# EDGAR Filing Document

**Accession Number:** 0001160106
**File Stem:** 0001160106-26-000010
**Filing Date:** 2026-2
**Character Count:** 2536831
**Document Hash:** 10d145cf27460049b9cf99772ee88e79
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001160106-26-000010.hdr.sgml**: 20260213

**ACCESSION NUMBER**: 0001160106-26-000010

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 615

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260213

**DATE AS OF CHANGE**: 20260213

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Lloyds Banking Group plc
- **CENTRAL INDEX KEY:** 0001160106
- **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:** 001-15246
- **FILM NUMBER:** 26628982

**BUSINESS ADDRESS:**
- **STREET 1:** 25 GRESHAM STREET
- **CITY:** LONDON
- **STATE:** X0
- **ZIP:** EC2V 7HN
- **BUSINESS PHONE:** 44 0 20 7626 1500

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

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** LLOYDS TSB GROUP PLC
- **DATE OF NAME CHANGE:** 20010926

?xml version='1.0' encoding='ASCII'? lyg-20251231_d2

**As filed with the Securities and Exchange Commission on 13 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 001-15246**

**Lloyds Banking Group plc**

(previously Lloyds TSB Group plc)

(Exact name of Registrant as specified in its charter)

**Scotland**

(Jurisdiction of incorporation or organization)

**33 Old Broad Street**

**LondonEC2N 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**

**LondonEC2N 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:**

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading symbol(s)** | **Name of each exchange**<br> **on which registered**<br>|
| Ordinary shares of nominal value 10 pence each, represented by American Depositary Shares............. |  | The New York Stock Exchange |
| $1,500,000,000 4.344% Subordinated Securities due in 2048...................................................................... | LYG48A | The New York Stock Exchange |
| $1,175,176,000 3.369% Subordinated Notes due 2046...................................................................................... | LYG46 | The New York Stock Exchange |
| $824,033,000 5.300% Subordinated Securities due 2045.............................................................................. | LYG45 | The New York Stock Exchange |
| $1,250,000,000 4.943% Senior Callable Fixed-to-Fixed Rate Notes due 2036.......................................... | LYG36A | The New York Stock Exchange |
| $1,250,000,000 6.068% Fixed Rate Reset Dated Subordinated Tier 2 Notes due 2036.......................... | LYG36 | The New York Stock Exchange |
| $1,000,000,000 5.590% Senior Callable Fixed-to-Fixed Rate Notes due 2035......................................... | LYG35A | The New York Stock Exchange |
| $2,000,000,000 5.679% Senior Callable Fixed-to-Fixed Rate Notes due 2035......................................... | LYG35 | The New York Stock Exchange |
| $1,000,000.000 7.953% Fixed Rate Reset Subordinated Debt Securities due 2033................................. | LYG33A | The New York Stock Exchange |
| $1,250,000,000 4.976% Senior Callable Fixed-to-Fixed Rate Notes due 2033.......................................... | LYG33 | The New York Stock Exchange |
| $300,000,000 Senior Callable Floating Rate Notes due 2031........................................................................ | LYG31B | The New York Stock Exchange |
| $1,500,000,000 4.425% Senior Callable Fixed-to-Fixed Rate Notes due 2031........................................... | LYG31A | The New York Stock Exchange |
| £500,000,000 1.985% Subordinated Notes due 2031....................................................................................... | LYG31 | The New York Stock Exchange |
| $1,500,000,000 5.721% Senior Callable Fixed-to-Fixed Rate Notes due 2030........................................... | LYG30 | The New York Stock Exchange |
| $500,000,000 Senior Callable Floating Rate Notes due 2029........................................................................ | LYG29B | The New York Stock Exchange |
| $1,250,000,000 4.818% Senior Callable Fixed-to-Fixed Rate Notes due 2029........................................... | LYG29A | The New York Stock Exchange |
| $1,250,000,000 5.871% Senior Callable Fixed-to-Fixed Rate Notes due 2029........................................... | LYG29 | The New York Stock Exchange |
| $750,000,000 Senior Callable Floating Rate Notes due 2028........................................................................ | LYG28H | The New York Stock Exchange |
| $1,250,000,000 5.087% Senior Callable Fixed-to-Fixed Rate Notes due 2028.......................................... | LYG28G | The New York Stock Exchange |
| $300,000,000 Senior Callable Floating Rate Notes due 2028....................................................................... | LYG28F | The New York Stock Exchange |
| $1,500,000,000 5.462% Senior Callable Fixed-to-Fixed Rate Notes due 2028.......................................... | LYG28E | The New York Stock Exchange |
| $1,000,000,000 3.750% Senior Callable Fixed-to-Fixed Rate Notes due 2028.......................................... | LYG28D | The New York Stock Exchange |
| $1,250,000,000 4.550% Senior Notes due 2028................................................................................................ | LYG28C | The New York Stock Exchange |
| $1,500,000,000 4.375% Senior Notes due 2028................................................................................................ | LYG28B | The New York Stock Exchange |
| $1,750,000,000 3.574% Senior Notes due in 2028 (callable in 2027)............................................................ | LYG28A | The New York Stock Exchange |
| $500,000,000 Senior Callable Floating Rate Notes due 2027........................................................................ | LYB27C | The New York Stock Exchange |
| $1,500,000,000 5.985% Senior Callable Fixed-to-Fixed Rate Notes due 2027.......................................... | LYG27B | The New York Stock Exchange |
| $1,000,000,000 1.627% Senior Notes due 2027.................................................................................................. | LYG27A | The New York Stock Exchange |
| $1,250,000,000 3.750% Senior Notes due 2027................................................................................................. | LYG27 | The New York Stock Exchange |
| $1,500,000,000 4.650% Subordinated Securities due 2026........................................................................... | LYG26 | The New York Stock Exchange |

---

**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:**

6.625% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities (Callable September 27, 2035 and every

five years thereafter)

7.500% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities (Callable June 27, 2030 and every five

years thereafter)

6.750% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities (Callable September 27, 2031 and every

five years thereafter)

8.000% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities (Callable September 27, 2029 and on any

day until the First Reset Date on March 27, 2030 and on any day in the period six months before any subsequent Reset Date)

8.500% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities (Callable March 27, 2028 and on any day

until the First Reset Date on September 27, 2028 and on any day in the period six months before any subsequent Reset Date)

8.500% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities (Callable September 27, 2027 and on any

day until the First Reset Date on March 27, 2028 and on any day in the period six months before any subsequent Reset Date)

7.500% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities

6.750% Callable Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities

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

---

| | |
|:---|:---|
| Ordinary shares, nominal value 10 pence each......................................................................................................................................................................... | 58885743602 |
| Preference shares, nominal value 25 pence each..................................................................................................................................................................... | 296140832 |
| Preference shares, nominal value 25 cents each...................................................................................................................................................................... | 86617 |

---

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 ☐

**Table of contents**

---

| | | | |
|:---|:---|:---|:---|
| Introduction........................................................................................................................................................................................................................................... | Introduction........................................................................................................................................................................................................................................... | Introduction........................................................................................................................................................................................................................................... | [1](#id846e96c95884edea25f7ad1407ed8f4_16) |
| Forward-looking statements............................................................................................................................................................................................................. | Forward-looking statements............................................................................................................................................................................................................. | Forward-looking statements............................................................................................................................................................................................................. | [2](#id846e96c95884edea25f7ad1407ed8f4_19) |
| Enforceability of civil liabilities......................................................................................................................................................................................................... | Enforceability of civil liabilities......................................................................................................................................................................................................... | Enforceability of civil liabilities......................................................................................................................................................................................................... | [2](#id846e96c95884edea25f7ad1407ed8f4_22) |
| Part I......................................................................................................................................................................................................................................................... | Part I......................................................................................................................................................................................................................................................... | Part I......................................................................................................................................................................................................................................................... | [3](#id846e96c95884edea25f7ad1407ed8f4_28) |
|  | Item 1. | Identity of Directors, Senior Management and Advisers............................................................................................................................. | [3](#id846e96c95884edea25f7ad1407ed8f4_28) |
|  | Item 2. | Offer Statistics and Expected Timetable......................................................................................................................................................... | [3](#id846e96c95884edea25f7ad1407ed8f4_31) |
|  | Item 3. | Key Information....................................................................................................................................................................................................... | [3](#id846e96c95884edea25f7ad1407ed8f4_34) |
|  | Item 4. | Information on the Company.............................................................................................................................................................................. | [4](#id846e96c95884edea25f7ad1407ed8f4_52) |
|  | Item 4A. | Unresolved Staff Comments................................................................................................................................................................................ | [10](#id846e96c95884edea25f7ad1407ed8f4_115) |
|  | Item 5. | Operating and Financial Review and Prospects............................................................................................................................................. | [11](#id846e96c95884edea25f7ad1407ed8f4_118) |
|  | Item 6. | Directors, Senior Management and Employees.............................................................................................................................................. | [23](#id846e96c95884edea25f7ad1407ed8f4_301) |
|  | Item 7. | Major Shareholders and Related Party Transactions.................................................................................................................................... | [25](#id846e96c95884edea25f7ad1407ed8f4_322) |
|  | Item 8. | Financial Information............................................................................................................................................................................................. | [25](#id846e96c95884edea25f7ad1407ed8f4_334) |
|  | Item 9. | The Offer and Listing............................................................................................................................................................................................. | [26](#id846e96c95884edea25f7ad1407ed8f4_349) |
|  | Item 10. | Additional Information.......................................................................................................................................................................................... | [26](#id846e96c95884edea25f7ad1407ed8f4_370) |
|  | Item 11. | Qualitative and Quantitative Disclosures About Market Risk................................................................................................................... | [28](#id846e96c95884edea25f7ad1407ed8f4_403) |
|  | Item 12. | Description of Securities Other than Equity Securities................................................................................................................................ | [29](#id846e96c95884edea25f7ad1407ed8f4_406) |
| Part II....................................................................................................................................................................................................................................................... | Part II....................................................................................................................................................................................................................................................... | Part II....................................................................................................................................................................................................................................................... | [29](#id846e96c95884edea25f7ad1407ed8f4_424) |
|  | Item 13. | Defaults, Dividend Arrearages and Delinquencies......................................................................................................................................... | [29](#id846e96c95884edea25f7ad1407ed8f4_424) |
|  | Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds.................................................................................... | [29](#id846e96c95884edea25f7ad1407ed8f4_427) |
|  | Item 15. | Controls and Procedures....................................................................................................................................................................................... | [30](#id846e96c95884edea25f7ad1407ed8f4_430) |
|  | Item 16. | [Reserved].................................................................................................................................................................................................................. | [32](#id846e96c95884edea25f7ad1407ed8f4_445) |
|  | Item 16A. | Audit Committee Financial Expert.................................................................................................................................................................... | [32](#id846e96c95884edea25f7ad1407ed8f4_448) |
|  | Item 16B. | Code of Ethics.......................................................................................................................................................................................................... | [32](#id846e96c95884edea25f7ad1407ed8f4_457) |
|  | Item 16C. | Principal Accountant Fees and Services........................................................................................................................................................... | [32](#id846e96c95884edea25f7ad1407ed8f4_469) |
|  | Item 16D. | Exemptions from the Listing Standards for Audit Committees................................................................................................................. | [32](#id846e96c95884edea25f7ad1407ed8f4_472) |
|  | Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers................................................................................................... | [32](#id846e96c95884edea25f7ad1407ed8f4_475) |
|  | Item 16F. | Change in Registrant's Certifying Accountant................................................................................................................................................ | [32](#id846e96c95884edea25f7ad1407ed8f4_478) |
|  | Item 16G. | Corporate Governance.......................................................................................................................................................................................... | [32](#id846e96c95884edea25f7ad1407ed8f4_481) |
|  | Item 16H. | Mine Safety Disclosure........................................................................................................................................................................................... | [32](#id846e96c95884edea25f7ad1407ed8f4_487) |
|  | Item 16I. | Disclosures Regarding Foreign Jurisdictions that Prevent Inspections..................................................................................................... | [32](#id846e96c95884edea25f7ad1407ed8f4_490) |
|  | Item 16J. | Insider Trading Policies.......................................................................................................................................................................................... | [33](#id846e96c95884edea25f7ad1407ed8f4_493) |
|  | Item 16K. | Cybersecurity............................................................................................................................................................................................................ | [33](#id846e96c95884edea25f7ad1407ed8f4_496) |
| Part III...................................................................................................................................................................................................................................................... | Part III...................................................................................................................................................................................................................................................... | Part III...................................................................................................................................................................................................................................................... | [33](#id846e96c95884edea25f7ad1407ed8f4_502) |
|  | Item 17. | Financial Statements............................................................................................................................................................................................. | [33](#id846e96c95884edea25f7ad1407ed8f4_502) |
|  | Item 18. | Financial Statements............................................................................................................................................................................................. | [33](#id846e96c95884edea25f7ad1407ed8f4_505) |
|  | Item 19. | Exhibits...................................................................................................................................................................................................................... | [41](#id846e96c95884edea25f7ad1407ed8f4_514) |

---

---

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

---

**Introduction**

In this annual report on Form 20-F (the "Annual Report on Form 20-F"), references to the "Company" are to Lloyds Banking Group plc;

references to "Lloyds Banking Group", "Lloyds" or the "Group" are to Lloyds Banking Group plc and its subsidiary and associated undertakings;

and references to "Lloyds Bank" are to Lloyds Bank plc. 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 Company'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 Lloyds Banking 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 [11](#id846e96c95884edea25f7ad1407ed8f4_118) to [23](#id846e96c95884edea25f7ad1407ed8f4_298).**

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.

---

| | |
|:---|:---|
| **2** | **Lloyds Banking Group 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

Banking Group plc together with its subsidiaries (the Group) and its current goals and expectations. Statements that are not historical or

current facts, including statements about the 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 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 Group's future financial performance; the level and extent of future impairments and write-downs; the

Group's ESG targets and/or commitments; statements of plans, objectives or goals of the 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 Group's credit ratings; fluctuations in interest rates, inflation, exchange rates, stock markets and

currencies; volatility in credit markets; volatility in the price of the Group's securities; natural pandemic and other disasters; risks concerning

borrower and counterparty credit quality; risks affecting insurance business and 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 Group; risks

associated with the 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 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 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; assumptions and estimates that form the basis of the Group's financial statements; and potential changes in

dividend policy. A number of these influences and factors are beyond the Group's control. Please refer to the latest Annual Report on Form 20-F

filed by Lloyds Banking Group 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 Banking Group 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 Banking Group 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 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 Company is a public limited company incorporated under the laws of Scotland. Most of the Company'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 Company, 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 Company 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.

---

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

---

**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.[Reserved]**

**B.Capitalization and indebtedness**

Not applicable.

**C.Reason for the offer and use of proceeds**

Not applicable.

**D.Risk factors**

Set out below is a summary of certain risk factors which could affect the Company's and the 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 the Group's businesses face.

**Economic and financial risks**

1. The 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. The 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 the Group's credit rating(s) could materially adversely affect the Group's results of operations, financial condition or

prospects

4. The 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 the 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 the Group, including negative fair value adjustments

6. The 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 the Group's balance sheet

7. The Group's insurance business and defined benefit pension schemes are subject to insurance and market risks

8. The 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. The Group and its businesses are subject to substantial regulation and oversight. Adverse legal or regulatory developments could have a

material adverse effect on the 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. The Group faces risks associated with its compliance with a wide range of laws and regulations

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

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

6. The Group is subject to resolution planning requirements

7. The Group is subject to regulatory actions which may be taken in the event of a bank or 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 the Group's results of operations, financial condition or prospects

---

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

---

**Part I** continued

**Business and operational risks**

1. The 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. The Group is exposed to conduct risk

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

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

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

issues

6. The Group's businesses are conducted in competitive environments, which are subject to ongoing regulatory scrutiny, and the Group's

financial performance depends upon management's ability to respond effectively to competitive pressures and any regulatory

developments

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

8. The 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. The 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. The Group's financial statements are based, in part, on assumptions and estimates

11. The Company may not have sufficient liquidity to meet its obligations, including its payment obligations with respect to its external debt

securities

12. The Company may not pay a dividend on its ordinary shares in any given financial/calendar year

13. Volatility in the price of the Company's ordinary shares may affect the value of any investment in the Company

Reference is made to the 6-K Risk Factors for a description of the above risk factors which could affect the 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 the 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 the Group's risk management policies and procedures, see the

section titled "Risk Management" under Item 5 - "Operating and Financial Review and Prospects".

**Item 4. Information on the Company**

**A.History and development of the company**

Lloyds Banking Group plc was incorporated as a public limited company and registered in Scotland under the UK Companies Act 1985 on

21 October 1985 with the registered number SC095000. Lloyds Banking Group plc's registered office is Lloyds Banking Group plc, The Mound,

Edinburgh EH1 1YZ, Scotland, and its principal executive offices in the UK are located at Lloyds Banking Group plc, 33 Old Broad Street, London

EC2N 1HZ, telephone number +44 (0)20 7626 1500. Lloyds Banking Group maintains a website at **www.lloydsbankinggroup.com**.

The Group'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.

**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 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.Business overview**

Lloyds Banking Group is a leading provider of financial services to individual and business customers in the UK. At 31 December 2025, Lloyds

Banking Group's total assets were £944,072 million and Lloyds Banking Group had 60,061 employees (on a full-time equivalent basis). Lloyds

Banking Group's market capitalisation at that date was £57,849 million. The Group reported a profit before tax for the year ended 31 December

2025 of £6,661 million, and its capital ratios at that date were14.0%for common equity tier 1 capital, 16.2% for tier 1 capital and 18.9% for total

capital.

Lloyds Banking Group's main business activities are retail and commercial banking and long-term savings, protection and investment and it

operates primarily in the UK. Services are offered through a number of well recognised brands including Lloyds Bank, Halifax, Bank of Scotland

and Scottish Widows, and through a range of distribution channels including the largest branch network and digital bank in the UK.

Reference is made to the "Consolidated income statement" on **page 211 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](#id846e96c95884edea25f7ad1407ed8f4_181)**.

**Divisional information**

The Group's financial reporting segments are differentiated by the type of products provided and by whether the customers are individuals or

corporate entities. At 31 December 2025, the Group's three primary operating divisions, which are also its financial reporting segments, were:

Retail; Commercial Banking; and Insurance, Pensions and Investments.

The Group Executive Committee, which is the chief operating decision maker for the Group (as defined by IFRS 8 Operating Segments), reviews

the Group's internal reporting based around these segments (which reflect the Group's organisational and management structures) in order to

assess performance and allocate resources; this reporting is on an underlying basis.

---

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

---

**Part I** continued

The aggregate total of the underlying basis segmental results constitutes a non-GAAP measure as defined in the SEC's Regulation G.

Management uses aggregate underlying profit, a non-GAAP measure, as a measure of performance and believes that it provides important

information for investors because it is a comparable representation of the Group's performance. Profit before tax is the comparable GAAP

measure to aggregate underlying profit. The results of the primary operating divisions are set out on the underlying basis in "Note 4: Segmental

analysis" on **pages 228 to 232 of the Annual Report 2025,** along with a reconciliation of this non-GAAP measure to its comparable GAAP

measure.

Reference is made to "Restructuring, volatility and other items" on**page 56 of the Annual Report 2025**for performance commentary on

restructuring costs and market volatility and asset sales.

Reference is also made to "Volatility arising in the Insurance business" on **page 59 of the Annual Report 2025**for information on insurance and

policyholder interests volatility.

**Competitive environment**

Reference is made to the "Our external environment" section on **pages 10 to 13 of the Annual Report 2025** for information on the economy and

competitive environment.

**Group structure and ring-fencing governance arrangements**

Reference is made to the section titled "Group structure and ring-fencing governance arrangements" on **page 73 of the Annual Report 2025.**

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

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
|  | **Average**<br>**balance**<br>**sheet**<br>**amount**<br>**£m**<br>| **Interest** <br>**earned**<br>**£m**<br>| **Average** <br>**yield%**<br>| Average<br>balance<br>sheet<br>amount<br>£m<br>| Interest <br>earned<br>£m<br>| Average <br>yield%<br>| Average<br>balance<br>sheet<br>amount<br>£m<br>| Interest <br>earned<br>£m<br>| Average <br>yield%<br>|
| **Assets**<sup>1</sup> |  |  |  |  |  |  |  |  |  |
| Financial assets at amortised cost: |  |  |  |  |  |  |  |  |  |
| Loans and advances to banks | **70780** | **2657** | **3.75** | 75135 | 3508 | 4.67 | 100631 | 4172 | 4.15 |
| Loans and advances to customers | **473647** | **23756** | **5.02** | 456763 | 23242 | 5.09 | 452222 | 20419 | 4.52 |
| Reverse repurchase agreements | **49058** | **2336** | **4.76** | 48343 | 2685 | 5.55 | 40004 | 2044 | 5.11 |
| Debt securities | **13712** | **658** | **4.80** | 15251 | 779 | 5.11 | 12433 | 559 | 4.50 |
| Financial assets at fair value through other <br>comprehensive income<br>| **34522** | **1342** | **3.89** | 29522 | 1074 | 3.64 | 23993 | 857 | 3.57 |
| Total average interest-earning assets of <br>banking book<br>| **641719** | **30749** | **4.79** | 625014 | 31288 | 5.01 | 629283 | 28051 | 4.46 |
| Total average interest-earning financial <br>assets at fair value through profit or loss<br>| **88475** | **3685** | **4.17** | 84043 | 3667 | 4.36 | 80201 | 3388 | 4.22 |
| **Total average interest-earning assets** | **730194** | **34434** | **4.72** | 709057 | 34955 | 4.93 | 709484 | 31439 | 4.43 |
| Allowance for impairment losses on <br>financial assets held at amortised cost<br>| **(3182)** |  |  | (3461) |  |  | (4732) |  |  |
| Non-interest earning assets | **202622** |  |  | 190269 |  |  | 174725 |  |  |
| **Total average assets and interest earned** | **929634** | **34434** | **3.70** | 895865 | 34955 | 3.90 | 879477 | 31439 | 3.57 |
| **Liabilities and shareholders' funds**<sup>1</sup> |  |  |  |  |  |  |  |  |  |
| Deposits by banks | **7355** | **244** | **3.32** | 5833 | 225 | 3.86 | 6376 | 213 | 3.34 |
| Customer deposits | **376795** | **9257** | **2.46** | 356294 | 10132 | 2.84 | 342305 | 7148 | 2.09 |
| Repurchase agreements at amortised cost | **37492** | **1984** | **5.29** | 39391 | 2392 | 6.07 | 43480 | 2397 | 5.51 |
| Debt securities in issue at amortised cost<sup>2</sup> | **72671** | **5299** | **7.29** | 74171 | 5493 | 7.41 | 79038 | 4253 | 5.38 |
| Lease liabilities | **1136** | **28** | **2.46** | 1490 | 31 | 2.08 | 1486 | 30 | 2.02 |
| Subordinated liabilities | **10344** | **707** | **6.83** | 10541 | 738 | 7.00 | 10549 | 712 | 6.75 |
| Total average interest-bearing liabilities of <br>banking book<br>| **505793** | **17519** | **3.46** | 487720 | 19011 | 3.90 | 483234 | 14753 | 3.05 |
| Total average interest-bearing liabilities of <br>trading book<br>| **29413** | **1690** | **5.75** | 27232 | 1700 | 6.24 | 23513 | 1445 | 6.15 |
| **Total average interest-bearing liabilities** | **535206** | **19209** | **3.59** | 514952 | 20711 | 4.02 | 506747 | 16198 | 3.20 |
| Non-interest-bearing customer accounts | **115585** |  |  | 117139 |  |  | 127683 |  |  |
| Other non-interest-bearing liabilities | **231633** |  |  | 216300 |  |  | 197431 |  |  |
| **Total average non-interest-bearing** <br>**liabilities**<br>| **347218** |  |  | 333439 |  |  | 325114 |  |  |
| Non-controlling interests, other equity <br>instruments and shareholders' funds<br>| **47210** |  |  | 47474 |  |  | 47616 |  |  |
| **Total average liabilities, average** <br>**shareholders' funds and interest expense**<br>| **929634** | **19209** | **2.07** | 895865 | 20711 | 2.31 | 879477 | 16198 | 1.84 |

---

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

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

---

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

---

**Part I** continued

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
| **Average interest-earning assets and net interest** <br>**income**<br>| **Average** <br>**interest-**<br>**earning** <br>**assets**<br>**£m**<br>| **Net** <br>**interest** <br>**income**<br>**£m**<br>| **Net** <br>**interest** <br>**yield on**<br>**interest-**<br>**earning**<br>**assets%**<br>| Average <br>interest-<br>earning <br>assets<br>£m<br>| Net<br>interest<br>income<br>£m<br>| Net <br>interest <br>yield on<br>interest-<br>earning<br>assets%<br>| Average <br>interest-<br>earning <br>assets<br>£m<br>| Net<br>interest<br>income<br>£m<br>| Net <br>interest <br>yield on<br>interest-<br>earning<br>assets%<br>|
| Banking business | **641719** | **13230** | **2.06** | 625014 | 12277 | 1.96 | 629283 | 13298 | 2.11 |
| Trading securities and other financial assets <br>at fair value through profit or loss<br>| **88475** | **1995** | **2.25** | 84043 | 1967 | 2.34 | 80201 | 1943 | 2.42 |
|  | **730194** | **15225** | **2.09** | 709057 | 14244 | 2.01 | 709484 | 15241 | 2.15 |

---

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.

**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.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **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**<br>| **Change in**<br>**volume**<br>**£m**<br>| **Change in**<br>**rates**<br>**£m**<br>| **Change in**<br>**rates and**<br>**volume**<br>**£m**<br>| Total<br>change<br>£m<br>| Change in<br>volume<br>£m<br>| Change in<br>rates<br>£m<br>| Change in<br>rates and<br>volume<br>£m<br>|
| **Interest income** |  |  |  |  |  |  |  |  |
| Financial assets at amortised cost: |  |  |  |  |  |  |  |  |
| Loans and advances to banks | **(851)** | **(203)** | **(688)** | **40** | (664) | (1057) | 526 | (133) |
| Loans and advances to customers | **514** | **859** | **(333)** | **(12)** | 2823 | 205 | 2592 | 26 |
| Reverse repurchase agreements | **(349)** | **40** | **(383)** | **(6)** | 641 | 426 | 178 | 37 |
| Debt securities | **(121)** | **(79)** | **(47)** | **5** | 220 | 127 | 76 | 17 |
| Financial assets at fair value through other <br>comprehensive income<br>| **268** | **182** | **74** | **12** | 217 | 197 | 16 | 4 |
| Total banking book interest income | **(539)** | **799** | **(1377)** | **39** | 3237 | (102) | 3388 | (49) |
| Total interest income on financial assets at <br>fair value through profit or loss<br>| **18** | **194** | **(167)** | **(9)** | 279 | 163 | 111 | 5 |
| **Total interest income** | **(521)** | **993** | **(1544)** | **30** | 3516 | 61 | 3499 | (44) |
| **Interest expense** |  |  |  |  |  |  |  |  |
| Deposits by banks | **19** | **59** | **(32)** | **(8)** | 12 | (18) | 33 | (3) |
| Customer deposits | **(875)** | **583** | **(1379)** | **(79)** | 2984 | 292 | 2586 | 106 |
| Repurchase agreements at amortised cost | **(408)** | **(115)** | **(308)** | **15** | (5) | (225) | 243 | (23) |
| Debt securities in issue at amortised cost | **(194)** | **(111)** | **(85)** | **2** | 1240 | (262) | 1600 | (98) |
| Lease liabilities | **(3)** | **(8)** | **6** | **(1)** | 1 | – | 1 | – |
| Subordinated liabilities | **(31)** | **(13)** | **(18)** | **–** | 26 | (1) | 27 | – |
| Total banking book interest expense | **(1492)** | **395** | **(1816)** | **(71)** | 4258 | (214) | 4490 | (18) |
| Total interest expense on trading and other <br>liabilities at fair value through profit or loss<br>| **(10)** | **136** | **(135)** | **(11)** | 255 | 229 | 22 | 4 |
| **Total interest expense** | **(1502)** | **531** | **(1951)** | **(82)** | 4513 | 15 | 4512 | (14) |

---

**Loan portfolio**

Summary of loan loss experience

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Gross loans and advances to banks and customers and reverse repurchase agreements | **542697** | 520425 | 503005 |
| Allowance for impairment losses | **3012** | 3192 | 3725 |
| **Ratio of allowance for credit losses to total lending (%)** | **0.6** | 0.6 | 0.7 |

---

---

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

---

**Part I** continued

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **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**<br>| 2024<br>£m<br>| 2023<br>£m<br>| **2025%**<br>| 2024%<br>| 2023%<br>|
| Loans and advances to banks | **–** | – | – | **–** | – | – |
| Loans and advances to customers | **(1096)** | (1029) | (1115) | **0.2** | 0.2 | 0.2 |
| Reverse repurchase agreements | **–** | – | – | **–** | – | – |
| **Total net advances written off** | **(1096)** | (1029) | (1115) | **0.2** | 0.2 | 0.2 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **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**<br>| 2024<br>£m<br>| 2023<br>£m<br>| **2025%**<br>| 2024%<br>| 2023%<br>|
| Loans and advances to banks | **1** | 1 | 8 | **–** | – | 0.1 |
| Loans and advances to customers | **3011** | 3191 | 3717 | **0.6** | 0.7 | 0.8 |
| Reverse repurchase agreements | **–** | – | – | **–** | – | – |
| **At 31 December** | **3012** | 3192 | 3725 | **0.6** | 0.6 | 0.7 |

---

**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.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **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**<br>| **Average** <br>**yield%**<br>| **Amount**<br>**£m**<br>| **Average** <br>**yield%**<br>| **Amount**<br>**£m**<br>| **Average** <br>**yield%**<br>| **Amount**<br>**£m**<br>| **Average** <br>**yield%**<br>|
| Financial assets at fair value through other <br>comprehensive income<br>| **2281** | **4.7** | **16984** | **3.3** | **14053** | **2.7** | **2951** | **2.6** |
| Debt securities held at amortised cost | **2962** | **3.3** | **3956** | **4.1** | **4383** | **4.1** | **2691** | **2.3** |

---

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.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Maturing**<br>**in one**<br>**year**<br>**or less**<br>**£m**<br>| **Maturing**<br>**after one**<br>**but within**<br>**five years**<br>**£m**<br>| **Maturing**<br>**after five**<br>**but within**<br>**fifteen years**<br>**£m**<br>| **Maturing**<br>**after**<br>**fifteen**<br>**years**<br>**£m**<br>| **Total**<br>**£m**<br>|
| Loans and advances to banks | **5521** | **1709** | **7** | **–** | **7237** |
| Loans and advances to customers | **74703** | **107718** | **141523** | **160530** | **484474** |
| Reverse repurchase agreements | **40608** | **10378** | **–** | **–** | **50986** |
| **Total loans** | **120832** | **119805** | **141530** | **160530** | **542697** |
| *Of which:* |  |  |  |  |  |
| Fixed interest rate | **67696** | **72964** | **121304** | **135006** | **396970** |
| Variable interest rate | **53136** | **46841** | **20226** | **25524** | **145727** |
|  | **120832** | **119805** | **141530** | **160530** | **542697** |

---

Deposits

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

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
|  | **Closing**<br>**balance**<br>**£m**<br>| **Average**<br>**balance**<br>**£m**<br>| **Average**<br>**rate%**<br>| Closing<br>balance<br>£m<br>| Average<br>balance<br>£m<br>| Average<br>rate%<br>| Closing<br>balance<br>£m<br>| Average<br>balance<br>£m<br>| Average<br>rate%<br>|
| Non-interest bearing demand deposits | **115301** | **115585** | **–** | 115580 | 117139 | – | 120990 | 127683 | – |
| Interest-bearing demand deposits | **260408** | **257144** | **2.04** | 250967 | 253033 | 2.83 | 251411 | 254426 | 2.14 |
| Other deposits | **120748** | **119651** | **3.35** | 116198 | 103261 | 2.89 | 98995 | 87879 | 1.95 |
| **Total customer deposits** | **496457** | **492380** | **1.88** | 482745 | 473433 | 2.14 | 471396 | 469988 | 1.52 |

---

---

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

---

**Part I** continued

Uninsured deposits

The following table gives details of Lloyds Banking Group's customer deposits which were not covered by any deposit protection scheme by

time remaining to maturity.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **3 months**<br>**or less**<br>**£m**<br>| **Over 3**<br>**months**<br>**but within**<br>**6 months**<br>**£m**<br>| **Over 6**<br>**months**<br>**but within**<br>**12 months**<br>**£m**<br>| **Over**<br>**12 months**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **At 31 December 2025** | **182289** | **7921** | **8273** | **4825** | **203308** |
| At 31 December 2024 | 181196 | 8490 | 17119 | 4607 | 211412 |

---

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.

**Recent developments**

Share buyback

On 30 January 2026, the Group announced the launch of an ordinary share buyback of up to £1.75 billion, which is expected to be completed,

subject to continued authority from the PRA, by 31 December 2026.

**Regulation**

The below sets out a brief description of the Group's primary regulators but does not include a description of all the regulations the 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 Company") 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.

---

| | |
|:---|:---|
| **9** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

*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")*

The Company 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.

*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 – The Group faces risks associated with its compliance with a wide range of laws and regulations" and

"Regulatory and Legal Risks – The Group is subject to resolution planning requirements" on **pages 10 and 13 respectively of the 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, the Company 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.

Each of the Company and LBCM 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.

Bank holding companies and financial holding companies are also subject to approval requirements in connection with certain acquisitions or

investments. For example, the Group 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.

---

| | |
|:---|:---|
| **10** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

The Group's US broker dealer, Lloyds Securities Inc. (LSI), is subject to regulation and supervision in the US and is a member of the Financial

Industry Regulatory Authority (FINRA) and is thus subject to requirements and oversight related to areas including sales methods, trade

practices, use and safekeeping of customers' funds and securities, capital structure, recordkeeping, conduct of directors, officers and employees

and other matters pertinent to its securities business.

LBCM is registered as a swap dealer and as such, is subject to regulation and supervision by the Commodity Futures Trading Commission

("CFTC") with respect to certain of its swap activities and registration with the National Futures Association ("NFA"), CFTC and NFA rules and

regulations include requirements related to risk management practices, trade documentation and reporting, business conduct and

recordkeeping, among others.

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. The 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, the

Group did not believe that the Group's business activities relating to countries designated as state sponsors of terrorism in 2025 were material

to its overall business.

The Group estimates that the value of its business in respect of such states represented less than 0.01% of the Group's total assets and, for the

year ended December 2025, the Group believes that the Group's revenues from all activities relating to such states were less than 0.001% of its

total income, net of insurance claims and changes in insurance and investment contract liabilities. This information has been compiled from

various sources within the 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, the 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 the 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 £7,600. Net profits from these activities were approximately £7,600.

The 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, the 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 the 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.

3. Sums paid out from a pension trust fund to UK nationals resident in the UK who were employees of a company indirectly owned or

controlled by an entity designated under Executive Order 13382 that is also owned or controlled by the Government of Iran.

**C.Organizational structure**

The Company is the holding company of the Lloyds Banking Group, which consists of the Company and its subsidiaries. The following are the

Group's principal subsidiaries; the list includes all significant subsidiaries, and certain other subsidiaries as noted below, of the Company at 31

December 2025.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of subsidiary undertaking** | **Country of**<br>**registration/**<br>**incorporation**<br>| **Percentage of equity**<br>**share capital and** <br>**voting rights held**<br>| **Nature of business** | **Registered office** |
| Lloyds Bank plc | England | 100% | Banking and financial services | 25 Gresham Street, London EC2V 7HN |
| Scottish Widows Limited | England | 100%\* | Life assurance | 25 Gresham Street, London EC2V 7HN |
| 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 |
| Lloyds Bank Corporate Markets plc<sup>1</sup> | England | 100% | Banking and financial services | 25 Gresham Street, London EC2V 7HN |
| LBG Equity Investments Limited<sup>1</sup> | England | 100% | Financial services | 25 Gresham Street, London EC2V 7HN |

---

\*Indirect interest

1Subsidiary that does not meet the quantitative threshold for significance.

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

**D.Property, plant and equipment**

Not applicable.

**Item 4A. Unresolved Staff Comments**

Not applicable.

---

| | |
|:---|:---|
| **11** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

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

**A.Operating results**

Reference is made to the sections titled:

• "Our external environment" on **pages 10 to 13 of the Annual Report 2025**;

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

**218** **of the Annual Report 2025**;

• "Note 3: Critical accounting judgements and key sources of estimation uncertainty" on **page 228of the Annual Report 2025**; and

• "Note 19: Derivative financial instruments" on **pages 269 to 271 of the Annual Report 2025.**

**Results of operations – 2025 and 2024**

**Income statement**

Reference is made to the "Consolidated income statement" on **page 211 of the Annual Report 2025** for the Group's income statement for each

of the last two years.

Net interest income

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | Change |
| Net interest income (£m) | **13230** | 12277 | 8 |
| Average interest-earning assets (£m) | **641719** | 625014 | 3 |
| Average rates: |  |  |  |
| Gross yield on average interest-earning assets of the banking book<sup>1</sup> (%) | **4.79** | 5.01 | (22)bp |
| Interest spread<sup>2</sup> (%) | **1.33** | 1.11 | 22bp |
| Net interest margin<sup>3</sup> (%) | **2.06** | 1.96 | 10bp |

---

1Gross yield is the rate of interest earned on average interest-earning assets of the banking book.

2Interest spread is the difference between the rate of interest earned on average interest-earning assets of the banking book and the rate of interest paid on average interest-bearing

liabilities of the banking book.

3The net interest margin represents the interest spread together with the contribution of interest-free liabilities. It is calculated by expressing net interest income as a percentage of

average interest-earning assets of the banking book.

Net interest income in the year of £13,230 million was up8%, compared to £12,277 million in 2024, reflecting higher average interest-earning

assets and a higher margin. The net interest margin was 10 basis points higher at 2.06%(2024: 1.96%).

Average interest-earning assets of the banking book were £16,705 million higher at £641,719 million (2024: £625,014 million) primarily reflecting

an increase in average loans and advances to customers partially offset by a decrease in average loans and advances to banks.

Other income

Other income includes net fee and commission income, net trading income, insurance service result, net investment return and finance result in

respect of insurance and investment contracts and other operating income. For further detail on each of these items, reference is made to

"Note 6: Net fee and commission income" on **pages 233 to 234 of the Annual Report 2025,** "Note 7: Net trading income" on **page 234 of the** 

**Annual Report 2025,** "Note 8: Insurance business (A)" on **page 235 of the Annual Report 2025,** "Note 8: Insurance business (B)" on **pages 235 to** 

**236 of the Annual Report 2025**and"Note 9: Other operating income" on **page 242 of the Annual Report 2025.**

Reference is also made to the "Statutory results" section on **page 53 of the Annual Report 2025**for a description of the Group's other income

result.

Operating expenses

For further detail on operating expenses, reference is made to "Note 10: Operating expenses" on**page 242 of the Annual Report 2025**.

Reference is also made to the "Statutory results" section on **page 53 of the Annual Report 2025**for a description of the Group's operating

expenses result.

Impairment

For further detail on the impairment result, reference is made to "Note 14: Impairment" on **pages 251 to 252 of the Annual Report 2025**.

Reference is also made to the "Statutory results" section on **page 53 of the Annual Report 2025**for a description of the Group's impairment

result.

Tax

For further detail on the tax result, reference is made to "Note 15: Tax" on **pages 252 to 254 of the Annual Report 2025**.

Reference is also made to the "Statutory results" section on **page 53of the Annual Report 2025**for a description of the Group's tax result.

**Balance sheet**

Reference is made to the "Consolidated balance sheet" on **page 213 of the Annual Report 2025** for the Group's balance sheet for each of the

last two years.

Reference is also made to the "Statutory results" section on **page 53 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 144 to 145 and pages 147 to 150 of the Annual Report 2025**; and

• "Capital returns" and "Minimum requirement for own funds and eligible liabilities (MREL)" on **pages 145 and 146 of the Annual Report 2025**

---

| | |
|:---|:---|
| **12** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

**Off-balance sheet arrangements**

A table setting out the amounts and maturities of Lloyds Banking Group's other commercial commitments and guarantees at 31 December 2025

is included in the section titled "Maturities of contingent liabilities, commitments and financial guarantees (audited)" on **page 186 of the Annual** 

**Report 2025**. These commitments and guarantees are not included in Lloyds Banking Group's consolidated balance sheet.

Lending commitments are agreements to lend to customers in accordance with contractual provisions; these are either for a specified period or,

as in the case of credit cards and overdrafts, represent a revolving credit facility which can be drawn down at any time, provided that the

agreement has not been terminated. The total amounts of unused commitments do not necessarily represent future cash requirements, in that

commitments often expire without being drawn upon.

Lloyds Banking Group's banking businesses are also exposed to liquidity risk through the provision of securitisation facilities to certain corporate

customers. At 31 December 2025, Lloyds Banking Group offered securitisation facilities to its corporate and financial institution client base

through its conduit securitisation programme, Cancara. This is funded in the global asset-backed commercial paper market. The assets and

obligations of the programme are included in Lloyds Banking Group's consolidated balance sheet. Lloyds Banking Group provides short-term

asset-backed commercial paper liquidity support facilities on commercial terms to the programme, for use should the issuer be unable to roll

over maturing commercial paper or obtain alternative sources of funding.

Details of securitisations and other special purpose entity arrangements entered into by Lloyds Banking Group are provided in "Note 26: Debt

securities in issue" on **page 283 of the Annual Report 2025**and "Note 37: Structured entities" on **pages 292 to 293 of the Annual Report 2025**.

The successful development of Lloyds Banking Group's ability to securitise its own assets has provided a mechanism to tap a well established

market, thereby diversifying Lloyds Banking Group's funding base.

Within Lloyds Banking Group's insurance businesses, the principal sources of liquidity are premiums received from policyholders, charges levied

upon policyholders, investment income and the proceeds from the sale and maturity of investments. The investment policies followed by Lloyds

Banking Group's life assurance companies take account of anticipated cash flow requirements including by matching the cash inflows with

projected liabilities where appropriate. Cash deposits and highly liquid government securities are available to provide liquidity to cover any

higher than expected cash outflows.

**Contractual cash obligations**

For detail on contractual cash obligations in respect of subordinated liabilities and their maturity profile, reference is made to "Note 29:

Subordinated liabilities" on **pages 285 to 286 of the Annual Report 2025** and "Note 18: Maturities of assets and liabilities" on **pages 267 to 268**

**of the Annual Report 2025**.

For detail on outstanding debt securities in issue and their maturity profile, reference is made to "Note 18: Maturities of assets and liabilities" on

**pages 267 to 268 of the Annual Report 2025**.

For detail on the Group's lease liabilities, reference is made to "Note 27: Other liabilities" on **page 283 of the Annual Report 2025**.

For detail on the Group's capital commitments, reference is made to "Capital commitments" within "Note 36: Contingent liabilities,

commitments and financial guarantees" on **pages 291 and 292 of the Annual Report 2025**.

The Group also had other purchase obligations totalling £4,858 million.

At 31 December 2025, the principal sources of potential liquidity for Lloyds Banking Group plc were dividends received from its directly owned

subsidiary companies, particularly Lloyds Bank plc and Scottish Widows Group Limited, and loans from this and other Lloyds Banking Group

companies. The ability of Lloyds Bank to pay dividends going forward, or for Lloyds Bank or other Lloyds Banking Group companies to make

loans to the Company depends on a number of factors, including their own regulatory capital requirements, distributable reserves and financial

performance.

**Results of operations – 2023**

The 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 20 February 2025, the discussion for which is hereby incorporated by reference into this document.

---

| | |
|:---|:---|
| **13** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

**Divisional information**

Please refer to the "Divisional information" section under Item 4.B - "Business overview" on **page [4](#id846e96c95884edea25f7ad1407ed8f4_76).**

**Divisional results**

Retail

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. Its aim is to build enduring relationships meeting more of its customers' financial needs

and improving financial resilience throughout their lifetime. Retail operates the largest digital bank in the UK and is improving digital experience

through a mobile-first strategy. Retail delivers market-leading products and meets consumer duty expectations, working within a prudent risk

appetite. Outside of the UK, Retail has a growing mortgages and savings focused European business. Through strategic investment and

increased use of data, Retail aims to deepen consumer relationships, deliver personalised propositions, broaden its intermediary offering,

improve customer experience and increase operational efficiency.

Reference is made to "Note 4: Segmental analysis" on **pages 228 to 232 of the Annual Report 2025**for a summary of the Retail division's

underlying profit before tax.

• Underlying profit increased by £164 million to £3,356 million in 2025 compared to £3,192 million in 2024, driven by higher underlying net

interest income and higher underlying other income, offset by increased operating lease depreciation, higher underlying operating costs,

higher remediation and a higher underlying impairment charge

• Underlying net interest income increased by £707 million to £9,637 million in 2025 compared to £8,930 million in 2024, driven by structural

hedge earnings and higher unsecured loans balances, partially offset by continued mortgage refinancing and deposit churn headwinds

• Underlying other income increased£282 million to £2,636 million in 2025 compared to £2,354 million in 2024, driven by fleet growth and

higher average rental values in UK Motor Finance alongside strength in current account and credit card income

• Operating lease depreciation increased£126 million to £1,445 million in 2025 compared to £1,319 million in 2024, reflecting fleet growth, the

depreciation of higher value vehicles and declines in used electric car prices. Used car price volatility continues to be partly mitigated

through lease extensions, used car leasing and remarketing agreements

• Underlying operating costs increased by £241 million to £5,807 million in 2025 compared to £5,566 million in 2024, from strategic investment

(including planned severance), business growth costs and inflationary pressures, partially offset by cost savings from investment and

continued cost discipline

• Remediation increased by £181 million to £931 million in 2025 compared to £750 million in 2024. Remediation costs in 2025 included

£800 million relating to the potential impact of motor finance commission arrangements taken in the third quarter

• Underlying impairment increased by £277 million to £734 million in 2025 compared to a charge of £457 million in 2024. 2024 included a

credit for improved economic outlook. 2025 benefits from model refinements and a debt sale write back. Strong credit performance with

ongoing improvement in UK mortgages and stability across unsecured products

Commercial Banking

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, whilst connecting the whole Group to clients. Through investment

in digitisation, product development and coverage capability, Commercial Banking is delivering an enhanced customer experience via a digital-

first model in Business and Commercial Banking and an expanded client proposition in Corporate and Institutional Banking. This is meeting

customer growth objectives, generating diversified capital efficient growth and supporting customers in their transition to net zero.

