and also on specific

sectors within the portfolio

• Credit strategies and policy remain robust, and within risk appetite

tolerances. The Group remains focused on credit underwriting and

monitoring standards, and proactively managing higher risk and

cyclical sector exposures

• The Group continues to review segments of portfolios as

appropriate, ensuring 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, covering a range of potential credit downside

scenarios, are maintained and refreshed as conditions evolve. Early

warning indicators and risk appetite metrics are tracked and

provide timely insight to enable proactive 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 approach balances prudent risk

appetite with ensuring support for financially viable clients,

reinforcing the Group's commitment to resilience and responsible

client management

• Commercial Banking UK Real Estate committed drawn lending

grew by £0.7 billion to £9.8 billion in 2025 (net of £2.6 billion

exposures subject to protection through significant risk transfer

(SRT) securitisations). Performance has remained strong and stable

within this sector, with a decrease in cases in its Watchlist

category and limited flow into Business Support

• The net impairment charge in 2025 was £59 million, versus a

charge of £2 million in 2024 and includes a charge from the

updated macroeconomic outlook, including a judgemental

adjustment in respect of global tariff and geo-political disruption

risks. Excluding macroeconomic updates, a small number of single

name charges were observed in the first half of the year, largely

isolated to a single sector and not representative of trends across

the portfolio. This has been offset by releases from Stage 1 and

Stage 2 provisions capturing strong credit performance and

reducing interest rates throughout the year

• ECL allowances decreased in the year to £871 million in 2025

(31 December 2024: £972 million), also as a result of favourable

model updates partially offset by single name cases

• Stage 2 loans and advances increased to £5,167 million

(31 December 2024: £5,061 million). Stage 2 as a proportion of

total loans and advances to customers is stable at 7.2%

(31 December 2024: 7.1%) with stable credit performance and

model updates resulting in lower Stage 2 ECL coverage at 5.8%

(31 December 2024: 6.2%)

• Stage 3 loans and advances decreased to £1,750 million

(31 December 2024: £1,831 million) and as a proportion of total

loans and advances to customers to 2.4% (31 December 2024:

2.6%), given movements in the first half of 2025. Stage 3 ECL

coverage is lower at 21.8% (31 December 2024: 22.6%)

*Business and Commercial Banking*

• Business and Commercial Banking lending reduced to £28.7 billion

(31 December 2024: £30.2 billion), driven by government-backed

lending repayments. Excluding these, the lending portfolio grew in

the year

• A net impairment credit of £53 million in 2025 compares to a

charge of £47 million in 2024, driven by improved expectations for

accounts in recoveries alongside continued strong credit

performance

• Stage 2 loans and advances increased to £3,329 million

(31 December 2024: £3,172 million). Stage 2 as a proportion of

total loans and advances to customers increased to 11.6%

(31 December 2024: 10.5%), while Stage 2 ECL coverage decreased

to 5.0% (31 December 2024: 5.9%) following model updates

• Stage 3 loans and advances decreased to £979 million

(31 December 2024: £1,197 million), primarily driven by repayments

and reduced to 3.4% (31 December 2024: 4.0%) as a proportion of

total loans and advances. Stage 3 ECL coverage reduced to 12.3%

(31 December 2024: 13.9%)

*Corporate and Institutional Banking*

• Corporate and Institutional lending grew to £42.8 billion

(31 December 2024: £40.7 billion), reflecting growth in

Institutional balances including securitised products, alongside

corporate infrastructure growth

• A net impairment charge of £112 million in 2025 compares to an

impairment credit of £45 million in 2024, driven by a small number

of single name charges, primarily in the first half of the year

• Stage 2 loans and advances decreased to £1,838 million

(31 December 2024: £1,889 million). Stage 2 as a proportion of

total loans and advances to customers decreased to 4.3%

(31 December 2024: 4.6%), with Stage 2 ECL coverage at 7.3% (31

December 2024: 6.7%)

• Stage 3 loans and advances increased to £771 million (31 December

2024: £634 million) and as a proportion of total loans and

advances to customers to 1.8% (31 December 2024: 1.6%), driven

by a small number of single name transfers to Stage 3, mainly in

the first half of the year. Stage 3 ECL coverage decreased to 34.0%

(31 December 2024: 39.1%) following the write-off of a large

longstanding case that was fully provided for

---

| | |
|:---|:---|
| **48** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

Collateral held as security for Commercial Banking loans and advances to customers (audited)

*Stage 1 and Stage 2 secured lending*

For Stage 1 and Stage 2 secured commercial lending, the Group reports assets gross of collateral and therefore discloses the maximum

loss exposure.

Stage 1 and Stage 2 secured commercial lending is predominantly managed on a cash flow basis. On occasion, it may include an assessment of

underlying collateral, although, for Stage 3 lending, this will not always involve assessing it on a fair value basis. No aggregated collateral

information for the entire unimpaired secured commercial lending portfolio is provided to key management personnel.

*Stage 3 secured lending*

The value of collateral is re-evaluated and its legal soundness reassessed if there is observable evidence of distress of the borrower;

this evaluation is used to determine potential loss allowances and management's strategy to either repair the business or recover the debt.

At 31 December 2025, Stage 3 secured commercial lending amounted to £447 million, net of an impairment allowance of £120 million (2024:

£447 million, net of an impairment allowance of £149 million). The fair value of the collateral held in respect of impaired secured commercial

lending was £459 million (2024: £563 million). In determining the fair value of collateral, no specific amounts have been attributed to the costs

of realisation. For the purposes of determining the total collateral held by the Group in respect of impaired secured commercial lending, the

value of collateral for each loan has been limited to the principal amount of the outstanding advance in order to eliminate the effects of any

over-collateralisation and to provide a clearer representation of the Group's exposure.

**Commercial Banking UK Real Estate**

• Commercial Banking UK Real Estate committed drawn lending stood at £9.8 billion at 31 December 2025 (net of £2.6 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 £2.6 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 £6.7 billion to social housing providers are also excluded

(31 December 2024: £6.9 billion)

• 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 strong and stable, 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.95%) rather than development. Of these investment exposures

c.91% have an LTV of less than 70%, with an average LTV of 45%. The average gross interest cover ratio was 3.1 times, with c.75% having

gross interest cover of above 2 times

• The portfolio is well diversified with approximately 45% of exposures relating to commercial real estate, including c.12% secured by office

assets, c.9% by retail assets and c.13% by industrial assets. Approximately 49% 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

LTV – UK Real Estate<sup>1</sup>

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 |
|  | **Stage 1 and 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **Total** <br>**£m**<br>| **Total%**<br>| Stage 1 and 2<br>£m<br>| Stage 3<br>£m<br>| Total<br>£m<br>| Total%<br>|
| Less than 60% | **8754** | **65** | **8819** | **84.7** | 8502 | 34 | 8536 | 85.0 |
| 60% to 70% | **677** | **21** | **698** | **6.7** | 789 | 49 | 838 | 8.4 |
| 70% to 80% | **53** | **16** | **69** | **0.6** | 166 | 5 | 171 | 1.7 |
| 80% to 100% | **40** | **21** | **61** | **0.6** | 40 | 69 | 109 | 1.1 |
| 100% to 120% | **5** | **47** | **52** | **0.5** | 7 | 32 | 39 | 0.4 |
| 120% to 140% | **1** | **–** | **1** | **–** | 5 | – | 5 | – |
| Greater than 140% | **4** | **76** | **80** | **0.8** | 11 | 81 | 92 | 0.9 |
| Unsecured<sup>2</sup> | **630** | **–** | **630** | **6.1** | 253 | – | 253 | 2.5 |
| **Subtotal**  | **10164** | **246** | **10410** | **100.0** | 9773 | 270 | 10043 | 100.0 |
| Other<sup>3</sup> | **667** | **45** | **712** |  | 525 | 67 | 592 |  |
| **Total investment**  | **10831** | **291** | **11122** |  | 10298 | 337 | 10635 |  |
| Development  | **607** | **19** | **626** |  | 731 | 8 | 739 |  |
| Government supported lending<sup>4</sup>  | **56** | **2** | **58** |  | 87 | 2 | 89 |  |
| Business Banking<sup>5</sup> | **528** | **7** | **535** |  | 704 | 9 | 713 |  |
| **Total gross**  | **12022** | **319** | **12341** |  | 11820 | 356 | 12176 |  |
| Significant Risk Transfer  |  |  | **(2585)** |  |  |  | (3109) |  |
| **Total net**  |  |  | **9756** |  |  |  | 9067 |  |

---

1Figures in the table above are stated on gross basis with Significant Risk Transfer deducted to show final net position. 2024 figures were previously prepared on a net basis and

have been represented on a consistent basis.

2Predominantly Investment grade corporate CRE lending where the Group is relying on the corporate covenant.

3Mainly lower value transactions where LTV not recorded on Commercial Banking UK Real Estate monitoring system.

4Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme lending to real estate clients, where government guarantees are in place at 100% and 80%,

respectively.

5Business Banking excluded from the published table in the annual report and accounts 2024.

---

| | |
|:---|:---|
| **49** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Credit quality of other financial assets (audited)**

*Cash and balances at central banks*

Substantially all of the Group's cash and balances at central banks are due from the Bank of England or the Deutsche Bundesbank.

*Loans and advances to bank*s

Significantly all of the Group's loans and advances to banks are assessed as Stage 1.

*Reverse repurchase agreement held at amortised cost*

All of the Group's reverse repurchase agreements held at amortised cost are assessed as Stage 1.

**Debt securities held at amortised cost**

At 31 December 2025 significantly all of the Group's debt securities held at amortised cost are investment grade.

*Debt securities at fair value through other comprehensive income (excluding equity shares)*

At 31 December 2025 significantly all of the Group's debt securities at fair value through other comprehensive income are investment grade.

**Derivative assets**

The Group reduces exposure to credit risk by using master netting agreements and by obtaining collateral in the form of cash or highly liquid

securities.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Investment**<br>**grade**<sup>1</sup><br>**£m**<br>| **Other**<br>**£m**<br>| **Total**<br>**£m**<br>| Investment<br>grade<sup>1</sup><br>£m<br>| Other<br>£m<br>| Total<br>£m<br>|
| Trading and other | **2271** | **238** | **2509** | 3294 | 126 | 3420 |
| Hedging | **8** | **1** | **9** | 3 | 5 | 8 |
|  | **2279** | **239** | **2518** | 3297 | 131 | 3428 |
| Due from fellow Lloyds Banking Group undertakings |  |  | **742** |  |  | 807 |
| **Total derivative financial instruments** |  |  | **3260** |  |  | 4235 |

---

1Credit ratings equal to or better than 'BBB'.

*Financial guarantees and loan commitments*

The level of expected credit loss allowance associated with the Group's financial guarantees and loan commitments is not significant.

At 31 December 2025, £131,449 million were Stage 1 (2024: £124,308 million), £4,040 million were Stage 2 (2024: £4,505 million), £61 million

were Stage 3 (2024: £95 million) and £20 million was POCI (2024: £39 million). Against these exposures the Group held an allowance for

expected credit losses of £195 million (2024: £265 million).

Further details can be seen in note 19 to the consolidated financial statements on **page [118](#iddf3b01e92c34e0691e008ab468ef39d_184)**.

**Collateral held as security for other financial assets (audited)**

The Group does not hold collateral against debt securities which are classified as financial assets held at amortised cost.

Reverse repurchase agreements

The Group enters into reverse repurchase agreements which are accounted for as collateralised loans (see note 15 to the consolidated financial

statements on **page [106](#iddf3b01e92c34e0691e008ab468ef39d_160)**).

Derivative assets, after offsetting of amounts under master netting arrangements

The Group reduces exposure to credit risk by using master netting agreements and by obtaining collateral in the form of cash or highly liquid

securities (see note 15 to the consolidated financial statements on **page [106](#iddf3b01e92c34e0691e008ab468ef39d_160)**).

Irrevocable loan commitments and other credit-related contingencies

The Group holds irrevocable loan commitments and other credit-related contingencies (see note 33 to the consolidated financial statements

on **page [132](#iddf3b01e92c34e0691e008ab468ef39d_232)**). Collateral is held as security, in the event that lending is drawn down, on £18,272 million (2024: £17,181 million) of these balances.

**Collateral pledged as security (audited)**

The Group pledges assets primarily for repurchase agreements and securities lending transactions which are generally conducted under terms

that are usual and customary for standard secured borrowing contracts.

Repurchase agreements

The Group enters into repurchase agreements which include amounts due under the Bank of England's Term Funding Scheme with additional

incentives for SMEs (TFSME) (see note 15 to the consolidated financial statements on **page [106](#iddf3b01e92c34e0691e008ab468ef39d_160)**).

Securities lending transactions

The following on-balance sheet financial assets have been lent to counterparties under securities lending transactions:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Financial assets at fair value through other comprehensive income | **4846** | 5714 |

---

In addition, securities held as collateral in the form of stock borrowed amounted to £5,319 million (2024: £10,329 million). Of this amount,

£2,252 million (2024: £3,970 million) had been resold or repledged as collateral for the Group's own transactions.

These transactions were generally conducted under terms that are usual and customary for standard secured lending activities.

Securitisations and covered bonds

In addition to the assets detailed above, the Group also holds assets that are encumbered through the Group's asset-backed conduits and its

securitisation and covered bond programmes. Further details of these assets are provided in note 24 to the consolidated financial statements

on **page [126](#iddf3b01e92c34e0691e008ab468ef39d_199)**.

---

| | |
|:---|:---|
| **50** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Economic crime risk**

**Definition**

Economic crime risk is defined as the risk that the Group implements

ineffective policies, systems, processes and controls to prevent,

detect and respond to the risk of fraud and/or financial crime

resulting in increased losses, regulatory censure, fines and/or adverse

publicity in the UK or other jurisdictions in which the Group operates.

**Level two risks**

Anti-bribery; Anti-money laundering; Fraud; Sanctions.

The Risk overview, on **page [7](#i50da067574354549a782044fe1ba4dde_60600)**, contains a summary of economic crime

risk performance and key mitigating actions.

**Risk appetite**

The Group recognises that economic crime risk presents itself as a

consequence of conducting business and it must be managed and

mitigated in order to protect our customers, our communities and the

Group.

The Group seeks to prevent, detect and disrupt economic crime and

manages its risk exposure through delivering compliant, robust and

risk-based controls to minimise the ability of criminals to exploit our

products, services and customers, whilst also supporting victims and

the legitimate economy.

The Group does not tolerate preventable or avoidable breaches of

economic crime legislation.

Economic crime risk appetite is expressed through the management

of economic crime controls and breaches in line with agreed

tolerances and fraud losses aligned to agreed provisions.

**Identification and assessment**

The principal economic crime risks to the Group are:

• Bribery, including corruption

• Money laundering, including terrorist financing, proliferation

financing and the facilitation of tax evasion

• Sanctions

• Fraud, including intentional acts of deception or omission by

external or internal parties

All of the above could result in customer detriment, financial loss,

regulatory censure and/or reputational damage.

Threat analysis enables the Group to conduct investigations of

previously undetected or unknown economic crime risks through the

receipt of intelligence from both the industry and law enforcement.

This is supplemented with internal data analysis to further develop

the intelligence and understand how economic crime is manifesting

within the Group.

An annual business economic crime risk assessment is used to provide

a more detailed analysis of the level of economic crime risk across the

Group. More detailed risk assessments of customers and third parties

are also undertaken to understand the profile of those whom the

Group is doing business with to determine the level of economic crime

risk and how that should be treated.

Horizon scanning and external engagement is used to identify,

examine and assess the external landscape and use intelligence to

identify potential sources of both medium- and long-term economic

crime risks, emerging issues and opportunities, and to provide a

platform for benchmarking and collaboration across the industry.

**Management and mitigation**

Controls are used across the Group to reduce the likelihood of a risk

occurring, or the impact should it occur. Controls apply to customers,

third parties and colleagues, including at initial onboarding, scheduled

stages and at trigger-based events, such as the exiting of

relationships, suppliers and intermediaries, and colleagues. Control

testing is then completed to ensure the effectiveness of controls.

Customer, payment and third-party screening processes are in place

to identify prohibited relationships and payments, higher risk

relationships including Politically Exposed Persons (PEPs) and

residents in high risk third countries, suspicious payments and any

customers that are outside of appetite. Suspicious payments are

subject to investigation, customer contact and rejection of prohibited

and fraudulent payments.

Due diligence is performed at the onboarding stage to build an

understanding of who the Group is establishing a relationship with,

and continues throughout the relationship to ensure it remains up-to-

date with an accurate risk classification.

Lloyds Banking Group-wide economic crime prevention policies and

standards are maintained to ensure compliance with legal and

regulatory requirements. The completion of a Lloyds Banking Group-

wide risk assessment and implementation of a comprehensive suite of

systems, processes and controls support the Group to detect and

prevent the use of its banking network for money laundering, bribery,

fraud and activities prohibited by legal and regulatory sanctions.

Lloyds Banking Group's economic crime prevention policy requires all

colleagues to complete mandatory economic crime training on at

least an annual basis. The Group's fraud awareness programme also

remains a key component of the fraud control environment.

**Monitoring**

Events and their associated impacts are identified, escalated and

recorded to ensure that losses are managed in line with risk appetite.

Effective root cause analysis is undertaken to identify issues that need

to be resolved and where action is necessary to strengthen the control

environment, including resilience.

Suspicious Activity Reporting (SAR) is in place to enable internal

reporting by colleagues and external disclosure by the Nominated

Officer to the UK Financial Intelligence Unit (UKFIU).

Changes to the internal and external environment are regularly

monitored to ensure there is an accurate and up-to-date view of the

risk profile. This includes but is not limited to:

• Utilising outputs from horizon scanning to determine changes in

regulatory obligations or the external environment

• Using key risk, control and performance indicators (as relevant) to

monitor the risk profile

• Monitoring risk appetite metrics and management measures

against agreed thresholds, including the escalation of breaches

• Understanding the impact of change and/or transformation

activity on the risk and control environment

• Ensuring strategic changes or new product offerings are monitored

and impacts understood

**Reporting**

Economic crime reporting ensures that senior management have full

visibility of the Group's economic crime risk exposure, to enable

informed decision making.

Money Laundering Reporting Officer (MLRO) reports are presented

annually to the relevant Group-level risk committees.

---

| | |
|:---|:---|
| **51** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Liquidity risk**

**Definition**

Liquidity Risk is the risk that the Group has insufficient financial

resources to meet its commitments when they fall due or can only

secure them at excessive cost.

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lbk-20251231_g14.gif) | ![LightGrey_topright7.gif](lbk-20251231_g15.gif) |

---

**Level two risks**

Funding; Liquidity.

The Risk overview, on **page [7](#i50da067574354549a782044fe1ba4dde_60601)**, contains a summary of liquidity risk

performance and key mitigating actions.

**Risk appetite**

The Group is commercially required to take liquidity risk to meet its

customers' borrowing and depositing needs and generate shareholder

returns.

The Banking Group's liquidity risk appetite is maintained above

regulatory minima in a severe but plausible stress for a reasonable

time-period, relying on non-franchise damaging management actions.

For the Banking Group, risk appetite is expressed primarily through

the Liquidity Coverage Ratio (LCR) metric, measured in a regulatory

defined 30-day severe stress scenario. This is supplemented by

additional metrics to manage longer term liquidity stresses, such as

the Net Stable Funding Ratio (NSFR).

**Identification and assessment**

Liquidity exposure represents the potential stressed outflows in any

future period, less expected inflows. The Group considers liquidity

exposure from both an internal and a regulatory perspective.

ILAAP is the key mechanism for assessing the Group's liquidity and

funding needs. It is completed at least annually and used to ensure

that the Group has robust strategies, processes and systems in place

to support the identification, measurement, management, monitoring

and reporting of liquidity risk over an appropriate set of time

horizons.

Liquidity risk appetite is proposed and reviewed at least annually and

approved by the Board. It comprises a liquidity risk appetite

statement and set of quantitative metrics. This is supported by a suite

of management measures.

Scenario analysis and stress testing are used to identify sources of

potential liquidity risk, highlight any vulnerabilities identified and

propose appropriate remedial action. Reverse stress testing is also

performed to identify and assess scenarios that would cause the

Group to fail and to propose mitigating actions to alleviate the risk of

failure.

Emerging and topical risk assessments are regularly conducted to

identify liquidity risks arising from market conditions, regulatory

changes, reputational issues, balance sheet changes and new product

offerings. Assessment outputs are used to inform the liquidity risk

stress testing framework.

**Management and mitigation**

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lbk-20251231_g14.gif) | ![LightGrey_topright7.gif](lbk-20251231_g15.gif) |

---

![AuditedLozenge.gif](lbk-20251231_g16.gif)

Liquidity risk is managed through a series of measures, tests and reports

that are primarily based on contractual maturities with behavioural

overlays as appropriate. The Group undertakes quantitative and

qualitative analysis of the behavioural aspects of its assets and liabilities

in order to reflect their expected behaviour.

The Group maintains a diverse, reliable and cost-effective funding

structure and strategy, which considers areas such as maturity

mismatches, concentration of funding sources, asset encumbrance

and stability of funding. The operating plan, which includes an

issuance plan, is produced for the Group and its material legal entities

ensuring compliance with Board liquidity risk appetite limits across all

years of the plan.

The Group considers the cost of liquidity and funding when forming

business plans and strategies to ensure liquidity and funding usage is

optimised. The transfer pricing mechanism ensures that levels of

liquidity risk taken in the Group are controlled and incentivises an

optimum funding mix.

A liquid asset buffer of unencumbered high quality liquid assets is held

to protect the Group against a range of stress scenarios. The

composition and eligibility of marketable assets is considered under

business-as-usual and stressed conditions.

![AuditedLozenge.gif](lbk-20251231_g16.gif)

The Group manages and monitors liquidity risks and ensures that

liquidity risk management systems and arrangements are adequate

with regard to the internal risk appetite, Group strategy and regulatory

requirements. Liquidity policies and procedures are subject to

independent internal oversight by the Risk function. Overseas branches

and subsidiaries of the Group may also be required to meet the liquidity

requirements of the entity's domestic country. Management of liquidity

requirements is performed by the overseas branch or subsidiary in line

with Group policy. The Group plans funding requirements over its

planning period, combining business-as-usual and stressed conditions.

The Group manages its liquidity position paying regard to its internal

risk appetite, Liquidity Coverage Ratio (LCR) and Net Stable Funding

Ratio (NSFR) as required by the PRA, the Capital Requirements

Directive (CRD V) and the Capital Requirements Regulation (UK CRR)

liquidity requirements.

**Monitoring**

Daily monitoring and control processes are in place to address internal

and regulatory liquidity requirements. A range of market and internal

early warning indicators are monitored daily for early signs of liquidity

risk in the market or specific to the Group.

A liquidity contingency framework is maintained as part of the

Recovery Plan and sets out strategies for addressing liquidity shortfalls

in emergency situations, detailing governance and escalation

procedures in the context of a liquidity stress event.

The Recovery Plan is prepared to ensure the Group continues to

operate through a liquidity crisis, documents how the Group would

respond to a financial stress event and restore itself to a viable

position.

Funding concentrations by counterparty, currency and tenor are

regularly monitored and, where high levels of concentrations exist,

these are managed as part of the operating plan process and limited

by the liquidity risk monitoring framework.

**Reporting**

Liquidity Board Risk Appetite Metrics and a set of management

measures are reported to relevant Asset Liability Committee (ALCOs)

and Board as required.

Operational limits are reported to the relevant committee, forum or

individual as required.

Regulatory reports required by the PRA, FCA and other regulatory

bodies are submitted within mandated timelines and processes are in

place to demonstrate, evidence and attest to regulatory compliance.

The Group is subject to the Bank of England's Resolvability

Assessment Framework (RAF) and ensures appropriate capabilities

are in place and documented to support the Funding in Resolution

(FiR) requirements.

---

| | |
|:---|:---|
| **52** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Liquidity and funding management in 2025**

The Group has maintained its strong funding and liquidity position with a loan to deposit ratio of 99% as at 31 December 2025 (31 December

2024: 98%).Total wholesale funding remained at £69.6 billion as at 31 December 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 135%

as at 31 December 2025 (31 December 2024: 137%). The net stable funding ratio is strong at 119% as at 31 December 2025 (31 December 2024:

124%).

LCR eligible assets<sup>1</sup> have reduced to £104.5 billion (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 to

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. In September 2025, S&P upgraded the Group's issuer credit rating by one notch.

1Based on a monthly simple average over the previous 12 months.

**Reconciliation of Lloyds Bank Group funding to the balance sheet (audited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Included**<br>**in funding**<br>**analysis**<br>**£bn**<br>| **Cash collateral** <br>**received**<br>**£bn**<br>| **Fair value**<br>**and other**<br>**accounting** <br>**methods**<sup>1</sup><br>**£bn**<br>| **Balance**<br>**sheet**<br>**£bn**<br>|
| **At 31 December 2025** |  |  |  |  |
| Deposits from banks | **2.7** | **0.4** | **–** | **3.1** |
| Debt securities in issue at amortised cost | **57.7** | **–** | **(5.6)** | **52.1** |
| Subordinated liabilities | **9.2** | **–** | **(1.2)** | **8.0** |
| **Total wholesale funding** | **69.6** | **0.4** |  |  |
| Customer deposits | **465.2** | **–** | **–** | **465.2** |
| **Total** | **534.8** | **0.4** |  |  |
| 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 |  |  |

---

1The Group enters into derivatives and repurchase and reverse repurchase agreements with various counterparties which are governed by industry standard master netting

agreements. The Group holds cash collateral on its balance sheet in respect of these agreements.

**Analysis of 2025 total wholesale funding by residual maturity**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Up to 1**<br>**month**<br>**£bn**<br>| **1 to 3**<br>**months**<br>**£bn**<br>| **3 to 6**<br>**months**<br>**£bn**<br>| **6 to 9**<br>**months**<br>**£bn**<br>| **9 to 12**<br>**months**<br>**£bn**<br>| **1 to 2**<br>**years**<br>**£bn**<br>| **2 to 5**<br>**years**<br>**£bn**<br>| **Over**<br>**five years**<br>**£bn**<br>| **Total** <br>**at 31 Dec**<br>**2025**<br>**£bn**<br>| Total<br>at 31 Dec<br>2024<br>£bn<br>|
| Deposits from banks | **1.8** | **0.2** | **0.4** | **0.3** | **–** | **–** | **–** | **–** | **2.7** | 2.3 |
| Debt securities in issue: |  |  |  |  |  |  |  |  |  |  |
| Certificates of deposit <br>issued<br>| **–** | **0.6** | **1.1** | **0.7** | **0.1** | **–** | **–** | **–** | **2.5** | 0.5 |
| Commercial paper | **–** | **5.6** | **5.1** | **1.0** | **0.1** | **–** | **–** | **–** | **11.8** | 5.0 |
| Senior unsecured notes <br>issued<br>| **–** | **0.7** | **1.2** | **1.2** | **0.3** | **3.3** | **7.1** | **12.0** | **25.8** | 29.1 |
| Covered bonds | **–** | **0.9** | **0.8** | **0.1** | **1.0** | **3.0** | **4.5** | **0.8** | **11.1** | 11.7 |
| Securitisation notes | **–** | **–** | **–** | **0.2** | **0.5** | **1.7** | **3.5** | **0.6** | **6.5** | 5.3 |
|  | **–** | **7.8** | **8.2** | **3.2** | **2.0** | **8.0** | **15.1** | **13.4** | **57.7** | 51.6 |
| Subordinated liabilities | **–** | **0.5** | **–** | **–** | **–** | **1.3** | **3.4** | **4.0** | **9.2** | 8.7 |
| **Total wholesale funding**<sup>1</sup> | **1.8** | **8.5** | **8.6** | **3.5** | **2.0** | **9.3** | **18.5** | **17.4** | **69.6** | 62.6 |

---

1The Group's definition of wholesale funding aligns with that used by other international market participants; including bank deposits, debt securities in issue and subordinated

liabilities. Excludes balances relating to cash collateral of £0.4 billion (31 December 2024: £0.6 billion).

**Total wholesale funding by currency (audited)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Sterling**<br>**£bn**<br>| **US dollar**<br>**£bn**<br>| **Euro**<br>**£bn**<br>| **Other**<br>**currencies**<br>**£bn**<br>| **Total**<br>**£bn**<br>|
| **At 31 December 2025** | **17.1** | **31.1** | **15.4** | **6.0** | **69.6** |
| At 31 December 2024 | 16.2 | 25.4 | 14.4 | 6.6 | 62.6 |

---

---

| | |
|:---|:---|
| **53** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Analysis of 2025 term issuance (audited)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Sterling**<br>**£bn**<br>| **US dollar**<br>**£bn**<br>| **Euro**<br>**£bn**<br>| **Other**<br>**currencies**<br>**£bn**<br>| **Total**<br>**£bn**<br>|
| Securitisation<sup>1</sup> | **0.8** | **–** | **0.6** |  | **1.4** |
| Covered bonds | **1.0** | **–** | **0.4** |  | **1.4** |
| Senior unsecured notes | **–** | **1.0** | **1.3** | **0.6** | **2.9** |
| Subordinated liabilities | **–** | **0.9** | **0.9** | **–** | **1.8** |
| Additional tier 1 | **0.8** | **0.8** | **–** | **–** | **1.6** |
| **Total issuance** | **2.6** | **2.7** | **3.2** | **0.6** | **9.1** |

---

1Securitisation includes externally issued notes from significant risk transfer transactions.

**Liquidity portfolio**

At 31 December 2025, the Group had £104.5 billion of highly liquid unencumbered LCR eligible assets, based on a monthly simple average over

the previous 12 months post any liquidity haircuts (31 December 2024: £107.5 billion), of which £99.3 billion was LCR level 1 eligible (31

December 2024: £102.4 billion) and £5.2 billion was LCR level 2 eligible (31 December 2024: £5.1 billion). These assets are available to meet cash

and collateral outflows and regulatory requirements.

**LCR eligible assets**

---

| | | |
|:---|:---|:---|
|  | **Average**<sup>1</sup> | **Average**<sup>1</sup> |
|  | **2025**<br>**£bn**<br>| 2024<br>£bn<br>|
| Cash and central bank reserves | **39.0** | 43.0 |
| High quality government/MDB/agency bonds<sup>2</sup> | **57.9** | 56.6 |
| High quality covered bonds | **2.4** | 2.8 |
| Level 1 | **99.3** | 102.4 |
| Level 2<sup>3</sup> | **5.2** | 5.1 |
| **Total LCR eligible assets** | **104.5** | 107.5 |

---

1Eligible assets are calculated as an average of month-end observations over the previous 12 months post any liquidity haircuts.

2Designated multilateral development banks (MDB).

3Includes Level 2A and Level 2B.

**LCR eligible assets by currency**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Sterling**<br>**£bn**<br>| **US dollar**<br>**£bn**<br>| **Euro**<br>**£bn**<br>| **Other**<br>**currencies**<br>**£bn**<br>| **Total**<br>**£bn**<br>|
| **At 31 December 2025** |  |  |  |  |  |
| Level 1 | **75.5** | **12.4** | **11.4** | **–** | **99.3** |
| Level 2 | **2.5** | **0.9** | **1.0** | **0.8** | **5.2** |
| **Total**<sup>1</sup> | **78.0** | **13.3** | **12.4** | **0.8** | **104.5** |
| At 31 December 2024 |  |  |  |  |  |
| Level 1 | 79.0 | 11.5 | 11.9 | – | 102.4 |
| Level 2 | 2.4 | 1.5 | 0.8 | 0.4 | 5.1 |
| Total<sup>1</sup> | 81.4 | 13.0 | 12.7 | 0.4 | 107.5 |

---

1Eligible assets are calculated as an average of month-end observations over the previous 12 months post any liquidity haircuts.

The Group 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 to external market

conditions.

**Stress testing results**

Internal liquidity stress testing results at 31 December 2025 (based on a monthly simple average over the previous 12 months) showed that the

Group had liquidity resources representing 138% of modelled outflows under the Group's most severe liquidity stress scenario (31 December

2024: 127%). The increase in ratio is explained primarily by a decrease in modelled stress outflows.

This scenario includes a two notch downgrade of the Group's current long-term debt rating and accompanying one notch short-term

downgrade implemented instantaneously by all major rating agencies.

---

| | |
|:---|:---|
| **54** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Maturities of financial instrument liabilities (audited)**

The table below analyses financial instrument liabilities of the Group on an undiscounted future cash flow basis according to contractual

maturity, into relevant maturity groupings based on the remaining period at the balance sheet date; balances with no fixed maturity are

included in the over 5 years category. In the case of dated subordinated liabilities, the maturity presented is based on call date where

applicable. The Group's preference shares have partially discretionary coupons and have been included in the below analysis.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Up to 1**<br>**month**<br>**£m**<br>| **1 to 3**<br>**months**<br>**£m**<br>| **3 to 12**<br>**months**<br>**£m**<br>| **1 to 5**<br>**years**<br>**£m**<br>| **Over 5**<br>**years**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |  |  |
| Deposits from banks | **1828** | **220** | **738** | **298** | **11** | **3095** |
| Customer deposits | **411217** | **17342** | **30312** | **7548** | **462** | **466881** |
| Repurchase agreements at amortised cost | **10963** | **9750** | **7866** | **6773** | **3147** | **38499** |
| Financial liabilities at fair value through profit or loss | **1** | **31** | **77** | **1115** | **4557** | **5781** |
| Notes in circulation | **2118** | **–** | **–** | **–** | **–** | **2118** |
| Debt securities in issue at amortised cost | **154** | **7800** | **14074** | **22548** | **23921** | **68497** |
| Lease liabilities | **31** | **58** | **195** | **426** | **315** | **1025** |
| Subordinated liabilities | **22** | **524** | **351** | **6045** | **5631** | **12573** |
| **Total non-derivative financial liabilities** | **426334** | **35725** | **53613** | **44753** | **38044** | **598469** |
| Derivative financial liabilities: |  |  |  |  |  |  |
| Gross settled derivatives – outflows | **9274** | **8142** | **5264** | **4924** | **3770** | **31374** |
| Gross settled derivatives – inflows | **(9180)** | **(7994)** | **(5207)** | **(4194)** | **(3070)** | **(29645)** |
| Gross settled derivatives – net flows | **94** | **148** | **57** | **730** | **700** | **1729** |
| Net settled derivative liabilities | **2322** | **–** | **3** | **30** | **265** | **2620** |
| **Total derivative financial liabilities** | **2416** | **148** | **60** | **760** | **965** | **4349** |
| At 31 December 2024 |  |  |  |  |  |  |
| Deposits from banks | 1769 | 342 | 504 | 520 | 105 | 3240 |
| Customer deposits | 421432 | 8810 | 18855 | 3396 | 218 | 452711 |
| Repurchase agreements at amortised cost | 8974 | 5169 | 15300 | 9416 | – | 38859 |
| Financial liabilities at fair value through profit or loss | 9 | 80 | 415 | 640 | 5848 | 6992 |
| Notes in circulation | 2121 | – | – | – | – | 2121 |
| Debt securities in issue at amortised cost | 1363 | 7812 | 5422 | 31428 | 10982 | 57007 |
| Lease liabilities | 23 | 64 | 237 | 554 | 373 | 1251 |
| Subordinated liabilities | 23 | 681 | 522 | 3973 | 4859 | 10058 |
| **Total non-derivative financial liabilities** | 435714 | 22958 | 41255 | 49927 | 22385 | 572239 |
| Derivative financial liabilities: |  |  |  |  |  |  |
| Gross settled derivatives – outflows | 7535 | 4934 | 7476 | 4956 | 2702 | 27603 |
| Gross settled derivatives – inflows | (7329) | (4683) | (6953) | (4332) | (1597) | (24894) |
| Gross settled derivatives – net flows | 206 | 251 | 523 | 624 | 1105 | 2709 |
| Net settled derivative liabilities | 3043 | – | 21 | 57 | 286 | 3407 |
| **Total derivative financial liabilities** | 3249 | 251 | 544 | 681 | 1391 | 6116 |

---

The principal amount for undated subordinated liabilities with no redemption option is included within the over 5 years column; interest of

£16 million (2024: £16 million) per annum is not included beyond 5 years.

An analysis of the Group's total wholesale funding by residual maturity and by currency is set out on **page [52](#id2f67d241a204968942100c81e4b6848_7317)**.

---

| | |
|:---|:---|
| **55** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Maturities of contingent liabilities, commitments and financial guarantees (audited)**

The table below shows the contractual maturity of the Group's contingents, commitments and financial guarantees. Commitments are shown

in the time band containing the earliest date the commitment can be drawn down. For financial guarantee contracts, the maximum amount of

the guarantee is allocated to the earliest period in which the guarantee could be called.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Within 1**<br>**year**<br>**£m**<br>| **1 to 3**<br>**years**<br>**£m**<br>| **3 to 5**<br>**years**<br>**£m**<br>| **Over 5**<br>**years**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |  |
| Acceptances and endorsements | **105** | **–** | **–** | **–** | **105** |
| Other contingent liabilities | **1493** | **688** | **364** | **337** | **2882** |
| **Total contingent liabilities** | **1598** | **688** | **364** | **337** | **2987** |
| Lending commitments and guarantees | **134392** | **297** | **440** | **346** | **135475** |
| Other commitments | **95** | **–** | **–** | **–** | **95** |
| **Total commitments and guarantees** | **134487** | **297** | **440** | **346** | **135570** |
| **Total contingents, commitments and guarantees** | **136085** | **985** | **804** | **683** | **138557** |
| At 31 December 2024 |  |  |  |  |  |
| Acceptances and endorsements | 39 | – | – | – | 39 |
| Other contingent liabilities | 1201 | 547 | 204 | 532 | 2484 |
| **Total contingent liabilities** | 1240 | 547 | 204 | 532 | 2523 |
| Lending commitments and guarantees | 127789 | 559 | 404 | 84 | 128836 |
| Other commitments | 111 | – | – | – | 111 |
| **Total commitments and guarantees** | 127900 | 559 | 404 | 84 | 128947 |
| **Total contingents, commitments and guarantees** | 129140 | 1106 | 608 | 616 | 131470 |

---

**Market risk**

**Definition**

Market risk is defined as the risk that the Group's capital or earnings

profile are adversely affected by changes in market rates or prices,

including, but not limited to, interest rates, foreign exchange, equity

prices and credit spreads.

**Level two risks**

Banking book (**page [56](#i4d5fd362bb1e4752bdcbb63785bcfb27_24869)**); Pensions (**page [58](#i4d5fd362bb1e4752bdcbb63785bcfb27_24866)**); Trading book (**page [58](#i4d5fd362bb1e4752bdcbb63785bcfb27_9857)**).

The Risk overview, on **page [7](#i50da067574354549a782044fe1ba4dde_60602)**, contains a summary of market risk

performance and key mitigating actions.

**Risk appetite**

The Group effectively manages market risk from banking and

insurance activity and is commercially required to engage in trading

and direct investment activity, as a necessary component of our

business model, to satisfy customer demands and generate stable

financial returns.

The Group aims to balance potential returns with the need to

safeguard our capital base and is willing to accept fluctuations in

earnings that do not trigger mandatory distribution restrictions, even

in mild stress market conditions.

Risk appetite is expressed primarily through an earning at risk metric,

measured in a mild market risk stress scenario. This is supplemented

by additional metrics for specific portfolios, such as the Structural

hedge and the Trading Book.

**Identification and assessment**

The Group ensures that all current and potential future market risks

are identified, understood and appropriately managed.

The market risk impacts of complex transactions, new products and

significant product changes identified by the Group are reviewed by

the Risk function prior to approval. Additionally, the market risk for all

products is reviewed and documented through the market risk

attestation process.

Where a new market risk exposure is discovered for example through

scenario analysis, stress testing, profit and loss attribution, back-

testing or model review, this must be notified to the Risk function.

Reverse stress testing is also performed to identify and assess

scenarios that would cause the Group to fail and to propose

mitigating actions to alleviate the risk of failure.

Market risk appetite is proposed and reviewed at least annually and

approved by the Board. It comprises a market risk appetite statement

and set of quantitative metrics. This is supported by a suite of

management measures.

**Management and mitigation**

Asset and Liability Committee (ALCO) is responsible for approving

and monitoring market risk management techniques, measures and

behavioural assumptions.

The transfer pricing process ensures that the level of market risk taken

in the Group is controlled and incentivises effective management of

market risk. Hedging costs, benefits and risks are incorporated into

the Group's product pricing and contribute to performance

measurement.

All hedgeable banking book market risk exposures in business units

are transferred to and centralised within the Corporate Treasury of

the relevant legal entity using an appropriate transfer pricing process.

Exposures are then managed by the Corporate Treasury.

Appropriate trading limits are allocated to trading desks. It is the

responsibility of first line of defence to manage the risk profile in

accordance with these limits on both the desk and trader level, with

heads of desks responsible for managing risk within agreed limits.

The long-term financial management of all the Group's defined

benefit pension schemes and the impact of both the current and

potential risk management strategy is analysed and monitored by

Group Corporate Treasury to ensure an appropriate financial

management strategy is agreed with the relevant Trustees and

implemented.

**Monitoring**

ALCO and Group Market Risk Committee (GMRC) regularly review

high level market risk exposures as part of the wider risk management

framework. They also make recommendations to the Board

concerning overall market risk appetite and policy.

Across the Group, appropriate monitoring, reporting and escalation

processes are in place for all market risk exposures consistent with the

size and complexity of the risk as well as the requirements of the

recipients.

Market risk exposures are monitored against market risk appetite and

reported to the relevant audience at the appropriate frequency, and

reported in accordance with all legal and regulatory requirements.

---

| | |
|:---|:---|
| **56** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Reporting**

Market risk appetite metrics and a set of management measures are

reported to the relevant ALCOs and Board as required.

Operational limits are reported to the relevant committee, forum or

individual as required.

Regulatory reports required by the PRA, FCA and other regulatory

bodies are submitted within mandated timelines and processes are in

place to demonstrate, evidence and attest to regulatory compliance.

**Banking activities**

**Identification and assessment**

The Group's banking activities expose it to the risk of adverse

movements in market rates or prices, predominantly interest rates,

credit spreads, exchange rates and equity prices. The volatility of

market rates or prices can be affected by both the transparency of

prices and the amount of liquidity in the market for the relevant

asset, liability or instrument.

Interest rate risk

Yield curve risk in the Group's divisional portfolios, and in the Group's

capital and funding activities, arises from the different repricing

characteristics of the Group's non-trading assets, liabilities and off-

balance sheet positions.

Basis risk arises from the potential changes in spreads between

indices, for example where the bank lends with reference to a central

bank rate but funds with reference to a market rate, for example,

SONIA, and the spread between these two rates widens or tightens.