Reference is made to "Note 4: Segmental analysis" on **pages 228 to 232 of the Annual Report 2025**for a summary of the Commercial Banking

division's underlying profit.

• Underlying profit increased by £145 million to £2,546 million in 2025 compared to £2,401 million in 2024, driven by higher underlying net

interest income and higher underlying other income, offset by higher underlying operating costs and a higher underlying impairment charge

• Underlying net interest income increased by £236 million to £3,670 million in 2025 compared to £3,434 million in 2024, underpinned by

strength in the deposits franchise including structural hedge refinancing benefits

• Underlying other income increased by £10 million to £1,825 million in 2025 compared to £1,815 million in 2024 driven by higher transaction

banking and markets income more than offsetting lower loan markets activity, with 2024 benefitting from one-off gains

• Underlying operating costs increased by £101 million to £2,853 million in 2025 compared to £2,752 million in 2024, reflecting strategic

investment (including planned high severance), business growth costs and inflationary pressures, partially offset by cost savings from

investment and continued cost discipline

• Remediation decreased by £77 million to £27 million in 2025 compared to £104 million in 2024, relating to a small number of rectification

programmes

• Underlying impairment charge of £60 million in 2025 compared to a credit of £14 million in 2024which benefitted from the improved

economic outlook. 2025 included model calibration benefits alongside strong credit performance particularly in the second half of the year

which more than offset higher Stage 3 charges observed in the first half of the year

Insurance, Pensions and Investments

Insurance, Pensions and Investments (IP&I) serves over 10 million customers, holds a top three market share across Home, Workplace and

Individual Annuities businesses. The Group continues to invest significantly in the business. This includes enhancing investment propositions,

supporting the Group's Wealth and Mass Affluent strategy, driving digitisation in customer facing and operational platforms, innovating

intermediary propositions and contributing to the transition to a low carbon economy.

Reference is made to "Note 4: Segmental analysis" on **pages 228 to 232 of the Annual Report 2025**for a summary of the Insurance, Pensions

and Investments division's underlying profit.

• Underlying profit from Insurance, Pensions and Investments was £110 millionhigher at £330 million compared to an underlying profit of

£220 million in 2024 primarily as a result of an increase of £124 million in underlying income

• Underlying net interest income was stable at a loss of £151 million (2024: a loss of £136 million. Underlying other income increased by £139

million, or 11% to £1,431 million from £1,292 million in 2024, driven by higher net general insurance and workplace pension business income,

alongside the integration of Schroders Personal Wealth in the fourth quarter

• Underlying operating costs were £9 million higher at £933 million (2024: £924 million) reflecting strategic investment, inflationary pressures

and the impact of the full acquisition of Schroders Personal Wealth in the fourth quarter, partially offset by cost savings from investment

and continued cost discipline

• Remediation decreased by £4 million to £15 million in 2025 compared to £19 million in 2024

---

| | |
|:---|:---|
| **14** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

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**Part I** continued

Other

Other includes the Group's equity investment businesses, including LDC, Lloyds Living, the Housing Growth Partnership (HGP), the Group's

share of the Business Growth Fund (BGF) and the MADE Partnership joint venture. LDC is a leading private equity investor, supporting more

than 90 growing SMEs that span all regions and sectors of the UK economy and employ over 25,000 people. LDC has almost £2.3 billion assets

under management. Lloyds Living is the Group's residential landlord business with 7,750 homes in operation or contracted as at 31 December

2025. Equity Investments and Central Items also includes income and expenses not attributed to the divisions, including residual underlying net

interest income after transfer pricing.

Reference is made to "Note 4: Segmental analysis" on **pages 228 to 232 of the Annual Report 2025**for a summary of the remaining items of the

Company's underlying profit.

Underlying profit in 2025 was higher compared to 2024, primarily as a result of an increase in underlying other income of £92 million, partly

offset by a reduction of £63 millionin underlying total costs. Underlying net interest income decreased in 2025 given increased funding costs to

support volume growth in the Group's equity and direct investment business, alongside lower divisional recharges from a reduction in structured

medium-term note and AT1 distribution costs. Underlying other income includes £579 million (2024: £502 million) generated by the Group's

equity and direct investment businesses, increasing versus 2024 as a result of strong income growth from Lloyds Living, partially offset by lower

income from LDC. Underlying total costs of £163 million in 2025decreased by 28% on the prior year, including the effects of lower remediation

costs.

**Environmental matters**

Reference is made to the sections titled:

• "Sustainability review" on **pages 35 to 49 of the Annual Report 2025**;

• "Climate risk" on **pages 150 to 152of the Annual Report 2025**; and

• "Sustainability governance" on **pages 80 to 81 of the Annual Report 2025**

**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" in the 6-K Risk Factors and the section titled "Regulation" under Item 4.B - "Business Overview".

**Risk management**

Included in the sections 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. Reference is made to:

• "Risk management" on **pages 138 to 143 of the Annual Report 2025**;

• "Capital risk" on **pages 144 to 145 and pages 147 to 150 of the Annual Report 2025**; and

• "Capital returns" and "Minimum requirement for own funds and eligible liabilities (MREL)" on **pages 145 and 146 of the Annual Report 2025**

• "Climate risk" on **pages 150 to 152of the Annual Report 2025**;

• "Compliance risk" on **page 152 of the Annual Report 2025**;

• "Conduct risk" on **page 153 of the Annual Report 2025**;

• "Economic crime risk" on **page 179 of the Annual Report 2025**;

• "Insurance underwriting risk" on **page 180 of the Annual Report 2025**;

• "Liquidity risk" on **pages 181 to 186 of the Annual Report 2025**;

• "Market risk" on **pages 187 to 193 of the Annual Report 2025**;

• "Model risk" on **page 194 of the Annual Report 2025**; and

• "Operational risk" on **pages 195 to 197 of the Annual Report 2025**

---

| | |
|:---|:---|
| **15** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

**Credit risk**

**Definition**

Credit risk is defined as the risk that parties with whom the Group has contracted fail to meet their financial obligations (both on and off-

balance sheet).

**Level two risks**

Retail credit (**page** **[19](#icdd352f3b1df4847990d7e0f02279f55_6542)**), Commercial credit (**page [21](#icdd352f3b1df4847990d7e0f02279f55_6543)**)

Included in the sections 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. Reference is made to:

• "Risk appetite" on **page 154 of the Annual Report 2025**;

• "Identification and assessment" on **page 154 of the Annual Report 2025**;

• "Management and mitigation" on **pages 154 to 157 of the Annual Report 2025**;

• "Monitoring" on **page 157 of the Annual Report 2025**; and

• "Reporting" on **page 157 of the Annual Report 2025**.

**The 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 £795 million, up from £431 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 expected credit loss (ECL) allowance was lower in 2025 at £3,228million (31 December 2024: £3,481 million) following

strong credit performance and additional benefits from model refinements.

Stage 2 loans and advances to customers are lower at £42,679million versus the prior year (31 December 2024: £44,765 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 8.8% of total lending (31 December 2024: 9.7%with Stage 2 coverage reducing slightly at2.7% (31 December

2024: 2.9%).

Stage 3 loans and advances to customers are lower at £6,526million versus the prior year (31 December 2024:£6,716million), and as a

percentage of total lending at 1.3%(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%).

**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** <br>**securities**<br>**£m**<br>| **Financial**<br>**assets at**<br>**fair value**<br>**through other**<br>**comprehensive**<br>**income**<br>**£m** | **Other**<br>**£m**<br>| **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 <br>Banking<br>| **(53)** | **–** | **–** | **–** | **–** | **–** | **(53)** | 47 |
| Corporate and Institutional <br>Banking<br>| **166** | **–** | **–** | **–** | **–** | **(53)** | **113** | (61) |
| Commercial Banking | **113** | **–** | **–** | **–** | **–** | **(53)** | **60** | (14) |
| Insurance, Pensions and <br>Investments<br>| **–** | **–** | **–** | **–** | **2** | **–** | **2** | (9) |
| Other | **–** | **–** | **–** | **(1)** | **–** | **–** | **(1)** | (3) |
| **Total impairment charge (credit)** | **867** | **–** | **–** | **(1)** | **2** | **(73)** | **795** | 431 |

---

---

| | |
|:---|:---|
| **16** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

**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 | **3011** | 3191 |
| Undrawn | **197** | 270 |
|  | **3208** | 3461 |
| Loans and advances to banks | **1** | 1 |
| Debt securities | **5** | 4 |
| Other assets | **14** | 15 |
| **Total expected credit loss allowance** | **3228** | 3481 |

---

**Movements in total expected credit loss allowance**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Opening ECL <br>at 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 | 504 | **(106)** | **113** | **7** | **511** |
| Commercial Banking | 989 | **(161)** | **60** | **(101)** | **888** |
| Insurance, Pensions and Investments | 15 | **(3)** | **2** | **(1)** | **14** |
| Other | 1 | **1** | **(1)** | **–** | **1** |
| **Total**<sup>2</sup> | 3481 | **(1048)** | **795** | **(253)** | **3228** |

---

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

<sup>2</sup>Total ECL includes £20 million relating to other non-customer-related assets (31 December 2024: £20 million).

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

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

generating four economic scenarios to reflect the range of outcomes; the central scenario reflects the Group's base case assumptions used for

medium-term planning purposes, an upside and a downside scenario are also selected together with a severe downside scenario. If the base

case moves adversely, it generates a new, more adverse downside and severe downside which are then incorporated into the ECL. Consistent

with prior years, the base case, upside and downside scenarios carry a 30% weighting; the severe downside is weighted at 10%.

The following table shows the Group's ECL for the probability-weighted, upside, base case, downside and severe downside scenarios. 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 £366 million compared to £445 million 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>|
| UK mortgages | **731** | **341** | **510** | **937** | **1943** |
| Credit cards | **603** | **498** | **579** | **674** | **777** |
| Other Retail | **991** | **922** | **969** | **1036** | **1126** |
| Commercial Banking | **888** | **690** | **789** | **1010** | **1414** |
| Other | **15** | **15** | **15** | **15** | **15** |
| **At 31 December 2025** | **3228** | **2466** | **2862** | **3672** | **5275** |
| UK mortgages | 852 | 345 | 567 | 1064 | 2596 |
| Credit cards | 674 | 518 | 641 | 773 | 945 |
| Other Retail | 950 | 843 | 923 | 1010 | 1172 |
| Commercial Banking | 989 | 745 | 889 | 1125 | 1608 |
| Other | 16 | 16 | 16 | 16 | 17 |
| At 31 December 2024 | 3481 | 2467 | 3036 | 3988 | 6338 |

---

---

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

---

**Part I** 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**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **At 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>| **Stage 2 as % of** <br>**total%**<br>| **Stage 3 as % of** <br>**total%**<br>|
| **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 | **59658** | **2035** | **778** | **–** | **62471** | **3.3** | **1.2** |
| Commercial Banking | **84020** | **5364** | **1757** | **–** | **91141** | **5.9** | **1.9** |
| Other<sup>1</sup> | **540** | **–** | **–** | **–** | **540** | **–** | **–** |
| **Total gross lending** | **430193** | **42679** | **6526** | **5076** | **484474** | **8.8** | **1.3** |
| **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 | **107** | **136** | **263** | **–** | **506** |  |  |
| Commercial Banking | **199** | **301** | **383** | **–** | **883** |  |  |
| Other | **–** | **–** | **–** | **–** | **–** |  |  |
| **Total** | **850** | **1160** | **1039** | **159** | **3208** |  |  |
| **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** | **6.7** | **33.8** | **–** | **0.8** |  |  |
| Commercial Banking | **0.2** | **5.6** | **21.8** | **–** | **1.0** |  |  |
| Other | **–** | **–** | **–** | **–** | **–** |  |  |
| **Total** | **0.2** | **2.7** | **15.9** | **3.1** | **0.7** |  |  |

---

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

<sup>2</sup>UK Motor Finance includes £243 million relating to provisions against residual values of vehicles subject to finance leases.

---

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

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**Part I** continued

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| At 31 December 2024 | Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>| Stage 2 as % of <br>total%<br>| Stage 3 as % of <br>total%<br>|
| Loans and advances to customers |  |  |  |  |  |  |  |
| UK mortgages | 269760 | 32995 | 4166 | 6207 | 313128 | 10.5 | 1.3 |
| Credit cards | 13534 | 2441 | 265 | – | 16240 | 15.0 | 1.6 |
| UK unsecured loans and overdrafts | 9314 | 1247 | 175 | – | 10736 | 11.6 | 1.6 |
| UK Motor Finance | 13897 | 2398 | 124 | – | 16419 | 14.6 | 0.8 |
| Other | 17373 | 516 | 147 | – | 18036 | 2.9 | 0.8 |
| Retail | 323878 | 39597 | 4877 | 6207 | 374559 | 10.6 | 1.3 |
| Business and Commercial Banking | 25785 | 3172 | 1197 | – | 30154 | 10.5 | 4.0 |
| Corporate and Institutional Banking | 55692 | 1996 | 642 | – | 58330 | 3.4 | 1.1 |
| Commercial Banking | 81477 | 5168 | 1839 | – | 88484 | 5.8 | 2.1 |
| Other<sup>1</sup> | 5 | – | – | – | 5 | – | – |
| Total gross lending | 405360 | 44765 | 6716 | 6207 | 463048 | 9.7 | 1.5 |
| Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) | Customer related ECL allowance (drawn and undrawn) |
| UK mortgages | 55 | 275 | 335 | 187 | 852 |  |  |
| Credit cards | 210 | 331 | 133 | – | 674 |  |  |
| UK unsecured loans and overdrafts | 170 | 235 | 118 | – | 523 |  |  |
| UK Motor Finance<sup>2</sup> | 173 | 115 | 72 | – | 360 |  |  |
| Other | 16 | 14 | 37 | – | 67 |  |  |
| Retail | 624 | 970 | 695 | 187 | 2476 |  |  |
| Business and Commercial Banking | 132 | 187 | 166 | – | 485 |  |  |
| Corporate and Institutional Banking | 122 | 129 | 249 | – | 500 |  |  |
| Commercial Banking | 254 | 316 | 415 | – | 985 |  |  |
| Other | – | – | – | – | – |  |  |
| Total | 878 | 1286 | 1110 | 187 | 3461 |  |  |
| 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 | 0.2 | 6.5 | 38.8 | – | 0.9 |  |  |
| Commercial Banking | 0.3 | 6.1 | 22.6 | – | 1.1 |  |  |
| Other | – | – | – | – | – |  |  |
| Total | 0.2 | 2.9 | 16.5 | 3.0 | 0.7 |  |  |

---

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

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

---

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

---

**Part I** 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>| **1888** | **135** | **7.2** | **21** | **–** | **–** | **7** | **1** | **14.3** | **119** | **–** | **0.0** |
| Commercial Banking | **4655** | **268** | **5.8** | **279** | **15** | **5.4** | **220** | **13** | **5.9** | **210** | **5** | **2.4** |
| **Total** | **35054** | **812** | **2.3** | **4612** | **163** | **3.5** | **1720** | **115** | **6.7** | **1293** | **70** | **5.4** |
| 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>| **1903** | **125** | **6.6** | **45** | **1** | **2.2** | **6** | **–** | **–** | **42** | **3** | **7.1** |
| Commercial Banking | **4348** | **279** | **6.4** | **471** | **19** | **4.0** | **182** | **10** | **5.5** | **167** | **8** | **4.8** |
| Total | **37356** | **899** | **2.4** | **4278** | **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.

**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 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 to1.2%

of total loans and advances (31 December 2024: 1.3%)

• Stage 3 ECL coverage reduced to13.8% (31 December 2024: 14.3%), largely due to continued house price increases

---

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

---

**Part I** continued

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 £194million 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 to9.4 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 to1.2% (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: £16.2billion), 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 at3.4% (31 December 2024:4.2%)

• Stable credit performance and higher portfolio balances resulted in a reduction in Stage 2 loans and advances to13.0% of total credit card

balances (31 December 2024: 15.0%), with lower Stage 2 ECL coverage at11.9% (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 £12.2billion (2024: £10.7billion) 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

to11.5% 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 at1.6%(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: £178million)

• The impairment charge of £212 million for 2025 is higher than the charge of £116million 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 to16.2% (31 December 2024: 14.6%)

• Stage 3 loans and advances remained stable at0.8% (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 £21.8billion (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 at0.7% 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

---

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

---

**Part I** 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 £10.0 billion in 2025 (net of £2.6billion 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 £60million, versus a credit of £14 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 £883 million in 2025 (31 December 2024: £985 million), also as a result of favourable model updates

partially offset by single name cases

• Stage 2 loans and advances increased to £5,364 million (31 December 2024: £5,168 million). Stage 2 as a proportion of total loans and

advances to customers is stable at 5.9% (31 December 2024: 5.8%) with stable credit performance and model updates resulting in lower

Stage 2 ECL coverage at 5.6% (31 December 2024: 6.1%)

• Stage 3 loans and advances decreased to £1,757 million (31 December 2024: £1,839 million) and as a proportion of total loans and advances

to customers to 1.9% (31 December 2024: 2.1%), 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 £62.5 billion (31 December 2024: £58.3 billion), reflecting growth in Institutional balances

including securitised products, alongside corporate infrastructure growth

• A net impairment charge of £113 million in 2025 compares to an impairment credit of £61 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 increased to £2,035 million (31 December 2024: £1,996 million). Stage 2 as a proportion of total loans and

advances to customers is stable at 3.3% (31 December 2024: 3.4%), with Stage 2 ECL coverage at 6.7%(31 December 2024: 6.5%)

• Stage 3 loans and advances increased to £778 million (31 December 2024: £642 million) and as a proportion of total loans and advances to

customers to 1.2% (31 December 2024: 1.1%), 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 33.8% (31 December 2024: 38.8%) following the write-off of a large longstanding case that was fully

provided for

Included in the sections 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. Reference is made to:

• "Movements in balances for the year ended 31 December 2025 (audited)" on **page 164 of the Annual Report 2025**;

• "Movements in balances for the year ended 31 December 2024 (audited)" on **page 165 of the Annual Report 2025**;

• "Concentrations of exposure (audited)" on **page 165 of the Annual Report 2025**;

• "Forbearance" on **page 166 of the Annual Report 2025**;

• "Credit quality of loans and advances to customers (audited)" on **pages 166 to 168 of the Annual Report 2025**;

• "Retail UK mortgage balance movements (audited)" on **page 170 of the Annual Report 2025**;

• "UK mortgages product analysis (statutory basis)" on **page 171 of the Annual Report 2025**;

• "Interest-only UK mortgages" on **page 171 of the Annual Report 2025**;

• "Collateral held as security for Retail loans and advances to customers (audited)" on **page 172 of the Annual Report 2025**;

• "Other Retail lending" and "Retail credit card balance movements (audited)" on **page 173 of the Annual Report 2025**;

• "Commercial Banking balance movements (audited)" on **page 175 of the Annual Report 2025**;

• "Collateral held as security for Commercial Banking loans and advances to customers (audited)" on **page 176 of the Annual Report 2025**;

• "Commercial Banking UK Real Estate" on **page 176 of the Annual Report 2025**;

• "Credit quality of other financial assets (audited)" on **page 177 of the Annual Report 2025**; and

• "Collateral held as security for other financial assets (audited)" on **page 178 of the Annual Report 2025**

---

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

---

**Part I** continued

**Glossary**

---

| | |
|:---|:---|
| **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. |
| Broking | Brokerage. |
| 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 <br>investment.<br>|
| Called-up share capital | Ordinary shares, issued and fully paid. |
| Contract hire | Leasing. |
| Creditors | Payables. |
| Debtors | Receivables. |
| Deferred tax | Deferred income tax. |
| 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 <br>the land or property reverts back to the owner.<br>|
| Life assurance | Life insurance. |
| Net income | Profit before tax, excluding total costs and underlying impairment |
| Nominal value | Par value. |
| Open Ended Investment Company (OEIC) | Mutual fund. |
| Ordinary shares | Common stock. |
| Overdraft | A line of credit, contractually repayable on demand unless a fixed-term has been agreed, established through a <br>customer's current account.<br>|
| Preference shares | Preferred stock. |
| Premises | Real estate. |
| Profit attributable to equity shareholders | Net income. |
| Provisions | Reserves. |
| Regular premium | Premiums which are payable throughout the duration of a policy or for some shorter fixed period. |
| Reinsurance | The insuring again by an insurer of the whole or part of a risk that it has already insured with another insurer <br>called a reinsurer.<br>|
| 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 <br>income. New mortgage lending of this type has not been offered by the Group since early 2009.<br>|
| Undistributable reserves | Restricted surplus. |
| Write-offs | Charge-offs. |

---

Reference is made to the sections titled:

• "Regulation" under Item 4.B - "Business overview" on **page [8](#id846e96c95884edea25f7ad1407ed8f4_91)**;

• "Group structure and ring-fencing governance arrangements" under Item 4.B - "Business overview" on **page [5](#id846e96c95884edea25f7ad1407ed8f4_85)**; and

• "Legal actions and regulatory matters" under Item 8 - "Financial Information" on **page [26](#id846e96c95884edea25f7ad1407ed8f4_343)**.

**B.Liquidity and capital resources**

Reference is made to the sections titled:

• "Capital risk" on **pages 144 to 145 and pages 147 to 150 of the Annual Report 2025**; and

• "Capital returns" and "Minimum requirement for own funds and eligible liabilities (MREL)" on **pages 145 and 146 of the Annual Report 2025**

• "Liquidity risk" on **pages 181 to 186 of the Annual Report 2025**;

• "Market risk" on **pages 187 to 193 of the Annual Report 2025**;

• "Note 16: Measurement basis of financial assets and liabilities" on **pages 255 to 256 of the Annual Report 2025**;

• "Note 19: Derivative financial instruments" on **pages 269 to 271 Annual Report 2025**; and

• "Note 36: Contingent liabilities, commitments and financial guarantees - Capital commitments" on **pages 291 to 292 of the Annual Report** 

**2025**

for information on the liquidity and capital resources.

---

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

---

**Part I** continued

**Investment portfolio, maturities, deposits**

Reference is made to the sections titled:

• "Investment portfolio, maturities, deposits" section under Item 4.B - "Business overview" on **page [7](#id846e96c95884edea25f7ad1407ed8f4_112)**; and

• "Liquidity risk - Analysis of 2025 term issuance (audited)" on **page 183 of the Annual Report 2025**

The majority of the Group cash and cash equivalents are held in sterling.

**C.Research and development, patents and licenses etc.**

Reference is made to the section titled "Other statutory and regulatory information - Research and development activities" on **page 135 of the** 

**Annual Report 2025.**

**D.Trend information**

Reference is made to the "Our external environment" section on **pages 10 to 13 of the Annual Report 2025** for information on trend

information.

**E.Critical accounting estimates**

Reference is made to "Note 3: Critical accounting judgements and key sources of estimation uncertainty" on **page 228 of the Annual Report** 

**2025**for information on critical accounting estimates.

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

**A.Directors and senior management**

The Group is led by the Board comprising a Chair (who was independent on appointment), independent non-executive directors and executive

directors with a wide range of experience. The appointment of directors is considered by the Nomination and Governance Committee and

approved by the Board. Following the provisions in the articles of association, directors must stand for election by the shareholders at the first

annual general meeting following their appointment. In line with UK Corporate Governance best practice, all directors are subject to annual re-

election by shareholders at each annual general meeting thereafter. The service contracts of all current executive directors are terminable on 12

months' notice from the Group and six months' notice from the individual. The Chair also has a letter 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 Board meets regularly. In 2025, a total of 10 meetings were held.

The roles of the Chair, the Group Chief Executive and the Board and its governance arrangements, including the schedule of matters specifically

reserved to the Board for decision, are periodically reviewed. The matters reserved to the Board for decision include the approval of the annual

report and accounts and any other financial statements; the payment of dividends; the long-term objectives of the Group; the strategies

necessary to achieve these objectives; the Group's medium-term plan and annual budget; significant investments and disposals; the basis of

allocation of capital within the Group; the organisational structure of the Group; the arrangements for ensuring that the Group manages risks

effectively; any significant change in accounting policies or practices; the appointment of the Company's main professional advisers and their

fees (where material) other than the external auditors, whose fees are (subject to shareholder approval) approved by a Committee of the

Board; and the determination of Board and Committee structures, together with their size and composition.

According to the articles of association, the business and affairs of the Company are managed by the directors, who have delegated to

management the power to make decisions on operational matters, including those relating to credit, liquidity and market risk, within an agreed

framework.

All directors have access to the services of the Company Secretary and independent professional advice is available to the directors at the

Group's expense, where they judge it necessary to discharge their duties as directors.

The Chair has a private discussion at least once a year with each director on a wide range of issues affecting the Group, including any matters

which the directors, individually, wish to raise.

There is an induction programme for all directors, which is tailored to their specific requirements having regard to their specific role on the

Board and their skills and experience to date.

Reference is made to the sections titled:

• "Our Board" on **pages 68 to 69 of the Annual Report 2025**;

• "Our Group Executive Committee" on **page 71 of the Annual Report 2025**;

• "Our governance structure and responsibilities" on **pages 72 to 73 of the Annual Report 2025;**

• "Board activities" on **pages 74 to 75 of the Annual Report 2025;**

• "Engaging with our stakeholders" on **pages 76 to 78 of the Annual Report 2025;**

• "Our culture in action" on **page 79 of the Annual Report 2025;**

• "Sustainability governance" on **pages 80 to 81 of the Annual Report 2025;** and

• "Board performance" on **pages 82 to 83 of the Annual Report 2025**.

---

| | |
|:---|:---|
| **24** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

**B.Compensation**

For information on compensation, reference is made to the sections titled:

• "Directors' remuneration report" on **pages 98 to 110, pages 112 to 116 and pages 118 to 133** **of the Annual Report 2025** (note the Director's

remuneration report has not been audited under PCAOB standards);

• "Note 10: Operating expenses" on **page 242 of the Annual Report 2025**;

• "Note 11: Share-based payments" on **pages 243 to 245 of the Annual Report 2025;** and

• "Note 12: Retirement benefit obligations" on **pages 245 to 250 of the Annual Report 2025.**

**C.Board practices**

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

For information on board practices, reference is made to the sections titled:

• "Our Board" on **pages 68 to 69 of the Annual Report 2025**;

• "Board performance" on **pages 82 to 83 of the Annual Report 2025;**

• "Nomination and Governance Committee report" on **pages 85 to 86 of the Annual Report 2025**;

• "Audit Committee report" on **pages 88 to 91 of the Annual Report 2025**(except for the section titled "Viability statement" on **page 90 of** 

**the Annual Report 2025**, which is not incorporated by reference in this Annual Report on Form 20-F);

• "Board Risk Committee report" on **pages 92 to 96 of the Annual Report 2025;**

• "Responsible Business Committee report" **on page 97 of the Annual Report 2025;**

• "Remuneration Committee Chair's statement" on **pages 98 to 102 of the Annual Report 2025**;

• "Remuneration Committee" on **page 105 of the Annual Report 2025**;

• "2023 Directors' Remuneration Policy summary and 2025 implementation" on **pages 106 to 107 of the Annual Report 2025**; and

• "Service agreements" and "Letters of appointment" on **pages 130 to 131** **of the Annual Report 2025.**

**D.Employees**

As at 31 December 2025, the Group employed 60,061 people (on a full-time equivalent basis), compared with 61,228 at 31 December 2024 and

62,569 at 31 December 2023. At 31 December 2025, 55,266 employees were located in the UK, 760 in continental Europe, 185 in the Americas,

and 3,851 in the rest of the world. At the same date, 27,574 people were employed in Retail, 7,955 in Commercial Banking, 6,025 in Insurance,

Pensions and Investments, and 18,507 in other functions. Within Retail, Commercial Banking, Insurance, Pensions and Investments and other

functions there were 659 agency staff. During 2025, the Group's non-permanent worker population increased by 2.6% to 24,005 at 31

December 2025, with an average of 23,879 during the year.

The Group has the Code of Ethics and Responsibility which applies to all employees. The Code of Ethics and Responsibility can be found at:

**https://www.lloydsbankinggroup.com/sustainability/esg-policies-downloads.html.**

An evolved approach to colleague engagement and collective representation was implemented during 2025. This new approach introduced

three forums to better represent colleagues at grades where trade union membership is low. The forums include the People Forum, the People

Consultation Forum, and the Management Advisory Forum. The Group also recognises two Trade Unions for collective bargaining purposes at

the three most junior grades. The Group also continues its engagement with Works Councils.

**E.Share ownership**

Reference is made to the section titled "Note 2(K): Accounting Policies (Employee benefits)" on **page 223 of the Annual Report 2025**and "Note

11: Share-based payments" on**pages 243 to 245 of the Annual Report 2025**for information on share ownership.

Reference is made to the tables titled "Directors' share interests and share awards (audited)", "Outstanding share plan interests (audited)" and

"Outstanding cash awards (audited)" on **pages 114 to 115 of the Annual Report 2025.**

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

There was no erroneously awarded compensation to management.

In 2023, the Group introduced a separate Performance Adjustment Policy which is specifically designed to comply with SEC rules which require

listed firms in the US (including foreign issuers such as Lloyds Banking Group) 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. ---

| | |
|:---|:---|
| **25** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

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

**A.Major shareholders**

All shareholders within a class of the Company's shares have the same voting rights. As at 5 February 2026 the Company had received

notification under the FCA Disclosure Guidance and Transparency Rules ('DTR') of the following holdings in the Company's issued ordinary share

capital.

---

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

---

1On 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.

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

3The 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 the Company representing 5.04% of

the voting rights in the Company as at 12 May 2015, and (ii) a holding of 69,305,385 in other financial instruments in respect of the Company representing 0.09% of the voting rights

of the Company as at 12 May 2015. BlackRock, Inc.'s holding most recently notified to the Company 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 the Company representing 8.4% of the issued share

capital in the Company. This variance is attributable to different notification and disclosure requirements between these regulatory regimes. The notifiable holding by BlackRock,

Inc. received by the Company has not changed since 31 December 2015. Prior to 31 December 2015, BlackRock, Inc.'s holding in the Company was not required to be disclosed under

the SEC rules.

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

As at 5 February 2026, the Company had 2,044,799 registered ordinary shareholders. The majority of the Company's ordinary shareholders are

registered in the United Kingdom. 2,400,874,341 ordinary shares, representing 4.07% of the Company'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 the Company's preference shareholders are registered in the United Kingdom, with a further one record holder with

an address in the United States registered through the Company's preference share American Depositary Share Programme.

**B.Related party transactions**

Reference is made to the section titled "Note 35: Related party transactions" on **pages 290 to 291** **of the Annual Report 2025**for information

on related party transactions.

**C.Interests of experts and counsel**

Not applicable.

**Item 8. Financial Information**

**A.Consolidated statements and other financial information**

The "Consolidated Financial Statements" and "Notes to the Consolidated Financial Statements", on **pages 211 to 296 of the Annual Report** 

**2025**are incorporated herein by reference.

See also Item 18 - "Financial Statements" on **page [33](#id846e96c95884edea25f7ad1407ed8f4_505)**. The audit opinion of Deloitte LLP (PCAOB ID No. 1147) is also included in Item 18.

**Dividends and share buybacks**

The Company'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, a company cannot pay a dividend if any of its UK insurance subsidiaries is insolvent on a regulatory valuation

basis or, in the case of regulated entities, if the payment of a dividend results in regulatory capital requirements not being met. Similar

restrictions exist over the ability of the Company's subsidiary companies to pay dividends to their immediate parent companies. Furthermore, in

the case of the Company, 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. In making this

decision, the board is mindful of the level of dividend cover and, consequently, profit growth may not necessarily result in increases in the

dividend. In the case of American Depositary Shares, dividends are paid through The Bank of New York Mellon which acts as paying and transfer

agent.

The Group has a progressive and sustainable ordinary dividend policy whilst maintaining the flexibility to return further surplus capital through

buybacks or special dividends.

In February 2025, the Board approved an ordinary share buyback programme of up to £1.7 billion to return surplus capital in respect of 2024.

This commenced in February 2025 and completed in December 2025, with c.2.2 billion ordinary shares repurchased.

In respect of 2025, the Board has recommended a final ordinary dividend of 2.43 pence per share, which, together with the interim ordinary

dividend of 1.22 pence per share totals 3.65 pence per share, an increase of 15% compared to 2024, in line with the Board's commitment to a

progressive and sustainable ordinary dividend. On 30 January 2026, the Group announced the launch of an ordinary share buyback of up to

£1.75 billion, which is expected to be completed, subject to continued authority from the PRA, by 31 December 2026.

Based on the total ordinary dividend and the announced ordinary share buyback the total capital return in respect of 2025 will be up to

£3.9 billion, equivalent to c.6% (as at 26 January 2026) of the Group's market capitalisation value.

The table below sets out the interim and final dividends declared in respect of the ordinary shares for fiscal years 2021 through 2025. The

Sterling amounts have been converted into US Dollars at the Noon Buying Rate in effect on each payment date with the exception of the

recommended final dividend for 2025, for which the Sterling amount has been converted into US Dollars at the Noon Buying Rate on 5 February

2026. ---

| | |
|:---|:---|
| **26** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Interim**<br>**ordinary**<br>**dividend**<br>**per share**<br>**(pence)**<br>| **Interim**<br>**ordinary**<br>**dividend**<br>**per share**<br>**(cents)**<br>| **Final**<br>**ordinary**<br>**dividend**<br>**per share**<br>**(pence)**<br>| **Final**<br>**ordinary**<br>**dividend**<br>**per share**<br>**(cents)**<br>|
| 2021 | 0.67 | 0.93 | 1.33 | 1.66 |
| 2022 | 0.80 | 0.94 | 1.60 | 1.99 |
| 2023 | 0.92 | 1.15 | 1.84 | 2.32 |
| 2024 | 1.06 | 1.38 | 2.11 | 2.66 |
| **2025** | **1.22** | **1.65** | **2.43** | **3.29** |

---

**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 28: Provisions" on **pages 283 to** 

**285 of the Annual Report 2025**and its contingent liabilities relating to other legal actions and regulatory matters is set out in "Note 36:

Contingent liabilities, commitments and financial guarantees" on **pages 291 to 292 of the Annual Report 2025**.

**B. Significant changes**

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

**Item 9. The Offer and Listing**

**A.Offer and listing details**

The ordinary shares of the Company are listed and traded on the London Stock Exchange under the symbol 'LLOY'. The prices for shares as

quoted in the official list of the London Stock Exchange are in pounds Sterling.

The Company's American Depositary Shares (ADSs) are listed on the New York Stock Exchange (NYSE) under the symbol 'LYG'. Each ADS

represents four ordinary shares.

**B.Plan of distribution**

Not applicable.

**C.Markets**

Please refer to Item 9.A - "Offer and listing details" on **page [26](#id846e96c95884edea25f7ad1407ed8f4_352)**. In addition, as shown in the cover of this Annual Report on Form 20-F, certain

debt securities issued by the Company are listed and traded on the NYSE, and the Company's Additional Tier 1 Securities also listed in the cover

of this Annual Report on Form 20-F are listed and traded on Euronext Dublin.

**D.Selling shareholders**

Not applicable.

**E.Dilution**

Not applicable.

**F.Expenses of the issue**

Not applicable.

**Item 10. Additional Information**

**A.Share capital**

Not applicable.

**B.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 28 February 2022, which discussion is hereby incorporated by reference

into this Annual Report on Form 20-F.

**C.Material contracts**

The Company 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 Lloyds Banking Group plc or any member of the Group became a party

in 2025.

**D.Exchange controls**

There are no UK laws, decrees or regulations that restrict the Company's import or export of capital, including the availability of cash and cash

equivalents for use by Lloyds Banking Group, or that affect the remittance of dividends, interest or other shareholders' payments to non-UK

holders of the Company's shares, except as set out in Taxation.

---

| | |
|:---|:---|
| **27** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

**E.Taxation**

The following discussion is intended only as a general guide to current UK and US federal income tax considerations relevant to US holders (as

defined below in the section on US federal income tax considerations) of Lloyds Banking Group ordinary shares or ADSs who are not resident in

the UK for UK tax purposes. It is based on current law and tax authority practice and the terms of the current UK/US income tax treaty (the

Treaty), all of which are subject to change at any time, possibly with retroactive effect.

This summary does not consider your personal circumstances, and it is not a substitute for tax advice. Any person who is in any doubt as to their

tax position should consult their own professional adviser.

**UK taxation of chargeable gains**

Subject to the provisions set out in the next paragraph in relation to temporary non-residents, US holders generally will not be liable for UK tax

on chargeable gains unless they carry on a trade, profession or vocation in the UK through a branch or agency and the ordinary shares or ADSs

are or have been used or held by or for the purposes of the branch or agency, in which case such US holders might, depending on individual

circumstances, be liable to UK tax on chargeable gains on any disposition of ordinary shares or ADSs.

An individual US holder who is only temporarily not resident in the UK may, under anti-avoidance legislation, still be liable for UK tax on

chargeable gains realised, subject to any available exemption, relief and/or foreign tax credit.

**UK taxation of dividends**

The Company will not be required to withhold tax at source when paying a dividend on the ordinary shares or ADSs to a US holder.

**Stamp duty and stamp duty reserve tax**

Any conveyance or transfer on sale of ordinary shares (whether effected using the CREST settlement system or not) will be subject to UK stamp

duty or stamp duty reserve tax (SDRT). The transfer on sale of ordinary shares will be liable to ad valorem UK stamp duty or SDRT, generally at

the rate of 0.5% of the consideration paid (rounded up to the next multiple of £5 in the case of stamp duty). Stamp duty is usually the liability

of the purchaser or transferee of the ordinary shares. An unconditional agreement to transfer such ordinary shares will be liable to SDRT,

generally at the rate of 0.5% of the consideration paid, but such liability will be cancelled, or, if already paid, refunded, if the agreement is

completed by a duly stamped transfer within six years of the agreement having become unconditional. SDRT is normally the liability of the

purchaser or transferee of the ordinary shares.

UK tax law provides that when a holder of ordinary shares transfers such shares to the custodian or nominee for the depositary to facilitate the

issue of ADSs to a person representing the ordinary shares or to a person providing clearance services (or their nominee or agent), a liability to

UK stamp duty or SDRT at the rate of 1.5% (rounded up to the next multiple of £5 in the case of stamp duty) of the listed price of the ordinary

shares, calculated in sterling, will arise. Where a holder of ordinary shares transfers such shares to the custodian or nominee for the depositary

or clearance services this charge will generally apply, and generally be payable by the person receiving the ADSs or transferring the ordinary

shares into the clearance service. However, such transfers of ordinary shares will not attract a liability to stamp duty or SDRT where they satisfy

the conditions of an exemption or relief, including exemptions which can apply to certain transfers made in the course of capital raising or

qualifying listing arrangements.

Specific professional advice should be sought before paying a 1.5% stamp duty or SDRT charge in any circumstances. No liability to stamp duty

or SDRT will arise as a result of the cancellation of any ADSs with the ordinary shares that they represent being transferred to the ADS holder.

No liability to UK stamp duty or SDRT will arise on a transfer of ADSs provided that any document that gives effect to such transfer is not

executed in the UK and remains at all subsequent times outside the UK. An agreement to transfer ADSs will not give rise to a liability to SDRT.

**US federal income tax considerations**

The following summary describes material US federal income tax consequences of the ownership and disposition of ADSs or ordinary shares to

the US holders described below, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant

to a decision to own such securities. The summary applies only to US holders that hold ADSs or ordinary shares as capital assets for US federal

income tax purposes.

This discussion does not address any minimum or Medicare Contribution tax consequences, nor does it address US federal tax consequences to

US holders that are subject to special rules, such as:

• certain financial institutions;

• dealers or electing traders in securities that use a mark-to-market method of tax accounting;

• persons holding ADSs or ordinary shares as part of a hedge, straddle, wash sale, conversion or other integrated transaction or holders

entering into a constructive sale with respect to ADSs or ordinary shares;

• persons whose functional currency for US federal income tax purposes is not the US Dollar;

• persons who acquired ADSs or ordinary shares pursuant to the exercise of any employee stock option or otherwise as compensation;

• tax-exempt entities, 'individual retirement accounts' or 'Roth IRAs';

• persons holding ADSs or ordinary shares in connection with a trade or business conducted outside of the United States;

• partnerships or other entities classified as partnerships for US federal income tax purposes; or

• persons that own or are deemed to own 10% or more (by vote or value) of the stock of the Company.

If an entity that is classified as a partnership for US federal income tax purposes owns ADSs or ordinary shares, the US federal income tax

treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships owning ADSs or

ordinary shares and partners in such partnerships should consult their tax advisers as to the particular US federal income tax consequences of

owning and disposing of the ADSs or ordinary shares.

This summary is based on the US Internal Revenue Code of 1986, as amended (the Code), administrative pronouncements, judicial decisions and

final, temporary and proposed Treasury Regulations, as well as the Treaty, all as of the date hereof, changes to any of which may affect the tax

consequences described herein, possibly with retroactive effect. It assumes that each obligation provided for in or otherwise contemplated by

the Deposit Agreement will be performed in accordance with its terms.

As used herein, a 'US holder' is a person that is, for US federal income tax purposes, a beneficial owner of ADSs or ordinary shares and:

• a citizen or individual resident of the United States;

• a corporation, or other entity taxable as a corporation, created or organised in or under the laws of the United States, any state therein or

the District of Columbia; or

• an estate or trust the income of which is subject to US federal income taxation regardless of its source.

In general, a US holder who owns ADSs should be treated as the owner of the underlying shares represented by those ADSs for US federal

income tax purposes. Accordingly, no gain or loss should be recognised if a US holder exchanges ADSs for the underlying shares represented by

those ADSs.

---

| | |
|:---|:---|
| **28** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

Owners of ADSs or ordinary shares should consult their tax advisers as to the US, UK or other tax consequences of the ownership and

disposition of such securities in their particular circumstances, including the effect of any US state or local tax laws.

**Taxation of distributions**

Distributions paid on ADSs or ordinary shares, other than certain pro rata distributions of ordinary shares, will generally be treated as dividends

to the extent paid out of the Company's current or accumulated earnings and profits (as determined in accordance with US federal income tax

principles). Because the Company does not maintain calculations of its earnings and profits under US federal income tax principles, it is

expected that distributions generally will be reported to US holders as dividends. The dividends will generally be foreign-source income to US

holders and will not be eligible for the dividends-received deduction generally allowed to US corporations under the Code.

Subject to applicable limitations, dividends paid to certain non-corporate US holders may be taxable at favourable rates. Non-corporate US

holders should consult their tax advisers to determine whether the favourable rates will apply to dividends they receive and whether they are

subject to any special rules that limit their ability to be taxed at these favourable rates.

Dividends will be included in a US holder's income on the date of the US holder's or, in the case of ADSs, the depositary's receipt of the

dividend. The amount of any dividend income will equal the US Dollar value of the pounds Sterling received, calculated by reference to the

exchange rate in effect on the date of receipt regardless of whether the payment is converted into US Dollars on the date of receipt. If the

pounds Sterling received as a dividend are not converted into US Dollars on the date of receipt, then the US holder's tax basis in the pounds

Sterling received will equal their US Dollar value on the date of receipt and the US holder may realise a foreign exchange gain or loss on the

subsequent conversion into US Dollars. Generally, any gains or losses resulting from the conversion of pounds Sterling into US Dollars will be

treated as US-source ordinary income or loss.

**Taxation of capital gains**

Gain or loss realised by a US holder on a sale or other disposition of ADSs or ordinary shares will generally be subject to US federal income tax as

capital gain or loss in an amount equal to the difference between the US holder's tax basis in the ADSs or ordinary shares disposed of and the

amount realised on the disposition, in each case as determined in US Dollars. Gains or losses, if any, will generally be US-source and will be long-

term if the US holder held the ADSs or ordinary shares for more than one year. The deductibility of losses is subject to limitations.

Any UK stamp duty or SDRT imposed upon transfers of ADSs or ordinary shares will not be treated as a creditable foreign tax for US federal

income tax purposes. US holders should consult their tax advisers regarding whether any such UK stamp duty or SDRT may be deductible or

reduce the amount of gain (or increase the amount of loss) recognised upon a sale or other disposition of the ADSs or ordinary shares.

**Information reporting and backup withholding**

Dividends paid on, and the sale proceeds from, ADSs or ordinary shares that are made within the US or through certain US-related financial

intermediaries may be subject to information reporting and backup withholding requirements unless the US holder:

• is a corporation or other exempt recipient, or

• in the case of backup withholding, provides a correct taxpayer identification number and certifies that it is not subject to backup

withholding.

The amount of any backup withholding from a payment to a US holder will be allowed as a credit against the US holder's US federal income tax

liability and may entitle it to a refund, provided that the required information is furnished on a timely basis to the Internal Revenue Service.

**F.Dividends and paying agents**

Not applicable.

**G.Statements by experts**

Not applicable.

**H.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.Subsidiary information**

Reference is made to the Item 4.C - "Organisational structure" on **page [10](#id846e96c95884edea25f7ad1407ed8f4_97)**.

**J.Annual Report to Security Holders**

The Company 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 [15](#id846e96c95884edea25f7ad1407ed8f4_7146825583971) to [21](#icdd352f3b1df4847990d7e0f02279f55_6847);**

• "Market Risk" on **pages 187 to 193 of the Annual Report 2025**; and

• "Note 39: Financial risk management" on **page 294 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 [6](#id846e96c95884edea25f7ad1407ed8f4_109)**.

---

| | |
|:---|:---|
| **29** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part I** continued

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

**A.Debt securities**

Not applicable.

**B.Warrants and rights**

Not applicable.

**C.Other securities**

Not applicable.

**D.American Depositary Shares**

**ADR fees**

The Company's American Depositary Shares (ADSs) are listed on the NYSE under the symbol "LYG". Each ADS represents four ordinary shares.

The Group's depositary, The Bank of New York Mellon (240 Greenwich Street, New York, New York 10286), collects its fees for delivery and

surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for

them. The depositary collects fees for making cash distributions to investors (including dividends) by deducting those fees from the amounts

distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by

deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them.

The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

---

| | |
|:---|:---|
| **Persons depositing or withdrawing shares must pay:** | **For:** |
| $5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | Issuance of ADSs, including issuances resulting from a distribution of <br>shares or rights or other property. <br>Cancellation of ADSs for the purpose of withdrawal, including if the <br>deposit agreement terminates.<br>|
| $.02 (or less) per ADS | Any cash distribution to ADS registered holders (including dividends). |
| A fee equivalent to the fee that would be payable if securities <br>distributed had been shares and the shares had been deposited for <br>issuance of ADSs<br>| Distribution of securities distributed to holders of deposited securities <br>which are distributed by the depositary to ADS registered holders.<br>|
| $.02 (or less) per ADSs per calendar year | Depositary services. |
| Registration or transfer fees | Transfer and registration of shares on the share register to or from the <br>name of the depositary or its agent when you deposit or withdraw <br>shares.<br>|
| Expenses of the depositary | Cable, telex and facsimile transmissions (when expressly provided in <br>the deposit agreement). <br>Converting foreign currency to US Dollars.<br>|
| Taxes and other governmental charges the depositary or the <br>custodian have to pay on any ADS or share underlying an ADS, for <br>example, stock transfer taxes, stamp duty or withholding taxes<br>| As necessary. |
| Any charges incurred by the depositary or its agents for servicing the <br>deposited securities<br>| As necessary. |

---

**Fees received to date**

In 2025, the Company received from the depositary $1,841,816 for continuing annual stock exchange listing fees, standard out-of-pocket

maintenance costs for the ADSs (consisting of the expenses of postage and envelopes for mailing annual and interim financial reports, printing

and distributing dividend checks, electronic filing of US Federal tax information, mailing required tax forms, stationery, postage, facsimile, and

telephone calls), any applicable performance indicators relating to the ADS facility, underwriting fees and legal fees. It also includes

reimbursements for certain investor relations programs or special investor relations promotional activities.

**Fees to be paid in the future**

The Bank of New York Mellon, as depositary, has agreed to reimburse the Company for maintenance expenses that they incur for the ADS

program. The depositary has agreed to pay the standard out-of-pocket maintenance costs for the ADSs, which consist of the expenses of

postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of US Federal

tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls. It has also agreed to reimburse the Company

annually for certain investor relationship programs or special investor relations promotional activities. The depositary has agreed to provide

payments to the Company based on the level of issuance, cancellation and dividend fees.

**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.

---

| | |
|:---|:---|
| **30** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part II** continued

**Item 15. Controls and Procedures**

Reference is made to the section titled "Board responsibility", "Control effectiveness review" and "Reviews by the Board" on **page 84** **of the** 

**Annual Report 2025** for information on controls and procedures.

**Statement on US Corporate Governance Standards**

The Board is committed to the delivery of the Group's strategy which is underpinned by high standards of corporate governance designed to

ensure consistency and rigour in its decision making. This report explains how those standards, in particular, those laid down in the Financial

Reporting Council's UK Corporate Governance Code 2024 (the "UK Code"), apply in practice to ensure that the Board and management work

together for the long-term benefit of the Company and its shareholders. The UK Code can be accessed at **www.frc.org.uk**.

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 and the

Responsible Business Committee can be found on **pages 85 to 86 and 88 to 97 of the Annual Report 2025**(except "Viability statement" on

**page 90 of the Annual Report 2025**), which are incorporated by reference in this Annual Report on Form 20-F. For additional information about

the Group's internal and external audit functions, reference is made to the sections "Internal control" on **page 84 of the Annual Report 2025**

and the"Audit Committee report" on **pages88 to 91 of the Annual Report 2025,** except for the "Viability statement" on **page 90 of the Annual** 

**Report 2025.** Further information about the work of the Remuneration Committee is included on **page 105 of the Annual Report 2025**.

As a non-US company listed on the NYSE the Company is required to disclose any significant ways in which its corporate governance practices

differ from those followed by domestic US companies listed on the NYSE, key differences are set out in the paragraphs below. As the Company's

main listing is on the London Stock Exchange, it follows the principles contained in the UK Code. The Group confirms that it applied the

principles and complied with all the relevant provisions of the Code throughout 2025. Compliance with the UK Code is discussed further on

**page 67 of the Annual Report 2025**.

The NYSE corporate governance listing standards require domestic US companies to adopt and disclose corporate governance policies. For the

Company, consistent with the principles of the UK Code, the Nomination and Governance Committee sets the corporate governance principles

applicable to the Company and oversees the annual evaluation of the performance of the Board, its Committees and its individual members.

Under the NYSE corporate governance listing standards, the remuneration, nomination and governance committees of domestic US companies

must be comprised of entirely independent directors. However for the Company, again consistent with the principles of the UK Code, the

Remuneration Committee and the Nomination and Governance Committee include the Chair, with all other members being independent non-

executive directors.

**Disclosure controls and procedures**

As of 31 December 2025, Lloyds Banking Group, under the supervision and with the participation of the Group's management, including the

Group Chief Executive and the Chief Financial Officer, performed an evaluation of the effectiveness of the Group's disclosure controls and

procedures. Based on this evaluation, the Group Chief Executive and Chief Financial Officer concluded that the Company's disclosure controls

and procedures, at 31 December 2025, were effective for gathering, analysing and disclosing with reasonable assurance the information that

Lloyds Banking 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. Lloyds Banking 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 Banking 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 Lloyds Banking Group's internal control over financial reporting.

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

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The

Company'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 Company'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 Company; and (iii)

provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company's assets

that could have a material effect on the financial statements.

The management of the Company assessed the effectiveness of the Company'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, at 31 December 2025, the Company'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.

Deloitte LLP, an independent registered public accounting firm, has issued opinions on the Company's consolidated financial statements and on

its internal controls over financial reporting. These opinions appear on **pages [37](#id846e96c95884edea25f7ad1407ed8f4_511) to [40](#if9a04fc085b04ee286dfc331dcab4d75_19038) and on page [31](#id846e96c95884edea25f7ad1407ed8f4_439) respectively.**

---

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

---

**Part II** continued

**Report of independent registered public accounting firm**

To the shareholders and the Board of Directors of Lloyds Banking Group plc

**Opinion on Internal Control over Financial Reporting**

We have audited the internal control over financial reporting of Lloyds Banking Group plc and subsidiaries (the "Group") as at 31 December

2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of

the Treadway Commission (COSO). In our opinion, the Group maintained, in all material respects, effective internal control over financial

reporting as at 31 December 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the

consolidated financial statements as at and for the year ended 31 December 2025, of the Group and our report dated 13 February 2026,

expressed an unqualified opinion on those financial statements.

**Basis for Opinion**

The Group's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the

effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial

Reporting. Our responsibility is to express an opinion on the Group's internal control over financial reporting based on our audit. We are a public

accounting firm registered with the PCAOB and are required to be independent with respect to the Group 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit

included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and

evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we

considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

**Definition and Limitations of Internal Control over Financial Reporting**

A company'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 generally accepted accounting principles. A

company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in

reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance

that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting

principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and

directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or

disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting 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 or procedures may deteriorate.

**/s/ Deloitte LLP**

London, United Kingdom

13 February 2026

---

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

---

**Part II** continued

**Item 16.[Reserved]**

[Reserved]

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

Reference is made to the section titled "Our Board" on **pages 68 to 69 of the Annual Report 2025** for information on the name, position and

experience of the members of the Audit Committee.

Sarah Legg is designated as the Audit Committee financial expert as defined by the SEC. All members of the Audit Committee qualify as

independent as defined by the US Exchange Act and the NYSE Corporate Governance Standards applicable to listed companies as described in

Section 303A of the NYSE Listed Company Manual.

**Audit Committee report**

Reference is made to the section titled "Audit Committee Report" on **pages 88 to91of the Annual Report 2025,** except for the "Viability

statement" on **page 90 of the Annual Report 2025.**

**Item 16B. Code of Ethics**

Please refer to the "Employees" section under Item 6.D - "Employees" on **page [24](#id846e96c95884edea25f7ad1407ed8f4_313).**

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

Reference is made to the sections titled:

• "Note 13: Auditors' Remuneration" on **page 251 of the Annual Report 2025**; and

• "Auditor independence and remuneration", "External auditor" and "Statutory Audit Services compliance" on **page 91 of the Annual Report** 

**2025**

for information on principal accountant fees and services.

**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**

For additional information about the Group's corporate governance practices, reference is made to the sections titled:

• "Item 15 - Controls and Procedures" on **page [30](#id846e96c95884edea25f7ad1407ed8f4_430)**;

• "Chair's statement" on **pages 66 to 67 of the Annual Report 2025**;

• "UK Corporate Governance Code" on **page 67 of the Annual Report 2025**;

• "Our governance structure and responsibilities" on **pages 72 to 73 of the Annual Report 2025;**

• "Board activities" on **pages 74 to 75 of the Annual Report 2025;**

• "Engaging with our stakeholders" on **pages 76 to 78 of the Annual Report 2025;**

• "Our culture in action" on **page 79 of the Annual Report 2025;** and

• "Sustainability governance" on **pages 80 to 81 of the Annual Report 2025.**

**Item 16H. Mine Safety Disclosure**

Not applicable.

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

Not applicable.

---

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

---

**Part II** continued

**Item 16J. Insider Trading Policies**

The Company has adopted dealing policies setting out requirements in relation to dealings in the Company's securities by the Company'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 Company 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.

**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 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 theGroup 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, the 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 211 to 296 of the Annual Report 2025**

are incorporated herein by reference.

---

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

---

**Part III** continued

**Schedule: Parent company disclosures**

**(A)Company income statement**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Interest income | **804** | 800 | 632 |
| Interest expense | **(1031)** | (1096) | (1129) |
| **Net interest expense** | **(227)** | (296) | (497) |
| Net trading (losses) income | **(129)** | 61 | 71 |
| Dividends from subsidiaries | **2990** | 5187 | 5024 |
| Other operating income | **893** | 701 | 672 |
| **Other income** | **3754** | 5949 | 5767 |
| **Total income** | **3527** | 5653 | 5270 |
| Operating expenses | **(164)** | (216) | (225) |
| Impairment credit | **3** | 3 | 10 |
| **Profit before tax** | **3366** | 5440 | 5055 |
| Tax credit | **23** | 48 | 84 |
| **Profit for the year** | **3389** | 5488 | 5139 |
| Profit attributable to ordinary shareholders | **2926** | 4990 | 4612 |
| Profit attributable to other equity holders | **463** | 498 | 527 |
| **Profit for the year** | **3389** | 5488 | 5139 |

---

**(B)Company balance sheet**

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Assets** |  |  |
| Cash and cash equivalents | **8** | 22 |
| Financial assets at fair value through profit or loss | **19703** | 23370 |
| Derivative financial instruments | **298** | 519 |
| Debt securities | **1623** | 2354 |
| Loans to subsidiaries | **16949** | 17068 |
| Investment in subsidiaries | **54567** | 51334 |
| Current tax recoverable | **6** | 75 |
| Deferred tax assets | **85** | 23 |
| Other assets | **7** | 14 |
| **Total assets** | **93246** | 94779 |
| **Liabilities** |  |  |
| Due to subsidiaries | **150** | 3 |
| Financial liabilities at fair value through profit or loss | **22433** | 24896 |
| Derivative financial instruments | **579** | 939 |
| Debt securities in issue at amortised cost | **9941** | 8310 |
| Other liabilities | **80** | 142 |
| Subordinated liabilities | **9970** | 9720 |
| **Total liabilities** | **43153** | 44010 |
| **Equity** |  |  |
| Share capital | **5889** | 6062 |
| Share premium account | **18797** | 18720 |
| Merger reserve | **6759** | 6759 |
| Capital redemption reserve | **5971** | 5751 |
| Retained profits | **6730** | 7282 |
| **Shareholders' equity** | **44146** | 44574 |
| Other equity instruments | **5947** | 6195 |
| **Total equity** | **50093** | 50769 |
| **Total equity and liabilities** | **93246** | 94779 |

---

---

| | |
|:---|:---|
| **35** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part III** continued

**Schedule: Parent company disclosures**continued

**(C)Company statement of changes in equity**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** | **Attributable to ordinary shareholders** |  |  |
|  | **Share capital**<sup>1</sup><br>**£m**<br>| **Share**<br>**premium**<sup>1</sup><br>**£m**<br>| **Merger**<br>**reserve**<sup>2</sup><br>**£m**<br>| **Capital**<br>**redemption**<br>**reserve**<sup>3</sup><br>**£m**<br>| **Retained**<br>**profits**<br>**£m**<br>| **Total**<br>**£m**<br>| **Other**<br>**equity**<br>**instruments**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2023 | 6729 | 18504 | 6806 | 4932 | 5222 | 42193 | 5297 | 47490 |
| **Total comprehensive income** | – | – | – | – | 4612 | 4612 | 527 | 5139 |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends | – | – | – | – | (1651) | (1651) | – | (1651) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | – | – | (527) | (527) |
| Issue of ordinary shares | 67 | 64 | – | – | – | 131 | – | 131 |
| Share buyback | (438) | – | – | 438 | (1993) | (1993) | – | (1993) |
| Issue of other equity instruments | – | – | – | – | (13) | (13) | 1778 | 1765 |
| Repurchase and redemptions of <br>other equity instruments<br>| – | – | – | – | – | – | (135) | (135) |
| Movement in treasury shares | – | – | – | – | 103 | 103 | – | 103 |
| Value of employee services | – | – | – | – | 227 | 227 | – | 227 |
| **Total transactions with owners** | (371) | 64 | – | 438 | (3327) | (3196) | 1116 | (2080) |
| At 31 December 2023 | 6358 | 18568 | 6806 | 5370 | 6507 | 43609 | 6940 | 50549 |
| **Total comprehensive income** | – | – | – | – | 4990 | 4990 | 498 | 5488 |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends | – | – | – | – | (1828) | (1828) | – | (1828) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | – | – | (498) | (498) |
| Issue of ordinary shares | 73 | 117 | – | – | – | 190 | – | 190 |
| Share buyback | (369) | – | – | 369 | (2011) | (2011) | – | (2011) |
| Redemption of preference shares | – | 35 | (47) | 12 | – | – | – | – |
| Issue of other equity instruments | – | – | – | – | (6) | (6) | 763 | 757 |
| Repurchase and redemptions of <br>other equity instruments<br>| – | – | – | – | (316) | (316) | (1508) | (1824) |
| Movement in treasury shares | – | – | – | – | (173) | (173) | – | (173) |
| Value of employee services | – | – | – | – | 119 | 119 | – | 119 |
| **Total transactions with owners** | (296) | 152 | (47) | 381 | (4215) | (4025) | (1243) | (5268) |
| At 31 December 2024 | 6062 | 18720 | 6759 | 5751 | 7282 | 44574 | 6195 | 50769 |
| **Total comprehensive income** | **–** | **–** | **–** | **–** | **2926** | **2926** | **463** | **3389** |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends | **–** | **–** | **–** | **–** | **(2000)** | **(2000)** | **–** | **(2000)** |
| Distributions on other equity <br>instruments<br>| **–** | **–** | **–** | **–** | **–** | **–** | **(463)** | **(463)** |
| Issue of ordinary shares | **47** | **77** | **–** | **–** | **–** | **124** | **–** | **124** |
| Share buyback | **(220)** | **–** | **–** | **220** | **(1710)** | **(1710)** | **–** | **(1710)** |
| Issue of other equity instruments | **–** | **–** | **–** | **–** | **(10)** | **(10)** | **1511** | **1501** |
| Repurchase and redemptions of <br>other equity instruments<br>| **–** | **–** | **–** | **–** | **–** | **–** | **(1759)** | **(1759)** |
| Movement in treasury shares | **–** | **–** | **–** | **–** | **38** | **38** | **–** | **38** |
| Value of employee services | **–** | **–** | **–** | **–** | **204** | **204** | **–** | **204** |
| **Total transactions with owners** | **(173)** | **77** | **–** | **220** | **(3478)** | **(3354)** | **(711)** | **(4065)** |
| **At 31 December 2025** | **5889** | **18797** | **6759** | **5971** | **6730** | **44146** | **5947** | **50093** |

---

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

2The merger reserve comprises the premium on shares issued on 13 January 2009 under the placing and open offer and shares issued on 16 January 2009 on the acquisition of HBOS

plc, offset by adjustments on the redemption of preference shares. Substantially all of the Company's merger reserve is available for distribution.

3The capital redemption reserve represents transfers from the merger reserve in accordance with companies' legislation and amounts transferred from share capital following the

cancellation of shares

---

| | |
|:---|:---|
| **36** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part III** continued

**Schedule: Parent company disclosures**continued

**(D)Company cash flow statement**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| **Cash flows from operating activities** |  |  |  |
| Profit before tax | **3366** | 5440 | 5055 |
| Adjustments for: |  |  |  |
| Fair value and exchange adjustments and other non-cash items | **311** | (83) | 744 |
| Change in other assets | **4405** | (1850) | (1317) |
| Change in other liabilities and other items | **(747)** | 4523 | (555) |
| Dividends received | **(2990)** | (5187) | (5024) |
| Distributions on other equity instruments received | **(680)** | (541) | (505) |
| Tax refunded | **84** | 115 | 4 |
| **Net cash provided by (used in) operating activities** | **3749** | 2417 | (1598) |
| **Cash flows from investing activities** |  |  |  |
| Return of capital contribution | **1** | 1 | 1 |
| Dividends received | **2990** | 5187 | 5024 |
| Distributions on other equity instruments received | **680** | 541 | 505 |
| Acquisitions of and capital injections to subsidiaries | **(5288)** | (1309) | (1496) |
| Return of capital by subsidiaries | **2054** | 800 | 278 |
| Amounts advanced to subsidiaries | **(6118)** | (4340) | (4563) |
| Repayment of loans to subsidiaries | **5796** | 2055 | 3556 |
| Interest received on loans to subsidiaries | **610** | 386 | 410 |
| **Net cash provided by investing activities** | **725** | 3321 | 3715 |
| **Cash flows from financing activities** |  |  |  |
| Dividends paid to ordinary shareholders | **(2000)** | (1828) | (1651) |
| Distributions on other equity instruments | **(463)** | (498) | (527) |
| Interest paid on subordinated liabilities | **(638)** | (509) | (466) |
| Proceeds from issue of subordinated liabilities | **1757** | 812 | 1416 |
| Proceeds from issue of other equity instruments | **1501** | 757 | 1765 |
| Proceeds from issue of ordinary shares | **99** | 187 | 86 |
| Share buyback | **(1710)** | (2011) | (1993) |
| Repayment of subordinated liabilities | **(1275)** | (819) | (643) |
| Repurchase and redemptions of other equity instruments | **(1759)** | (1824) | (135) |
| **Net cash used in financing activities** | **(4488)** | (5733) | (2148) |
| Change in cash and cash equivalents | **(14)** | 5 | (31) |
| Cash and cash equivalents at beginning of year | **22** | 17 | 48 |
| **Cash and cash equivalents at end of year** | **8** | 22 | 17 |

---

**(E)Interests in subsidiaries**

The principal subsidiaries, all of which have prepared accounts to 31 December 2024 and whose results are included in the consolidated

accounts of Lloyds Banking Group plc, are:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of subsidiary undertaking** | **Country of**<br>**registration/**<br>**incorporation**<br>| **Percentage of equity**<br>**share capital and** <br>**voting rights held**<br>| **Nature of business** | **Registered office** |
| Lloyds Bank plc | England | 100% | Banking and financial services | 25 Gresham Street, London EC2V 7HN |
| Scottish Widows Limited | England | 100%\* | Life assurance | 25 Gresham Street, London EC2V 7HN |
| 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 |
| Lloyds Bank Corporate Markets plc<sup>1</sup> | England | 100% | Banking and financial services | 25 Gresham Street, London EC2V 7HN |
| LBG Equity Investments Limited<sup>1</sup> | England | 100% | Financial services | 25 Gresham Street, London EC2V 7HN |

---

\*Indirect interest

1Subsidiary that does not meet quantitative threshold for significance. Included for consistency with the consolidated financial statements.

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

---

| | |
|:---|:---|
| **37** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part III** continued

**Report of independent registered public accounting firm** 

To the shareholders and the Board of Directors of Lloyds Banking Group plc

**Opinion on the financial statements**

We have audited the accompanying consolidated balance sheets of Lloyds Banking Group 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 [11](#id846e96c95884edea25f7ad1407ed8f4_118) to [23](#id846e96c95884edea25f7ad1407ed8f4_298)**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').

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the

Group's internal control over financial reporting as at 31 December 2025, based on criteria established in *Internal Control – Integrated* 

*Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated 13 February 2026,

expressed an unqualified opinion on the Group's internal control over financial reporting.

**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 PCAOB and are required to be independent with respect to

the Group 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. 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, 14, 20, 21 and 39 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.

---

| | |
|:---|:---|
| **38** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**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.

---

| | |
|:---|:---|
| **39** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part III** continued

**Regulatory and legal provisions**

Provisions

Refer to notes 2 and 28 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 12 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.

**Valuation of certain complex and illiquid financial instruments held at fair value**

Financial assets at fair value through profit or loss

Refer to notes 2, 16, 17 and 39 in the financial statements

*Critical Audit Matter description*

Financial instruments are classified as level 1, 2 or 3 in accordance with IFRS 13 'Fair value measurement'.

The fair value of complex and illiquid financial instruments, involves significant judgement. The extent of judgement applied by the Group in

valuing the Group's financial investments varies with the nature of assets held, the markets in which they are traded, and the valuation

methodology applied.

The Group holds several portfolios of level 3 illiquid investments totalling £6.1 billion, the largest of which is held within the Insurance, Pensions

and Investments division, and includes loans in the commercial real estate, social housing, infrastructure, and education sectors. The valuation

of these loans uses complex valuation models as they are without readily determinable market values and were valued using significant

unobservable inputs, such as loan to bond premium and calibration spread that involved considerable judgement by management.

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

We tested the controls over the valuation of financial instruments, including controls over significant assumptions used in the valuation of these

financial assets, and model review controls.

---

| | |
|:---|:---|
| **40** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part III** continued

We worked with our valuation specialists in our audit of the valuation of the level 3 portfolio loans and we performed the following procedures:

• evaluated the appropriateness of loan valuation methodologies;

• calculated a range of comparable values for a sample of modelled illiquid financial instruments using an independent valuation model and

considered reasonable alternative key assumptions based on comparable securities and compared results;

• evaluated the appropriateness of the internal credit ratings methodology and tested the appropriateness of the ratings for a sample of loan

counterparties;

• evaluated the consistency and appropriateness of inputs and assumptions over time, challenging both significant movements and non-

movements where we expected change; and

• assessed the appropriateness of disclosures and sensitivity analysis.

**/s/ Deloitte LLP**

London, United Kingdom

13 February 2026

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

---

| | |
|:---|:---|
| **41** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part III** continued

**Item 19. Exhibits**

**A.Annual Report**

The following pages from the Annual Report 2025 (see Exhibits 15.1) are incorporated by reference into this Annual Report on Form 20-F, listed

in order of appearance. 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 | 211 |  |
|  |  | Note 4: Segmental analysis | 228 | 232 |
|  |  | Restructuring, volatility and other items | 56 |  |
|  |  | Volatility arising in the Insurance business | 59 |  |
|  |  | Our external environment | 10 | 13 |
|  |  | Group structure and ring-fencing governance arrangements | 73 |  |
| Part 1 | Item 5. | Our external environment | 10 | 13 |
|  |  | Note 1: Basis of preparation | 218 |  |
|  |  | Note 3: Critical accounting judgements and key sources of estimation uncertainty | 228 |  |
|  |  | Note 19: Derivative financial instruments | 269 | 271 |
|  |  | Consolidated income statement | 211 |  |
|  |  | Note 6: Net fee and commission income | 233 | 234 |
|  |  | Note 7: Net trading income | 234 |  |
|  |  | Note 8: Insurance business (A) | 235 |  |
|  |  | Note 8: Insurance business (B) | 235 | 236 |
|  |  | Note 9: Other operating income | 242 |  |
|  |  | Statutory results | 53 |  |
|  |  | Note 10: Operating expenses | 242 |  |
|  |  | Note 14: Impairment | 251 | 252 |
|  |  | Note 15: Tax | 252 | 254 |
|  |  | Consolidated balance sheet | 213 |  |
|  |  | Capital risk | 144 | 145 |
|  |  | Capital returns and Minimum requirement for own funds and eligible liabilities (MREL) | 145 | 146 |
|  |  | Capital risk | 147 | 150 |
|  |  | Maturities of contingent liabilities, commitments and financial guarantees (audited) | 186 |  |
|  |  | Note 26: Debt securities in issue | 283 |  |
|  |  | Note 37: Structured entities | 292 | 293 |
|  |  | Note 29: Subordinated liabilities | 285 | 286 |
|  |  | Note 18: Maturities of assets and liabilities | 267 | 268 |
|  |  | Note 27: Other liabilities | 283 |  |
|  |  | Note 36: Contingent liabilities, commitments and financial guarantees | 291 | 292 |
|  |  | Note 4: Segmental analysis | 228 | 232 |
|  |  | Sustainability review | 35 | 49 |
|  |  | Climate risk | 150 | 152 |
|  |  | Sustainability governance | 80 | 81 |
|  |  | Risk management | 138 | 143 |
|  |  | Compliance risk | 152 |  |
|  |  | Conduct risk | 153 |  |
|  |  | Economic crime risk | 179 |  |
|  |  | Insurance underwriting risk | 180 |  |
|  |  | Liquidity risk | 181 | 186 |
|  |  | Market risk | 187 | 193 |
|  |  | Model risk | 194 |  |
|  |  | Operational risk | 195 | 197 |
|  |  | Credit risk: Risk appetite | 154 |  |
|  |  | Credit risk: Identification and assessment | 154 |  |
|  |  | Credit risk: Management and mitigation | 154 | 157 |
|  |  | Credit risk: Monitoring | 157 |  |
|  |  | Credit risk: Reporting | 157 |  |
|  |  | Movements in balances for the year ended 31 December 2025 (audited) | 164 |  |
|  |  | Movements in balances for the year ended 31 December 2024 (audited) | 165 |  |
|  |  | Concentrations of exposure (audited) | 165 |  |
|  |  | Forbearance | 166 |  |
|  |  | Credit quality of loans and advances to customers (audited) | 166 | 168 |
|  |  | Retail UK mortgage balance movements (audited) | 170 |  |
|  |  | UK mortgages product analysis (statutory basis) | 171 |  |
|  |  | Interest-only UK mortgages | 171 |  |

---

---

| | |
|:---|:---|
| **42** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part III** continued

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **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** |
|  |  | Collateral held as security for Retail loans and advances to customers (audited) | 172 |  |
|  |  | Other Retail lending | 173 |  |
|  |  | Retail credit card balance movements (audited) | 173 |  |
|  |  | Commercial Banking balance movements (audited) | 175 |  |
|  |  | Collateral held as security for Commercial Banking loans and advances to customers <br>(audited)<br>| 176 |  |
|  |  | Commercial Banking UK Real Estate | 176 |  |
|  |  | Credit quality of other financial assets (audited) | 177 |  |
|  |  | Collateral held as security for other financial assets (audited) | 178 |  |
|  |  | Note 16: Measurement basis of financial assets and liabilities | 255 | 256 |
|  |  | Liquidity risk - Analysis of 2025 term issuance (audited) | 183 |  |
|  |  | Other statutory and regulatory information - Research and development activities | 135 |  |
| Part 1 | Item 6. | Our Board | 68 | 69 |
|  |  | Our Group Executive Committee | 71 |  |
|  |  | Our governance structure and responsibilities | 72 | 73 |
|  |  | Board activities | 74 | 75 |
|  |  | Engaging with our stakeholders | 76 | 78 |
|  |  | Our culture in action | 79 |  |
|  |  | Sustainability governance | 80 | 81 |
|  |  | Board performance | 82 | 83 |
|  |  | Directors' remuneration report | 98 | 110 |
|  |  | Directors' remuneration report | 112 | 116 |
|  |  | Directors' remuneration report | 118 | 133 |
|  |  | Note 10: Operating expenses | 242 |  |
|  |  | Note 11: Share-based payments | 243 | 245 |
|  |  | Note 12: Retirement benefit obligations | 245 | 250 |
|  |  | Nomination and Governance Committee report | 85 | 86 |
|  |  | Audit Committee report (except "Viability statement" on page 90) | 88 | 91 |
|  |  | Board Risk Committee report | 92 | 96 |
|  |  | Responsible Business Committee report | 97 |  |
|  |  | Remuneration Committee Chair's statement | 98 | 102 |
|  |  | Remuneration Committee | 105 |  |
|  |  | 2023 Directors' Remuneration Policy summary and 2025 implementation | 106 | 107 |
|  |  | Service agreement and Letters of appointment | 130 | 131 |
|  |  | Note 2(K): Accounting policies (Employee benefits) | 223 |  |
|  |  | Directors' share interests and share awards (audited) | 114 | 115 |
|  |  | Outstanding share plan interests (audited) | 114 | 115 |
|  |  | Outstanding cash awards (audited) | 114 | 115 |
| Part 1 | Item 7. | Note 35: Related party transactions | 290 | 291 |
| Part 1 | Item 8. | The Consolidated Financial Statements and Notes to the Consolidated Financial <br>Statements<br>| 211 | 296 |
|  |  | Note 28: Provisions | 283 | 285 |
|  |  | Note 36: Contingent liabilities, commitments and financial guarantees | 291 | 292 |
| Part 1 | Item 11. | Market risk | 187 | 193 |
|  |  | Note 39: Financial risk management | 294 |  |
| Part 2 | Item 15. | Board responsibility, Control effectiveness review, Reviews by the Board | 84 |  |
|  |  | Committees' membership role and activities | 85 | 86 |
|  |  | Committees' membership role and activities (except "Viability statement" on page 90) | 88 | 97 |
|  |  | Internal control | 84 |  |
|  |  | Audit Committee report (except "Viability statement" on page 90) | 88 | 91 |
|  |  | Remuneration Committee | 105 |  |
|  |  | UK Corporate Governance Code | 67 |  |
| Part 2 | Item 16A. | Our Board | 68 | 69 |
|  |  | Audit Committee report (except "Viability statement" on page 90) | 88 | 91 |
| Part 2 | Item 16C. | Note 13: Auditors' remuneration | 251 |  |
|  |  | Auditor independence and remuneration, External auditor and Statutory Audit Services <br>compliance<br>| 91 |  |
| Part 2 | Item 16G. | Chair's statement | 66 | 67 |
|  |  | UK Corporate Governance Code | 67 |  |
|  |  | Our governance structure and responsibilities | 72 | 73 |
|  |  | Board activities | 74 | 75 |
|  |  | Engaging with our stakeholders | 76 | 78 |

---

---

| | |
|:---|:---|
| **43** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part III** continued

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **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** |
|  |  | Our culture in action | 79 |  |
|  |  | Sustainability governance | 80 | 81 |
| Part 3 | Item 18. | The Consolidated Financial Statements and Notes to the Consolidated Financial <br>Statements<br>| 211 | 296 |

---

**B.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** <br>**January 2026** | **Pages in the Form 6-K filed 29** <br>**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 | 23 |
| Part 1 | Item 4. | Regulatory and Legal Risks – The Group faces risks associated with its compliance with a <br>wide range of laws and regulations<br>| 10 |  |
|  |  | Regulatory and Legal Risks – The Group is subject to resolution planning requirements | 13 |  |

---

---

| | |
|:---|:---|
| **44** | **Lloyds Banking Group plc** Annual Report on Form 20-F 2025 |

---

**Part III** continued

**C.Exhibits**

---

| | |
|:---|:---|
| 1 | [Articles of association of the Company](https://www.sec.gov/Archives/edgar/data/1160106/000116010622000008/lbgexhibit12021.htm)<sup>4</sup> |
| 2 | Neither the Company nor any subsidiary is party to any single long-term debt instrument pursuant to which a total amount of securities exceeding 10% <br>of the Group's total assets (on a consolidated basis) is authorised to be issued. The Company hereby agrees to furnish to the SEC, upon its request, a <br>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 <br>for which consolidated or unconsolidated financial statements are required to be filed with the SEC. |
| 2<br> (d) | [Description of securities registered under Section 12 of the Exchange Act.](lbgexhibit2d2025.htm) |
| 4<br> (b)<br> (i) | [Letter of appointment dated 17 April 2018 between the Company and Amanda Mackenzie](https://www.sec.gov/Archives/edgar/data/1160106/000093041319000675/c92465_ex4bxiv.htm)<sup>1</sup> |
| (ii) | [Supplementary letter dated 3 September 2018 to the letter of appointment dated 17 April 2018 between the Company and Amanda](https://www.sec.gov/Archives/edgar/data/1160106/000093041319000675/c92465_ex4bxv.htm)<br>[Mackenzie](https://www.sec.gov/Archives/edgar/data/1160106/000093041319000675/c92465_ex4bxv.htm)<sup>1</sup><br>|
| (iii) | [Service agreement dated 15 March 2019 between Lloyds Bank plc and William Chalmers](https://www.sec.gov/Archives/edgar/data/1160106/000093041320000534/c95250_ex4bxviii.htm)<sup>2</sup> |
| (iv) | [Addendum to the service agreement dated 15 March 2019 between Lloyds Bank plc and William Chalmers](https://www.sec.gov/Archives/edgar/data/1160106/000116010621000011/lbgexhibit4bxix.htm)<sup>3</sup> |
| (v) | [Deed of variation of contract dated 22 June 2020 to the service agreement dated 15 March 2019 between Lloyds Bank plc and William](https://www.sec.gov/Archives/edgar/data/1160106/000116010621000011/lbgexhibit4bxx.htm)<br>[Chalmers](https://www.sec.gov/Archives/edgar/data/1160106/000116010621000011/lbgexhibit4bxx.htm)<sup>3</sup><br>|
| (vi) | [Letter to William Chalmers regarding his deputisation allowance and increased fixed share award for the period he assumed the](https://www.sec.gov/Archives/edgar/data/1160106/000116010622000008/lbgexhibit4bxviii2021.htm)<br>[acting Group Chief Executive role](https://www.sec.gov/Archives/edgar/data/1160106/000116010622000008/lbgexhibit4bxviii2021.htm)<sup>4</sup><br>|
| (vii) | [Letter of appointment dated 21 October 2019 between the Company and Sarah Legg](https://www.sec.gov/Archives/edgar/data/1160106/000093041320000534/c95250_ex4bxix.htm)<sup>2</sup> |
| (viii) | [Supplementary letter dated 31 October 2019 to the letter of appointment dated 21 October 2019 between the Company and Sarah](https://www.sec.gov/Archives/edgar/data/1160106/000093041320000534/c95250_ex4bxx.htm)<br>[Legg](https://www.sec.gov/Archives/edgar/data/1160106/000093041320000534/c95250_ex4bxx.htm)<sup>2</sup><br>|
| (ix) | [Letter of appointment dated 22 October 2019 between the Company and Catherine Woods](https://www.sec.gov/Archives/edgar/data/1160106/000116010621000011/lbgexhibit4bxxiii.htm)<sup>3</sup> |
| (x) | [Supplementary letter dated 31 October 2019 to the letter of appointment dated 22 October 2019 between the Company and](https://www.sec.gov/Archives/edgar/data/1160106/000116010621000011/lbgexhibit4bxxiv.htm)<br>[Catherine Woods](https://www.sec.gov/Archives/edgar/data/1160106/000116010621000011/lbgexhibit4bxxiv.htm)<sup>3</sup><br>|
| (xi) | [Letter of appointment dated 4 July 2020 between the Company and Robin Budenberg](https://www.sec.gov/Archives/edgar/data/1160106/000116010621000011/lbgexhibit4bxxv.htm)<sup>3</sup> |
| (xii) | [Service agreement dated 29 November 2020 between Lloyds Bank plc and Charlie Nunn](https://www.sec.gov/Archives/edgar/data/1160106/000116010622000008/lbgexhibit4bxxiv2021.htm)<sup>4</sup> |
| (xiii) | [Addendum to the service agreement dated 29 November 2020 between Lloyds Bank plc and Charlie Nunn](https://www.sec.gov/Archives/edgar/data/1160106/000116010622000008/lbgexhibit4bxxv2021.htm)<sup>4</sup> |
| (xiv) | [Letter of appointment dated 5 October 2021 between the Company and Harmeen Mehta](https://www.sec.gov/Archives/edgar/data/1160106/000116010622000008/lbgexhibit4bxxvi2021.htm)<sup>4</sup> |
| (xv) | [Letter of appointment dated 26 July 2022 between the Company and Scott Wheway](https://www.sec.gov/Archives/edgar/data/1160106/000116010623000008/lbgexhibit4bxix2022.htm)<sup>5</sup> |
| (xvi) | [Supplementary letter dated 13 September 2022 to the letter of appointment dated 26 July 2022 between the Company and Scott](https://www.sec.gov/Archives/edgar/data/1160106/000116010623000008/lbgexhibit4bxx2022.htm)<br>[Wheway](https://www.sec.gov/Archives/edgar/data/1160106/000116010623000008/lbgexhibit4bxx2022.htm)<sup>5</sup><br>|
| (xvii) | [Letter of appointment dated 11 October 2022 between the Company and Cathy Turner](https://www.sec.gov/Archives/edgar/data/1160106/000116010623000008/lbgexhibit4bxxi2022.htm)<sup>5</sup> |
| (xviii) | [Letter of appointment dated 29 July 2024 between the Company and Nathan Bostock](https://www.sec.gov/Archives/edgar/data/1160106/000116010625000005/lbgexhibit4bxxi2024.htm)<sup>6</sup> |
| (xix) | [Letter of appointment dated 11 June 2025 between the Company and Chris Vogelzang](lbgexhibit4bxix2025.htm) |
| 8.1 | [List of subsidiaries, their jurisdiction of incorporation and the names under which they conduct business](lbgexhibit812025.htm) |
| 11.1 | [Dealing Policy for Directors, GEC Members and GEC Attendees](lbgexhibit111_2025.htm) |
| 11.2 | [Code of Ethics and Responsibility](https://www.sec.gov/Archives/edgar/data/1160106/000116010625000005/lbgexhibit1122024.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](lbgexhibit1212025.htm) |
| 12.2 | [Certification of William Chalmers filed pursuant to 17 CFR 240.13a-14(a) and 15 U.S.C. 7241](lbgexhibit1222025.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](lbgexhibit1312025.htm) |
| 15.1 | [The Annual Report 2025](lyg-20251231.htm)<sup>7</sup> |
| 15.2 | [The 6-K Risk Factors](https://www.sec.gov/Archives/edgar/data/1160106/000116010626000007/lbg6-kriskfactors2025.htm)<sup>8</sup> |
| 15.3 | [Consent of Deloitte LLP](lbgexhibit1532025.htm) |
| 97 | [Lloyds Banking Group plc's Performance Adjustment Policy](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001160106/000116010624000009/lyg-20231231.htm)<sup>9</sup> |
| 101 | Interactive Data File |
| 104 | Cover Page Interactive Data File |
| <sup>1</sup> | Previously filed with the SEC on the Company's Form 20-F filed 25 February 2019. |
| <sup>2</sup> | Previously filed with the SEC on the Company's Form 20-F filed 25 February 2020. |
| <sup>3</sup> | Previously filed with the SEC on the Company's Form 20-F filed 26 February 2021. |
| <sup>4</sup> | Previously filed with the SEC on the Company's Form 20-F filed 28 February 2022. |
| <sup>5</sup> | Previously filed with the SEC on the Company's Form 20-F filed 24 February 2023. |
| <sup>6</sup> | Previously filed with the SEC on the Company's Form 20-F filed 20 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 <br>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 <br>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 Company's Form 6-K filed 29 January 2026. |
| <sup>9</sup> | Previously filed with the SEC on the Company's Form 20-F filed 22 February 2024. |

---

---

| | |
|:---|:---|
| **45** | **Lloyds Banking Group 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 Banking Group plc | Lloyds Banking Group plc |
| By: | /s/ William Chalmers |
| Name: | William Chalmers |
| Title: | Chief Financial Officer |
| Dated: | 13 February 2026 |

---

## Ex-2

**EXHIBIT 2(d)**

**Description of Securities Registered Under Section 12 of the Exchange Act**

As of December 31, 2025, Lloyds Banking Group plc ("**LBG**," the "**Company**," "**we**," "**us**" and "**our**") had the following series of securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Ticker symbol** | **Name of each exchange on which registered** |
| Ordinary shares of nominal value 10 pence each, represented by American Depositary Shares  |  | <br>The New York Stock Exchange |
| 4.344% Subordinated Securities due in 2048  | LYG48A | The New York Stock Exchange |
| 3.369% Fixed Rate Reset Subordinated Debt Securities due 2046 | LYG46 | The New York Stock Exchange |
| 5.300% Subordinated Securities due 2045  | LYG45 | The New York Stock Exchange |
| 4.943% Senior Callable Fixed-to-Fixed Rate Notes due 2036 | LYG36A | The New York Stock Exchange |
| 6.068% Fixed Rate Reset Dated Subordinated Tier 2 Notes due 2036 | LYG36 | The New York Stock Exchange |
| 5.590% Senior Callable Fixed-to-Fixed Rate Notes due 2035 | LYG35A | The New York Stock Exchange |
| 5.679% Senior Callable Fixed-to-Fixed Rate Notes due 2035 | LYG35 | The New York Stock Exchange |
| 7.953% Fixed Rate Reset Subordinated Debt Securities due 2033 | LYG33A | The New York Stock Exchange |
| 4.976% Senior Callable Fixed-to-Fixed Rate Notes due 2033 | LYG33 | The New York Stock Exchange |
| Senior Callable Floating Rate Notes due 2031 | LYG 31B | The New York Stock Exchange |
| 4.425% Senior Callable Fixed-to-Fixed Rate Notes due 2031 | LYG 31A | The New York Stock Exchange |
| 1.985% Fixed Rate Reset Subordinated Debt Securities due 2031 | LYG31 | The New York Stock Exchange |
| 5.721% Senior Callable Fixed-to-Fixed Rate Notes due 2030 | LYG30 | The New York Stock Exchange |
| 4.818% Senior Callable Fixed-to-Fixed Rate Notes due 2029  | LYG29A | The New York Stock Exchange |
| Senior Callable Floating Rate Notes due 2029 | LYG29B | The New York Stock Exchange |
| 5.871% Senior Callable Fixed-to-Fixed Rate Notes due 2029 | LYG29 | The New York Stock Exchange |
| Senior Callable Floating Rate Notes due 2028 | LYG28H | The New York Stock Exchange |
| 5.087% Senior Callable Fixed-to-Fixed Rate Notes due 2028 | LYG28G | The New York Stock Exchange  |
| Senior Callable Floating Rate Notes due 2028 | LYG28F | The New York Stock Exchange |
| 5.462% Senior Callable Fixed-to-Fixed Rate Notes due 2028 | LYG28E | The New York Stock Exchange |
| 3.750% Senior Callable Fixed-to-Fixed Rate Notes due 2028 | LYG28D | The New York Stock Exchange |
| 4.550% Senior Notes due 2028  | LYG28C | The New York Stock Exchange |
| 4.375% Senior Notes due 2028  | LYG28B | The New York Stock Exchange |
| 3.574% Senior Notes due in 2028 | LYG28A | The New York Stock Exchange |
| Senior Callable Floating Rate Notes due 2027 | LYG27C | The New York Stock Exchange |
| 5.985% Senior Callable Fixed-to-Fixed Rate Notes due 2027 | LYG27B | The New York Stock Exchange |
| 1.627% Senior Callable Fixed-to-Fixed Rate Notes due 2027 | LYG27A | The New York Stock Exchange |
| 3.750% Senior Notes due 2027  | LYG27 | The New York Stock Exchange |
| 4.650% Subordinated Securities due 2026  | LYG26 | The New York Stock Exchange |

---

Capitalized terms used but not defined herein have the meanings given to them in LBG's annual report on Form 20-F for the fiscal year ended December 31, 2025 (the "**2025 Annual Report**").

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

------

**Ordinary Shares**

The following is a summary of the material terms of the ordinary shares and preference shares, as set forth in our Articles of Association and the material provisions of U.K. law. This description is a summary and does not purport to be complete. You are encouraged to read our Articles of Association, which are filed as an exhibit to LBG's annual report on Form 20-F for the fiscal year ended December 31, 2021, incorporated by reference into this document (the "**2021 Annual Report**").

**Share Capital**

As at December 31, 2025, the number of shares outstanding was as follows:

---

| | | |
|:---|:---|:---|
| **Class of Share** | **number**<br>**(in thousands)** | **amount**<br>**(in £m)** |
| Ordinary shares, nominal value of 10 pence each  | 58885744 | 5888.57 |
| Preference shares, nominal value of 25 pence each  | 296141 | 74.04 |
| Preference shares, nominal value of 25 cents each  | 87 | 0.02<sup>1</sup> |

---

Please refer to pages 171-176 of the 2021 Annual Report for a summary of the material provisions of LBG's Articles of Association.

<sup>1</sup> Converted based on the pound sterling/U.S. dollar exchange rate of £1/U.S.$1.3447 on December 31, 2025, as announced by the U.S. Federal Reserve Board.

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

------

**American Depositary Shares**

*The following is a summary of the general terms and provisions of the deposit agreement under which the Depositary will deliver the American Depositary Shares ("ADSs"). The deposit agreement is among us, The Bank of New York Mellon, as Depositary, and all registered holders and beneficial owners from time to time of ADSs issued under it. This summary does not purport to be complete. You should read the deposit agreement, which we have filed with the SEC as an exhibit to the registration statement of which this prospectus is a part. You may also read the deposit agreement at the depositary offices of The Bank of New York Mellon in The City of New York and the offices of the Custodian in London. The principal executive office of the Depositary and its depositary office is currently located at 240 Greenwich Street, New York, NY 10286.*

**American Depositary Shares**

The Bank of New York Mellon, as Depositary, will register and deliver ADSs pursuant to the deposit agreement. Each ADS will represent four ordinary shares, or evidence of the right to receive four ordinary shares, deposited with the Custodian and registered in the name of the Depositary or its nominee (such ordinary shares, together with any additional ordinary shares at any time deposited or deemed deposited under the deposit agreement and any other securities, cash or other property received by the Depositary or the Custodian in respect of such ordinary shares, the "Deposited Securities").