Optionality risk arises predominantly from embedded optionality

within assets, liabilities or off-balance sheet items where either the

Group or the customer can affect the size or timing of cash flows. One

example of this is mortgage prepayment risk where the customer

owns an option allowing them to prepay when it is economical to do

so. This can result in customer balances amortising more quickly or

slowly than anticipated due to customers' response to changes in

economic conditions.

Foreign exchange risk

Economic foreign exchange exposure arises from the Group's

investment in its overseas operations. In addition, the Group incurs

foreign exchange risk through non-functional currency flows from

services provided by customer-facing divisions, the Group's debt and

capital management programmes and is exposed to volatility in its

CET1 ratio, due to the impact of changes in foreign exchange rates on

the retranslation of non-sterling-denominated risk-weighted assets.

Equity risk

Equity risk arises primarily from exposure to Lloyds Banking Group

share price through deferred shares and deferred options granted to

employees as part of their benefits package.

Credit spread risk

Credit spread risk arises largely from: (i) the liquid asset portfolio held

in the management of Group liquidity, comprising government,

supranational and other eligible assets; (ii) the Credit Valuation

Adjustment (CVA) and Debit Valuation Adjustment (DVA) sensitivity

to credit spreads; (iii) a number of the Group's structured medium-

term notes where the Group has elected to fair value the notes

through the profit and loss account; and (iv) banking book assets in

Commercial Banking held at fair value under IFRS 9.

Sensitivities

Interest rate risk exposure is monitored monthly using the following

methodologies.

Market value sensitivity considers all repricing mismatches

(behaviourally adjusted where appropriate) in the current balance

sheet and calculates the change in market value that would result

from an instantaneous 25, 100 and 200 basis points parallel rise or fall

in the yield curve. The market value sensitivities are calculated on a

static balance sheet using principal cash flows excluding interest,

commercial margins and other spread components and are

discounted at the risk-free rate.

Interest income sensitivity measures the impact on future net interest

income arising from various economic scenarios. These include

instantaneous 25, 100 and 200 basis point parallel shifts in all yield

curves and the Group economic scenarios. These scenarios are

reviewed every year and are designed to replicate severe but plausible

economic events, capturing risks that would not be evident through

the use of parallel shocks alone such as basis risk and steepening or

flattening of the yield curve.

Unlike the market value sensitivities, the interest income sensitivities

incorporate additional behavioural assumptions as to how and when

individual products would reprice in response to changing rates.

Reported sensitivities are not necessarily predictive of future

performance as they do not capture additional management actions

that would likely be taken in response to an immediate, large,

movement in interest rates. These actions could reduce the net

interest income sensitivity, help mitigate any adverse impacts or they

may result in changes to total income that are not captured in the net

interest income.

*T*he structural hedging programme managing interest rate risk in the

banking book relies on assumptions made around customer

behaviour. A number of metrics are in place to monitor the risks

within the portfolio.

The Group has an integrated Asset and Liability Management (ALM)

system which supports non-traded asset and liability management of

the Group. This provides a single consolidated tool to measure and

manage interest rate repricing profiles (including behavioural

assumptions), perform stress testing and produce forecast outputs.

The Group is aware that any assumptions-based model is open to

challenge.

A full behavioural review is performed annually, or in response to

changing market conditions, to ensure the assumptions remain

appropriate and the model itself is subject to annual re-validation, as

required under the Lloyds Banking Group model governance policy.

The key behavioural assumptions are:

• Embedded optionality within products

• The duration of balances that are contractually repayable on

demand, such as current accounts and overdrafts, together with

net free reserves of the Group

• The re-pricing behaviour of managed rate liabilities, such as

variable rate savings

---

| | |
|:---|:---|
| **57** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Lloyds Bank Group banking activities: market value sensitivity (audited)**

The table below shows, split by material currency, the Group's market value sensitivities to an instantaneous parallel up and down 25 and 100

basis points change to all interest rates.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
| | **Up**<br>**25bps**<br>**£m**<br>| **Down**<br>**25bps**<br>**£m**<br>| **Up**<br>**100bps**<br>**£m**<br>| **Down**<br>**100bps**<br>**£m**<br>| Up<br>25bps<br>£m<br>| Down<br>25bps<br>£m<br>| Up<br>100bps<br>£m<br>| Down<br>100bps<br>£m<br>|
| Sterling | **21.6** | **(21.8)** | **84.6** | **(89.3)** | 5.8 | (5.9) | 22.4 | (24.5) |
| US dollar | **(1.8)** | **1.8** | **(7.1)** | **7.4** | (1.2) | 1.3 | (4.8) | 5.2 |
| Euro | **(4.0)** | **(0.1)** | **(15.4)** | **(0.6)** | (1.9) | (1.8) | (7.1) | (7.4) |
| Other | **(1.6)** | **1.6** | **(6.5)** | **6.5** | (1.0) | 1.0 | (3.7) | 4.5 |
| **Total** | **14.2** | **(18.5)** | **55.6** | **(76.0)** | 1.7 | (5.4) | 6.8 | (22.2) |

---

This is a risk-based disclosure and the amounts shown would be amortised in the income statement over the duration of the portfolio.

The market value sensitivity has increased year-on-year as a result of increased customer prepayments for fixed mortgages.

**Lloyds Bank Group banking activities: market value sensitivity to a steepening and flattening of the yield curve (audited)**

The table below shows supplementary value sensitivity to a steepening and flattening (c.100 basis points around the three-year point) in the

yield curve. This ensures there are no unintended consequences to managing risk to parallel shifts in rates.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Steepener**<br>**£m**<br>| **Flattener**<br>**£m**<br>| Steepener<br>£m<br>| Flattener<br>£m<br>|
| Sterling | **7.2** | **(8.2)** | (1.0) | (0.4) |
| US dollar | **2.7** | **(2.6)** | (1.2) | 1.3 |
| Euro | **(8.5)** | **(1.9)** | (11.6) | 2.0 |
| Other | **3.3** | **(3.3)** | (2.5) | 3.1 |
| **Total** | **4.7** | **(16.0)** | (16.3) | 6.0 |

---

**Lloyds Bank Group banking activities: three-year net interest income sensitivity (audited)**

The table below shows the banking book net interest income sensitivity on a one- to three-year forward-looking basis to an instantaneous

parallel up 25, down 25, up 50 and down 50 basis points change to all interest rates.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Year 1**<br>**£m**<br>| **Year 2**<br>**£m**<br>| **Year 3**<br>**£m**<br>| Year 1<br>£m<br>| Year 2<br>£m<br>| Year 3<br>£m<br>|
| Up 50bps | **211** | **362** | **642** | 227 | 333 | 555 |
| Up 25bps | **106** | **182** | **322** | 114 | 167 | 277 |
| Down 25bps | **(127)** | **(185)** | **(326)** | (146) | (168) | (278) |
| Down 50bps | **(252)** | **(372)** | **(655)** | (294) | (338) | (557) |

---

Year 1 net interest income sensitivity, to both up and down shocks, has decreased slightly year-on-year mostly as a result of changing customer

deposit behaviour and structural hedge activity.

The overall three-year net interest income sensitivity to up and down 25 basis points and 50 basis points shocks is largely due to reinvestment

of structural hedge maturities in years two and three.

The sensitivities are illustrative and do not reflect new business margin implications and/or pricing actions, other than as outlined.

The following assumptions have been applied:

• Instantaneous parallel shift in interest rate curve, including bank base rate

• Balance sheet remains constant

• Illustrative 50% pass-through on deposits and 100% pass-through on assets, which could be different in practice

Basis risk, foreign exchange, equity and credit spread risks are measured primarily through scenario analysis by assessing the impact on profit

before tax over a 12-month horizon arising from a change in market rates, and reported within the Board risk appetite on a monthly basis.

Supplementary measures such as sensitivity and exposure limits are applied where they provide greater insight into risk positions. Frequency of

reporting supplementary measures varies from daily to quarterly appropriate to each risk type.

---

| | |
|:---|:---|
| **58** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Management and mitigation**

![AuditedLozenge.gif](lbk-20251231_g16.gif)

The Group's policy is to optimise reward while managing its market risk

exposures within the risk appetite defined by the Board. Lloyds Banking

Group's market risk policy and procedures outlines the hedging process,

and the centralisation of risk from business units into Group Corporate

Treasury (GCT), for example via the transfer pricing framework. GCT is

responsible for managing the centralised risk and does this through

natural offsets of matching assets and liabilities, and appropriate

hedging activity of the residual exposures, subject to the authorisation

and mandate of ALCO within the Board risk appetite. The hedges are

externalised to the market by derivative desks within GCT and the

Commercial Bank. The Group mitigates income statement volatility

through hedge accounting. This reduces the accounting volatility arising

from the Group's economic hedging activities and any hedge

accounting ineffectiveness is continuously monitored.

The Group establishes hedge accounting relationships for interest rate

risk components using cash flow hedges and fair value hedges. The

Group is exposed to cash flow interest rate risk on its variable rate loans

and deposits together with its floating rate subordinated debt. The

derivatives used to manage the structural hedge may be designated

into cash flow hedges to manage income statement volatility. The

economic items related to the structural hedge, for example current

accounts, are not eligible hedged items under IAS 39 for inclusion into

accounting hedge relationships. The Group is exposed to fair value

interest rate risk on its fixed rate customer loans, its fixed rate customer

deposits and the majority of its subordinated debt.

Hedge ineffectiveness arises during the management of interest rate

risk due to residual unhedged risk. Sources of ineffectiveness, which the

Group may decide to not fully mitigate, can include basis differences,

timing differences and notional amount differences. The effectiveness

of accounting hedge relationships is assessed between the hedging

derivatives and the documented hedged item, which can differ to the

underlying economically hedged item.

The largest residual risk exposure arises from balances that are

deemed to be insensitive to changes in market rates (including current

accounts, a portion of variable rate deposits and investable equity),

and is managed through the Group structural hedge. Consistent with

the Group's strategy to deliver stable returns, ALCO seeks to minimise

large reinvestment risk, and to smooth earnings over a range of

investment tenors. The structural hedge consists of longer-term fixed

rate assets or interest rate swaps and the amount and duration of the

hedging activity is reviewed regularly by ALCO.

The Group exposure to pipeline and prepayment risks are managed

through hedging in line with expected customer behaviour. These are

appropriately monitored and controlled through divisional ALCOs.

Economic foreign exchange exposures arising from non-functional

currency flows are identified by divisions and transferred and

managed centrally. The Group also has a policy of forward hedging its

forecasted currency profit and loss to year end.

![AuditedLozenge.gif](lbk-20251231_g16.gif)

The Group's structural foreign currency exposure is represented by its

investments in overseas subsidiaries and branches which create capital

resources denominated in foreign currencies, principally USD and EUR.

Gains or losses on structural foreign currency exposures are taken to

reserves, resulting in a movement in CET1 capital. The Group's main

overseas operations are in America and Europe and do not represent a

significant proportion on its overall portfolio.

The Group makes use of both accounting and economic foreign

exchange exposures, as an offset against the impact of changes in

foreign exchange rates on the value of non-sterling-denominated risk-

weighted assets. This involves the holding of a structurally open

currency position; sensitivity is minimised where, for a given currency,

the ratio of the structural open position to risk-weighted assets equals

the CET1 ratio. Continually evaluating this structural open currency

position against evolving non-sterling-denominated risk-weighted

assets mitigates volatility in the Group's CET1 ratio.

![AuditedLozenge.gif](lbk-20251231_g16.gif)

The Group manages foreign currency accounting exposure via cash <br>flow hedge accounting, utilising currency swaps and forward foreign <br>exchange trades. All non-structural foreign exchange exposures in the <br>non-trading book are managed centrally within allocated exposure <br>limits.<br>

**Monitoring**

The appropriate limits and triggers are monitored by senior executive

committees within the Banking divisions. Banking assets, liabilities

and associated hedging are actively monitored and if necessary

rebalanced to be within agreed tolerances.

**Defined benefit pension schemes**

**Identification and assessment**

The Group's defined benefit pension schemes are exposed to risks

that impact their assets and liabilities, that could adversely impact

the Group.

• The liability discount rate exposes the Group to interest rate risk

and credit spread risk, which is partially offset by fixed interest

assets, such as government and corporate bonds and swaps

• Increases to pensions in deferment and in payment expose the

Group to inflation risk, which is partially offset by real assets, such

as index-linked gilts and swaps

• The schemes' asset holdings expose the Group to investment risk.

Assets are invested in a diversified portfolio of debt securities,

equities and other return-seeking assets

• The schemes' membership exposes the Group to longevity risk,

which is partially offset by longevity swap assets.

For further information on defined benefit pension scheme assets and

liabilities please refer to note 11 to the consolidated financial

statements on **page [97](#iddf3b01e92c34e0691e008ab468ef39d_148)**.

The schemes are assessed on a number of different measures for

differing purposes, including but not limited to, the IAS 19 accounting

basis for annual reporting and accounts, and the Trustees' Technical

Provisions funding basis for agreeing contributions into the schemes.

Management of the schemes' assets is primarily the responsibility of

the Trustees of the schemes, who are responsible for setting the

investment strategy in consultation with the Group, and, for agreeing

funding requirements with the Group as part of the triennial valuation

process.

Pension scheme risks are measured and monitored using a number of

different metrics and use a range of techniques including scenario

analysis and stress testing.

**Management and mitigation**

The Group takes an active involvement in agreeing risk mitigation

strategies with the schemes' Trustees.

The current and long-term investment strategy is regularly reviewed

to ensure an appropriate balance of risk. An interest rate and inflation

hedging programme is in place to reduce liability risk and the schemes

hold a diversified portfolio of debt securities and other return seeking

assets.

The merits of longevity risk transfer and hedging solutions are

reviewed regularly, and the Trustees have put in place longevity swaps

to mitigate longevity risk.

**Monitoring**

In addition to the wider risk management framework, governance of

the schemes includes a specialist Group Pensions Committee.

The surplus, or deficit, in the schemes is tracked regularly along with

various single factor and scenario stresses which consider the risks to

the assets and liabilities holistically. Key metrics are monitored

regularly including the impact on the Group's capital resources of the

schemes, the performance against risk limits and triggers, and the

performance of the hedged asset and liability matching positions.

**Trading portfolios**

**Identification and assessment**

The Group's trading activity is small relative to its peers. The Group's

trading activity is undertaken primarily to meet the financial

requirements of commercial and retail customers for foreign exchange

and interest rate products. These activities support customer flow

and market making activities.

---

| | |
|:---|:---|
| **59** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

All trading activities are performed within the Commercial Banking

division. While the trading positions taken are generally small, any

extreme moves in the main risk factors and other related risk factors

could cause significant losses in the trading book depending on the

positions at the time. The average 95% 1-day trading VaR (Value at

Risk; diversified across risk factors) was £0.04million for 31 December

2025 compared to £0.05 million for 31 December 2024.

Trading market risk measures are applied to all of the Group's

regulatory trading books and they include daily VaR, sensitivity-based

measures, and stress testing calculations.

The Group internally uses stress testing as the primary risk measure,

complemented by VaR, for all trading book positions.

The risk of loss measured by the VaR model is the loss in earnings

which is not expected to be exceeded with 95% confidence. The total

and average trading VaR numbers reported below have been obtained

after the application of the diversification benefits across the five risk

types. The maximum and minimum VaR reported for each risk

category did not necessarily occur on the same day as the maximum

and minimum VaR reported at Group level.

The Group's closing VaR, allowing for diversification, on 31 December

2025 across interest rate risk, foreign exchange risk, equity risk, credit

spread risk and inflation risk was less than £0.05 million. During the

year ended 31 December 2025, the Group's minimum diversified VaR

was less than £0.04 million, its average VaR was £0.04 million and

maximum VaR was £0.14 million.

For the year ended 31 December 2025, excluding the effects of

diversification, the maximum total VaR for all of the above risks was

£0.14 million, the average total VaR was £0.04 million and minimum

VaR was less than £0.04 million. The closing VaR on 31 December

2025, excluding the effects of diversification, was less than £0.05

million.

For the year ended 31 December 2025, the average interest rate risk

VaR was £0.04 million, the maximum interest rate risk VaR was £0.14

million and the minimum interest rate risk VaR was less than £0.04

million. The minimum, maximum and average VaR for all other risk

types was less than £0.02 million. As at 31 December 2025, the closing

VaR for all risk types was less than £0.05 million.

The market risk for the trading book continues to be low relative to

the size of the Group and in comparison to peers. This reflects the

fact that the Group's trading operations are customer-centric and

focused on hedging and recycling client risks.

Although it is an important market standard measure of risk, VaR has

limitations. One of them is the use of a limited historical data sample

which influences the output by the implicit assumption that future

market behaviour will not differ greatly from the historically observed

period. Another known limitation is the use of defined holding periods

which assumes that the risk can be liquidated or hedged within that

holding period. Also calculating VaR at the chosen confidence interval

does not give enough information about potential losses which may

occur if this level is exceeded. The Group fully recognises these

limitations and supplements the use of VaR with a variety of other

measurements which reflect the nature of the business activity. These

include detailed sensitivity analysis, position reporting and a stress

testing programme.

**Management and mitigation**

The level of exposure is controlled by establishing and communicating

the approved risk limits and controls through policies and procedures

that define the responsibility and authority for risk taking. Market risk

limits are clearly and consistently communicated to the business. Any

new or emerging risks are brought within risk reporting and defined

limits.

**Monitoring**

Trading risk is monitored daily against 1-day 95% VaR and stress

testing limits. These limits are complemented with position level

action triggers and profit and loss referrals. Risk and position limits are

set and managed at both desk and overall trading book levels. They

are reviewed at least annually and can be changed as required within

the overall Group risk appetite framework.

**Model risk**

**Definition**

Model risk is the potential for adverse consequences from model

errors or the inappropriate use of modelled outputs to inform

business decisions. Adverse consequences could lead to a

deterioration in the prudential position, non-compliance with

applicable laws and/or regulations, or damage to the Group's

reputation. Model risk can also lead to financial loss, as well as

qualitative limitations such as the imposition of restrictions on

business activities.

The Risk overview, on **page [7](#i50da067574354549a782044fe1ba4dde_60588)**, contains a summary of model risk

performance and key mitigating actions.

**Risk appetite**

Models underpin a broad range of activities which are essential in

supporting the Group's strategy. The Group manages model risk to

prevent potential adverse consequences arising from model errors or

the inappropriate use of modelled outputs to inform business

decisions.

Risk appetite is expressed through tolerances measuring the

effectiveness of the model risk control framework and model use.

**Identification and assessment**

The Group uses models to support a broad range of activity, including:

• Capital adequacy calculation

• Formulating business strategies

• Informing business decisions

• Identifying and measuring risks

• Credit decisioning

• Fraud and economic crime

• Pricing models

• Impairment calculation

• Stress testing and forecasting

• Market risk measurement

These models use quantitative methods to process input data into

quantitative or qualitative outputs which have a quantitative measure

associated with them. They use simplifications of complex real-world

systems and processes, therefore the use of models creates model

risk.

The wide scope and breadth of coverage leads to model risk exposure

across a number of the Group's principal activities.

A comprehensive discovery exercise has been undertaken across the

Group to identify all models (and in-scope deterministic quantitative

methods), complimented with model risk training to help colleagues

with continued identification.

All models which are under development, implemented for use, or

decommissioned are recorded in the model inventory. The inventory

contains a record of all direct and indirect model interdependencies

to obtain a better understanding of aggregate model risk.

A risk-based model tiering approach is used to prioritise validation

activities and to identify and classify those models that pose the most

risk to the Group. All models are assigned a model tier by the model

owner, based on model materiality and complexity. Challenge by

independent validation teams is provided where appropriate.

**Management and mitigation**

The Group manages model risk to prevent potential adverse

consequences arising from model errors or the inappropriate use of

modelled outputs to inform business decisions. Adverse consequences

could lead to deterioration in the prudential position, non-compliance

with applicable laws and/or regulations, or damage to the Group's

reputation.

Model risk can also lead to financial loss, as well as qualitative

limitations such as the imposition of restrictions on business activities.

Material models are independently validated to ensure model risks are

appropriately identified, assessed and mitigated. The model

validation process provides ongoing, independent and effective

challenge to model performance and use. The outputs of the

validation are documented in a model validation report, which

outlines findings and assigns an independent risk rating.

---

| | |
|:---|:---|
| **60** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

New model developments, material changes to existing models

or new model uses all require pre-approval before implementation

and use.

Model issues and limitations are identified throughout the model

lifecycle. Detailed action plans are created to remediate model issues

and are captured in the model inventory. Model limitations are clearly

outlined within model development documentation.

Post model adjustments can be used after model approval to mitigate

model weaknesses where unforeseen risks and uncertainties are not

adequately reflected in models. There must be a clear rationale for

use.

The evolution of AI systems will support the Group in increasing

productivity and reimagining the customer experience through

innovative solutions. However, these advancements introduce unique

model risks. To address these risks, additional controls are being

developed to support the safe and controlled use of the Group's AI

aspirations.

**Monitoring**

Ongoing performance monitoring is undertaken to assess model

performance against established tolerances.

Periodic validations performed by both the model owner and

independent validation teams provide an in-depth assessment of

fitness for purpose, at a frequency and depth determined by the

model's risk tier.

**Reporting**

Board model risk appetite metrics and management measures are

reported to the Board and Group Model Governance Committee as

required. This provides senior management with visibility of the

Group's model risk exposure.

Regulatory reports required by the PRA are submitted within

mandated timelines. Processes are in place to demonstrate, evidence

and attest to regulatory compliance.

**Operational risk**

**Definition**

Operational risk is defined as the risk of actual or potential impact to

the Group (financial and/or non-financial) resulting from inadequate

or failed internal processes, people, and systems or from external

events.

Resilience is core to the management of operational risk within the

Group to ensure that business processes (including those that are

outsourced) can withstand operational risks and can respond to and

meet customer and stakeholder needs when continuity of operations

is compromised.

**Level two risks**

Business continuity; Change execution; Data and privacy; Financial

reporting and tax; Health, safety and premises; Information, cyber

and physical security; Internal and external supplier; IT systems;

Payments and transaction execution; People

The Risk overview, on **page [8](#i50da067574354549a782044fe1ba4dde_60603)**, contains a summary of operational risk

performance and key mitigating actions.

**Risk appetite**

The Group manages and mitigates inherent operational risk to serve

our customers and meet our strategic objectives, however accepts

that it is not practical or economic to avoid all operational risks.

The Group accepts that operational disruption and material

operational risk events may occur. When they do, it responds quickly,

seeking to protect customers, the Group, and the wider market from

non-financial impacts and prevent reoccurrence.

Risk appetite is expressed through individual tolerances for each of

the Group's operational risks, allowing risk decisions to be taken

within clear boundaries.

**Identification and assessment**

The principal operational risk to the Group covers a number of level

two operational risks, which could result in customer harm, unfair

outcomes, colleague detriment, financial loss, regulatory censure and/

or reputational damage. A number of these risks could increase where

there is a reliance on third-party suppliers to provide services to the

Group or its customers.

Horizon scanning is used to identify both medium- and long-term

operational risks that could affect the ability to achieve strategic

objectives. Similarly, the emerging and topical risks provide a forward-

looking view of themes with the potential to alter execution of

strategy or operations in the medium to long term.

Scenario analysis and loss forecasting form an integral part of

identifying operational risk, focusing on severe but plausible events

that have an impact on customers, colleagues, reputation, or finances.

Scenario analysis findings are used to inform risk management

activity, such as identifying control improvements or risk exposures

that are not fully understood. New scenarios or enhancements to

existing scenarios are identified by considering emerging risks, threats,

or changes to the risk profile. Loss forecasting feeds directly into

capital planning.

---

| | |
|:---|:---|
| **61** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Risk management** continued

**Operational risk events by risk category (losses greater than or equal to £10,000)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **% of total volume** | **% of total volume** | **% of total losses** | **% of total losses** |
|  | **2025** | 2024<sup>1</sup> | **2025** | 2024<sup>1</sup> |
| Business disruption and system failures | **0.44** | 1.04 | **0.08** | 0.74 |
| Clients, products and business practices<sup>2</sup> | **2.00** | 1.91 | **81.44** | 82.58 |
| Damage to physical assets | **0.03** | 0.17 | **–** | 0.02 |
| Employee practices and workplace safety | **0.29** | 0.60 | **0.04** | 0.23 |
| Execution, delivery and process management | **5.43** | 11.84 | **9.41** | 7.66 |
| External fraud<sup>3</sup> | **91.68** | 84.17 | **9.03** | 8.76 |
| Internal fraud<sup>3</sup> | **0.13** | 0.27 | **–** | 0.01 |
| **Total** | **100.00** | 100.00 | **100.00** | 100.00 |

---

12024 figures have been restated to reflect any losses that occurred during the year and were captured after the 2024 financial year-end.

2The risk management of clients, products and business practices is outlined within conduct risk, on page [29](#i3efff9ce8ef742dfaa3138e28e82339d_11841).

3Fraud level two risk is explained in further detail under economic crime risk on page [50](#iddf3b01e92c34e0691e008ab468ef39d_46).

**Management and mitigation**

Controls are activities performed to reduce the likelihood of a risk

occurring or the impact of a risk should it occur. Controls are

established across the business and can be preventative, detective, or

relate to recovery. Controls can also be manual, semi or fully

automated, and their performance is monitored. All types of controls

come together to form a robust control environment.

Key controls, defined as those providing the greatest defence against

risks materialising, are identified and assessed as part of the Group's

Risk and Control Self Assessment (RCSA) process to ensure they are

adequately designed and operating effectively.

Issues and actions are used to address identified risk exposure or

weaknesses in the control environment in a consistent manner.

The operational risk events by risk category table above shows high

level loss and event trends for the Group using Basel II categories.

Based on data captured on the Group's RCSA, in 2025 the highest

frequency of events occurred in external fraud with 92% of the total

volume. Clients, products and business practices accounted for the

highest losses by value at 81%. Conduct risks are explained in further

detail on **page 29**. Operational risk losses and scenario analysis is used

to inform the Internal Capital Adequacy Assessment Process (ICAAP).

The Group calculates its minimum (Pillar I) operational risk capital

requirements using The Standardised Approach (TSA). Pillar II is

calculated using internal and external loss data and severe but

plausible scenarios that may occur in the next 12 months.

Specific mitigating actions for level two operational level risks are:

**Business continuity**

The Group remains committed to managing operational resilience

risks and ensuring lessons are learned from internal and external

events of disruption, which may have an impact on the Group's ability

to continue operations. The Group's priority is centred on minimising

any potential impacts to the Group and its customers, as well as the

wider financial sector and UK economy, such as through scenario

analysis and testing, business continuity, supplier exit planning and

implementation of 'resilience by design'.

**Change execution**

The Group takes a range of mitigating actions with respect to change

execution risk.

These include the following:

• Ensuring there are sufficient, appropriately skilled colleagues to

support the safe delivery of the Group's current and future change

portfolio

• Businesses assess the potential impacts of undertaking any change

activity on their ability to execute effectively, on customers and

colleagues and on the potential consequences for existing business

risk profiles

• Ensuring compliance with the change policy and associated

policies and procedures, which set out the principles and key

controls that apply across the business and are aligned to the

Group's risk appetite

• The implementation of effective governance and control

frameworks to ensure adequate controls are in place to manage

change activity and act to mitigate the change execution risks

identified. These controls, such as testing, are monitored in line

with the change policy and RMF

• Events and incidents related to change activities are escalated and

managed appropriately in line with risk framework guidance

**Data and privacy**

The Group continues to invest to reduce data risk exposure, by:

• Delivering a strategy focused on data management and culture,

data-driven insights, platforms, tooling and AI-enablement

• Enhancing data quality and capability, such as standardised

controls implemented across critical data elements

• Embedding data privacy impact assessments in the processing of

high-risk data

**Financial reporting and tax**

The Group maintains risk management systems and internal controls

relating to the financial reporting and tax processes ensuring:

• The consistent and appropriate application of accounting policies,

the accurate recording of transactions, which are undertaken in

accordance with delegated authorities, and safeguarding of assets

with liabilities properly stated

• The calculation, preparation and reporting of financial, regulatory

(financial) and tax outcomes in accordance with applicable

International Financial Reporting Standards, statutory and

regulatory requirements, such as the UK Finance Code for Financial

Reporting Disclosure and the US Sarbanes-Oxley Act

• Ongoing monitoring to assess the impact of emerging regulation

and legislation on financial, regulatory (financial) and tax reporting

• An accurate view of the Group's performance to allow the Board

and senior management to appropriately manage the affairs and

strategy of the business and each of its regulated entities

---

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|:---|:---|
| **62** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Risk management** continued

**Health and safety and premises**

The Group strives to ensure compliance with legal and regulatory

requirements, embedding compliant and appropriate colleague

behaviours in line with its policies, values and people risk priorities.

The Group continues to monitor horizon scanning, risk assessments

and any incident information to continually improve its health, safety

and premises risk management. Colleagues also regularly complete

health and safety training to ensure that policies, standards,

procedures, processes and practices are understood and implemented

effectively.

**Information, cyber and physical security**

The Group adopts a risk-based approach to mitigate cyber threats it

faces. Specifically, the Group continues to enhance access controls

across certain business applications and associated IT infrastructure.

The effective operation of the Group's estate is supported by an IT

and Cyber Security Governance framework, guided by a threat-based

strategy which underpins investment decisions. The ongoing

protection of the estate and confidentiality of material information is

ensured through adherence to the Group Security Policy which has

been aligned to industry good practice including the NIST Cyber

Security Framework; and material laws and regulations. The Group

engages a specialist third-party consultancy on a periodic basis, to

assess the maturity of its cyber security programme, in assessing,

identifying and managing material risks from cyber security threats.

The Lloyds Banking Group and Ring-Fenced Banks Risk Committee is

responsible for ensuring that management has processes in place

designed to identify and evaluate information, cyber and security risks

that the Group is exposed to, implementing processes and

programmes to manage these risks and mitigate related incidents

within appetite. The Board Risk Committee (BRC) continues to be

supported by the IT and Cyber Advisory Forum (ITCAF), which is

attended by the BRC chair and other Board members. ITCAF

dedicates time and attention to reviewing and challenging risks

associated with IT infrastructure, IT strategy, IT resilience and cyber

risks. Senior management is responsible for identifying, considering

and assessing material IT systems and security risks on an ongoing

basis, establishing processes to ensure that such potential risk

exposures are monitored, putting in place appropriate mitigation

measures and maintaining control improvement programmes.

**Internal and external supplier**

The threat landscape associated with third party suppliers and the

critical services they provide continues to receive a significant amount

of attention. The Group acknowledges the importance of control and

responsibility for critical business services and processes, which could

cause significant harm to the Group's customers

The Group segments its suppliers by criticality and has processes in

place to support ongoing supplier management, including:

• Policy expectations are underpinned by standards, notably the

sourcing and supply chain management framework

• All material arrangements are set out in written agreements and

based on Group standard terms, which comply with regulations,

including the expectation that all sub-outsourcing is managed in

line with the supplier's contractual obligations to the Group

• A risk-proportionate process exists for onboarding and managing

third-party arrangements through the life cycle

• Pre-outsourcing and ongoing risk assessments to identify key

operational and financial risks, including on-site or virtual

assurance for suppliers with a higher criticality assessment

• Assessments drive the level of ongoing supplier governance,

assurance and monitoring. For example, the Group provides

training and other resources to its suppliers to support IT systems

and information security resilience in its supply chain

**IT systems**

The Group continues its journey to simplify its technology estate, in

line with its strategy, through the targeted simplification of legacy

applications, infrastructure platforms and on-premise data centres.

The Group has controls in place to manage legacy technology, IT

change and monitoring, incident management and recovery. IT

disaster recovery is a key capability to recover from multiple

scenarios, ranging from likely and medium impact (such as

infrastructure failure for a single application), to low likelihood with

severe or material impact scenarios, such as the loss of a data centre

or cloud region.

**People**

The Group takes many mitigating actions with respect to people risk.

Key areas of focus include:

• Focusing on leadership and colleague engagement, through

delivery of strategies to attract, retain and develop high calibre

people together with a focus on creating a strong and resilient

talent pipeline

• Continued focus on the Group's culture and inclusivity strategy by

developing and delivering initiatives that reinforce the appropriate

behaviours which generate the best possible long- term outcomes

for customers and colleagues

• Managing organisational capability and capacity through divisional

people strategies to ensure there are the right skills and resources

to meet customers' needs and deliver the Group's strategic plan

• Ensuring colleague wellbeing strategies and support are in place to

meet colleague needs, alongside skills and capability growth

required to maximise the potential of our people

• Ensuring compliance with legal and regulatory requirements,

embedding compliant and appropriate colleague behaviours in line

with Group policies, values and its people risk priorities

• Reviewing and enhancing people processes to ensure they are fit

for purpose and operationally resilient

**Payments and transaction execution**

The Group adopts a robust approach to minimising risks associated

with payments or transaction execution, which may have an impact

on customers, clients, or internal operations. This includes processing

and execution failures relating to clients and products, such as errors

in payment processing or management of payments and claims,

including those where a third party is operating on the Group's behalf.

**Monitoring**

Events and their associated impacts are identified, escalated and

recorded to ensure that losses are managed in line with risk appetite,

with some events requiring immediate notification to the regulator.

Effective root cause analysis is undertaken to identify issues that need

to be resolved and where action is necessary to strengthen the control

environment, including resilience. Events data is also used to inform

the amount of capital required to cover unexpected severe

operational risk losses.

Changes to the internal and external environment are regularly

monitored to ensure there is an accurate and up-to-date view of the

operational risk profile. This includes but is not limited to:

• Utilising outputs from horizon scanning to determine changes in

regulatory obligations or the external environment

• Using key risk, control and performance indicators (as relevant) to

monitor the risk profile

• Monitoring risk appetite metrics and management measures

against agreed thresholds, including the escalation of breaches

• Understanding the impact of change and/or transformation

activity on the risk and control environment

• Ensuring strategic changes or new product offerings are monitored

and impacts understood

**Reporting**

Operational risk reporting ensures senior management has full

visibility of the Group's operational risk exposure to enable informed

decision making.

---

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**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; risks related to new and emerging technologies,

including artificial intelligence; 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.

---

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**Consolidated income statement**

for the year ended 31 December

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Note | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Interest income |  | **28208** | 28386 | 25300 |
| Interest expense |  | **(14845)** | (15794) | (11591) |
| **Net interest income** | 5 | **13363** | 12592 | 13709 |
| Fee and commission income |  | **2515** | 2416 | 2456 |
| Fee and commission expense |  | **(1254)** | (1478) | (1104) |
| Net fee and commission income | 6 | **1261** | 938 | 1352 |
| Net trading income | 7 | **523** | 597 | 384 |
| Other operating income | 8 | **3282** | 2944 | 2922 |
| **Other income** |  | **5066** | 4479 | 4658 |
| **Total income** |  | **18429** | 17071 | 18367 |
| Operating expenses | 9 | **(12165)** | (11927) | (10968) |
| Impairment | 13 | **(792)** | (456) | (343) |
| **Profit before tax** |  | **5472** | 4688 | 7056 |
| Tax expense | 14 | **(1616)** | (1202) | (1849) |
| **Profit for the year** |  | **3856** | 3486 | 5207 |
| Profit attributable to ordinary shareholders |  | **3425** | 3101 | 4858 |
| Profit attributable to other equity holders |  | **404** | 363 | 334 |
| Profit attributable to equity holders |  | **3829** | 3464 | 5192 |
| Profit attributable to non-controlling interests |  | **27** | 22 | 15 |
| **Profit for the year** |  | **3856** | 3486 | 5207 |

---

The accompanying notes are an integral part of the consolidated financial statements.

---

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|:---|:---|
| **74** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Consolidated statement of comprehensive income**

for the year ended 31 December

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<sup>1</sup><br>£m<br>| 2023<sup>1</sup> <br>£m<br>|
| **Profit for the year** | **3856** | 3486 | 5207 |
| **Other comprehensive income** |  |  |  |
| **Items that will not subsequently be reclassified to profit or loss:** |  |  |  |
| Post-retirement defined benefit scheme remeasurements: |  |  |  |
| Remeasurements before tax | **(520)** | (768) | (1633) |
| Current tax | **50** | 50 | 376 |
| Deferred tax | **85** | 154 | 52 |
|  | **(385)** | (564) | (1205) |
| Gains and losses attributable to own credit risk: |  |  |  |
| Losses before tax | **(126)** | (78) | (234) |
| Deferred tax | **35** | 22 | 66 |
|  | **(91)** | (56) | (168) |
|  | **(476)** | (620) | (1373) |
| **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 comprehensive income: | Movements in revaluation reserve in respect of debt securities held at fair value through other comprehensive income: |  |  |
| Change in fair value | **117** | (52) | (41) |
| Current tax | **1** | 1 | 1 |
| Deferred tax | **(32)** | 14 | 11 |
|  | **86** | (37) | (29) |
| Income statement transfers in respect of disposals | **108** | 157 | 140 |
| Deferred tax | **(33)** | (44) | (38) |
|  | **75** | 113 | 102 |
| Income statement transfers in respect of impairment | **(1)** | (3) | (2) |
|  | **160** | 73 | 71 |
| Movements in cash flow hedging reserve: |  |  |  |
| Effective portion of changes in fair value taken to other comprehensive income | **378** | (2317) | 725 |
| Deferred tax | **(106)** | 649 | (207) |
|  | **272** | (1668) | 518 |
| Net income statement transfers | **1762** | 2297 | 1517 |
| Deferred tax | **(493)** | (643) | (421) |
|  | **1269** | 1654 | 1096 |
|  | **1541** | (14) | 1614 |
| Movements in foreign currency translation reserve (tax: £nil) | **70** | (65) | (33) |
|  | **1771** | (6) | 1652 |
| **Total other comprehensive income (loss) for the year, net of tax** | **1295** | (626) | 279 |
| **Total comprehensive income for the year** | **5151** | 2860 | 5486 |
| Total comprehensive income attributable to ordinary shareholders | **4720** | 2475 | 5137 |
| Total comprehensive income attributable to other equity holders | **404** | 363 | 334 |
| Total comprehensive income attributable to equity holders | **5124** | 2838 | 5471 |
| Total comprehensive income attributable to non-controlling interests | **27** | 22 | 15 |
| **Total comprehensive income for the year** | **5151** | 2860 | 5486 |

---

<sup>1</sup>Current tax and deferred tax impacts, previously shown in aggregate for each reserve, are now presented alongside each line item. Comparatives are represented on a consistent

basis.

The accompanying notes are an integral part of the consolidated financial statements.

---

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|:---|:---|
| **75** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Consolidated balance sheet**

at 31 December

---

| | | | |
|:---|:---|:---|:---|
|  | Note | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Assets** |  |  |  |
| Cash and balances at central banks |  | **37720** | 42396 |
| Financial assets at fair value through profit or loss | 16 | **2279** | 2321 |
| Derivative financial instruments | 16 | **3260** | 4235 |
| Loans and advances to banks |  | **5836** | 6433 |
| Loans and advances to customers | 18 | **461504** | 441907 |
| Reverse repurchase agreements |  | **43962** | 44143 |
| Debt securities |  | **11983** | 11854 |
| Due from fellow Lloyds Banking Group undertakings |  | **1182** | 560 |
| Financial assets at amortised cost |  | **524467** | 504897 |
| Financial assets at fair value through other comprehensive income | 16 | **36257** | 30344 |
| Goodwill and other intangible assets | 21 | **5692** | 5804 |
| Current tax recoverable |  | **1263** | 338 |
| Deferred tax assets | 14 | **3917** | 4785 |
| Retirement benefit assets | 11 | **2695** | 3028 |
| Other assets | 22 | **13785** | 13065 |
| **Total assets** |  | **631335** | 611213 |
| **Liabilities** |  |  |  |
| Deposits from banks |  | **3085** | 3144 |
| Customer deposits |  | **465207** | 451794 |
| Repurchase agreements at amortised cost |  | **37567** | 37760 |
| Due to fellow Lloyds Banking Group undertakings |  | **3852** | 4049 |
| Financial liabilities at fair value through profit or loss | 16 | **4243** | 4630 |
| Derivative financial instruments | 17 | **4286** | 5787 |
| Notes in circulation |  | **2118** | 2121 |
| Debt securities in issue at amortised cost | 24 | **52132** | 45281 |
| Other liabilities | 25 | **5772** | 7211 |
| Retirement benefit obligations | 11 | **120** | 122 |
| Current tax liabilities |  | **35** | 33 |
| Deferred tax liabilities | 14 | **146** | 125 |
| Provisions | 26 | **2772** | 2198 |
| Subordinated liabilities | 27 | **8020** | 7211 |
| **Total liabilities** |  | **589355** | 571466 |
| **Equity** |  |  |  |
| Share capital | 28 | **1574** | 1574 |
| Share premium account |  | **600** | 600 |
| Other reserves | 29 | **4160** | 2389 |
| Retained profits |  | **30208** | 29412 |
| **Ordinary shareholders' equity** |  | **36542** | 33975 |
| Other equity instruments | 30 | **5367** | 5692 |
| **Total equity excluding non-controlling interests** |  | **41909** | 39667 |
| Non-controlling interests |  | **71** | 80 |
| **Total equity** |  | **41980** | 39747 |
| **Total equity and liabilities** |  | **631335** | 611213 |

---

The accompanying notes are an integral part of the consolidated financial statements.

The directors approved the consolidated financial statements on 26 February 2026.