ADSs can be held either (A) directly (i) by having an American Depositary Receipt ("ADR"), which is a certificate evidencing a specific number of ADSs, registered in the holder's name, or (ii) by having ADSs registered in the owner's name in the Direct Registration System ("DRS"), or (B) indirectly by holding a security entitlement in ADSs through a broker or other financial institution. A direct holder of an ADS is an ADS registered holder. This description assumes that each holder is an ADS registered holder. Indirect holders of ADSs must rely on the procedures of a broker or other financial institution to assert the rights of ADS registered holders described in this section, and such holders should consult with their broker or financial institution to find out what those procedures are.

The DRS is a system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs. See "—Direct Registration System" below.

Holders of ADSs will not have shareholder rights. Scottish law governs shareholder rights. The Depositary will be the holder of the ordinary shares represented by each investor's ADSs. As a registered holder of ADSs, each investor will have ADS registered holder rights as set forth in the deposit agreement. The deposit agreement also sets forth the rights and obligations of us and of the Depositary. New York law governs the deposit agreement and the ADSs.

In this section, the term "deliver", or its noun form, when used with respect to ADSs, shall mean (A) book-entry transfer of ADSs to an account at The Depository Trust Company, or its successor, designated by the person entitled to such delivery, (B) registration of ADSs not evidenced by an ADR on the books of the Depositary in the name requested by the person entitled to such delivery and mailing to that person of a statement confirming that registration or (C) if requested by the person entitled to such delivery, delivery at the office of the Depositary to the person entitled to such delivery of one or more ADRs evidencing ADSs registered in the name requested by that person. The term "surrender", when used with respect to ADSs, shall mean (A) one or more book-entry transfers of ADSs to the DTC account of the Depositary, (B) delivery to the Depositary at its office of an instruction to surrender ADSs not evidenced by an ADR or (C) surrender to the Depositary at its office of one or more ADRs evidencing ADSs.

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

------

**Deposit and Withdrawal**

The Depositary has agreed, subject to the terms and conditions of the deposit agreement, that upon delivery to the Custodian of ordinary shares (or evidence of rights to receive ordinary shares) in a form satisfactory to the Custodian, the Depositary will, upon payment of the fees, charges and taxes provided in the deposit agreement, deliver to, or upon the written order of, the person or persons named in the notice of the Custodian delivered to the Depositary or requested by the person depositing such shares with the Depositary, the number of ADSs issuable in respect of such deposit.

Upon surrender at the office of the Depositary of ADSs for the purpose of withdrawal of the Deposited Securities represented thereby, and upon payment of the fees, governmental charges and taxes provided in the deposit agreement, and subject to the terms and conditions of the deposit agreement, our Articles of Association and the Deposited Securities, the holder of such ADSs will be entitled to delivery, to him or upon his order, as permitted by applicable law, of the amount of Deposited Securities at the time represented by such ADSs. The forwarding of share certificates, other securities, property, cash and other documents of title for such delivery will be at the risk and expense of the holder.

An ADR holder may surrender its ADR to the Depositary for the purpose of exchanging its ADR for uncertificated ADSs. The Depositary will cancel that ADR and will send the ADS registered holder a statement confirming that the ADS registered holder is the registered holder of uncertificated ADSs. Alternatively, upon receipt by the Depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the Depositary will execute and deliver to the ADS registered holder an ADR evidencing those ADSs.

Ordinary shares that the Depositary believes have been withdrawn from a restricted depositary receipt facility established or maintained by a depositary bank (including any such other facility maintained by the Depositary) may be accepted for deposit only if those ordinary shares are not "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, and the Depositary may, as a condition of accepting those ordinary shares for deposit, require the person depositing those ordinary shares to provide the Depositary with a certificate to the foregoing effect.

**Dividends and Other Distributions**

The Depositary will distribute all cash dividends or other cash distributions that it receives in respect of deposited ordinary shares to the holders of the ADSs, after payment of any charges and fees provided for in the deposit agreement in proportion to their holdings of ADSs. The cash amount distributed will be reduced by any amounts that the Depositary must withhold on account of taxes.

If we make a non-cash distribution in respect of any deposited ordinary shares, the Depositary will distribute the property it receives to holders of the ADSs, after deduction or upon payment of any taxes, charges and fees provided for in the deposit agreement, in proportion to their holdings of ADSs. If a distribution that we make in respect of deposited ordinary shares consists of a dividend in, or free distribution of, ordinary shares, the Depositary may, after consultation with us, and will, if we request so in writing, distribute to holders of the ADSs, in proportion to their holdings of ADSs, additional ADSs representing the amount of ordinary shares received as such dividend or free distribution. If the Depositary does not distribute additional ADSs, each ADS will from then forward also represent its proportional share of the additional ordinary shares distributed in respect of the deposited ordinary shares before the dividend or free distribution.

If the Depositary determines that any distribution of property, other than cash or ordinary shares, cannot be made proportionately among ADS holders or if for any other reason, including any requirement that we or the Depositary withhold an amount on account of taxes or other governmental charges, the Depositary deems that such a distribution is not feasible, the Depositary may dispose of all or part of the property in any manner, including by public or private sale, that it deems equitable and practicable. The Depositary will then distribute the net proceeds of any such sale (net of any fees and expenses of the Depositary provided for in the deposit agreement) to ADS holders as in the case of a distribution received in cash.

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

------

**Record Date**

Whenever any cash dividend or other cash distribution becomes payable or any distribution other than cash shall be made, or whenever rights shall be issued with respect to the deposited ordinary shares, or whenever the Depositary causes a change in the number of ordinary shares represented by each ADS or receives notice of any meeting of holders of ordinary shares, the Depositary will fix a record date, which shall be as close as possible to the corresponding record date set by us, for the determination of the ADS holders who are entitled to receive the dividend distribution, distribution of rights or the net proceeds of the sale of ordinary shares as the case may be, or to give instructions for the exercise of voting rights at the meeting, subject to the provisions of the deposit agreement.

**Voting of the Underlying Deposited Securities**

When the Depositary receives notice of any meeting of holders of ordinary shares, it will, if we request, as soon as practicable thereafter, mail to the record holders of ADSs a notice including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the information contained in the notice of meeting provided by us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a statement that the record holders of ADSs at the close of business on a specified record date will be entitled, subject to any applicable provision of Scottish law and the Articles of Association or any similar document of ours, to instruct the Depositary as to the exercise of any voting rights pertaining to the ordinary shares represented by their ADSs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a brief explanation of how they may give instructions.

The Depositary has agreed that it will endeavor, in so far as practical, to vote or cause to be voted the ordinary shares in accordance with any written non-discretionary instructions of record holders of ADSs that it receives on or before the date set by the Depositary for that purpose. However, holders of ADSs may not receive notice or otherwise learn of a meeting of holders of ordinary shares in time to instruct the Depositary prior to a cut-off date the Depositary will set. The Depositary will not vote the ordinary shares except in accordance with such instructions.

Holders of ADSs will not be entitled to vote ordinary shares directly.

**Inspection of Transfer Books**

The Depositary will, at its office in New York City, keep books for the registration and transfer of ADSs. These books will be open for inspection by ADS holders at all reasonable times. However, this inspection may not be for the purpose of communicating with ADS holders in the interest of a business or object other than our business or a matter related to the deposit agreement or the ADSs.

**Reports and Notices**

We will furnish the Depositary with our annual and interim reports as described under "Incorporation of Documents by Reference". The Depositary will make available at its office in New York City, for any ADS holder to inspect, any reports and communications received from us that are both received by the Depositary as holder of ordinary shares and made generally available by us to the holders of those ordinary shares, including our annual report and accounts and interim report and accounts. Upon our written request, the Depositary will mail copies of those reports to ADS holders as provided in the deposit agreement.

On or before the first date on which we give notice, by publication or otherwise, of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any meeting of holders of the ordinary shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any adjourned meeting of holders of the ordinary shares; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the taking of any action in respect of any cash or other distributions or the offering of any rights in respect of the ordinary shares,

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

------

we have agreed to transmit to the Depositary and the Custodian a copy of the notice in the form given or to be given to holders of the ordinary shares. If requested in writing by us, the Depositary will, at our expense, arrange for the prompt transmittal or mailing of such notices, and any other reports or communications made generally available to holders of the ordinary shares, to all holders of ADSs.

**Amendment and Termination of the Deposit Agreement**

The form of the ADRs and any provisions of the deposit agreement may at any time and from time to time be amended by agreement between us and the Depositary, without the consent of holders of ADSs, in any respect which we and the Depositary may deem necessary or advisable. Any amendment that imposes or increases any fees or charges, other than taxes and other governmental charges, registration fees, transmission costs, delivery costs or other such expenses, or that otherwise prejudices any substantial existing right of holders of outstanding ADSs, will not take effect as to outstanding ADSs until thirty (30) days after notice of the amendment has been given to the record holders of those ADSs. Every holder of ADSs at the time an amendment becomes effective will be deemed by continuing to hold the ADSs to consent and agree to the amendment and to be bound by the deposit agreement or the ADR as amended. No amendment may impair the right of any holder of ADSs to surrender ADSs and receive in return the ordinary shares represented by those ADSs.

Whenever we direct, the Depositary has agreed to terminate the deposit agreement by mailing a termination notice to the record holders of all ADSs then outstanding at least ninety (90) days before the date fixed in the notice of termination. The Depositary may likewise terminate the deposit agreement by mailing a termination notice to us and the record holders of all ADSs then outstanding if at any time sixty (60) days shall have expired since the Depositary delivered a written notice to us of its election to resign and a successor depositary shall not have been appointed and accepted its appointment.

If any ADSs remain outstanding after the date of any termination, the Depositary will then:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• discontinue the registration of transfers of ADSs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• suspend the distribution of dividends to holders of ADSs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not give any further notices or perform any further acts under the deposit agreement, except those listed below, with respect to those ADSs.

The Depositary will, however, continue to collect dividends and other distributions pertaining to the ordinary shares. It will also continue to sell rights and other property as provided in the deposit agreement and deliver ordinary shares, together with any dividends or other distributions received with respect to them and the net proceeds of the sale of any rights or other property, in exchange for ADSs surrendered to it.

At any time after the date of termination of the deposit agreement, the Depositary may sell the ordinary shares then held. The Depositary will then hold uninvested the net proceeds of any such sales, together with any other cash then held by it under the deposit agreement, unsegregated and without liability for interest, for the pro rata benefit of the holders of ADSs that have not previously been surrendered.

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**Charges of the Depositary**

The following charges shall be incurred by any party depositing or withdrawing ordinary shares, or by any party surrendering ADSs or to whom ADSs are issued:

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| | |
|:---|:---|
| $5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property.<br>Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates. |
| $.02 (or less) per ADS | Any cash distribution to ADS registered holders (including dividends). |
| A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for issuance of ADSs | Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS registered holders. |
| $.02 (or less) per ADSs per calendar year | Depositary services. |
| Registration or transfer fees | Transfer and registration of shares on the share register to or from the name of the depositary or its agent when you deposit or withdraw shares. |
| Expenses of the depositary | Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement).<br>Converting foreign currency to US Dollars. |
| Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes | As necessary. |
| Any charges incurred by the depositary or its agents for servicing the deposited securities | As necessary. |

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The Depositary collects its fees for delivery and surrender of ADSs directly from investors depositing ordinary shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may collect its annual fee for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants for them. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

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

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The Depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the Depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the Depositary's obligation to act without negligence or bad faith. The methodology used to determine exchange rates used in currency conversions is available upon request.

The holders of ADSs will be responsible for any taxes or other governmental charges payable on their ADSs or on the ordinary shares. The Depositary may refuse to transfer ADSs or allow withdrawal of the ordinary shares until such taxes or other charges are paid. The Depositary may apply payments owed to holders of ADSs or sell deposited ordinary shares underlying such ADSs to pay any taxes owed and holders of ADSs will remain liable for any deficiency. If the Depositary sells deposited ordinary shares, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to holders of ADSs any proceeds, or send to holders of ADSs any property, remaining after it has paid the taxes.

**Direct Registration System**

ADSs not evidenced by ADRs shall be transferable as uncertificated registered securities under the laws of the State of New York.

The Direct Registration System ("DRS") and Profile Modification System ("Profile") will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the Depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements sent by the Depositary to the owners entitled thereto. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of a registered holder of ADSs, to direct the Depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the ADS registered holder to register such transfer.

In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the Depositary will not verify, determine or otherwise ascertain that the DTC participant which is claiming to be acting on behalf of an ADS registered holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the ADS registered holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the Depositary's reliance on and compliance with instructions received by the Depositary through the DRS/Profile System and in accordance with the deposit agreement, shall not constitute negligence or bad faith on the part of the Depositary.

**General**

Neither the Depositary nor we nor any of the Depositary's or our respective directors, employees, agents or affiliates will be liable to ADS holders if prevented or forbidden or delayed by any present or future law of any country or by any governmental or regulatory authority or stock exchange, any present or future provision of the Articles of Association, any provision of any securities issued or distributed by us, or any act of God or war or terrorism or other circumstances beyond our or its control in performing our or its obligations under the deposit agreement. The obligations of each of us and the Depositary under the deposit agreement are expressly limited to performing our and its specified duties without negligence or bad faith.

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The ADSs are transferable on the books of the Depositary or its agent. However, the Depositary may close the transfer books as to ADSs at any time when it deems it expedient to do so in connection with the performance of its duties or at our request. As a condition precedent to the execution and delivery, registration of transfer, split-up, combination or surrender of any ADSs or withdrawal of any ordinary shares, the Depositary or the Custodian may require the person presenting the ADSs or depositing the ordinary shares to pay a sum sufficient to reimburse it for any related tax or other governmental charge and any share transfer or registration fee and any applicable fees payable as provided in the deposit agreement. The Depositary may withhold any dividends or other distributions, or may sell for the account of the holder any part or all of the ordinary shares represented by the ADSs, and may apply those dividends or other distributions or the proceeds of any sale in payment of the tax or other governmental charge. The ADS holder will remain liable for any deficiency.

Any ADS holder may be required from time to time to furnish the Depositary or the Custodian with proof satisfactory to the Depositary of citizenship or residence, exchange control approval, legal or beneficial ownership of ADSs or other securities, compliance with all applicable laws or regulations and the terms of the deposit agreement or such information relating to the registration on our books or those that the registrar maintains for us for the ordinary shares in registered form, or other information, to execute certificates and to make representations and warranties that the Depositary deems necessary or proper or as we may reasonably request by written request to the Depositary. Until those requirements have been satisfied, the Depositary may withhold the delivery or registration of transfer of any ADSs or the distribution or sale of any dividend or other distribution or proceeds of any sale or distribution or the delivery of any deposited preference shares or other property related to the ADSs. The delivery or registration of transfer of ADSs may be suspended during any period when the transfer books of the Depositary are closed or if we or the Depositary deems it necessary or advisable. The surrender of outstanding ADSs and the withdrawal of ordinary shares may only be suspended as a result of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• temporary delays caused by closing the transfer books or those of the Depositary or the deposit of ordinary shares in connection with voting at shareholder meetings, or the payment of dividends;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the non-payment of fees, taxes and similar charges; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• non-compliance with any U.S. or foreign laws or governmental regulations relating to the ADSs or to the withdrawal of ordinary shares.

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**Debt Securities**

Each series of notes listed on the New York Stock Exchange and set forth on the cover page to the 2025 Annual Report has been issued by LBG. Each of these series of notes was issued pursuant to an effective registration statement and a related prospectus and prospectus supplement (if applicable) setting forth the terms of the relevant series of notes.

The following table sets forth the dates of the registration statements, dates of the base prospectuses and dates of issuance for each relevant series of notes (the "**Notes**").

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| | | | |
|:---|:---|:---|:---|
| **Date of Base Prospectus** | **Series** | **Registration Statement** | **Date of Issuance** |
| June 6, 2025 | 4.425% Senior Callable Fixed-to-Fixed Rate Notes due 2036 | 333-287829 | November 4, 2025 |
| June 6, 2025 | 4.943% Senior Callable Fixed-to-Fixed Rate Notes due 2031 | 333-287829 | November 4, 2025 |
| June 6, 2025 | Senior Callable Floating Rate Notes due 2031 | 333-287829 | November 4, 2025 |
| June 6, 2025 | 4.818% Senior Callable Fixed-to-Fixed Rate Notes due 2029 | 333-287829 | June 13, 2025 |
| June 6, 2025 | Senior Callable Floating Rate Notes due 2029 | 333-287829 | June 13, 2025 |
| June 6, 2025 | 6.068% Fixed Rate Reset Dated Subordinated Tier 2 Notes due 2036 | <br>333-287829  | June 13, 2025 |
| June 7, 2022 | 5.590% Senior Callable Fixed-to-Fixed Rate Notes due 2035 | 333-265452 | November 26, 2024 |
| June 7, 2022 | 5.087% Senior Callable Fixed-to-Fixed Rate Notes due 2028 | 333-265452 | November 26, 2024 |
| June 7, 2022 | Senior Callable Floating Rate Notes due 2028 | 333-265452 | November 26, 2024 |
| June 7, 2022 | 5.721% Senior Callable Fixed-to-Fixed Rate Notes due 2030 | 333-265452 | June 5, 2024 |
| June 7, 2022 | 5.679% Senior Callable Fixed-to-Fixed Rate Notes due 2035 | 333-265452 | January 5, 2024 |
| June 7, 2022 | 5.462 % Senior Callable Fixed-to-Fixed Rate Notes due 2028 | 333-265452 | January 5, 2024 |
| June 7, 2022 | Senior Callable Floating Rate Notes due 2028 | 333-265452 | January 5, 2024 |
| June 7, 2022 | 5.985% Senior Callable Fixed-to-Fixed Rate Notes due 2027 | 333-265452 | August 7, 2023 |
| June 7, 2022 | Senior Callable Floating Rate Notes due 2027 | 333-265452 | August 7, 2023 |
| June 7, 2022 | 5.871% Senior Callable Fixed-to-Fixed Rate Notes due 2029 | 333-265452 | March 6, 2023 |
| June 7, 2022 | 7.953% Fixed Rate Reset Subordinated Debt Securities due 2033 | 333-265452 | November 15, 2022 |
| June 7, 2022 | 4.976% Senior Callable Fixed-to-Fixed Rate Notes due 2033 | 333-265452 | August 11, 2022 |
| June 3, 2019 | 3.750% Senior Callable Fixed-to-Fixed Rate Notes due 2028 | 333-231902 | March 18, 2022 |
| June 3, 2019 | 3.369% Fixed Rate Reset Subordinated Debt Securities | 333-260953 | December 14, 2021 |
| June 3, 2019 | 1.985% Fixed Rate Reset Subordinated Debt Securities | 333-231902 | June 15, 2021 |
| June 3, 2019 | 1.627% Senior Callable Fixed-to-Fixed Rate Notes due 2027 | 333-231902 | March 11, 2021 |
| June 2, 2016 | 4.550% Senior Notes due 2028 | 333-211791 | August 9, 2018 |
| June 2, 2016 | 4.375% Senior Notes due 2028 | 333-211791 | March 15, 2018 |
| June 2, 2016 | 4.344% Subordinated Securities due in 2048 | 333-211791 | January 4, 2018 |
| June 2, 2016 | 3.574% Senior Notes due in 2028 | 333-211791 | October 31, 2017 |
| June 2, 2016 | 3.750% Senior Notes due 2027 | 333-211791 | January 4, 2017 |
| June 2, 2016 | 5.300% Subordinated Securities due 2045 | 333-214016 | November 4, 2016 |
| June 7, 2013 | 4.650% Subordinated Securities due 2026 | 333-189150 | March 17, 2016 |

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

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Each of the following descriptions of our Notes is a summary and does not purport to be complete and is qualified in its entirety by the full terms of the Notes and the relevant indenture thereto, which are available at www.sec.com. Each of the descriptions is organized by each base prospectus and includes the description of notes for each issuance thereunder. References to "accompanying prospectus" refers to the relevant base prospectus for the issuance. To the extent the language in the prospectus supplement modifies language in the base prospectus or there is any inconsistency between the information in the base prospectus and the prospectus supplement, the terms of the prospectus supplement govern.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.<u>Base Prospectus – dated June 6, 2025:</u>**

**DESCRIPTION OF DEBT SECURITIES**

*The following is a summary of the general terms of the debt securities issued by LBG. Each time that debt securities are issued, a prospectus supplement will be filed with the SEC, which you should read carefully. The prospectus supplement will summarize specific financial terms of your security and may contain additional terms of those debt securities. The terms presented here, together with the terms contained in the prospectus supplement, will be a description of the material terms of the debt securities, but if there is any inconsistency between the terms presented here and those in the prospectus supplement, those in the prospectus supplement will apply and will replace those presented here. Therefore, the statements we make below in this section may not apply to your debt security. You should also read the indentures and any related supplemental indentures establishing such debt securities under which we will respectively issue the debt securities, which have been filed with the SEC as exhibits to the registration statement of which this prospectus is a part.*

*References to "debt securities" in this prospectus, mean the senior debt securities and subordinated debt securities that may be issued by LBG. The term "debt securities" does not include the "capital securities" described under "Description of Capital Securities".*

*Senior debt securities will be issued under a senior debt indenture. Subordinated debt securities will be issued under a subordinated debt indenture. The subordinated debt securities of any series will be subordinated obligations. Each indenture for debt securities issued by LBG is a contract between LBG and The Bank of New York Mellon, acting through its London Branch, which will initially act as trustee. None of the indentures limit our ability to incur additional indebtedness, including additional senior indebtedness.*

**General**

The debt securities are not deposits and are not insured or guaranteed by the U.S. Federal Deposit Insurance Corporation or any other government agency of the United States or the United Kingdom.

The indentures do not limit the amount of debt securities that we may issue. We may issue debt securities in one or more series. The relevant prospectus supplement for any particular series of debt securities will contain, where applicable, the following terms of, and other information relating to, any of the offered debt securities:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether they are senior debt securities or subordinated debt securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• their title (which will distinguish the debt securities of the series from all other debt securities), authorized denomination and aggregate principal amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the price or prices at which they will be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• their maturity date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the annual interest rate or rates, or how to calculate the interest rate or rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the date or dates from which interest, if any, will accrue or the method, if any, by which such date or dates will be determined;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether the payment of interest can be deferred;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether payments are conditional on our ability to make such payments and remain able to pay our debts as they fall due and that our assets continue to exceed our liabilities (other than subordinated liabilities);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the times and places for payment of the principal of and premium, if any, and any interest, if any, on the debt securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the terms of any mandatory or optional redemption, including the amount of any premium;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any repurchase or sinking fund provisions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if other than the principal amount thereof, the portion of the principal amount of the debt securities payable upon acceleration or redemption;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the currency or currencies in which they are denominated and in which we will make any payments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether the debt securities will be issued in whole or in part in the form of one or more global securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provisions, if any, for the exchange, modification or conversion of such debt securities, including, but not limited to, with respect to senior debt securities, the terms, if any, on which such senior debt securities may or will be converted into or exchanged at our option or otherwise for our stock or other securities or for stock or other securities of another entity or other entities, into a basket or baskets of such securities, into an index or indices of such securities, into the cash value therefor or into any combination of the foregoing, any specific terms relating to the adjustment thereof and the period during which such senior debt securities may or shall be so converted or exchanged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether the amounts of payment of principal of and premium, if any, or interest, if any, on the debt securities may be determined with reference to an index or are otherwise not fixed on the original issue date thereof, the manner in which such amounts shall be determined and the calculation agent, if any, who will be appointed and authorized to calculate such amounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any modifications or additions to the events of default with respect to the debt securities offered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any additional subordination terms with respect to the subordinated debt securities offered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether and under what circumstances, if other than those described in this prospectus, we will pay additional amounts on the debt securities and whether, and on what terms, if other than those described in this prospectus, we may redeem the debt securities following certain developments with respect to tax laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provisions relating to the exercise of the U.K. bail-in power by the relevant U.K. resolution authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any listing on a securities exchange; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any other terms of the debt securities.

In addition, the prospectus supplement will describe the material U.S. federal and U.K. tax considerations that apply to any particular series of debt securities.

Debt securities may bear interest at a fixed rate or a floating rate. We may sell any debt securities that bear no interest, or that bear interest at a rate that at the time of issuance is below the prevailing market rate, at a discount to their stated principal amount.

Holders of debt securities shall have no voting rights except those described under the heading "—Modification and Waiver" below.

*If we issue subordinated debt securities that, in each case, qualify as Tier 2 capital or other capital for regulatory purposes, the payment, subordination, redemption, events of default and other terms may vary from those described in this prospectus and will be set forth in the relevant prospectus supplement.*

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**Payments**

We will make any payments of interest and principal on any particular series of debt securities on the dates and, in the case of payments of interest, at the rate or rates, that are set out in, or that are determined by the method of calculation described in, the relevant prospectus supplement.

***Subordinated Debt Securities***

Unless the relevant prospectus supplement provides otherwise, if we do not make a payment on a series of subordinated debt securities on any payment date, the obligation to make that payment shall be deferred, if it is an interest payment, until the date upon which we pay a dividend on any class of our share capital and, if it is a principal payment, until the first business day after the date that falls six months after the original payment date (a "Deferred Payment Date"). If we fail to make a payment before the Deferred Payment Date, that failure shall not create a default or otherwise allow any holder to sue us for the payment or take any other action. The relevant prospectus supplement will set forth the terms on which the payment of interest and principal on the subordinated debt securities can be deferred and any other terms relating to payments on subordinated debt securities.

**Subordination**

***Senior Debt Securities***

Unless the relevant prospectus supplement provides otherwise, senior debt securities and coupons (if any) appertaining thereto constitute direct, unconditional, unsecured and unsubordinated obligations ranking *pari passu*, without any preference among themselves, with all of our other outstanding unsecured and unsubordinated obligations, present and future, except such obligations as are preferred by operation of law.

***Subordinated Debt Securities***

Unless the relevant prospectus supplement provides otherwise, in a winding-up, all payments on any series of subordinated debt securities will be subordinate to, and subject in right of payment to the prior payment in full of, all claims of all creditors other than claims in respect of any liability that is, or is expressed to be, subordinated, whether only in the event of a winding up or otherwise, to the claims of all or any creditors, in the manner provided in the relevant subordinated debt indenture.

***General***

As a consequence of these subordination provisions, if winding-up proceedings should occur, each holder of subordinated debt securities may recover less ratably than the holders of unsubordinated liabilities. If, in any winding-up, the amount payable on any series of debt securities and any claims ranking equally with that series are not paid in full, those debt securities and other claims ranking equally will share ratably in any distribution of assets in a winding-up in proportion to the respective amounts to which they are entitled. If any holder is entitled to any recovery with respect to the debt securities in any winding-up or liquidation, the holder might not be entitled in those proceedings to a recovery in U.S. dollars and might be entitled only to a recovery in pounds respective amounts to which they are entitled. If any holder is entitled to any recovery with respect to the debt securities in any winding-up or liquidation, the holder might not be entitled in those proceedings to a recovery in U.S. dollars and might be entitled only to a recovery in pounds sterling or any other lawful currency of the United Kingdom.

**Agreement with Respect to the Exercise of U.K. Bail-in Power**

The debt securities may be subject to the exercise of the U.K. bail-in power by the relevant U.K. resolution authority. As more fully set out in the relevant prospectus supplement, if the U.K. bail-in power applies to the debt securities of a series, by its acquisition of the debt securities, each holder of such debt securities will be bound by (a) the effect of the exercise of any U.K. bail-in power by the relevant U.K. resolution authority and (b) the variation of the terms of debt securities or the relevant indenture, if necessary, to give effect to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority.

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**Additional Amounts**

Unless the relevant prospectus supplement provides otherwise, amounts to be paid on any series of debt securities will be made without deduction or withholding for, or on account of, any and all present and future income, stamp and other taxes, levies, imposts, duties, charges or fees imposed, levied, collected, withheld or assessed by or on behalf of the United Kingdom or any political subdivision thereof or authority thereof that has the power to tax (a "U.K. taxing jurisdiction"), unless such deduction or withholding is required by law. If at any time a U.K. taxing jurisdiction requires us to make such deduction or withholding, we will pay additional amounts with respect to the interest only on the debt securities ("Additional Amounts") that are necessary in order that the net amounts of interest paid to the holders of those debt securities, after the deduction or withholding, shall equal the amounts of interest only which would have been payable on that series of debt securities if the deduction or withholding had not been required. However, this will not apply to any such tax, levy, impost, duty, charge or fee which would not have been deducted or withheld but for the fact that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holder or the beneficial owner of the debt securities is a domiciliary, national or resident of, or engaging in business or maintaining a permanent establishment or physically present in, a U.K. taxing jurisdiction or otherwise having some connection with the U.K. taxing jurisdiction other than the holding or ownership of a debt security, or the collection of any payment of, or in respect of, principal of, or any interest or other payment on, any debt security of the relevant series;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• except in the case of a winding-up in the United Kingdom, the relevant debt security is presented (where presentation is required) for payment in the United Kingdom;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the relevant debt security is presented (where presentation is required) for payment more than 30 days after the date payment became due or was provided for, whichever is later, except to the extent that the holder would have been entitled to the Additional Amounts on presenting the debt security for payment at the close of that 30 day period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holder or the beneficial owner of the relevant debt security or the beneficial owner of any payment of or in respect of principal of, or any interest or other payment on, the debt security failed to comply with a request by us or our liquidator or other authorized person addressed to the holder to provide information concerning the nationality, residence or identity of the holder or the beneficial owner or to make any declaration or other similar claim to satisfy any requirement, which is required or imposed by a statute, treaty, regulation or administrative practice of a U.K. taxing jurisdiction as a precondition to exemption from all or part of the tax, levy, impost, duty, charge or fee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the deduction or withholding is imposed by reason of any agreement with the U.S. Internal Revenue Service in connection with Sections 1471-1474 of the U.S. Internal Revenue Code and the U.S. Treasury regulations thereunder ("FATCA"), any intergovernmental agreement between the United States and the United Kingdom or any other jurisdiction with respect to FATCA, or any law, regulation or other official guidance enacted in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any combination of the above items,

nor shall Additional Amounts be paid with respect to any interest only on the debt securities to any holder who is a fiduciary or partnership or settlor with respect to such fiduciary or a member of such partnership other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of any taxing jurisdiction to be included in the income for tax purposes of a beneficiary or partner or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such Additional Amounts, had it been the holder.

Whenever we refer in this prospectus and any prospectus supplement, in any context, to the payment of interest on, or in respect of, any debt security of any series, we mean to include the payment of Additional Amounts to the extent that, in the context, Additional Amounts are, were or would be payable.

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**Redemption of Senior Debt Securities**

***Tax Redemption of Senior Debt Securities***

Unless the relevant prospectus supplement provides otherwise, we will have the option to redeem the senior debt securities of any series, as a whole but not in part, upon not less than 30 nor more than 60 days' notice to each holder of senior debt securities, on any interest payment date, at a redemption price equal to 100% of their principal amount together with any accrued but unpaid interest, to the redemption date, or, in the case of discount securities, their accreted face amount, together with any accrued interest, if, at any time, we determine that as a result of a change in or amendment to the laws or regulations of a U.K. taxing jurisdiction, including any treaty to which it is a party, or any change in the application or interpretation of those laws or regulations, including a decision of any court or tribunal which change or amendment becomes effective or applicable on or after a date included in the terms of such senior debt securities:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in making any payments on the particular series of senior debt securities, we have paid or will or would on the next interest payment date be required to pay Additional Amounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the payment of interest on the next interest payment date in respect of any of the series of senior debt securities would be treated as "a distribution" within the meaning of Chapter 2, Part 23 of the Corporation Tax Act 2010 of the United Kingdom, or any statutory modification or reenactment of such Act; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on the next interest payment date we would not be entitled to claim a deduction in respect of the payment of interest in computing our U.K. taxation liabilities, or the value of such deduction to us would be materially reduced.

Prior to the giving of any notice of redemption, we must deliver to the trustee (i) a written legal opinion of independent United Kingdom counsel of recognized standing selected by us in a form satisfactory to the trustee confirming that the relevant change or amendment has occurred and that we are entitled to exercise its right of redemption; and (ii) an officer's certificate, evidencing compliance with such provisions and stating that we are entitled to redeem the senior debt securities pursuant to the terms of such senior debt securities.

***Optional Redemption of Senior Debt Securities***

The relevant prospectus supplement will specify whether or not the relevant issuer may redeem the senior debt securities of any series, in whole or in part, at its option, including any conditions to its right to exercise such option, in any other circumstances and, if so, the prices and any premium at which and the dates on which it may do so. Any notice of redemption of senior debt securities of any series will state, among other items:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the relevant regular record date or special record date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of senior debt securities to be redeemed if less than all of the outstanding senior debt securities of any series is to be redeemed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the redemption price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that, the redemption price will become due and payable on the redemption date and, if applicable, that interest will cease to accrue on such date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the place or places at which such senior debt securities are to be surrendered for payment of the redemption price; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the CUSIP, Common Code and/or ISIN number or numbers, if any, with respect to the senior debt securities being redeemed.

In the case of a partial redemption, the trustee shall select the senior debt securities to be redeemed in any manner which it deems fair and appropriate, and consistent with the rules and regulations of the applicable clearing system.

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We or any of our respective subsidiaries may at any time and from time to time purchase senior debt securities of any series in the open market or by tender (available to each holder of senior debt securities of the relevant series) or by private agreement, if applicable law permits. Any senior debt securities of any series that we purchase beneficially for our account, other than in connection with dealing in securities, will be treated as cancelled and will no longer be issued and outstanding.

**Redemption of Subordinated Debt Securities**

Any terms of the redemption of any series of subordinated debt securities, whether at our option or upon the occurrence of certain events (including, but not be limited to, the occurrence of certain tax or regulatory events), will be set forth in the relevant prospectus supplement.

Under existing PRA requirements, we may not make any redemption or repurchase of certain debt securities beneficially for our own account, other than a repurchase in connection with dealing in securities, unless, among other things, prior notice to the PRA is given and, in certain circumstances, the PRA has consented or given its permission in advance. The PRA (or any successor thereto) may impose conditions on any redemption or repurchase, all of which will be set out in the accompanying prospectus supplement with respect to any series of debt securities.

**Modification and Waiver**

We and the trustee may make certain modifications and amendments to the applicable indenture with respect to any series of debt securities without the consent of the holders of the debt securities. Other modifications and amendments may be made to the indenture with the consent of the holder or holders of not less than a majority, or in the case of subordinated debt securities, two-thirds, in aggregate outstanding principal amount of the debt securities of the series outstanding under the indenture that are affected by the modification or amendment, voting as one class. However, no modifications or amendments may be made without the consent of the holder of each debt security affected that would:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• change the stated maturity of the principal amount of any debt security;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduce the principal amount of, the interest rates on, or any premium payable upon the redemption of, with respect to, any debt security;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduce the amount of principal of discount securities that would be due and payable upon an acceleration of their maturity date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• change any obligation to pay Additional Amounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• change the currency of payment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• impair the right to institute suit for the enforcement of any payment due and payable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduce the percentage in aggregate principal amount of outstanding debt securities of any series necessary to modify or amend the relevant indenture or to waive compliance with certain provisions of the relevant indenture and any Senior Debt Security Event of Default, Subordinated Debt Security Event of Default or Subordinated Debt Security Default (as such terms are defined below);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• modify the subordination provisions or change the terms of our obligations in respect of the due and punctual payment of the amounts due and payable on the debt securities in a manner adverse to the holders; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• modify any of the above requirements.

In addition, variations in the terms and conditions of our subordinated debt securities of any series, including modifications relating to subordination, redemption, a Subordinated Debt Security Event of Default, or Subordinated Debt Security Default (as such terms are defined below) as described in the relevant prospectus supplement, may require the permission of, or consent from, the PRA.

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**Events of Default; Default; Limitation of Remedies**

***Senior Debt Security Event of Default***

Unless the relevant prospectus supplement provides otherwise, a "Senior Debt Security Event of Default" with respect to any series of senior debt securities shall result if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• LBG does not pay any principal or interest on any senior debt securities of that series within 14 days from the due date for payment and the principal or interest has not been duly paid within 14 days following written notice from the trustee or from holders of 25% in aggregate principal amount of the outstanding senior debt securities of that series to LBG requiring the payment to be made. It shall not, however, be a Senior Debt Security Event of Default if during the 14 days after the notice, LBG delivers a written opinion of legal advisors, who may be an employee of, or legal advisors for, LBG or other legal advisors, to the trustee, such opinion to be acceptable to the trustee ("Opinion of Counsel"), concluding that such sums were not paid in order to comply with a law, regulation or order of any court of competent jurisdiction; provided however, that the trustee may by notice to LBG require LBG to take such action (including but not limited to proceedings for a declaration by a court of competent jurisdiction) as the trustee may be advised in an Opinion of Counsel, upon which opinion the trustee may conclusively rely, is appropriate and reasonable in the circumstances to resolve such doubt, in which case LBG will forthwith take and expeditiously proceed with such action and will be bound by any final resolution of the doubt resulting therefrom. If any such action results in a determination that the relevant payment can be made without violating any applicable law, regulation or order, then such payment will become due and payable on the expiration of 14 days after the trustee gives written notice to LBG informing it of such resolution. The foregoing shall not otherwise be deemed to impair the right of any holder to receive payment of the principal of and interest on any such security or to institute suit for the enforcement of any such payment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• LBG defaults in the performance or breaches, any covenant or warranty of the senior debt indenture (other than as stated above with respect to payments when due) and that breach has not been remedied within 60 days of receipt of a written notice from (i) the trustee certifying that in its opinion the breach is materially prejudicial to the interests of the holders of the senior debt securities of that series and requiring the breach to be remedied or (ii) holders of at least 25% in outstanding principal amount of the senior debt securities of that series requiring the breach to be remedied; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• either a court of competent jurisdiction issues an order which is not successfully appealed within 30 days, or an effective shareholders' resolution is validly adopted, for the winding-up of LBG (other than under or in connection with a scheme of reconstruction, merger or amalgamation not involving bankruptcy or insolvency).

If a Senior Debt Security Event of Default occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal amount of the senior outstanding debt securities of that series may at their discretion declare the outstanding senior debt securities of that series to be due and repayable immediately (and the senior debt securities of that series shall thereby become due and repayable) at their principal amount (or at such other repayment amount as may be specified in or determined in accordance with the relevant prospectus supplement and in the case of original issue discount securities, the accreted face amount) together with accrued interest, if any, as provided in the prospectus supplement. However, after such declaration but before the trustee obtains a judgment or decree for payment of money due, the holder or holders of a majority in aggregate principal amount of the outstanding senior debt securities of the series may rescind or annul the declaration of acceleration and its consequences, but only if all Senior Debt Security Events of Default have been cured or waived and all payments due, other than those due as a result of acceleration, have been made. The trustee may at its discretion and without further notice institute such proceedings as it may think suitable, against LBG to enforce payment. Notwithstanding any contrary provisions, nothing shall impair the right of a holder, absent the holder's consent, to sue for any payments due but unpaid with respect to the senior debt securities.

Unless the relevant prospectus supplement provides otherwise, by accepting a senior debt security, each holder will be deemed to have waived any right of set-off, counterclaim or combination of accounts with respect to the senior debt securities or the applicable indenture that they might otherwise have against LBG whether before or during the winding-up of LBG.

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***Subordinated Debt Security Events of Default***

Unless the relevant prospectus supplement provides otherwise, a "Subordinated Debt Security Event of Default" with respect to any series of subordinated debt securities of LBG shall result if either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a court of competent jurisdiction makes an order which is not successfully appealed within 30 days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an effective shareholders' resolution is validly adopted for the winding-up of LBG other than under or in connection with a scheme of amalgamation or reconstruction not involving a bankruptcy or insolvency.

The exercise of any U.K. bail-in power by the relevant U.K. resolution authority shall not constitute a Subordinated Debt Security Event of Default.

If a Subordinated Debt Security Event of Default occurs and is continuing, the trustee or the holder or holders of at least 25% in aggregate principal amount of the outstanding subordinated debt securities of each series may declare to be due and payable immediately in accordance with the terms of the indenture the principal amount of, any accrued but unpaid payments (or, in the case of original issue discount securities, the accreted face amount, together with any accrued interest), including any deferred interest on the subordinated debt securities of the series. However, after such declaration but before the trustee obtains a judgment or decree for payment of money due, the holder or holders of a majority in aggregate principal amount of the outstanding subordinated debt securities of the series may rescind or annul the declaration of acceleration and its consequences, but only if all Subordinated Debt Security Events of Default have been cured or waived and all payments due, other than those due as a result of acceleration, have been made.

***Subordinated Debt Security Defaults***

In addition to Subordinated Debt Security Events of Default, the subordinated debt indentures also separately provide for Subordinated Debt Security Defaults. Unless the relevant prospectus supplement provides otherwise, it shall be a "Subordinated Debt Security Default" with respect to any series of subordinated debt securities if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any installment of interest upon any subordinated debt security of that series is not paid on or before its deferred payment date or such other date specified for its payment in the subordinated debt indentures and such failure continues for 14 days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all or any part of the principal of any subordinated debt security of that series is not paid on its deferred payment date, or when it otherwise becomes due and payable, whether upon redemption or otherwise, and such failure continues for seven days.

If a Subordinated Debt Security Default occurs and is continuing, the trustee may commence a proceeding in Scotland (but not elsewhere) for the winding-up of LBG.

However, a failure to make any payment on a series of subordinated debt securities shall not be a Subordinated Debt Security Default if it is withheld or refused in order to comply with any applicable fiscal or other law or regulation or order of any court of competent jurisdiction and LBG delivers an Opinion of Counsel to the trustee with that conclusion, at any time before the expiry of the applicable 14 day or seven day period by independent legal advisers.

Notwithstanding any contrary provisions, nothing shall impair the right of a holder, absent the holder's consent, to sue for any payments due but unpaid with respect to the subordinated debt securities.

Unless the relevant prospectus supplement provides otherwise, by accepting a subordinated debt security, each holder and the trustee will be deemed to have waived any right of set-off, counterclaim or combination of accounts with respect to the subordinated debt security or the applicable indenture (or between obligations which LBG may have under or in respect of any subordinated debt security and any liability owed by a holder or the trustee to LBG) that they might otherwise have against LBG, whether before or during the winding-up or liquidation of LBG.

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***Events of Default and Defaults–General***

Subject to certain exceptions, such as in the case of a default in the payment of the principal (or premium, if any) or interest on a senior debt security, the trustee may, without the consent of the holders, waive or authorize a Senior Debt Security Event of Default, provided that in the opinion of the trustee, the interests of the holders shall not be materially prejudiced thereby and provided further that the trustee shall not exercise any powers conferred on it in contravention of any notice in writing to LBG and the trustee of a declaration described in "—Senior Debt Security Event of Default" above but so that no such notice shall affect any waiver or authorization previously given or made.

The holder or holders of not less than a majority in aggregate principal amount of the outstanding debt securities of any series may waive any past Senior Debt Security Event of Default, Subordinated Debt Security Event of Default or Subordinated Debt Security Default with respect to the series, except a Senior Debt Security Event of Default, Subordinated Debt Security Event of Default or Subordinated Debt Security Default, in respect of the payment of interest, if any, or principal of (or premium, if any) or payments on any debt security or a covenant or provision of the indenture which cannot be modified or amended without the consent of each holder of debt securities of such affected series.

Subject to the provisions of the applicable indenture relating to the duties of the trustee, if a Senior Debt Security Event of Default, Subordinated Debt Security Event of Default or Subordinated Debt Security Default occurs and is continuing with respect to the debt securities of any series, the trustee will be under no obligation to any holder or holders of the debt securities of the series, unless they have offered indemnity or security satisfactory to the trustee in its sole discretion. Subject to the indenture provisions for the indemnification of the trustee, the holder or holders of a majority in aggregate principal amount of the outstanding debt securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee with respect to the series, if the direction is not in conflict with any rule of law or with the applicable indenture and does not expose the trustee to undue risk and the action would not be unjustly prejudicial to the holder or holders of any debt securities of any series not taking part in that direction. The trustee may take any other action that it deems proper which is not inconsistent with that direction.

The indentures provide that the trustee will, within 90 days after the occurrence of a Senior Debt Security Event of Default, Subordinated Debt Security Event of Default or Subordinated Debt Security Default with respect to the debt securities of any series, give to each holder of the debt securities of the affected series notice of the Senior Debt Security Event of Default, Subordinated Debt Security Event of Default or Subordinated Debt Security Default known to it, unless the Senior Debt Security Event of Default, Subordinated Debt Security Event of Default or Subordinated Debt Security Default, has been cured or waived; provided that the trustee shall be protected in withholding notice (except for a payment default) if it determines in good faith that withholding notice is in the interest of the holders of the debt securities of the affected series.

We are required to furnish to the trustee a statement as to our compliance with all conditions and covenants under the indenture (i) annually, and (ii) within five Business Days of a written request from the trustee.

**Consolidation, Merger and Sale of Assets; Assumption**

We may, without the consent of the holders of any of the debt securities, consolidate or amalgamate with, merge into or transfer or lease our assets substantially as an entirety to any person, provided that any successor corporation formed by any consolidation or amalgamation or into which we are merged, or any transferee or lessee of our assets, is a company organized under the laws of any part of the United Kingdom that assumes, by a supplemental indenture, our obligations on the debt securities, and under the applicable indenture, immediately after giving effect to such transaction, no event of default or default shall have occurred and be continuing, and we procure the delivery of a customary officer's certificate and legal opinion providing that the conditions precedent to the transaction have been complied with.

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**Governing Law**

The debt securities and the indentures will be governed by and construed in accordance with the laws of the State of New York, except that, as the indentures specify, the subordination provisions relating to each series of debt securities issued by LBG in the relevant indenture will be governed and construed in accordance with the laws of Scotland.

**Notices**

All notices to holders of registered debt securities shall be validly given if in writing and mailed, first-class postage prepaid, to them at their respective addresses in the registers maintained by the trustee.

**The Trustee**

The Bank of New York Mellon, acting through its London Branch, 160 Queen Victoria Street, London EC4V 4LA, is the trustee under the indentures. The trustee shall have and be subject to all the duties and responsibilities specified with respect to an indenture trustee under the Trust Indenture Act of 1939, as amended (the "TIA"). Subject to the provisions of the TIA, the trustee is under no obligation to exercise any of the powers vested in it by the indentures at the request of any holder of notes, unless offered indemnity or security satisfactory to the trustee in its sole discretion, by the holder against the costs, expense and liabilities which might be incurred thereby. LBG and certain members of the Group maintain deposit accounts and conduct other banking transactions with The Bank of New York Mellon in the ordinary course of our business. The Bank of New York Mellon under a nominee name is also the book-entry depositary with respect to certain of our debt securities and the depositary with respect to the ADSs representing certain of our ordinary shares.

**Consent to Service of Process**

Under the indentures, LBG irrevocably designates Kelvina Smith, Chief Legal Officer, Lloyds Securities Inc. and Deputy Chief Legal Officer, North America, Lloyds Bank Corporate Markets plc (or any successor thereto), currently of 1095 Avenue of the Americas, New York, NY 10036, as the authorized agent for service of process in any legal action or proceeding arising out of or relating to the indentures or any debt securities brought in any federal or state court in the Borough of Manhattan, in The City of New York, New York and LBG irrevocably submits to the jurisdiction of those courts.

**DESCRIPTION OF CERTAIN PROVISIONS RELATING TO DEBT SECURITIES AND CAPITAL SECURITIES**

**Form of Debt Securities and Capital Securities; Book-Entry System**

***General***

Unless the relevant prospectus supplement states otherwise, the debt securities and capital securities shall initially be represented by one or more global securities in registered form, without coupons attached, and will be deposited with or on behalf of one or more depositaries, including, without limitation, The Depository Trust Company ("DTC"), Euroclear Bank SA/NV ("Euroclear") and/or Clearstream Banking, S.A. ("Clearstream Luxembourg"), and will be registered in the name of such depositary or its nominee. Unless and until the debt securities or capital securities, as applicable, are exchanged in whole or in part for other securities under the terms of the applicable indenture or the global securities are exchanged for definitive securities, the global securities may not be transferred except as a whole by the depositary to a nominee or a successor of the depositary.

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Special procedures to facilitate clearance and settlement have been established among these clearing systems to trade securities across borders in the secondary market. Where payments for securities we issue in global form will be made in U.S. dollars, these procedures can be used for cross-market transfers and the securities will be cleared and settled on a delivery against payment basis. Cross-market transfers of securities that are not in global form may be cleared and settled in accordance with other procedures that may be established among the clearing systems for these securities.

The debt securities and capital securities may be accepted for clearance by DTC, Euroclear and Clearstream Luxembourg.

Neither we nor the trustee nor any of our or their agents has any responsibility for any aspect of the actions of DTC, Euroclear or Clearstream Luxembourg or any of their direct or indirect participants. Neither we nor the trustee nor any of our or their agents has any responsibility for any aspect of the records kept by DTC, Euroclear or Clearstream Luxembourg or any of their direct or indirect participants. Neither we nor the trustee nor any of our or their agents supervise these systems in any way. This is also true for any other clearing system indicated in a prospectus supplement.

DTC, Euroclear or Clearstream Luxembourg and their participants perform these clearance and settlement functions under agreements they have made with one another or with their customers. Investors should be aware that DTC, Euroclear or Clearstream Luxembourg and their participants are not obligated to perform these procedures and may modify them or discontinue them at any time.

The description of the clearing systems in this section reflects our understanding of the rules and procedures of DTC, Euroclear or Clearstream Luxembourg as they are currently in effect. Those systems could change their rules and procedures at any time.

So long as the depositary, or its nominee, is the holder of a global security, the depositary or its nominee will be considered the sole holder of such global security for all purposes under the indentures. Except as described below under the heading "—Issuance of Definitive Securities", no participant, indirect participant or other person will be entitled to have debt securities or capital securities, as applicable, registered in its name, receive or be entitled to receive physical delivery of debt securities or capital securities, as applicable, in definitive form or be considered the owner or holder of the debt securities or capital securities, as applicable, under the indentures. Each person having an ownership or other interest in debt securities or capital securities, as applicable, must rely on the procedures of the depositary, and, if a person is not a participant in the depositary, must rely on the procedures of the participant or other securities intermediary through which that person owns its interest to exercise any rights and obligations of a holder under the indentures, the debt securities or capital securities, as applicable.

**Payments on Global Securities**

Payments of any amounts in respect of any global securities will be made by the trustee to the depositary. Payments will be made to beneficial owners of debt securities or capital securities, as applicable, in accordance with the rules and procedures of the depositary or its direct and indirect participants, as applicable. We, the trustee and any of our and their agents will not have any responsibility or liability for any aspect of the records of any securities intermediary in the chain of intermediaries between the depositary and any beneficial owner of an interest in a global security, or the failure of the depositary or any intermediary to pass through to any beneficial owner any payments that we make to the depositary.

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**The Clearing Systems**

DTC, Euroclear and Clearstream Luxembourg have advised us as follows:

*DTC*. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly. The DTC rules applicable to its participants are on file with the SEC.

*Euroclear*. Euroclear holds securities for its participants and clears and settles transactions between its participants through simultaneous electronic book-entry delivery against payment, thus eliminating the need for physical movement of certificates. Euroclear provides various other services, including safekeeping, administration, clearance and settlement and securities lending and borrowing, and interfaces with domestic markets in several countries. Euroclear is operated by Euroclear Bank, under contract with Euroclear plc, a U.K. corporation. Euroclear Bank conducts all operations, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with Euroclear Bank, not Euroclear plc. Euroclear plc establishes policy for Euroclear on behalf of Euroclear participants. Euroclear participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include any underwriters for the debt securities or contingent convertible securities, as applicable. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly. Euroclear is an indirect participant in DTC. Securities clearance accounts and cash accounts with Euroclear are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System (collectively, the "Euroclear Terms and Conditions"), and applicable law. The Euroclear Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear.

*Clearstream Luxembourg*. Clearstream Luxembourg is incorporated under the laws of The Grand Duchy of Luxembourg as a *société anonyme* and is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector (*Commission de Surveillance du Secteur Financier*). Clearstream Luxembourg is owned by Deutsche Börse AG, a publicly traded company. Clearstream Luxembourg holds securities for its participants and facilitates the clearance and settlement of securities transactions among its participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Clearstream Luxembourg provides to its participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream Luxembourg interfaces with domestic markets in several countries.

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Clearstream Luxembourg's customers include worldwide securities brokers and dealers, banks, trust companies and clearing corporations and may include professional financial intermediaries. Its U.S. customers are limited to securities brokers, dealers and banks. Indirect access to the Clearstream Luxembourg system is also available to others that clear through Clearstream Luxembourg customers or that have custodial relationships with its customers, such as banks, brokers, dealers and trust companies. Clearstream Luxembourg is an indirect participant in DTC. Clearstream Luxembourg has established an electronic bridge with Euroclear to facilitate settlement of trades between Clearstream Luxembourg and Euroclear. Distributions with respect to the securities held beneficially through Clearstream Luxembourg are credited to cash accounts of Clearstream Luxembourg customers in accordance with its rules and procedures, to the extent received by Clearstream Luxembourg.

*Other Clearing Systems*. We may choose any other clearing system for a particular series of securities. The clearance and settlement procedures for the clearing system we choose will be described in the applicable prospectus supplement.

**Primary Distribution**

The distribution of debt securities and capital securities will be cleared through one or more of the clearing systems that we have described above or any other clearing system that is specified in the applicable prospectus supplement. Payment for debt securities and capital securities will be made on a delivery versus payment or free delivery basis. These payment procedures will be more fully described in the applicable prospectus supplement.

Clearance and settlement procedures may vary from one series of debt securities and capital securities, as applicable, to another according to the currency that is chosen for the specific series of debt securities or capital securities. Customary clearance and settlement procedures are described below.

We will submit applications to the relevant system or systems for the debt securities and capital securities to be accepted for clearance. The clearance numbers that are applicable to each clearance system will be specified in the applicable prospectus supplement.

**Clearance and Settlement Procedures**

*DTC.* DTC participants that hold debt securities or capital securities, as applicable, through DTC on behalf of investors will follow the settlement practices applicable to United States corporate debt obligations in DTC's Same-Day Funds Settlement System.

Debt securities and capital securities, as applicable, will be credited to the securities custody accounts of these DTC participants against payment in same-day funds, for payments in U.S. dollars, on the settlement date. For payments in a currency other than U.S. dollars, debt securities or capital securities, as applicable, will be credited free of payment on the settlement date. If payment is made other than in U.S. dollars, separate payment arrangements outside of the DTC system must be made between the DTC Participants involved.

*Euroclear and Clearstream Luxembourg.* We understand that investors that hold debt securities or capital securities, as applicable, through Euroclear or Clearstream Luxembourg accounts will follow the settlement procedures that are applicable to conventional Eurobonds in registered form for securities.

Debt securities or capital securities, as applicable, will be credited to the securities custody accounts of Euroclear and Clearstream Luxembourg participants on the business day following the settlement date, for value on the settlement date. They will be credited either free of payment or against payment for value on the settlement date.

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**Secondary Market Trading**

***Trading Between DTC Participants***

Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC's rules. Secondary market trading will be settled using procedures applicable to United States corporate debt obligations in DTC's Same-Day Funds Settlement System for securities.

If payment is made in U.S. dollars, settlement will be in same-day funds. If payment is made in a currency other than U.S. dollars, settlement will be free of payment. If payment is made other than in U.S. dollars, separate payment arrangements outside of the DTC system must be made between the DTC participants involved.

***Trading Between Euroclear and/or Clearstream Luxembourg Participants***

We understand that secondary market trading between Euroclear and/or Clearstream Luxembourg participants will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream Luxembourg. Secondary market trading will be settled using procedures applicable to conventional Eurobonds in registered form for securities.

***Trading Between a DTC Seller and a Euroclear or Clearstream Luxembourg Purchaser***

A purchaser of debt securities or capital securities, as applicable, that are held in the account of a DTC participant must send instructions to Euroclear or Clearstream Luxembourg at least one business day prior to settlement. The instructions will provide for the transfer of the debt securities or capital securities, as applicable, from the selling DTC participant's account to the account of the purchasing Euroclear or Clearstream Luxembourg participant. Euroclear or Clearstream Luxembourg, as the case may be, will then instruct the common depositary for Euroclear and Clearstream Luxembourg to receive the debt securities or capital securities, as applicable, either against payment or free of payment.

The interests in the debt securities or capital securities, as applicable, will be credited to the respective clearing system. The clearing system will then credit the account of the participant, following its usual procedures. Credit for the debt securities or capital securities, as applicable, will appear on the next day, European time. Cash debit will be back-valued to, and the interest on the debt securities or capital securities, as applicable, will accrue from, the value date, which would be the preceding day, when settlement occurs in New York. If the trade fails and settlement is not completed on the intended date, the Euroclear or Clearstream Luxembourg cash debit will be valued as of the actual settlement date instead.

Euroclear participants or Clearstream Luxembourg participants will need the funds necessary to process same-day funds settlement. The most direct means of doing this is to pre-position funds for settlement, either from cash or from existing lines of credit, as for any settlement occurring within Euroclear or Clearstream Luxembourg. Under this approach, participants may take on credit exposure to Euroclear or Clearstream Luxembourg until the debt securities or capital securities, as applicable, are credited to their accounts one business day later.

As an alternative, if Euroclear or Clearstream Luxembourg has extended a line of credit to them, participants can choose not to pre-position funds and will instead allow that credit line to be drawn upon to finance settlement. Under this procedure, Euroclear participants or Clearstream Luxembourg participants purchasing debt securities or capital securities, as applicable, would incur overdraft charges for one business day (assuming they cleared the overdraft as soon as the securities were credited to their accounts). However, any interest on the debt securities or capital securities, as applicable, would accrue from the value date. Therefore, in many cases, the investment income on debt securities or capital securities, as applicable, that is earned during that one-business day period may substantially reduce or offset the amount of the overdraft charges. This result will, however, depend on each participant's particular cost of funds.

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Because the settlement will take place during New York business hours, DTC participants will use their usual procedures to deliver debt securities or capital securities, as applicable, to the depositary on behalf of Euroclear participants or Clearstream Luxembourg participants. The sale proceeds will be available to the DTC seller on the settlement date. For DTC participants, then, a cross-market transaction will settle no differently than a trade between two DTC participants.

**Special Timing Considerations**

Investors should be aware that they will only be able to make and receive deliveries, payments and other communications involving the debt securities or capital securities, as applicable, through Clearstream Luxembourg and Euroclear on days when those systems are open for business. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States.

In addition, because of time-zone differences, there may be problems with completing transactions involving Clearstream Luxembourg and Euroclear on the same business day as in the United States. U.S. investors who wish to transfer their interests in the debt securities or capital securities, as applicable, or to receive or make a payment or delivery of the debt securities or capital securities, as applicable, on a particular day, may find that the transactions will not be performed until the next business day in Luxembourg or Brussels, depending on whether Clearstream Luxembourg or Euroclear is used.

**Issuance of Definitive Securities**

So long as the depositary holds the global securities of a particular series of debt securities or capital securities, as applicable, such global securities will not be exchangeable for definitive securities of that series unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the depositary notifies the trustee that it is unwilling or unable to continue to act as depositary for the debt securities or capital securities, as applicable, or the depositary ceases to be a clearing agency registered under the Exchange Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we are wound up and we fail to make a payment on the debt securities or capital securities, as applicable, when due; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• at any time we determine at our option and in our sole discretion that the global securities of a particular series of debt securities or capital securities should be exchanged for definitive debt securities or capital securities, as applicable, of that series in registered form.

Each person having an ownership or other interest in a debt security or capital security, as applicable, must rely exclusively on the rules or procedures of the depositary as the case may be, and any agreement with any direct or indirect participant of the depositary, including Euroclear or Clearstream Luxembourg and their participants, as applicable, or any other securities intermediary through which that person holds its interest, to receive or direct the delivery of possession of any definitive security. The indentures permit us to determine at any time and in our sole discretion that debt securities or capital securities, as applicable, shall no longer be represented by global securities. DTC has advised us that, under its current practices, it would notify its participants of our request, but will only withdraw beneficial interests from the global securities at the request of each DTC participant. We would issue definitive certificates in exchange for any such beneficial interests withdrawn.

Unless otherwise specified in the relevant prospectus supplement, definitive debt securities and definitive capital securities will be issued in registered form only. To the extent permitted by law, we, the trustee and any paying agent shall be entitled to treat the person in whose name any definitive security is registered as its absolute owner.

Payments in respect of each series of definitive securities and definitive capital securities will be made to the person in whose name such definitive securities are registered as it appears in the register for that series of debt securities or capital securities, as applicable. Payments will be made in respect of the debt securities or capital securities, as applicable, by check drawn on a bank in New York or, if the holder requests, by transfer to the holder's account in New York. Definitive securities should be presented to the paying agent for redemption.

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If we issue definitive debt securities or capital securities, as applicable, of a particular series in exchange for a particular global security, the depositary, as holder of that global security, will surrender it against receipt of the definitive debt securities or capital securities, as applicable, cancel the book-entry debt securities or capital securities, as applicable, of that series, and distribute the definitive debt securities or capital securities, as applicable, of that series to the persons and in the amounts that the depositary specifies pursuant to the internal procedures of such depositary.

If definitive securities are issued in the limited circumstances described above, those securities (i) will be transferable only on the register for that series of debt securities or capital securities, and (ii) may be transferred in whole or in part in denominations of any whole number of securities upon surrender of the definitive securities certificates together with the form of transfer endorsed on it, duly completed and executed at the specified office of a paying agent. If only part of a securities certificate is transferred, a new securities certificate representing the balance not transferred will be issued to the transferor within three business days after the paying agent receives the certificate. The new certificate representing the balance will be delivered to the transferor by uninsured post at the risk of the transferor, to the address of the transferor appearing in the records of the paying agent. The new certificate representing the securities that were transferred will be sent to the transferee within three business days after the paying agent receives the certificate transferred, by uninsured post at the risk of the holder entitled to the securities represented by the certificate, to the address specified in the form of transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.<u>Prospectus Supplement - 4.425% Senior Callable Fixed-to-Fixed Rate Notes due 2031, 4.943% Senior Callable Fixed-to-Fixed Rate Notes due 2036 and Senior Callable Floating Rate Notes due 2031</u>**

**DESCRIPTION OF THE SENIOR NOTES**

*In this prospectus supplement, we refer to the 2031 Fixed Rate Notes and the 2036 Fixed Rate Notes collectively as the "Fixed Rate Notes" and to the Fixed Rate Notes and the Floating Rate Notes collectively as the "Senior Notes". The following is a summary of certain terms of the Senior Notes. It supplements the description of the general terms of the debt securities of any series we may issue contained in the accompanying prospectus under the heading "Description of Debt Securities". If there is any inconsistency between the following summary and the description in the accompanying prospectus, the following summary governs.*

**2031 Fixed Rate Notes**

The 2031 Fixed Rate Notes will be issued in an aggregate principal amount of $1,500,000,000 and will mature on November 4, 2031. The 2031 Fixed Rate Notes bear interest at a fixed annual rate during the initial fixed rate period and at a reset annual rate during the reset fixed rate period, each as described below.

During the initial fixed rate period, interest will accrue from November 4, 2025 on the 2031 Fixed Rate Notes at a fixed rate of 4.425% per annum. Interest accrued on the Senior Notes during the initial fixed rate period will be payable semi-annually in arrear on May 4 and November 4 of each year, commencing on May 4, 2026. We refer to each such interest payment date during the initial fixed rate period as a "fixed rate interest payment date".

During the reset fixed rate period, interest will accrue on the 2031 Fixed Rate Notes at a fixed annual rate equal to the applicable U.S. Treasury Rate (as defined below) as determined by the Calculation Agent (as defined herein) on the 2031 Fixed Rate Notes Reset Determination Date (as defined below), *plus* 82 basis points (0.820%). Interest accrued on the 2031 Fixed Rate Notes during the reset fixed rate period will be payable semi-annually in arrear on May 4, 2031 and November 4, 2031. We refer to each such interest payment date during the reset fixed rate period as a "2031 Fixed Rate Notes reset rate interest payment date", and together with the fixed rate interest payment dates, the "2031 Fixed Rate Notes interest payment dates".

The "initial fixed rate period" is from, and including, November 4, 2025 to, but excluding, November 4, 2030 (the "2031 Fixed Rate Notes Reset Date") and the "reset fixed rate period" starts from, and including, the 2031 Fixed Rate Notes Reset Date to, but excluding, November 4, 2031.

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The "2031 Fixed Rate Notes Reset Determination Date" will be on the second business day immediately preceding the 2031 Fixed Rate Notes Reset Date.

**2036 Fixed Rate Notes**

The 2036 Fixed Rate Notes will be issued in an aggregate principal amount of $1,250,000,000 and will mature on November 4, 2036. The 2036 Fixed Rate Notes bear interest at a fixed annual rate during the initial fixed rate period and at a reset annual rate during the reset fixed rate period, each as described below.

During the initial fixed rate period, interest will accrue from November 4, 2025 on the 2036 Fixed Rate Notes at a fixed rate of 4.943% per annum. Interest accrued on the Senior Notes during the initial fixed rate period will be payable semi-annually in arrear on May 4 and November 4 of each year, commencing on May 4, 2026. We refer to each such interest payment date during the initial fixed rate period as a "fixed rate interest payment date".

During the reset fixed rate period, interest will accrue on the 2036 Fixed Rate Notes at a fixed annual rate equal to the applicable U.S. Treasury Rate (as defined below) as determined by the Calculation Agent (as defined herein) on the 2036 Fixed Rate Notes Reset Determination Date (as defined below), *plus* 97 basis points (0.970%). Interest accrued on the 2036 Fixed Rate Notes during the reset fixed rate period will be payable semi-annually in arrear on May 4, 2036 and November 4, 2036. We refer to each such interest payment date during the reset fixed rate period as a "2036 Fixed Rate Notes reset rate interest payment date", and together with the fixed rate interest payment dates, the "2036 Fixed Rate Notes interest payment dates".

The "initial fixed rate period" is from, and including, November 4, 2025 to, but excluding, November 4, 2035 (the "2036 Fixed Rate Notes Reset Date") and the "reset fixed rate period" starts from, and including, the 2036 Fixed Rate Notes Reset Date to, but excluding, November 4, 2036.

The "2036 Fixed Rate Notes Reset Determination Date" will be on the second business day immediately preceding the 2036 Fixed Rate Notes Reset Date.

Interest will be paid to holders of record of each series of Fixed Rate Notes in respect of the principal amount thereof outstanding 15 calendar days preceding the relevant Fixed Rate Notes interest payment date, whether or not a business day. If the scheduled maturity date or date of redemption or repayment is not a business day, we may pay interest and principal on the next succeeding business day, but interest on that payment will not accrue during the period from and after the scheduled maturity date or date of redemption or repayment.

***Initial Fixed Rate Period***

Interest on the Fixed Rate Notes during the initial fixed rate period will be calculated on the basis of a 360-day year consisting of twelve 30-day months and, in the case of an incomplete month, on the basis of the actual number of days elapsed in such period. If any scheduled fixed rate interest payment date, redemption date or maturity date is not a business day, we will pay interest and principal, as applicable, on the next business day, but interest on that payment will not accrue during the period from and after such scheduled fixed rate interest payment date, redemption date or maturity date.

***Reset Fixed Rate Period***

Interest on the Fixed Rate Notes during the reset fixed rate period will be calculated on the basis of a 360-day year consisting of twelve 30-day months and, in the case of an incomplete month, on the basis of the actual number of days elapsed in such period. The interest rate for the 2031 Fixed Rate Notes during the reset fixed rate period will be reset on the 2031 Fixed Rate Notes Reset Date. The interest rate for the 2036 Fixed Rate Notes during the reset fixed rate period will be reset on the 2036 Fixed Rate Notes Reset Date. If any scheduled reset rate interest payment date, redemption date or maturity date is not a business day, we will pay interest and principal, as applicable, on the next business day, but interest on that payment will not accrue during the period from and after such scheduled reset rate interest payment date, redemption date or maturity date.

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***Determination of the U.S. Treasury Rate***

The U.S. Treasury Rate shall be determined by The Bank of New York Mellon, London Branch as calculation agent (the "Calculation Agent").

"U.S. Treasury Rate" means, with respect to the 2031 Fixed Rate Notes Reset Date or the 2036 Fixed Rate Notes Reset Date, as applicable, the rate per annum equal to: (1) the arithmetic average of the yields on actively traded U.S. Treasury securities adjusted to constant maturity for the maturity of one year ("Yields"), for the five consecutive business days immediately prior to the 2031 Fixed Rate Notes Reset Determination Date or the 2036 Fixed Rate Notes Reset Determination Date, as applicable, and appearing under the caption "Treasury constant maturities" on the 2031 Fixed Rate Notes Reset Determination Date or the 2036 Fixed Rate Notes Reset Determination Date, as applicable, as of 5:00 p.m. (New York City time), in the applicable most recently published statistical release designated "H.15 Daily Update", or any successor publication that is published by the Board of Governors of the Federal Reserve System that establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity, under the caption "Treasury constant maturities", for the maturity of one year; *provided that* if the Yield is not available through such release (or successor publication) for any relevant business day, then the arithmetic average will be determined based on the Yields for the remaining business days during the five business day period described above (provided further that if the Yield is available for only a single business day during such five business day period, the "U.S. Treasury Rate" will mean the single-day Yield for such day); or (2) if such release (or any successor release) is not published during the week immediately prior to the 2031 Fixed Rate Notes Reset Determination Date or the 2036 Fixed Rate Notes Reset Determination Date, as applicable, or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for the 2031 Fixed Rate Notes Reset Date or the 2036 Fixed Rate Notes Reset Date, as applicable.

If the U.S. Treasury Rate cannot be determined, for whatever reason, as described under (1) or (2) above, "U.S. Treasury Rate" means the rate in percentage per annum as notified by the Calculation Agent to the Issuer equal to the last reported Yield on U.S. Treasury securities having a maturity of one year based on information appearing in the most recently published statistical release designated "H.15 Daily Update" (or any successor publication by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded U.S. Treasury securities) as of 5:00 p.m. (New York City time) on the 2031 Fixed Rate Notes Reset Determination Date or the 2036 Fixed Rate Notes Reset Determination Date, as applicable.

"Comparable Treasury Issue" means, with respect to the applicable reset fixed rate period, the U.S. Treasury security or securities selected by the Issuer with a maturity date on or about the last day of the applicable reset fixed rate period and that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in U.S. dollars and having a maturity of one year.

"Comparable Treasury Price" means, with respect to the 2031 Fixed Rate Notes Reset Date or the 2036 Fixed Rate Notes Reset Date, respectively, (i) the arithmetic average of the Reference Treasury Dealer Quotations for the 2031 Fixed Rate Notes Reset Date or the 2036 Fixed Rate Notes Reset Date, as applicable, received by the Issuer (calculated by the Calculation Agent on the 2031 Fixed Rate Notes Reset Determination Date preceding the 2031 Fixed Rate Notes Reset Date or the 2036 Fixed Rate Notes Reset Determination Date preceding the 2036 Fixed Rate Notes Reset Date, as applicable), after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if fewer than five such Reference Treasury Dealer Quotations are received by the Issuer, the arithmetic average of all such quotations, or (iii) if fewer than two such Reference Treasury Dealer Quotations are received by the Issuer, then such Reference Treasury Dealer Quotation as quoted in writing to the Issuer by a Reference Treasury Dealer.

"Reference Treasury Dealer" means each of up to five banks selected by the Issuer, or the affiliates of such banks, which are (i) primary U.S. Treasury securities dealers, and their respective successors, or (ii) market makers in pricing corporate bond issues denominated in U.S. dollars.

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"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and the 2031 Fixed Rate Notes Reset Date and the 2036 Fixed Rate Notes Reset Date, the bid and offered prices obtained by LBG for the applicable Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, at 11:00 a.m. (New York City time), on the 2031 Fixed Rate Notes Reset Determination Date or the 2036 Fixed Rate Notes Reset Determination Date, as applicable.

All calculations of the Calculation Agent, in the absence of manifest error, will be conclusive for all purposes and binding on the Issuer, the Trustee, the paying agent and on the holders of the Senior Notes.

All percentages resulting from any of the above calculations will be rounded, if necessary, to the nearest one hundred thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent being rounded upwards).

The interest rate on each series of Fixed Rate Notes during the reset fixed rate period will in no event be higher than the maximum rate permitted by law or lower than 0.00% per annum.

**Floating Rate Notes** 

&nbsp;&nbsp;&nbsp;&nbsp;The Floating Rate Notes will be issued in an aggregate principal amount of $300,000,000 and will mature on November 4, 2031. The Floating Rate Notes bear interest at a floating rate from November 4, 2025, as described below.

&nbsp;&nbsp;&nbsp;&nbsp;The Floating Rate Notes Interest Rate will be equal to the sum of (A) the SOFR Index Average (as defined below), as determined, with respect to each Floating Rate Notes Interest Period (as defined below), on the applicable Floating Rate Notes Interest Determination Date (as defined below), and (B) 1.100% per annum, *provided* that the Floating Rate Notes Interest Rate with respect to any Floating Rate Notes Interest Period shall be subject to a minimum rate *per annum* of 0.00% (the "Minimum Rate"), calculated on the basis of a 360-day year and the actual number of days elapsed.

&nbsp;&nbsp;&nbsp;&nbsp;The first Floating Rate Notes interest payment date (as defined below) will fall on February 4, 2026. Thereafter, interest on the Floating Rate Notes will be paid quarterly in arrear on February 4, May 4, August 4 and November 4 of each year (together with the first Floating Rate Notes interest payment date, each a "Floating Rate Notes interest payment date"). However, if a Floating Rate Notes interest payment date would fall on a day that is not a business day, other than the interest payment date that is also a redemption date or the date of maturity, the Floating Rate Notes interest payment date will be postponed to the next succeeding day that is a business day and interest thereon will continue to accrue, except that if the business day falls in the next succeeding calendar month, the applicable Floating Rate Notes interest payment date will be the immediately preceding business day. In each such case, except for the Floating Rate Notes interest payment date falling on a redemption date or the maturity date, the Floating Rate Notes Interest Periods and the Floating Rate Notes Reset Dates (as defined below) will be adjusted accordingly to calculate the amount of interest payable on the Floating Rate Notes.

The Floating Rate Notes Interest Rate will be reset on each Floating Rate Notes interest payment date (together with the initial Floating Rate Notes Reset Date, each a "Floating Rate Notes Reset Date"). However, if any Floating Rate Notes Reset Date would otherwise be a day that is not a business day, that Floating Rate Notes Reset Date will be postponed to the next succeeding day that is a business day, except that if the business day falls in the next succeeding calendar month, the applicable Floating Rate Notes Reset Date will be the immediately preceding business day.

Interest will be paid to holders of record of the Floating Rate Notes in respect of the principal amount thereof outstanding 15 calendar days preceding the relevant Floating Rate Notes interest payment date, whether or not a business day. If the scheduled maturity date or date of redemption or repayment is not a business day, we may pay interest and principal on the next succeeding business day, but interest on that payment will not accrue during the period from and after the scheduled maturity date or date of redemption or repayment.

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&nbsp;&nbsp;&nbsp;&nbsp;The first interest period will begin on and include November 4, 2025 and will end on and exclude February 4, 2026. Thereafter, the interest periods will be the periods from and including a Floating Rate Notes interest payment date to but excluding the immediately succeeding Floating Rate Notes interest payment date (together with the initial interest period, each a "Floating Rate Notes Interest Period"). However, the final Floating Rate Notes Interest Period will be the period from and including the Floating Rate Notes interest payment date immediately preceding the maturity date to but excluding the maturity date. The Floating Rate Notes interest determination date ("Floating Rate Notes Interest Determination Date") for each Floating Rate Interest Period will be on the fifth U.S. Government Securities Business Day (as defined below) preceding the applicable Floating Rate Notes interest payment date. If a tax redemption or Loss Absorption Disqualification Event redemption (see "*Description of the Senior Notes—Tax Redemption*" and "*Description of the Senior Notes—Loss Absorption Disqualification Event Redemption*" in this prospectus supplement) occurs, the Floating Rate Notes Interest Determination Date will be on the fifth U.S. Government Securities Business Day preceding such tax redemption or Loss Absorption Disqualification Event redemption date, as applicable. "U.S. Government Securities Business Day" means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.

***Calculation of Floating Rate Notes Interest Rate***

The Calculation Agent for the Floating Rate Notes is The Bank of New York Mellon, London Branch or its successor appointed by LBG. The Calculation Agent will determine the Floating Rate Notes Interest Rate for each Floating Rate Notes Interest Period by reference to the SOFR Index Average on the applicable Floating Rate Notes Interest Determination Date. Promptly upon such determination, the Calculation Agent will notify LBG and the Trustee (as defined below) of the applicable Floating Rate Notes Interest Rate. Upon the request of the holder of any Floating Rate Note, the Calculation Agent will provide the Floating Rate Notes Interest Rate as determined for the most recent applicable Floating Rate Notes Interest Period.

Subject to the circumstances described under "*— SOFR Discontinuation*" below, the "SOFR Index Average" for each Floating Rate Notes Interest Period shall be equal to the value of the SOFR rates for each day during the relevant Floating Rate Notes Interest Period as calculated by the Calculation Agent as follows:

![image_0.jpg](image_0.jpg)

with the resulting percentage being rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with 0.000005 being rounded upwards, where:

"dc" for any SOFR Observation Period, means the number of calendar days in the relevant SOFR Observation Period;

"SOFR Index" means the SOFR Index in relation to any U.S. Government Securities Business Day as published by the NY Federal Reserve on the NY Federal Reserve's Website at the SOFR Determination Time;

"SOFR IndexEnd" means the SOFR Index value on the date that is five U.S. Government Securities Business Days preceding the Floating Rate Notes interest payment date relating to such Floating Rate Notes Interest Period (or in the final Floating Rate Notes Interest Period, preceding the maturity date) (such date a "SOFR Index Determination Date"); and

"SOFR IndexStart" means the SOFR Index value on the date that is five U.S. Government Securities Business Days preceding the first date of the relevant Floating Rate Notes Interest Period (such date a "SOFR Index Determination Date"), and, for the initial Floating Rate Notes Interest Period, the SOFR Index value on October 28, 2025.

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Subject to the circumstances described under "*— SOFR Discontinuation*" below, if the SOFR Index is not published on any relevant SOFR Index Determination Date and a SOFR Benchmark Event and its related SOFR Benchmark Replacement Date has not occurred, the "SOFR Index Average" for such Floating Rate Notes Interest Period shall be calculated by the Calculation Agent on the relevant Floating Rate Notes Interest Determination Date as follows:

![image_11.jpg](image_11.jpg)

with the resulting percentage being rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with 0.000005 being rounded upwards, where:

"d" for any SOFR Observation Period, means the number of calendar days in the relevant SOFR Observation Period;

"do" for any SOFR Observation Period, means the number of U.S. Government Securities Business Days in the relevant SOFR Observation Period;

"i" means a series of whole numbers from one to do, each representing the relevant U.S. Government Securities Business Days in chronological order from (and including) the first U.S. Government Securities Business Day in the relevant SOFR Observation Period;

"ni" for any U.S. Government Securities Business Day "i" in the relevant SOFR Observation Period, means the number of calendar days from (and including) such U.S. Government Securities Business Day "i" up to (but excluding) the following U.S. Government Securities Business Day ("i+1"); and

"SOFRi" for any U.S. Government Securities Business Day "i" in the relevant SOFR Observation Period, is equal to SOFR in respect of that day "i".

In connection with the SOFR provisions above, the following definitions apply:

"Bloomberg Screen SOFRRATE Page" means the Bloomberg screen designated "SOFRRATE" or any successor page or service; "NY Federal Reserve" means the Federal Reserve Bank of New York;

"NY Federal Reserve's Website" means the website of the NY Federal Reserve, currently at www.newyorkfed.org, or any successor website of the NY Federal Reserve or the website of any successor administrator of SOFR;

"Reuters Page USDSOFR=" means the Reuters page designated "USDSOFR=" or any successor page or service;

"SOFR" means, with respect to any day (including any U.S. Government Securities Business Day), the rate determined by the Calculation Agent, as the case may be, in accordance with the following provisions:

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the Secured Overnight Financing Rate published at the SOFR Determination Time, as such rate is reported on the Bloomberg Screen SOFRRATE Page, then the Secured Overnight Financing Rate published at the SOFR Determination Time, as such rate is reported on the Reuters Page USDSOFR= or, if no such rate is reported on the Reuters Page USDSOFR=, then the Secured Overnight Financing Rate that appears at the SOFR Determination Time on the NY Federal Reserve's Website; or

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&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;if the rate specified in (a) above does not appear, the SOFR published on the NY Federal Reserve's Website for the first preceding U.S. Government Securities Business Day for which SOFR was published on the NY Federal Reserve's Website;

"SOFR Determination Time" means approximately 3:00 p.m. (New York City time) on the NY Federal Reserve's Website on the immediately following U.S. Government Securities Business Day; and

"SOFR Observation Period" means, in respect of each Floating Rate Notes Interest Period, the period from (and including) the fifth U.S. Government Securities Business Day preceding the first date in such Floating Rate Notes Interest Period to (but excluding) the fifth U.S. Government Securities Business Day preceding the Floating Rate Notes interest payment date (or in the final Floating Rate Notes Interest Period, preceding the maturity date) for such Floating Rate Notes Interest Period.

***SOFR Discontinuation***

Notwithstanding the provisions described under "*—Calculation of Floating Rate Notes Interest Rate*" above, if a SOFR Benchmark Event and its related SOFR Benchmark Replacement Date occurs when any Floating Rate Notes Interest Rate (or any component part thereof) remains to be determined by reference to the SOFR Benchmark in respect of the Floating Rate Notes, then LBG (or its designee) may, at its sole discretion, appoint and consult with an Independent Adviser, as soon as reasonably practicable, with a view to LBG (or its designee) determining a SOFR Benchmark Replacement and the applicable SOFR Benchmark Replacement Adjustment Spread and any other amendments to the terms of the Floating Rate Notes, in accordance with the provisions below.

In the absence of fraud, LBG (or its designee) and any Independent Adviser appointed pursuant to this section "*— SOFR Discontinuation*", as applicable, shall have no liability whatsoever to LBG, the Trustee (as defined below), the Calculation Agent, any paying agent or the holders of the Floating Rate Notes for any determination made by it or for any advice given to LBG (or its designee) in connection with any determination made by LBG (or its designee) pursuant to this section "— *SOFR Discontinuation*".

If LBG (or its designee) has not appointed an Independent Adviser in accordance with this section "*— SOFR Discontinuation*", LBG (or its designee) may still make any determinations and/or any amendments contemplated by and in accordance with this section "*— SOFR Discontinuation*" (with the relevant provisions in this section applying *mutatis mutandis* to allow such determinations or amendments to be made by LBG (or its designee) without consultation with an Independent Adviser). Any determination, decision or election that may be made by LBG (or its designee) pursuant to this section "— *SOFR Discontinuation*", including any determination with respect to tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error, will be made in LBG's (or its designee's) sole discretion, and, notwithstanding anything to the contrary in the documentation relating to the Floating Rate Notes, shall become effective without consent from the holders of the Floating Rate Notes or any other party.

Subject to the paragraph below, if LBG (or its designee), following consultation with its Independent Adviser, no later than three business days prior to the Floating Rate Notes Interest Determination Date relating to the next Floating Rate Notes Interest Period (the "Determination Cut-off Date") determines the SOFR Benchmark Replacement for the purposes of determining the Floating Rate Notes Interest Rate for all future Floating Rate Notes Interest Periods (subject to the subsequent operation of this section "*— SOFR Discontinuation*" during any other future Floating Rate Notes Interest Periods), then such SOFR Benchmark Replacement shall be the SOFR Benchmark for all future Floating Rate Notes Interest Periods (subject to the subsequent operation of this section during any other future Floating Rate Notes Interest Period(s)).

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Notwithstanding the above paragraph, if LBG (or its designee), following consultation with its Independent Adviser, determines prior to the Determination Cut-off Date that no SOFR Benchmark Replacement exists then the relevant Floating Rate Notes Interest Rate shall be determined using the SOFR Benchmark last displayed on the relevant page prior to the relevant Floating Rate Notes Interest Determination Date. This paragraph shall apply to the relevant Floating Rate Notes Interest Period only. Any subsequent Floating Rate Notes Interest Period(s) shall be subject to the subsequent operation of, and adjustment as provided in, this section "— *SOFR Discontinuation*".

Promptly following the determination of the SOFR Benchmark Replacement as described in this section "*— SOFR Discontinuation*", LBG (or its designee) shall give notice thereof pursuant to this section to the Trustee, the Calculation Agent, any paying agents and the holders of the Floating Rate Notes. For the avoidance of doubt, neither the Trustee, the Calculation Agent nor any paying agents shall have any responsibility for making such determination.

Subject to receipt of notice pursuant to the above paragraph, the Trustee, the Calculation Agent and any paying agents shall, at the direction and expense of LBG, effect such waivers and consequential amendments to the terms and conditions of the Floating Rate Notes, the Indenture and any other document as LBG (or its designee), following consultation with its Independent Adviser, determines may be required to give effect to any application of this section "*— SOFR Discontinuation*", including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;changes to the terms and conditions of the Floating Rate Notes which LBG (or its designee), following consultation with its Independent Adviser, determines may be required in order to follow market practice (determined according to factors including, but not limited to, public statements, opinions and publications of industry bodies and organizations) in relation to such SOFR Benchmark Replacement, including, but not limited to (A) the business day, business day convention, day count fraction, Floating Rate Notes Interest Determination Date and/or any relevant time applicable to the Floating Rate Notes and (B) the method for determining the fallback to the Floating Rate Notes Interest Rate if such SOFR Benchmark Replacement is not available; and

&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;any other changes which LBG (or its designee), following consultation with its Independent Adviser, determines are reasonably necessary to ensure the proper operation and comparability to the SOFR Benchmark of such SOFR Benchmark Replacement, which changes shall apply to the Floating Rate Notes for all future Floating Rate Notes Interest Periods (subject to the subsequent operation of this section "— *SOFR Discontinuation*"). None of the Trustee, the Calculation Agent or any paying agents shall be responsible or liable for any determinations, decisions or elections made by LBG (or its designee) with respect to any waivers or consequential amendments to be effected pursuant to this section "— *SOFR Discontinuation*" or any other changes and shall be entitled to rely conclusively on any certifications provided to each of them in this regard.

No consent of the holders of the Floating Rate Notes shall be required in connection with effecting the relevant SOFR Benchmark Replacement as described in this section or such other relevant adjustments pursuant to this section, including for the execution of, or amendment to, any documents or the taking of other steps by LBG (or its designee) or any of the parties to the Indenture or Calculation Agent Agreement (if required).

By its acquisition of the Floating Rate Notes, each holder and beneficial owner of the Floating Rate Notes and each subsequent holder and beneficial owner acknowledges, accepts, agrees to be bound by, and consents to, LBG's (or its designee's) determination of the SOFR Benchmark Replacement, as contemplated by this section "— *SOFR Discontinuation*", and to any amendment or alteration of the terms and conditions of the Floating Rate Notes, including an amendment of the amount of interest due on the Floating Rate Notes, as may be required in order to give effect to this section "— *SOFR Discontinuation*", without the need for any further consent from the holders of the Floating Rate Notes. The Trustee shall be entitled to rely on this deemed consent in connection with any supplemental indenture or amendment which may be necessary to give effect to the SOFR Benchmark Replacement or any application of this section "— *SOFR Discontinuation*".

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By its acquisition of the Floating Rate Notes, each holder and beneficial owner of the Floating Rate Notes and each subsequent holder and beneficial owner waives any and all claims in law and/or equity against the Trustee, the Calculation Agent and any paying agent for, agrees not to initiate a suit against the Trustee, the Calculation Agent and any paying agent in respect of, and agrees that neither the Trustee, the Calculation Agent nor any paying agent will be liable for, any action that the Trustee, the Calculation Agent or any paying agent, as the case may be, takes, or abstains from taking, in each case in accordance with this section "— *SOFR Discontinuation*" or any losses suffered in connection therewith.

Notwithstanding any other provision of this section "— *SOFR Discontinuation*", no SOFR Benchmark Replacement will be adopted, nor will the SOFR Benchmark Replacement Adjustment (as applicable) be applied, nor will any other amendments to the terms and conditions of the Floating Rate Notes be made, if and to the extent that, in the determination of LBG , the same could reasonably be expected to result in the exclusion of the Floating Rate Notes (in whole or in part) from LBG's and/or its subsidiaries' minimum requirements for (A) own funds and eligible liabilities and/or (B) loss absorbing capacity instruments, in each case as such minimum requirements are applicable to LBG and/or its subsidiaries and as determined in accordance with, and pursuant to, the relevant Loss Absorption Regulations.

"Corresponding Tenor" with respect to a SOFR Benchmark Replacement means a tenor (including overnight) having approximately the same length (disregarding business day adjustment) as the applicable tenor for the then-current SOFR Benchmark;

"Independent Adviser" means an independent financial institution of international repute or an independent financial adviser with appropriate expertise appointed by LBG under this section "*— SOFR Discontinuation*";

"ISDA" means the International Swaps and Derivatives Association, Inc. or any successor;

"ISDA Definitions" means the 2006 ISDA Definitions, as published by ISDA, as amended, supplemented or replaced from time to time;

"ISDA Fallback Rate" means the rate to be effective upon the occurrence of a SOFR Index Cessation Event according to (and as defined in) the ISDA Definitions, where such rate may have been adjusted for an overnight tenor, but without giving effect to any additional spread adjustment to be applied according to such ISDA Definitions;

"ISDA Spread Adjustment" means the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that shall have been selected by ISDA as the spread adjustment that would apply to the ISDA Fallback Rate;

"Relevant Governmental Body" means the Board of Governors of the Federal Reserve System and/or the NY Federal Reserve or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System and/or the NY Federal Reserve, or any successor.

"SOFR Benchmark" means, initially, the SOFR Index Average, provided that if a SOFR Benchmark Event has occurred with respect to the SOFR Index Average or the then-current SOFR Benchmark, then "SOFR Benchmark" means the applicable SOFR Benchmark Replacement;

"SOFR Benchmark Event" means the occurrence of one or more of the following events with respect to the then-current SOFR Benchmark (including the daily published component used in the calculation thereof):

&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;a public statement or publication of information by or on behalf of the administrator of the SOFR Benchmark (or such component) announcing that such administrator has ceased or will cease to provide the SOFR Benchmark (or such component), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the SOFR Benchmark (or such component);

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&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;a public statement or publication of information by the regulatory supervisor for the administrator of the SOFR Benchmark (or such component), the central bank for the currency of the SOFR Benchmark (or such component), an insolvency official with jurisdiction over the administrator for the SOFR Benchmark (or such component), a resolution authority with jurisdiction over the administrator for the SOFR Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the SOFR Benchmark (or such component), which states that the administrator of the SOFR Benchmark (or such component) has ceased or will cease to provide the SOFR Benchmark (or such component) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the SOFR Benchmark (or such component); or

&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;a public statement or publication of information by the regulatory supervisor for the administrator of the SOFR Benchmark announcing that the SOFR Benchmark is no longer representative;

"SOFR Benchmark Replacement" means the first alternative set forth in the order below that can be determined by LBG, following consultation with its Independent Adviser:

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the sum of (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current SOFR Benchmark for the applicable Corresponding Tenor and (b) the SOFR Benchmark Replacement Adjustment;

&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;the sum of (a) the ISDA Fallback Rate and (b) the SOFR Benchmark Replacement Adjustment; or

&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;the sum of (a) the alternate rate that has been selected by LBG, in consultation with the Independent Adviser, as the replacement for the then-current SOFR Benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate as a replacement for the then-current SOFR Benchmark for U.S. dollar-denominated floating rate notes at such time and (b) the SOFR Benchmark Replacement Adjustment;

"SOFR Benchmark Replacement Adjustment" means the first alternative set forth in the order below that can be determined by LBG, following consultation with its Independent Adviser:

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted SOFR Benchmark Replacement;

&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;if the applicable Unadjusted SOFR Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Spread Adjustment;

&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;the spread adjustment (which may be a positive or negative value or zero) determined by LBG, following consultation with its Independent Adviser, giving due consideration to any industry accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current SOFR Benchmark with the applicable Unadjusted SOFR Benchmark Replacement for U.S. dollar-denominated floating rate notes at such time;

"SOFR Benchmark Replacement Date" means the earliest to occur of the following events with respect to the then-current SOFR Benchmark (including the daily published component used in the calculation thereof):

&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;in the case of clause (1) or (2) of the definition of "SOFR Benchmark Event," the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the SOFR Benchmark permanently or indefinitely ceases to provide the SOFR Benchmark (or such component); or

&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;in the case of clause (3) of the definition of "SOFR Benchmark Event," the date of the public statement or publication of information referenced therein; and

"Unadjusted SOFR Benchmark Replacement" means the SOFR Benchmark Replacement excluding the applicable SOFR Benchmark Replacement Adjustment.