---

| | | |
|:---|:---|:---|
| ![1.8.3 43795_Signature_RobinBudenberg-2.jpg](lbk-20251231_g2.jpg) | ![1.8.1 41326_Signature_CharlieNunn_v2-2.jpg](lbk-20251231_g17.jpg) | ![1.8.2 41326_Signature_WilliamChalmers-2.jpg](lbk-20251231_g18.jpg) |
| **Sir Robin Budenberg**<br>Chair<br>| **Charlie Nunn**<br>Group Chief Executive<br>| **William Chalmers**<br>Chief Financial Officer<br>|

---

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|:---|:---|
| **76** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Consolidated statement of changes in equity**

for the year ended 31 December

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** |  |  |  |
| | **Share** <br>**capital**<sup>2</sup><br>**£m**<br>| **Share** <br>**premium**<sup>2</sup><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**<br>| **Non-**<br>**controlling**<br>**interests**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2025 | **1574** | **600** | **2389** | **29412** | **33975** | **5692** | **80** | **39747** |
| **Comprehensive income** |  |  |  |  |  |  |  |  |
| Profit for the year | **–** | **–** | **–** | **3425** | **3425** | **404** | **27** | **3856** |
| *Other comprehensive income* |  |  |  |  |  |  |  |  |
| Post-retirement defined benefit <br>scheme remeasurements, net of <br>tax<br>| **–** | **–** | **–** | **(385)** | **(385)** | **–** | **–** | **(385)** |
| Movements in revaluation <br>reserve in respect of FVOCI <br>assets, net of tax:<br>|  |  |  |  |  |  |  |  |
| Debt securities | **–** | **–** | **160** | **–** | **160** | **–** | **–** | **160** |
| Gains and losses attributable to <br>own credit risk, net of tax<br>| **–** | **–** | **–** | **(91)** | **(91)** | **–** | **–** | **(91)** |
| Movements in cash flow hedging <br>reserve, net of tax<br>| **–** | **–** | **1541** | **–** | **1541** | **–** | **–** | **1541** |
| Movements in foreign currency <br>translation reserve, net of tax<br>| **–** | **–** | **70** | **–** | **70** | **–** | **–** | **70** |
| Total other comprehensive loss | **–** | **–** | **1771** | **(476)** | **1295** | **–** | **–** | **1295** |
| **Total comprehensive income**<sup>1</sup> | **–** | **–** | **1771** | **2949** | **4720** | **404** | **27** | **5151** |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends (note 31) | **–** | **–** | **–** | **(2390)** | **(2390)** | **–** | **(16)** | **(2406)** |
| Distributions on other equity <br>instruments<br>| **–** | **–** | **–** | **–** | **–** | **(404)** | **–** | **(404)** |
| Issue of other equity <br>instruments (note 30)<br>| **–** | **–** | **–** | **(14)** | **(14)** | **1514** | **–** | **1500** |
| Repurchases and redemptions <br>of other equity instruments <br>(note 30)<br>| **–** | **–** | **–** | **81** | **81** | **(1839)** | **–** | **(1758)** |
| Capital contributions received | **–** | **–** | **–** | **151** | **151** | **–** | **–** | **151** |
| Return of capital contributions | **–** | **–** | **–** | **(1)** | **(1)** | **–** | **–** | **(1)** |
| Changes in non-controlling <br>interests<br>| **–** | **–** | **–** | **20** | **20** | **–** | **(20)** | **–** |
| **Total transactions with owners** | **–** | **–** | **–** | **(2153)** | **(2153)** | **(729)** | **(36)** | **(2918)** |
| Realised gains and losses on <br>equity shares held at FVOCI<br>| **–** | **–** | **–** | **–** | **–** | **–** | **–** | **–** |
| **At 31 December 2025** | **1574** | **600** | **4160** | **30208** | **36542** | **5367** | **71** | **41980** |

---

1 Total comprehensive income attributable to owners of the parent was a surplus of £5,124 million (2024: surplus of £2,838 million; 2023: surplus of £5,471 million).

2 Share capital and share premium, previously presented in aggregate, are now shown separately. Comparatives have been represented on a consistent basis.

Further details of movements in the Group's share capital, reserves and other equity instruments are provided in notes 28 to 30.

The accompanying notes are an integral part of the consolidated financial statements.

---

| | |
|:---|:---|
| **77** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Consolidated statement of changes in equity** continued

for the year ended 31 December

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders |  |  |  |
|  | Share <br>capital<sup>1</sup><br>£m<br>| Share <br>premium<sup>1</sup> <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<br>| Non-<br>controlling<br>interests<br>£m<br>| Total<br>£m<br>|
| At 1 January 2024 | 1574 | 600 | 2395 | 30786 | 35355 | 5018 | 58 | 40431 |
| **Comprehensive income** |  |  |  |  |  |  |  |  |
| Profit for the year | – | – | – | 3101 | 3101 | 363 | 22 | 3486 |
| *Other comprehensive income* |  |  |  |  |  |  |  |  |
| Post-retirement defined benefit <br>scheme remeasurements, net of <br>tax<br>| – | – | – | (564) | (564) | – | – | (564) |
| Movements in revaluation <br>reserve in respect of FVOCI <br>assets, net of tax:<br>|  |  |  |  |  |  |  |  |
| Debt securities | – | – | 73 | – | 73 | – | – | 73 |
| Gains and losses attributable to <br>own credit risk, net of tax<br>| – | – | – | (56) | (56) | – | – | (56) |
| Movements in cash flow hedging <br>reserve, net of tax<br>| – | – | (14) | – | (14) | – | – | (14) |
| Movements in foreign currency <br>translation reserve, net of tax<br>| – | – | (65) | – | (65) | – | – | (65) |
| Total other comprehensive loss | – | – | (6) | (620) | (626) | – | – | (626) |
| **Total comprehensive (loss)** <br>**income**<br>| – | – | (6) | 2481 | 2475 | 363 | 22 | 2860 |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends (note 31) | – | – | – | (3990) | (3990) | – | – | (3990) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | – | (363) | – | (363) |
| Issue of other equity instruments <br>(note 30)<br>| – | – | – | (6) | (6) | 1174 | – | 1168 |
| Repurchases and redemptions of <br>other equity instruments (note <br>30)<br>| – | – | – | – | – | (500) | – | (500) |
| Capital contributions received | – | – | – | 142 | 142 | – | – | 142 |
| Return of capital contributions | – | – | – | (1) | (1) | – | – | (1) |
| **Total transactions with owners** | – | – | – | (3855) | (3855) | 311 | – | (3544) |
| Realised gains and losses on <br>equity shares held at FVOCI<br>| – | – | – | – | – | – | – | – |
| At 31 December 2024 | 1574 | 600 | 2389 | 29412 | 33975 | 5692 | 80 | 39747 |

---

1 Share capital and share premium, previously presented in aggregate, are now shown separately. Comparatives have been represented on a consistent basis.

The accompanying notes are an integral part of the consolidated financial statements.

---

| | |
|:---|:---|
| **78** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Consolidated statement of changes in equity** continued

for the year ended 31 December

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders |  |  |  |
|  | Share <br>capital<sup>1</sup><br>£m<br>| Share <br>premium<sup>1</sup> <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<br>| Non-<br>controlling<br>interests<br>£m<br>| Total<br>£m<br>|
| At 1 January 2023 | 1574 | 600 | 743 | 31792 | 34709 | 4268 | 82 | 39059 |
| **Comprehensive income** |  |  |  |  |  |  |  |  |
| Profit for the year | – | – | – | 4858 | 4858 | 334 | 15 | 5207 |
| *Other comprehensive income* |  |  |  |  |  |  |  |  |
| Post-retirement defined benefit <br>scheme remeasurements, net of <br>tax<br>| – | – | – | (1205) | (1205) | – | – | (1205) |
| Movements in revaluation <br>reserve in respect of FVOCI <br>assets, net of tax:<br>|  |  |  |  |  |  |  |  |
| Debt securities | – | – | 71 | – | 71 | – | – | 71 |
| Gains and losses attributable to <br>own credit risk, net of tax<br>| – | – | – | (168) | (168) | – | – | (168) |
| Movements in cash flow hedging <br>reserve, net of tax<br>| – | – | 1614 | – | 1614 | – | – | 1614 |
| Movements in foreign currency <br>translation reserve, net of tax<br>| – | – | (33) | – | (33) | – | – | (33) |
| Total other comprehensive <br>income (loss)<br>| – | – | 1652 | (1373) | 279 | – | – | 279 |
| **Total comprehensive income** | – | – | 1652 | 3485 | 5137 | 334 | 15 | 5486 |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends (note 31) | – | – | – | (4700) | (4700) | – | (39) | (4739) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | – | (334) | – | (334) |
| Issue of other equity <br>instruments (note 30)<br>| – | – | – | (5) | (5) | 750 | – | 745 |
| Capital contributions received | – | – | – | 215 | 215 | – | – | 215 |
| Return of capital contributions | – | – | – | (1) | (1) | – | – | (1) |
| **Total transactions with owners** | – | – | – | (4491) | (4491) | 416 | (39) | (4114) |
| Realised gains and losses on <br>equity shares held at FVOCI<br>| – | – | – | – | – | – | – | – |
| At 31 December 2023 | 1574 | 600 | 2395 | 30786 | 35355 | 5018 | 58 | 40431 |

---

1 Share capital and share premium, previously presented in aggregate, are now shown separately. Comparatives have been represented on a consistent basis.

The accompanying notes are an integral part of the consolidated financial statements.

---

| | |
|:---|:---|
| **79** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Consolidated cash flow statement**

for the year ended 31 December

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Note | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| **Cash flows provided by (used in) operating activities** |  |  |  |  |
| Profit before tax |  | **5472** | 4688 | 7056 |
| Adjustments for: |  |  |  |  |
| Change in operating assets | 37(A) | **(22432)** | (21996) | 8923 |
| Change in operating liabilities | 37(B) | **15414** | 4470 | (15325) |
| Non-cash and other items | 37(C) | **5889** | 6051 | 4818 |
| Tax paid |  | **(2357)** | (1432) | (1357) |
| Tax refunded |  | **200** | 970 | – |
| **Net cash provided by (used in) operating activities** |  | **2186** | (7249) | 4115 |
| **Cash flows (used in) provided by investing activities** |  |  |  |  |
| Purchase of financial assets |  | **(19761)** | (10508) | (10303) |
| Proceeds from sale and maturity of financial assets |  | **14296** | 7053 | 5289 |
| Purchase of property, plant and equipment |  | **(4454)** | (3693) | (3489) |
| Purchase of other intangible assets |  | **(1244)** | (1246) | (1473) |
| Proceeds from sale of property, plant and equipment |  | **1528** | 1183 | 979 |
| Proceeds from sale of goodwill and other intangible assets |  | **–** | 8 | – |
| Acquisition of businesses, net of cash acquired | 37(D) | **–** | – | (293) |
| **Net cash used in investing activities** |  | **(9635)** | (7203) | (9290) |
| **Cash flows used in financing activities** |  |  |  |  |
| Dividends paid to ordinary shareholders | 31 | **(2390)** | (3990) | (4700) |
| Distributions on other equity instruments |  | **(404)** | (363) | (334) |
| Dividends paid to non-controlling interests |  | **(16)** | – | (39) |
| Return of capital contributions |  | **(1)** | (1) | (1) |
| Interest paid on subordinated liabilities |  | **(578)** | (366) | (335) |
| Proceeds from issue of subordinated liabilities |  | **1761** | 386 | 670 |
| Proceeds from issue of other equity instruments |  | **1500** | 1168 | 745 |
| Repayment of subordinated liabilities |  | **(913)** | – | (251) |
| Repurchases and redemptions of other equity instruments |  | **(1758)** | (500) | – |
| Borrowings from parent company |  | **4611** | 2895 | 1942 |
| Repayments of borrowings to parent company |  | **(3206)** | (1280) | (931) |
| Interest paid on borrowings from parent company |  | **(413)** | (200) | (210) |
| **Net cash used in financing activities** | **Net cash used in financing activities** | **(1807)** | (2251) | (3444) |
| Effects of exchange rate changes on cash and cash equivalents |  | **143** | (123) | (44) |
| Change in cash and cash equivalents |  | **(9113)** | (16826) | (8663) |
| Cash and cash equivalents at beginning of year |  | **49712** | 66538 | 75201 |
| **Cash and cash equivalents at end of year** | 37(E) | **40599** | 49712 | 66538 |

---

Interest received was £27,498 million (2024: £27,626 million; 2023: £23,847 million) and interest paid was £14,493 million (2024: £14,420

million; 2023: £9,623 million).

The accompanying notes are an integral part of the consolidated financial statements.

---

| | |
|:---|:---|
| **80** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements**

for the year ended 31 December

**Note 1: Basis of preparation**

The consolidated financial statements of Lloyds Bank plc and its subsidiary undertakings (the Group) have been prepared in accordance with

United Kingdom adopted international accounting standards and in conformity with the requirements of the Companies Act 2006. The

financial statements have also been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting

Standards Board (IASB).

The financial information has been prepared under the historical cost convention, as modified by the revaluation of investment properties,

financial assets measured at fair value through other comprehensive income, trading securities and certain other financial assets and liabilities

at fair value through profit or loss and all derivative contracts. The directors consider that it is appropriate to continue to adopt the going

concern basis in preparing the financial statements. In reaching this assessment, the directors have considered the Group's capital and funding

position, the impact of climate change upon the Group's future performance and the results from stress testing scenarios.

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.

Current and deferred tax are presented separately for each movement in the revaluation reserve in respect of debt securities held at fair value

through other comprehensive income and movements in the cash flow hedge reserve within the statement of other comprehensive income.

Previously both current tax and deferred tax were presented in aggregate for each reserve.

The IASB has issued an amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates, effective 1 January 2025. This amendment has

not had a significant impact on the Group.

**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 and IFRS 19 Subsidiaries without Public Accountability: Disclosures.

IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1 Presentation of Financial Statements. While many of the existing

requirements of IAS 1 Presentation of Financial Statements are retained, IFRS 18 Presentation and Disclosure in Financial Statements

introduces additional disclosure obligations in relation to the structure of the income statement, management-defined performance measures,

and the aggregation and disaggregation of financial information. IFRS 18 will have no impact on the Group's net profit as it impacts neither

recognition nor measurement. The new standard will impact the presentation of the Group's results as it requires that operating, investing and

financing activities are presented separately. There will also be a change in the Group's cash flow statement as IFRS 18 requires that the first

line of the cash flow statement is operating profit rather than profit before tax.

IFRS 19 Subsidiaries without Public Accountability: Disclosures is being assessed and is not expected to have a significant impact on the Bank.

IFRS 19 has yet to be 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 Disclosures*. These improvements and

amendments are not expected to have a significant impact on the Group.

**Note 2: Accounting policies**

The Group's accounting policies are set out below. These accounting policies have been applied consistently.

**(A)Consolidation**

The assets, liabilities and results of Group undertakings (including structured entities) are included in the financial statements on the basis of

accounts made up to the reporting date. Group undertakings include subsidiaries, associates and joint ventures. Details of the Group's

subsidiaries and related undertakings are given on **pages [171](#iddf3b01e92c34e0691e008ab468ef39d_439) to [173](#idf1b5d944cb6464cb10eeadc498cf57f_14911).**

Subsidiaries are entities controlled by the Group. The Group controls an entity when it has power over the entity, is exposed to, or has rights

to, variable returns from its involvement with the entity, and has the ability to affect those returns through the exercise of its power. This

generally accompanies a shareholding of more than one half of the voting rights although in certain circumstances a holding of less than one

half of the voting rights may still result in the ability of the Group to exercise control. The existence and effect of potential voting rights that

are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The Group reassesses

whether or not it controls an entity if facts and circumstances indicate that there have been changes to any of the above elements.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group; they are deconsolidated from the date that

control ceases.

Structured entities are entities that are designed so that their activities are not governed by way of voting rights. In assessing whether the

Group has power over such entities in which it has an interest, the Group considers factors such as the purpose and design of the entity; its

practical ability to direct the relevant activities of the entity; the nature of the relationship with the entity; and the size of its exposure to the

variability of returns of the entity.

The treatment of transactions with non-controlling interests depends on whether, as a result of the transaction, the Group loses control of the

subsidiary. Changes in the parent's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity

transactions; any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration

paid or received is recognised directly in equity and attributed to the owners of the parent entity. Where the Group loses control of the

subsidiary, at the date when control is lost the amount of any non-controlling interest in that former subsidiary is derecognised and any

investment retained in the former subsidiary is remeasured to its fair value; the gain or loss that is recognised in profit or loss on the partial

disposal of the subsidiary includes the gain or loss on the remeasurement of the retained interest.

Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated.

The acquisition method of accounting is used to account for business combinations by the Group. The consideration for the acquisition of a

subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration

includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as

incurred except those relating to the issuance of debt instruments (see (E)(4) below) or share capital (see (O) below). Identifiable assets

acquired and liabilities assumed in a business combination are measured initially at their fair value at the acquisition date.

---

| | |
|:---|:---|
| **81** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 2: Accounting policies** continued

**(B)Goodwill**

Goodwill arises on business combinations and represents the excess of the cost of an acquisition over the fair value of the Group's share of the

identifiable assets, liabilities and contingent liabilities acquired. Where the fair value of the Group's share of the identifiable assets, liabilities

and contingent liabilities of the acquired entity is greater than the cost of acquisition, the excess is recognised immediately in the income

statement.

Goodwill is recognised as an asset at cost and is tested at least annually for impairment. For impairment testing, goodwill is allocated to the

cash-generating unit (CGU) or groups of CGUs that are expected to benefit from the business combination. The Group's CGUs are largely

product based for its Retail business and client based for its Commercial Banking business.

An impairment loss is recognised if the carrying amount of a CGU is determined to be greater than its recoverable amount. The recoverable

amount of a CGU is the higher of its fair value less costs to sell and its value in use. If an impairment loss is identified, the carrying value of the

goodwill is written down immediately through the income statement. This impairment loss cannot be reversed in a subsequent period. At the

date of disposal of a subsidiary, the carrying value of attributable goodwill is included in the calculation of the profit or loss on disposal.

**(C)Other intangible assets**

Intangible assets which have been determined to have a finite useful life are amortised on a straight-line basis over their estimated useful life as

follows: up to 7 years for capitalised software; 10 to 15 years for brands and other intangible assets.

Intangible assets with finite useful lives are reviewed at each reporting date to assess whether there is any indication that they are impaired. If

any such indication exists the recoverable amount of the asset is determined and in the event that the asset's carrying amount is greater than

its recoverable amount, it is written down immediately. Certain brands have been determined to have an indefinite useful life and are not

amortised. Such intangible assets are assessed annually to determine whether the asset is impaired and to reconfirm that an indefinite useful

life remains appropriate. In the event that an indefinite life is inappropriate, a finite life is determined and a further impairment review is

performed on the asset.

**(D)Revenue recognition**

**(1)Net interest income**

Interest income and expense are recognised in the income statement using the effective interest method for all interest-bearing financial

instruments, except for those classified at fair value through profit or loss. The effective interest method is a method of calculating the

amortised cost of a financial asset or liability and of allocating the interest income or interest expense over the expected life of the financial

instrument. The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts over the expected life

of the financial instrument to the gross carrying amount of the financial asset (before adjusting for expected credit losses) or to the amortised

cost of the financial liability, including early redemption fees, other fees, and premiums and discounts that are an integral part of the overall

return. In the case of financial assets that are purchased or originated credit-impaired, the effective interest rate is the rate that discounts the

estimated future cash flows to the amortised cost of the instrument. Direct incremental transaction costs related to the acquisition, issue or

disposal of a financial instrument are also taken into account. Interest income from non-credit-impaired financial assets is recognised by

applying the effective interest rate to the gross carrying amount of the asset; for credit-impaired financial assets, the effective interest rate is

applied to the net carrying amount after deducting the allowance for expected credit losses. Impairment policies are set out in (H) below.

**(2)Fee and commission income and expense**

Fees and commissions receivable which are not an integral part of the effective interest rate are recognised as income as the Group fulfils its

performance obligations. The Group's principal performance obligations arising from contracts with customers are in respect of value added

current accounts, credit cards and debit cards. These fees are received, and the Group provides the service, monthly; the fees are recognised in

income on this basis. The Group also receives certain fees in respect of its asset finance business where the performance obligations are

typically fulfilled towards the end of the customer contract; these fees are recognised in income on this basis. Where it is unlikely that the loan

commitments will be drawn, loan commitment fees are recognised in fee and commission income over the life of the facility, rather than as an

adjustment to the effective interest rate for the lending expected to be drawn. Incremental costs incurred to generate fee and commission

income are charged to fee and commission expense as they are incurred.

**(3)Other**

Dividend income is recognised when the right to receive payment is established.

Revenue recognition policies specific to trading income are set out in (E)(3) below and those relating to leases are set out in (J)(1) below.

---

| | |
|:---|:---|
| **82** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 2: Accounting policies** continued

**(E)Financial assets and liabilities**

On initial recognition, financial assets are classified as measured at amortised cost, fair value through other comprehensive income or fair value

through profit or loss, depending on the Group's business model for managing those financial assets and whether the resultant cash flows

represent solely payments of principal and interest on principal outstanding. The Group assesses its business models at a portfolio level based

on its objectives for the relevant portfolio, how the performance of the portfolio is managed and reported, and the frequency of asset sales.

Financial assets with embedded derivatives are considered in their entirety when considering their cash flow characteristics. The Group

reclassifies financial assets only when its business model for managing those assets changes. A reclassification will only take place when the

change is significant to the Group's operations and will occur at a portfolio level and not for individual instruments; reclassifications are

expected to be rare.Equity investments are measured at fair value through profit or loss unless the Group elects at initial recognition to

account for the instruments at fair value through other comprehensive income. For these instruments, principally strategic investments,

dividends are recognised in profit or loss but fair value gains and losses are not subsequently reclassified to profit or loss following

derecognition of the investment.

The Group initially recognises loans and advances, deposits, debt securities in issue and subordinated liabilities when the Group becomes a

party to the contractual provisions of the instrument. Regular way purchases and sales of securities and other financial assets and trading

liabilities are recognised on trade date, being the date that the Group is committed to purchase or sell an asset.

Financial assets are derecognised when the contractual right to receive cash flows from those assets has expired or when the Group has

transferred its contractual right to receive the cash flows from the assets and either: substantially all of the risks and rewards of ownership

have been transferred; or the Group has neither retained nor transferred substantially all of the risks and rewards, but has transferred control.

Financial liabilities are derecognised when the obligation is discharged, cancelled or expires.

**(1)Financial instruments measured at amortised cost**

Financial assets that are held to collect contractual cash flows where those cash flows represent solely payments of principal and interest are

measured at amortised cost. A basic lending arrangement results in contractual cash flows that are solely payments of principal and interest on

the principal amount outstanding. Where the contractual cash flows introduce exposure to risks or volatility unrelated to a basic lending

arrangement such as changes in equity prices or commodity prices, the payments do not comprise solely principal and interest. Financial assets

measured at amortised cost are predominantly loans and advances to customers and banks, reverse repurchase agreements and certain debt

securities used by the Group to manage its liquidity. Loans and advances and reverse repurchase agreements are initially recognised when cash

is advanced to the borrower at fair value inclusive of transaction costs. Interest income is accounted for using the effective interest method

(see (D) above).

Financial liabilities are measured at amortised cost, except for trading liabilities and other financial liabilities designated at fair value through

profit or loss on initial recognition which are held at fair value.

**(2)Financial assets measured at fair value through other comprehensive income**

Financial assets that are held to collect contractual cash flows and for subsequent sale where those cash flows represent solely payments of

principal and interest are recognised in the balance sheet at their fair value, inclusive of transaction costs. Interest calculated using the

effective interest method and foreign exchange gains and losses on assets denominated in foreign currencies are recognised in the income

statement. All other gains and losses arising from changes in fair value are recognised directly in other comprehensive income, until the financial

asset is either sold or matures, at which time, other than in respect of equity shares, the cumulative gain or loss previously recognised in other

comprehensive income is recognised in the income statement. The cumulative revaluation amount in respect of equity shares is transferred

directly to retained profits. The Group recognises a charge for expected credit losses in the income statement (see (H) below). As the asset is

measured at fair value, the charge does not adjust the carrying value of the asset, and this is reflected in other comprehensive income.

**(3)Financial instruments measured at fair value through profit or loss**

Financial assets are classified at fair value through profit or loss where they do not meet the criteria to be measured at amortised cost or fair

value through other comprehensive income or where they are designated at fair value through profit or loss to reduce an accounting mismatch.

All derivatives are carried at fair value through profit or loss, other than those in effective cash flow hedging relationships. Derivatives are

carried on the balance sheet as assets when their fair value is positive and as liabilities when their fair value is negative. Refer to note 16 (Fair

values of financial assets and liabilities) for details of valuation techniques and significant inputs to valuation models.

Derivatives embedded in a financial asset are not considered separately; the financial asset is considered in its entirety when determining

whether its cash flows are solely payments of principal and interest. Derivatives embedded in financial liabilities are treated as separate

derivatives when their economic characteristics and risks are not closely related to those of the host contract and the host contract is not

carried at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in the

income statement.

Trading securities, which are debt securities and equity shares acquired principally for the purpose of selling in the short term or which are part

of a portfolio which is managed for short-term gains, do not meet these criteria and are also measured at fair value through profit or loss.

Financial assets measured at fair value through profit or loss are recognised in the balance sheet at their fair value. Fair value gains and losses

together with interest coupons and dividend income are recognised in the income statement within net trading income.

Financial liabilities are measured at fair value through profit or loss where they are trading liabilities or where they are designated at fair value

through profit or loss in order to reduce an accounting mismatch; where the liabilities are part of a group of liabilities (or assets and liabilities)

which is managed, and its performance evaluated, on a fair value basis; or where the liabilities contain one or more embedded derivatives that

significantly modify the cash flows arising under the contract and would otherwise need to be separately accounted for. Financial liabilities

measured at fair value through profit or loss are recognised in the balance sheet at their fair value. Fair value gains and losses are recognised in

the income statement within net trading income in the period in which they occur, except in the case of financial liabilities designated at fair

value through profit or loss where gains and losses attributable to changes in own credit risk are recognised in other comprehensive income.

The fair values of assets and liabilities traded in active markets are based on current bid and offer prices, respectively, which include the

expected effects of potential changes to laws and regulations, risks associated with climate change and other factors. If the market is not

active the Group establishes a fair value by using valuation techniques. The fair values of derivative financial instruments are adjusted where

appropriate to reflect credit risk (via credit valuation adjustments (CVAs), debit valuation adjustments (DVAs) and funding valuation

adjustments (FVAs)), market liquidity and other risks.

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| **83** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 2: Accounting policies** continued

**(4)Borrowings**

Borrowings (which include deposits from banks, customer deposits, repurchase agreements, debt securities in issue and subordinated liabilities)

are recognised initially at fair value, being their issue proceeds net of transaction costs incurred. These instruments are subsequently stated at

amortised cost using the effective interest method.

Preference shares and other instruments which carry a mandatory coupon or are redeemable on a specific date are classified as financial

liabilities. The coupon on these instruments is recognised in the income statement as interest expense. Securities which carry a discretionary

coupon and have no fixed maturity or redemption date are classified as other equity instruments. Interest payments on these securities are

recognised as distributions from equity in the period in which they are paid.

An exchange of financial liabilities on substantially different terms is accounted for as an extinguishment of the original financial liability and

the recognition of a new financial liability. The difference between the carrying amount of a financial liability extinguished and the new

financial liability is recognised in profit or loss together with any related costs or fees incurred. When a financial liability is exchanged for an

equity instrument, the new equity instrument is recognised at fair value and any difference between the carrying value of the liability and the

fair value of the new equity instrument is recognised in profit or loss.

**(5)Sale and repurchase agreements (including securities lending and borrowing)**

Securities sold subject to repurchase agreements (repos) continue to be recognised on the balance sheet where substantially all of the risks and

rewards are retained. Funds received for repos carried at fair value are included within trading liabilities.

Securities purchased under agreements to resell (reverse repos), where the Group does not acquire substantially all of the risks and rewards of

ownership, are measured at amortised cost or at fair value. Those measured at fair value are recognised within trading securities. The difference

between sale and repurchase price is treated as interest and accrued over the life of the agreements using the effective interest method.

Securities borrowing and lending transactions are typically secured; collateral takes the form of securities or cash advanced or received.

Securities lent to counterparties are retained on the balance sheet. Securities borrowed are not recognised on the balance sheet, unless these

are sold to third parties, in which case the obligation to return them is recorded at fair value as a trading liability. Cash collateral given or

received is treated as a loan and advance measured at amortised cost or customer deposit.

**(F)Hedge accounting**

As permitted by IFRS 9, the Group continues to apply the requirements of IAS 39 to its hedging relationships.

Changes in the fair value of all derivative instruments, other than those in effective cash flow hedging relationships, are recognised immediately

in the income statement. As noted in (2) below, the change in fair value of a derivative in an effective cash flow hedging relationship is

allocated between the income statement and other comprehensive income.

Hedge accounting allows one financial instrument, generally a derivative, to be designated as a hedge of another financial instrument such as a

loan or deposit or a portfolio of such instruments. At the inception of the hedge relationship, formal documentation is drawn up specifying the

hedging strategy, the hedged item, the hedging instrument and the methodology that will be used to measure the effectiveness of the hedge

relationship in offsetting changes in the fair value or cash flow of the hedged risk. The effectiveness of the hedging relationship is tested both at

inception and throughout its life and if at any point it is concluded that it is no longer highly effective in achieving its documented objective,

hedge accounting is discontinued. Note 17 provides details of the types of derivatives held by the Group and presents separately those

designated in hedge relationships.

**(1)Fair value hedges**

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together

with the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk; this also applies if the hedged asset is

classified as a financial asset at fair value through other comprehensive income. If the hedge no longer meets the criteria for hedge accounting,

changes in the fair value of the hedged item attributable to the hedged risk are no longer recognised in the income statement. The cumulative

adjustment that has been made to the carrying amount of the hedged item is amortised to the income statement using the effective interest

method over the period to maturity.

**(2)Cash flow hedges**

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other

comprehensive income in the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised immediately in the

income statement. Amounts accumulated in equity are reclassified to the income statement in the periods in which the hedged item affects

profit or loss. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative

gain or loss existing in equity at that time remains in equity and is recognised in the income statement when the forecast transaction is

ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that

was reported in equity is immediately transferred to the income statement.

**(G)Offset**

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right of offset

and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. Cash collateral on exchange traded

derivative transactions is presented gross unless the collateral cash flows are always settled net with the derivative cash flows. In certain

situations, even though master netting agreements exist, the lack of management intention to settle on a net basis results in the financial

assets and liabilities being reported gross on the balance sheet.

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| **84** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 2: Accounting policies** continued

**(H)Impairment of financial assets**

The impairment charge in the income statement reflects the change in expected credit losses, including those arising from fraud. Expected

credit losses are recognised for loans and advances to customers and banks, other financial assets held at amortised cost, financial assets

(other than equity investments) measured at fair value through other comprehensive income, and certain loan commitments and financial

guarantee contracts. Expected credit losses are calculated as an unbiased and probability-weighted estimate using an appropriate probability

of default, adjusted to take into account a range of possible future economic scenarios, and applying this to the estimated exposure of the

Group at the point of default after taking into account the value of any collateral held, repayments, or other mitigants of loss and including the

impact of discounting using the effective interest rate.

At initial recognition, allowance (or provision in the case of some loan commitments and financial guarantees) is made for expected credit

losses resulting from default events that are possible within the next 12 months (12-month expected credit losses). In the event of a significant

increase in credit risk since origination, allowance (or provision) is made for expected credit losses resulting from all possible default events

over the expected life of the financial instrument (lifetime expected credit losses). Financial assets where 12-month expected credit losses are

recognised are considered to be Stage 1; financial assets which are considered to have experienced a significant increase in credit risk since

initial recognition are in Stage 2; and financial assets which have defaulted or are otherwise considered to be credit-impaired are allocated to

Stage 3. Some Stage 3 assets, mainly in Commercial Banking, are subject to individual rather than collective assessment. Such cases are subject

to a risk-based impairment sanctioning process, and these are reviewed and updated at least quarterly, or more frequently if there is a

significant change in the credit profile. The collective assessment of impairment aggregates financial instruments with similar risk

characteristics, such as whether the facility is revolving in nature or secured and the type of security held against financial assets.

An assessment of whether credit risk has increased significantly since initial recognition considers the change in the risk of default occurring

over the remaining expected life of the financial instrument. In determining whether there has been a significant increase in credit risk, the

Group uses quantitative tests based on relative and absolute probability of default (PD) movements linked to internal credit ratings together

with qualitative indicators such as watchlists and other indicators of historical delinquency, credit weakness or financial difficulty. The use of

internal credit ratings and qualitative indicators ensures alignment between the assessment of staging and the Group's management of credit

risk which utilises these internal metrics within distinct retail and commercial portfolio risk management practices. However, unless identified

at an earlier stage, the credit risk of financial assets is deemed to have increased significantly when more than 30 days past due. The use of a

payment holiday in and of itself has not been judged to indicate a significant increase in credit risk, with the underlying long-term credit risk

deemed to be driven by economic conditions and captured through the use of forward-looking models. These portfolio-level models are

capturing the anticipated volume of increased defaults and therefore an appropriate assessment of staging and expected credit loss. Where

the credit risk subsequently improves such that it no longer represents a significant increase in credit risk since initial recognition, the asset is

transferred back to Stage 1.

Assets are transferred to Stage 3 when they have defaulted or are otherwise considered to be credit-impaired. Default is considered to have

occurred when there is evidence that the customer is experiencing financial difficulty which is likely to affect significantly the ability to repay

the amount due. IFRS 9 contains a rebuttable presumption that default occurs no later than when a payment is 90 days past due which the

Group uses for all its products. In addition, other indicators of mortgage default are added including end-of-term payments on past due

interest-only accounts and loans considered non-performing due to recent arrears or forbearance. The use of payment holidays is not

considered to be an automatic trigger of regulatory default and therefore does not automatically trigger Stage 3. Days past due will also not

accumulate on any accounts that have taken a payment holiday including those already past due.

**Note 2: Accounting policies** continued

In certain circumstances, the Group will renegotiate the original terms of a customer's loan, either as part of an ongoing customer relationship

or in response to adverse changes in the circumstances of the borrower. In the latter circumstances, the loan will remain classified as either

Stage 2 or Stage 3 until the credit risk has improved such that it no longer represents a significant increase since origination (for a return to

Stage 1), or the loan is no longer credit-impaired (for a return to Stage 2). On renegotiation the gross carrying amount of the loan is recalculated

as the present value of the renegotiated or modified contractual cash flows, which are discounted at the original effective interest rate.

Renegotiation may also lead to the loan and associated allowance being derecognised and a new loan being recognised initially at fair value.

Purchased or originated credit-impaired financial assets (POCI) include financial assets that are purchased or originated at a deep discount

that reflects incurred credit losses. At initial recognition, POCI assets do not carry an impairment allowance; instead, lifetime expected credit

losses are incorporated into the calculation of the effective interest rate. All changes in lifetime expected credit losses subsequent to the

assets' initial recognition are recognised as an impairment charge.

A loan or advance is normally written off, either partially or in full, against the related allowance when the proceeds from realising any available

security have been received or there is no realistic prospect of recovery and the amount of the loss has been determined. Subsequent

recoveries of amounts previously written off decrease the amount of impairment losses recorded in the income statement. For both secured

and unsecured retail balances, the write-off takes place only once an extensive set of collections processes has been completed, or the status

of the account reaches a point where policy dictates that continuing attempts to recover are no longer appropriate. For commercial lending, a

write-off occurs if the loan facility with the customer is restructured, the asset is under administration and the only monies that can be

received are the amounts estimated by the administrator, the underlying assets are disposed and a decision is made that no further settlement

monies will be received, or external evidence (for example, third party valuations) is available that there has been an irreversible decline in

expected cash flows.

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| **85** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 2: Accounting policies** continued

**(I)Property, plant and equipment**

Property, plant and equipment (other than investment property) is recognised on the balance sheet at cost less accumulated depreciation. The

value of land (included in premises) is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate the

difference between the cost and the residual value over their estimated useful lives, as follows: the shorter of 50 years and the remaining

period of the lease for freehold/long and short leasehold premises; the shorter of 10 years and, if lease renewal is not likely, the remaining

period of the lease for leasehold improvements; 10 to 20 years for fixtures and furnishings; and 2 to 8 years for other equipment and motor

vehicles.

The assets' residual values and useful lives are reviewed and, if appropriate, revised at each balance sheet date.

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In

assessing the recoverable amount of assets the Group considers the effects of potential or actual changes in legislation, customer behaviour,

climate-related risks and other factors on the asset's cash-generating unit (CGU). In the event that an asset's CGU carrying amount is

determined to be greater than its recoverable amount the asset is written down immediately.

Investment property comprises freehold and long leasehold land and buildings that are held either to earn rental income or for capital

accretion or both. Investment property is carried at fair value based on current prices for similar properties, adjusted for the specific

characteristics of the property (such as location or condition). If this information is not available, the Group uses alternative valuation methods

such as discounted cash flow projections or recent prices in less active markets. These valuations are reviewed at least annually by independent

professionally qualified valuers. Investment property being redeveloped for continuing use as investment property, or for which the market has

become less active, continues to be valued at fair value.

**(J)Leases**

Under IFRS 16, a lessor is required to determine if a lease is a finance or operating lease. A lessee is not required to make this determination.

**(1)As lessor**

Assets leased to customers are classified as finance leases if the lease agreements transfer substantially all of the risks and rewards of

ownership to the lessee but not necessarily legal title. All other leases are classified as operating leases. When assets are subject to finance

leases, the present value of the lease payments, together with any unguaranteed residual value, is recognised as a receivable, net of allowances

for expected credit losses and residual value impairment, within loans and advances to banks and customers. The difference between the gross

receivable and the present value of the receivable is recognised as unearned finance lease income. Finance lease income is recognised in

interest income over the term of the lease using the net investment method (before tax) so as to give a constant rate of return on the net

investment in the lease. Unguaranteed residual values are reviewed regularly to identify any impairment.

Operating lease assets are included within other assets at cost and depreciated over their estimated useful lives. The depreciation charge is

based on the asset's residual value and the life of the lease. Operating lease rental income is recognised on a straight-line basis over the life of

the lease.

The Group evaluates non-lease arrangements such as outsourcing and similar contracts to determine if they contain a lease which is then

accounted for separately.

**(2)As lessee**

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the

Group. Assets and liabilities arising from a lease are initially measured on a present value basis. The lease payments are discounted using the

interest rate implicit in the lease, if that rate can be determined, or the Group's incremental borrowing rate appropriate for the right-of-use

asset arising from the lease, and the liability recognised within other liabilities.

Lease payments are allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to

produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over

the shorter of the asset's useful life and the lease term on a straight-line basis.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss.

Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

---

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|:---|:---|
| **86** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 2: Accounting policies** continued

**(K)Employee benefits**

Short-term employee benefits, such as salaries, paid absences, performance-based cash awards and social security costs, are recognised over

the period in which the employees provide the related services.

**(1)Pension schemes**

The Group operates a number of post-retirement benefit schemes for its employees including both defined benefit and defined contribution

pension plans. A defined benefit scheme is a pension plan that defines an amount of pension benefit that an employee will receive on

retirement, dependent on one or more factors such as age, years of pensionable service and pensionable salary. A defined contribution plan is a

pension plan into which the Group pays fixed contributions; there is no legal or constructive obligation to pay further contributions.

(i)Defined benefit schemes

Scheme assets are included at their fair value and scheme liabilities are measured on an actuarial basis using the projected unit credit method.

The defined benefit scheme liabilities are discounted using rates equivalent to the market yields at the balance sheet date on high quality

corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to

the terms of the related pension liability. The Group's income statement charge includes the current service cost of providing pension benefits,

past service costs, net interest expense (income), and plan administration costs that are not deducted from the return on plan assets. Past

service costs, which represents the change in the present value of the defined benefit obligation resulting from a plan amendment or

curtailment, are recognised when the plan amendment or curtailment occurs. Net interest expense (income) is calculated by applying the

discount rate at the beginning of the period to the net defined benefit liability or asset.

Remeasurements, comprising actuarial gains and losses, the return on plan assets (excluding amounts included in net interest expense (income)

and net of the cost of managing the plan assets), and the effect of changes to the asset ceiling (if applicable) are reflected immediately in the

balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurements recognised

in other comprehensive income are reflected immediately in retained profits and will not subsequently be reclassified to profit or loss.

The Group's balance sheet includes the net surplus or deficit, being the difference between the fair value of scheme assets and the discounted

value of scheme liabilities at the balance sheet date. Surpluses are only recognised to the extent that they are recoverable through reduced

contributions in the future or through refunds from the schemes. In assessing whether a surplus is recoverable, the Group considers (i) its

current right to obtain a refund or a reduction in future contributions and (ii) the rights of other parties existing at the balance sheet date. In

determining the rights of third parties existing at the balance sheet date, the Group does not anticipate any future acts by other parties.

(ii)Defined contribution schemes

The costs of the Group's defined contribution plans are charged to the income statement in the period in which they fall due.

**(2)Share-based compensation**

Lloyds Banking Group operates a number of equity-settled, share-based compensation plans in respect of services received from certain of its

employees. The value of the employee services received in exchange for equity instruments granted under these plans is recognised as an

expense over the vesting period of the instruments, with a corresponding increase in equity. This expense is determined by reference to the fair

value of the number of equity instruments that are expected to vest. The fair value of equity instruments granted is based on market prices, if

available, at the date of grant. In the absence of market prices, the fair value of the instruments at the date of grant is estimated using an

appropriate valuation technique, such as a Black-Scholes option pricing model or a Monte Carlo simulation. The determination of fair values

excludes the impact of any non-market vesting conditions, which are included in the assumptions used to estimate the number of options that

are expected to vest. At each balance sheet date, this estimate is reassessed and if necessary revised. Any revision of the original estimate is

recognised in the income statement, together with a corresponding adjustment to equity. Cancellations by employees of contributions to the

Group's Save As You Earn plans are treated as non-vesting conditions and the Group recognises, in the year of cancellation, the amount of the

expense that would have otherwise been recognised over the remainder of the vesting period. Modifications are assessed at the date of

modification and any incremental charges are charged to the income statement.

**(L)Taxation**

Tax expense comprises current and deferred tax. Current and deferred tax are charged or credited in the income statement except to the

extent that the tax arises from a transaction or event which is recognised, in the same or a different period, outside the income statement

(either in other comprehensive income, directly in equity, or through a business combination), in which case the tax appears in the same

statement as the transaction that gave rise to it. The tax consequences of the Group's dividend payments (including distributions on other

equity instruments), if any, are charged or credited to the statement in which the profit distributed originally arose.

Current tax is the amount of corporate income taxes expected to be payable or recoverable based on the profit for the period as adjusted for

items that are not taxable or not deductible, and is calculated using tax rates and laws that were enacted or substantively enacted at the

balance sheet date.

Current tax includes amounts provided in respect of uncertain tax positions when management expects that, upon examination of the

uncertainty by His Majesty's Revenue and Customs (HMRC) or other relevant tax authority, it is more likely than not that an economic outflow

will occur. Provisions reflect management's best estimate of the ultimate liability based on their interpretation of tax law, precedent and

guidance, informed by external tax advice as necessary. Changes in facts and circumstances underlying these provisions are reassessed at each

balance sheet date, and the provisions are remeasured as required to reflect current information.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the

balance sheet. Deferred tax is calculated using tax rates and laws that have been enacted or substantively enacted at the balance sheet date,

and which are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax liabilities are generally recognised for all taxable temporary differences but not recognised for taxable temporary differences

arising on investments in subsidiaries where the reversal of the temporary difference can be controlled and it is probable that the difference

will not reverse in the foreseeable future. Deferred tax liabilities are not recognised on temporary differences that arise from goodwill which is

not deductible for tax purposes.

Deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which the deductible temporary

differences can be utilised, and are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient

taxable profits will be available to allow all or part of the asset to be recovered.