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**General**

The Senior Notes will constitute our direct, unconditional, unsecured and unsubordinated obligations ranking *pari passu* and without any preference among themselves and at least *pari passu*, with all of our other outstanding unsecured and unsubordinated obligations, present and future, subject to such exceptions as may be provided by mandatory provisions of applicable law.

Each of the 2031 Fixed Rate Notes, the 2036 Fixed Rate Notes and the Floating Rate Notes will constitute a separate series of senior debt securities issued under an indenture dated as of July 6, 2010, as amended by the First Supplemental Indenture dated as of July 6, 2016 (the "Senior Indenture") between us as Issuer and The Bank of New York Mellon, acting through its London Branch, as trustee (the "Trustee"), as supplemented by a Twenty-Second Supplemental Indenture to be dated as of November 4, 2025 (the "Twenty-Second Supplemental Indenture" and, together with the Senior Indenture, the "Indenture") between us as Issuer and the Trustee, The Bank of New York Mellon, London Branch as paying agent and The Bank of New York Mellon SA/NV, Dublin Branch, as senior debt security registrar. Book-entry interests in the Senior Notes will be issued in minimum denominations of $200,000 and in integral multiples of $1,000 in excess thereof.

The Bank of New York Mellon, London Branch is designated as the paying agent. We may at any time designate additional paying agents or rescind the designation of paying agents or approve a change in the office through which any paying agent acts.

We will issue the Senior Notes in fully registered form. Each series of Senior Notes will be represented by one or more global securities in the name of a nominee of The Depository Trust Company (the "DTC"). You will hold beneficial interest in the Senior Notes through the DTC and its participants. The Underwriters expect to deliver the Senior Notes through the facilities of the DTC on November 4, 2025. For a more detailed summary of the form of the Senior Notes and settlement and clearance arrangements, you should read "*Description of Certain Provisions Relating to Debt Securities and Capital Securities—Form of Debt Securities and Capital Securities; Book-Entry System*" in the accompanying prospectus. Indirect holders trading their beneficial interests in the Senior Notes through the DTC must trade in the DTC's same-day funds settlement system and pay in immediately available funds. Secondary market trading will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream Luxembourg.

Definitive debt securities will only be issued in limited circumstances described under "*Description of Certain Provisions Relating to Debt Securities and Capital Securities—Form of Debt Securities and Capital Securities; Book-Entry System*" in the accompanying prospectus.

Payment of principal of and interest on the Senior Notes, so long as the Senior Notes are represented by global securities, will be made in immediately available funds. Beneficial interests in the global securities will trade in the same-day funds settlement system of the DTC, and secondary market trading activity in such interests will therefore settle in same-day funds.

A "business day" means any day, other than Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in the City of New York or in the City of London.

All payments in respect of the Senior Notes by us or our paying agent will be made subject to any deduction or withholding that may be imposed or levied by any jurisdiction. Except as provided under "*—Payment of Additional Amounts*" below, no additional amounts will be paid on the Senior Notes with respect to any such amounts withheld. For the avoidance of doubt, notwithstanding anything to the contrary herein, if by reason of any agreement with the U.S. Internal Revenue Service in connection with Sections 1471-1474 of the U.S. Internal Revenue Code and the U.S. Treasury regulations thereunder ("FATCA"), any intergovernmental agreement between the United States and the United Kingdom or any other jurisdiction with respect to FATCA, or any law, regulation or other official guidance enacted or issued in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement, any of us, the Trustee, our paying agent or another withholding agent deducts and withholds from any amount payable on, or in respect of, the Senior Notes, the amounts so deducted or withheld shall be treated as

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having been paid to the holder of the Senior Notes, and no additional amounts will be paid on account of any such deduction or withholding. Neither we, the Trustee nor our paying agent shall have any liability in connection with our compliance with any such withholding obligation under applicable law.

**Optional Redemption**

On at least 5 business days' but no more than 30 business days' prior written notice delivered to the registered holders of a series of Senior Notes, we may, in our sole discretion (but subject to, if and to the extent then required by the Relevant Regulator or the Loss Absorption Regulations, our giving notice to the Relevant Regulator and the Relevant Regulator granting us permission) redeem that series of Senior Notes, in whole, but not in part, on November 4, 2030 for the 2031 Fixed Rate Notes and the Floating Rate Notes and, in whole, but not in part, on November 4, 2035 for the 2036 Fixed Rate Notes, at a redemption price equal to 100% of the principal amount of such series of Senior Notes *plus* accrued and unpaid interest thereon, if any, to, but excluding, the date of redemption (the "redemption date").

**Agreement with Respect to the Exercise of U.K. Bail-in Power**

Notwithstanding any other agreements, arrangements, or understandings between us and any holder or beneficial owner of the Senior Notes, by purchasing or acquiring the Senior Notes, each holder (including each beneficial owner) of the Senior Notes acknowledges, accepts, agrees to be bound by and consents to the exercise of any U.K. bail-in power (as defined below) by the relevant U.K. resolution authority that may result in (i) the reduction or cancellation of all, or a portion, of the principal amount of, or interest on, the Senior Notes; (ii) the conversion of all, or a portion, of the principal amount of, or interest on, the Senior Notes into shares or other securities or other obligations of LBG or another person (and the issue to or conferral on the holder of such shares, securities or obligations, including by means of amendment, modification or variation of the terms of the Senior Notes); and/or (iii) the amendment or alteration of the maturity of the Senior Notes, or amendment of the amount of interest due on the Senior Notes, or the dates on which interest becomes payable, including by suspending payment for a temporary period; any U.K. bail-in power may be exercised by means of variation of the terms of the Senior Notes solely to give effect to the exercise by the relevant U.K. resolution authority of such U.K. bail-in power. With respect to (i), (ii) and (iii) above, references to principal and interest shall include payments of principal and interest that have become due and payable (including principal that has become due and payable at the relevant maturity date), but which have not been paid, prior to the exercise of any U.K. bail-in power. Each holder and each beneficial owner of the Senior Notes further acknowledges and agrees that the rights of the holders and/or beneficial owners under the Senior Notes are subject to, and will be varied, if necessary, solely to give effect to, the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. For these purposes, a "U.K. bail-in power" is any write-down, conversion, transfer, modification, moratorium and/or suspension power existing from time to time under any laws, regulations, rules or requirements relating to the resolution of financial holding companies, mixed financial holding companies, banks, banking group companies, credit institutions and/or investment firms incorporated in the United Kingdom in effect and applicable in the United Kingdom to LBG or other members of the Group, including but not limited to any such laws, regulations, rules or requirements which are implemented, adopted or enacted in the United Kingdom within the context of the U.K. resolution regime under the Banking Act 2009 as the same has been or may be amended from time to time (whether pursuant to the U.K. Financial Services (Banking Reform) Act 2013, secondary legislation or otherwise) (the "Banking Act") and/or the Loss Absorption Regulations, pursuant to which obligations of a bank, banking group company, credit institution or investment firm or any of its affiliates can be reduced, canceled, modified, transferred and/or converted into shares or other securities or obligations of the obligor or any other person (or suspended for a temporary period) or pursuant to which any right in a contract governing such obligations may be deemed to have been exercised. A reference to the "relevant U.K. resolution authority" is to any authority with the ability to exercise a U.K. bail-in power.

*According to the principles contained in the Banking Act, we expect that the relevant U.K. resolution authority would exercise its U.K. bail-in power in respect of the Senior Notes having regard to the hierarchy of creditor claims (with the exception of excluded liabilities, as such term is described in the Banking Act) and that the holders of the Senior Notes would be treated equally in respect of the exercise of any U.K. bail-in power with all other claims that would rank pari passu with the Senior Notes upon an insolvency of LBG.*

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No repayment of the principal amount of the Senior Notes or payment of interest on the Senior Notes shall become due and payable after the exercise of any U.K. bail-in power by the relevant U.K. resolution authority unless, at the time that such repayment or payment, respectively, is scheduled to become due, such repayment or payment would be permitted to be made by us under the laws and regulations of the United Kingdom applicable to us or other members of the Group. See also "*Risk Factors― Under the terms of the Senior Notes, you have agreed to be bound by the exercise of any U.K. bail-in power imposed by the relevant U.K. resolution authority".*

Neither a reduction or cancellation, in part or in full, of the principal amount of, or interest on, the Senior Notes or the conversion thereof into another security or obligation of LBG or another person, as a result of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to LBG, nor the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Senior Notes will be a Senior Notes Default or a Senior Notes Event of Default for any purpose.

LBG's obligations to indemnify the Trustee in accordance with Section 6.07 of the Senior Indenture (as supplemented by the Twenty-Second Supplemental Indenture) shall survive the exercise of the U.K. Bail-in Power by the relevant U.K. resolution authority with respect to the Senior Notes.

By purchasing or acquiring Senior Notes, each holder and each beneficial owner of the Senior Notes: (i) acknowledges and agrees that the exercise of the U.K. bail-in power by the relevant U.K. resolution authority in respect of the Senior Notes shall not give rise to a default or an Event of Default for purposes of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act (the "TIA"); (ii) to the extent permitted by the TIA, waives any and all claims against the Trustee for, agrees not to initiate a suit against the Trustee in respect of, and agrees that the Trustee shall not be liable for, any action that the Trustee takes, or abstains from taking, in either case in accordance with the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Senior Notes; and (iii) acknowledges and agrees that, upon the exercise of any U.K. bail-in power by the relevant U.K. resolution authority, (a) the Trustee shall not be required to take any further directions from holders or beneficial owners of the Senior Notes under Section 5.12 (Control by Holders) of the Senior Indenture, and (b) neither the Senior Indenture nor the Twenty-Second Supplemental Indenture shall impose any duties upon the Trustee whatsoever with respect to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. Notwithstanding the foregoing, if, following the completion of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority, any of the Senior Notes remain outstanding (for example, if the exercise of the U.K. bail-in power results in only a partial write-down of the principal of such Senior Notes), then the Trustee's duties under the Indenture shall remain applicable with respect to such Senior Notes following such completion to the extent that LBG and the Trustee agree pursuant to a supplemental indenture or an amendment to the Indenture, unless LBG and the Trustee agree in writing that a supplemental indenture is not necessary.

By purchasing or acquiring the Senior Notes, each holder and each beneficial owner shall be deemed to have (i) consented to the exercise of any U.K. bail-in power as it may be imposed without any prior notice by the relevant U.K. resolution authority of its decision to exercise such power with respect to the Senior Notes and (ii) authorized, directed and requested DTC and any direct participant in DTC or other intermediary through which it holds such Senior Notes to take any and all necessary action, if required, to implement the exercise of any U.K. bail-in power with respect to the Senior Notes as it may be imposed, without any further action or direction on the part of such holder or beneficial owner or the Trustee.

Upon the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Senior Notes, we shall provide a written notice to DTC as soon as practicable regarding such exercise of the U.K. bail-in power for purposes of notifying holders and beneficial owners of such occurrence. We shall also deliver a copy of such notice to the Trustee for information purposes. Any delay or failure by us in delivering the notices referred to in this paragraph shall not affect the validity and enforceability of the U.K. bail-in power.

For a discussion of certain risk factors relating to the U.K. bail-in power, see "*Risk Factors—Risks relating to the Senior Notes*".

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**Events of Default; Default; Limitation of Remedies**

***Events of Default***

An "Event of Default" with respect to a series of Senior Notes shall result if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a court of competent jurisdiction makes an order which is not successfully appealed within 30 days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an effective shareholders' resolution is validly adopted,

for the winding-up of LBG, other than under or in connection with a scheme of amalgamation or reconstruction not involving a bankruptcy or insolvency.

If an Event of Default occurs, the Trustee or the holder or holders of at least 25% in aggregate principal amount of the outstanding notes of such series of Senior Notes may declare to be due and payable immediately in accordance with the terms of the Indenture the principal amount of, and accrued but unpaid interest thereon, if any, and any Additional Amounts (as defined below), on the Senior Notes of that series. However, after this declaration but before the Trustee obtains a judgment or decree for payment of money due, the holder or holders of a majority in aggregate principal amount of the outstanding notes of such series of Senior Notes may rescind the declaration of acceleration and its consequences, but only if all Events of Default have been remedied and all payments due, other than those due as a result of acceleration, in respect of such series of Senior Notes have been made.

***Defaults***

A "Default" with respect to a series of Senior Notes shall result if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any installment of interest in respect of the Senior Notes of such series is not paid on or before its interest payment date and such failure continues for 14 days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all or any part of the principal of the Senior Notes of such series is not paid when it otherwise becomes due and payable, whether upon redemption or otherwise, and such failure continues for seven days.

If a Default occurs with respect to a series of Senior Notes, the Trustee may commence a proceeding for the winding-up of LBG, provided that the Trustee may not (except in such winding-up, in accordance with "*Events of Default*" above) declare the principal amount of, or any other amount in respect of, the outstanding Senior Notes of any series to be due and payable.

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However, a failure to make any payment on a series of Senior Notes shall not be a Default if it is withheld or refused in order to comply with any applicable fiscal or other law or regulation or order of any court of competent jurisdiction and LBG delivers a written opinion of legal advisors, who may be an employee of, or legal advisors for, LBG or other legal advisors, such opinion to be acceptable to the Trustee ("Opinion of Counsel"), to the Trustee with that conclusion, at any time before the expiry of the applicable 14 day or seven day period by independent legal advisers, *provided*, *however*, that the Trustee may by notice to LBG require it to take such action (including but not limited to proceedings for a declaration by a court of competent jurisdiction) as the Trustee may be advised in an Opinion of Counsel, upon which opinion the Trustee may conclusively rely, is appropriate and reasonable in the circumstances to resolve such doubt, in which case LBG will forthwith take and expeditiously proceed with such action and will be bound by any final resolution of the doubt resulting therefrom. If any such action results in a determination that the relevant payment can be made without violating any applicable law, regulation or order then such payment will become due and payable on the expiration of 14 days (in the case of a Default in respect of a payment of interest) or seven days (in the case of a Default in respect of a payment of principal) after the Trustee gives written notice to LBG informing it of such resolution.

During the continuance of an Event of Default, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of holders of such series of Senior Notes by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in the Indenture or in aid of the exercise of any power granted therein, or to enforce any other legal or equitable right vested in the Trustee by the Indenture or by law, *provided*, *however*, that LBG shall not, as a result of the bringing of such judicial proceedings, be required to pay any amount representing or measured by reference to the principal of, or any interest on, the Senior Notes of such series prior to any date on which the principal of, or any interest on, the Senior Notes of such series would have otherwise been payable by LBG.

Notwithstanding any contrary provisions, nothing shall impair the right of a holder, absent the holder's consent, to sue for any payments due but unpaid with respect to such series of Senior Notes.

***General***

The holder or holders of not less than a majority in aggregate principal amount of the outstanding Senior Notes may waive any past Event of Default or Default in respect of such series, except an Event of Default or Default in respect of the payment of interest, if any, or principal of (or premium, if any) or payments on any Senior Note of such series or a covenant or provision of the Indenture which cannot be modified or amended without the consent of each holder of the Senior Notes of such series.

Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default or a Default occurs, the Trustee will be under no obligation to take direction from any holder or holders of such series of Senior Notes, unless they have offered reasonable indemnity to the Trustee. Subject to the Indenture provisions for the indemnification of the Trustee, the holder or holders of a majority in aggregate principal amount of the outstanding Senior Notes of such series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, if the direction is not in conflict with any rule of law or with the Indenture and does not expose the Trustee to undue risk and the action would not be unjustly prejudicial to the holder or holders of the Senior Notes not taking part in that direction. The Trustee may take any other action that it deems proper which is not inconsistent with that direction.

The Indenture provides that the Trustee will, within 90 days after the occurrence of an Event of Default or a Default, give to each holder of a series of Senior Notes notice of the Event of Default or Default known to it, unless the Event of Default or Default, has been cured or waived in respect of such series. However, the Trustee shall be protected in withholding notice if it determines in good faith that withholding notice is in the interest of the holders.

We are required to furnish to the Trustee a statement as to our compliance with all conditions and covenants under the Indenture (i) annually, and (ii) within five business days of a written request from the Trustee.

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**Additional Issuances**

We may, without the consent of the holders of a series of Senior Notes, issue additional notes having the same ranking and same interest rate, maturity date, redemption terms and other terms as such series of Senior Notes described in this prospectus supplement except for the price to the public, issue date and first interest payment date, provided however that such additional notes that form part of any series of Senior Notes described in this prospectus supplement and are issued with the same CUSIP, Common Code and/or ISIN number or numbers as the outstanding Senior Notes of the relevant series must be fungible with the outstanding Senior Notes of that series for U.S. federal income tax purposes. Any such additional notes, together with the Senior Notes offered by this prospectus supplement, will constitute a single series of securities under the Indenture. There is no limitation on the amount of Senior Notes or other debt securities that we may issue under such indenture.

**Tax Redemption**

In addition to our right to redeem each series of Senior Notes described above under "*—Optional Redemption*", we may (subject to, if and to the extent then required by the Relevant Regulator or the Loss Absorption Regulations, our giving notice to the Relevant Regulator and the Relevant Regulator granting us permission) redeem Senior Notes of any series in whole but not in part if we determine that as a result of a change in or amendment to the laws or regulations of the United Kingdom or any political subdivision thereof or authority thereof that has the power to tax (a "U.K. taxing jurisdiction") (including any treaty to which such U.K. taxing jurisdiction is a party), or any change in the application or interpretation of such laws or regulations (including a decision of any court or tribunal) which change or amendment becomes effective or applicable on or after November 4, 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in making any payments on the Senior Notes of the relevant series, we have paid or will or would on the next payment date be required to pay additional amounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• payments on the next payment date in respect of the Senior Notes of the relevant series would be treated as "distributions" within the meaning of Chapter 2 Part 23 of the Corporation Tax Act 2010 of the United Kingdom, or any statutory modification or re-enactment of such Act; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on the next payment date we would not be entitled to claim a deduction in respect of the payments in computing our U.K. taxation liabilities, or the value of the deduction to us would be materially reduced.

In the event of such a redemption, the redemption price of the Senior Notes of the relevant series will be 100% of their principal amount together with accrued but unpaid interest thereon, if any, to the date of redemption.

If we elect to redeem the Senior Notes of any series in accordance with this subsection, they will cease to accrue interest from the redemption date, unless there is a failure to pay the redemption price on the payment date. The circumstances in which we may redeem the Senior Notes of any series and the applicable procedures are described further in the accompanying prospectus under "*Description of Debt Securities—Redemption of Senior Debt Securities*".

**Loss Absorption Disqualification Event Redemption**

We may, at our option (but subject to, if and to the extent then required by the Relevant Regulator or the Loss Absorption Regulations, our giving notice to the Relevant Regulator and the Relevant Regulator granting us permission), having given not less than 15 nor more than 30 days' notice to holders, redeem all but not some only of a series of Senior Notes outstanding at any time at 100% of their principal amount together with accrued but unpaid interest thereon, if any, to the date of redemption, if immediately prior to the giving of the notice referred to above, we notify the Trustee that a Loss Absorption Disqualification Event has occurred.

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A "Loss Absorption Disqualification Event" shall be deemed to have occurred with respect to a series of Senior Notes if, as a result of any amendment to, or change in, the Loss Absorption Regulations, or any change in the application or official interpretation of the Loss Absorption Regulations, in any such case becoming effective on or after the issue date of the first tranche of the Senior Notes, such Senior Notes are or (in our opinion or the opinion of the Relevant Regulator and/or the relevant U.K. resolution authority) are likely to be fully or partially excluded from LBG's or the Group's minimum requirements for (A) own funds and eligible liabilities and/or (B) loss absorbing capacity instruments, in each case as such minimum requirements are applicable to LBG and/or the Group and determined in accordance with, and pursuant to, the relevant Loss Absorption Regulations; provided that a Loss Absorption Disqualification Event shall not occur where the exclusion of the Senior Notes from the relevant minimum requirement(s) is due to the remaining maturity of the Senior Notes being less than any period prescribed by any applicable eligibility criteria for such minimum requirements under the relevant Loss Absorption Regulations effective with respect to LBG and/or the Group on the issue date of the first tranche of the Senior Notes.

"Loss Absorption Regulations" means, at any time, the laws, regulations, requirements, guidelines, rules, standards and policies relating to minimum requirements for own funds and eligible liabilities and/or loss absorbing capacity instruments of the United Kingdom, the Relevant Regulator, the relevant U.K. resolution authority and/or the Financial Stability Board then applicable in the United Kingdom including, without limitation to the generality of the foregoing, any regulations, requirements, guidelines, rules, standards and policies relating to minimum requirements for own funds and eligible liabilities and/or loss absorbing capacity instruments adopted or applied by the Relevant Regulator and/or the relevant U.K. resolution authority from time to time (whether or not such regulations, requirements, guidelines, rules, standards or policies are applied generally or specifically to LBG or to the Group).

***Conditions to redemption and purchase, etc.***

Any redemption or purchase of a series of Senior Notes (other than redemption on the relevant maturity date), and any modification to the terms of a series of Senior Notes or any indenture relating thereto, is subject to, if and to the extent then required by the Relevant Regulator or the Loss Absorption Regulations, our giving notice to the Relevant Regulator and the Relevant Regulator granting us permission therefor and otherwise to compliance with the Loss Absorption Regulations if and to the extent then required thereunder.

"Relevant Regulator" means the relevant U.K. resolution authority or such other governmental authority in the United Kingdom (or if LBG becomes domiciled in a jurisdiction other than the United Kingdom, in such other jurisdiction) having primary supervisory authority with respect to LBG and/or the Group with respect to resolution matters.

**Payment of Additional Amounts**

Amounts to be paid on the Senior Notes will be made without deduction or withholding for, or on account of, any and all present and future income, stamp and other taxes, levies, imposts, duties, charges, or fees imposed, levied, collected, withheld or assessed by or on behalf of a U.K. taxing jurisdiction, unless such deduction or withholding is required by law. If at any time a U.K. taxing jurisdiction requires us to make such deduction or withholding, we will pay additional amounts with respect to interest only on the Senior Notes ("Additional Amounts") that are necessary in order that the net amounts of interest paid to the holders of the Senior Notes, after the deduction or withholding, shall equal the amounts of interest only which would have been payable on the Senior Notes if the deduction or withholding had not been required. However, this will not apply to any such amount that would not have been payable or due but for the fact that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holder or the beneficial owner of the relevant Senior Notes is a domiciliary, national or resident of, or engaging in business or maintaining a permanent establishment or physically present in, a U.K. taxing jurisdiction or otherwise having some connection with the U.K. taxing jurisdiction other than the holding or ownership of the relevant Senior Note, or the collection of any payment of, or in respect of, principal of, or any interest or other payment on, the relevant Senior Note;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• except in the case of a winding up in the United Kingdom, the relevant Senior Notes are presented (where presentation is required) for payment in the United Kingdom;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the relevant Senior Notes are presented (where presentation is required) for payment more than 30 days after the date payment became due or was provided for, whichever is later, except to the extent that the holder would have been entitled to the Additional Amounts on presenting the Senior Notes for payment at the close of that 30 day period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holder or the beneficial owner of the relevant Senior Notes or the beneficial owner of any payment of or in respect of principal of, or any interest or other payment on, the relevant Senior Notes failed to comply with a request by us or our liquidator or other authorized person addressed to the holder to provide information concerning the nationality, residence or identity of the holder or the beneficial owner or to make any declaration or other similar claim to satisfy any requirement, which is required or imposed by a statute, treaty, regulation or administrative practice of a U.K. taxing jurisdiction as a precondition to exemption from all or part of the tax, levy, impost, duty, charge or fee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the deduction or withholding is imposed by reason of any agreement with the U.S. Internal Revenue Service in connection with Sections 1471- 1474 of the US Internal Revenue Code and the U.S. Treasury regulations thereunder ("FATCA"), any intergovernmental agreement between the United States and the United Kingdom or any other jurisdiction with respect to FATCA, or any law, regulation or other official guidance enacted or issued in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any combination of the above items,

nor shall Additional Amounts be paid with respect to any interest only on the Senior Notes to any holder who is a fiduciary or partnership or any person other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of any taxing jurisdiction to be included in the income for tax purposes of a beneficiary or partner or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such Additional Amounts, had it been the holder.

Whenever we refer in this prospectus supplement, in any context, to the payment of interest on, or in respect of, any Senior Note, we mean to include the payment of Additional Amounts to the extent that, in the context, Additional Amounts are, were or would be payable.

**Waiver of Right to Set-Off**

Subject to applicable law, no holder may exercise or claim any right of set-off, counterclaim, combination of accounts, compensation or retention in respect of any amount owed to it by LBG arising under or in connection with the Senior Notes. By accepting a Senior Note, each holder will be deemed to have waived any right of set-off, counterclaim, combination of accounts, compensation or retention with respect to such Senior Note or the Indenture (or between our obligations under or in respect of any Senior Note and any liability owed by a holder or the Trustee to us) that they might otherwise have against us, whether before or during our winding up. Notwithstanding the provisions of the foregoing sentence, if any of the said rights and claims of any holder of any Senior Note against LBG is discharged by set-off, counterclaim, combination of accounts, compensation or retention, such holder will immediately pay an amount equal to the amount of such discharge to LBG (or, in the event of winding-up or administration of LBG, the liquidator or, as applicable, the administrator of LBG) and accordingly such discharge will be deemed not to have taken place.

**Trustee; Direction of Trustee**

LBG's obligations to indemnify the Trustee in accordance with Section 6.07 of the Senior Indenture (as supplemented by the Twenty-Second Supplemental Indenture) shall survive the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Senior Notes and the Indenture.

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By purchasing or acquiring the Senior Notes, each holder (including each beneficial owner) of the Senior Notes acknowledges and agrees that, upon the exercise of any U.K. bail-in power by the relevant U.K. resolution authority, (a) the Trustee shall not be required to take any further directions from holders or beneficial owners of the Senior Notes under Section 5.12 (Control by Holders) of the Senior Indenture, and (b) neither the Senior Indenture nor the Twenty-Second Supplemental Indenture shall impose any duties upon the Trustee whatsoever with respect to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. Notwithstanding the foregoing, if, following the completion of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority, any of the Senior Notes remain outstanding (for example, if the exercise of the U.K. bail-in power results in only a partial write-down of the principal of such Senior Notes), then the Trustee's duties under the Indenture shall remain applicable with respect to such Senior Notes following such completion to the extent that LBG and the Trustee agree pursuant to a supplemental indenture or an amendment to the Indenture, unless LBG and the Trustee agree in writing that a supplemental indenture is not necessary.

In addition to the foregoing, the Trustee may decline to act or accept direction from holders unless it receives written direction from holders representing a majority in aggregate principal amount of the Senior Notes and security and/or indemnity satisfactory to the Trustee in its sole discretion. The Indenture shall not be deemed to require the Trustee to take any action which may conflict with applicable law, or which may be unjustly prejudicial to the holders not taking part in the direction, or which could subject the Trustee to risk or for which it is not indemnified to its satisfaction in its sole discretion.

The Trustee makes no representations regarding, and shall not be liable with respect to, the information set forth in this prospectus supplement.

**Subsequent Holders' Agreement**

Holders and beneficial owners of the Senior Notes that acquire the Senior Notes in the secondary market shall be deemed to acknowledge, agree to be bound by and consent to the same provisions specified herein to the same extent as the holders and beneficial owners of the Senior Notes that acquire the Senior Notes upon their initial issuance, including, without limitation, with respect to the acknowledgement and agreement to be bound by and consent to the terms of the Senior Notes including in relation to the U.K. bail-in power.

**Listing**

We intend to apply for the listing of each series of Senior Notes on the New York Stock Exchange in accordance with its rules.

**Governing Law**

The Senior Indenture, the Twenty-Second Supplemental Indenture and the Senior Notes are governed by, and construed in accordance with, the laws of the State of New York, except that, as the Indenture specifies, the provisions relating to the waiver of set-off in the Indenture are governed by and construed in accordance with Scots law.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.<u>Prospectus Supplement - 4.818% Senior Callable Fixed-to-Fixed Rate Notes due 2029, Senior Callable Floating Rate Notes due 2029, and 6.068% Fixed Rate Reset Dated Subordinated Tier 2 Notes due 2036</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**DESCRIPTION OF THE NOTES**

*In this prospectus supplement, we refer to the Senior Notes and the Subordinated Notes collectively as the "Notes". The following is a summary of certain terms of the Notes. It supplements the description of the general terms of the debt securities of any series we may issue contained in the accompanying prospectus under the heading "Description of Debt Securities". If there is any inconsistency between the following summary and the description in the accompanying prospectus, the following summary governs.*

**<u>Senior Notes</u>**

**Senior Fixed Rate Notes**

The Senior Fixed Rate Notes will be issued in an aggregate principal amount of $1,250,000,000 and will mature on June 13, 2029. The Senior Fixed Rate Notes bear interest at a fixed annual rate during the Senior Fixed Rate Notes initial fixed rate period and at a reset annual rate during the Senior Fixed Rate Notes reset fixed rate period, each as described below.

During the Senior Fixed Rate Notes initial fixed rate period, interest will accrue from June 13, 2025 on the Senior Fixed Rate Notes at a fixed rate of 4.818% per annum. Interest accrued on the Senior Fixed Rate Notes during the Senior Fixed Rate Notes initial fixed rate period will be payable semi-annually in arrears on June 13 and December 13 of each year, commencing on December 13, 2025. We refer to each such interest payment date during the Senior Fixed Rate Notes initial fixed rate period as a "Senior Fixed Rate Notes fixed rate interest payment date".

During the Senior Fixed Rate Notes reset fixed rate period, interest will accrue on the Senior Fixed Rate Notes at a fixed annual rate equal to the Senior Fixed Rate Notes U.S. Treasury Rate (as defined below) as determined by the Calculation Agent (as defined herein) on the Senior Notes Fixed Rate Reset Determination Date (as defined below), *plus* 83 basis points (0.830%). Interest accrued on the Senior Fixed Rate Notes during the Senior Fixed Rate Notes reset fixed rate period will be payable semi-annually in arrears on December 13, 2028 and June 13, 2029. We refer to each such Senior Fixed Rate Notes interest payment date during the Senior Fixed Rate Notes reset fixed rate period as a "Senior Fixed Rate Notes reset rate interest payment date", and together with the Senior Fixed Rate Notes fixed rate interest payment dates, the "Senior Fixed Rate Notes interest payment dates".

The "Senior Fixed Rate Notes initial fixed rate period" is from, and including, June 13, 2025 to, but excluding, June 13, 2028 (the "Senior Fixed Rate Notes Reset Date") and the "Senior Fixed Rate Notes reset fixed rate period" starts from, and including, the Senior Fixed Rate Notes Reset Date to, but excluding, June 13, 2029.

The "Senior Fixed Rate Notes Reset Determination Date" will be on the second business day immediately preceding the Senior Fixed Rate Notes Reset Date.

Interest will be paid to holders of record of the Senior Fixed Rate Notes in respect of the principal amount thereof outstanding 15 calendar days preceding the relevant Senior Fixed Rate Notes interest payment date, whether or not a business day. If the scheduled maturity date or date of redemption or repayment is not a business day, we may pay interest and principal on the next succeeding business day, but interest on that payment will not accrue during the period from and after the scheduled maturity date or date of redemption or repayment.

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***Senior Fixed Rate Notes Initial Fixed Rate Period***

Interest on the Senior Fixed Rate Notes during the Senior Fixed Rate Notes initial fixed rate period will be calculated on the basis of a 360-day year consisting of twelve 30-day months and, in the case of an incomplete month, on the basis of the actual number of days elapsed in such period. If any scheduled Senior Fixed Rate Notes fixed rate interest payment date, redemption date or maturity date is not a business day, we will pay interest on the next business day, but interest on that payment will not accrue during the period from and after such scheduled Senior Fixed Rate Notes fixed rate interest payment date, redemption date or maturity date.

***Senior Fixed Rate Notes Reset Fixed Rate Period***

Interest on the Senior Fixed Rate Notes during the Senior Fixed Rate Notes reset fixed rate period will be calculated on the basis of a 360-day year consisting of twelve 30-day months and, in the case of an incomplete month, on the basis of the actual number of days elapsed in such period. The interest rate for the Senior Fixed Rate Notes during the Senior Fixed Rate Notes reset fixed rate period will be reset on the Senior Fixed Rate Notes Reset Date. If any scheduled Senior Fixed Rate Notes reset rate interest payment date, redemption date or maturity date is not a business day, we will pay interest on the next business day, but interest on that payment will not accrue during the period from and after such scheduled Senior Fixed Rate Notes reset rate interest payment date, redemption date or maturity date.

**Determination of the Senior Fixed Rate Notes U.S. Treasury Rate**

The Senior Fixed Rate Notes U.S. Treasury Rate shall be determined by The Bank of New York Mellon, London Branch as calculation agent (the "Calculation Agent").

The "Senior Fixed Rate Notes U.S. Treasury Rate" means the rate per annum equal to: (1) the arithmetic average of the yields on actively traded U.S. Treasury securities adjusted to constant maturity for the maturity of one year ("Yields"), for the five consecutive business days immediately prior to the Senior Fixed Rate Notes Reset Determination Date, and appearing under the caption "Treasury constant maturities" on the Senior Fixed Rate Notes Reset Determination Date, as of 5:00 p.m. (New York City time), in the applicable most recently published statistical release designated "H.15 Daily Update", or any successor publication that is published by the Board of Governors of the Federal Reserve System that establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity, under the caption "Treasury constant maturities", for the maturity of one year; *provided that* if the Yield is not available through such release (or successor publication) for any relevant business day, then the arithmetic average will be determined based on the Yields for the remaining business days during the five business day period described above (provided further that if the Yield is available for only a single business day during such five business day period, the "Senior Fixed Rate Notes U.S. Treasury Rate" will mean the single-day Yield for such day); or (2) if such release (or any successor release) is not published during the week immediately prior to the Senior Fixed Rate Notes Reset Determination Date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Senior Fixed Rate Notes Comparable Treasury Issue, calculated using a price for the Senior Fixed Rate Notes Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Senior Fixed Rate Notes Comparable Treasury Price for the Senior Fixed Rate Notes Reset Date.

If the Senior Fixed Rate Notes U.S. Treasury Rate cannot be determined, for whatever reason, as described under (1) or (2) above, the "Senior Fixed Rate Notes U.S. Treasury Rate" means the rate in percentage per annum as notified by the Calculation Agent to the Issuer equal to the last reported Yield on U.S. Treasury securities having a maturity of one year based on information appearing in the most recently published statistical release designated "H.15 Daily Update" (or any successor publication by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded U.S. Treasury securities) as of 5:00 p.m. (New York City time) on the Senior Fixed Rate Notes Reset Determination Date.

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"Senior Fixed Rate Notes Comparable Treasury Issue" means, with respect to the Senior Fixed Rate Notes reset fixed rate period, the U.S. Treasury security or securities selected by the Issuer with a maturity date on or about the last day of the Senior Fixed Rate Notes reset fixed rate period and that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in U.S. dollars and having a maturity of one year.

"Senior Fixed Rate Notes Comparable Treasury Price" means (i) the arithmetic average of the Senior Fixed Rate Notes Reference Treasury Dealer Quotations for the Senior Fixed Rate Notes Reset Date, received by the Issuer (calculated by the Calculation Agent on the Senior Fixed Rate Notes Reset Determination Date preceding the Senior Fixed Rate Notes Reset Date), after excluding the highest and lowest such Senior Fixed Rate Notes Reference Treasury Dealer Quotations, or (ii) if fewer than five such Senior Fixed Rate Notes Reference Treasury Dealer Quotations are received by the Issuer, the arithmetic average of all such quotations, or (iii) if fewer than two such Senior Fixed Rate Notes Reference Treasury Dealer Quotations are received by the Issuer, then such Senior Fixed Rate Notes Reference Treasury Dealer Quotation as quoted in writing to the Issuer by a Senior Fixed Rate Notes Reference Treasury Dealer.

"Senior Fixed Rate Notes Reference Treasury Dealer" means each of up to five banks selected by the Issuer, or the affiliates of such banks, which are (i) primary U.S. Treasury securities dealers, and their respective successors, or (ii) market makers in pricing corporate bond issues denominated in U.S. dollars.

"Senior Fixed Rate Notes Reference Treasury Dealer Quotations" means, with respect to each Senior Fixed Rate Notes Reference Treasury Dealer and the Senior Fixed Rate Notes Reset Date, the bid and offered prices obtained by LBG for the Senior Fixed Rate Notes Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, at 11:00 a.m. (New York City time), on the Senior Fixed Rate Notes Reset Determination Date.

All calculations of the Calculation Agent, in the absence of manifest error, will be conclusive for all purposes and binding on the Issuer, the Trustee, the paying agent and on the holders of the Senior Notes.

All percentages resulting from any of the above calculations will be rounded, if necessary, to the nearest one hundred thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent being rounded upwards).

The interest rate on the Senior Fixed Rate Notes during the Senior Fixed Rate Notes reset fixed rate period will in no event be higher than the maximum rate permitted by law or lower than 0.00% per annum.

**Senior Floating Rate Notes** 

&nbsp;&nbsp;&nbsp;&nbsp;The Senior Floating Rate Notes will be issued in an aggregate principal amount of $500,000,000 and will mature on June 13, 2029. The Senior Floating Rate Notes bear interest at a floating rate from June 13, 2025, as described below.

&nbsp;&nbsp;&nbsp;&nbsp;The Senior Floating Rate Notes Interest Rate will be equal to the sum of (A) the SOFR Index Average (as defined below), as determined, with respect to each Senior Floating Rate Notes Interest Period (as defined below), on the applicable Senior Floating Rate Notes Interest Determination Date (as defined below), and (B) 1.060% per annum, *provided* that the Senior Floating Rate Notes Interest Rate with respect to any Senior Floating Rate Notes Interest Period shall be subject to a minimum rate *per annum* of 0.00% (the "Minimum Rate"), calculated on the basis of a 360-day year and the actual number of days elapsed.

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The first Senior Floating Rate Notes interest payment date (as defined below) will fall on September 13, 2025. Thereafter, interest on the Senior Floating Rate Notes will be paid quarterly in arrears on March 13, June 13, September 13 and December 13 of each year (together with the first Senior Floating Rate Notes interest payment date, each a "Senior Floating Rate Notes interest payment date"). However, if a Senior Floating Rate Notes interest payment date would fall on a day that is not a business day, other than the interest payment date that is also a redemption date or the date of maturity, the Senior Floating Rate Notes interest payment date will be postponed to the next succeeding day that is a business day and interest thereon will continue to accrue, except that if the business day falls in the next succeeding calendar month, the applicable Senior Floating Rate Notes interest payment date will be the immediately preceding business day. In each such case, except for the Senior Floating Rate Notes interest payment date falling on a redemption date or the maturity date, the Senior Floating Rate Notes Interest Periods and the Senior Floating Rate Notes Reset Dates (as defined below) will be adjusted accordingly to calculate the amount of interest payable on the Senior Floating Rate Notes.

The Senior Floating Rate Notes Interest Rate will be reset on each Senior Floating Rate Notes interest payment date (together with the initial Senior Floating Rate Notes Reset Date, each a "Senior Floating Rate Notes Reset Date"). However, if any Senior Floating Rate Notes Reset Date would otherwise be a day that is not a business day, that Senior Floating Rate Notes Reset Date will be postponed to the next succeeding day that is a business day, except that if the business day falls in the next succeeding calendar month, the applicable Senior Floating Rate Notes Reset Date will be the immediately preceding business day.

Interest will be paid to holders of record of the Senior Floating Rate Notes in respect of the principal amount thereof outstanding 15 calendar days preceding the relevant Senior Floating Rate Notes interest payment date, whether or not a business day. If the scheduled maturity date or date of redemption or repayment is not a business day, we may pay interest and principal on the next succeeding business day, but interest on that payment will not accrue during the period from and after the scheduled maturity date or date of redemption or repayment.

&nbsp;&nbsp;&nbsp;&nbsp;The first interest period will begin on and include June 13, 2025 and will end on and exclude September 13, 2025. Thereafter, the interest periods will be the periods from and including a Senior Floating Rate Notes interest payment date to but excluding the immediately succeeding Senior Floating Rate Notes interest payment date (together with the initial interest period, each a "Senior Floating Rate Notes Interest Period"). However, the final Senior Floating Rate Notes Interest Period will be the period from and including the Senior Floating Rate Notes interest payment date immediately preceding the maturity date to but excluding the maturity date. The Senior Floating Rate Notes interest determination date ("Senior Floating Rate Notes Interest Determination Date") for each Senior Floating Rate Interest Period will be on the fifth U.S. Government Securities Business Day (as defined below) preceding the applicable Senior Floating Rate Notes interest payment date. If a tax redemption or Loss Absorption Disqualification Event redemption (see "*Description of the Senior Notes—Tax Redemption*" and "*Description of the Senior Notes—Loss Absorption Disqualification Event Redemption*" in this prospectus supplement) occurs, the Senior Floating Rate Notes Interest Determination Date will be on the fifth U.S. Government Securities Business Day preceding such tax redemption or Loss Absorption Disqualification Event redemption date, as applicable. "U.S. Government Securities Business Day" means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.

***Calculation of Senior Floating Rate Notes Interest Rate***

The Calculation Agent for the Senior Floating Rate Notes is The Bank of New York Mellon, London Branch or its successor appointed by LBG. The Calculation Agent will determine the Senior Floating Rate Notes Interest Rate for each Senior Floating Rate Notes Interest Period by reference to the SOFR Index Average on the applicable Senior Floating Rate Notes Interest Determination Date. Promptly upon such determination, the Calculation Agent will notify LBG and the Trustee (as defined below) of the applicable Senior Floating Rate Notes Interest Rate. Upon the request of the holder of any Senior Floating Rate Note, the Calculation Agent will provide the Senior Floating Rate Notes Interest Rate as determined for the most recent applicable Senior Floating Rate Notes Interest Period.

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Subject to the circumstances described under "*— SOFR Discontinuation*" below, the "SOFR Index Average" for each Senior Floating Rate Notes Interest Period shall be equal to the value of the SOFR rates for each day during the relevant Senior Floating Rate Notes Interest Period as calculated by the Calculation Agent as follows:

![image_0.jpg](image_0.jpg)

with the resulting percentage being rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with 0.000005 being rounded upwards, where:

"dc" for any SOFR Observation Period, means the number of calendar days in the relevant SOFR Observation Period;

"SOFR Index" means the SOFR Index in relation to any U.S. Government Securities Business Day as published by the NY Federal Reserve on the NY Federal Reserve's Website at the SOFR Determination Time;

"SOFR IndexEnd" means the SOFR Index value on the date that is five U.S. Government Securities Business Days preceding the Senior Floating Rate Notes interest payment date relating to such Senior Floating Rate Notes Interest Period (or in the final Senior Floating Rate Notes Interest Period, preceding the maturity date) (such date a "SOFR Index Determination Date"); and

"SOFR IndexStart" means the SOFR Index value on the date that is five U.S. Government Securities Business Days preceding the first date of the relevant Senior Floating Rate Notes Interest Period (such date a "SOFR Index Determination Date"), and, for the initial Senior Floating Rate Notes Interest Period, the SOFR Index value on June 10, 2025.

Subject to the circumstances described under "*— SOFR Discontinuation*" below, if the SOFR Index is not published on any relevant SOFR Index Determination Date and a SOFR Benchmark Event and its related SOFR Benchmark Replacement Date has not occurred, the "SOFR Index Average" for such Senior Floating Rate Notes Interest Period shall be calculated by the Calculation Agent on the relevant Senior Floating Rate Notes Interest Determination Date as follows:

![image_11.jpg](image_11.jpg)

with the resulting percentage being rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with 0.000005 being rounded upwards, where:

"d" for any SOFR Observation Period, means the number of calendar days in the relevant SOFR Observation Period;

"do" for any SOFR Observation Period, means the number of U.S. Government Securities Business Days in the relevant SOFR Observation Period;

"i" means a series of whole numbers from one to do, each representing the relevant U.S. Government Securities Business Days in chronological order from (and including) the first U.S. Government Securities Business Day in the relevant SOFR Observation Period;

"ni" for any U.S. Government Securities Business Day "i" in the relevant SOFR Observation Period, means the number of calendar days from (and including) such U.S. Government Securities Business Day "i" up to (but excluding) the following U.S. Government Securities Business Day ("i+1"); and

"SOFRi" for any U.S. Government Securities Business Day "i" in the relevant SOFR Observation Period, is equal to SOFR in respect of that day "i".

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In connection with the SOFR provisions above, the following definitions apply:

"Bloomberg Screen SOFRRATE Page" means the Bloomberg screen designated "SOFRRATE" or any successor page or service; "NY Federal Reserve" means the Federal Reserve Bank of New York;

"NY Federal Reserve's Website" means the website of the NY Federal Reserve, currently at www.newyorkfed.org, or any successor website of the NY Federal Reserve or the website of any successor administrator of SOFR;

"Reuters Page USDSOFR=" means the Reuters page designated "USDSOFR=" or any successor page or service;

"SOFR" means, with respect to any day (including any U.S. Government Securities Business Day), the rate determined by the Calculation Agent, as the case may be, in accordance with the following provisions:

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the Secured Overnight Financing Rate published at the SOFR Determination Time, as such rate is reported on the Bloomberg Screen SOFRRATE Page, then the Secured Overnight Financing Rate published at the SOFR Determination Time, as such rate is reported on the Reuters Page USDSOFR= or, if no such rate is reported on the Reuters Page USDSOFR=, then the Secured Overnight Financing Rate that appears at the SOFR Determination Time on the NY Federal Reserve's Website; or

&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;if the rate specified in (a) above does not appear, the SOFR published on the NY Federal Reserve's Website for the first preceding U.S. Government Securities Business Day for which SOFR was published on the NY Federal Reserve's Website;

"SOFR Determination Time" means approximately 3:00 p.m. (New York City time) on the NY Federal Reserve's Website on the immediately following U.S. Government Securities Business Day; and

"SOFR Observation Period" means, in respect of each Senior Floating Rate Notes Interest Period, the period from (and including) the fifth U.S. Government Securities Business Day preceding the first date in such Senior Floating Rate Notes Interest Period to (but excluding) the fifth U.S. Government Securities Business Day preceding the Senior Floating Rate Notes interest payment date (or in the final Senior Floating Rate Notes Interest Period, preceding the maturity date) for such Senior Floating Rate Notes Interest Period.

***SOFR Discontinuation***

Notwithstanding the provisions described under "*—Calculation of Senior Floating Rate Notes Interest Rate*" above, if a SOFR Benchmark Event and its related SOFR Benchmark Replacement Date occurs when any Senior Floating Rate Notes Interest Rate (or any component part thereof) remains to be determined by reference to the SOFR Benchmark in respect of the Senior Floating Rate Notes, then LBG (or its designee) may, at its sole discretion, appoint and consult with an Independent Adviser, as soon as reasonably practicable, with a view to LBG (or its designee) determining a SOFR Benchmark Replacement and the applicable SOFR Benchmark Replacement Adjustment Spread and any other amendments to the terms of the Senior Floating Rate Notes, in accordance with the provisions below.

In the absence of fraud, LBG (or its designee) and any Independent Adviser appointed pursuant to this section "*— SOFR Discontinuation*", as applicable, shall have no liability whatsoever to LBG, the Trustee (as defined below), the Calculation Agent, any paying agent or the holders of the Senior Floating Rate Notes for any determination made by it or for any advice given to LBG (or its designee) in connection with any determination made by LBG (or its designee) pursuant to this section "— *SOFR Discontinuation*".

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If LBG (or its designee) has not appointed an Independent Adviser in accordance with this section "*— SOFR Discontinuation*", LBG (or its designee) may still make any determinations and/or any amendments contemplated by and in accordance with this section "*— SOFR Discontinuation*" (with the relevant provisions in this section applying *mutatis mutandis* to allow such determinations or amendments to be made by LBG (or its designee) without consultation with an Independent Adviser). Any determination, decision or election that may be made by LBG (or its designee) pursuant to this section "— *SOFR Discontinuation*", including any determination with respect to tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error, will be made in LBG's (or its designee's) sole discretion, and, notwithstanding anything to the contrary in the documentation relating to the Senior Floating Rate Notes, shall become effective without consent from the holders of the Senior Floating Rate Notes or any other party.

Subject to the paragraph below, if LBG (or its designee), following consultation with its Independent Adviser, no later than three business days prior to the Senior Floating Rate Notes Interest Determination Date relating to the next Senior Floating Rate Notes Interest Period (the "Determination Cut-off Date") determines the SOFR Benchmark Replacement for the purposes of determining the Senior Floating Rate Notes Interest Rate for all future Senior Floating Rate Notes Interest Periods (subject to the subsequent operation of this section "*— SOFR Discontinuation*" during any other future Senior Floating Rate Notes Interest Periods), then such SOFR Benchmark Replacement shall be the SOFR Benchmark for all future Senior Floating Rate Notes Interest Periods (subject to the subsequent operation of this section during any other future Senior Floating Rate Notes Interest Period(s)).

Notwithstanding the above paragraph, if LBG (or its designee), following consultation with its Independent Adviser, determines prior to the Determination Cut-off Date that no SOFR Benchmark Replacement exists then the relevant Senior Floating Rate Notes Interest Rate shall be determined using the SOFR Benchmark last displayed on the relevant page prior to the relevant Senior Floating Rate Notes Interest Determination Date. This paragraph shall apply to the relevant Senior Floating Rate Notes Interest Period only. Any subsequent Senior Floating Rate Notes Interest Period(s) shall be subject to the subsequent operation of, and adjustment as provided in, this section "— *SOFR Discontinuation*".

Promptly following the determination of the SOFR Benchmark Replacement as described in this section "*— SOFR Discontinuation*", LBG (or its designee) shall give notice thereof pursuant to this section to the Trustee, the Calculation Agent, any paying agents and the holders of the Senior Floating Rate Notes. For the avoidance of doubt, neither the Trustee, the Calculation Agent nor any paying agents shall have any responsibility for making such determination.

Subject to receipt of notice pursuant to the above paragraph, the Trustee, the Calculation Agent and any paying agents shall, at the direction and expense of LBG, effect such waivers and consequential amendments to the terms and conditions of the Senior Floating Rate Notes, the Indenture and any other document as LBG (or its designee), following consultation with its Independent Adviser, determines may be required to give effect to any application of this section "*— SOFR Discontinuation*", including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;changes to the terms and conditions of the Senior Floating Rate Notes which LBG (or its designee), following consultation with its Independent Adviser, determines may be required in order to follow market practice (determined according to factors including, but not limited to, public statements, opinions and publications of industry bodies and organizations) in relation to such SOFR Benchmark Replacement, including, but not limited to (A) the business day, business day convention, day count fraction, Senior Floating Rate Notes Interest Determination Date and/or any relevant time applicable to the Senior Floating Rate Notes and (B) the method for determining the fallback to the Senior Floating Rate Notes Interest Rate if such SOFR Benchmark Replacement is not available; and

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&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;any other changes which LBG (or its designee), following consultation with its Independent Adviser, determines are reasonably necessary to ensure the proper operation and comparability to the SOFR Benchmark of such SOFR Benchmark Replacement, which changes shall apply to the Senior Floating Rate Notes for all future Senior Floating Rate Notes Interest Periods (subject to the subsequent operation of this section "— *SOFR Discontinuation*"). None of the Trustee, the Calculation Agent or any paying agents shall be responsible or liable for any determinations, decisions or elections made by LBG (or its designee) with respect to any waivers or consequential amendments to be effected pursuant to this section "— *SOFR Discontinuation*" or any other changes and shall be entitled to rely conclusively on any certifications provided to each of them in this regard.

No consent of the holders of the Senior Floating Rate Notes shall be required in connection with effecting the relevant SOFR Benchmark Replacement as described in this section or such other relevant adjustments pursuant to this section, including for the execution of, or amendment to, any documents or the taking of other steps by LBG (or its designee) or any of the parties to the Indenture or Calculation Agent Agreement (if required).

By its acquisition of the Senior Floating Rate Notes, each holder and beneficial owner of the Senior Floating Rate Notes and each subsequent holder and beneficial owner acknowledges, accepts, agrees to be bound by, and consents to, LBG's (or its designee's) determination of the SOFR Benchmark Replacement, as contemplated by this section "— *SOFR Discontinuation*", and to any amendment or alteration of the terms and conditions of the Senior Floating Rate Notes, including an amendment of the amount of interest due on the Senior Floating Rate Notes, as may be required in order to give effect to this section "— *SOFR Discontinuation*", without the need for any further consent from the holders of the Senior Floating Rate Notes. The Trustee shall be entitled to rely on this deemed consent in connection with any supplemental indenture or amendment which may be necessary to give effect to the SOFR Benchmark Replacement or any application of this section "— *SOFR Discontinuation*".

By its acquisition of the Senior Floating Rate Notes, each holder and beneficial owner of the Senior Floating Rate Notes and each subsequent holder and beneficial owner waives any and all claims in law and/or equity against the Trustee, the Calculation Agent and any paying agent for, agrees not to initiate a suit against the Trustee, the Calculation Agent and any paying agent in respect of, and agrees that neither the Trustee, the Calculation Agent nor any paying agent will be liable for, any action that the Trustee, the Calculation Agent or any paying agent, as the case may be, takes, or abstains from taking, in each case in accordance with this section "— *SOFR Discontinuation*" or any losses suffered in connection therewith.

Notwithstanding any other provision of this section "— *SOFR Discontinuation*", no SOFR Benchmark Replacement will be adopted, nor will the SOFR Benchmark Replacement Adjustment (as applicable) be applied, nor will any other amendments to the terms and conditions of the Senior Floating Rate Notes be made, if and to the extent that, in the determination of LBG , the same could reasonably be expected to result in the exclusion of the Senior Floating Rate Notes (in whole or in part) from LBG's and/or its subsidiaries' minimum requirements for (A) own funds and eligible liabilities and/or (B) loss absorbing capacity instruments, in each case as such minimum requirements are applicable to LBG and/or its subsidiaries and as determined in accordance with, and pursuant to, the relevant Loss Absorption Regulations.

"Corresponding Tenor" with respect to a SOFR Benchmark Replacement means a tenor (including overnight) having approximately the same length (disregarding business day adjustment) as the applicable tenor for the then-current SOFR Benchmark;

"Independent Adviser" means an independent financial institution of international repute or an independent financial adviser with appropriate expertise appointed by LBG under this section "*— SOFR Discontinuation*";

"ISDA" means the International Swaps and Derivatives Association, Inc. or any successor;

"ISDA Definitions" means the 2006 ISDA Definitions, as published by ISDA, as amended, supplemented or replaced from time to time;

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"ISDA Fallback Rate" means the rate to be effective upon the occurrence of a SOFR Index Cessation Event according to (and as defined in) the ISDA Definitions, where such rate may have been adjusted for an overnight tenor, but without giving effect to any additional spread adjustment to be applied according to such ISDA Definitions;

"ISDA Spread Adjustment" means the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that shall have been selected by ISDA as the spread adjustment that would apply to the ISDA Fallback Rate;

"Relevant Governmental Body" means the Board of Governors of the Federal Reserve System and/or the NY Federal Reserve or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System and/or the NY Federal Reserve, or any successor.

"SOFR Benchmark" means, initially, the SOFR Index Average, provided that if a SOFR Benchmark Event has occurred with respect to the SOFR Index Average or the then-current SOFR Benchmark, then "SOFR Benchmark" means the applicable SOFR Benchmark Replacement;

"SOFR Benchmark Event" means the occurrence of one or more of the following events with respect to the then-current SOFR Benchmark (including the daily published component used in the calculation thereof):

&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;a public statement or publication of information by or on behalf of the administrator of the SOFR Benchmark (or such component) announcing that such administrator has ceased or will cease to provide the SOFR Benchmark (or such component), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the SOFR Benchmark (or such component);

&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;a public statement or publication of information by the regulatory supervisor for the administrator of the SOFR Benchmark (or such component), the central bank for the currency of the SOFR Benchmark (or such component), an insolvency official with jurisdiction over the administrator for the SOFR Benchmark (or such component), a resolution authority with jurisdiction over the administrator for the SOFR Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the SOFR Benchmark (or such component), which states that the administrator of the SOFR Benchmark (or such component) has ceased or will cease to provide the SOFR Benchmark (or such component) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the SOFR Benchmark (or such component); or

&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;a public statement or publication of information by the regulatory supervisor for the administrator of the SOFR Benchmark announcing that the SOFR Benchmark is no longer representative;

"SOFR Benchmark Replacement" means the first alternative set forth in the order below that can be determined by LBG, following consultation with its Independent Adviser:

&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the sum of (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current SOFR Benchmark for the applicable Corresponding Tenor and (b) the SOFR Benchmark Replacement Adjustment;

&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;the sum of (a) the ISDA Fallback Rate and (b) the SOFR Benchmark Replacement Adjustment; or

&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;the sum of (a) the alternate rate that has been selected by LBG, in consultation with the Independent Adviser, as the replacement for the then-current SOFR Benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate as a replacement for the then-current SOFR Benchmark for U.S. dollar-denominated floating rate notes at such time and (b) the SOFR Benchmark Replacement Adjustment;

"SOFR Benchmark Replacement Adjustment" means the first alternative set forth in the order below that can be determined by LBG, following consultation with its Independent Adviser:

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&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted SOFR Benchmark Replacement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;if the applicable Unadjusted SOFR Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Spread Adjustment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;the spread adjustment (which may be a positive or negative value or zero) determined by LBG, following consultation with its Independent Adviser, giving due consideration to any industry accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current SOFR Benchmark with the applicable Unadjusted SOFR Benchmark Replacement for U.S. dollar-denominated floating rate notes at such time;

"SOFR Benchmark Replacement Date" means the earliest to occur of the following events with respect to the then-current SOFR Benchmark (including the daily published component used in the calculation thereof):

&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;in the case of clause (1) or (2) of the definition of "SOFR Benchmark Event," the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the SOFR Benchmark permanently or indefinitely ceases to provide the SOFR Benchmark (or such component); or

&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;in the case of clause (3) of the definition of "SOFR Benchmark Event," the date of the public statement or publication of information referenced therein; and

"Unadjusted SOFR Benchmark Replacement" means the SOFR Benchmark Replacement excluding the applicable SOFR Benchmark Replacement Adjustment.

**General**

The Senior Notes will constitute our direct, unconditional, unsecured and unsubordinated obligations ranking *pari passu* and without any preference among themselves and at least *pari passu*, with all of our other outstanding unsecured and unsubordinated obligations, present and future, subject to such exceptions as may be provided by mandatory provisions of applicable law.

Each series of Senior Notes will constitute a separate series of senior debt securities issued under an indenture dated as of July 6, 2010, as amended by the First Supplemental Indenture dated as of July 6, 2016 (the "Senior Base Indenture") between us as Issuer and The Bank of New York Mellon, acting through its London Branch, as trustee (the "Trustee"), as supplemented by a Twenty-First Senior Supplemental Indenture to be dated as of June 13, 2025 (the "Twenty-First Senior Supplemental Indenture" and, together with the Senior Base Indenture, the "Senior Indenture") between us as Issuer and the Trustee, The Bank of New York Mellon, London Branch as paying agent and The Bank of New York Mellon SA/NV, Dublin Branch, as senior debt security registrar. Book-entry interests in the Senior Notes will be issued in minimum denominations of $200,000 and in integral multiples of $1,000 in excess thereof.

The Bank of New York Mellon, London Branch is designated as the paying agent. We may at any time designate additional paying agents or rescind the designation of paying agents or approve a change in the office through which any paying agent acts.

We will issue the Senior Notes in fully registered form. Each series of Senior Notes will be represented by one or more global securities in the name of a nominee of The Depository Trust Company (the "DTC"). You will hold beneficial interest in the Senior Notes through the DTC and its participants. The Underwriters expect to deliver the Senior Notes through the facilities of the DTC on June 13, 2025. For a more detailed summary of the form of the Senior Notes and settlement and clearance arrangements, you should read "*Description of Certain Provisions Relating to Debt Securities and Capital Securities—Form of Debt Securities and Capital Securities; Book-Entry System*" in the accompanying prospectus. Indirect holders trading their beneficial interests in the Senior Notes through the DTC must trade in the DTC's same-day funds settlement system and pay in immediately available

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funds. Secondary market trading will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream Luxembourg.

Definitive debt securities will only be issued in limited circumstances described under "*Description of Certain Provisions Relating to Debt Securities and Capital Securities—Form of Debt Securities and Capital Securities; Book-Entry System*" in the accompanying prospectus.

Payment of principal of and interest on the Senior Notes, so long as the Senior Notes are represented by global securities, will be made in immediately available funds. Beneficial interests in the global securities will trade in the same-day funds settlement system of the DTC, and secondary market trading activity in such interests will therefore settle in same-day funds.

A "business day" means any day, other than Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in the City of New York or in the City of London.

All payments in respect of the Senior Notes by us or our paying agent will be made subject to any deduction or withholding that may be imposed or levied by any jurisdiction. Except as provided under "*—Payment of Additional Amounts*" below, no additional amounts will be paid on the Senior Notes with respect to any such amounts withheld. For the avoidance of doubt, notwithstanding anything to the contrary herein, if by reason of any agreement with the U.S. Internal Revenue Service in connection with Sections 1471-1474 of the U.S. Internal Revenue Code and the U.S. Treasury regulations thereunder ("FATCA"), any intergovernmental agreement between the United States and the United Kingdom or any other jurisdiction with respect to FATCA, or any law, regulation or other official guidance enacted or issued in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement, any of us, the Trustee, our paying agent or another withholding agent deducts and withholds from any amount payable on, or in respect of, the Senior Notes, the amounts so deducted or withheld shall be treated as having been paid to the holder of the Senior Notes, and no additional amounts will be paid on account of any such deduction or withholding. Neither we, the Trustee nor our paying agent shall have any liability in connection with our compliance with any such withholding obligation under applicable law.

**Optional Redemption**

On at least 5 business days' but no more than 30 business days' prior written notice delivered to the registered holders of a series of Senior Notes, we may, in our sole discretion (but subject to, if and to the extent then required by the Relevant Regulator or the Loss Absorption Regulations, our giving notice to the Relevant Regulator and the Relevant Regulator granting us permission) redeem that series of Senior Notes, in whole, but not in part, on June 13, 2028, at a redemption price equal to 100% of the principal amount of such series of Senior Notes *plus* accrued and unpaid interest thereon, if any, to, but excluding, the date of redemption (the "Senior Notes redemption date").

**Agreement with Respect to the Exercise of U.K. Bail-in Power**

Notwithstanding any other agreements, arrangements, or understandings between us and any holder or beneficial owner of the Senior Notes, by purchasing or acquiring the Senior Notes, each holder (including each beneficial owner) of the Senior Notes acknowledges, accepts, agrees to be bound by and consents to the exercise of any U.K. bail-in power (as defined below) by the relevant U.K. resolution authority that may result in (i) the reduction or cancellation of all, or a portion, of the principal amount of, or interest on, the Senior Notes; (ii) the conversion of all, or a portion, of the principal amount of, or interest on, the Senior Notes into shares or other securities or other obligations of LBG or another person (and the issue to or conferral on the holder of such shares, securities or obligations, including by means of amendment, modification or variation of the terms of the Senior Notes); and/or (iii) the amendment or alteration of the maturity of the Senior Notes, or amendment of the amount of interest due on the Senior Notes, or the dates on which interest becomes payable, including by suspending payment for a temporary period; any U.K. bail-in power may be exercised by means of variation of the terms of the Senior Notes solely to give effect to the exercise by the relevant U.K. resolution authority of such U.K. bail-in power. With respect to (i), (ii) and (iii) above, references to principal and interest shall include payments of principal and interest that have become due and payable (including principal that has become due and payable at the relevant maturity

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date), but which have not been paid, prior to the exercise of any U.K. bail-in power. Each holder and each beneficial owner of the Senior Notes further acknowledges and agrees that the rights of the holders and/or beneficial owners under the Senior Notes are subject to, and will be varied, if necessary, solely to give effect to, the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. For these purposes, a "U.K. bail-in power" is any write-down, conversion, transfer, modification, moratorium and/or suspension power existing from time to time under any laws, regulations, rules or requirements relating to the resolution of financial holding companies, mixed financial holding companies, banks, banking group companies, credit institutions and/or investment firms incorporated in the United Kingdom in effect and applicable in the United Kingdom to LBG or other members of the Group, including but not limited to any such laws, regulations, rules or requirements which are implemented, adopted or enacted in the United Kingdom within the context of the U.K. resolution regime under the Banking Act 2009 as the same has been or may be amended from time to time (whether pursuant to the U.K. Financial Services (Banking Reform) Act 2013, secondary legislation or otherwise) (the "Banking Act") and/or the Loss Absorption Regulations, pursuant to which obligations of a bank, banking group company, credit institution or investment firm or any of its affiliates can be reduced, canceled, modified, transferred and/or converted into shares or other securities or obligations of the obligor or any other person (or suspended for a temporary period) or pursuant to which any right in a contract governing such obligations may be deemed to have been exercised. A reference to the "relevant U.K. resolution authority" is to any authority with the ability to exercise a U.K. bail-in power.

*According to the principles contained in the Banking Act, we expect that the relevant U.K. resolution authority would exercise its U.K. bail-in power in respect of the Senior Notes having regard to the hierarchy of creditor claims (with the exception of excluded liabilities, as such term is described in the Banking Act) and that the holders of the Senior Notes would be treated equally in respect of the exercise of any U.K. bail-in power with all other claims that would rank pari passu with the Senior Notes upon an insolvency of LBG.*

No repayment of the principal amount of the Senior Notes or payment of interest on the Senior Notes shall become due and payable after the exercise of any U.K. bail-in power by the relevant U.K. resolution authority unless, at the time that such repayment or payment, respectively, is scheduled to become due, such repayment or payment would be permitted to be made by us under the laws and regulations of the United Kingdom applicable to us or other members of the Group. See also "*Risk Factors― Under the terms of the Notes, you have agreed to be bound by the exercise of any U.K. bail-in power imposed by the relevant U.K. resolution authority".*

Neither a reduction or cancellation, in part or in full, of the principal amount of, or interest on, the Senior Notes or the conversion thereof into another security or obligation of LBG or another person, as a result of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to LBG, nor the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Senior Notes will be a Senior Notes Default or a Senior Notes Event of Default for any purpose.

LBG's obligations to indemnify the Trustee in accordance with Section 6.07 of the Senior Base Indenture (as supplemented by the Twenty-First Senior Supplemental Indenture) shall survive the exercise of the U.K. Bail-in Power by the relevant U.K. resolution authority with respect to the Senior Notes.

By purchasing or acquiring Senior Notes, each holder and each beneficial owner of the Senior Notes: (i) acknowledges and agrees that the exercise of the U.K. bail-in power by the relevant U.K. resolution authority in respect of the Senior Notes shall not give rise to a default or an Event of Default for purposes of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act (the "TIA"); (ii) to the extent permitted by the TIA, waives any and all claims against the Trustee for, agrees not to initiate a suit against the Trustee in respect of, and agrees that the Trustee shall not be liable for, any action that the Trustee takes, or abstains from taking, in either case in accordance with the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Senior Notes; and (iii) acknowledges and agrees that, upon the exercise of any U.K. bail-in power by the relevant U.K. resolution authority, (a) the Trustee shall not be required to take any further directions from holders or beneficial owners of the Senior Notes under Section 5.12 (Control by Holders) of the Senior Base Indenture, and (b) neither the Senior Base Indenture nor the Twenty-First Senior Supplemental Indenture shall impose any duties upon the Trustee whatsoever with respect to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. Notwithstanding the foregoing, if, following the completion of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority, any of the Senior

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Notes remain outstanding (for example, if the exercise of the U.K. bail-in power results in only a partial write-down of the principal of such Senior Notes), then the Trustee's duties under the Senior Indenture shall remain applicable with respect to such Senior Notes following such completion to the extent that LBG and the Trustee agree pursuant to a supplemental indenture or an amendment to the Senior Indenture, unless LBG and the Trustee agree in writing that a supplemental indenture is not necessary.

By purchasing or acquiring the Senior Notes, each holder and each beneficial owner shall be deemed to have (i) consented to the exercise of any U.K. bail-in power as it may be imposed without any prior notice by the relevant U.K. resolution authority of its decision to exercise such power with respect to the Senior Notes and (ii) authorized, directed and requested DTC and any direct participant in DTC or other intermediary through which it holds such Senior Notes to take any and all necessary action, if required, to implement the exercise of any U.K. bail-in power with respect to the Senior Notes as it may be imposed, without any further action or direction on the part of such holder or beneficial owner or the Trustee.

Upon the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Senior Notes, we shall provide a written notice to DTC as soon as practicable regarding such exercise of the U.K. bail-in power for purposes of notifying holders and beneficial owners of such occurrence. We shall also deliver a copy of such notice to the Trustee for information purposes. Any delay or failure by us in delivering the notices referred to in this paragraph shall not affect the validity and enforceability of the U.K. bail-in power.

For a discussion of certain risk factors relating to the U.K. bail-in power, see "*Risk Factors—Risks relating to the Notes*".

**Events of Default; Default; Limitation of Remedies**

***Senior Notes Events of Default***

A "Senior Notes Event of Default" with respect to a series of Senior Notes shall result if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a court of competent jurisdiction makes an order which is not successfully appealed within 30 days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an effective shareholders' resolution is validly adopted,

for the winding-up of LBG, other than under or in connection with a scheme of amalgamation or reconstruction not involving a bankruptcy or insolvency.

If a Senior Notes Event of Default occurs, the Trustee or the holder or holders of at least 25% in aggregate principal amount of the outstanding notes of such series of Senior Notes may declare to be due and payable immediately in accordance with the terms of the Senior Indenture the principal amount of, and accrued but unpaid interest thereon, if any, and any Senior Notes Additional Amounts (as defined below), on the Senior Notes of that series. However, after this declaration but before the Trustee obtains a judgment or decree for payment of money due, the holder or holders of a majority in aggregate principal amount of the outstanding notes of such series of Senior Notes may rescind the declaration of acceleration and its consequences, but only if all Senior Notes Events of Default have been remedied and all payments due, other than those due as a result of acceleration, in respect of such series of Senior Notes have been made.

***Defaults***

A "Senior Notes Default" with respect to a series of Senior Notes shall result if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any installment of interest in respect of the Senior Notes of such series is not paid on or before its interest payment date and such failure continues for 14 days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all or any part of the principal of the Senior Notes of such series is not paid when it otherwise becomes due and payable, whether upon redemption or otherwise, and such failure continues for seven days.

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If a Senior Notes Default occurs with respect to a series of Senior Notes, the Trustee may commence a proceeding for the winding-up of LBG, provided that the Trustee may not (except in such winding-up, in accordance with "*Events of Default*" above) declare the principal amount of, or any other amount in respect of, the outstanding Senior Notes of any series to be due and payable.

However, a failure to make any payment on a series of Senior Notes shall not be a Senior Notes Default if it is withheld or refused in order to comply with any applicable fiscal or other law or regulation or order of any court of competent jurisdiction and LBG delivers a written opinion of legal advisors, who may be an employee of, or legal advisors for, LBG or other legal advisors, such opinion to be acceptable to the Trustee ("Opinion of Counsel"), to the Trustee with that conclusion, at any time before the expiry of the applicable 14 day or seven day period by independent legal advisers, *provided*, *however*, that the Trustee may by notice to LBG require it to take such action (including but not limited to proceedings for a declaration by a court of competent jurisdiction) as the Trustee may be advised in an Opinion of Counsel, upon which opinion the Trustee may conclusively rely, is appropriate and reasonable in the circumstances to resolve such doubt, in which case LBG will forthwith take and expeditiously proceed with such action and will be bound by any final resolution of the doubt resulting therefrom. If any such action results in a determination that the relevant payment can be made without violating any applicable law, regulation or order then such payment will become due and payable on the expiration of 14 days (in the case of a Senior Notes Default in respect of a payment of interest) or seven days (in the case of a Senior Notes Default in respect of a payment of principal) after the Trustee gives written notice to LBG informing it of such resolution.

During the continuance of a Senior Notes Event of Default, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of holders of such series of Senior Notes by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in the Senior Indenture or in aid of the exercise of any power granted therein, or to enforce any other legal or equitable right vested in the Trustee by the Senior Indenture or by law, *provided*, *however*, that LBG shall not, as a result of the bringing of such judicial proceedings, be required to pay any amount representing or measured by reference to the principal of, or any interest on, the Senior Notes of such series prior to any date on which the principal of, or any interest on, the Senior Notes of such series would have otherwise been payable by LBG.

Notwithstanding any contrary provisions, nothing shall impair the right of a holder, absent the holder's consent, to sue for any payments due but unpaid with respect to such series of Senior Notes.

***General***

The holder or holders of not less than a majority in aggregate principal amount of the outstanding Senior Notes may waive any past Senior Notes Event of Default or Senior Notes Default in respect of such series, except a Senior Notes Event of Default or Senior Notes Default in respect of the payment of interest, if any, or principal of (or premium, if any) or payments on any Senior Note of such series or a covenant or provision of the Senior Indenture which cannot be modified or amended without the consent of each holder of the Senior Notes of such series.

Subject to the provisions of the Senior Indenture relating to the duties of the Trustee, if a Senior Notes Event of Default or a Senior Notes Default occurs, the Trustee will be under no obligation to take direction from any holder or holders of such series of Senior Notes, unless they have offered reasonable indemnity to the Trustee. Subject to the Senior Indenture provisions for the indemnification of the Trustee, the holder or holders of a majority in aggregate principal amount of the outstanding Senior Notes of such series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, if the direction is not in conflict with any rule of law or with the Senior Indenture and does not expose the Trustee to undue risk and the action would not be unjustly prejudicial to the holder or holders of the Senior Notes not taking part in that direction. The Trustee may take any other action that it deems proper which is not inconsistent with that direction.

The Senior Indenture provides that the Trustee will, within 90 days after the occurrence of a Senior Notes Event of Default or a Senior Notes Default, give to each holder of a series of Senior Notes notice of the Senior Notes Event of Default or Senior Notes Default known to it, unless the Senior Notes Event of Default or Senior Notes Default,

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has been cured or waived in respect of such series. However, the Trustee shall be protected in withholding notice if it determines in good faith that withholding notice is in the interest of the holders.

We are required to furnish to the Trustee a statement as to our compliance with all conditions and covenants under the Senior Indenture (i) annually, and (ii) within five business days of a written request from the Trustee.

**Additional Issuances**

We may, without the consent of the holders of a series of Senior Notes, issue additional notes having the same ranking and same interest rate, maturity date, redemption terms and other terms as such series of Senior Notes described in this prospectus supplement except for the price to the public, issue date and first interest payment date, provided however that such additional notes that form part of any series of Senior Notes described in this prospectus supplement must be fungible with the outstanding Senior Notes of that series for U.S. federal income tax purposes. Any such additional notes, together with the Senior Notes offered by this prospectus supplement, will constitute a single series of securities under the Senior Indenture. There is no limitation on the amount of Senior Notes or other debt securities that we may issue under such indenture.

**Tax Redemption**

In addition to our right to redeem each series of Senior Notes described above under "*—Optional Redemption*", we may (subject to, if and to the extent then required by the Relevant Regulator or the Loss Absorption Regulations, our giving notice to the Relevant Regulator and the Relevant Regulator granting us permission) redeem the Senior Notes of any series in whole but not in part if we determine that as a result of a change in or amendment to the laws or regulations of the United Kingdom or any political subdivision thereof or authority thereof that has the power to tax (a "U.K. taxing jurisdiction") (including any treaty to which such U.K. taxing jurisdiction is a party), or any change in the application or interpretation of such laws or regulations (including a decision of any court or tribunal) which change or amendment becomes effective or applicable on or after June 13, 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in making any payments on the Senior Notes of the relevant series, we have paid or will or would on the next payment date be required to pay additional amounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• payments on the next payment date in respect of the Senior Notes of the relevant series would be treated as "distributions" within the meaning of Chapter 2 Part 23 of the Corporation Tax Act 2010 of the United Kingdom, or any statutory modification or re-enactment of such Act; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on the next payment date we would not be entitled to claim a deduction in respect of the payments in computing our U.K. taxation liabilities, or the value of the deduction to us would be materially reduced.

In the event of such a redemption, the redemption price of the Senior Notes of the relevant series will be 100% of their principal amount together with accrued but unpaid interest thereon, if any, to the date of redemption.

If we elect to redeem the Senior Notes of any series in accordance with this subsection, they will cease to accrue interest from the Senior Notes redemption date, unless there is a failure to pay the redemption price on the payment date. The circumstances in which we may redeem the Senior Notes of any series and the applicable procedures are described further in the accompanying prospectus under "*Description of Debt Securities—Redemption of Senior Debt Securities*".

**Loss Absorption Disqualification Event Redemption**

We may, at our option (but subject to, if and to the extent then required by the Relevant Regulator or the Loss Absorption Regulations, our giving notice to the Relevant Regulator and the Relevant Regulator granting us permission), having given not less than 15 nor more than 30 days' notice to holders, redeem all but not some only of a series of Senior Notes outstanding at any time at 100% of their principal amount together with accrued but unpaid interest thereon, if any, to the date of redemption, if immediately prior to the giving of the notice referred to above, we notify the Trustee that a Loss Absorption Disqualification Event has occurred.

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A "Loss Absorption Disqualification Event" shall be deemed to have occurred with respect to a series of Senior Notes if, as a result of any amendment to, or change in, the Loss Absorption Regulations, or any change in the application or official interpretation of the Loss Absorption Regulations, in any such case becoming effective on or after the issue date of the first tranche of the Senior Notes, such Senior Notes are or (in our opinion or the opinion of the Relevant Regulator and/or the relevant U.K. resolution authority) are likely to be fully or partially excluded from LBG's or the Group's minimum requirements for (A) own funds and eligible liabilities and/or (B) loss absorbing capacity instruments, in each case as such minimum requirements are applicable to LBG and/or the Group and determined in accordance with, and pursuant to, the relevant Loss Absorption Regulations; provided that a Loss Absorption Disqualification Event shall not occur where the exclusion of the Senior Notes from the relevant minimum requirement(s) is due to the remaining maturity of the Senior Notes being less than any period prescribed by any applicable eligibility criteria for such minimum requirements under the relevant Loss Absorption Regulations effective with respect to LBG and/or the Group on the issue date of the first tranche of the Senior Notes.

"Loss Absorption Regulations" means, at any time, the laws, regulations, requirements, guidelines, rules, standards and policies relating to minimum requirements for own funds and eligible liabilities and/or loss absorbing capacity instruments of the United Kingdom, the Relevant Regulator, the relevant U.K. resolution authority and/or the Financial Stability Board then applicable in the United Kingdom including, without limitation to the generality of the foregoing, any regulations, requirements, guidelines, rules, standards and policies relating to minimum requirements for own funds and eligible liabilities and/or loss absorbing capacity instruments adopted or applied by the Relevant Regulator and/or the relevant U.K. resolution authority from time to time (whether or not such regulations, requirements, guidelines, rules, standards or policies are applied generally or specifically to LBG or to the Group).

***Conditions to redemption and purchase, etc.***

Any redemption or purchase of a series of Senior Notes (other than redemption on the relevant maturity date), and any modification to the terms of a series of Senior Notes or any indenture relating thereto, is subject to, if and to the extent then required by the Relevant Regulator or the Loss Absorption Regulations, our giving notice to the Relevant Regulator and the Relevant Regulator granting us permission therefor and otherwise to compliance with the Loss Absorption Regulations if and to the extent then required thereunder.

"Relevant Regulator" means, in relation to the Senior Notes, the relevant U.K. resolution authority or such other governmental authority in the United Kingdom (or if LBG becomes domiciled in a jurisdiction other than the United Kingdom, in such other jurisdiction) having primary supervisory authority with respect to LBG and/or the Group in such circumstances.

**Payment of Additional Amounts**

Amounts to be paid on the Senior Notes will be made without deduction or withholding for, or on account of, any and all present and future income, stamp and other taxes, levies, imposts, duties, charges, or fees imposed, levied, collected, withheld or assessed by or on behalf of a U.K. taxing jurisdiction, unless such deduction or withholding is required by law. If at any time a U.K. taxing jurisdiction requires us to make such deduction or withholding, we will pay additional amounts with respect to interest only on the Senior Notes ("Senior Notes Additional Amounts") that are necessary in order that the net amounts of interest paid to the holders of the Senior Notes, after the deduction or withholding, shall equal the amounts of interest only which would have been payable on the Senior Notes if the deduction or withholding had not been required. However, this will not apply to any such amount that would not have been payable or due but for the fact that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holder or the beneficial owner of the relevant Senior Notes is a domiciliary, national or resident of, or engaging in business or maintaining a permanent establishment or physically present in, a U.K. taxing jurisdiction or otherwise having some connection with the U.K. taxing jurisdiction other than the holding or ownership of the relevant Senior Note, or the collection of any payment of, or in respect of, principal of, or any interest or other payment on, the relevant Senior Note;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• except in the case of a winding up in the United Kingdom, the relevant Senior Notes are presented (where presentation is required) for payment in the United Kingdom;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the relevant Senior Notes are presented (where presentation is required) for payment more than 30 days after the date payment became due or was provided for, whichever is later, except to the extent that the holder would have been entitled to the Senior Notes Additional Amounts on presenting the Senior Notes for payment at the close of that 30 day period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the holder or the beneficial owner of the relevant Senior Notes or the beneficial owner of any payment of or in respect of principal of, or any interest or other payment on, the relevant Senior Notes failed to comply with a request by us or our liquidator or other authorized person addressed to the holder to provide information concerning the nationality, residence or identity of the holder or the beneficial owner or to make any declaration or other similar claim to satisfy any requirement, which is required or imposed by a statute, treaty, regulation or administrative practice of a U.K. taxing jurisdiction as a precondition to exemption from all or part of the tax, levy, impost, duty, charge or fee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the deduction or withholding is imposed by reason of any agreement with the U.S. Internal Revenue Service in connection with Sections 1471- 1474 of the US Internal Revenue Code and the U.S. Treasury regulations thereunder ("FATCA"), any intergovernmental agreement between the United States and the United Kingdom or any other jurisdiction with respect to FATCA, or any law, regulation or other official guidance enacted or issued in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any combination of the above items,

nor shall Senior Notes Additional Amounts be paid with respect to any interest only on the Senior Notes to any holder who is a fiduciary or partnership or any person other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of any taxing jurisdiction to be included in the income for tax purposes of a beneficiary or partner or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such Senior Notes Additional Amounts, had it been the holder.

Whenever we refer in this prospectus supplement, in any context, to the payment of interest on, or in respect of, any Senior Note, we mean to include the payment of Senior Notes Additional Amounts to the extent that, in the context, Senior Notes Additional Amounts are, were or would be payable.

**Waiver of Right to Set-Off**

Subject to applicable law, no holder may exercise or claim any right of set-off, counterclaim, combination of accounts, compensation or retention in respect of any amount owed to it by LBG arising under or in connection with the Senior Notes. By accepting a Senior Note, each holder will be deemed to have waived any right of set-off, counterclaim, combination of accounts, compensation or retention with respect to such Senior Note or the Senior Indenture (or between our obligations under or in respect of any Senior Note and any liability owed by a holder or the Trustee to us) that they might otherwise have against us, whether before or during our winding up. Notwithstanding the provisions of the foregoing sentence, if any of the said rights and claims of any holder of any Senior Note against LBG is discharged by set-off, counterclaim, combination of accounts, compensation or retention, such holder will immediately pay an amount equal to the amount of such discharge to LBG (or, in the event of winding-up or administration of LBG, the liquidator or, as applicable, the administrator of LBG) and accordingly such discharge will be deemed not to have taken place.

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**Trustee; Direction of Trustee**

LBG's obligations to indemnify the Trustee in accordance with Section 6.07 of the Senior Base Indenture (as supplemented by the Twenty-First Senior Supplemental Indenture) shall survive the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Senior Notes and the Senior Indenture.

By purchasing or acquiring the Senior Notes, each holder (including each beneficial owner) of the Senior Notes acknowledges and agrees that, upon the exercise of any U.K. bail-in power by the relevant U.K. resolution authority, (a) the Trustee shall not be required to take any further directions from holders or beneficial owners of the Senior Notes under Section 5.12 (Control by Holders) of the Senior Base Indenture, and (b) neither the Senior Base Indenture nor the Twenty-First Senior Supplemental Indenture shall impose any duties upon the Trustee whatsoever with respect to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. Notwithstanding the foregoing, if, following the completion of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority, any of the Senior Notes remain outstanding (for example, if the exercise of the U.K. bail-in power results in only a partial write-down of the principal of such Senior Notes), then the Trustee's duties under the Senior Indenture shall remain applicable with respect to such Senior Notes following such completion to the extent that LBG and the Trustee agree pursuant to a supplemental indenture or an amendment to the Senior Indenture, unless LBG and the Trustee agree in writing that a supplemental indenture is not necessary.

In addition to the foregoing, the Trustee may decline to act or accept direction from holders unless it receives written direction from holders representing a majority in aggregate principal amount of the Senior Notes and security and/or indemnity satisfactory to the Trustee in its sole discretion. The Senior Indenture shall not be deemed to require the Trustee to take any action which may conflict with applicable law, or which may be unjustly prejudicial to the holders not taking part in the direction, or which could subject the Trustee to risk or for which it is not indemnified to its satisfaction in its sole discretion.

The Trustee makes no representations regarding, and shall not be liable with respect to, the information set forth in this prospectus supplement.

**Subsequent Holders' Agreement**

Holders and beneficial owners of the Senior Notes that acquire the Senior Notes in the secondary market shall be deemed to acknowledge, agree to be bound by and consent to the same provisions specified herein to the same extent as the holders and beneficial owners of the Senior Notes that acquire the Senior Notes upon their initial issuance, including, without limitation, with respect to the acknowledgement and agreement to be bound by and consent to the terms of the Senior Notes including in relation to the U.K. bail-in power.

**Listing**

We intend to apply for the listing of each series of Senior Notes on the New York Stock Exchange in accordance with its rules.

**Governing Law**

The Senior Base Indenture, the Twenty-First Senior Supplemental Indenture and the Senior Notes are governed by, and construed in accordance with, the laws of the State of New York, except that, as the Senior Indenture specifies, the provisions relating to the waiver of set-off in the Senior Indenture are governed by and construed in accordance with Scots law.

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**<u>Subordinated Notes</u>**

The Subordinated Notes will be issued in an aggregate principal amount of $1,250,000,000 and will mature on June 13, 2036. Interest will accrue on the Subordinated Notes from, and including, June 13, 2025 to, but excluding, June 13, 2035 (the "Subordinated Notes Reset Date"), at a fixed rate of 6.068% per annum (the "Subordinated Notes Initial Interest Rate"), payable semi-annually in arrears, on June 13 and December 13 of each year, commencing on December 13, 2025, and from, and including, the Subordinated Notes Reset Date to, but excluding, the maturity date (the "Subordinated Notes Reset Period"), at a rate per annum calculated by the Calculation Agent on the Subordinated Notes Reset Determination Date (as defined below) as being equal to the sum of the Subordinated Notes U.S. Treasury Rate (as defined below) and 1.600%, such sum being converted to a semi-annual rate in accordance with market convention (rounded to three decimal places, with 0.0005 rounded down) (the "Subordinated Notes Reset Rate of Interest"). Interest will be payable semi-annually in arrears on June 13 and December 13 of each year (each, an "Subordinated Notes interest payment date"), commencing on December 13, 2025 to, and including, maturity. Interest will be paid to holders of record of the Subordinated Notes as of 15 calendar days immediately preceding the related Subordinated Notes interest payment date, whether or not a business day.

Interest on the Subordinated Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months and, in the case of an incomplete month, on the basis of the actual number of days elapsed in such period. If any scheduled Subordinated Notes interest payment date, redemption date or maturity date is not a business day, we will pay interest on the next business day, but interest on that payment will not accrue during the period from and after the scheduled Subordinated Notes interest payment date, redemption date or maturity date. If the scheduled maturity date or date of redemption or repayment is not a business day, we may pay interest and principal on the next succeeding business day, but interest on that payment will not accrue during the period from and after the scheduled maturity date or date of redemption or repayment.

All calculations of the Calculation Agent, in the absence of manifest error, will be conclusive for all purposes and binding on LBG, the Calculation Agent, the Trustee, the Paying Agent and on the holders of the Subordinated Notes.

All dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half-cent being rounded upwards).

There shall be no Subordinated Notes Deferred Payment Dates (as defined in the accompanying prospectus) in respect of the Subordinated Notes.

In this description of the Subordinated Notes, the following expressions have the following meanings:

"Applicable Regulations" means, at any time, the laws, regulations, requirements, guidelines and policies relating to capital adequacy and prudential supervision (including, without limitation, as to leverage) then in effect in the United Kingdom including, without limitation to the generality of the foregoing (and for so long as the same are applicable in the United Kingdom), any regulations, requirements, guidelines and policies relating to capital adequacy adopted by the Relevant Regulator, from time to time (whether or not such requirements, guidelines or policies are applied generally or specifically to LBG or the Group (as defined below)).

A "business day" means any day, other than Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in the City of New York or in the City of London.

"Capital Disqualification Event" shall occur if at any time LBG determines that as a result of a change or pending change to the regulatory classification of the Subordinated Notes which becomes effective on or after June 13, 2025 (the "Issue Date") some or all of the aggregate outstanding principal amount of the Subordinated Notes ceases or would be likely to cease to be included in, or count towards, the Tier 2 Capital of LBG and/or the Group.

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"Group" means LBG and its subsidiaries and subsidiary undertakings from time to time.

"Relevant Regulator" means, in relation to the Subordinated Notes, the BoE acting through its Prudential Regulation Committee or such other governmental authority in the United Kingdom (or if LBG becomes domiciled in a jurisdiction other than the United Kingdom, in such other jurisdiction) having primary supervisory authority with respect to LBG and/or the Group with respect to prudential matters, as the case may be.

"Senior Creditors" means in respect of LBG (i) creditors of LBG whose claims are admitted to proof in the winding-up or administration of LBG and who are unsubordinated creditors of LBG and (ii) creditors of LBG whose claims are or are expressed to be subordinated to the claims of other creditors of LBG (other than those whose claims constitute, or would, but for any applicable limitation on the amount of such capital, constitute Tier 1 Capital or Tier 2 Capital of LBG, or whose claims rank or are expressed to rank *pari passu* with, or junior to, the claims of holders of the Subordinated Notes).

"Subordinated Notes Reset Determination Date" means the second business day immediately preceding the Subordinated Notes Reset Date.

"Tier 1 Capital" has the meaning given to it by the Relevant Regulator from time to time.

"Tier 2 Capital" has the meaning given to it by the Relevant Regulator from time to time.