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| **87** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 2: Accounting policies** continued

Deferred tax assets and liabilities are not recognised in respect of temporary differences that arise on initial recognition of assets and liabilities

acquired other than in a business combination, or where at the time of the transaction they give rise to equal taxable and deductible

temporary differences. Deferred tax is not discounted.

The Group has applied the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar 2

income taxes currently required by IAS 12 Income Taxes.

**(M)Foreign currency translation**

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic

environment in which the entity operates (the functional currency). Foreign currency transactions are translated into the appropriate

functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the

settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign

currencies are recognised in the income statement, except when recognised in other comprehensive income as qualifying cash flow hedges.

Non-monetary assets that are measured at fair value are translated using the exchange rate at the date that the fair value was determined.

Translation differences on equities and similar non-monetary items held at fair value through profit and loss are recognised in profit or loss as

part of the fair value gain or loss. Translation differences on non-monetary financial assets measured at fair value through other comprehensive

income, such as equity shares, are included in the fair value reserve in equity unless the asset is a hedged item in a fair value hedge.

The results and financial position of all Group entities that have a functional currency different from the presentation currency are translated

into the presentation currency as follows: the assets and liabilities of foreign operations, including goodwill and fair value adjustments arising

on the acquisition of a foreign entity, are translated into sterling at foreign exchange rates ruling at the balance sheet date; and the income and

expenses of foreign operations are translated into sterling at average exchange rates unless these do not approximate to the foreign exchange

rates ruling at the dates of the transactions, in which case income and expenses are translated at the dates of the transactions.

Foreign exchange differences arising on the translation of a foreign operation are recognised in other comprehensive income and accumulated

in a separate component of equity together with exchange differences arising from the translation of borrowings and other currency

instruments designated as hedges of such investments. On disposal or liquidation of a foreign operation, the cumulative amount of exchange

differences relating to that foreign operation is reclassified from equity and included in determining the profit or loss arising on disposal or

liquidation.

**(N)Provisions and contingent liabilities**

Provisions are recognised in respect of present obligations arising from past events where it is probable that outflows of resources will be

required to settle the obligations and they can be reliably estimated.

Contingent liabilities are possible obligations whose existence depends on the outcome of uncertain future events or those present obligations

where the outflows of resources are uncertain or cannot be measured reliably. Contingent liabilities are not recognised in the financial

statements but are disclosed unless they are remote.

Provision is made for expected credit losses in respect of irrevocable undrawn loan commitments and financial guarantee contracts

(see (H) above).

**(O)Share capital**

Incremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are shown in equity as a

deduction, net of tax, from the proceeds. Dividends paid on the Group's ordinary shares are recognised as a reduction in equity in the period in

which they are paid.

**(P)Cash and cash equivalents**

For the purposes of the cash flow statement, cash and cash equivalents comprise cash and non-mandatory deposits held with central banks,

mandatory deposits held with central banks in demand accounts and amounts due from banks with an original maturity of less than three

months that are available to finance the Group's day-to-day operations.

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| **88** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 3: Critical accounting judgements and key sources of estimation uncertainty**

The preparation of the Group's financial statements in accordance with IFRS Accounting Standards 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 those

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 significant judgements, apart from those involving estimation, made by management in applying the Group's accounting policies in these

financial statements (critical judgements) and the key sources of estimation uncertainty that may have a significant risk of causing a material

adjustment to the carrying amount of assets and liabilities within the next financial year (key sources of estimation uncertainty), which

together are considered critical to the Group's results and financial position, are disclosed within the following notes:

• Retirement benefit obligations (note 11)

• Tax (note 14)

• Fair value of financial assets and liabilities (note 16)

• Allowance for expected credit losses (note 19)

• Provisions (note 26)

**Consideration of climate change** 

Financial statement preparation includes the consideration of the impact of climate change on the Group's financial statements. There has

been no material impact identified on the financial reporting judgements and estimates. In particular, the directors considered the impact of

climate change in respect of the:

• Going concern of the Group for a period of at least 12 months from the date of approval of the financial statements

• Assessment of impairment of non-financial assets

• Carrying value and useful economic lives of property, plant and equipment

• Fair value of financial assets and liabilities. These are generally based on market indicators which include the market's assessment of climate

risk

• Assessments on expected credit loss, focusing on specific climate-related macroeconomic, physical and transition risk impacts on credit

quality at a sector and segment level

• Forecasting of the Group's future UK taxable profits, which impacts deferred tax recognition

Whilst there is currently no material short-term impact of climate change expected, the Group acknowledges the long-term nature of climate

risk and continues to monitor and assess climate risks highlighted in the risk management section on **pages [27](#iddf3b01e92c34e0691e008ab468ef39d_34) to 28.**

**Note 4: 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 has been determined to be the chief operating decision-maker, as defined by IFRS 8 *Operating Segments*,

for the Group. The Group's operating segments reflect its organisational and management structures. The GEC reviews the Group's internal

reporting based around these segments in order to assess performance and allocate resources. They consider interest income and expense on a

net basis and consequently the total interest income and expense for all reportable segments is presented net. The segments are differentiated

by the type of products provided and by whether the customers are individuals or corporate entities.

The Group has two operating and reportable segments: Retail and Commercial Banking:

• Retail offers a broad range of financial services products to personal customers, including current accounts, savings, mortgages, credit cards,

unsecured loans, motor finance and leasing solutions

• Commercial Banking serves small and medium businesses and corporate and institutional clients, providing lending, transactional banking,

working capital management, debt financing and risk management services

Other comprises income and expenditure not attributed to the Group's operating segments. These amounts include the costs of certain central

and head office functions.

Inter-segment services are generally recharged at cost, although some attract a margin. Inter-segment lending and deposits are generally

entered into at market rates, except that non-interest bearing balances are priced at a rate that reflects the external yield that could be

earned on such funds.

For the majority of those derivative contracts entered into by business units for risk management purposes, the business unit recognises the net

interest income or expense on an accrual accounting basis and transfers the remainder of the movement in the fair value of the derivative to

the central function where the resulting accounting volatility is managed where possible through the establishment of hedge accounting

relationships. Any change in fair value of the hedged instrument attributable to the hedged risk is also recorded within the central function.

This allocation of the fair value of the derivative and change in fair value of the hedged instrument attributable to the hedged risk avoids

accounting asymmetry in segmental results and leads to accounting volatility, which is managed centrally and reported within Other.

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| **89** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Notes to the consolidated financial statements** continued

for the year ended 31 December

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| | | | | |
|:---|:---|:---|:---|:---|
| **Year ended 31 December 2025** | **Retail**<br>**£m**<br>| **Commercial**<br>**Banking**<br>**£m**<br>| **Other**<br>**£m**<br>| **Group**<br>**£m**<br>|
| Net interest income | **9637** | **3372** | **354** | **13363** |
| Other income | **2610** | **1101** | **1355** | **5066** |
| **Total income** | **12247** | **4473** | **1709** | **18429** |
| Operating expenses | **(8278)** | **(2312)** | **(1575)** | **(12165)** |
| Impairment (charge) credit | **(734)** | **(59)** | **1** | **(792)** |
| **Profit before tax** | **3235** | **2102** | **135** | **5472** |
| External income | **15349** | **2862** | **218** | **18429** |
| Inter-segment (expense) income | **(3102)** | **1611** | **1491** | **–** |
| **Total income** | **12247** | **4473** | **1709** | **18429** |
| External assets | **404828** | **83410** | **143097** | **631335** |
| External liabilities | **331241** | **143244** | **114870** | **589355** |
| **Analysis of other income:** |  |  |  |  |
| Consumer lending | **2066** |  |  | **2066** |
| Consumer relationships | **544** |  |  | **544** |
| Business and Commercial Banking |  | **541** |  | **541** |
| Corporate and Institutional Banking |  | **560** |  | **560** |
| Other |  |  | **1355** | **1355** |
| **Other income** | **2610** | **1101** | **1355** | **5066** |
| **Other items reflected in income statement above:** |  |  |  |  |
| Depreciation and amortisation | **2352** | **345** | **723** | **3420** |
| Defined benefit scheme charge | **–** | **–** | **(37)** | **(37)** |
| **Non-income statement items:** |  |  |  |  |
| Additions to fixed assets | **4173** | **239** | **1286** | **5698** |

---

---

| | |
|:---|:---|
| **90** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 4: Segmental analysis** continued

---

| | | | | |
|:---|:---|:---|:---|:---|
| Year ended 31 December 2024 | Retail<br>£m<br>| Commercial<br>Banking<br>£m<br>| Other<br>£m<br>| Group<br>£m<br>|
| Net interest income | 8934 | 3265 | 393 | 12592 |
| Other income | 2058 | 1073 | 1348 | 4479 |
| **Total income** | 10992 | 4338 | 1741 | 17071 |
| Operating expenses | (7779) | (2375) | (1773) | (11927) |
| Impairment (charge) credit | (457) | (2) | 3 | (456) |
| **Profit (loss) before tax** | 2756 | 1961 | (29) | 4688 |
| External income | 13269 | 5606 | (1804) | 17071 |
| Inter-segment (expense) income | (2277) | (1268) | 3545 | – |
| **Total income** | 10992 | 4338 | 1741 | 17071 |
| External assets | 386199 | 82731 | 142283 | 611213 |
| External liabilities | 324727 | 135396 | 111343 | 571466 |
| **Analysis of other income:**<sup>1</sup> |  |  |  |  |
| Consumer lending | 1516 |  |  | 1516 |
| Consumer relationships | 542 |  |  | 542 |
| Business and Commercial Banking |  | 537 |  | 537 |
| Corporate and Institutional Banking |  | 536 |  | 536 |
| Other |  |  | 1348 | 1348 |
| **Other income** | 2058 | 1073 | 1348 | 4479 |
| **Other items reflected in income statement above:** |  |  |  |  |
| Depreciation and amortisation | 2303 | 337 | 731 | 3371 |
| Defined benefit scheme charge | – | – | (11) | (11) |
| **Non-income statement items:** |  |  |  |  |
| Additions to fixed assets | 3485 | 99 | 1355 | 4939 |

---

1Categories of analysis have been updated for 2025. Comparative figures have been updated accordingly.

---

| | |
|:---|:---|
| **91** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 4: Segmental analysis** continued

---

| | | | | |
|:---|:---|:---|:---|:---|
| Year ended 31 December 2023 | Retail<br>£m<br>| Commercial<br>Banking<br>£m<br>| Other<br>£m<br>| Group<br>£m<br>|
| Net interest income | 9651 | 3675 | 383 | 13709 |
| Other income | 2157 | 1054 | 1447 | 4658 |
| **Total income** | 11808 | 4729 | 1830 | 18367 |
| Operating expenses | (7031) | (2278) | (1659) | (10968) |
| Impairment (charge) credit | (831) | 483 | 5 | (343) |
| **Profit before tax** | 3946 | 2934 | 176 | 7056 |
| External income | 12805 | 5788 | (226) | 18367 |
| Inter-segment (expense) income | (997) | (1059) | 2056 | – |
| **Total income** | 11808 | 4729 | 1830 | 18367 |
| External assets | 376589 | 90301 | 138515 | 605405 |
| External liabilities | 313232 | 138835 | 112907 | 564974 |
| **Analysis of other income:**<sup>1</sup> |  |  |  |  |
| Consumer lending | 1552 |  |  | 1552 |
| Consumer relationships | 605 |  |  | 605 |
| Business and Commercial Banking |  | 512 |  | 512 |
| Corporate and Institutional Banking |  | 542 |  | 542 |
| Other |  |  | 1447 | 1447 |
| **Other income** | 2157 | 1054 | 1447 | 4658 |
| **Other items reflected in income statement above:** |  |  |  |  |
| Depreciation and amortisation | 1927 | 408 | 516 | 2851 |
| Defined benefit scheme charge | – | – | (79) | (79) |
| **Non-income statement items:** |  |  |  |  |
| Additions to fixed assets | 3294 | 86 | 1583 | 4963 |

---

1Categories of analysis have been updated for 2025. Comparative figures have been updated accordingly.

**Geographical areas**

The Group's operations are predominantly UK-based and as a result an analysis between UK and non-UK activities is not provided.

**Note 5: Net interest income**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Interest income: |  |  |  |
| Loans and advances to banks | **1722** | 2439 | 3096 |
| Loans and advances to customers | **22338** | 21712 | 18992 |
| Reverse repurchase agreements | **2198** | 2441 | 1866 |
| Debt securities | **618** | 737 | 495 |
| Financial assets held at amortised cost | **26876** | 27329 | 24449 |
| Financial assets at fair value through other comprehensive income | **1332** | 1057 | 851 |
| **Total interest income**<sup>1</sup> | **28208** | 28386 | 25300 |
| Interest expense: |  |  |  |
| Deposits from banks | **(144)** | (121) | (131) |
| Customer deposits | **(8205)** | (9009) | (6045) |
| Repurchase agreements at amortised cost | **(1980)** | (2390) | (2397) |
| Debt securities in issue at amortised cost<sup>2</sup> | **(4030)** | (3814) | (2595) |
| Lease liabilities | **(27)** | (30) | (28) |
| Subordinated liabilities | **(459)** | (430) | (395) |
| **Total interest expense** | **(14845)** | (15794) | (11591) |
| **Net interest income** | **13363** | 12592 | 13709 |

---

1Includes £1,200 million (2024: £1,089 million; 2023: £885 million) in respect of finance lease receivables.

2The impact of the Group's hedging arrangements is included on this line.

Net interest income also includes a debit of £1,762 million (2024: debit of £2,297 million; 2023: debit of £1,517 million) transferred from the cash

flow hedging reserve (see statement of comprehensive income).

---

| | |
|:---|:---|
| **92** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 6: Net fee and commission income**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Year ended 31 December 2025** | **Retail**<br>**£m**<br>| **Commercial**<br>**Banking**<br>**£m** | **Other**<br>**£m**<br>| **Total**<br>**£m**<br>|
| Fee and commission income: |  |  |  |  |
| Current accounts | **431** | **239** | **–** | **670** |
| Credit and debit card fees | **845** | **475** | **–** | **1320** |
| Commercial banking fees | **–** | **243** | **–** | **243** |
| Factoring | **–** | **66** | **–** | **66** |
| Other fees and commissions | **79** | **126** | **11** | **216** |
| Total fee and commission income | **1355** | **1149** | **11** | **2515** |
| Fee and commission expense | **(811)** | **(307)** | **(136)** | **(1254)** |
| **Net fee and commission income** | **544** | **842** | **(125)** | **1261** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Year ended 31 December 2024 | Retail<br>£m<br>| Commercial<br>Banking<br>£m | Other<br>£m<br>| Total<br>£m<br>|
| Fee and commission income: |  |  |  |  |
| Current accounts | 423 | 217 | – | 640 |
| Credit and debit card fees | 829 | 453 | – | 1282 |
| Commercial banking fees | – | 195 | – | 195 |
| Factoring | – | 69 | – | 69 |
| Other fees and commissions | 74 | 144 | 12 | 230 |
| Total fee and commission income | 1326 | 1078 | 12 | 2416 |
| Fee and commission expense | (1055) | (284) | (139) | (1478) |
| **Net fee and commission income** | 271 | 794 | (127) | 938 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Year ended 31 December 2023 | Retail<br>£m<br>| Commercial<br>Banking<br>£m | Other<br>£m<br>| Total<br>£m<br>|
| Fee and commission income: |  |  |  |  |
| Current accounts | 406 | 214 | – | 620 |
| Credit and debit card fees | 800 | 459 | – | 1259 |
| Commercial banking fees | – | 191 | – | 191 |
| Factoring | – | 75 | – | 75 |
| Other fees and commissions | 85 | 171 | 55 | 311 |
| Total fee and commission income | 1291 | 1110 | 55 | 2456 |
| Fee and commission expense | (673) | (288) | (143) | (1104) |
| **Net fee and commission income** | 618 | 822 | (88) | 1352 |

---

Fees and commissions which are an integral part of the effective interest rate form part of net interest income shown in note 5. Fees and

commissions relating to instruments that are held at fair value through profit or loss are included within net trading income shown in note 7.

In determining the disaggregation of fees and commissions the Group has considered how the nature, amount, timing and uncertainty of

revenue and cash flows are affected by economic factors. It has determined that the above disaggregation by product type provides useful

information that does not aggregate items that have substantially different characteristics.

At 31 December 2025, the Group held on its balance sheet £112 million (31 December 2024: £105 million) in respect of services provided to

customers and £83 million (31 December 2024: £69 million) in respect of amounts received from customers for services to be provided after the

balance sheet date. Current unsatisfied performance obligations amount to £203 million (31 December 2024: £189 million); the Group expects

to receive substantially all of this revenue by the end of 2027.

Income recognised during the year included £29 million (2024: £27 million) in respect of amounts included in the contract liability balance at

the start of the year and £nil (2024: £nil) in respect of amounts from performance obligations satisfied in previous years.

The most significant performance obligations undertaken by the Group are in respect of current accounts, the provision of other banking

services for commercial customers and credit and debit card services.

In respect of current accounts, the Group receives fees for the provision of bank account and transaction services such as ATM services, fund

transfers, overdraft facilities and other value-added offerings.

For commercial customers, alongside its provision of current accounts, the Group provides other corporate banking services including factoring

and commitments to provide loan financing. Loan commitment fees are included in fees and commissions where the loan is not expected to be

drawn down by the customer.

The Group receives interchange and merchant fees, together with fees for overseas use and cash advances, for provision of card services to

cardholders and merchants.

---

| | |
|:---|:---|
| **93** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 7: Net trading income**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Net gains on financial assets and liabilities at fair value through profit or loss: |  |  |  |
| Net gains on financial instruments held for trading<sup>1</sup> | **405** | 416 | 295 |
| Net gains on other financial instruments mandatorily held at fair value through profit or loss | **97** | 83 | 64 |
| Net losses on financial liabilities designated at fair value through profit or loss | **(251)** | (335) | (342) |
|  | **251** | 164 | 17 |
| Foreign exchange and other | **272** | 433 | 367 |
| **Net trading income** | **523** | 597 | 384 |

---

1Includes hedge ineffectiveness in respect of fair value hedges (2025: loss of £73 million; 2024: loss of £78 million; 2023: loss of £264 million) and cash flow hedges (2025: gain of

£50 million; 2024: loss of £56 million; 2023: gain of £17 million).

**Note 8: Other operating income**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Operating lease rental income | **1979** | 1681 | 1383 |
| Net losses on disposal of financial assets at fair value through other comprehensive income | **(108)** | (157) | (140) |
| Gain on disposal of business<sup>1</sup> | **–** | – | 191 |
| Intercompany recharges and other | **1411** | 1420 | 1488 |
| **Total other operating income** | **3282** | 2944 | 2922 |

---

1On 1 November 2023 the Group sold Halifax Share Dealing Limited to a fellow Lloyds Banking Group undertaking.

**Note 9: Operating expenses**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Staff costs: |  |  |  |
| Salaries and social security costs<sup>1</sup> | **3564** | 3563 | 3389 |
| Pensions and other retirement benefit schemes (note 11) | **504** | 504 | 335 |
| Restructuring and other staff costs | **403** | 378 | 538 |
|  | **4471** | 4445 | 4262 |
| Premises and equipment costs<sup>2</sup> | **457** | 407 | 411 |
| Depreciation and amortisation<sup>3</sup> | **3420** | 3371 | 2851 |
| Regulatory and legal provisions (note 26) | **953** | 880 | 661 |
| Other | **2864** | 2824 | 2783 |
| **Total operating expenses** | **12165** | 11927 | 10968 |

---

1Including social security costs of £429 million (2024: £405 million; 2023: £347 million). Also includes amounts related to the Group's share-based payment schemes (see note 10).

2Net of loss on disposal of operating lease assets of £10 million (2024: profit of £59 million; 2023: profit of £93 million).

3Including depreciation in respect of premises £100 million (2024: £94 million; 2023: £107 million), equipment £346 million (2024: £397 million; 2023: £385 million), operating lease

assets £1,468 million (2024: £1,411 million; 2023: £1,070 million) and right-of-use assets £177 million (2024: £192 million; 2023: £203 million).

**Average headcount**

The average number of persons on a headcount basis employed by the Group during the year was as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| UK | **58754** | 63777 | 64844 |
| Overseas | **3488** | 1658 | 555 |
| **Total** | **62242** | 65435 | 65399 |

---

**Note 10: Share-based payments**

During the year ended 31 December 2025 Lloyds Banking Group plc operated a number of share-based payment schemes for which employees

of the Lloyds Bank Group were eligible and all of which are mainly equity settled. Details of all schemes operated by Lloyds Banking Group are

set out below; these are managed and operated on a Lloyds Banking Group-wide basis. The amount charged to the Group's income statement

in respect of Lloyds Banking Group share-based payment schemes, and which is included within staff costs (note 9), was £232 million (2024:

£259 million; 2023: £302 million).

During the year ended 31 December 2025 the Lloyds Banking Group operated the following share-based payment schemes, which are mainly

equity settled.

---

| | |
|:---|:---|
| **94** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 10: Share-based payments** continued

**Lloyds Banking Group Performance Share plan**

The Lloyds Banking Group operates a Group Performance Share plan that is part equity settled. Bonuses in respect of employee service in 2025

have been recognised in the charge in line with the proportion of the deferral period completed.

**Save-As-You-Earn schemes**

Eligible employees may enter into contracts through the Save-As-You-Earn (SAYE) schemes to save up to £500 per month and, at the expiry of

a fixed term of three years, have the option to use these savings within six months of the expiry of the fixed term to acquire shares in the

Group at a discounted price of no less than 90% of the market price at the start of the invitation period.

Movements in the number of share options outstanding under the SAYE schemes are set out below:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Number**<br>**of options**<br>| **Weighted**<br>**average**<br>**exercise price**<br>**(pence)**<br>| Number<br>of options<br>| Weighted<br>average<br>exercise price<br>(pence)<br>|
| Outstanding at 1 January | **797624786** | **42.30** | 1311205148 | 31.70 |
| Granted | **119602764** | **74.35** | 200820157 | 52.35 |
| Exercised | **(189981525)** | **39.40** | (663187372) | 24.60 |
| Forfeited | **(24349649)** | **43.66** | (17375716) | 39.01 |
| Cancelled | **(15760828)** | **47.99** | (27852684) | 40.70 |
| Expired | **(1816675)** | **39.45** | (5984747) | 35.40 |
| **Outstanding at 31 December** | **685318873** | **48.52** | 797624786 | 42.30 |
| **Exercisable at 31 December** | **178806** | **39.40** | 955281 | 24.25 |

---

The weighted average share price at the time that the options were exercised during 2025 was £0.61 (2024: £0.47). The weighted average

remaining contractual life of options outstanding at the end of the year was 1.88 years (2024: 1.85 years).

The weighted average fair value of SAYE options granted during 2025 was £0.15 (2024: £0.09). The fair values of the SAYE options have been

determined using a standard Black-Scholes model.

**Other share option plans**

**Executive Share Plans – buyout and retention awards**

Share options may be granted to senior employees under the Lloyds Banking Group Executive Share Plan 2003, Lloyds Banking Group

Executive Group Ownership Share Plan and Deferred Bonus Scheme 2021 specifically to facilitate recruitment (to compensate new recruits for

any lost share awards), and also to make grants to key individuals for retention purposes. In some instances, grants may be made subject to

individual performance conditions.

Participants are not entitled to any dividends paid during the vesting period.

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
|  | **Number**<br>**of options**<br>| Number<br>of options<br>|
| Outstanding at 1 January | **15578997**<br> **nil** | 26131255<br> nil |
| Granted | **–**<br> **nil** | 768170<br> nil |
| Exercised | **(6945829)**<br> **nil** | (10815436)<br> nil |
| Forfeited | **(253070)**<br> **nil** | (488091)<br> nil |
| Lapsed | **–**<br> **nil** | (16901)<br> nil |
| **Outstanding at 31 December** | **8380098**<br> **nil** | 15578997<br> nil |
| **Exercisable at 31 December** | **200359**<br> **nil** | 988243<br> nil |

---

The weighted average fair value of options granted in the year was £nil (2024: £0.46). The fair values of options granted have been determined

using a standard Black-Scholes model. The weighted average share price at the time that the options were exercised during 2025 was £0.75

(2024: £0.53). The weighted average remaining contractual life of options outstanding at the end of the year was 5.9 years (2024: 6.2 years).

Included in the above are awards to the Group Chief Executive.

---

| | |
|:---|:---|
| **95** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 10: Share-based payments** continued

Charlie Nunn joined the Group on 16 August 2021 as Group Chief Executive. He was granted deferred share awards over 8,301,708 shares to

replace unvested awards from his former employer, HSBC, that were forfeited as a result of him joining the Lloyds Banking Group.

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**Number**<br>**of options**<br>| 2024<br>Number<br>of options<br>|
| Outstanding at 1 January | **3968909** | 5337899 |
| Exercised | **(1368990)** | (1368990) |
| **Outstanding at 31 December** | **2599919** | 3968909 |

---

**Other share plans**

**Lloyds Banking Group Executive Group Ownership Share Plan**

The plan, introduced in 2006, is aimed at delivering shareholder value by linking the receipt of shares to an improvement in the performance of

the Lloyds Banking Group over a three-year period. Awards are made within limits set by the rules of the plan, with the limits determining the

maximum number of shares that can be awarded equating to three times annual salary. In exceptional circumstances this may increase to four

times annual salary.

The Executive Group Ownership awards were replaced by Long Term Share Plan awards in 2021.

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**Number**<br>**of shares**<br>| 2024<br>Number<br>of shares<br>|
| Outstanding at 1 January | **22123194** | 39804293 |
| Vested | **(10254907)** | (18490246) |
| Forfeited | **–** | (33055) |
| Dividend award | **–** | 842202 |
| **Outstanding at 31 December** | **11868287** | 22123194 |

---

**Lloyds Banking Group Long Term Share Plan**

The plan, approved at the 2020 AGM and introduced in 2021, replaced the Lloyds Banking Executive Group Ownership Share Plan and is

intended to provide alignment to the Group's aim of delivering sustainable returns to shareholders, supported by its values and behaviours.

The awards in respect of the 2023 grant are due to vest in 2026 at a rate of 100%.

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**Number**<br>**of shares**<br>| 2024<br>Number<br>of shares<br>|
| Outstanding at 1 January | **195879295** | 262409389 |
| Vested | **(62272967)** | (53608504) |
| Forfeited | **(4809902)** | (12921590) |
| **Outstanding at 31 December** | **128796426** | 195879295 |

---

**Lloyds Banking Group Long Term Incentive Plan**

The plan, approved at the 2023 AGM and introduced in 2024, replaced the Long Term Share Plan and is intended to deliver stronger alignment

between variable reward outcomes and the creation of shareholder value through the delivery of our strategy and the deepening of our

relationships with our customers.

The awards in respect of the 2024 grant are due to vest in 2027.

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**Number**<br>**of shares**<br>| 2024<br>Number<br>of shares<br>|
| Outstanding at 1 January | **75,063,395** | **–** |
| Granted | **46,999,778** | **75,063,395** |
| **Outstanding at 31 December** | **122,063,173** | **75,063,395** |

---

The weighted average fair value of awards granted in the year was £0.48 (2024: £0.30).

---

| | |
|:---|:---|
| **96** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 10: Share-based payments** continued

**Executive Share Plans – buyout and retention awards**

Share awards in the form of conditional shares may be granted to senior employees under the Lloyds Banking Group Executive Group

Ownership Share Plan and Deferred Bonus Scheme 2021 specifically to facilitate recruitment (to compensate new recruits for any lost share

awards), and also to make grants to key individuals for retention purposes. In some instances, grants may be made subject to individual

performance conditions.

Participants are not entitled to any dividends paid during the vesting period.

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
|  | **Number**<br>**of shares**<br>| Number<br>of shares<br>|
| Outstanding at 1 January | **2865027** | **–** |
| Granted | **3679148** | **3593397** |
| Vested | **(1747624)** | **(728370)** |
| **Outstanding at 31 December** | **4796551** | **2865027** |

---

The weighted average fair value of awards granted in the year was £0.73 (2024: £0.51).

**Assumptions at 31 December 2025**

The fair value calculations at 31 December 2025 for grants made in the year, using Black-Scholes models and Monte Carlo simulation, are based

on the following assumptions:

---

| | | | |
|:---|:---|:---|:---|
|  | **SAYE** | **Executive** <br>**Share Plans**<br>| **Long Term Share** <br>**Plan**<br>|
| Weighted average risk-free interest rate | **3.87%** | **3.81%** | **4.13%** |
| Weighted average expected life | **3.3 years** | **1.5 years** | **4.4 years** |
| Weighted average expected volatility | **25%** | **25%** | **27%** |
| Weighted average expected dividend yield | **5.0%** | **6.0%** | **6.0%** |
| Weighted average share price | **£0.84** | **£0.80** | **£0.71** |
| Weighted average exercise price | **£0.74** | **nil** | **nil** |

---

Expected volatility is a measure of the amount by which the Lloyds Banking Group's shares are expected to fluctuate during the life of an

option. The expected volatility is estimated based on the historical volatility of the closing daily share price over the most recent period that is

commensurate with the expected life of the option. The historical volatility is compared to the implied volatility generated from market traded

options in the Lloyds Banking Group's shares to assess the reasonableness of the historical volatility and adjustments made where appropriate.

**Share Incentive Plans**

**Matching shares**

The Lloyds Banking Group undertakes to match shares purchased by employees up to the value of £45 per month; these matching shares are

held in trust for a mandatory period of three years on the employee's behalf, during which period the employee is entitled to any dividends

paid on such shares. The award is subject to a non-market based condition: if an employee leaves within this three-year period for other than a

'good' reason, all of the matching shares are forfeited. Similarly, if the employees sell their purchased shares within three years, their matching

shares are forfeited.

The number of shares awarded relating to matching shares in 2025 was 26,409,397 (2024: 38,464,042), with an average fair value of £0.74

(2024: £0.53), based on market prices at the date of award.

**Fixed share awards**

Fixed share awards were introduced in 2014 in order to ensure that total fixed remuneration is commensurate with role and to provide a

competitive reward package for certain Lloyds Banking Group employees, with an appropriate balance of fixed and variable remuneration, in

line with regulatory requirements. The fixed share awards are delivered in Lloyds Banking Group plc shares, and are released over three years

with one third being released each year following the year of award. The number of shares purchased in relation to fixed share awards in 2025

was 1,470,573 (2024: 1,541,751) with an average fair value of £0.81 (2024: £0.55) based on market prices at the date of the award.

The fixed share award is not subject to any performance conditions, performance adjustment or clawback. On an employee leaving the Lloyds

Banking Group, there is no change to the timeline for which shares will become unrestricted.

Since the beginning of 2023 the number of recipients of these awards has been reduced to the executive directors only.

**Free shares**

An award of shares may be made annually to employees up to a maximum of £3,600. The shares awarded are held in trust for a mandatory

period of three years on the employee's behalf, during which period the employee is entitled to any dividends paid on such shares. The award is

subject to a non-market based condition. If an employee leaves the Group within this three-year period for other than a 'good' reason, all of

the shares awarded will be forfeited.

There have not been any awards made since 2021.

---

| | |
|:---|:---|
| **97** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 11: Retirement benefit obligations**

**Critical accounting judgements and key sources of estimation uncertainty**

---

| | |
|:---|:---|
| **Key sources of estimation uncertainty:** | Discount rate applied to future cash flows |
|  | Expected lifetime of the schemes' members |
|  | Expected rate of future inflationary increases |

---

The net asset recognised in the balance sheet at 31 December 2025 in respect of the Group's defined benefit pension scheme obligations was

£2,612 million, comprising an asset of £2,695 million and a liability of £83 million (2024: a net asset of £2,945 million comprising an asset of

£3,028 million and a liability of £83 million). The Group's accounting policy for its defined benefit pension scheme obligations is set out in note

2(K).

Income statement and balance sheet sensitivities to changes in the key sources of estimation uncertainty and other actuarial assumptions are

provided in part (v).

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| **Charge (credit) to the income statement** |  |  |  |
| Defined benefit pension schemes | **(39)** | (13) | (80) |
| Other retirement benefit schemes | **2** | 2 | 1 |
| Total defined benefit schemes | **(37)** | (11) | (79) |
| Defined contribution pension schemes | **541** | 515 | 414 |
| **Total charge to the income statement (note 9)** | **504** | 504 | 335 |

---

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Amounts recognised in the balance sheet** |  |  |
| Retirement benefit assets | **2695** | 3028 |
| Retirement benefit obligations | **(120)** | (122) |
| **Total amounts recognised in the balance sheet** | **2575** | 2906 |

---

The total amounts recognised in the balance sheet relate to:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Defined benefit pension schemes | **2612** | 2945 |
| Other retirement benefit schemes | **(37)** | (39) |
| **Total amounts recognised in the balance sheet** | **2575** | 2906 |

---

The Group holds on its balance sheet the net surplus or deficit, being the difference between the fair value of plan assets and the present value

of scheme liabilities, at the balance sheet date for each plan. Surpluses are only recognised to the extent that they are recoverable through

reduced contributions in the future or through potential future refunds from the schemes. In assessing whether a surplus is recoverable, the

Group considers its current right to obtain a refund or a reduction in future contributions together with the rights of third parties, such as

trustees, at the balance sheet date.

**Pension schemes**

**Defined benefit schemes**

(i)Characteristics of and risks associated with the Group's schemes

The Group has established a number of defined benefit pension schemes in the UK and overseas, both funded and unfunded. All significant

schemes are funded and based in the UK, with the three most significant being the main sections of the Lloyds Bank Pension Scheme No. 1, the

Lloyds Bank Pension Scheme No. 2 and the HBOS Final Salary Pension Scheme. At 31 December 2025, these schemes represented 94% of the

Group's total gross defined benefit pension assets (2024: 94%). These schemes provide retirement benefits calculated as a proportion of final

pensionable salary depending upon the length of pensionable service.

All of the UK funded schemes are operated as separate legal entities under trust law, are in compliance with the Pensions Act 2004 and are

managed by a Trustee Board (the Trustee) whose role is to ensure that the schemes are administered in accordance with the scheme rules and

relevant legislation, and to safeguard the assets in the best interests of all members and beneficiaries.

A valuation to determine the funding status of each scheme is carried out at least every three years, whereby scheme assets are measured at

market value and liabilities (technical provisions) are measured using prudent assumptions. If a funding deficit is identified, a recovery plan is

agreed between the employer and the scheme Trustee and sent to the Pensions Regulator for review. The Group does not provide for

these deficit contributions as the future economic benefits arising from these contributions are expected to be available to the Group.

The Group's overseas defined benefit pension schemes are subject to local regulatory arrangements.

The 31 December 2022 triennial valuation for the main defined benefit schemes was completed in 2023, and following the contributions paid in

2023, no further deficit contributions were paid for this triennial period (to 31 December 2025).

The Group pays regular contributions to meet benefits accruing over the year, and to cover the expenses of running the schemes. The Group

expects to pay contributions of at least £0.1 billion to its defined benefit schemes in 2026.

The Group provides additional security arrangements to a number of the UK schemes for the Group's obligations to the schemes.

At 31 December 2025 the security arrangements held assets of £4.0 billion. The security arrangements are fully consolidated in the

Group's balance sheet.

---

| | |
|:---|:---|
| **98** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 11: Retirement benefit obligations** continued

The last funding valuations of other Group schemes were carried out on a number of different dates. In order to report the position under

IAS 19 as at 31 December 2025, the most recent valuation results for all schemes have been updated by qualified independent actuaries. The

funding valuations use a more prudent approach to setting the discount rate and more conservative longevity and inflation assumptions than

the IAS 19 valuations.

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 September 2025, recognising that schemes and sponsoring employers need

clarity around scheme liabilities, proposed legislation to give affected pension schemes the ability to retrospectively obtain written actuarial

confirmation that historic benefit changes met the necessary standards. The Group has not made any allowance for the possible impact of the

ruling as it is currently unclear whether any additional liabilities might arise, and if they were to arise, how they would be reliably measured. The

Group is continuing to review scheme amendments to decide whether any subsequent actions are required and will continue to monitor

developments.

(ii)Amounts in the financial statements

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Amount included in the balance sheet** |  |  |
| Present value of funded obligations | **(26571)** | (27118) |
| Fair value of scheme assets | **29183** | 30063 |
| **Net amount recognised in the balance sheet** | **2612** | 2945 |

---

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Net amount recognised in the balance sheet** |  |  |
| At 1 January | **2945** | 3532 |
| Net defined benefit pension credit  | **39** | 13 |
| Actuarial gains on defined benefit obligation | **412** | 2940 |
| Return on plan assets | **(934)** | (3712) |
| Employer contributions | **150** | 172 |
| **At 31 December** | **2612** | 2945 |

---

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Movements in the defined benefit obligation** |  |  |
| At 1 January | **(27118)** | (30201) |
| Current service cost | **(64)** | (85) |
| Interest expense | **(1459)** | (1385) |
| Remeasurements: |  |  |
| Actuarial gains – demographic assumptions | **114** | 109 |
| Actuarial (losses) gains – experience | **(427)** | 94 |
| Actuarial gains – financial assumptions | **725** | 2737 |
| Benefits paid | **1693** | 1638 |
| Past service cost | **(30)** | (35) |
| Settlements | **2** | 1 |
| Exchange and other adjustments | **(7)** | 9 |
| **At 31 December** | **(26571)** | (27118) |

---

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Analysis of the defined benefit obligation** |  |  |
| Active members | **(1960)** | (2463) |
| Deferred members | **(6722)** | (7080) |
| Dependants | **(1486)** | (1429) |
| Pensioners | **(16403)** | (16146) |
| **At 31 December** | **(26571)** | (27118) |

---

---

| | |
|:---|:---|
| **99** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 11: Retirement benefit obligations** continued

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Changes in the fair value of scheme assets** |  |  |
| At 1 January | **30063** | 33733 |
| Return on plan assets excluding amounts included in interest income | **(934)** | (3712) |
| Interest income | **1624** | 1551 |
| Employer contributions | **150** | 172 |
| Benefits paid | **(1693)** | (1638) |
| Settlements | **(2)** | (1) |
| Administrative costs paid | **(32)** | (33) |
| Exchange and other adjustments | **7** | (9) |
| **At 31 December** | **29183** | 30063 |

---

The credit recognised in the income statement for the year ended 31 December comprises:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Current service cost | **64** | 85 | 88 |
| Net interest amount | **(165)** | (166) | (208) |
| Past service cost – plan amendments | **30** | 35 | 5 |
| Plan administration costs incurred during the year | **32** | 33 | 35 |
| **Total defined benefit pension credit** | **(39)** | (13) | (80) |

---

(iii)Composition of scheme assets

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Quoted**<br>**£m**<br>| **Unquoted**<br>**£m**<br>| **Total**<br>**£m**<br>| Quoted<br>£m<br>| Unquoted<br>£m<br>| Total<br>£m<br>|
| Debt instruments<sup>1</sup>: |  |  |  |  |  |  |
| Fixed interest government bonds | **6326** | **–** | **6326** | 6985 | – | 6985 |
| Index-linked government bonds | **15382** | **–** | **15382** | 15550 | – | 15550 |
| Corporate and other debt securities | **9771** | **–** | **9771** | 7396 | – | 7396 |
| Asset-backed securities | **3** | **–** | **3** | – | – | – |
|  | **31482** | **–** | **31482** | 29931 | – | 29931 |
| Pooled investment vehicles | **653** | **5964** | **6617** | 686 | 7342 | 8028 |
| Property | **–** | **132** | **132** | – | 130 | 130 |
| Equity instruments | **12** | **59** | **71** | 23 | 66 | 89 |
| Money market instruments, cash, derivatives and other assets <br>and liabilities<br>| **135** | **(9254)** | **(9119)** | 55 | (8170) | (8115) |
| **At 31 December** | **32282** | **(3099)** | **29183** | 30695 | (632) | 30063 |

---

1Of the total debt instruments, £29,876 million (2024: £27,551 million) were investment grade (credit ratings equal to or better than 'BBB').

The assets of all of the funded plans are held independently of the Group's assets in separate trustee-administered funds.

The pension schemes' pooled investment vehicles comprise:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Alternative credit funds | **1138** | 1793 |
| Bond and debt funds | **276** | 449 |
| Equity funds | **1644** | 1553 |
| Hedge and mutual funds | **–** | 709 |
| Infrastructure funds | **1012** | 1059 |
| Liquidity funds | **1702** | 1449 |
| Property funds | **817** | 992 |
| Other | **28** | 24 |
| **At 31 December** | **6617** | 8028 |

---

The Trustee's approach to investment is focused on acting in the members' best financial interests, with the integration of ESG (environmental,

social and governance) considerations into investment management processes and practices. This policy is reviewed annually (or more

frequently as required) and has been shared with the schemes' investment managers for implementation.

---

| | |
|:---|:---|
| **100** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 11: Retirement benefit obligations** continued

(iv)Assumptions

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

---

| | | |
|:---|:---|:---|
|  | **2025%**<br>| 2024%<br>|
| Discount rate | **5.57** | 5.55 |
| Rate of inflation: |  |  |
| Retail Price Index (RPI) | **2.65** | 2.97 |
| Consumer Price Index (CPI) | **2.13** | 2.52 |
| Rate of salary increases | **0.00** | 0.00 |
| Weighted-average rate of increase for pensions in payment | **2.52** | 2.69 |

---

To determine the RPI assumption a term-dependent inflation curve has been used adjusting for an assumed inflation risk premium. A gap of

100 basis points has been assumed between RPI and CPI from 2025 to 2030; thereafter a 20 basis point gap has been assumed.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Men** | **Men** | **Women** | **Women** |
|  | **2025**<br>**Years**<br>| 2024<br>Years<br>| **2025**<br>**Years**<br>| 2024<br>Years<br>|
| Life expectancy for average member aged 60, on the valuation date | **26.5** | 26.4 | **28.6** | 28.5 |
| Life expectancy for average member aged 60, 15 years after the valuation date | **27.4** | 27.3 | **29.5** | 29.4 |

---

The mortality assumptions used in the UK scheme valuations are based on standard tables published by the Institute and Faculty of Actuaries

which were adjusted in line with the actual experience of the relevant schemes. The Group uses the 2023 CMI mortality projections model to

project future mortality improvements. In line with actuarial industry recommendations no weight is placed on 2020 and 2021 mortality

experience and 15% weight on 2022 and 2023 mortality experience.

(v)Amount, timing and uncertainty of future cash flows

*Risk exposure of the defined benefit schemes*

While the Group is not exposed to any unusual, entity-specific or scheme-specific risks in its defined benefit pension schemes, it is exposed to a

number of significant risks, detailed below:

**Inflation rate risk:** The majority of the schemes' benefit obligations are linked to inflation both in deferment and once in payment. Higher

inflation will lead to higher liabilities although this will be materially offset by holdings of inflation-linked gilts and, in most cases, caps on the

level of inflationary increases are in place to protect against extreme inflation.

**Interest rate risk:** The defined benefit obligation is determined using a discount rate derived from yields on AA-rated corporate bonds. A

decrease in corporate bond yields will increase plan liabilities although this will be materially offset by an increase in the value of bond holdings

and through the use of derivatives.

**Longevity risk:** The majority of the schemes' obligations are to provide benefits for the life of the members so increases in life expectancy will

result in an increase in the schemes' liabilities.

**Investment risk:** Scheme assets are invested in a diversified portfolio of debt securities, equities and other return-seeking assets. If the assets

underperform the discount rate used to calculate the defined benefit obligation, it will reduce the surplus or increase the deficit. Volatility in

asset values and the discount rate will lead to volatility in the net pension asset on the Group's balance sheet and in other comprehensive

income. To a lesser extent this will also lead to volatility in the pension expense in the Group's income statement.

In addition, the schemes themselves are exposed to liquidity risk with the need to ensure that liquid assets held are sufficient to meet benefit

payments as they fall due and there is sufficient collateral available to support their hedging activity.

The ultimate cost of the defined benefit obligations to the Group will depend upon actual future events rather than the assumptions made.

The assumptions made are unlikely to be borne out in practice and as such the cost may be higher or lower than expected.

*Sensitivity analysis*

The effect of reasonably possible changes in key assumptions on the Group's income statement and on the net defined benefit pension scheme

asset from the change in value of scheme liabilities is set out below. The sensitivities provided assume that all other assumptions and the value

of the schemes' assets remain unchanged. The calculations are approximate in nature and full detailed calculations could lead to a different

result. It is unlikely that isolated changes to individual assumptions will be experienced in practice. Due to the correlation of assumptions,

aggregating the effects of these isolated changes may not be a reasonable estimate of the actual effect of simultaneous changes in multiple

assumptions.

---

| | |
|:---|:---|
| **101** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 11: Retirement benefit obligations** continued

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Effect of reasonably possible alternative assumptions** | **Effect of reasonably possible alternative assumptions** | **Effect of reasonably possible alternative assumptions** | **Effect of reasonably possible alternative assumptions** |
|  | **Increase (decrease) in the**<br>**income statement charge** | **Increase (decrease) in the**<br>**income statement charge** | **Increase (decrease) in the**<br>**net defined benefit**<br>**pension scheme surplus** | **Increase (decrease) in the**<br>**net defined benefit**<br>**pension scheme surplus** |
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Inflation (including pension increases)<sup>1</sup>: |  |  |  |  |
| Increase of 0.25% | **27** | 28 | **(455)** | (484) |
| Decrease of 0.25% | **(25)** | (27) | **433** | 467 |
| Discount rate<sup>2</sup>: |  |  |  |  |
| Increase of 0.25% | **(46)** | (51) | **659** | 718 |
| Decrease of 0.25% | **45** | 49 | **(700)** | (757) |
| Expected life expectancy of members: |  |  |  |  |
| Increase of one year | **45** | 46 | **(802)** | (806) |
| Decrease of one year | **(47)** | (47) | **827** | 830 |

---

1At 31 December 2025, the assumed rate of RPI inflation is 2.65% and CPI inflation 2.13% (2024: RPI 2.97% and CPI 2.52%).

2At 31 December 2025, the assumed discount rate is 5.57% (2024: 5.55%).

*Sensitivity analysis method and assumptions*

The sensitivity analysis above reflects the impact on the liabilities of the Group's three most significant schemes which account for over 90% of

the Group's defined benefit obligations. While differences in the underlying liability profiles for the remainder of the Group's pension

arrangements mean that they may exhibit slightly different sensitivities to variations in these assumptions, the sensitivities provided above are

indicative of the impact across the Group as a whole.

The inflation assumption sensitivity applies to the assumed rate of increase in both the Consumer Price Index (CPI) and the Retail Price Index

(RPI), and includes the impact on the rate of increases to pensions, both before and after retirement. These pension increases are linked to

inflation (either CPI or RPI) subject to certain minimum and maximum limits.

The sensitivity analysis (including the inflation sensitivity) does not include the impact of any change in the rate of salary increases as

pensionable salaries have been frozen since 2 April 2014.

The life expectancy assumption has been applied by allowing for an increase/decrease in life expectation from age 60 of one year, based upon

the approximate weighted average age for each scheme. While this is an approximate approach and will not give the same result as a one year

increase in life expectancy at every age, it provides an appropriate indication of the potential impact on the schemes from changes in life

expectancy.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from the prior year.

*Asset-liability matching strategies*

The main schemes' assets are invested in a diversified portfolio which are independently determined by the responsible governance body for

each scheme and in consultation with the employer.

A significant goal of the asset strategies adopted by the schemes is to reduce volatility caused by changes in market expectations of interest

rates and inflation. In the main schemes this is achieved by investing in liability-driven investment (LDI) strategies. The assets in these LDI

strategies represented c.47% of scheme assets at 31 December 2025.

The LDI strategies are actively managed to reflect both changing market conditions and changes to the liability profile. At 31 December 2025

the asset-liability matching strategy mitigated c.110% of the liability sensitivity to interest rate movements and c.130% of the liability sensitivity

to inflation movements. In addition, a small amount of interest rate sensitivity arises through holdings of corporate and other debt securities.

The higher level of hedging provides greater protection to the funding position of the schemes.

The main schemes hold a number of longevity insurance contracts, hedging c.60% of their longevity risk exposure at 31 December 2025. These

arrangements form part of the schemes' investment portfolio and reduce the risk of members living longer than expected through the exchange

of fixed payments for actual payments.

At 31 December 2025 the value of scheme assets included longevity swaps valued at £(217) million.

*Maturity profile of defined benefit obligation*

The following table provides information on the weighted average duration of the defined benefit pension obligation and the distribution and

timing of benefit payments:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**Years**<br>| 2024<br>Years<br>|
| Duration of the defined benefit obligation | **11** | 12 |

---

---

| | |
|:---|:---|
| **102** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 11: Retirement benefit obligations** continued

Maturity analysis of benefits expected to be paid:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Within 12 months | **1816** | 1800 |
| Between 1 and 2 years | **1625** | 1595 |
| Between 2 and 5 years | **5229** | 5134 |
| Between 5 and 10 years | **9294** | 9318 |
| Between 10 and 15 years | **8993** | 9150 |
| Between 15 and 25 years | **15679** | 16316 |
| Between 25 and 35 years | **10382** | 11294 |
| Between 35 and 45 years | **4375** | 5171 |
| In more than 45 years | **906** | 1201 |

---

*Maturity analysis method and assumptions*

The projected benefit payments are based on the assumptions underlying the assessment of the obligations, including allowance for expected

future inflation. They are shown in their undiscounted form and therefore appear large relative to the discounted assessment of the defined

benefit obligations recognised in the Group's balance sheet. They are in respect of benefits that have been accrued prior to the respective year

end date only and make no allowance for any benefits that may have been accrued subsequently.

**Defined contribution schemes**

The Group operates a number of defined contribution pension schemes in the UK and overseas.

During the year ended 31 December 2025 the charge to the income statement in respect of defined contribution schemes was £541 million

(2024: £515 million; 2023: £414 million), representing the contributions payable by the employer in accordance with each scheme's rules.

**Other retirement benefit schemes**

The Group operates a number of schemes which provide post-retirement healthcare benefits to certain employees, retired employees and their

dependants. The principal scheme relates to former Lloyds Bank staff and under this scheme the Group has undertaken to meet the cost of

post-retirement healthcare for all eligible former employees (and their dependants) who retired prior to 1 January 1996. The Group has entered

into an insurance contract to provide these benefits and a provision has been made for the estimated cost of future insurance premiums

payable.

For the principal post-retirement healthcare scheme, the latest actuarial valuation of the liability was carried out at 31 December 2025 by

qualified independent actuaries. The principal assumptions used were as set out above in section (iv), except that the long-term rate of

increase in healthcare premiums has been assumed at 10.00% (2024: 10.00%).

Movements in the other retirement benefits obligation:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| At 1 January | **(39)** | (44) |
| Actuarial gains | **2** | 4 |
| Insurance premiums paid | **2** | 3 |
| Charge for the year | **(2)** | (2) |
| **At 31 December** | **(37)** | (39) |

---

**Note 12: Auditors' remuneration**

Fees payable to the Bank's auditors are included within other operating expenses and are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Fees payable for the: |  |  |  |
| – audit of the Bank's current year Annual report | **5.4** | 5.2 | 5.1 |
| – audits of the Bank's subsidiaries | **12.8** | 12.4 | 12.2 |
| – total audit fees in respect of the statutory audit of Group entities<sup>1</sup> | **18.2** | 17.6 | 17.3 |
| – services normally provided in connection with statutory and regulatory filings or engagements | **0.6** | 0.5 | 0.3 |
| Total audit fees<sup>2</sup> | **18.8** | 18.1 | 17.6 |
| Other audit-related fees<sup>2</sup> | **0.1** | 0.2 | 0.1 |
| All other fees<sup>2</sup> | **0.1** | 0.2 | 0.1 |
| Total non-audit services<sup>3</sup> | **0.2** | 0.4 | 0.2 |
| **Total fees payable to the Bank's auditors by the Group** | **19.0** | 18.5 | 17.8 |

---

1As defined by the Financial Reporting Council (FRC).

2As defined by the Securities and Exchange Commission (SEC).

3As defined by the SEC. Total non-audit services as defined by the FRC include all fees other than audit fees in respect of the statutory audit of Group entities. These fees totalled

£0.8 million in 2025 (2024: £0.9 million; 2023: £0.5 million).

---

| | |
|:---|:---|
| **103** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 12: Auditors' remuneration** continued

The following types of services are included in the categories listed above:

**Audit fees:** This category includes fees in respect of the audit of the Group's annual financial statements and other services in connection with

regulatory filings. Other services supplied pursuant to legislation relate primarily to costs incurred in connection with client asset assurance and

with the Sarbanes-Oxley Act requirements associated with the audit of the financial statements of Lloyds Bank plc filed on its Form 20-F.

**Other audit-related fees:** This category includes fees in respect of services for assurance and related services that are reasonably related to the

performance of the audit or review of the financial statements, for example acting as reporting accountants in respect of debt prospectuses

required by the Listing Rules.

**All other fees:** This category includes other assurance services not related to the performance of the audit or review of the financial

statements, for example, the review of controls operated by the Group on behalf of a third party. The auditors are not engaged to provide tax

services.

It is the Group's policy to use the auditors only on non-audit assignments in cases where their knowledge of the Group means that it is neither

efficient nor cost effective to employ another firm of accountants.

Lloyds Banking Group has procedures that are designed to ensure auditor independence for Lloyds Banking Group plc and all of its subsidiaries,

including prohibiting certain non-audit services. All audit and non-audit assignments must be pre-approved by the Lloyds Banking Group Audit

Committee (the Audit Committee) on an individual engagement basis; for certain types of non-audit engagements where the fee is 'de minimis'

the Audit Committee has pre-approved all assignments subject to confirmation by management. On a quarterly basis, the Audit Committee

receives and reviews a report detailing all pre-approved services and amounts paid to the auditors for such pre-approved services.

During the year, the auditors also earned fees payable by entities outside the consolidated Lloyds Bank Group in respect of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Audits of Group pension schemes | **0.5** | 0.4 | 0.4 |

---

**Note 13: Impairment**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year ended 31 December 2025** | **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **POCI**<br>**£m**<br>| **Total**<br>**£m**<br>|
| *In respect of:* |  |  |  |  |  |
| Loans and advances to banks | **–** | **–** | **–** | **–** | **–** |
| Loans and advances to customers | **13** | **(81)** | **996** | **(64)** | **864** |
| Debt securities | **–** | **–** | **–** | **–** | **–** |
| Financial assets at amortised cost | **13** | **(81)** | **996** | **(64)** | **864** |
| Financial assets at fair value through other comprehensive income | **(1)** | **–** | **–** | **–** | **(1)** |
| Loan commitments and financial guarantees | **(28)** | **(43)** | **–** | **–** | **(71)** |
| **Total impairment (credit) charge** | **(16)** | **(124)** | **996** | **(64)** | **792** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Year ended 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>|
| *In respect of:* |  |  |  |  |  |
| Loans and advances to banks | (5) | – | – | – | (5) |
| Loans and advances to customers | (139) | (286) | 946 | (5) | 516 |
| Debt securities | (4) | – | – | – | (4) |
| Financial assets at amortised cost | (148) | (286) | 946 | (5) | 507 |
| Financial assets at fair value through other comprehensive income | (3) | – | – | – | (3) |
| Loan commitments and financial guarantees | (14) | (34) | – | – | (48) |
| **Total impairment (credit) charge** | (165) | (320) | 946 | (5) | 456 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Year ended 31 December 2023 | Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>|
| *In respect of:* |  |  |  |  |  |
| Loans and advances to banks | (3) | – | – | – | (3) |
| Loans and advances to customers | 269 | (270) | 412 | (73) | 338 |
| Debt securities | – | – | – | – | – |
| Financial assets at amortised cost | 266 | (270) | 412 | (73) | 335 |
| Financial assets at fair value through other comprehensive income | (2) | – | – | – | (2) |
| Loan commitments and financial guarantees | 31 | (19) | (2) | – | 10 |
| **Total impairment charge (credit)** | 295 | (289) | 410 | (73) | 343 |

---

The impairment charge includes a charge of £137 million (2024: £24 million charge; 2023: £73 million charge) in respect of residual value

impairment and voluntary terminations within the Group's UK motor finance business.

---

| | |
|:---|:---|
| **104** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 14: Tax**

**Analysis of tax expense for the year**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| UK corporation tax: |  |  |  |
| Current tax on profit for the year | **(1307)** | (1181) | (1307) |
| Adjustments in respect of prior years | **90** | (2) | 87 |
|  | **(1217)** | (1183) | (1220) |
| Foreign tax: |  |  |  |
| Current tax on profit for the year | **(52)** | (41) | (44) |
| Adjustments in respect of prior years | **(13)** | 2 | 2 |
|  | **(65)** | (39) | (42) |
| Current tax expense | **(1282)** | (1222) | (1262) |
| Deferred tax: |  |  |  |
| Current year | **(278)** | (41) | (559) |
| Adjustments in respect of prior years | **(56)** | 61 | (28) |
| Deferred tax expense | **(334)** | 20 | (587) |
| **Tax expense** | **(1616)** | (1202) | (1849) |

---

**Factors affecting the tax expense for the year**

The UK corporation tax rate for the year was 25.0% (2024: 25.0%; 2023: 23.5%). The increase in applicable tax rate from 2023 relates to the

change in statutory tax rate effective from 1 April 2023. An explanation of the relationship between tax expense and accounting profit is set

out below.

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Profit before tax | **5472** | 4688 | 7056 |
| UK corporation tax thereon | **(1368)** | (1172) | (1658) |
| Impact of surcharge on banking profits | **(158)** | (145) | (290) |
| Non-deductible costs: conduct charges | **(70)** | (27) | (30) |
| Non-deductible costs: bank levy | **(28)** | (32) | (31) |
| Other non-deductible costs<sup>1</sup> | **(47)** | (47) | (10) |
| Non-taxable income<sup>1</sup> | **5** | 36 | 14 |
| Tax relief on coupons on other equity instruments | **101** | 91 | 78 |
| (Non-deductible) non-taxable foreign exchange (losses) gains<sup>1</sup> | **(72)** | 31 | (21) |
| Tax-exempt gains on disposals | **1** | 5 | 49 |
| Remeasurement of deferred tax due to rate changes | **–** | – | (8) |
| Differences in overseas tax rates | **(1)** | (3) | (3) |
| Adjustments in respect of prior years | **21** | 61 | 61 |
| **Tax expense** | **(1616)** | (1202) | (1849) |

---

1(Non-deductible) non-taxable foreign exchange gains (losses) on non-sterling denominated other equity instruments and on net investment hedging of subsidiaries, previously

shown in aggregate within other non-deductible costs and non-taxable income, are now presented as an individual line item. Comparatives are represented on a consistent basis.

On 11 July 2023, the Government enacted its legislation implementing the G20-OECD Inclusive Framework Pillar 2 rules in the UK, including a

Qualified Domestic Minimum Top-Up Tax rule. This legislation seeks to ensure that UK-headquartered multinational enterprises pay a minimum

tax rate of 15% on UK and overseas profits arising after 31 December 2023. No provision for Pillar 2 current tax is included in tax expense for the

period on the basis that no additional liability is expected to fall due in respect of any of the jurisdictions in which we conduct business.

The Group paid UK and overseas corporation taxes of £1,627 million in the period, and received refunds of £200 million relating to tax overpaid

in respect of the previous period. In addition, the Group paid £730 million in respect of the Irish loss relief case (see note 33). Refunds received

in 2024 of £970 million related to recovery from HMRC of taxes overpaid in respect of previous periods.

**Deferred tax**

The Group's deferred tax assets and liabilities are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Statutory position** | **2025**<br>**£m**<br>| 2024<br>£m<br>| **Tax disclosure** | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Deferred tax assets | **3917** | 4785 | Deferred tax assets | **5431** | 6599 |
| Deferred tax liabilities | **(146)** | (125) | Deferred tax liabilities | **(1660)** | (1939) |
| **Net deferred tax asset at 31 December** | **3771** | 4660 | **Net deferred tax asset at 31 December** | **3771** | 4660 |

---

The statutory position reflects the deferred tax assets and liabilities as disclosed in the consolidated balance sheet and takes into account the

ability of the Group to net assets and liabilities where there is a legally enforceable right of offset and the deferred tax assets and liabilities

relate to income taxes levied by the same taxation authority. The tax disclosure of deferred tax assets and liabilities ties to the amounts

outlined in the tables below which splits the deferred tax assets and liabilities by type, before such netting.

---

| | |
|:---|:---|
| **105** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 14: Tax** continued

Movements in deferred tax assets and liabilities (before taking into consideration the offsetting of balances within the same taxing jurisdiction)

can be summarised as follows:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Deferred tax assets** | **Tax** <br>**losses**<br>**£m**<br>| **Property,**<br>**plant and**<br>**equipment**<br>**£m**<br>| **Provisions**<br>**£m**<br>| **Share-based**<br>**payments** <br>**£m**<br>| **Asset**<br>**revaluations**<sup>1</sup><br>**£m**<br>| **Pension**<br>**liabilities**<br>**£m**<br>| **Derivatives** <br>**£m**<br>| **Other**<br>**temporary**<br>**differences** <br>**£m**<br>| **Total** <br>**£m**<br>|
| At 1 January 2024 | 4747 | 270 | 219 | 26 | 55 | 47 | 1425 | 74 | 6863 |
| (Charge) credit to the income statement | (132) | (75) | (21) | (1) | 45 | (8) | (41) | (6) | (239) |
| (Charge) credit to other comprehensive <br>income<br>| – | – | – | – | (30) | – | 5 | – | (25) |
| At 31 December 2024 | 4615 | 195 | 198 | 25 | 70 | 39 | 1389 | 68 | 6599 |
| (Charge) credit to the income statement | **(396)** | **(76)** | **(23)** | **3** | **29** | **(6)** | **1** | **(36)** | **(504)** |
| (Charge) to other comprehensive income | **–** | **–** | **–** | **–** | **(65)** | **–** | **(599)** | **–** | **(664)** |
| **At 31 December 2025** | **4219** | **119** | **175** | **28** | **34** | **33** | **791** | **32** | **5431** |
| **Deferred tax liabilities** |  | **Property,**<br>**plant and**<br>**equipment**<br>**£m**<br>| **Capitalised**<br>**software**<br>**enhancements**<br>**£m** | **Capitalised**<br>**software**<br>**enhancements**<br>**£m** | **Acquisition**<br>**fair value**<br>**£m**<br>| **Pension**<br>**assets**<br>**£m**<br>| **Derivatives**<br>**£m**<br>| **Other**<br>**temporary**<br>**differences**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2024 |  | – |  | (89) | (346) | (971) | (683) | (295) | (2384) |
| (Charge) credit to the income statement |  | – |  | (31) | 123 | 2 | 150 | 15 | 259 |
| Credit to other comprehensive income |  | – |  | – | – | 155 | – | 22 | 177 |
| Exchange and other adjustments |  | – |  | – | – | – | – | 9 | 9 |
| At 31 December 2024 |  | – |  | (120) | (223) | (814) | (533) | (249) | (1939) |
| (Charge) credit to the income statement |  | **(45)** |  | **31** | **32** | **2** | **164** | **(14)** | **170** |
| Credit to other comprehensive income |  |  |  | **–** | **–** | **85** | **–** | **35** | **120** |
| Exchange and other adjustments |  | **–** |  | **–** | **–** | **–** | **–** | **(11)** | **(11)** |
| **At 31 December 2025** |  | **(45)** |  | **(89)** | **(191)** | **(727)** | **(369)** | **(239)** | **(1660)** |

---

1Financial assets at fair value through other comprehensive income.

Estimation of income taxes includes the assessment of recoverability of deferred tax assets. Deferred tax assets are only recognised to the

extent that they are considered more likely than not to be recoverable based on existing tax laws and forecasts of future taxable profits

against which the underlying tax deductions can be utilised.

The Group has recognised a deferred tax asset of £4,219 million (2024: £4,615 million) in respect of trading losses carried forward. Substantially

all of these losses have arisen in Bank of Scotland plc and Lloyds Bank plc, and they will be utilised as taxable profits arise in those legal entities

in future periods.

The Group's expectations of future UK taxable profits require management judgement, and take into account the Group's long-term financial

and strategic plans and anticipated future tax-adjusting items. In making this assessment, account is taken of business plans, the Board-

approved operating plan and the expected future economic outlook as set out in the strategic report, as well as the risks associated with future

regulatory, climate-related and other change, in order to produce a base case forecast of future UK taxable profits. Under current law there is

no expiry date for UK trading losses not yet utilised, and given the forecast of future profitability and the Group's commitment to the UK

market, in management's judgement it is more likely than not that the value of the losses will be recovered by the Group while still operating as

a going concern.

Banking tax losses that arose before 1 April 2015 can only be used against 25% of taxable profits arising after 1 April 2016, and they cannot be

used to reduce the surcharge on banking profits. These restrictions in utilisation mean that the value of the deferred tax asset in respect of tax

losses is only expected to be fully recovered by 2036 (2024: 2037) in the base case forecast. The rate of recovery of the Group's tax loss asset is

not a straight line, being affected by the relative profitability of the different legal entities in future periods, and the relative size of their tax

losses carried forward. It is expected in the base case that 85% of the value will be recovered by 2033, when Lloyds Bank plc will have utilised

all of its available tax losses. It is possible that future tax law changes could materially affect the timing of recovery and the value of these

losses ultimately realised by the Group.

**Deferred tax not recognised**

Deferred tax assets of £107 million (2024: £119 million) have not been recognised in respect of £427 million of UK tax losses and other

temporary differences which can only be used to offset future capital gains. UK capital losses can be carried forward indefinitely.

No deferred tax has been recognised in respect of foreign trade losses where it is not more likely than not that we will be able to utilise them in

future periods. Of the asset not recognised, £45 million (2024: £48 million) relates to losses that will expire if not used within 20 years, and

£4 million (2024: £4 million) relates to losses with no expiry date.

As a result of parent company exemptions on dividends from subsidiaries and on capital gains on disposal there are no significant taxable

temporary differences associated with investments in subsidiaries, branches, associates and joint arrangements.

---

| | |
|:---|:---|
| **106** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 14: Tax** continued

**Critical accounting judgements and key sources of estimation uncertainty**

---

| | |
|:---|:---|
| **Critical judgement:** | The Group believes that its interpretation of the tax rules on group relief are correct |

---

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 £855 million (including

interest) and a reduction in the Group's deferred tax asset of approximately £270 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. The

appeal has been listed for hearing in March 2027, however 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.

**Note 15: Measurement basis of financial assets and liabilities**

The accounting policies in note 2 describe how different classes of financial instruments are measured, and how income and expenses,

including fair value gains and losses, are recognised. The following table analyses the carrying amounts of the financial assets and liabilities by

category and by balance sheet heading.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Derivatives**<br>**designated**<br>**as hedging**<br>**instruments**<br>**£m** | **Mandatorily held at**<br>**fair value through**<br>**profit or loss** | **Mandatorily held at**<br>**fair value through**<br>**profit or loss** | **Designated**<br>**at fair value**<br>**through**<br>**profit or loss**<br>**£m** | **At fair value**<br>**through other**<br>**comprehensive**<br>**income**<br>**£m** | **Held at**<br>**amortised**<br>**cost**<br>**£m** | **Total**<br>**£m** |
| **At 31 December 2025** | **Derivatives**<br>**designated**<br>**as hedging**<br>**instruments**<br>**£m** | **Held for**<br>**trading**<br>**£m**<br>| **Other**<br>**£m**<br>| **Designated**<br>**at fair value**<br>**through**<br>**profit or loss**<br>**£m** | **At fair value**<br>**through other**<br>**comprehensive**<br>**income**<br>**£m** | **Held at**<br>**amortised**<br>**cost**<br>**£m** | **Total**<br>**£m** |
| **Financial assets** |  |  |  |  |  |  |  |
| Cash and balances at central banks | **–** | **–** | **–** | **–** | **–** | **37720** | **37720** |
| Financial assets at fair value through profit or <br>loss<br>| **–** | **–** | **2279** | **–** | **–** | **–** | **2279** |
| Derivative financial instruments | **11** | **3249** | **–** | **–** | **–** | **–** | **3260** |
| Loans and advances to banks | **–** | **–** | **–** | **–** | **–** | **5836** | **5836** |
| Loans and advances to customers | **–** | **–** | **–** | **–** | **–** | **461504** | **461504** |
| Reverse repurchase agreements | **–** | **–** | **–** | **–** | **–** | **43962** | **43962** |
| Debt securities | **–** | **–** | **–** | **–** | **–** | **11983** | **11983** |
| Due from fellow Lloyds Banking Group <br>undertakings<br>| **–** | **–** | **–** | **–** | **–** | **1182** | **1182** |
| Financial assets at amortised cost | **–** | **–** | **–** | **–** | **–** | **524467** | **524467** |
| Financial assets at fair value through other <br>comprehensive income<br>| **–** | **–** | **–** | **–** | **36257** | **–** | **36257** |
| **Total financial assets** | **11** | **3249** | **2279** | **–** | **36257** | **562187** | **603983** |
| **Financial liabilities** |  |  |  |  |  |  |  |
| Deposits from banks | **–** | **–** | **–** | **–** | **–** | **3085** | **3085** |
| Customer deposits | **–** | **–** | **–** | **–** | **–** | **465207** | **465207** |
| Repurchase agreements at amortised cost | **–** | **–** | **–** | **–** | **–** | **37567** | **37567** |
| Due to fellow Lloyds Banking Group <br>undertakings<br>| **–** | **–** | **–** | **–** | **–** | **3852** | **3852** |
| Financial liabilities at fair value through profit <br>or loss<br>| **–** | **–** | **–** | **4243** | **–** | **–** | **4243** |
| Derivative financial instruments | **264** | **4022** | **–** | **–** | **–** | **–** | **4286** |
| Notes in circulation | **–** | **–** | **–** | **–** | **–** | **2118** | **2118** |
| Debt securities in issue at amortised cost | **–** | **–** | **–** | **–** | **–** | **52132** | **52132** |
| Other | **–** | **–** | **–** | **–** | **–** | **986** | **986** |
| Subordinated liabilities | **–** | **–** | **–** | **–** | **–** | **8020** | **8020** |
| **Total financial liabilities** | **264** | **4022** | **–** | **4243** | **–** | **572967** | **581496** |

---

---

| | |
|:---|:---|
| **107** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 15: Measurement basis of financial assets and liabilities** continued

**Offsetting of financial assets and liabilities**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | **Related amounts where set off in the balance**<br>**sheet not permitted**<sup>1</sup> | **Related amounts where set off in the balance**<br>**sheet not permitted**<sup>1</sup> | **Related amounts where set off in the balance**<br>**sheet not permitted**<sup>1</sup> | **Potential**<br>**net amounts**<br>**if offset**<br>**of related**<br>**amounts**<br>**permitted**<br>**£m** |
| **At 31 December 2025** | **Gross**<br>**amounts of** <br>**assets and**<br>**liabilities**<br>**£m**<br>| **Amount** <br>**offset in** <br>**the balance**<br>**sheet**<sup>2</sup><br>**£m**<br>| **Net amounts**<br>**presented in**<br>**the balance**<br>**sheet**<br>**£m** | **Cash**<br>**collateral**<br>**(received)/**<br>**pledged**<br>**£m**<br>| **Non-cash**<br>**collateral**<br>**(received)/**<br>**pledged**<br>**£m**<br>| **Master** <br>**netting and** <br>**similar** <br>**agreements**<br>**£m**<br>| **Potential**<br>**net amounts**<br>**if offset**<br>**of related**<br>**amounts**<br>**permitted**<br>**£m** |
| Derivative assets | **35865** | **(32605)** | **3260** | **(362)** | **(136)** | **(1589)** | **1173** |
| Derivative liabilities | **(38929)** | **34643** | **(4286)** | **1363** | **189** | **1589** | **(1145)** |
| **Net position** | **(3064)** | **2038** | **(1026)** | **1001** | **53** | **–** | **28** |
| Reverse repurchase agreements held at <br>amortised cost<br>| **56687** | **(12725)** | **43962** | **64** | **(43819)** | **–** | **207** |
| Repurchase agreements held at amortised cost | **(50292)** | **12725** | **(37567)** | **2** | **37422** | **–** | **(143)** |
| **Net position** | **6395** | **–** | **6395** | **66** | **(6397)** | **–** | **64** |

---

1The Group enters into derivatives and repurchase and reverse repurchase agreements with various counterparties which are governed by industry standard master netting

agreements. The Group holds and provides cash and securities collateral in respect of derivative transactions covered by these agreements. The right to set off balances under these

master netting agreements or to set off cash and securities collateral only arises in the event of non-payment or default and, as a result, these arrangements do not qualify for

offsetting under IAS 32.

2The amounts offset in the balance sheet as shown above meet the criteria for offsetting under IAS 32.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Derivatives<br>designated<br>as hedging<br>instruments<br>£m | Mandatorily held at<br>fair value through<br>profit or loss | Mandatorily held at<br>fair value through<br>profit or loss | Designated<br>at fair value<br>through<br>profit or loss<br>£m | At fair value<br>through other<br>comprehensive<br>income<br>£m | Held at<br>amortised<br>cost<br>£m | Total<br>£m |
| At 31 December 2024 | Derivatives<br>designated<br>as hedging<br>instruments<br>£m | Held for<br>trading<br>£m<br>| Other<br>£m<br>| Designated<br>at fair value<br>through<br>profit or loss<br>£m | At fair value<br>through other<br>comprehensive<br>income<br>£m | Held at<br>amortised<br>cost<br>£m | Total<br>£m |
| **Financial assets** |  |  |  |  |  |  |  |
| Cash and balances at central banks | – | – | – | – | – | 42396 | 42396 |
| Financial assets at fair value through profit or <br>loss<br>| – | – | 2321 | – | – | – | 2321 |
| Derivative financial instruments | 51 | 4184 | – | – | – | – | 4235 |
| Loans and advances to banks | – | – | – | – | – | 6433 | 6433 |
| Loans and advances to customers | – | – | – | – | – | 441907 | 441907 |
| Reverse repurchase agreements  | – | – | – | – | – | 44143 | 44143 |
| Debt securities | – | – | – | – | – | 11854 | 11854 |
| Due from fellow Lloyds Banking Group <br>undertakings<br>| – | – | – | – | – | 560 | 560 |
| Financial assets at amortised cost | – | – | – | – | – | 504897 | 504897 |
| Financial assets at fair value through other <br>comprehensive income<br>| – | – | – | – | 30344 | – | 30344 |
| Other | – | – | – | – | – | 172 | 172 |
| **Total financial assets** | 51 | 4184 | 2321 | – | 30344 | 547465 | 584365 |
| **Financial liabilities** |  |  |  |  |  |  |  |
| Deposits from banks | – | – | – | – | – | 3144 | 3144 |
| Customer deposits | – | – | – | – | – | 451794 | 451794 |
| Repurchase agreements at amortised cost | – | – | – | – | – | 37760 | 37760 |
| Due to fellow Lloyds Banking Group <br>undertakings<br>| – | – | – | – | – | 4049 | 4049 |
| Financial liabilities at fair value through profit <br>or loss<br>| – | – | – | 4630 | – | – | 4630 |
| Derivative financial instruments | 340 | 5447 | – | – | – | – | 5787 |
| Notes in circulation | – | – | – | – | – | 2121 | 2121 |
| Debt securities in issue at amortised cost | – | – | – | – | – | 45281 | 45281 |
| Other | – | – | – | – | – | 1663 | 1663 |
| Subordinated liabilities | – | – | – | – | – | 7211 | 7211 |
| **Total financial liabilities** | 340 | 5447 | – | 4630 | – | 553023 | 563440 |

---

---

| | |
|:---|:---|
| **108** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 15: Measurement basis of financial assets and liabilities** continued

**Offsetting of financial assets and liabilities**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Related amounts where set off in the balance<br>sheet not permitted<sup>1</sup> | Related amounts where set off in the balance<br>sheet not permitted<sup>1</sup> | Related amounts where set off in the balance<br>sheet not permitted<sup>1</sup> | Potential<br>net amounts<br>if offset<br>of related<br>amounts<br>permitted<br>£m |
| At 31 December 2024 | Gross<br>amounts of <br>assets and<br>liabilities<br>£m<br>| Amount <br>offset in <br>the balance<br>sheet<sup>2</sup><br>£m<br>| Net amounts<br>presented in<br>the balance<br>sheet<br>£m<br>| Cash<br>collateral<br>(received)/<br>pledged<br>£m<br>| Non-cash<br>collateral<br>(received)/<br>pledged<br>£m<br>| Master <br>netting and <br>similar <br>agreements<br>£m<br>| Potential<br>net amounts<br>if offset<br>of related<br>amounts<br>permitted<br>£m |
| Derivative assets | 40288 | (36053) | 4235 | (407) | (524) | (2217) | 1087 |
| Derivative liabilities | (44261) | 38474 | (5787) | 1742 | 208 | 2217 | (1620) |
| **Net position** | (3973) | 2421 | (1552) | 1335 | (316) | – | (533) |
| Reverse repurchase agreements held at <br>amortised cost<br>| 55165 | (11022) | 44143 | 256 | (44031) | – | 368 |
| Repurchase agreements held at amortised cost | (48782) | 11022 | (37760) | 8 | 37427 | – | (325) |
| **Net position** | 6383 | – | 6383 | 264 | (6604) | – | 43 |

---

1The Group enters into derivatives and repurchase and reverse repurchase agreements with various counterparties which are governed by industry standard master netting

agreements. The Group holds and provides cash and securities collateral in respect of derivative transactions covered by these agreements. The right to set off balances under these

master netting agreements or to set off cash and securities collateral only arises in the event of non-payment or default and, as a result, these arrangements do not qualify for

offsetting under IAS 32.

2The amounts offset in the balance sheet as shown above meet the criteria for offsetting under IAS 32.

**Note 16: Fair values of financial assets and liabilities**

At 31 December 2025, the carrying value of the Group's financial instrument assets held at fair value was £41,796 million (2024:

£36,900 million), and its financial instrument liabilities held at fair value was £8,529 million (2024: £10,417 million).

**(A)Fair value measurement**

Fair value is the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date. It is a measure as at a specific date and may be significantly different from the amount which will

actually be paid or received on maturity or settlement date.

Wherever possible, fair values have been calculated using unadjusted quoted market prices in active markets for identical instruments to those

held by the Group. Where quoted market prices are not available, or are unreliable because of poor liquidity, fair values have been determined

using valuation techniques which, to the extent possible, use market observable inputs, but in some cases use non-market observable inputs.

Valuation techniques used include discounted cash flow analysis and pricing models and, where appropriate, comparison to instruments with

characteristics similar to those of the instruments held by the Group. The Group measures valuation adjustments for its derivative exposures on

the same basis as the derivatives are managed.

The carrying amount of the following financial instruments is a reasonable approximation of fair value: cash and balances at central banks,

items in the course of collection from banks, items in course of transmission to banks and notes in circulation.

Because a variety of estimation techniques are employed and significant estimates made, comparisons of fair values between financial

institutions may not be meaningful. Readers of these financial statements are thus advised to use caution when using this data to evaluate the

Group's financial position.

Fair value information is not provided for items that are not financial instruments or for other assets and liabilities which are not carried at fair

value in the Group's consolidated balance sheet. These items include intangible assets, property, plant and equipment, and shareholders'

equity. These items are material and accordingly the Group believes that any fair value information presented would not represent the

underlying value of the Group.

**Valuation control framework**

The key elements of the control framework for the valuation of financial instruments include model validation, product implementation review

and independent price verification. These functions are carried out by appropriately skilled risk and finance teams, independent of the business

area responsible for the products.

Model validation covers both qualitative and quantitative elements relating to new models. In respect of new products, a product

implementation review is conducted pre and post-trading. Pre-trade testing ensures that the new model is integrated into the Group's systems

and that the profit and loss and risk reporting are consistent throughout the trade lifecycle. Post-trade testing examines the explanatory power

of the implemented model, actively monitoring model parameters and comparing in-house pricing to external sources. Independent price

verification procedures cover financial instruments carried at fair value and are performed at a minimum on a monthly basis. Valuation

differences in breach of established thresholds are escalated to senior management. The results from independent pricing and valuation

reserves are reviewed monthly by senior management.

Formal committees, consisting of senior risk, finance and business management, meet at least quarterly to discuss and approve valuations in

more judgemental areas, in particular for unquoted equities, structured credit, derivatives and the credit valuation adjustment (CVA), funding

valuation adjustment (FVA) and other valuation adjustments.

---

| | |
|:---|:---|
| **109** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 16: Fair values of financial assets and liabilities** continued

**Valuation of financial assets and liabilities**

Assets and liabilities carried at fair value or for which fair values are disclosed have been classified into three levels according to the quality and

reliability of information used to determine the fair values.

Level 1

Level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets or liabilities. Products

classified as level 1 predominantly comprise listed equity shares and government securities.

Level 2

Level 2 valuations are those where quoted market prices are not available, for example where the instrument is traded in a market that is not

considered to be active or valuation techniques are used to determine fair value and where these techniques use inputs that are based

significantly on observable market data. Examples of such financial instruments include most over-the-counter derivatives, financial institution

issued securities, certificates of deposit and certain asset-backed securities.

Level 3

Level 3 portfolios are those where at least one input which could have a significant effect on the instrument's valuation is not based on

observable market data. Such instruments would include the Group's unlisted equity investments which are valued using various valuation

techniques that require significant management judgement in determining appropriate assumptions, including earnings multiples and

estimated future cash flows. Certain of the Group's asset-backed securities, loans and advances recognised at fair value and derivatives are also

classified as level 3.

Transfers in or out of the level 3 portfolio arise when inputs that could have a significant impact on the instrument's valuation become

unobservable or observable, or where an unobservable input becomes significant or insignificant to an instrument's value.

**(B)Financial assets and liabilities carried at fair value**

**(1)Financial assets (excluding derivatives)**

Valuation hierarchy

At 31 December 2025, the Group's financial assets (excluding derivatives) carried at fair value totalled £38,536 million (2024: £32,665 million).

The table below analyses these financial assets by balance sheet classification, asset type and valuation methodology (level 1, 2 or 3, as

described above). The fair value measurement approach is recurring in nature. There were no significant transfers between level 1 and 2 during

the year.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Level 1**<br>**£m**<br>| **Level 2**<br>**£m**<br>| **Level 3**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |
| Financial assets at fair value through profit or loss |  |  |  |  |
| Loans and advances to customers | **–** | **1711** | **282** | **1993** |
| Equity shares | **281** | **–** | **5** | **286** |
| **Total financial assets at fair value through profit or loss** | **281** | **1711** | **287** | **2279** |
| Financial assets at fair value through other comprehensive income |  |  |  |  |
| Debt securities: |  |  |  |  |
| Government securities | **22867** | **308** | **–** | **23175** |
| Asset-backed securities | **–** | **168** | **50** | **218** |
| Corporate and other debt securities | **1273** | **11591** | **–** | **12864** |
| **Total financial assets at fair value through other comprehensive income** | **24140** | **12067** | **50** | **36257** |
| **Total financial assets (excluding derivatives) at fair value** | **24421** | **13778** | **337** | **38536** |
| 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: |  |  |  |  |
| Government securities | 15131 | 115 | – | 15246 |
| Asset-backed securities | – | 149 | 48 | 197 |
| Corporate and other debt securities | 1147 | 13754 | – | 14901 |
| **Total financial assets at fair value through other comprehensive income** | 16278 | 14018 | 48 | 30344 |
| **Total financial assets (excluding derivatives) at fair value** | 16506 | 15831 | 328 | 32665 |

---

---

| | |
|:---|:---|
| **110** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 16: Fair values of financial assets and liabilities** continued

Movements in level 3 portfolio

The table below analyses movements in level 3 financial assets (excluding derivatives) at fair value, recurring basis.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **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 level 3**<br>**financial assets**<br>**(excluding**<br>**derivatives)**<br>**at fair value,** <br>**recurring basis**<br>**£m**<br>| 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 level 3<br>financial assets<br>(excluding<br>derivatives)<br>at fair value, <br>recurring basis<br>£m<br>|
| At 1 January | **280** | **48** | **328** | 270 | 53 | 323 |
| Exchange and other adjustments | **–** | **3** | **3** | – | (2) | (2) |
| (Losses) gains recognised in the income statement <br>within other income<br>| **(14)** | **2** | **(12)** | 41 | (1) | 40 |
| Purchases/increases to customer loans | **51** | **–** | **51** | 4 | – | 4 |
| Sales/repayments of customer loans | **(30)** | **(3)** | **(33)** | (35) | (2) | (37) |
| **At 31 December** | **287** | **50** | **337** | 280 | 48 | 328 |
| (Losses) gains recognised in the income statement, <br>within other income, relating to the change in fair <br>value of those assets held at 31 December<br>| **(13)** | **5** | **(8)** | 36 | (1) | 35 |

---

Valuation methodology for financial assets (excluding derivatives)

*Loans and advances to customers*

The fair value of these assets is determined using discounted cash flow techniques. The discount rates are derived from market observable

interest rates, a risk margin that reflects loan credit ratings and an incremental illiquidity premium based on historical spreads at origination on

similar loans.

*Reverse repurchase agreements*

The fair value of these assets is determined using discounted cash flow techniques. The discount rates are derived from observable repurchase

agreement rate curves specific to the type of security sold under the reverse repurchase agreement.

*Debt securities*

Debt securities measured at fair value and classified as level 2 are valued by discounting expected cash flows using an observable credit spread

applicable to the particular instrument.

Where there is limited trading activity in debt securities, the Group uses valuation models, consensus pricing information from third party

pricing services and broker or lead manager quotes to determine an appropriate valuation. Debt securities are classified as level 3 if there is a

significant valuation input that cannot be corroborated through market sources or where there are materially inconsistent values for an input.

Asset classes classified as level 3 mainly comprise certain collateralised loan obligations and collateralised debt obligations.

At 31 December 2025 £2,006 million (2024: £1,714 million) of financial assets at fair value through profit or loss had a contractual residual

maturity of greater than one year.

**(2)Financial liabilities (excluding derivatives)**

Valuation hierarchy

At 31 December 2025, the Group's financial liabilities (excluding derivatives) carried at fair value, comprised its financial liabilities at fair value

through profit or loss and totalled £4,243 million (2024: £4,630 million). The table below analyses these financial liabilities by balance sheet

classification and valuation methodology (level 1, 2 or 3, as described on **page [109](#i389e8c2b8c554404b7910855fd571e3a_1216)**). The fair value measurement approach is recurring in nature.

There were no significant transfers between level 1 and 2 during the year.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
|  | **Level 1**<br>**£m**<br>| **Level 2**<br>**£m**<br>| **Level 3**<br>**£m**<br>| **Total**<br>**£m**<br>| Level 1<br>£m<br>| Level 2<br>£m<br>| Level 3<br>£m<br>| Total<br>£m<br>|
| Debt securities in issue designated at fair value through <br>profit or loss<br>| **–** | **4226** | **17** | **4243** | – | 4608 | 22 | 4630 |

---

The amount contractually payable on maturity of the debt securities held at fair value through profit or loss at 31 December 2025 was

£8,934 million, which was £4,691 million higher than the balance sheet carrying value (2024: £9,863 million, which was £5,232 million higher

than the balance sheet carrying value). At 31 December 2025 there was a cumulative £114 million increase in the fair value of these liabilities

attributable to changes in credit spread risk; this is determined by reference to the quoted credit spreads of Lloyds Bank plc, the issuing entity

within the Group. Of the cumulative amount, an increase of £126 million arose in 2025 and an increase of £78 million arose in 2024.

---

| | |
|:---|:---|
| **111** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 16: Fair values of financial assets and liabilities** continued

Movements in level 3 portfolio

The table below analyses movements in the level 3 financial liabilities (excluding derivatives) at fair value portfolio.

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| At 1 January | **22** | 23 |
| (Gains) losses recognised in the income statement within other income | **(2)** | 3 |
| Redemptions | **(3)** | (4) |
| **At 31 December** | **17** | 22 |
| (Gains) losses recognised in the income statement, within other income, relating to the change in fair value of those <br>liabilities held at 31 December<br>| **(2)** | 3 |

---

Valuation methodology for financial liabilities (excluding derivatives)

*Liabilities held at fair value through profit or loss*

These principally comprise debt securities in issue which are classified as level 2 and their fair value is determined using techniques whose

inputs are based on observable market data. The carrying amount of the securities is adjusted to reflect the effect of changes in own credit

spreads and the resulting gain or loss is recognised in other comprehensive income.

In the year ended 31 December 2025, the own credit adjustment arising from the fair valuation of £4,243 million (2024: £4,630 million) of the

Group's debt securities in issue designated at fair value through profit or loss resulted in a loss of £126 million (2024: loss of £78 million), before

tax, recognised in other comprehensive income.

At 31 December 2025, £4,159 million (2024: £4,147 million) of financial liabilities at fair value through profit or loss had a contractual residual

maturity of greater than one year.

**(3)Derivatives**

Valuation hierarchy

All of the Group's derivative assets and liabilities are carried at fair value. At 31 December 2025, such assets totalled £3,260 million (2024:

£4,235 million) and liabilities totalled £4,286 million (2024: £5,787 million).

The table below analyses these derivative balances by valuation methodology (level 1, 2 or 3, as described on **page [109](#i389e8c2b8c554404b7910855fd571e3a_1216)**). The fair value

measurement approach is recurring in nature. There were no significant transfers between level 1 and level 2 during the year.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
|  | **Level 1**<br>**£m**<br>| **Level 2**<br>**£m**<br>| **Level 3**<br>**£m**<br>| **Total**<br>**£m**<br>| Level 1<br>£m<br>| Level 2<br>£m<br>| Level 3<br>£m<br>| Total<br>£m<br>|
| Derivative assets | **–** | **3260** | **–** | **3260** | – | 4235 | – | 4235 |
| Derivative liabilities | **–** | **(4168)** | **(118)** | **(4286)** | – | (5644) | (143) | (5787) |

---

Movements in level 3 portfolio

The table below analyses movements in level 3 derivative assets and liabilities carried at fair value.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Derivative**<br>**assets**<br>**£m**<br>| **Derivative**<br>**liabilities**<br>**£m**<br>| Derivative<br>assets<br>£m<br>| Derivative<br>liabilities<br>£m<br>|
| At 1 January | **–** | **(143)** | – | (139) |
| Gains (losses) recognised in the income statement within other income | **–** | **8** | – | (24) |
| Redemptions | **–** | **17** | – | 20 |
| **At 31 December** | **–** | **(118)** | – | (143) |
| Gains (losses) recognised in the income statement, within other income, relating to the <br>change in fair value of those assets or liabilities held at 31 December<br>| **–** | **6** | – | (24) |

---

Valuation methodology for derivatives

The Group's derivatives are valued using techniques including discounted cash flow and options pricing models, as appropriate. The types of

derivatives classified as level 2 and the valuation techniques used include:

• Interest rate swaps which are valued using discounted cash flow models; the most significant inputs into those models are interest rate yield

curves which are developed from publicly quoted rates

• Foreign exchange derivatives that do not contain options which are priced using rates available from publicly quoted sources

• Credit derivatives are valued using standard models with observable inputs, including publicly available yield and credit default swap (CDS)

curves

• Less complex interest rate and foreign exchange option products which are valued using volatility surfaces developed from publicly available

interest rate cap, interest rate swaption and other option volatilities; option volatility skew information is derived from a market standard

consensus pricing service

Complex interest rate products where inputs to the valuation are significant and unobservable are classified as level 3.

Derivatives where the counterparty becomes distressed from a credit perspective are generally reclassified to level 3 given limited observability

in all traded levels.

---

| | |
|:---|:---|
| **112** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 16: Fair values of financial assets and liabilities** continued

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

**Critical accounting judgements and key sources of estimation uncertainty**

---

| | |
|:---|:---|
| **Key sources of estimation uncertainty:** | Interest rate spreads, credit spreads, earnings multiples, interest rate volatility and recovery rates |

---

The Group's valuation control framework and a description of level 1, 2 and 3 financial assets and liabilities is set out in section (A) above. The

valuation techniques for level 3 financial instruments involve management judgement and estimates, the extent of which depends on the

complexity of the instrument and the availability of market observable information. In addition, in line with market practice, the Group applies

credit, debit and funding valuation adjustments in determining the fair value of its uncollateralised derivative positions. A description of these

adjustments is set out in section (3) above.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  |  |  |  | **Effect of reasonably possible** <br>**alternative assumptions**<sup>1</sup> | **Effect of reasonably possible** <br>**alternative assumptions**<sup>1</sup> |  | Effect of reasonably possible <br>alternative assumptions<sup>1</sup> | Effect of reasonably possible <br>alternative assumptions<sup>1</sup> |
|  | **Valuation techniques** | **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** | 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** | **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** | **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 <br>advances to <br>customers<br>| Discounted cash <br>flows<br>| Interest rate spreads<br>(+/- 6%)<sup>3</sup><br>| **282** | **19** | **(17)** | 276 | 19 | (19) |
| Equity <br>investments <br>|  | n/a  | **5** | **1** | **(1)** | 4 | 1 | (1) |
|  |  |  | **287** |  |  | 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** | **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** | **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** |
| Asset-backed <br>securities<br>| Lead manager or <br>broker quote/<br>consensus pricing<br>| n/a | **50** | **2** | **(2)** | 48 | 2 | (2) |
| **Level 3 financial assets carried at fair value** | **Level 3 financial assets carried at fair value** | **Level 3 financial assets carried at fair value** | **337** |  |  | 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** | **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** | **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** |
| Securitisation <br>notes and other<br>| Discounted cash <br>flows<br>| Interest rate spreads<br>(+/- 50bps)<sup>4</sup><br>| **17** | **2** | **(2)** | 22 | 1 | (1) |
| **Derivative financial liabilities** | **Derivative financial liabilities** | **Derivative financial liabilities** | **Derivative financial liabilities** | **Derivative financial liabilities** | **Derivative financial liabilities** | **Derivative financial liabilities** | **Derivative financial liabilities** | **Derivative financial liabilities** |
| Interest rate <br>derivatives<br>| Option pricing <br>model<br>| Interest rate <br>volatility <br>(12%/195%)<sup>5</sup><br>| **7** | **–** | **–** | 13 | – | – |
| Shared <br>appreciation <br>rights<br>| Market values – <br>property valuation<br>| HPI (+/- 1%)<sup>6</sup> | **111** | **11** | **(10)** | 130 | 12 | (11) |
|  |  |  | **118** |  |  | 143 |  |  |
| **Level 3 financial liabilities carried at fair value** | **Level 3 financial liabilities carried at fair value** | **Level 3 financial liabilities carried at fair value** | **135** |  |  | 165 |  |  |

---

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

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

32024: +/- 50bps.

42024: +/- 50bps.

52024: 11%/183%.

62024: +/- 1%.

Unobservable inputs

Significant unobservable inputs affecting the valuation of debt securities and derivatives relate to volatility parameters representing key

attributes of option behaviour; higher volatilities typically denote a wider range of possible outcomes.

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.

*Debt securities*

Reasonably possible alternative assumptions have been determined in respect of the Group's structured credit investments by flexing credit

spreads.

*Derivatives*

Reasonably possible alternative assumptions have been determined in respect of swaptions in the Group's derivative portfolios which are

priced using industry standard option pricing models. Such models require interest rate volatilities which may be unobservable at longer

maturities. To derive reasonably possible alternative valuations these volatility parameters have been flexed within a range.

---

| | |
|:---|:---|
| **113** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 16: Fair values of financial assets and liabilities** continued

**(C)Financial assets and liabilities carried at amortised cost**

**(1)Financial assets**

Valuation hierarchy

The table below analyses the fair values of those financial assets of the Group which are carried at amortised cost by valuation methodology

(level 1, 2 or 3, as described on **page [109](#i389e8c2b8c554404b7910855fd571e3a_1216)**). Financial assets carried at amortised cost are mainly classified as level 3 due to significant

unobservable inputs used in the valuation models. Where inputs are observable, debt securities are classified as level 1 or 2.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Carrying**<br>**value**<br>**£m** | **Fair**<br>**value**<br>**£m** | **Valuation hierarchy** | **Valuation hierarchy** | **Valuation hierarchy** |
|  | **Carrying**<br>**value**<br>**£m** | **Fair**<br>**value**<br>**£m** | **Level 1**<br>**£m**<br>| **Level 2**<br>**£m**<br>| **Level 3**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |  |
| Loans and advances to banks | **5836** | **5836** | **–** | **–** | **5836** |
| Loans and advances to customers | **461504** | **460820** | **–** | **–** | **460820** |
| Reverse repurchase agreements | **43962** | **43962** | **–** | **43962** | **–** |
| Debt securities | **11983** | **12112** | **–** | **11051** | **1061** |
| Due from fellow Lloyds Banking Group undertakings | **1182** | **1182** | **–** | **–** | **1182** |
| At 31 December 2024 |  |  |  |  |  |
| Loans and advances to banks | 6433 | 6433 | – | – | 6433 |
| Loans and advances to customers | 441907 | 438094 | – | – | 438094 |
| Reverse repurchase agreements | 44143 | 44143 | – | 44143 | – |
| Debt securities | 11854 | 11808 | – | 9554 | 2254 |
| Due from fellow Lloyds Banking Group undertakings | 560 | 560 | – | – | 560 |

---

Valuation methodology

*Loans and advances to banks*

The carrying value of short-dated loans and advances to banks is assumed to be their fair value. The fair value of other loans and advances to

banks is estimated by discounting the anticipated cash flows at a market discount rate adjusted for the credit spread of the obligor or, where

not observable, the credit spread of borrowers of similar credit quality.

*Loans and advances to customers*

The Group provides loans and advances to commercial, corporate and personal customers at both fixed and variable rates.

To determine the fair value of loans and advances to customers, loans are segregated into portfolios of similar characteristics. A number of

techniques are used to estimate the fair value of fixed rate lending; these take account of expected credit losses based on historic trends,

prevailing market interest rates and expected future cash flows. For retail exposures, fair value is usually estimated by discounting anticipated

cash flows (including interest at contractual rates) at market rates for similar loans offered by the Group and other financial institutions.

Certain loans secured on residential properties are made at a fixed rate for a limited period, typically two to five years, after which the loans

revert to the relevant variable rate. The fair value of such loans is estimated by reference to market rates for similar loans of maturity equal to

the remaining fixed interest rate period. The fair value of commercial loans is estimated by discounting anticipated cash flows at a rate which

reflects the effects of interest rate changes, adjusted for changes in credit risk.

*Reverse repurchase agreements*

The carrying amount is deemed a reasonable approximation of fair value given the short-term nature of these instruments.

*Debt securities*

The fair values of debt securities are determined predominantly from lead manager quotes and, where these are not available, by alternative

techniques including reference to credit spreads on similar assets with the same obligor, market standard consensus pricing services, broker

quotes and other research data.

---

| | |
|:---|:---|
| **114** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 16: Fair values of financial assets and liabilities** continued

**(2)Financial liabilities**

Valuation hierarchy

The table below analyses the fair values of those financial liabilities of the Group which are carried at amortised cost by valuation methodology

(level 1, 2 or 3, as described on **page [109](#i389e8c2b8c554404b7910855fd571e3a_1216)**).

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Carrying**<br>**value**<br>**£m** | **Fair**<br>**value**<br>**£m** | **Valuation hierarchy** | **Valuation hierarchy** | **Valuation hierarchy** |
|  | **Carrying**<br>**value**<br>**£m** | **Fair**<br>**value**<br>**£m** | **Level 1**<br>**£m**<br>| **Level 2**<br>**£m**<br>| **Level 3**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |  |
| Deposits from banks | **3085** | **3085** | **–** | **3085** | **–** |
| Customer deposits | **465207** | **466567** | **–** | **466567** | **–** |
| Repurchase agreements at amortised cost | **37567** | **37567** | **–** | **37567** | **–** |
| Due to fellow Lloyds Banking Group undertakings | **3852** | **3852** | **–** | **3852** | **–** |
| Debt securities in issue at amortised cost | **52132** | **52202** | **–** | **52202** | **–** |
| Subordinated liabilities | **8020** | **9058** | **–** | **9058** | **–** |
| At 31 December 2024 |  |  |  |  |  |
| Deposits from banks | 3144 | 3144 | – | 3144 | – |
| Customer deposits | 451794 | 452607 | – | 452607 | – |
| Repurchase agreements at amortised cost | 37760 | 37760 | – | 37760 | – |
| Due to fellow Lloyds Banking Group undertakings | 4049 | 4049 | – | 4049 | – |
| Debt securities in issue at amortised cost | 45281 | 45382 | – | 45382 | – |
| Subordinated liabilities | 7211 | 7304 | – | 7304 | – |

---

Valuation methodology

*Deposits from banks and customer deposits*

The fair value of bank and customer deposits repayable on demand is assumed to be equal to their carrying value.

The fair value for all other deposits is estimated using discounted cash flows applying either market rates, where applicable, or current rates for

deposits of similar remaining maturities.

*Repurchase agreements at amortised cost*

The carrying amount is deemed a reasonable approximation of fair value given the short-term nature of these instruments.

*Debt securities in issue at amortised cost*

The fair value of short-term debt securities in issue is approximately equal to their carrying value. Fair value for other debt securities in issue is

calculated based on quoted market prices where available. Where quoted market prices are not available, fair value is estimated using

discounted cash flow techniques at a rate which reflects market rates of interest and the Lloyds Banking Group's own credit spread.

*Subordinated liabilities*

The fair value of subordinated liabilities is determined by reference to quoted market prices where available or by reference to quoted market

prices of similar instruments. Subordinated liabilities are classified as level 2, since the inputs used to determine their fair value are largely

observable.

**(D)Reclassifications of financial assets**

There have been no reclassifications of financial assets in 2024 or 2025.

---

| | |
|:---|:---|
| **115** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 17: Derivative financial instruments**

The fair values and notional amounts of derivative instruments are set out in the following table:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Contract/**<br>**notional**<br>**amount**<br>**£m** | **Fair value** | **Fair value** | Contract/<br>notional<br>amount<br>£m | Fair value | Fair value |
|  | **Contract/**<br>**notional**<br>**amount**<br>**£m** | **Assets**<br>**£m**<br>| **Liabilities**<br>**£m**<br>| Contract/<br>notional<br>amount<br>£m | Assets<br>£m<br>| Liabilities<br>£m<br>|
| **Trading and other** |  |  |  |  |  |  |
| Exchange rate contracts | **94808** | **1806** | **1585** | 70547 | 2550 | 1793 |
| Interest rate contracts | **836347** | **1372** | **2240** | 689874 | 1554 | 3425 |
| Credit derivatives | **3484** | **71** | **92** | 3614 | 79 | 99 |
| Other contracts | **29** | **–** | **105** | 78 | 1 | 130 |
| **Total derivative assets/liabilities - trading and other** | **934668** | **3249** | **4022** | 764113 | 4184 | 5447 |
| **Hedging** |  |  |  |  |  |  |
| Interest rate |  |  |  |  |  |  |
| Currency swaps | **35** | **4** | **–** | 43 | 2 | – |
| Interest rate swaps | **196406** | **4** | **254** | 213215 | – | 336 |
| Designated as fair value hedges | **196441** | **8** | **254** | 213258 | 2 | 336 |
| Currency swaps | **1270** | **3** | **10** | 1967 | 46 | 4 |
| Interest rate swaps | **539755** | **–** | **–** | 468726 | 3 | – |
| Designated as cash flow hedges | **541025** | **3** | **10** | 470693 | 49 | 4 |
| **Total derivative assets/liabilities - hedging** | **737466** | **11** | **264** | 683951 | 51 | 340 |
| **Total recognised derivative assets/liabilities** | **1672134** | **3260** | **4286** | 1448064 | 4235 | 5787 |

---

The notional amount of the contract does not represent the Group's exposure to credit risk, which is limited to the current cost of replacing

contracts with a positive value to the Group should the counterparty default. To reduce credit risk the Group uses a variety of credit

enhancement techniques such as netting and collateralisation, where security is provided against the exposure; a large proportion of the

Group's derivatives are held through exchanges such as London Clearing House and are collateralised through those exchanges.

The Group holds derivatives as part of the following strategies:

• Customer driven, where derivatives are held as part of the provision of risk management products to Group customers

• To manage and hedge the Group's interest rate and foreign exchange risk arising from normal banking business. The hedge accounting

strategy adopted by the Group is to utilise a combination of fair value and cash flow hedge approaches

The principal derivatives used by the Group are as follows:

• Interest rate related contracts that include interest rate swaps, forward rate agreements and options. An interest rate swap is an agreement

between two parties to exchange fixed and floating interest payments, based upon interest rates defined in the contract, without the

exchange of the underlying principal amounts. Forward rate agreements are contracts for the payment of the difference between a

specified rate of interest and a reference rate, applied to a notional principal amount at a specific date in the future. An interest rate option

gives the buyer, on payment of a premium, the right, but not the obligation, to fix the rate of interest on a future loan or deposit, for a

specified period and commencing on a specified future date

• Exchange rate related contracts that include forward foreign exchange contracts, currency swaps and options. A forward foreign exchange

contract is an agreement to buy or sell a specified amount of foreign currency on a specified future date at an agreed rate. Currency swaps

generally involve the exchange of interest payment obligations denominated in different currencies. A currency option gives the buyer, on

payment of a premium, the right, but not the obligation, to sell specified amounts of currency at agreed rates of exchange on or before a

specified future date

• Credit derivatives, principally credit default swaps, are used by the Group as part of its trading activity and to manage its own exposure to

credit risk. A credit default swap is a swap in which one counterparty receives a premium at pre-set intervals in consideration for

guaranteeing to make a specific payment should a negative credit event take place

---

| | |
|:---|:---|
| **116** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 17: Derivative financial instruments** continued

The Group's hedged items and gains and losses arising from hedge accounting are summarised as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Carrying amount of**<br>**the hedged item** | **Carrying amount of**<br>**the hedged item** | **Accumulated amount of**<br>**fair value adjustment on**<br>**the hedged item** | **Accumulated amount of**<br>**fair value adjustment on**<br>**the hedged item** | **Change in fair**<br>**value of hedged**<br>**item for**<br>**ineffectiveness**<br>**assessment**<br>**£m** | **Hedge** <br>**ineffectiveness**<br>**recognised in the**<br> **income** <br>**statement**<sup>4</sup> |
|  | **Carrying amount of**<br>**the hedged item** | **Carrying amount of**<br>**the hedged item** | **Accumulated amount of**<br>**fair value adjustment on**<br>**the hedged item** | **Accumulated amount of**<br>**fair value adjustment on**<br>**the hedged item** | **Change in fair**<br>**value of hedged**<br>**item for**<br>**ineffectiveness**<br>**assessment**<br>**£m** | **Hedge** <br>**ineffectiveness**<br>**recognised in the**<br> **income** <br>**statement**<sup>4</sup> |
| **Fair value hedges** | **Assets**<br>**£m**<br>| **Liabilities**<br>**£m**<br>| **Assets**<br>**£m**<br>| **Liabilities**<br>**£m**<br>| **Change in fair**<br>**value of hedged**<br>**item for**<br>**ineffectiveness**<br>**assessment**<br>**£m** | **Hedge** <br>**ineffectiveness**<br>**recognised in the**<br> **income** <br>**statement**<sup>4</sup> |
| **At 31 December 2025** |  |  |  |  |  |  |
| **Interest rate** |  |  |  |  |  |  |
| Fixed rate mortgages<sup>1</sup> | **121732** | **–** | **(178)** | **–** | **725** | **(70)** |
| Fixed rate issuance<sup>2</sup> | **–** | **29073** | **–** | **1060** | **(313)** | **(7)** |
| Fixed rate bonds<sup>3</sup> | **35058** | **–** | **(1053)** | **–** | **(138)** | **4** |
| **Total** | **156790** | **29073** | **(1231)** | **1060** | **274** | **(73)** |
| At 31 December 2024 |  |  |  |  |  |  |
| **Interest rate** |  |  |  |  |  |  |
| Fixed rate mortgages<sup>1</sup> | 124013 | – | (890) | – | (185) | (51) |
| Fixed rate issuance<sup>2</sup> | – | 32535 | – | 1507 | 80 | (10) |
| Fixed rate bonds<sup>3</sup> | 29264 | – | (1070) | – | (1158) | (17) |
| Total | 153277 | 32535 | (1960) | 1507 | (1263) | (78) |

---

1Included within loans and advances to customers.

2Included within debt securities in issue at amortised cost.

3Included within financial assets at amortised cost and financial assets at fair value through other comprehensive income.

4Hedge ineffectiveness is included in the income statement within net trading income.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Gain (loss)** <br>**recognised in** <br>**other** <br>**comprehensive** <br>**income**<br>**£m** | **Amounts reclassified from reserves**<br>**to income statement as:** | **Amounts reclassified from reserves**<br>**to income statement as:** | **Cash flow hedging reserve** | **Cash flow hedging reserve** | **Change in fair**<br>**value of** <br>**hedged**<br>**item for**<br>**ineffectiveness**<br>**assessment**<br>**£m** | **Hedge** <br>**ineffectiveness** <br>**recognised in** <br>**the income** <br>**statement**<sup>1</sup><br>**£m** |
| **Cash flow hedges** | **Gain (loss)** <br>**recognised in** <br>**other** <br>**comprehensive** <br>**income**<br>**£m** | **Hedged cash** <br>**flows that will** <br>**no longer occur**<br>**£m**<br>| **Hedged item** <br>**affected income** <br>**statement**<br>**£m**<br>| **Continuing**<br>**hedges**<br>**£m**<br>| **Discontinued**<br>**hedges**<br>**£m**<br>| **Change in fair**<br>**value of** <br>**hedged**<br>**item for**<br>**ineffectiveness**<br>**assessment**<br>**£m** | **Hedge** <br>**ineffectiveness** <br>**recognised in** <br>**the income** <br>**statement**<sup>1</sup><br>**£m** |
| **At 31 December 2025** |  |  |  |  |  |  |  |
| **Foreign exchange** |  |  |  |  |  |  |  |
| Foreign currency issuance<sup>2</sup> | **(40)** | **–** | **(8)** | **(27)** | **78** | **48** | **–** |
| Customer deposits<sup>3</sup> | **–** | **–** | **4** | **–** | **9** | **–** | **–** |
| **Interest rate** |  |  |  |  |  |  |  |
| Customer loans<sup>4</sup> | **269** | **–** | **1139** | **(2820)** | **(1495)** | **(780)** | **59** |
| Central bank balances<sup>5</sup> | **162** | **–** | **683** | **77** | **(814)** | **(339)** | **3** |
| Customer deposits<sup>3</sup> | **(13)** | **–** | **(56)** | **2112** | **65** | **72** | **(12)** |
| **Total** | **378** | **–** | **1762** | **(658)** | **(2157)** | **(999)** | **50** |
| At 31 December 2024 |  |  |  |  |  |  |  |
| **Foreign exchange** |  |  |  |  |  |  |  |
| Foreign currency issuance<sup>2</sup> | 92 | – | (1) | 77 | 22 | (91) | – |
| Customer deposits<sup>3</sup> | – | – | – | – | 5 | – | – |
| **Interest rate** |  |  |  |  |  |  |  |
| Customer loans<sup>4</sup> | (2880) | – | 2600 | (4098) | (1626) | 1006 | (61) |
| Central bank balances<sup>5</sup> | (603) | – | 718 | (692) | (890) | 414 | (3) |
| Customer deposits<sup>3</sup> | 1074 | – | (1020) | 2174 | 72 | (56) | 8 |
| Total | (2317) | – | 2297 | (2539) | (2417) | 1273 | (56) |

---

1Hedge ineffectiveness is included in the income statement within net trading income. The reported hedge ineffectiveness includes an adjustment for off-market derivatives.

2Included within debt securities in issue at amortised cost.

3Included within customer deposits.

4Included within loans and advances to customers.

5Included within cash and balances at central banks.

There was no gain or loss in either 2025 or 2024 reclassified from the cash flow hedging reserve for which hedge accounting had previously

been used but for which the hedged future cash flows are no longer expected to occur.

At 31 December 2025 £2,703 million of total recognised derivative assets and £3,976 million of total recognised derivative liabilities

(2024: £3,097 million of assets and £4,716 million of liabilities) had a contractual residual maturity of greater than one year.

The accumulated amount of fair value hedge adjustments remaining in the balance sheet for hedged items that have ceased to be adjusted for

hedging gains and losses is a liability of £124 million relating to fixed rate issuances of £98 million and mortgages of £26 million (2024: liability

of £524 million relating to fixed rate issuances of £126 million and mortgages of £398 million).

---

| | |
|:---|:---|
| **117** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 17: Derivative financial instruments** continued

Details of the Group's hedging instruments are set out below:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Maturity** | **Maturity** | **Maturity** | **Maturity** | **Maturity** | **Maturity** | **Changes in fair**<br>**value used for**<br>**calculating**<br>**hedge**<br>**ineffectiveness**<br>**£m** |
| **Fair value hedges** | **Up to 1 month**<br>**£m**<br>| **1 to 3 months**<br>**£m**<br>| **3 to 12 months**<br>**£m** | **1 to 5 years**<br>**£m**<br>| **Over 5 years**<br>**£m** | **Total**<br>**£m**<br>| **Changes in fair**<br>**value used for**<br>**calculating**<br>**hedge**<br>**ineffectiveness**<br>**£m** |
| **At 31 December 2025** |  |  |  |  |  |  |  |
| **Interest rate** |  |  |  |  |  |  |  |
| Cross currency swap |  |  |  |  |  |  |  |
| Notional | **–** | **–** | **–** | **35** | **–** | **35** | **2** |
| Average fixed interest rate | **–** | **–** | **–** | **1.28%** | **–** |  |  |
| Average EUR/GBP exchange rate | **–** | **–** | **–** | **1.38** | **–** |  |  |
| Interest rate swap |  |  |  |  |  |  |  |
| Notional | **382** | **5299** | **30252** | **120038** | **40435** | **196406** | **(349)** |
| Average fixed interest rate | **3.05%** | **3.42%** | **3.83%** | **3.35%** | **1.99%** |  |  |
|  |  |  |  |  |  | **196441** | **(347)** |
| **Cash flow hedges** |  |  |  |  |  |  |  |
| **At 31 December 2025** |  |  |  |  |  |  |  |
| **Foreign exchange** |  |  |  |  |  |  |  |
| Currency swap |  |  |  |  |  |  |  |
| Notional | **337** | **793** | **89** | **51** | **–** | **1270** | **(48)** |
| Average EUR/GBP exchange rate | **1.13** | **0.93** | **1.14** | **1.12** | **–** |  |  |
| Average USD/GBP exchange rate | **1.35** | **1.34** | **1.30** | **1.28** | **–** |  |  |
| **Interest rate** |  |  |  |  |  |  |  |
| Interest rate swap |  |  |  |  |  |  |  |
| Notional | **10658** | **30021** | **108493** | **308233** | **82350** | **539755** | **1582** |
| Average fixed interest rate | **4.10%** | **3.42%** | **3.68%** | **3.61%** | **3.58%** |  |  |
|  |  |  |  |  |  | **541025** | **1534** |
| **Total** |  |  |  |  |  | **737466** | **1187** |
| **Fair value hedges**  |  |  |  |  |  |  |  |
| At 31 December 2024 |  |  |  |  |  |  |  |
| **Interest rate** |  |  |  |  |  |  |  |
| Cross currency swap |  |  |  |  |  |  |  |
| Notional | – | – | – | – | 43 | 43 | – |
| Average fixed interest rate | – | – | – | – | 1.28% |  |  |
| Average EUR/GBP exchange rate | – | – | – | – | 1.38 |  |  |
| Interest rate swap |  |  |  |  |  |  |  |
| Notional | 3354 | 12749 | 52764 | 101148 | 43200 | 213215 | 1185 |
| Average fixed interest rate | 4.43% | 3.84% | 4.12% | 3.44% | 2.30% |  |  |
|  |  |  |  |  |  | 213258 | 1185 |
| **Cash flow hedges** |  |  |  |  |  |  |  |
| At 31 December 2024 |  |  |  |  |  |  |  |
| **Foreign exchange** |  |  |  |  |  |  |  |
| Currency swap |  |  |  |  |  |  |  |
| Notional | 599 | 596 | 746 | 26 | – | 1967 | 91 |
| Average EUR/GBP exchange rate | 1.17 | 1.16 | 1.19 | 1.16 | – |  |  |
| Average USD/GBP exchange rate | 1.27 | 1.29 | 1.29 | 1.24 | – |  |  |
| **Interest rate** |  |  |  |  |  |  |  |
| Interest rate swap |  |  |  |  |  |  |  |
| Notional | 8601 | 20637 | 126308 | 254931 | 58249 | 468726 | (672) |
| Average fixed interest rate | 4.38% | 4.40% | 3.87% | 3.37% | 3.03% |  |  |
|  |  |  |  |  |  | 470693 | (581) |
| Total |  |  |  |  |  | 683951 | 604 |

---

---

| | |
|:---|:---|
| **118** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 18: Loans and advances to customers**

Reference is made to the Credit Risk section on **pages [30](#i699a03b3579a4d1ba970905a768d5368_54902) to [49](#i699a03b3579a4d1ba970905a768d5368_56872)**.

At 31 December 2025 £398,740 million (2024: £383,009 million) of loans and advances to customers had a contractual residual maturity of

greater than one year.

**Note 19: Allowance for expected credit losses**

The Group recognises an allowance for expected credit losses (ECLs) for loans and advances to customers and banks, other financial assets

held at amortised cost, financial assets (other than equity investments) measured at fair value through other comprehensive income and

certain loan commitment and financial guarantee contracts. At 31 December 2025, the Group's expected credit loss allowance was

£3,201 million (2024: £3,453 million), of which £3,006 million (2024: £3,188 million) was in respect of drawn balances.

The Group's total expected credit loss allowances were as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 |
| **Allowance for expected credit losses** | **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **POCI**<br>**£m**<br>| **Total**<br>**£m**<br>| Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>|
| *In respect of:* |  |  |  |  |  |  |  |  |  |  |
| Loans and advances to banks | **1** | **–** | **–** | **–** | **1** | 1 | – | – | – | 1 |
| Loans and advances to customers | **729** | **1076** | **1037** | **159** | **3001** | 730 | 1159 | 1107 | 187 | 3183 |
| Debt securities | **3** | **–** | **1** | **–** | **4** | 3 | – | 1 | – | 4 |
| Financial assets at amortised cost | **733** | **1076** | **1038** | **159** | **3006** | 734 | 1159 | 1108 | 187 | 3188 |
| Provisions in relation to loan commitments <br>and financial guarantees<br>| **112** | **82** | **1** | **–** | **195** | 138 | 125 | 2 | – | 265 |
| **Total** | **845** | **1158** | **1039** | **159** | **3201** | 872 | 1284 | 1110 | 187 | 3453 |
| Expected credit loss in respect of financial <br>assets at fair value through other <br>comprehensive income (memorandum <br>item)<br>| **3** | **–** | **–** | **–** | **3** | 4 | – | – | – | 4 |

---

The calculation of the Group's expected credit loss allowances and provisions against loan commitments and guarantees, which are set out

above, requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out below:

**Critical accounting judgements and key sources of estimation uncertainty**

---

| | |
|:---|:---|
| **Critical judgements:** | Determining an appropriate definition of default against which a probability of default, exposure at default and loss given <br>default parameter can be evaluated<br>|
|  | Establishing the criteria for a significant increase in credit risk (SICR) |
|  | The individual assessment of material cases and the use of judgemental adjustments made to impairment modelling processes <br>that adjust inputs, parameters and outputs to reflect risks not captured by models<br>|
| **Key source of estimation uncertainty:** | Base case and multiple economic scenarios (MES) assumptions, including the rate of unemployment and the rate of change of <br>house prices, required for creation of MES scenarios and forward-looking credit parameters<br>|

---

**Definition of default**

The probability of default (PD) of an exposure, both over a 12-month period and over its lifetime, is a key input to the measurement of the ECL

allowance. Default has occurred when there is evidence that the customer is experiencing significant financial difficulty which is likely to affect

the ability to repay amounts due. The definition of default adopted by the Group is described in note 2(H) Impairment of financial assets. A

Stage 3 asset that is no longer credit-impaired is transferred back to Stage 2 as no general probation period is applied to assets in Stage 3. UK

mortgages is an exception to this rule where a probation period is enforced for non-performing forborne and defaulted exposures in

accordance with prudential regulation.

**Significant increase in credit risk**

An ECL allowance equivalent to 12 months' expected losses is established against assets in Stage 1; assets classified as Stage 2 carry an ECL

allowance equivalent to lifetime expected losses. Assets are transferred from Stage 1 to Stage 2 when there has been a significant increase in

credit risk (SICR) since initial recognition. Credit-impaired assets are transferred to Stage 3 with a lifetime expected losses allowance. If an

exposure that is classified as Stage 2 no longer meets the SICR criteria, which in some cases capture customer behaviour in previous periods, it

is moved back to Stage 1.

The Group uses both quantitative and qualitative indicators to determine whether there has been a SICR for an asset. The setting of precise

trigger points combined with risk indicators requires judgement and the use of different trigger points may have a material impact upon the

ECL allowance. The Group monitors the effectiveness of SICR criteria on an ongoing basis.

For UK mortgages a doubling of PD since origination is set as a quantitative SICR trigger. All originations post IFRS 9 adoption incorporate

forward looking information, and for recent Interest Only accounts the likelihood of default occurring at the end of term. This is supplemented

by qualitative triggers including where customers have surpassed their original contractual term through use of term extensions, where fraud is

evident, or where an account is in arrears.

For credit cards, loans and overdrafts an increase of three PD grades since origination on the retail master scale (RMS) shown below is set as a

quantitative SICR trigger. Assets are also assumed to have suffered a SICR if they have either been in arrears on three occasions, or in default

once, in the past 12 months.

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **RMS grade** | **1** | **2** | **3** | **4** | **5** | **6** | **7** | **8** | **9** | **10** | **11** | **12** | **13** | **14** |
| PD boundary<sup>1</sup> (%) | 0.10 | 0.40 | 0.80 | 1.20 | 2.50 | 4.50 | 7.50 | 10.00 | 14.00 | 20.00 | 30.00 | 45.00 | 99.99 | 100.00 |

---

1Probability-weighted annualised lifetime probability of default.

For Commercial Banking a doubling of PD with a minimum increase in PD of 1% since origination is treated as a SICR. This is complemented

with the use of internal credit risk classifications and ratings as qualitative indicators to identify a SICR.

---

| | |
|:---|:---|
| **119** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 19: Allowance for expected credit losses** continued

The Group does not use the low credit risk exemption in its staging assessments, though more simplistic SICR criteria are applied for portfolios

not listed above. All financial assets are assumed to have suffered a SICR if they are more than 30 days past due.

**Individual assessments and application of judgement in adjustments to modelled ECL**

The table below analyses total ECL allowances 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 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 |
|  | **Modelled**<br>**ECL**<br>**£m**<br>| **Individually**<br>**assessed**<br>**£m** | **I**<br>**n**<br>**f**<br>**l**<br>**a**<br>**t**<br>**i**<br>**o**<br>**n**<br>**a**<br>**r**<br>**y**<br>**a**<br>**n**<br>**d**<br>**i**<br>**n**<br>**t**<br>**e**<br>**r**<br>**e**<br>**s**<br>**t**<br>**r**<br>**a**<br>**t**<br>**e**<br>**r**<br>**i**<br>**s**<br>**k**<br>**£**<br>**m**<br>| **Judgemental** <br>**adjustments**<br>**£m**<br>| **Total**<br>**ECL**<br>**£m**<br>| Modelled<br>ECL<br>£m<br>| Individually<br>assessed<br>£m | I<br>n<br>f<br>l<br>a<br>t<br>i<br>o<br>n<br>a<br>r<br>y<br>a<br>n<br>d<br>i<br>n<br>t<br>e<br>r<br>e<br>s<br>t<br>r<br>a<br>t<br>e<br>r<br>i<br>s<br>k<br>£<br>m<br>| Judgemental <br>adjustments<br>£m<br>| Total<br>ECL<br>£m<br>|
| UK mortgages | **623** | **–** |  | **108** | **731** | 720 | – |  | 132 | 852 |
| Credit cards | **540** | **–** |  | **63** | **603** | 681 | – |  | (7) | 674 |
| Other Retail | **916** | **–** |  | **75** | **991** | 860 | – |  | 90 | 950 |
| Commercial Banking | **542** | **354** |  | **(21)** | **875** | 877 | 354 |  | (255) | 976 |
| Other | **1** | **–** |  | **–** | **1** | 1 | – |  | – | 1 |
| **Total** | **2622** | **354** |  | **225** | **3201** | 3139 | 354 |  | (40) | 3453 |

---

**Individually assessed ECL**

Stage 3 ECL in Commercial Banking is largely assessed on an individual basis by the Business Support Unit using bespoke assessment of loss for

each specific client based on potential recovery strategies. While these assessments are based on the Group's latest economic view, the use of

Group-wide multiple economic scenarios and weightings is not considered appropriate for these cases due to their individual characteristics. In

place of this, a range of case-specific outcomes are considered with any alternative better or worse outcomes that carry a 25% likelihood taken

into account in establishing a probability-weighted ECL. At 31 December 2025, individually assessed provisions for Commercial Banking were

£354 million (2024: £354 million) which reflected a range of £276 million to £439 million (2024: £309 million to £437 million), based on the

range of alternative outcomes considered.

**Application of judgement in adjustments to modelled ECL**

Impairment models fall within the Group's model risk framework with model monitoring, periodic validation and back testing performed on

model components, such as probability of default. Limitations in the models or data inputs may be identified through these assessments and

review of model outputs, which may require appropriate judgemental adjustments to the ECL. These adjustments are determined by

considering the particular attributes of exposures which have not been adequately captured by the impairment models and range from

changes to model inputs and parameters, at account level (in-model adjustments), through to more qualitative post-model adjustments.

**Other judgements**

**UK mortgages: £108 million (2024: £132 million)** 

These adjustments principally comprise:

Repossession risk: £85 million (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 methodology refinement and latest data points on the population

judged at risk.

Adjustment for specific segments: £13 million (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: £63 million (2024: £(7) million) and Other Retail: £75 million (2024: £90 million)**

These adjustments principally comprise:

Lifetime extension: Credit cards: £49 million (2024: £55 million) and Other Retail: £9 million (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.

Adjustments to loss rates: Credit cards: £nil (2024: £(57) million) and Other Retail: £25 million (2024: £47 million)

A number of adjustments were previously made to the loss given default (LGD) assumptions used within unsecured and motor credit models.

For unsecured portfolios, the previous adjustments reflected 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. These impacts have now been integrated into the model

solution following model refinements. The remaining adjustment for UK Motor Finance, within Other Retail, captures the observed loss rates

and the latest outlook on used car prices.

**Commercial Banking: £(21) million (2024: £(255) million)**

These adjustments principally comprise:

Corporate insolvency rates: £(119) million (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 stable credit performance, 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 changes due to the interaction with the implementation of loss rate model enhancements in the period.

---

| | |
|:---|:---|
| **120** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 19: Allowance for expected credit losses** continued

Adjustments to loss given defaults (LGDs): £50 million (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.

Corporate income gearing (CIG) adjustment: £nil (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.

Commercial Real Estate (CRE) price reduction: £nil (2024: £35 million)

This adjustment recognised the potential impact on loss rates from valuations on specific CRE sectors where evidence suggested valuations

may lag achievable levels, notably in cases of stressed sale. Recent performance reflects stabilisation in valuations and improved confidence in

the CRE sector, removing the judgemental adjustment.

Global tariff and geo-political disruption risks: £48 million (2024: £nil)

This new adjustment is 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.

**Generation of multiple economic scenarios**

The estimate of expected credit losses is required to be based on an unbiased expectation of future economic scenarios. The approach used to

generate the range of future economic scenarios depends on the methodology and judgements adopted. The Group's approach is to start from

a defined base case scenario, used for planning purposes, and to generate alternative economic scenarios around this base case. The base case

scenario is a conditional forecast underpinned by a number of conditioning assumptions that reflect the Group's best view of key future

developments. If circumstances appear likely to materially deviate from the conditioning assumptions, then the base case scenario is updated.

The base case scenario is central to a range of future economic scenarios generated by simulation of an economic model, for which the same

conditioning assumptions apply as in the base case scenario. These scenarios are ranked by using estimated relationships with industry-wide

historical loss data. With the base case already pre-defined, three other scenarios are identified as averages of constituent scenarios located

around the 15th, 75th and 95th percentiles of the distribution. The full distribution is therefore summarised by a practical number of scenarios

to run through ECL models representing an upside, the base case, and a downside scenario weighted at 30% each, together with a severe

downside scenario weighted at 10%. The scenario weights represent the distribution of economic scenarios and not subjective views on

likelihood. The inclusion of a severe downside scenario with a smaller weighting ensures that the non-linearity of losses in the tail of the

distribution is adequately captured. Macroeconomic projections may employ reversionary techniques to adjust the paths of economic drivers

towards long-run equilibria after a reasonable forecast horizon. The Group does not use such techniques to force the MES scenarios to revert to

the base case planning view. Utilising such techniques would be expected to be immaterial for expected credit losses since loss sensitivity is

minimal after the initial five years of the projections.

A forum under the chairmanship of the Chief Economist meets at least quarterly to review and, if appropriate, recommend changes to the

method by which economic scenarios are generated, for approval by the Chief Financial Officer and Chief Risk Officer. Since 30 September

2025, the non-modelled adjustments previously applied to UK Bank Rate and CPI inflation in the severe downside scenario have been removed.

This is because the incremental ECL impact is no longer considered sufficiently material to justify their application. Accordingly, its removal has

had no material impact on ECL.

**Base case and MES economic assumptions**

The Group's base case economic scenario has been updated to reflect global developments and changes in domestic economic policy. The

Group's updated base case scenario has the following conditioning assumptions. First, developments in global conflicts, technology or financial

sector issues do not cause a significant degree of financial market volatility. Second, the US effective tariff rate is maintained at levels

prevailing at the balance sheet date pending a switch to a sector-based tariff framework. Third, the UK's macroeconomic framework for

monetary and fiscal policy remains in place, alongside broader continuity on other areas of government policy.

Based on these assumptions and incorporating the economic data published for the third 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, modest further reductions in UK Bank Rate are

expected to continue 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 fourth quarter of 2025. Actual data for this period, or

restatements of past data, may have since emerged prior to publication and have not been included.

**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 at 31 December 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.

---

| | |
|:---|:---|
| **121** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 19: Allowance for expected credit losses** continued

Five year start to peak and trough

The peak or trough for any metric may occur intra year and therefore not be identifiable from the annual assumptions, so they are also

disclosed. For GDP, house price growth and commercial real estate price growth, the peak, or trough, reflects the highest, or lowest cumulative

quarterly position reached relative to the start of the five-year period, which as at 31 December 2025 is 1 January 2025. Given these metrics

may exhibit increases followed by greater falls, the start to trough movements quoted may be smaller than the equivalent 'peak to trough'

movement (and vice versa for start to peak). Unemployment, UK Bank Rate and CPI inflation reflect the highest, or lowest, quarterly level

reached in the five-year period.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **At 31 December 2025** | **2025%**<br>| **2026%**<br>| **2027%**<br>| **2028%**<br>| **2029%**<br>| **2025 to 2029** <br>**average%**<br>| **Start to**<br>**peak%**<br>| **Start to** <br>**trough%**<br>|
| **Upside** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | **1.4** | **2.0** | **2.3** | **1.6** | **1.6** | **1.8** | **9.4** | **0.7** |
| Unemployment rate | **4.8** | **4.2** | **3.2** | **3.1** | **3.2** | **3.7** | **5.1** | **3.0** |
| House price growth | **0.8** | **3.5** | **7.1** | **6.9** | **6.0** | **4.8** | **26.4** | **(0.1)** |
| Commercial real estate price growth | **1.2** | **7.9** | **4.9** | **1.7** | **0.8** | **3.2** | **17.3** | **0.6** |
| UK Bank Rate | **4.13** | **3.94** | **4.59** | **5.07** | **5.33** | **4.61** | **5.39** | **3.75** |
| CPI inflation | **3.4** | **2.6** | **2.4** | **2.8** | **3.1** | **2.9** | **3.8** | **2.1** |
| **Base case** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | **1.4** | **1.2** | **1.4** | **1.5** | **1.6** | **1.4** | **7.6** | **0.7** |
| Unemployment rate | **4.8** | **5.2** | **4.8** | **4.6** | **4.5** | **4.8** | **5.3** | **4.5** |
| House price growth | **0.8** | **1.6** | **1.9** | **2.2** | **3.1** | **1.9** | **9.8** | **(0.1)** |
| Commercial real estate price growth | **1.2** | **0.6** | **1.7** | **0.5** | **0.2** | **0.9** | **4.4** | **0.6** |
| UK Bank Rate | **4.13** | **3.44** | **3.25** | **3.44** | **3.50** | **3.55** | **4.50** | **3.25** |
| CPI inflation | **3.4** | **2.6** | **2.2** | **2.2** | **2.3** | **2.6** | **3.8** | **2.1** |
| **Downside** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | **1.4** | **(0.3)** | **(0.5)** | **1.1** | **1.6** | **0.7** | **3.6** | **0.1** |
| Unemployment rate | **4.8** | **6.6** | **7.5** | **7.4** | **7.0** | **6.7** | **7.6** | **4.5** |
| House price growth | **0.8** | **(0.2)** | **(4.7)** | **(5.7)** | **(2.8)** | **(2.6)** | **0.9** | **(12.2)** |
| Commercial real estate price growth | **1.2** | **(7.1)** | **(4.2)** | **(2.7)** | **(2.3)** | **(3.1)** | **1.3** | **(14.4)** |
| UK Bank Rate | **4.13** | **2.74** | **1.09** | **0.75** | **0.52** | **1.85** | **4.50** | **0.45** |
| CPI inflation | **3.4** | **2.6** | **2.0** | **1.4** | **1.0** | **2.1** | **3.8** | **0.8** |
| **Severe downside** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | **1.4** | **(1.9)** | **(1.8)** | **0.7** | **1.4** | **0.0** | **1.3** | **(2.8)** |
| Unemployment rate | **4.8** | **8.3** | **10.2** | **9.9** | **9.4** | **8.5** | **10.3** | **4.5** |
| House price growth | **0.8** | **(1.2)** | **(11.1)** | **(12.2)** | **(7.8)** | **(6.5)** | **0.8** | **(28.4)** |
| Commercial real estate price growth | **1.2** | **(17.4)** | **(9.8)** | **(7.4)** | **(5.4)** | **(8.0)** | **1.3** | **(34.0)** |
| UK Bank Rate | **4.13** | **1.91** | **0.10** | **0.03** | **0.01** | **1.24** | **4.50** | **0.01** |
| CPI inflation | **3.4** | **2.6** | **1.7** | **0.5** | **(0.4)** | **1.6** | **3.8** | **(0.7)** |
| **Probability-weighted** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | **1.4** | **0.7** | **0.8** | **1.3** | **1.6** | **1.2** | **6.1** | **0.7** |
| Unemployment rate | **4.8** | **5.6** | **5.7** | **5.5** | **5.4** | **5.4** | **5.8** | **4.5** |
| House price growth | **0.8** | **1.3** | **0.2** | **(0.2)** | **1.1** | **0.6** | **2.8** | **(0.1)** |
| Commercial real estate price growth | **1.2** | **(1.3)** | **(0.3)** | **(0.9)** | **(0.9)** | **(0.4)** | **1.3** | **(2.6)** |
| UK Bank Rate | **4.13** | **3.23** | **2.69** | **2.78** | **2.81** | **3.13** | **4.50** | **2.64** |
| CPI inflation | **3.4** | **2.6** | **2.2** | **2.0** | **1.9** | **2.4** | **3.8** | **1.8** |

---

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Base case scenario by quarter**<sup>1</sup><br>**At 31 December 2025**<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>| **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** | **0.3** | **0.1** | **0.3** | **0.3** | **0.3** | **0.4** | **0.4** |
| Unemployment rate | **4.5** | **4.7** | **5.0** | **5.1** | **5.3** | **5.3** | **5.2** | **5.1** |
| House price growth | **2.9** | **2.7** | **1.3** | **0.8** | **1.3** | **1.6** | **1.6** | **1.6** |
| Commercial real estate price growth | **2.5** | **2.6** | **2.6** | **1.2** | **0.5** | **0.2** | **0.1** | **0.6** |
| UK Bank Rate | **4.50** | **4.25** | **4.00** | **3.75** | **3.75** | **3.50** | **3.25** | **3.25** |
| CPI inflation | **2.8** | **3.5** | **3.8** | **3.7** | **3.3** | **2.6** | **2.2** | **2.2** |

---

1Gross domestic product growth is presented quarter-on-quarter. House price growth, commercial real estate 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.

---

| | |
|:---|:---|
| **122** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 19: Allowance for expected credit losses** continued

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| At 31 December 2024 | 2024%<br>| 2025%<br>| 2026%<br>| 2027%<br>| 2028%<br>| 2024 to 2028 <br>average%<br>| Start to<br>peak%<br>| Start to<br>trough%<br>|
| **Upside** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | 1.9 | 2.2 | 1.5 | 1.4 | 1.6 | 8.9 | 0.7 |
| Unemployment rate | 4.3 | 3.5 | 2.8 | 2.7 | 2.8 | 3.2 | 4.4 | 2.7 |
| House price growth | 3.4 | 3.7 | 6.5 | 6.6 | 5.4 | 5.1 | 28.2 | 0.4 |
| Commercial real estate price growth | 0.7 | 7.8 | 6.7 | 3.2 | 0.5 | 3.7 | 20.0 | (0.8) |
| UK Bank Rate | 5.06 | 4.71 | 5.02 | 5.19 | 5.42 | 5.08 | 5.50 | 4.50 |
| CPI inflation | 2.6 | 2.8 | 2.6 | 2.9 | 3.0 | 2.8 | 3.5 | 2.0 |
| **Base case** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | 1.0 | 1.4 | 1.5 | 1.5 | 1.2 | 7.0 | 0.7 |
| Unemployment rate | 4.3 | 4.7 | 4.7 | 4.5 | 4.5 | 4.5 | 4.8 | 4.2 |
| House price growth | 3.4 | 2.1 | 1.0 | 1.4 | 2.4 | 2.0 | 10.5 | 0.4 |
| Commercial real estate price growth | 0.7 | 0.3 | 2.5 | 1.9 | 0.0 | 1.1 | 5.4 | (0.8) |
| UK Bank Rate | 5.06 | 4.19 | 3.63 | 3.50 | 3.50 | 3.98 | 5.25 | 3.50 |
| CPI inflation | 2.6 | 2.8 | 2.4 | 2.4 | 2.2 | 2.5 | 3.5 | 2.0 |
| **Downside** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | (0.5) | (0.4) | 1.0 | 1.5 | 0.5 | 3.2 | 0.0 |
| Unemployment rate | 4.3 | 6.0 | 7.4 | 7.4 | 7.1 | 6.4 | 7.5 | 4.2 |
| House price growth | 3.4 | 0.6 | (5.5) | (6.6) | (3.4) | (2.4) | 4.0 | (11.4) |
| Commercial real estate price growth | 0.7 | (7.8) | (3.1) | (0.9) | (2.3) | (2.7) | 0.7 | (12.9) |
| UK Bank Rate | 5.06 | 3.53 | 1.56 | 0.96 | 0.68 | 2.36 | 5.25 | 0.59 |
| CPI inflation | 2.6 | 2.8 | 2.3 | 1.8 | 1.2 | 2.1 | 3.5 | 0.9 |
| **Severe downside** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | (1.9) | (1.5) | 0.7 | 1.3 | (0.1) | 1.2 | (2.4) |
| Unemployment rate | 4.3 | 7.7 | 10.0 | 10.0 | 9.7 | 8.4 | 10.2 | 4.2 |
| House price growth | 3.4 | (0.8) | (12.4) | (13.6) | (8.8) | (6.7) | 3.4 | (29.2) |
| Commercial real estate price growth | 0.7 | (17.4) | (8.5) | (5.5) | (5.7) | (7.5) | 0.7 | (32.3) |
| UK Bank Rate – modelled | 5.06 | 2.68 | 0.28 | 0.08 | 0.02 | 1.62 | 5.25 | 0.02 |
| UK Bank Rate – adjusted<sup>1</sup> | 5.06 | 4.03 | 2.70 | 2.23 | 1.95 | 3.19 | 5.25 | 1.88 |
| CPI inflation – modelled | 2.6 | 2.8 | 1.9 | 1.0 | 0.1 | 1.7 | 3.5 | (0.2) |
| CPI inflation – adjusted<sup>1</sup> | 2.6 | 3.6 | 2.1 | 1.4 | 0.8 | 2.1 | 3.9 | 0.7 |
| **Probability-weighted** |  |  |  |  |  |  |  |  |
| Gross domestic product growth | 0.8 | 0.5 | 0.8 | 1.2 | 1.4 | 1.0 | 5.7 | 0.7 |
| Unemployment rate | 4.3 | 5.0 | 5.5 | 5.4 | 5.3 | 5.1 | 5.5 | 4.2 |
| House price growth | 3.4 | 1.8 | (0.7) | (1.0) | 0.4 | 0.8 | 5.3 | 0.4 |
| Commercial real estate price growth | 0.7 | (1.7) | 1.0 | 0.7 | (1.1) | (0.1) | 0.7 | (1.3) |
| UK Bank Rate – modelled | 5.06 | 4.00 | 3.09 | 2.90 | 2.88 | 3.59 | 5.25 | 2.88 |
| UK Bank Rate – adjusted<sup>1</sup> | 5.06 | 4.13 | 3.33 | 3.12 | 3.08 | 3.74 | 5.25 | 3.06 |
| CPI inflation – modelled | 2.6 | 2.8 | 2.4 | 2.2 | 1.9 | 2.4 | 3.5 | 1.8 |
| CPI inflation – adjusted<sup>1</sup> | 2.6 | 2.9 | 2.4 | 2.3 | 2.0 | 2.4 | 3.5 | 1.9 |

---

1The adjustment to UK Bank Rate and CPI inflation in the severe downside was considered to better reflect the risks around the Group's base case view in an economic environment

where the risks of supply and demand shocks are more balanced.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Base case scenario by quarter<sup>1</sup><br>At 31 December 2024<br>| 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 |

---

1Gross domestic product growth is presented quarter-on-quarter. House price growth, commercial real estate 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.

---

| | |
|:---|:---|
| **123** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 19: Allowance for expected credit losses** continued

**ECL sensitivity to economic assumptions**

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

allocation for an asset is based on the overall 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 £363 million compared to £443 million at 31 December 2024.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | **At 31 December 2025** | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 |
|  | **Probability-**<br>**weighted**<br>**£m**<br>| **Upside**<br>**£m**<br>| **Base case**<br>**£m**<br>| **Downside**<br>**£m**<br>| **Severe**<br>**downside**<br>**£m**<br>| Probability-<br>weighted<br>£m<br>| Upside<br>£m<br>| Base case<br>£m<br>| Downside<br>£m<br>| Severe<br>downside<br>£m<br>|
| UK mortgages | **731** | **341** | **510** | **937** | **1943** | 852 | 345 | 567 | 1064 | 2596 |
| Credit cards | **603** | **498** | **579** | **674** | **777** | 674 | 518 | 641 | 773 | 945 |
| Other Retail | **991** | **922** | **969** | **1036** | **1126** | 950 | 843 | 923 | 1010 | 1172 |
| Commercial Banking | **875** | **681** | **779** | **995** | **1389** | 976 | 737 | 878 | 1110 | 1586 |
| Other | **1** | **1** | **1** | **1** | **1** | 1 | 1 | 1 | 1 | 1 |
| **ECL allowance** | **3201** | **2443** | **2838** | **3643** | **5236** | 3453 | 2444 | 3010 | 3958 | 6300 |

---

The impact of isolated changes in the UK unemployment rate and House Price Index (HPI) has been assessed on a univariate basis. Although

such changes would not be observed in isolation, as economic indicators tend to be correlated in a coherent scenario, this gives insight into the

sensitivity of the Group's ECL to gradual changes in these two critical economic factors.

The impacts are assessed as changes to probability-weighted modelled ECL inclusive of the impacts upon staging of assets, excluding post

model adjustments. In previous assessments, impacts were assessed as changes to base case modelled ECL only (at 100% weighting) with

staging held flat to the reported view, and similarly excluded post model adjustments. The updated approach addresses the limitations of the

prior methodology and provides a more representative view of the potential impact of these sensitivities.

The ECL impact due to a change in unemployment has reduced in 2025 compared to 2024 as a result of lower loss rates within the Commercial

Banking model. The HPI reduction versus 2024 is due to lower default rates and a reduced proportion of assets in Stage 2 for UK mortgages,

following strong credit performance in the year.

The table below shows the impact on the Group's ECL resulting from a 1 percentage point increase or decrease in the UK unemployment rate.

The increase or decrease is presented based on the adjustment phased evenly over the first 10 quarters of all four scenarios. A more immediate

increase or decrease would drive a more material ECL impact as it would be fully reflected in both 12-month and lifetime probability of

defaults.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **At 31 December 2025** | **At 31 December 2025** | At 31 December 2024<sup>1</sup> | At 31 December 2024<sup>1</sup> |
|  | **1pp increase in**<br>**unemployment**<br>**£m**<br>| **1pp decrease in**<br>**unemployment**<br>**£m**<br>| 1pp increase in<br>unemployment<br>£m<br>| 1pp decrease in<br>unemployment<br>£m<br>|
| UK mortgages | **11** | **(11)** | 13 | (12) |
| Credit cards | **54** | **(53)** | 54 | (53) |
| Other Retail | **25** | **(25)** | 23 | (24) |
| Commercial Banking | **58** | **(48)** | 111 | (81) |
| **ECL impact** | **148** | **(137)** | 201 | (170) |

---

<sup>1</sup>For 2025, impacts are assessed as changes to probability-weighted modelled ECL inclusive of the impacts upon staging of assets, excluding post model adjustments. The

comparative period has been represented on a consistent basis.

The table below shows the impact on the Group's ECL in respect of UK mortgages of an increase or decrease in loss given default for a

10 percentage point increase or decrease in HPI. The increase or decrease is presented based on the adjustment phased evenly over the first 10

quarters of all four scenarios.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **At 31 December 2025** | **At 31 December 2025** | At 31 December 2024<sup>1</sup> | At 31 December 2024<sup>1</sup> |
|  | **10pp increase**<br>**in HPI**<br>**£m**<br>| **10pp decrease**<br>**in HPI**<br>**£m**<br>| 10pp increase<br>in HPI<br>£m<br>| 10pp decrease<br>in HPI<br>£m<br>|
| **ECL impact** | **(172)** | **261** | (207) | 312 |

---

<sup>1</sup>For 2025, impacts are assessed as changes to probability-weighted modelled ECL inclusive of the impacts upon staging of assets, excluding post model adjustments. The

comparative period has been represented on a consistent basis.

---

| | |
|:---|:---|
| **124** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 20: Finance lease receivables**

The Group's finance lease receivables are classified as loans and advances to customers and accounted for at amortised cost. These balances

are analysed as follows:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Not later than 1 year | **7799** | 6160 |
| Later than 1 year and not later than 2 years | **5143** | 5215 |
| Later than 2 years and not later than 3 years | **4116** | 4268 |
| Later than 3 years and not later than 4 years | **2713** | 2846 |
| Later than 4 years and not later than 5 years | **404** | 502 |
| Later than 5 years | **189** | 294 |
| **Gross investment** | **20364** | 19285 |
| Unearned future finance income | **(2427)** | (2362) |
| Rentals received in advance | **(22)** | (16) |
| **Net investment** | **17915** | 16907 |

---

Equipment leased to customers under finance lease receivables relates to financing transactions to fund the purchase of aircraft, ships, motor

vehicles and other items. There was an allowance for uncollectable finance lease receivables included in the allowance for impairment losses of

£439 million (2024: £368 million).

The Group's finance lease assets are comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Electric vehicles | **1502** | 996 |
| Internal combustion engine vehicles | **12715** | 11521 |
| Self-charging hybrid vehicles | **571** | 346 |
| Plug-in hybrid vehicles | **1605** | 1302 |
| Other | **1522** | 2742 |
| **Net investment** | **17915** | 16907 |

---

**Note 21: Goodwill and other intangible assets**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Goodwill**<br>**£m**<br>| **Brands**<br>**£m**<br>| **Purchased**<br>**credit card**<br>**relationships**<br>**£m**<br>| **Customer-**<br>**related**<br>**intangibles**<br>**£m**<br>| **Capitalised**<br>**software**<br>**enhancements**<br>**£m**<br>| **Total**<br>**£m**<br>|
| *Cost:*<sup>1</sup> |  |  |  |  |  |  |
| At 1 January 2024 | 957 | 585 | 1002 | 230 | 8774 | 11548 |
| Exchange and other adjustments | – | – | – | – | (5) | (5) |
| Additions | – | – | – | – | 1246 | 1246 |
| Disposals and write-offs | – | – | – | – | (208) | (208) |
| At 31 December 2024 | 957 | 585 | 1002 | 230 | 9807 | 12581 |
| Exchange and other adjustments | **–** | **–** | **–** | **–** | **(66)** | **(66)** |
| Additions | **–** | **–** | **–** | **–** | **1244** | **1244** |
| Disposals and write-offs | **–** | **–** | **–** | **–** | **(269)** | **(269)** |
| **At 31 December 2025** | **957** | **585** | **1002** | **230** | **10716** | **13490** |
| *Accumulated amortisation:* |  |  |  |  |  |  |
| At 1 January 2024 | 344 | 204 | 762 | 59 | 4342 | 5711 |
| Exchange and other adjustments | – | – | – | – | (11) | (11) |
| Charge for the year<sup>2</sup> | – | – | 70 | 10 | 1197 | 1277 |
| Disposals and write-offs | – | – | – | – | (200) | (200) |
| At 31 December 2024 | 344 | 204 | 832 | 69 | 5328 | 6777 |
| Exchange and other adjustments | **–** | **1** | **–** | **–** | **(40)** | **(39)** |
| Charge for the year<sup>2</sup> | **–** | **–** | **71** | **10** | **1248** | **1329** |
| Disposals and write-offs | **–** | **–** | **–** | **–** | **(269)** | **(269)** |
| **At 31 December 2025** | **344** | **205** | **903** | **79** | **6267** | **7798** |
| **Balance sheet amount at 31 December 2025** | **613** | **380** | **99** | **151** | **4449** | **5692** |
| Balance sheet amount at 31 December 2024 | 613 | 381 | 170 | 161 | 4479 | 5804 |

---

1For acquisitions made prior to 1 January 2004, the date of transition to IFRS Accounting Standards, cost is included net of amounts amortised up to 31 December 2003.

2The charge for the year is recognised in operating expenses (note 9).

---

| | |
|:---|:---|
| **125** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 21: Goodwill and other intangible assets** continued

**Goodwill**

The goodwill held in the Group's balance sheet is tested at least annually for impairment. For the purposes of impairment testing the goodwill

is allocated to the appropriate cash-generating unit; of the total balance of £613 million (2024: £613 million), £302 million, or 49% (2024:

£302 million, 49%) has been allocated to the Credit card cash-generating unit and £309 million, or 50% (2024: £309 million, 50%) has been

allocated to the Motor business cash generating units, both in the Group's Retail division. Management believes that any reasonably possible

change in the key assumptions (listed below) would not cause the recoverable amount of the goodwill to fall below its balance sheet carrying

value.

The recoverable amount of the goodwill relating to the Motor business is based on a value-in-use calculation using post-tax cash flow

projections based on financial budgets and plans approved by management covering a three-year period and a discount rate (post-tax) of

10.5%, based on the Group's cost of equity. This is equivalent to a pre-tax rate of 14.0%. The budgets and plans are based upon past experience

adjusted to take into account anticipated changes in sales volumes having regard to expected market conditions and competitor activity. The

cash flows beyond the plan period are extrapolated using a growth rate of 3.5%, which does not exceed the long-term average growth rates for

the markets in which the Motor business participates.

The recoverable amount of the goodwill relating to Credit cards has been based on a value-in-use calculation using post-tax cash flow

projections based on financial budgets and plans approved by management covering a three-year period and a discount rate (post-tax) of

10.5%, based on the Group's cost of equity. This is equivalent to a pre-tax rate of 14.0%. The budgets and plans are based upon past experience

adjusted to take into account anticipated changes in credit card volumes having regard to expected market conditions and competitor activity.

The cash flows beyond the plan period are extrapolated using a growth rate of 3.5%, which does not exceed the long-term average growth

rates for the markets in which the Cards business participates.

**Other intangible assets**

The brand arising from the acquisition of Bank of Scotland in 2009 is recognised on the Group's balance sheet and has been determined to

have an indefinite useful life. The carrying value at 31 December 2025 was £380 million (2024: £380 million). The Bank of Scotland name has

been in existence for over 300 years and there are no indications that the brand should not have an indefinite useful life. The recoverable

amount has been based on a value-in-use calculation. The calculation uses post-tax projections for a three-year period of the income

generated by the Bank of Scotland cash-generating unit, a discount rate of 10.5% and a future growth rate of 3.5%. Management believes that

any reasonably possible change in the key assumptions would not cause the recoverable amount of the Bank of Scotland brand to fall below its

balance sheet carrying value.

**Note 22: Other assets**

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Property, plant and equipment: |  |  |
| Premises | **1113** | 1085 |
| Equipment | **895** | 877 |
| Operating lease assets (see below) | **8213** | 7265 |
| Right-of-use assets (note 23) | **737** | 849 |
|  | **10958** | 10076 |
| Prepayments | **1631** | 1478 |
| Other assets | **1196** | 1511 |
| **Total other assets** | **13785** | 13065 |

---

**Operating lease assets where the Group is lessor** 

Equipment leased to customers under operating leases primarily relates to vehicle contract hire arrangements. At 31 December the future

minimum rentals receivable under non-cancellable operating leases were as follows:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Within 1 year**<br>**£m**<br>| **1 to 2 years**<br>**£m**<br>| **2 to 3 years**<br>**£m**<br>| **3 to 4 years**<br>**£m**<br>| **4 to 5 years**<br>**£m**<br>| **Over 5 years**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **At 31 December 2025** | **1911** | **1131** | **1072** | **483** | **124** | **16** | **4737** |
| At 31 December 2024 | 1577 | 956 | 821 | 365 | 85 | 6 | 3810 |

---

Equipment leased to customers under operating leases primarily relates to vehicle contract hire arrangements. Operating lease assets are

comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Electric vehicles | **4534** | 3894 |
| Internal combustion engine vehicles | **1641** | 1630 |
| Self-charging hybrid vehicles | **125** | 166 |
| Plug-in hybrid vehicles | **1905** | 1575 |
| Other | **8** | – |
| **Total operating lease assets** | **8213** | 7265 |

---

The group continues to mitigate used car price movements through a number of market and customer initiatives to improve performance and

reduce volatility, including lease extensions, used car leasing, remarketing agreements and residual value insurance.

---

| | |
|:---|:---|
| **126** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 23: Lessee disclosures**

The table below sets out the movement in the Group's right-of-use assets, which are primarily in respect of premises, and are recognised within

other assets (note 22).

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| At 1 January | **849** | 1025 |
| Exchange and other adjustments | **(3)** | 1 |
| Additions | **79** | 128 |
| Disposals | **(11)** | (113) |
| Depreciation charge for the year | **(177)** | (192) |
| **At 31 December** | **737** | 849 |

---

The Group's lease liabilities are recognised within other liabilities (note 25). The maturity analysis of the Group's lease liabilities on an

undiscounted basis is set out in the liquidity risk section.

The total cash outflow for leases in the year ended 31 December 2025 was £175 million (2024: £199 million). The amount recognised within

interest expense in respect of lease liabilities is disclosed in note 5.

**Note 24: Debt securities in issue**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **At fair value** <br>**through profit** <br>**or loss**<br>**£m**<br>| **At**<br>**amortised**<br> **cost**<br>**£m**<br>| **Total**<br>**£m**<br>| At fair value <br>through profit <br>or loss<br>£m<br>| At<br>amortised<br> cost<br>£m<br>| Total<br>£m<br>|
| Senior unsecured notes issued | **4226** | **20356** | **24582** | 4608 | 22902 | 27510 |
| Covered bonds | **–** | **11264** | **11264** | – | 11800 | 11800 |
| Certificates of deposit issued | **–** | **2484** | **2484** | – | 597 | 597 |
| Securitisation notes | **17** | **6325** | **6342** | 22 | 5185 | 5207 |
| Commercial paper | **–** | **11703** | **11703** | – | 4797 | 4797 |
| **Total debt securities in issue** | **4243** | **52132** | **56375** | 4630 | 45281 | 49911 |

---

**Covered bonds and securitisation programmes**

At 31 December 2025, the covered bonds held by external parties and those held internally, were secured on certain loans and advances to

customers amounting to £22,072 million (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 has two covered bond programmes, which have ring-fence asset pools and guarantee the covered bonds issued by the Group. At the

reporting date the Group had over-collateralised these programmes to meet the terms of the programmes, to secure the rating of the covered

bonds and to provide operational flexibility. From time to time, the obligations of the Group to provide collateral may increase due to the

formal requirements of the programmes. The Group may also voluntarily contribute collateral to support the ratings of the covered bonds.

Covered bonds includes Pfandbriefe, which the Group issued for the first time in 2024.

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 £27,418 million at 31 December 2025 (2024: £27,284 million), the majority of which have been sold by subsidiary

companies 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 £3,326 million (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. Additionally, the Group has certain contractual arrangements to

provide liquidity facilities to some of these structured entities. At 31 December 2025 these obligations had not been triggered; the maximum

exposure under these facilities was £4 million (2024: £4 million).

The Group recognises the full liabilities associated with its securitisation and covered bond programmes within debt securities in issue,

although the obligations of the Group in respect of its securitisation issuances are limited to the cash flows generated from the underlying

assets. The Group could be required to provide additional support to a number of the securitisation programmes to support the credit ratings

of the debt securities issued, in the form of increased cash reserves and the holding of subordinated notes. Further, certain programmes

contain contractual obligations that require the Group to repurchase assets should they become credit-impaired or as otherwise required by

the transaction documents. The Group has not provided financial or other support by voluntarily offering to repurchase assets from any of its

public securitisation programmes during 2025 (2024: none).

At 31 December 2025 £31,597 million (2024: £32,397 million) of debt securities in issue at amortised cost had a contractual residual maturity of

greater than one year.

---

| | |
|:---|:---|
| **127** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 25: Other liabilities**

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Lease liabilities | **986** | 1219 |
| Other creditors and accruals<sup>1</sup> | **4786** | 5992 |
| **Total other liabilities** | **5772** | 7211 |

---

1Includes settlement balances and accruals and deferred income.

The maturity analysis of the Group's lease liabilities on an undiscounted basis is set out in the liquidity risk section.

At 31 December 2025 £708 million (2024: £898 million) of lease liabilities had a contractual residual maturity of greater than one year.

**Note 26: Provisions**

**Critical accounting judgements and key sources of estimation uncertainty**

---

| | |
|:---|:---|
| **Critical judgement:** | Determining whether a present obligation exists and whether it is more likely than not that an outflow of <br>resources will be required to settle that obligation<br>|
| **Key sources of estimation uncertainty:** | Populations impacted, level of remediation and response rates |

---

Determining the amount of the provisions, which represent management's best estimate of the cost of settling these issues, requires the

exercise of significant judgement and estimation. It will often be necessary to form a view on matters which are inherently uncertain, such as

the scope of reviews required by regulators, and to estimate the number of future complaints, the extent to which they will be upheld, the

average cost of redress and the impact of decisions reached by legal and other review processes that may be relevant to claims received.

Consequently, the continued appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other

relevant evidence and adjustments made to the provisions where appropriate.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Provisions**<br>**for financial**<br>**commitments**<br>**and guarantees**<br>**£m**<br>| **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 | **–** | **(276)** | **(472)** | **(748)** |
| (Release) charge for the year | **(71)** | **953** | **439** | **1321** |
| **At 31 December 2025** | **195** | **2193** | **384** | **2772** |

---

**Provisions for financial commitments and guarantees**

Provisions are recognised for expected credit losses on undrawn loan commitments and financial guarantees.

**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 and pre-action correspondence in connection with its past conduct and claims brought or threatened 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 of these matters, events or circumstances 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 full year to 31 December 2025 the Group charged a further £953

million in respect of legal actions and other regulatory matters and the unutilised balance at 31 December 2025 was £2,193 million

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

---

| | |
|:---|:---|
| **128** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 26: Provisions** continued

**Motor commission review**

The Group recognised a further £800 million provision in the third quarter of 2025 following the FCA's announcement in October 2025 that it

intends to implement a motor finance commission redress scheme. As at 31 December 2025, the total provision recognised is £1,950 million.

The Supreme Court judgment in Johnson v FirstRand Bank Limited in August 2025 found that there was an unfair relationship under s.140A of

the Consumer Credit Act (CCA). Following the Supreme Court judgment, the FCA published Consultation Paper CP25/27 in October 2025

setting out detailed proposals for a scheme (including their proposed basis) to redress unfair customer relationships.

The increased provision reflects the increased likelihood of a higher number of scheme cases (i.e. discretionary commission arrangements,

commercial tie or high commission arrangements) being eligible for redress, including those dating back to 2007 and also the likelihood of a

higher level of redress than anticipated in the previous scenario-based provision; the FCA's proposed redress calculation approach is less closely

linked to customer loss than previously anticipated. The Group has made representations to the FCA on a number of aspects of the proposed

scheme.

On 3 December 2025, the FCA announced that the pause on motor finance complaints handling would be lifted on 31 May 2026 for complaints

made in relation to the subject matter of the scheme, and that this timeline may be superseded in due course by the operational timetable to

be set out in the final scheme rules. The FCA also lifted the pause on handling motor finance complaints in respect of leasing products on 5

December 2025. The Group continues to receive new 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 April 2026, the Court of

Appeal is expected to consider whether, in the context of motor finance claims, it is possible for multiple unfair relationship claims to be dealt

with via one omnibus claim form.

In establishing the provision estimate, the Group has considered the potential impact of the FCA's proposed redress scheme, as well as a

number of possible modifications to the scheme which might arise as a result of the consultation. The Group will continue to assess

developments and potential impacts following the announcement by the FCA of the final scheme rules, which are expected by the end of

March 2026. The ultimate financial impact will be determined by a number of factors still to be resolved, in particular the final scheme rules,

customer response rates, scheme operating costs, any further interventions and any broader implications of legal proceedings and complaints.

Given the significant level of uncertainty in terms of the final outcome, the ultimate financial impact could materially differ from the amount

provided. The total £1,950 million provision represents the Group's current best estimate of the potential impact of the motor finance issue.

**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.

All of the population have now had an initial decision, with a small number of the populations' challenges to the Panel's initial decision ongoing

through the published 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 separate 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 £98 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 31 December 2025 provisions of £163 million (31 December 2024: £130 million) were held.

The Group carries provisions of £41 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.

---

| | |
|:---|:---|
| **129** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 27: Subordinated liabilities**

The movement in subordinated liabilities during the year was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Preferred**<br>**securities**<br>**£m**<br>| **Undated**<br>**£m**<br>| **Dated**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2024 | – | 141 | 6794 | 6935 |
| **Issued during the year**<sup>1</sup>**:** |  |  |  |  |
| Floating Rate Dated Subordinated Notes 2034 (A$500 million) | – | – | 257 | 257 |
| 5.963% Fixed-to-Floating Rate Dated Subordinated Notes 2034 (A$250 million) | – | – | 129 | 129 |
|  | – | – | 386 | 386 |
| Foreign exchange movements | – | – | (3) | (3) |
| Other movements (cash and non-cash)<sup>2</sup> | – | – | (107) | (107) |
| At 31 December 2024 | – | 141 | 7070 | 7211 |
| **Issued during the year**<sup>1</sup>**:** |  |  |  |  |
| 4.327% Fixed Rate Reset Dated Subordinated Notes 2035 (€1,000 million) | **–** | **–** | **844** | **844** |
| 6.264% Fixed Rate Reset Dated Subordinated Notes 2036 ($1,250 million) | **–** | **–** | **917** | **917** |
|  | **–** | **–** | **1761** | **1761** |
| **Repurchases and redemptions during the year**<sup>1</sup>**:** |  |  |  |  |
| 4.50% Fixed Rate Step-up Subordinated Notes 2030 (€441 million) | **–** | **–** | **(371)** | **(371)** |
| 2.6787% Fixed Rate Bond 2025 (€309 million) | **–** | **–** | **(260)** | **(260)** |
| 7.625% Dated Subordinated Notes 2025 (£273 million) | **–** | **–** | **(273)** | **(273)** |
| 5.75% Undated Step-up Subordinated Notes callable 2025 (£9 million) | **–** | **(9)** | **–** | **(9)** |
|  | **–** | **(9)** | **(904)** | **(913)** |
| Foreign exchange movements | **–** | **–** | **(271)** | **(271)** |
| Other movements (cash and non-cash)<sup>2</sup> | **–** | **1** | **231** | **232** |
| **At 31 December 2025** | **–** | **133** | **7887** | **8020** |

---

1Issuances in the year generated cash inflows of £1,761 million (2024: £386 million); the repurchases and redemptions resulted in cash outflows of £913 million (2024: £nil).

2Other movements include hedge accounting movements and cash payments in respect of interest on subordinated liabilities in the year amounting to £411 million (2024: £366

million) offset by the interest expense in respect of subordinated liabilities of £459 million (2024: £430 million).

These securities will, in the event of the winding-up of the issuer, be subordinated to the claims of depositors and all other creditors of the

issuer, other than creditors whose claims rank equally with, or are junior to, the claims of the holders of the subordinated liabilities. The

subordination of specific subordinated liabilities is determined in respect of the issuer and any guarantors of that liability. The claims of holders

of preference shares and preferred securities are generally junior to those of the holders of undated subordinated liabilities, which in turn are

junior to the claims of holders of the dated subordinated liabilities.

**Preference shares**

The Bank has in issue one class of preference shares which are classified as liabilities under accounting standards.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | **2025** | **2025** | 2024 | 2024 |  |
|  | **2025**<br>**Number**<br>**of shares**<br>| 2024<br>Number<br>of shares<br>| 2023<br>Number<br>of shares<br>| **£m** | **% of**<br>**share**<br>**capital**<br>| £m | % of<br>share<br>capital<br>| 2023<br>£m<br>|
| 6% Non-cumulative Redeemable <br>Preference shares of GBP1.00<br>| **100** | 100 | 100 | **–** | **–** | – | – | – |

---

The rights and obligations attaching to these shares are set out in the Bank's articles of association, a copy of which can be obtained from

Companies House or from the Lloyds Banking Group website (**www.lloydsbankinggroup.com/who-we-are/group-overview/corporate-**

**governance.html**).

At 31 December 2025 £7,534 million (2024: £6,289 million) of subordinated liabilities had a contractual residual maturity of greater than one

year.

**Note 28: Share capital**

**Issued and fully paid ordinary share capital**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Ordinary shares of £1 each**<sup>1</sup> | **2025**<br>**Number**<br>**of shares**<br>| 2024<br>Number<br>of shares<br>| 2023<br>Number<br>of shares<br>| **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| **At 1 January and 31 December** | **1574285752** | 1574285752 | 1574285752 | **1574** | 1574 | 1574 |

---

1Ordinary shares represent effectively 100% of total share capital in issue as the issued preference shares represent below 0.01%.

**Ordinary shares**

The holders of ordinary shares are entitled to receive the Bank's report and accounts, attend, speak and vote at general meetings and appoint

proxies to exercise voting rights. Holders of ordinary shares may also receive a dividend (subject to the provisions of the Bank's articles of

association) and in the event of a winding-up, may share in the assets of the Bank.

**Issued and fully paid preference shares**

The Bank has in issue one class of preference shares which are classified as liabilities under accounting standards and which are included in note

27. ---

| | |
|:---|:---|
| **130** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 29: Other reserves**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| **Merger reserve** |  |  |  |
| At 1 January and 31 December | **6348** | 6348 | 6348 |
| **Revaluation reserve in respect of debt securities held at fair value through other comprehensive income** |  |  |  |
| At 1 January | **(249)** | (322) | (393) |
| Movements recognised in other comprehensive income | **160** | 73 | 71 |
| At 31 December | **(89)** | (249) | (322) |
| **Cash flow hedging reserve** |  |  |  |
| At 1 January | **(3568)** | (3554) | (5168) |
| Movements recognised in other comprehensive income | **1541** | (14) | 1614 |
| At 31 December | **(2027)** | (3568) | (3554) |
| **Foreign currency translation reserve** |  |  |  |
| At 1 January | **(142)** | (77) | (44) |
| Movements recognised in other comprehensive income | **70** | (65) | (33) |
| At 31 December | **(72)** | (142) | (77) |
| **Total other reserves at 31 December** | **4160** | 2389 | 2395 |

---

The merger reserve arose on the transfer of HBOS plc from the Bank's ultimate holding company in January 2010.

The revaluation reserves in respect of debt securities and equity shares held at fair value through other comprehensive income represent the

cumulative after-tax unrealised change in the fair value of financial assets so classified since initial recognition; or in the case of financial assets

obtained on acquisitions of businesses, since the date of acquisition.

The cash flow hedge reserve represents the cumulative after-tax gains and losses on effective cash flow hedging instruments that will be

reclassified to the income statement in the periods in which the hedged item affects profit or loss.

The foreign currency translation reserve represents the cumulative after-tax gains and losses on the translation of foreign operations and

exchange differences arising on financial instruments designated as hedges of the Group's net investment in foreign operations.

**Note 30: Other equity instruments**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| At 1 January | **5692** | 5018 | 4268 |
| **Issued in the year:** |  |  |  |
| £750 million Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Permanent Write-Down Securities | **750** | – | – |
| $1,000 million Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Permanent Write-Down Securities | **764** | – | – |
| $550 million Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Permanent Write-Down Securities | **–** | 410 | – |
| $1,000 million Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Permanent Write-Down Securities | **–** | 764 | – |
| £750 million Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Permanent Write-Down Securities | **–** | – | 750 |
|  | **1514** | 1174 | 750 |
| **Repurchases and redemptions during the year:** |  |  |  |
| €750 million Additional Tier 1 Perpetual Subordinated Permanent Write-Down Securities | **(687)** | – | – |
| $1,500 million Additional Tier 1 Perpetual Subordinated Permanent Write-Down Securities | **(1152)** | – | – |
| £500 million Additional Tier 1 Perpetual Subordinated Permanent Write-Down Securities | **–** | (500) | – |
|  | **(1839)** | (500) | – |
| Profit for the year attributable to other equity holders | **404** | 363 | 334 |
| Distributions on other equity instruments | **(404)** | (363) | (334) |
| **At 31 December** | **5367** | 5692 | 5018 |

---

The principal terms of the AT1 securities are described below:

• The securities rank behind the claims against the Bank of unsubordinated creditors on a winding-up

• The fixed rate reset securities bear a fixed rate of interest until the first call date. After the initial call date, in the event that they are not

redeemed, the fixed rate reset AT1 securities will bear interest at rates fixed periodically in advance. The floating rate AT1 securities will be

reset quarterly both prior to and following the first call date

• Interest on the securities will be due and payable only at the sole discretion of the Bank and the Bank may at any time elect to cancel any

interest payment (or any part thereof) which would otherwise be payable on any interest payment date. There are also certain restrictions

on the payment of interest as specified in the terms

• The securities are undated and are repayable, at the option of the Bank, in whole at the first call date, or at any interest payment date

thereafter. In addition, the AT1 securities are repayable, at the option of the Bank, in whole for certain regulatory or tax reasons. Any

repayments require the prior consent of the PRA

• The securities will be subject to a Permanent Write Down should the Common Equity Tier 1 ratio of the Bank fall below 7.0%

---

| | |
|:---|:---|
| **131** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 31: Dividends on ordinary shares**

During the year the Bank paid cumulative interim dividends of £2,390 million (2024: £3,990 million). The directors have not recommended a

final dividend for the year ended 31 December 2025 (2024: £nil).

Dividends paid during the year were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Interim dividends | **2390** | 3990 | 4700 |

---

In February 2026, the directors approved the payment of an interim dividend of £480 million, which was paid on 16 February 2026.

**Note 32: Related party transactions**

**Key management personnel**

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of an

entity; the Group's key management personnel are the members of the Lloyds Banking Group plc Group Executive Committee together with its

non-executive directors.

The table below details, on an aggregated basis, key management personnel compensation:

---

| | | | |
|:---|:---|:---|:---|
| **Compensation** | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Salaries and other short-term benefits | **15** | 14 | 15 |
| Share-based payments | **22** | 18 | 15 |
| **Total compensation** | **37** | 32 | 30 |

---

The aggregate of the emoluments of the directors was £10.7 million (2024: £9.2 million; 2023: £9.3 million).

There were £nil aggregate contributions in respect of key management personnel to defined contribution pension schemes (2024: £nil; 2023:

£nil).

The total for the highest paid director (Charlie Nunn) was £6,099,000 (2024: Charlie Nunn: £4,966,000; 2023: Charlie Nunn: £5,105,000); this

did not include any gain on exercise of Lloyds Banking Group plc shares in any year.

---

| | | | |
|:---|:---|:---|:---|
| **Share options over Lloyds Banking Group plc shares** | **2025**<br>**million**<br>| 2024<br>million<br>| 2023<br>million<br>|
| At 1 January | **–** | – | – |
| Granted, including certain adjustments (includes entitlements of appointed key management personnel) | **–** | – | – |
| Exercised/lapsed (includes entitlements of former key management personnel) | **–** | – | – |
| **At 31 December** | **–** | – | – |

---

---

| | | | |
|:---|:---|:---|:---|
| **Share plans settled in Lloyds Banking Group plc shares** | **2025**<br>**million**<br>| 2024<br>million<br>| 2023<br>million<br>|
| At 1 January | **114** | 55 | 72 |
| Granted, including certain adjustments (includes entitlements of appointed key management personnel) | **42** | 69 | 27 |
| Exercised/lapsed (includes entitlements of former key management personnel) | **(9)** | (10) | (44) |
| **At 31 December** | **147** | 114 | 55 |

---

The tables below detail, on an aggregated basis, balances outstanding at the year end and related income and expense, together with

information relating to other transactions between the Group and its key management personnel:

---

| | | | |
|:---|:---|:---|:---|
| **Loans** | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| At 1 January | **1** | 1 | 2 |
| Advanced (includes loans to appointed key management personnel) | **1** | 1 | – |
| Repayments (includes loans to former key management personnel) | **(1)** | (1) | (1) |
| **At 31 December** | **1** | 1 | 1 |

---

The loans are on both a secured and unsecured basis and are expected to be settled in cash. The loans attracted interest rates of between

3.67% and 31.80% in 2025 (2024: 2.03% and 32.40%; 2023: 1.09% and 32.40%).

No provisions have been recognised in respect of loans given to key management personnel (2024 and 2023: £nil).

---

| | | | |
|:---|:---|:---|:---|
| **Deposits** | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| At 1 January | **8** | 14 | 10 |
| Placed (includes deposits of appointed key management personnel) | **43** | 32 | 45 |
| Withdrawn (includes deposits of former key management personnel) | **(44)** | (38) | (41) |
| **At 31 December** | **7** | 8 | 14 |

---

Deposits placed by key management personnel attracted interest rates of up to 6.25% (2024: 6.25%; 2023: 6.25%).

At 31 December 2025, the Group did not provide any guarantees in respect of key management personnel (2024 and 2023: none).

---

| | |
|:---|:---|
| **132** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 32: Related party transactions** continued

At 31 December 2025, transactions, arrangements and agreements entered into by the Group and its banking subsidiaries with directors and

connected persons included amounts outstanding in respect of loans and credit card transactions of £38.8 thousand with four directors and

one connected person (2024: £29.0 thousand with five directors and one connected person; 2023: £23.6 thousand with six directors and no

connected persons).

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

**Balances and transactions between members of the Lloyds Bank Group**

In accordance with IFRS 10 *Consolidated Financial Statements,* transactions and balances between the Bank and its subsidiary undertakings,

and between those subsidiary undertakings, have all been eliminated on consolidation and thus are not reported as related party transactions

of the Group.

**Balances and transactions with Lloyds Banking Group plc and fellow subsidiaries of the Bank**

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

the Bank. These are included on the Group's balance sheet as follows:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Assets, included within:** |  |  |
| Derivative financial instruments | **742** | 807 |
| Financial assets at amortised cost: due from fellow Lloyds Banking Group undertakings<sup>1</sup> | **1182** | 560 |
|  | **1924** | 1367 |
| **Liabilities, included within:** |  |  |
| Due to fellow Lloyds Banking Group undertakings | **3852** | 4049 |
| Derivative financial instruments | **580** | 687 |
| Debt securities in issue at amortised cost | **18223** | 19198 |
| Subordinated liabilities | **8600** | 7336 |
|  | **31255** | 31270 |

---

1Includes reverse repurchase transactions at amortised cost, subject to IAS 32 offsetting, with fellow Lloyds Banking Group undertakings.

These balances include Lloyds Banking Group plc's banking arrangements and, due to the size and volume of transactions passing through

these accounts, it is neither practical nor meaningful to disclose information on gross inflows and outflows. During 2025 the Group earned

£28 million interest income on the above asset balances (2024: £18 million; 2023: £9 million) and the Group incurred £1,322 million interest

expense on the above liability balances (2024: £1,353 million; 2023: £1,010 million).

Details of intercompany recharges recognised within other operating income are given in note 8 and details of contingent liabilities and

commitments entered into on behalf of fellow Lloyds Banking Group undertakings are given in note 33.

**Other related party transactions**

**Pension funds**

The Group provides banking services to certain of its pension funds. At 31 December 2025, customer deposits of £128 million (2024:

£113 million) related to the Group's pension funds.

**Joint ventures and associates**

At 31 December 2025 there were loans and advances to customers of £34 million (2024: £23 million) outstanding and balances within customer

deposits of £13 million (2024: £12 million) relating to joint ventures and associates.

During the year the Group paid fees of £3 million (2024: £4 million) to the Lloyds Banking Group's Schroders Personal Wealth joint venture.

**Note 33: Contingent liabilities, commitments and guarantees**

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

At 31 December 2025 contingent liabilities, such as performance bonds and letters of credit, arising from the banking business were

£2,987 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 financial guarantees were £135,570 million (31 December 2024: £128,947 million), of which in respect

of undrawn formal standby facilities, credit lines and other commitments to lend, £65,360 million (31 December 2024: £59,143 million)

was irrevocable.

**Capital commitments**

Capital expenditure contracted but not provided for at 31 December 2025 amounted to £610 million (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.

---

| | |
|:---|:---|
| **133** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 33: 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.

Litigation has been 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

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.

Separate litigation was 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

releases and any subsequent sales of Visa common stock do not impact the contingent liability.

**LIBOR and other trading rates** 

Certain Lloyds Banking Group companies, together with other panel banks, were previously named as defendants in private lawsuits 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 Group company dismissals from these lawsuits remain subject to appeal.

Certain Lloyds Banking Group companies are also named as defendants in two Dutch class actions, raising LIBOR manipulation allegations and

one English claim relating to the alleged mis-sale of interest rate hedging products which also includes an allegation of LIBOR manipulation.

It is currently not possible to predict the scope and ultimate outcome on the Lloyds Banking Group of any private lawsuits. As such, it is not

practicable to provide an estimate of any potential financial effect.

**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 £855 million

(including interest) and a reduction in the Group's deferred tax asset of approximately £270 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. The appeal has been listed for hearing in March 2027, however 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 brought by (i) Arena Television Limited and Arena Holdings Limited and (ii) Sentinel Broadcast Limited, alleging

breach of duty and/or mandate in connection with an external fraud. The Group's application for permission to appeal the Court's decision not

to determine a central legal issue on a summary basis was refused on 29 January 2026. The Group is continuing to defend the claims, which are

now proceeding to trial. At this stage, it is not practicable to estimate the timing of any such trial, the final outcome of the matter or 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 actions) 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 26.

---

| | |
|:---|:---|
| **134** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 34: Structured entities**

The Group's interests in structured entities are both consolidated and unconsolidated. Details of the Group's interests in consolidated

structured entities are set out in note 24 for securitisations and covered bond vehicles, note 11 for structured entities associated with the

Group's pension schemes, and below. Details of the Group's interests in unconsolidated structured entities are also included below.

**Asset-backed conduits**

In addition to the structured entities discussed in note 24, which are used for securitisation and covered bond programmes, the Group sponsors

an active asset-backed conduit, Cancara, which invests in client receivables and debt securities. The total consolidated exposure of Cancara at

31 December 2025 was £2,043 million (2024: £2,272 million), comprising £1,387 million of loans and advances (2024: £1,155 million), £588

million of debt securities (2024: £559 million) and £68 million of financial assets at fair value through profit or loss (2024: £558 million).

All lending assets and debt securities held by the Group in Cancara are restricted in use, as they are held by the collateral agent for the benefit

of the commercial paper investors and the liquidity providers only. The Group provides liquidity facilities to Cancara under terms that are usual

and customary for standard lending activities in the normal course of the Group's banking activities. During 2025 there have continued to be

planned drawdowns on certain liquidity facilities for balance sheet management purposes, supporting the programme to provide funding

alongside the proceeds of the asset-backed commercial paper issuance.

The Group could be asked to provide support under the contractual terms of these arrangements including, for example, if Cancara

experienced a shortfall in external funding, which may occur in the event of market disruption. The external assets in Cancara are consolidated

in the Group's financial statements.

**Unconsolidated structured entities**

The Group considers itself the sponsor of a structured entity where it is primarily involved in the design and establishment of the structured

entity and further where the Group transfers assets to the structured entity, markets products associated with the structured entity in its own

name and/or provides guarantees regarding the structured entity's performance.

The following table describes the types of structured entities that the Group does not consolidate but in which it holds an interest.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **Total assets of**<br>**structured entities** | **Total assets of**<br>**structured entities** |
| **Type of entity** | **Nature and purpose of structured entities** | **Interest held by the Group** | **2025**<br>**£bn**<br>| 2024<br>£bn<br>|
| Securitisation vehicles | These vehicles issue asset-backed notes to <br>investors and facilitate the management of the <br>Group's balance sheet.<br>| •Interest in notes issued by the vehicles<br>•Fees for loan servicing<br>| **4** | 5 |

---

The following table sets out an analysis of the carrying amount of interest held by the Group in the unconsolidated structured entities. The

maximum exposure to loss is the carrying amounts of the assets held.

---

| | | | |
|:---|:---|:---|:---|
| **Carrying amount** | **Recognised within;** | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Notes held in securitisation vehicles | Financial assets at fair value through profit or loss; and<br>Financial assets at amortised cost<br>| **1110** | 2311 |

---

During the year the Group has not provided any non-contractual financial or other support to these entities and has no current intention of

providing any non-contractual financial or other support in the future.

The carrying amount of assets transferred to securitisation vehicles at the time of transfer was £nil (2024: £2,004 million) and the Group

recognised £nil gain or loss on transfer (2024: gain of £11 million).

**Continuing involvement in financial assets that have been derecognised**

The Group has derecognised financial assets in their entirety following transactions with securitisation vehicles, as noted above. The continuing

involvement largely arises from funding provided to the vehicles through the purchase of issued notes. The majority of these notes are

recognised as debt securities held at amortised cost, with the remaining notes held by the Group recognised at fair value through profit or loss.

The carrying amount of these interests and the maximum exposure to loss is included in the table above. At 31 December 2025 the fair value of

the retained notes was £1,105 million (2024: £2,310 million). The income from the Group's interest in these structures for the year ended 31

December 2025 was £46 million (2024: £218 million) and cumulatively for the lifetime was £387 million (2024: £341 million).

---

| | |
|:---|:---|
| **135** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 35: Transfers of financial assets**

**Transferred financial assets derecognised in their entirety with ongoing exposure**

Through asset securitisations, the Group has transferred financial assets which were derecognised in their entirety, with some continuing

involvement. Further details are available in note 34.

**Transferred financial assets that continue to be recognised**

Details of transferred financial assets that continue to be recognised in full are as follows.

The Group enters into repurchase and securities lending transactions in the normal course of business that do not result in derecognition of the

financial assets as substantially all of the risks and rewards, including credit, interest rate, prepayment and other price risks are retained by the

Group. In all cases, the transferee has the right to sell or repledge the assets concerned.

As set out in note 24, included within financial assets measured at amortised cost are loans transferred under the Group's securitisation and

covered bond programmes. As the Group retains all or a majority of the risks and rewards associated with these loans, including credit, interest

rate, prepayment and liquidity risk, they remain on the Group's balance sheet. Assets transferred into the Group's securitisation and covered

bond programmes are not available to be used by the Group while the assets are within the programmes. However, the Group retains the right

to remove loans from the covered bond programmes where they are in excess of the programme's requirements. In addition, where the Group

has retained some of the notes issued by securitisation and covered bond programmes, the Group has the ability to sell or pledge these

retained notes.

In 2024, the Group securitised a portfolio of £1.25 billion of finance lease receivables. This transaction resulted in a partial derecognition of the

leases, as the Group neither retained nor transferred substantially all risks and rewards. As of 31 December 2025, the Group continues to

recognise £344 million (2024: £798 million) of these lease receivables with a gross up of the same amount in finance lease receivables and other

liabilities for the continuing involvement asset and liability required to be recognised under IFRS 9.

The table below sets out the carrying values of the transferred assets and the associated liabilities. For repurchase and securities lending

transactions, the associated liabilities represent the Group's obligation to repurchase the transferred assets. For securitisation programmes, the

associated liabilities represent the external notes in issue (note 24). The liabilities shown in the table below have recourse to the transferred

assets.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Assets**<br>**£m**<br>| **Liabilities**<br>**£m**<br>| Assets<br>£m<br>| Liabilities<br>£m<br>|
| **Repurchase and securities lending transactions** |  |  |  |  |
| Debt securities held at amortised cost | **701** | **–** | 1420 | – |
| Financial assets at fair value through other comprehensive income | **15436** | **10530** | 10272 | 3543 |
| **Securitisation programmes** |  |  |  |  |
| Financial assets at amortised cost: |  |  |  |  |
| Loans and advances to customers<sup>1</sup> | **27418** | **6342** | 27284 | 5207 |

---

1The carrying value of associated liabilities excludes securitisation notes held by the Group of £15,960 million (31 December 2024: £16,752 million).

---

| | |
|:---|:---|
| **136** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 36: Financial risk management**

Financial instruments are fundamental to the Group's activities and the associated risks represent a significant component of the overall risks

faced by the Group.

The primary risks affecting the Group through its use of financial instruments are: market risk, credit risk, liquidity risk and capital risk.

**Market risk**

The Group's risk management policy is to optimise reward while managing its market risk exposures within the risk appetite defined by the

Lloyds Banking Group Board. The Group's largest residual interest rate risk exposure arises from balances that are deemed to be insensitive to

changes in market rates (including current accounts, a portion of variable rate deposits and investable equity). The risk is managed through the

Group's structural hedge which consists of longer-term fixed rate assets and interest rate swaps. The notional balance and duration of the

structural hedge is reviewed regularly by the Lloyds Banking Group Asset and Liability Committee. More information is set out on **page [55](#iddf3b01e92c34e0691e008ab468ef39d_55).**

**Credit risk**

Credit risk appetite is set at Board level and is described and reported through a suite of metrics devised from a combination of accounting and

credit portfolio performance measures, which include the use of various credit risk rating systems as inputs and assess credit risk at a

counterparty level using three components: (i) the probability of default by the counterparty on its contractual obligations; (ii) the current

exposures to the counterparty and their likely future development, from which the Group derives the exposure at default; and (iii) the likely

loss ratio on the defaulted obligations, the loss given default. The Group uses a range of approaches to mitigate credit risk, including internal

control policies, obtaining collateral, using master netting agreements and other credit risk transfers, such as asset sales and credit derivatives

based transactions. The Group's credit risk exposure is predominantly in the United Kingdom. More information is set out on **page [30](#i699a03b3579a4d1ba970905a768d5368_54902)**.

**Liquidity risk**

Liquidity risk is defined as the risk that the Group has insufficient financial resources to meet its commitments as they fall due, or can only

secure them at excessive cost. Liquidity risk is managed through a series of measures, tests and reports that are primarily based on contractual

maturity. The Group carries out monthly stress testing of its liquidity position against a range of scenarios, including those prescribed by the

PRA. The Group's liquidity risk appetite is also calibrated against a number of stressed liquidity metrics. More information is set out on **page [51](#iddf3b01e92c34e0691e008ab468ef39d_49)**.

The Group's assets and liabilities may be repaid or otherwise mature earlier or later than implied by their contractual terms.

**Capital risk**

The Group maintains capital levels across all regulated entities commensurate with a prudent level of solvency to achieve financial resilience

and market confidence. The Group assesses both its regulatory capital requirements and the quantity and quality of capital resources it holds

to meet those requirements in accordance with the relevant provisions of the Capital Requirements Directive (CRD V) and Capital

Requirements Regulation (UK CRR). This is supplemented through additional regulation set out under the PRA Rulebook and through

associated statements of policy, supervisory statements and other regulatory guidance. Close monitoring of regulatory capital ratios is

undertaken to ensure the Group meets regulatory requirements and risk appetite levels and deploys its capital resources efficiently. Target

capital levels take account of current and future regulatory requirements, capacity for growth and to cover uncertainties. At 31 December

2025, the Group's common equity tier 1 capital was £26,468 million (31 December 2024: £25,610 million).

**Note 37: Cash flow statement**

**(A)Change in operating assets**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Change in amounts due from fellow Lloyds Banking Group undertakings | **(623)** | 280 | (24) |
| Change in other financial assets held at amortised cost | **(23183)** | (19683) | 9394 |
| Change in financial assets at fair value through profit or loss | **42** | (459) | (491) |
| Change in derivative financial instruments | **1188** | (3182) | 279 |
| Change in other operating assets | **144** | 1048 | (235) |
| **Change in operating assets** | **(22432)** | (21996) | 8923 |

---

**(B)Change in operating liabilities**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Change in deposits from banks | **(59)** | (413) | (1101) |
| Change in customer deposits | **13413** | 9841 | (4219) |
| Change in repurchase agreements | **(193)** | 58 | (10888) |
| Change in amounts due to fellow Lloyds Banking Group undertakings | **(1188)** | (298) | (408) |
| Change in financial liabilities at fair value through profit or loss | **(513)** | (703) | (138) |
| Change in derivative financial instruments | **(1362)** | 1480 | (1584) |
| Change in debt securities in issue at amortised cost | **6822** | (7160) | 3393 |
| Change in other operating liabilities<sup>1</sup> | **(1506)** | 1665 | (380) |
| **Change in operating liabilities** | **15414** | 4470 | (15325) |

---

1Includes a decrease of £233 million (2024: decrease of £370 million; 2023: increase of £329 million) in respect of lease liabilities.

---

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|:---|:---|
| **137** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

---

**Notes to the consolidated financial statements** continued

for the year ended 31 December

**Note 37: Cash flow statement** continued

**(C)Non-cash and other items**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Interest expense and hedging valuation adjustments on subordinated liabilities<sup>1</sup> | **536** | 275 | 399 |
| Revaluation of investment properties | **–** | – | 1 |
| Net credit in respect of defined benefit schemes | **(37)** | (11) | (79) |
| Depreciation and amortisation | **3420** | 3371 | 2851 |
| Regulatory and legal provisions | **953** | 880 | 661 |
| Other provision movements | **(33)** | (170) | 7 |
| Allowance for loan losses | **864** | 507 | 335 |
| Write-off of allowance for loan losses, net of recoveries | **(1094)** | (1028) | (1113) |
| Impairment (credit) charge on undrawn balances | **(71)** | (48) | 10 |
| Impairment credit on financial assets at fair value through other comprehensive income | **(1)** | (3) | (2) |
| Foreign exchange impact on balance sheet<sup>2</sup> | **167** | 92 | 273 |
| Other non-cash items | **1613** | 2739 | 3182 |
| **Total non-cash items** | **6317** | 6604 | 6525 |
| Contributions to defined benefit schemes | **(152)** | (175) | (1345) |
| Payments in respect of regulatory and legal provisions | **(276)** | (378) | (362) |
| **Total other items** | **(428)** | (553) | (1707) |
| **Non-cash and other items** | **5889** | 6051 | 4818 |

---

1Hedging valuation adjustments on subordinated debt, previously reported within other non-cash items, is presented together with interest expenses on subordinated liabilities.

2When considering the movement on each line of the balance sheet, the impact of foreign exchange rate movements is removed in order to show the underlying cash impact.

**(D)Acquisition of Group undertakings and businesses**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| *Net assets acquired:* |  |  |  |
| Cash and cash equivalents | **–** | – | 38 |
| Intangible assets | **–** | – | 182 |
| Other assets | **–** | – | 672 |
| Deferred tax | **–** | – | (58) |
| Other liabilities | **–** | – | (646) |
| Goodwill arising on acquisition | **–** | – | 143 |
| **Cash consideration** | **–** | – | 331 |
| Less cash and cash equivalents acquired | **–** | – | (38) |
| **Net cash outflow arising from acquisitions of subsidiaries and businesses** | **–** | – | 293 |

---

**(E)Analysis of cash and cash equivalents as shown in the balance sheet**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Cash and balances at central banks | **37720** | 42396 | 57909 |
| Less mandatory reserve deposits<sup>1</sup> | **(37)** | (21) | (1740) |
|  | **37683** | 42375 | 56169 |
| Loans and advances to banks and reverse repurchase agreements | **14893** | 13278 | 15186 |
| Less amounts with a maturity of three months or more | **(11977)** | (5941) | (4817) |
|  | **2916** | 7337 | 10369 |
| **Total cash and cash equivalents** | **40599** | 49712 | 66538 |

---

1Mandatory reserve deposits are held with local central banks in accordance with statutory requirements. Where these deposits are not held in demand accounts and are not

available to finance the Group's day-to-day operations they are excluded from cash and cash equivalents.

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**Subsidiaries and related undertakings**

In compliance with section 409 of the Companies Act 2006, the

following comprises a list of all related undertakings of the Group,

as at 31 December 2025. The list includes each undertaking's

registered office and the percentage of the class(es) of shares held

by the Group. All shares held are ordinary shares unless indicated

otherwise in the notes.

**Subsidiary undertakings**

The Group directly or indirectly holds 100% of the share class or a

majority of voting rights (including where the undertaking does

not have share capital as indicated) in the following undertakings.

All material subsidiary undertakings are consolidated by Lloyds

Banking Group.

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| A G Finance Ltd | 20 ii iii  |
| A.C.L. Ltd | 1 i |
| ACL Autolease Holdings Ltd | 1 i |
| Alex Lawrie Factors Ltd | 9 i |
| Alex. Lawrie Receivables Financing Ltd | 9 i |
| Amberdate Ltd | 1 i v |
| Anglo Scottish Utilities Partnership 1 | + \*  |
| Aquilus Ltd | 13 i ‡ |
| Automobile Association Personal Finance Ltd | 4 i |
| Bank of Scotland (B G S) Nominees Ltd | 5 \* |
| Bank of Scotland Edinburgh Nominees Ltd | 5 \* |
| Bank of Scotland Equipment Finance Ltd | 13 i ‡ |
| Bank of Scotland plc | 5 i v |
| Bank of Scotland Structured Asset Finance Ltd | 1 i |
| Bank of Scotland Transport Finance 1 Ltd | 13 i ‡ |
| Bank of Wales Ltd | 13 i ‡ |
| Barents Leasing Ltd | 1 i |
| Birchcrown Finance Ltd | 1 v ix |
| Black Horse (TRF) Ltd | 1 i |
| Black Horse Finance Holdings Ltd | 1 ii iii |
| Black Horse Group Ltd | 1 i v |
| Black Horse Ltd | 1 i |
| Boltro Nominees Ltd | 1 i |
| BOS (Shared Appreciation Mortgages (Scotland)) Ltd | 4 i |
| BOS (Shared Appreciation Mortgages (Scotland) No. 2) Ltd | 4 i |
| BOS (Shared Appreciation Mortgages (Scotland) No. 3) Ltd | 4 i |
| BOS (Shared Appreciation Mortgages) No. 1 plc  | 4 # i |
| BOS (Shared Appreciation Mortgages) No. 2 plc | 4 # i |
| BOS (Shared Appreciation Mortgages) No. 3 plc | 4 # i |
| BOS (Shared Appreciation Mortgages) No. 4 plc  | 4 # i |
| BOS (Shared Appreciation Mortgages) No. 5 plc  | 4 i  |
| BOS (Shared Appreciation Mortgages) No. 6 plc  | 4 i |
| BOS Personal Lending Ltd | 4 ii iii |
| BOSSAF Rail Ltd | 1 i |
| British Linen Leasing (London) Ltd  | 5 i |
| British Linen Leasing Ltd | 5 i |
| British Linen Shipping Ltd | 5 i |
| Capital Bank Leasing 12 Ltd | 5 i |
| Capital Bank Leasing 3 Ltd | 13 i ‡ |
| Capital Bank Leasing 5 Ltd | 2 i |
| Capital Bank Property Investments (3) Ltd | 2 i ‡ |
| Capital Personal Finance Ltd | 4 i |
| Cardnet Merchant Services Ltd | 1 # ^ iii iv |
| Cashfriday Ltd | 9 i |
| Cawley (Chester) Ltd | 2 ii iii viii |
| CF Asset Finance Ltd | 13 i ‡ |
| Cheltenham & Gloucester plc | 12 i |
| Cloak Lane Funding Sàrl | 23 i |
| Cloak Lane Investments Sàrl | 23 i |
| Conquest Securities Ltd | 1 v ix |
| Corbiere Asset Investments Ltd | 1 ii iii |
| Dunstan Investments (UK) Ltd | 1 i |

---

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| Eurolead Services Holdings Ltd | 9 i |
| First Retail Finance (Chester) Ltd | 4 i |
| Forthright Finance Ltd | 2 i |
| Gresham Nominee 1 Ltd | 1 i |
| Gresham Nominee 2 Ltd | 1 i |
| Halifax Leasing (March No.2) Ltd | 1 i |
| Halifax Leasing (September) Ltd | 1 i |
| Halifax Loans Ltd | 4 i |
| Halifax Pension Nominees Ltd | 1 i |
| Halifax Vehicle Leasing (1998) Ltd | 4 i |
| Hamsard 3352 Ltd | 14 i |
| Hamsard 3353 Ltd | 14 i |
| HBOS plc | 5 i v vi  |
| HBOS Social Housing Covered Bonds LLP | 2 \* |
| HBOS UK Ltd  | 5 i |
| Heidi Finance Holdings (UK) Ltd | 1 i |
| Hill Samuel Finance Ltd | 1 v vii |
| Hill Samuel Leasing Co. Ltd | 1 i |
| Home Shopping Personal Finance Ltd | 4 i |
| HVF Ltd | 1 i |
| Hyundai Car Finance Ltd | 20 i |
| International Motors Finance Ltd | 20 ii # |
| Landau Finance Ltd | 28 i |
| LB Healthcare Trustee Ltd | 1 i |
| LBCF Ltd | 9 i |
| LBI Leasing Ltd | 1 i |
| Lex Autolease (CH) Ltd | 1 i |
| Lex Autolease (VC) Ltd | 1 i |
| Lex Autolease Carselect Ltd | 1 i |
| Lex Autolease Ltd | 1 i |
| Lex Vehicle Leasing (Holdings) Ltd | 13 ii iii x ‡ |
| Lex Vehicle Leasing Ltd | 13 i ‡ |
| Lime Street (Funding) Ltd | 13 i ‡ |
| Lloyds (Gresham) Ltd | 13 i x ‡ |
| Lloyds (Nimrod) Specialist Finance Ltd  | 1 i |
| Lloyds Asset Leasing Ltd | 1 i |
| Lloyds Bank (Colonial & Foreign) Nominees Ltd | 1 i |
| Lloyds Bank (I.D.) Nominees Ltd | 1 i |
| Lloyds Bank Asset Finance Ltd | 1 i |
| Lloyds Bank Commercial Finance Ltd | 9 i |
| Lloyds Bank Commercial Finance Scotland Ltd | 17 i |
| Lloyds Bank Corporate Asset Finance (HP) Ltd | 1 i |
| Lloyds Bank Corporate Asset Finance (No.2) Ltd | 1 i |
| Lloyds Bank Corporate Asset Finance (No.3) Ltd | 1 i |
| Lloyds Bank Corporate Asset Finance (No.4) Ltd | 1 i |
| Lloyds Bank Covered Bonds (LM) Ltd | 6 i |
| Lloyds Bank Covered Bonds LLP | 6 \* |
| Lloyds Bank Equipment Leasing (No. 7) Ltd | 13 i ‡ |
| Lloyds Bank Equipment Leasing (No. 9) Ltd | 1 i |
| Lloyds Bank Financial Services (Holdings) Ltd  | 1 i v |
| Lloyds Bank General Leasing (No. 3) Ltd | 13 i ‡ |
| Lloyds Bank General Leasing (No. 5) Ltd  | 13 i ‡ |
| Lloyds Bank GmbH  | 29 i |
| Lloyds Bank Leasing (No. 6) Ltd | 1 i |
| Lloyds Bank Leasing Ltd | 1 i |
| Lloyds Bank Maritime Leasing (No. 10) Ltd | 1 i |
| Lloyds Bank Nominees Ltd | 1 i |
| Lloyds Bank Offshore Pension Trust Ltd | 11 i  |
| Lloyds Bank Pension ABCS (No. 1) LLP | 1 \* |
| Lloyds Bank Pension ABCS (No. 2) LLP | 1 \* |
| Lloyds Bank Pensions Property (Guernsey) Ltd | 27 ii iii |
| Lloyds Bank Property Company Ltd | 1 i |
| Lloyds Bank S.F. Nominees Ltd | 1 i |

---

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**Subsidiaries and related undertakings** continued

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| Lloyds Bank Subsidiaries Ltd | 1 i |
| Lloyds Bank Trustee Services Ltd | 1 i |
| Lloyds Banking Group Pensions Trustees Ltd | 1 i |
| Lloyds Far East Sàrl | 23 i |
| Lloyds General Leasing Ltd | 1 i |
| Lloyds Hypotheken B.V. | 21 i |
| Lloyds Industrial Leasing Ltd | 1 i |
| Lloyds Leasing (North Sea Transport) Ltd | 1 i |
| Lloyds Leasing Developments Ltd | 13 i ‡ |
| Lloyds Offshore Global Services Private Ltd | 7 i |
| Lloyds Plant Leasing Ltd | 1 i |
| Lloyds Portfolio Leasing Ltd | 1 i |
| Lloyds Project Leasing Ltd | 1 i |
| Lloyds Property Investment Company No. 4 Ltd | 13 i ‡ |
| Lloyds Secretaries Ltd | 1 i |
| Lloyds TSB Pacific Ltd | 26 i |
| Lloyds UDT Asset Rentals Ltd | 13 i ‡ |
| Lloyds UDT Leasing Ltd | 1 i |
| Lloyds UDT Ltd | 13 i ‡ |
| Loans.co.uk Ltd | 2 i |
| London Taxi Finance Ltd | 1 ii iii |
| Lotus Finance Ltd | 20 ii iii |
| LTGP Limited Partnership Incorporated | 27 \* |
| Maritime Leasing (No. 19) Ltd | 13 i ‡ |
| MBNA Ltd | 2 i |
| Membership Services Finance Ltd | 4 i |
| Mitre Street Funding Sàrl | 23 i |
| NWS Trust Ltd | 5 i |
| Pacific Leasing Ltd | 13 i ‡ |
| Perry Nominees Ltd | 1 i |
| PIPS Asset Investments Ltd | 1 ii iii |
| Proton Finance Ltd | 20 ii iii |
| R.F. Spencer and Company Ltd | 9 i |
| Ranelagh Nominees Ltd | 1 i |
| Retail Revival (Burgess Hill) Investments Ltd | 1 i |
| Savban Leasing Ltd | 1 i |
| Scotland International Finance B.V. | 24 i |
| Scottish Widows Services Ltd | 5 i |
| Seaspirit Leasing Ltd | 1 i |
| Shogun Finance Ltd | 20 i |
| Standard Property Investment (1987) Ltd | 5 ii # |
| Sussex County Homes Ltd | 4 i |
| Suzuki Financial Services Ltd | 20 ii # |
| The Agricultural Mortgage Corporation plc | 15 i |
| The British Linen Company Ltd | 5 i |
| The Mortgage Business plc | 4 i |
| Thistle Leasing | + \* |
| Tranquillity Leasing Ltd | 1 i |
| TuskerDirect Ltd | 14 i |
| UDT Budget Leasing Ltd | 13 i ‡ |
| United Dominions Leasing Ltd | 1 i |
| United Dominions Trust Ltd | 1 i |
| Ward Nominees (Abingdon) Ltd | 1 i |
| Waymark Asset Investments Ltd | 1 ii iii |
| Wood Street Leasing Ltd | 1 i |

---

The Group has determined that it has the power to exercise

control over the following entities without having the majority of

the voting rights of the undertakings. Unless otherwise stated, the

undertakings do not have share capital or the Group does not hold

any shares.

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| Addison Social Housing Holdings Ltd | 22 |
| Cancara Asset Securitisation Ltd  | 8 |
| Candide Financing 2021-1 B.V. | 19 |
| Candide Financing 2024-1 B.V. | 19 |
| Candide Financing 2025-1 B.V. | 19 |
| Cardiff Auto Receivables Securitisation 2022-1 plc | 16 ‡ |
| Cardiff Auto Receivables Securitisation 2024-1 plc | 6 |
| Cardiff Auto Receivables Securitisation Holdings Ltd | 6 |
| Cardiff Auto Receivables Securitisation Holdings No. 2 <br>Ltd<br>| 6 |
| Elland RMBS 2018 plc | 6 |
| Elland RMBS Holdings Ltd | 6 |
| Fontwell Securities 2016 Ltd | 22 |
| Fontwell II Securities 2020 DAC | 18 |
| Gresham Receivables (No. 10) Ltd | 8 |
| Gresham Receivables (No. 13) UK Ltd | 25 |
| Gresham Receivables (No. 20) Ltd | 8 |
| Gresham Receivables (No. 24) Ltd | 8 |
| Gresham Receivables (No.27) UK Ltd | 25 |
| Gresham Receivables (No. 32) UK Ltd | 25 |
| Gresham Receivables (No. 34) UK Ltd | 25 |
| Gresham Receivables (No.35) Ltd | 8 |
| Gresham Receivables (No.36) UK Ltd | 25 |
| Gresham Receivables (No.37) UK Ltd | 25 |
| Gresham Receivables (No.38) UK Ltd | 25 |
| Gresham Receivables (No.39) UK Ltd | 10 ‡ |
| Gresham Receivables (No.40) UK Ltd | 25 |
| Gresham Receivables (No.41) UK Ltd | 25 |
| Gresham Receivables (No.44) UK Ltd | 10 ‡ |
| Gresham Receivables (No.45) UK Ltd | 25 |
| Gresham Receivables (No.46) UK Ltd | 10 ‡ |
| Gresham Receivables (No.47) UK Ltd | 25 |
| Gresham Receivables (No.48) UK Ltd | 25 |
| Guildhall Asset Purchasing Company (No.11) UK Ltd  | 25 |
| Housing Association Risk Transfer 2019 DAC | 18 |
| Lloyds Bank Covered Bonds (Holdings) Ltd | 6 |
| Molineux RMBS 2016-1 plc | 16 ‡ |
| Molineux RMBS Holdings Ltd | 6 |
| Penarth Asset Securitisation Holdings Ltd | 6 |
| Penarth Funding 1 Ltd | 6 |
| Penarth Funding 2 Ltd | 6 |
| Penarth Master Issuer plc | 6 |
| Penarth Receivables Trustee Ltd | 6 |
| Permanent Funding (No. 1) Ltd | 6 |
| Permanent Funding (No. 2) Ltd | 6 |
| Permanent Holdings Ltd | 6 |
| Permanent Master Issuer plc | 6 |
| Permanent Mortgages Trustee Ltd | 6 |
| Permanent PECOH Holdings Ltd | 6 |
| Permanent PECOH Ltd | 6 |
| Salisbury Securities 2015 Ltd | 22 |
| Salisbury II Securities 2016 Ltd | 22 |
| Salisbury II-A Securities 2017 Ltd | 22 |
| Salisbury III Securities 2019 DAC | 18 |
| Syon Securities 2019 DAC | 18 |
| Syon Securities 2020 DAC | 18 |
| Syon Securities 2020-2 DAC | 18 |
| Wetherby II Securities 2018 DAC | 3 ‡ |
| Wetherby III Securities 2019 DAC | 18 |
| Wilmington Cards 2021-1 plc | 6 |
| Wilmington Cards Holdings Ltd | 6 |
| Wilmington Receivables Trustee Ltd | 6 |

---

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|:---|:---|
| **173** | **Lloyds Bank plc** Annual Report and Accounts 2025 |

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**Subsidiaries and related undertakings** continued

**Associated Undertaking**

The Group has a participating interest in the following undertaking.

---

| | | | |
|:---|:---|:---|:---|
| **Name of undertaking** | **% of share class** <br>**held by immediate** <br>**parent company** <br>**(or by the Group** <br>**where this varies)**<br>| **Registered office address**  | **Notes** |
| Addison Social Housing Ltd | 20% | 18a Capricorn Centre, Cranes Farm Road, Basildon, Essex, SS14 3JJ | i ‡ |

---

**Notes**

\*The undertaking does not have share capital

+The undertaking does not have a registered office

#In relation to Subsidiary Undertakings, an undertaking external to the Group holds shares

^Shares held directly by Lloyds Banking Group plc

‡The undertaking is in Liquidation

(i) Ordinary Shares

(ii) A Ordinary Shares

(iii) B Ordinary Shares

(iv) Deferred Shares

(v) Preference Shares

(vi) Non-Voting Deferred Shares

(vii) Ordinary Limited Voting Shares

(viii) C Ordinary Shares

(ix) Ordinary Non-Voting Shares

(x) Redeemable Preference Shares

**Registered office addresses**

(1) 25 Gresham Street, London, EC2V 7HN

(2) Cawley House, Chester Business Park, Chester, CH4 9FB

(3) 13-18 City Quay, Dublin 2, DO2 ED70

(4) Trinity Road, Halifax, West Yorkshire, HX1 2RG

(5) The Mound, Edinburgh, EH1 1YZ

(6) 10th Floor, 5 Churchill Place, London, E14 5HU

(7) 10th Floor, Unit 3, Plot No.2, Survey No.83/1, Octave Block, Phase 1 of Cyberabad Knowledge City, Serilingampally, Mandal, Raidurg Panmaktha Village, Hyderabad, Rangareddy

District, Telangana – 500081,India

(8) 26 New Street, St. Helier, JE2 3RA, Jersey

(9) 1 Brookhill Way, Banbury, Oxon, OX16 3EL

(10)7th Floor, 21 Lombard Street, London, EC3V 9AH

(11) 3rd Floor, IFC5, Castle Street, St Helier, JE2 3BY, Jersey

(12) Barnett Way, Gloucester, GL4 3RL

(13)1 More London Place, London, SE1 2AF

(14)Building 4 Hatters Lane, Croxley Green Business Park, Watford, Hertfordshire, WD18 8YF

(15)Keens House, Anton Mill Road, Andover, Hampshire, SP10 2NQ

(16)18a Capricorn Centre, Cranes Farm Road, Basildon, Essex, SS14 3JJ

(17)110 St. Vincent Street, Glasgow, G2 4QR

(18) 5th Floor, The Exchange, George's Dock, IFSC, Dublin 1, D01 W3P9, Ireland

(19) Basisweg 10, Amsterdam, 1043AP, Netherlands

(20) 33 Old Broad Street, London, EC2N 1HZ

(21)Fascinatio Boulevard 1302, 2909VA Capelle aan den IJssel, Netherlands

(22) 44 Esplanade, St. Helier, JE4 9WG, Jersey

(23) 17 Boulevard F.W. Raiffeisen, L-2411 Luxembourg

(24) De Entrée 254, 1101 EE, Amsterdam, Netherlands

(25) Wilmington Trust SP Services (London) Limited, Third Floor, 1 King's Arms Yard, London, EC2R 7AF

(26) 43/F, One Taikoo Place, 979 King's Road, Quarry Bay, Hong Kong

(27) P O Box 186, Royal Chambers, St Julian's Avenue, St. Peter Port, GY1 4HP, Guernsey

(28) Building 4 Hatters Lane, Croxley Green Business Park, Watford, Hertfordshire, WS18 8YF

(29) Karl-Liebknecht-STR. 5, D-10178 Berlin, Germany

## Ex-15

**EXHIBIT 15.3**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in Registration Statement No. 333-287829-01 on Form F-3 of our report dated 26 February 2026, relating to the financial statements of Lloyds Bank plc appearing in this Annual Report on Form 20-F for the year ended 31 December 2025.

/s/ Deloitte LLP

London, United Kingdom

26 February 2026

<br>