**Determination of the Subordinated Notes U.S. Treasury Rate** 

The Subordinated Notes U.S. Treasury Rate shall be determined by The Bank of New York Mellon, London Branch as calculation agent (the "Calculation Agent").

The "Subordinated Notes U.S. Treasury Rate" means the rate per annum equal to: (1) the arithmetic average of the yields on actively traded U.S. Treasury securities adjusted to constant maturity for the maturity of one year ("Yields"), for the five consecutive business days immediately prior to the Subordinated Notes Reset Determination Date, and appearing under the caption "Treasury constant maturities" on the Subordinated Notes Reset Determination Date, as of 5:00 p.m. (New York City time), in the applicable most recently published statistical release designated "H.15 Daily Update", or any successor publication that is published by the Board of Governors of the Federal Reserve System that establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity, under the caption "Treasury constant maturities", for the maturity of one year; *provided that* if the Yield is not available through such release (or successor publication) for any relevant business day, then the arithmetic average will be determined based on the Yields for the remaining business days during the five business day period described above (provided further that if the Yield is available for only a single business day during such five business day period, the "Subordinated Notes U.S. Treasury Rate" will mean the single-day Yield for such day); or (2) if such release (or any successor release) is not published during the week immediately prior to the Subordinated Notes Reset Determination Date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Subordinated Notes Comparable Treasury Issue, calculated using a price for the Subordinated Notes Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Subordinated Notes Comparable Treasury Price for the Subordinated Notes Reset Date.

If the Subordinated Notes U.S. Treasury Rate cannot be determined, for whatever reason, as described under (1) or (2) above, the "Subordinated Notes U.S. Treasury Rate" means the rate in percentage per annum as notified by the Calculation Agent to the Issuer equal to the last reported Yield on U.S. Treasury securities having a maturity of one year based on information appearing in the most recently published statistical release designated "H.15 Daily Update" (or any successor publication by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded U.S. Treasury securities) as of 5:00 p.m. (New York City time) on the Subordinated Notes Reset Determination Date.

"Subordinated Notes Comparable Treasury Issue" means, with respect to the Subordinated Notes Reset Period, the U.S. Treasury security or securities selected by the Issuer with a maturity date on or about the last day of the Subordinated Notes Reset Period and that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in U.S. dollars and having a maturity of one year.

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"Subordinated Notes Comparable Treasury Price" means (i) the arithmetic average of the Subordinated Notes Reference Treasury Dealer Quotations for the Subordinated Notes Reset Date, received by the Issuer (calculated by the Calculation Agent on the Subordinated Notes Reset Determination Date preceding the Subordinated Notes Reset Date), after excluding the highest and lowest such Subordinated Notes Reference Treasury Dealer Quotations, or (ii) if fewer than five such Subordinated Notes Reference Treasury Dealer Quotations are received by the Issuer, the arithmetic average of all such quotations, or (iii) if fewer than two such Subordinated Notes Reference Treasury Dealer Quotations are received by the Issuer, then such Subordinated Notes Reference Treasury Dealer Quotation as quoted in writing to the Issuer by a Subordinated Notes Reference Treasury Dealer.

"Subordinated Notes Reference Treasury Dealer" means each of up to five banks selected by the Issuer, or the affiliates of such banks, which are (i) primary U.S. Treasury securities dealers, and their respective successors, or (ii) market makers in pricing corporate bond issues denominated in U.S. dollars.

"Subordinated Notes Reference Treasury Dealer Quotations" means, with respect to each Subordinated Notes Reference Treasury Dealer and the Subordinated Notes Reset Date, the bid and offered prices obtained by LBG for the Subordinated Notes Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, at 11:00 a.m. (New York City time), on the Subordinated Notes Reset Determination Date.

All calculations of the Calculation Agent, in the absence of manifest error, will be conclusive for all purposes and binding on the Issuer, the Trustee, the paying agent and on the holders of the Subordinated Notes.

All percentages resulting from any of the above calculations will be rounded, if necessary, to the nearest one hundred thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent being rounded upwards).

The interest rate on the Subordinated Notes during the Subordinated Notes reset fixed rate period will in no event be higher than the maximum rate permitted by law or lower than 0.00% per annum.

**General**

The Subordinated Notes will constitute our direct, unconditional, unsecured, unguaranteed and subordinated obligations ranking *pari passu* without any preference among themselves and ranking junior in right of payment to the claims of any existing and future unsecured and unsubordinated indebtedness of LBG. In a winding up or in the event that an administrator has been appointed in respect of us and notice has been given that it intends to declare and distribute a dividend, all amounts due in respect of or arising under (including any damages awarded for breach of any obligations under) the Subordinated Notes will be subordinated to, and subject in right of payment to the prior payment in full of, all claims of all Senior Creditors.

The rights and claims of the holders of the Subordinated Notes shall rank at least *pari passu* with the claims of holders of all obligations of LBG which constitute, or would but for any applicable limitation on the amount of such capital constitute, Tier 2 Capital of LBG and in priority to (1) the claims of holders of all obligations of LBG which constitute Tier 1 Capital of LBG, (2) the claims of holders of all undated or perpetual subordinated obligations of LBG and (3) the claims of holders of all ordinary share capital of LBG.

In addition, because we are a holding company, our rights to participate in the assets of any subsidiary if it is liquidated will be subject to the prior claims of its creditors, including in the case of bank subsidiaries, their depositors, except to the extent that we may be a creditor with recognized claims against the subsidiary.

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The Subordinated Notes will constitute a separate series of subordinated debt securities issued under the indenture dated as of November 4, 2014 (the "Subordinated Base Indenture") between us and The Bank of New York Mellon acting through its London Branch, as trustee (the "Trustee"), as amended by an eleventh subordinated supplemental indenture to be dated as of the Issue Date (the "Eleventh Subordinated Supplemental Indenture" and, together with the Subordinated Base Indenture, the "Subordinated Indenture") between us, the Trustee, the Paying Agent and The Bank of New York Mellon SA/NV, Dublin Branch as Registrar. Book-entry interests in the Subordinated Notes will be issued in minimum denominations of $200,000 and in integral multiples of $1,000 in excess thereof.

The Bank of New York Mellon, London Branch is designated as the paying agent. We may at any time designate additional paying agents or rescind the designation of paying agents or approve a change in the office through which any paying agent acts.

We will issue the Subordinated Notes in fully registered form. The Subordinated Notes will be represented by one or more global securities in the name of a nominee of The Depository Trust Company ("DTC"). You will hold beneficial interest in the Subordinated Notes through DTC and its participants. We expect the Subordinated Notes to be delivered through the facilities of DTC on the Issue Date. For a more detailed summary of the form of the Subordinated Notes and settlement and clearance arrangements, you should read *"Description of Certain Provisions Relating to Debt Securities and Capital Securities—Form of Debt Securities and Capital Securities; Book-Entry System"* in the accompanying prospectus. Indirect holders trading their beneficial interests in the Subordinated Notes through DTC must trade in DTC's same-day funds settlement system and pay in immediately available funds. Secondary market trading will occur in the ordinary way following the applicable rules and clearing system and operating procedures of DTC, including those of its indirect participants, Euroclear and Clearstream Luxembourg.

Definitive debt securities will only be issued in limited circumstances described under *"Description of Certain Provisions Relating to Debt Securities and Capital Securities—Form of Debt Securities and Capital Securities; Book-Entry System"* in the accompanying prospectus.

Payment of principal of and interest on the Subordinated Notes, so long as the Subordinated Notes are represented by global securities, will be made in immediately available funds. Beneficial interests in the global securities will trade in the same-day funds settlement system of DTC, and secondary market trading activity in such interests will therefore settle in same-day funds.

All payments in respect of the Subordinated Notes by us or our paying agent will be made subject to any deduction or withholding that may be imposed or levied by any jurisdiction. Except as provided under "*—Payment of Additional Amounts*", no additional amounts will be paid on the Subordinated Notes with respect to any such amounts withheld. For the avoidance of doubt, notwithstanding anything to the contrary herein, if by reason of any agreement with the U.S. Internal Revenue Service in connection with Sections 1471-1474 of the U.S. Internal Revenue Code and the U.S. Treasury regulations thereunder ("FATCA"), any intergovernmental agreement between the United States and the United Kingdom or any other jurisdiction with respect to FATCA, or any law, regulation or other official guidance enacted or issued in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement, any of us, the Trustee, our paying agent or another withholding agent deducts and withholds from any amount payable on, or in respect of, the Subordinated Notes, the amounts so deducted or withheld shall be treated as having been paid to the holder of the Subordinated Notes, and no additional amounts will be paid on account of any such deduction or withholding. Neither we, the Trustee nor our paying agent shall have any liability in connection with our compliance with any such withholding obligation under applicable law.

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**Agreement with Respect to the Exercise of U.K. Bail-in Power**

Notwithstanding any other agreements, arrangements, or understandings between us and any holder or beneficial owner of the Subordinated Notes, by purchasing or acquiring the Subordinated Notes, each holder (including each beneficial owner) of the Subordinated Notes acknowledges, accepts, agrees to be bound by and consents to the exercise of any U.K. bail-in power (as defined below) by the relevant U.K. resolution authority that may result in (i) the reduction or cancellation of all, or a portion, of the principal amount of, or interest on, the Subordinated Notes; (ii) the conversion of all, or a portion, of the principal amount of, or interest on, the Subordinated Notes into shares or other securities or other obligations of LBG or another person (and the issue to or conferral on the holder of such shares, securities or obligations, including by means of amendment, modification or variation of the terms of the Subordinated Notes); and/or (iii) the amendment or alteration of the maturity of the Subordinated Notes, or amendment of the amount of interest due on the Subordinated Notes, or the dates on which interest becomes payable, including by suspending payment for a temporary period; any U.K. bail-in power may be exercised by means of variation of the terms of the Subordinated Notes solely to give effect to the exercise by the relevant U.K. resolution authority of such U.K. bail-in power. With respect to (i), (ii) and (iii) above, references to principal and interest shall include payments of principal and interest that have become due and payable (including principal that has become due and payable at the relevant maturity date), but which have not been paid, prior to the exercise of any U.K. bail-in power. Each holder and each beneficial owner of the Subordinated Notes further acknowledges and agrees that the rights of the holders and/or beneficial owners under the Subordinated Notes are subject to, and will be varied, if necessary, solely to give effect to, the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. For these purposes, a "U.K. bail-in power" is any write-down, conversion, transfer, modification, moratorium and/or suspension power existing from time to time under any laws, regulations, rules or requirements relating to the resolution of financial holding companies, mixed financial holding companies, banks, banking group companies, credit institutions and/or investment firms incorporated in the United Kingdom in effect and applicable in the United Kingdom to LBG or other members of the Group, including but not limited to any such laws, regulations, rules or requirements which are implemented, adopted or enacted in the United Kingdom within the context of the U.K. resolution regime under the Banking Act 2009 as the same has been or may be amended from time to time (whether pursuant to the U.K. Financial Services (Banking Reform) Act 2013, secondary legislation or otherwise) (the "Banking Act"), pursuant to which obligations of a bank, banking group company, credit institution or investment firm or any of its affiliates can be reduced, canceled, modified, transferred and/or converted into shares or other securities or obligations of the obligor or any other person (or suspended for a temporary period) or pursuant to which any right in a contract governing such obligations may be deemed to have been exercised. A reference to the "relevant U.K. resolution authority" is to any authority with the ability to exercise a U.K. bail-in power.

*According to the principles contained in the Banking Act, we expect that the relevant U.K. resolution authority would exercise its U.K. bail-in power in respect of the* Subordinated *Notes having regard to the hierarchy of creditor claims (with the exception of excluded liabilities, as such term is described in the Banking Act) and that the holders of the* Subordinated *Notes would be treated equally in respect of the exercise of any U.K. bail-in power with all other claims that would rank pari passu with the* Subordinated *Notes upon an insolvency of LBG.*

No repayment of the principal amount of the Subordinated Notes or payment of interest on the Subordinated Notes shall become due and payable after the exercise of any U.K. bail-in power by the relevant U.K. resolution authority unless, at the time that such repayment or payment, respectively, is scheduled to become due, such repayment or payment would be permitted to be made by us under the laws and regulations of the United Kingdom applicable to us or other members of the Group. See also "*Risk Factors― Under the terms of the Notes, you have agreed to be bound by the exercise of any U.K. bail-in power imposed by the relevant U.K. resolution authority".*

Neither a reduction or cancellation, in part or in full, of the principal amount of, or interest on, the Subordinated Notes or the conversion thereof into another security or obligation of LBG or another person, as a result of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to LBG, nor the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Subordinated Notes will be a Subordinated Notes Default or a Subordinated Notes Event of Default for any purpose.

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LBG's obligations to indemnify the Trustee in accordance with Section 6.07 of the Subordinated Base Indenture (as amended by the Eleventh Subordinated Supplemental Indenture) shall survive the exercise of the U.K. Bail-in Power by the relevant U.K. resolution authority with respect to the Subordinated Notes.

By purchasing or acquiring Subordinated Notes, each holder and each beneficial owner of the Subordinated Notes: (i) acknowledges and agrees that the exercise of the U.K. bail-in power by the relevant U.K. resolution authority in respect of the Subordinated Notes shall not give rise to a default or an Event of Default for purposes of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act (the "TIA"); (ii) to the extent permitted by the TIA, waives any and all claims against the Trustee for, agrees not to initiate a suit against the Trustee in respect of, and agrees that the Trustee shall not be liable for, any action that the Trustee takes, or abstains from taking, in either case in accordance with the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Subordinated Notes; and (iii) acknowledges and agrees that, upon the exercise of any U.K. bail-in power by the relevant U.K. resolution authority, (a) the Trustee shall not be required to take any further directions from holders or beneficial owners of the Subordinated Notes under Section 5.12 (Control by Holders) of the Subordinated Base Indenture, and (b) neither the Subordinated Base Indenture nor the Eleventh Subordinated Supplemental Indenture shall impose any duties upon the Trustee whatsoever with respect to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. Notwithstanding the foregoing, if, following the completion of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority, any of the Subordinated Notes remain outstanding (for example, if the exercise of the U.K. bail-in power results in only a partial write-down of the principal of such Subordinated Notes), then the Trustee's duties under the Subordinated Indenture shall remain applicable with respect to such Subordinated Notes following such completion to the extent that LBG and the Trustee agree pursuant to a supplemental indenture or an amendment to the Subordinated Indenture, unless LBG and the Trustee agree in writing that a supplemental indenture is not necessary.

By purchasing or acquiring the Subordinated Notes, each holder and each beneficial owner shall be deemed to have (i) consented to the exercise of any U.K. bail-in power as it may be imposed without any prior notice by the relevant U.K. resolution authority of its decision to exercise such power with respect to the Subordinated Notes and (ii) authorized, directed and requested DTC and any direct participant in DTC or other intermediary through which it holds such Subordinated Notes to take any and all necessary action, if required, to implement the exercise of any U.K. bail-in power with respect to the Subordinated Notes as it may be imposed, without any further action or direction on the part of such holder or beneficial owner or the Trustee.

Upon the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Subordinated Notes, we shall provide a written notice to DTC as soon as practicable regarding such exercise of the U.K. bail-in power for purposes of notifying holders and beneficial owners of such occurrence. We shall also deliver a copy of such notice to the Trustee for information purposes. Any delay or failure by us in delivering the notices referred to in this paragraph shall not affect the validity and enforceability of the U.K. bail-in power.

For a discussion of certain risk factors relating to the U.K. bail-in power, see "*Risk Factors—Risks relating to the Notes*".

**Events of Default; Default; Limitation of Remedies**

The applicable defaults, events of default and limitations of remedies which apply to the Subordinated Notes are described in the accompanying prospectus under "*Description of Debt Securities—Events of Default; Default; Limitation of Remedies—Subordinated Debt Security Events of Default*" and "*Description of Debt Securities—Events of Default; Default; Limitation of Remedies—Subordinated Debt Security Defaults*".

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**Additional Issuances**

We may, without the consent of the holders of the Subordinated Notes, issue additional notes having the same ranking and same interest rate, maturity date, redemption terms and other terms as the Subordinated Notes described in this prospectus supplement except for the price to the public, issue date and first Subordinated Notes interest payment date, provided however that such additional notes that form part of the Subordinated Notes described in this prospectus supplement must be fungible with the outstanding Subordinated Notes for U.S. federal income tax purposes. Any such additional notes, together with the Subordinated Notes offered by this prospectus supplement, will constitute a single series of securities under the Subordinated Indenture. There is no limitation on the amount of Subordinated Notes or other debt securities that we may issue under such indenture.

**Optional Redemption**

The Subordinated Notes will, subject to the satisfaction of the conditions described under "—*Conditions to Redemption, Purchase, Substitution or Variation*" below, be redeemable in whole, but not in part, at the option of LBG on the Subordinated Notes Reset Date at 100% of their principal amount, together with accrued and unpaid interest thereon, if any, on the Subordinated Notes, to, but excluding, June 13, 2035.

Notice of any optional redemption of the Subordinated Notes will be given to holders not less than 15 nor more than 30 calendar days prior to the date fixed for redemption in accordance with "—*Conditions to Redemption, Purchase, Substitution or Variation*" below, and to the Trustee at least five (5) business days prior to the date notice is sent to holders, unless a shorter notice period shall be satisfactory to the Trustee.

**Tax Redemption**

If at any time a Tax Event has occurred, LBG may, subject to the satisfaction of the conditions described under "*—Conditions to Redemption, Purchase, Substitution or Variation*" below, redeem the Subordinated Notes, in whole but not in part, at any time, at 100% of their principal amount, together with accrued interest thereon, if any, to, but excluding, the date fixed for redemption.

A "Tax Event" will be deemed to have occurred if LBG determines that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) as a result of a Tax Law Change, in making any payments on the Subordinated Notes, LBG has paid or will or would on the next payment date be required to pay any Subordinated Notes Additional Amounts (as defined in the accompanying prospectus) to any holder pursuant to "*—Payment of Additional Amounts*" below and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a Tax Law Change would:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• result in LBG not being entitled to claim a deduction in respect of any payments (or its corresponding funding costs as recognized in its financial statements) in respect of the Subordinated Notes in computing its taxation liabilities or the amount or value of such deduction to LBG would be materially reduced;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prevent the Subordinated Notes from being treated as loan relationships for United Kingdom tax purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as a result of the Subordinated Notes being in issue, result in LBG not being able to have losses or deductions set against the profits or gains, or profits or gains offset by the losses or deductions, of companies with which it is or would otherwise be so grouped for applicable United Kingdom tax purposes (whether under the group relief system current as of the Issue Date or any similar system or systems having like effect as may from time to time exist);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• result in a United Kingdom tax liability, or the receipt of income or profit which would be subject to United Kingdom tax, in respect of a write-down of the principal amount of the Subordinated Notes or the conversion of the Subordinated Notes into shares or other obligations of LBG (including pursuant to the terms and conditions of the Subordinated Notes or as a result of the exercise of any regulatory powers under the Banking Act); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• result in a Subordinated Note or any part thereof being treated as a derivative or an embedded derivative for United Kingdom tax purposes,

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in each case, *provided that*, LBG could not avoid the foregoing in connection with the Subordinated Notes by taking measures reasonably available to it.

"Tax Law Change" means a change in, or amendment to, the laws or regulations of the United Kingdom, or any political subdivision or authority therein or thereof, having the power to tax, including any treaty to which the United Kingdom is a party, or any change in any generally published application or interpretation of such laws, including a decision of any court or tribunal, or any change in the generally published application or interpretation of such laws by any relevant tax authority or any generally published pronouncement by any tax authority, which change, amendment or pronouncement (x) (subject to (y)) becomes effective on or after the Issue Date, or (y) in the case of a change in law, if such change is enacted by United Kingdom Act of Parliament or implemented by statutory instrument, on or after the Issue Date.

Notice of any redemption of the Subordinated Notes due to the occurrence of a Tax Event will be given to holders not less than 15 nor more than 30 calendar days prior to the relevant redemption date in accordance with "*—Conditions to Redemption, Purchase, Substitution or Variation*" below, and to the Trustee at least five (5) business days prior to the date notice is sent to holders, unless a shorter notice period shall be satisfactory to the Trustee.

Prior to the giving of any notice of redemption, LBG must deliver to the Trustee (i) a legal opinion, in a form satisfactory to the Trustee, to the effect that a Tax Event has occurred, and (ii) an officer's certificate confirming that (1) all the conditions necessary for redemption have occurred and that LBG could not avoid the consequences of the Tax Event by taking measures reasonably available to it, and (2) that if, and to the extent required under Applicable Regulations, LBG has demonstrated to the satisfaction of the Relevant Regulator that the relevant change or event is material and was not reasonably foreseeable by LBG on the Issue Date. The Trustee shall be entitled to accept such opinion and officer's certificate without any further inquiry and without liability to any person, in which event such opinion and officer's certificate shall be conclusive and binding on the Trustee and the holders of the Subordinated Notes.

**Capital Disqualification Event Redemption**

We may redeem the Subordinated Notes, in whole but not in part, at any time, upon not less than 15 calendar days' nor more than 30 calendar days' notice to the holders of the Subordinated Notes, if at any time immediately prior to the giving of the notice referred to above a Capital Disqualification Event has occurred. In the event of such a redemption, the redemption price of the Subordinated Notes will be 100% of their principal amount together with accrued but unpaid interest thereon, if any, `to, but excluding, the date fixed for redemption. Any right of redemption will be subject to the conditions set forth under "—*Conditions to Redemption, Purchase, Substitution or Variation*" below.

Prior to the giving of any notice of redemption, LBG must deliver to the Trustee an officer's certificate stating that (1) a Capital Disqualification Event has occurred, and (2) if, and to the extent required under Applicable Regulations, LBG has demonstrated to the satisfaction of the Relevant Regulator that the relevant change was not reasonably foreseeable by LBG as at the Issue Date. The Trustee shall be entitled to accept such officer's certificate without any further inquiry, in which event such officer's certificate shall be conclusive and binding on the Trustee and the holders of the Subordinated Notes.

**Substitution or Variation**

If a Tax Event or Capital Disqualification Event has occurred, then LBG may, subject to "*—Conditions to Redemption, Purchase, Substitution or Variation*" below, but without any requirement for the consent or approval of the holders of the Subordinated Notes, at any time (whether before, on or following the Subordinated Notes Reset Date) either substitute all (but not some only) of the Subordinated Notes for, or vary the terms of the Subordinated Notes so that they remain or, as appropriate, become, Subordinated Notes Compliant Securities, and the Trustee shall (subject to the below) agree to such substitution or variation. Upon the expiry of such notice, LBG shall either vary the terms of or substitute the Subordinated Notes, as the case may be.

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Notice of any substitution or variation of the Subordinated Notes due to the occurrence of a Tax Event or Capital Disqualification Event will be given to holders not less than 15 nor more than 30 calendar days prior to the date of substitution or variation (as applicable), and to the Trustee at least five (5) business days prior to the date of such notice to holders, unless a shorter notice period shall be satisfactory to the Trustee. Such notice shall specify the date fixed for substitution or, as the case may be, variation of the Subordinated Notes and shall, except as otherwise provided herein, be irrevocable.

Prior to the giving of any notice of substitution or variation, LBG must deliver to the Trustee an officer's certificate stating that a Tax Event or Capital Disqualification Event, as the case may be, has occurred, setting out the details thereof, and stating that the terms of the relevant Subordinated Notes Compliant Securities comply with the definition thereof. The Trustee shall be entitled to accept such officer's certificate without any further inquiry and without liability to any person, in which event such officer's certificate shall be conclusive and binding on the Trustee and the holders and beneficial owners of the Subordinated Notes.

"Subordinated Notes Compliant Securities" means securities issued directly by LBG that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) have terms not materially less favorable to an investor than the terms of the Subordinated Notes (as reasonably determined by LBG in consultation with an investment bank or financial adviser of international standing (which in either case is independent of LBG)) and provided that LBG has delivered an officer's certificate to such effect (including as to such consultation) to the Trustee (upon which the Trustee shall be entitled to rely without further inquiry and without liability to any person) prior to the issue or variation of the relevant securities);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) subject to (a) above (1) contain terms which comply with the then current requirements of the Relevant Regulator in relation to Tier 2 capital; (2) provide for the same interest rate and interest payment dates from time to time applying to the Subordinated Notes; (3) rank *pari passu* with the ranking of the Subordinated Notes; (4) preserve any existing rights under the Subordinated Indenture to any accrued interest or other amounts which have not been either paid or canceled; and (5) preserve the obligations of LBG as to payments of principal in respect of the Subordinated Notes, including (without limitation) as to the timing and amount of such payments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) are (1) listed on the New York Stock Exchange or (2) listed on such other stock exchange as is a Recognized Stock Exchange at that time as selected by LBG; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) where the Subordinated Notes which have been substituted or varied had a published rating (solicited by, or assigned with the cooperation of, LBG) from a Rating Agency immediately prior to their substitution or variation, each such Rating Agency has ascribed, or announced its intention to ascribe, an equal or higher published rating to the relevant Subordinated Notes Compliant Securities.

"Recognized Stock Exchange" means a recognized stock exchange as defined in section 1005 of the U.K. Income Tax Act 2007 as the same may be amended from time to time and any provision, statute or statutory instrument replacing the same from time to time.

**Purchases**

Subject to applicable law in force at the relevant time, including the Applicable Regulations, we may at any time, and from time to time, purchase Subordinated Notes in the open market or by tender or by private agreement in any manner and at any price or at differing prices. Subordinated Notes purchased or otherwise acquired by us may be (i) held, (ii) resold or (iii) at our sole discretion, surrendered to the Trustee for cancellation (in which case all Subordinated Notes so surrendered will forthwith be cancelled in accordance with applicable law and thereafter may not be re-issued or resold). Any such purchases will be subject to the conditions set forth under "*—Conditions to Redemption, Purchase, Substitution or Variation*" below.

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**Conditions to Redemption, Purchase, Substitution or Variation**

Any redemption, purchase, substitution or variation of the Subordinated Notes prior to the maturity date is subject to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) LBG giving notice to the Relevant Regulator and the Relevant Regulator granting permission to LBG to redeem, purchase, substitute or vary the Subordinated Notes, as the case may be (in each case to the extent, and in the manner, required by the Applicable Regulations); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) in respect of any redemption of the Subordinated Notes proposed to be made prior to the fifth anniversary of the date of issuance of the Subordinated Notes, if and to the extent then required under the Applicable Regulations: (A) in the case of an optional redemption due to a Tax Event, LBG having demonstrated to the satisfaction of the Relevant Regulator that the relevant change or event is material and was not reasonably foreseeable by LBG as at the Issue Date; or (B) in the case of redemption following the occurrence of a Capital Disqualification Event, LBG having demonstrated to the satisfaction of the Relevant Regulator that the relevant change (or pending change) was not reasonably foreseeable by LBG as at the Issue Date and the Relevant Regulator considering such change to be sufficiently certain;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) if and to the extent then required under the Applicable Regulations, either: (A) LBG having replaced the Subordinated Notes with instruments qualifying as own funds of equal or higher quality on terms that are sustainable for the income capacity of LBG; or (B) (save in the case of sub-paragraph (d)(A) below) LBG demonstrating to the satisfaction of the Relevant Regulator that the own funds and eligible liabilities of LBG would, following such redemption, purchase, substitution or variation exceed its minimum applicable capital requirements (including any applicable buffer requirements) by a margin that the Relevant Regulator considers necessary at such time; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) in the case of any purchase prior to the fifth anniversary of the date of issuance of the Subordinated Notes, in addition to satisfying either of the conditions specified in paragraph (c) above, either: (A) LBG having, before or at the same time as such purchase, replaced the Subordinated Notes with own funds instruments of equal or higher quality at terms that are sustainable for the income capacity of LBG, and the Relevant Regulator having permitted such action on the basis of the determination that it would be beneficial from a prudential point of view and justified by exceptional circumstances; or (B) the relevant Subordinated Notes being purchased for market-making purposes in accordance with the Applicable Regulations.

Any refusal by the Relevant Regulator to grant its permission as contemplated above shall not constitute a Subordinated Notes Default or a Subordinated Notes Event of Default for any purpose. Notwithstanding the above conditions, if, at the time of any redemption, purchase, substitution or variation, the then-prevailing Applicable Regulations permit the repayment, purchase, substitution or variation only after compliance with one or more alternative or additional preconditions to those set out above, LBG shall comply with such other and/or, as appropriate, additional pre-condition(s).

**Modification and Waiver**

The modification and waiver provisions which apply to the Subordinated Notes are described in the accompanying prospectus under "*Description of Debt Securities—Modification and Waiver*".

**Payment of Additional Amounts**

&nbsp;&nbsp;&nbsp;&nbsp;The payment of additional amounts provisions which apply to the Subordinated Notes (and exceptions thereto) are described in the accompanying prospectus under "*Description of Debt Securities—Additional Amounts*". Holders and beneficial owners should note that we will not be required to pay any additional amounts to the extent that any withholding or deduction applied to payments of principal.

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**Waiver of Right to Set-Off**

Subject to applicable law, no holder may exercise or claim any right of set-off, counterclaim, combination of accounts, compensation or retention in respect of any amount owed to it by LBG arising under or in connection with the Subordinated Notes. By accepting a Subordinated Note, each holder will be deemed to have waived any right of set-off, counterclaim, combination of accounts, compensation or retention with respect to such Subordinated Note or the Subordinated Indenture (or between our obligations under or in respect of any Subordinated Note and any liability owed by a holder or the Trustee to us) that they might otherwise have against us, whether before or during our winding up. Notwithstanding the provisions of the foregoing sentence, if any of the said rights and claims of any holder of any Subordinated Note against LBG is discharged by set-off, counterclaim, combination of accounts, compensation or retention, such holder will immediately pay an amount equal to the amount of such discharge to LBG (or, in the event of winding-up or administration of LBG, the liquidator or, as applicable, the administrator of LBG) and accordingly such discharge will be deemed not to have taken place.

**Trustee; Direction of Trustee**

LBG's obligations to indemnify the Trustee in accordance with Section 6.07 of the Subordinated Base Indenture (as amended by the Eleventh Subordinated Supplemental Indenture) shall survive the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Subordinated Notes and the Subordinated Indenture.

By purchasing or acquiring the Subordinated Notes, each holder (including each beneficial owner) of the Subordinated Notes acknowledges and agrees that, upon the exercise of any U.K. bail-in power by the relevant U.K. resolution authority, (a) the Trustee shall not be required to take any further directions from holders or beneficial owners of the Subordinated Notes under Section 5.12 (Control by Holders) of the Subordinated Base Indenture, and (b) neither the Subordinated Base Indenture nor the Eleventh Subordinated Supplemental Indenture shall impose any duties upon the Trustee whatsoever with respect to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. Notwithstanding the foregoing, if, following the completion of the exercise of the U.K. bail-in power by the relevant U.K. resolution authority, any of the Subordinated Notes remain outstanding (for example, if the exercise of the U.K. bail-in power results in only a partial write-down of the principal of such Subordinated Notes), then the Trustee's duties under the Subordinated Indenture shall remain applicable with respect to such Subordinated Notes following such completion to the extent that LBG and the Trustee agree pursuant to a supplemental indenture or an amendment to the Subordinated Indenture, unless LBG and the Trustee agree in writing that a supplemental indenture is not necessary.

In addition to the foregoing, the Trustee may decline to act or accept direction from holders unless it receives written direction from holders representing a majority in aggregate principal amount of the Subordinated Notes and security and/or indemnity satisfactory to the Trustee in its sole discretion. The Subordinated Indenture shall not be deemed to require the Trustee to take any action which may conflict with applicable law, or which may be unjustly prejudicial to the holders not taking part in the direction, or which could subject the Trustee to risk or for which it is not indemnified to its satisfaction in its sole discretion.

The Trustee makes no representations regarding, and shall not be liable with respect to, the information set forth in this prospectus supplement.

**Subsequent Holders' Agreement**

Holders and beneficial owners of the Subordinated Notes that acquire the Subordinated Notes in the secondary market shall be deemed to acknowledge, agree to be bound by and consent to the same provisions specified herein to the same extent as the holders and beneficial owners of the Subordinated Notes that acquire the Subordinated Notes upon their initial issuance, including, without limitation, with respect to the acknowledgement and agreement to be bound by and consent to the terms of the Subordinated Notes including in relation to the U.K. bail-in power.

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**Listing**

We intend to apply for the listing of the Subordinated Notes on the New York Stock Exchange in accordance with its rules.

**Governing Law**

The Subordinated Base Indenture, the Eleventh Subordinated Supplemental Indenture and the Subordinated Notes are governed by, and construed in accordance with, the laws of the State of New York, except for the subordination and waiver of set-off provisions relating to the Subordinated Notes, which are governed by, and construed in accordance with, the laws of Scotland.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.<u>Base Prospectus – dated June 7, 2022:</u>**

Please refer to pages 3-18 of Exhibit 2(d) of LBG's annual report on Form 20-F for the fiscal year ended December 31, 2022 (the "**2022 Annual Report**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.<u>Prospectus Supplement - 5.590% Senior Callable Fixed-to-Fixed Rate Notes due 2035, 5.087% Senior Callable Fixed-to-Fixed Rate Notes due 2028 and Senior Callable Floating Rate Notes due 2028</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please refer to pages 4-21 of Exhibit 2(d) of LBG's annual report on Form 20-F for the fiscal year ended December 31, 2024 (the "**2024 Annual Report**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.<u>Prospectus Supplement - 5.721% Senior Callable Fixed-to-Fixed Rate Notes due 2030</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please refer to pages 21-31 of Exhibit 2(d) of the 2024 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.<u>Prospectus Supplement - 5.679% Senior Callable Fixed-to-Fixed Rate Notes due 2035, 5.462% Senior Callable Fixed-to-Fixed Rate Notes due 2028 and Senior Callable Floating Rate Notes due 2028</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please refer to pages 31-49 of Exhibit 2(d) of the 2024 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.<u>Prospectus Supplement - 5.985% Senior Callable Fixed-to-Fixed Rate Notes due 2027 and Senior Callable Floating Rate Notes due 2027</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please refer to pages 49-65 of Exhibit 2(d) of the 2024 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.<u>Prospectus Supplement - 5.871% Senior Callable Fixed-to-Fixed Rate Notes due 2029:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please refer to pages 66-76 of Exhibit 2(d) of the 2024 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6. <u>Prospectus Supplement - 7.953% Fixed Rate Reset Subordinated Debt Securities due 2033:</u>**

Please refer to pages 18-28 of Exhibit 2(d) of the 2022 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C. <u>Prospectus - Offer to Exchange 3.369% Fixed Rate Reset Subordinated Debt Securities due 2046 with a call date in 2041 for American Depositary Shares ("ADSs") representing LBG's 6.413% Non-Cumulative Fixed to Floating Rate Preference Shares, ADSs representing LBG's 6.657% Non-Cumulative Fixed to Floating Rate Preference Shares, 6.00% Subordinated Notes due 2033 issued by HBOS plc, LBG's 4.582% Subordinated Debt Securities due 2025 and LBG's 4.500% Fixed Rate Subordinated Debt Securities due 2024:</u>**

Please refer to pages 4-18 of Exhibit 2(d) of the 2021 Annual Report.

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

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D. <u>Base Prospectus - dated June 3, 2019:</u>**

Please refer to pages 15-28 of Exhibit 2(d) of LBG's annual report on Form 20-F for the fiscal year ended December 31, 2019 (the "**2019 Annual Report**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>Prospectus Supplement - 3.750% Senior Callable Fixed-to-Fixed Rate Notes due 2028:</u>**

Please refer to pages 39-49 of Exhibit 2(d) of the 2022 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. <u>Prospectus Supplement - 1.985% Fixed Rate Reset Subordinated Debt Securities due 2031:</u>**

Please refer to pages 18-27 of Exhibit 2(d) of the 2021 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E. <u>Base Prospectus - dated June 2, 2016:</u>**

Please refer to pages 42-58 of Exhibit 2(d) of the 2019 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>Prospectus Supplement - 4.550% Senior Notes due 2028:</u>**

Please refer to pages 66-73 of Exhibit 2(d) of the 2019 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. <u>Prospectus Supplement - 4.375% Notes due 2028:</u>**

Please refer to pages 98-106 of Exhibit 2(d) of the 2019 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. <u>Prospectus Supplement - 4.344% Fixed Rate Subordinated Debt Securities due 2048:</u>**

Please refer to pages 106-117 of Exhibit 2(d) of the 2019 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. <u>Prospectus Supplement - 3.574% Senior Callable Fixed-to-Floating Rate Notes due 2028:</u>**

Please refer to pages 117-126 of Exhibit 2(d) of the 2019 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. <u>Prospectus Supplement - 3.750% Senior Notes due 2027:</u>**

Please refer to pages 126-133 of Exhibit 2(d) of the 2019 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F. <u>Base Prospectus - dated June 7, 2013:</u>**

Please refer to pages 138-152 of Exhibit 2(d) of the 2019 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>Prospectus Supplement - 4.650% Fixed Rate Subordinated Debt Securities due 2026:</u>**

Please refer to pages 152-163 of Exhibit 2(d) of the 2019 Annual Report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**G. <u>Prospectus - Offer to Exchange 4.582% Subordinated Debt Securities due 2025 and 5.300% Subordinated Debt Securities due 2045 for New 4.582% Subordinated Debt Securities due 2025 and New 5.300% Subordinated Debt Securities due 2045:</u>**

Please refer to pages 202-215 of Exhibit 2(d) of the 2019 Annual Report.

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

## Ex-4

![image_1.jpg](image_1.jpg)&nbsp;&nbsp;&nbsp;&nbsp;**Exhibit 4(b)(xix)**&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

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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.

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**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:

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&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:

---

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

---

&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.

------

![image_1.jpg](image_1.jpg)

**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

------

![image_1.jpg](image_1.jpg)

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.

------

![image_1.jpg](image_1.jpg)

**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)

---

| | | |
|:---|:---|:---|
| **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. |

---

------

![image_1.jpg](image_1.jpg)

---

| | | |
|:---|:---|:---|
| 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 |

---

------

![image_1.jpg](image_1.jpg)

---

| | | |
|:---|:---|:---|
| | (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. |

---

## Ex-8

**EXHIBIT 8.1**

**LLOYDS BANKING GROUP STRUCTURE**

The following is list of the principal subsidiaries of Lloyds Banking Group plc at 31 December 2025.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Name of subsidiary undertaking | Country of<br>registration/<br>incorporation | Percentage of equity share<br>capital and voting rights held | Nature of business | Registered office |
| Lloyds Bank plc | England | 100% | Banking and financial services | 25 Gresham Street, London EC2V 7HN |
| Scottish Widows Limited | England | 100% \* | Life assurance | 25 Gresham Street, London EC2V 7HN |
| 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 |
| Lloyds Bank Corporate Markets plc<sup>1</sup> | England | 100% | Banking and financial services | 25 Gresham Street, London EC2V 7HN |
| LBG Equity Investments Limited<sup>1</sup> | England | 100% | Financial services | 25 Gresham Street, London EC2V 7HN |

---

\*Indirect interest

1Subsidiary that does not meet quantitative threshold for significance. Included for consistency with the consolidated financial statements.

## Ex-11

**Exhibit 11.1**

---

| |
|:---|
| 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 |

---

&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

------

CONTENTS

---

| | |
|:---|:---|
| [1&nbsp;&nbsp;&nbsp;&nbsp;WHAT ARE THE KEY TERMS USED IN THIS POLICY?](#i570baec1484b4890bf0c4e994d0b9175) | [&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](#i570baec1484b4890bf0c4e994d0b9175) |
| [2&nbsp;&nbsp;&nbsp;&nbsp;DEALING AND NOTIFICATION REQUIREMENTS "AT A GLANCE"](#i5967f9fa69c540c98b88b77322663cdf) | [&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](#i5967f9fa69c540c98b88b77322663cdf) |
| [3&nbsp;&nbsp;&nbsp;&nbsp;DOES THIS POLICY APPLY TO ME?](#ieed5622838314f7daef23b9cbd0d8510) | [&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](#ieed5622838314f7daef23b9cbd0d8510) |
| [4&nbsp;&nbsp;&nbsp;&nbsp;WHY IS THIS POLICY IMPORTANT?](#iacfc1124250d439581c32e38241397f4) | [&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](#iacfc1124250d439581c32e38241397f4) |
| [5&nbsp;&nbsp;&nbsp;&nbsp;WHAT KINDS OF DEALINGS ARE COVERED BY THIS POLICY?](#if11b371f6e744aa184d71ad11dfbb064) | [&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](#if11b371f6e744aa184d71ad11dfbb064) |
| [6&nbsp;&nbsp;&nbsp;&nbsp;WHAT ARE MY OBLIGATIONS UNDER THIS POLICY?](#i13ec7fa1b72b49cd86b8d1eb0ed6ebdd) | [&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](#i13ec7fa1b72b49cd86b8d1eb0ed6ebdd) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[6.1&nbsp;&nbsp;&nbsp;&nbsp;OBLIGATIONS IN RELATION TO GROUP SECURITIES](#if36fd0a8a9b345d0ae0b87c7710492dc) | [&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](#if36fd0a8a9b345d0ae0b87c7710492dc) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[6.2&nbsp;&nbsp;&nbsp;&nbsp;OBLIGATIONS IN RELATION TO OTHER SECURITIES](#i38397c218fed4ad6a00b8f6f810f2832) | [&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](#i38397c218fed4ad6a00b8f6f810f2832) |
| [7&nbsp;&nbsp;&nbsp;&nbsp;HOW DO I OBTAIN CLEARANCE TO DEAL?](#i6a7ee3dcaeae4787bdbf37678bd21481) | [&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](#i6a7ee3dcaeae4787bdbf37678bd21481) |
| [8&nbsp;&nbsp;&nbsp;&nbsp;HOW DO I NOTIFY THE GROUP OF MY DEALINGS?](#i64f35f0c42fe453887c622b72e97b0c3) | [&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](#i64f35f0c42fe453887c622b72e97b0c3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[8.1&nbsp;&nbsp;&nbsp;&nbsp;PROCEDURE FOR ALL PERSONS TO WHOM THIS DEALING POLICY APPLIES](#ibb039bf6c8c34537ac64064abaa9c1c7) | [&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](#ibb039bf6c8c34537ac64064abaa9c1c7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[8.2&nbsp;&nbsp;&nbsp;&nbsp;ADDITIONAL OBLIGATIONS FOR PDMRS AND THEIR PCAS](#ib314b8ba04de428db57c35c7713a8b8c) | [&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](#ib314b8ba04de428db57c35c7713a8b8c) |
| [9&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX 1 - PERSONS CLOSELY ASSOCIATED](#i702cd7899a164c49b6592fb039714b98) | [&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](#i702cd7899a164c49b6592fb039714b98) |
| [10&nbsp;&nbsp;&nbsp;&nbsp;APPENDIX 2 – CLEARANCE AND NOTIFICATION REQUIREMENTS IN SPECIFIC DEALING SCENARIOS](#ia0a113c539d74649bc35ea7b50fa6430) | [&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](#ia0a113c539d74649bc35ea7b50fa6430) |
| &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](#i86ad1cf4a13d4598a8109c3e18f303ed) | [&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](#i86ad1cf4a13d4598a8109c3e18f303ed) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.2&nbsp;&nbsp;&nbsp;&nbsp;DEALINGS IN RELATION TO THE GROUP'S SHARE PLANS](#i1299f54c63a74e44a5613860259455ea) | [&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](#i1299f54c63a74e44a5613860259455ea) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10.3&nbsp;&nbsp;&nbsp;&nbsp;DEALINGS IN A TRUSTEE CAPACITY](#i0cef311f83c04db7abb4b79f7f839663) | [&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](#i0cef311f83c04db7abb4b79f7f839663) |

---

1WHAT ARE THE KEY TERMS USED IN THIS POLICY?

---

| | |
|:---|:---|
| 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  |

---

&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

------

---

| | |
|:---|:---|
| 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  |

---

&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

------

2DEALING AND NOTIFICATION REQUIREMENTS "AT A GLANCE"

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| &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  |

---

---

| | | | |
|:---|:---|:---|:---|
| 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

------

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

------

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

------

• 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

------

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.

&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

------

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

------

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**

---

| | |
|:---|:---|
| **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.) | ✘ |

---

**PCA checklist – Corporate Interests**

---

| | |
|:---|:---|
| **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

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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 Banking Group 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: 13 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 Banking Group 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: 13 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 Banking Group 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 Banking Group plc.

---

| |
|:---|
| 13 February 2026 |
| /s/ Charlie Nunn |
| Charlie Nunn |
| Group Chief Executive |
| /s/ William Chalmers |
| William Chalmers |
| Chief Financial Officer |

---

## 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 on Form F-3 of our reports dated 13 February 2026, relating to the financial statements of Lloyds Banking Group plc and the effectiveness of Lloyds Banking Group plc's internal control over financial reporting appearing in this Annual Report on Form 20-F for the year ended 31 December 2025.

/s/ Deloitte LLP

London, United Kingdom

13 February 2026

## Ex-15

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

![CoverImage.jpg](lyg-20251231_g1.jpg)

![Cover_logo.gif](lyg-20251231_g2.gif)

**Helping**

**Britain**

**Prosper**

Lloyds Banking Group plc

Annual Report and Accounts 2025

![StratRep_IFC.gif](lyg-20251231_g3.gif)

**We're delivering** 

**sustainable profit** 

**and returns**

With a clear strategic plan...

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ![GrowIcon.gif](lyg-20251231_g4.gif) | Grow | ![FocusIcon.gif](lyg-20251231_g5.gif) | Focus | ![ChangeIcon.gif](lyg-20251231_g6.gif) | Change |
|  | Drive revenue <br>growth and <br>diversification<br>|  | Strengthen <br>cost and capital <br>efficiency<br>|  | Maximise <br>the potential of <br>people, technology <br>and data |

---

...reinforcing competitive advantage...

---

| | | |
|:---|:---|:---|
| Market leader | Cost and capital leader | Digital and AI leader |
| #1 in key markets, <br>enhancing growth <br>as an integrated <br>financial services <br>provider.<br>| Efficient scale model, <br>building operating <br>leverage. De-risked <br>and optimised <br>balance sheet. <br>| Largest UK digital <br>bank, leading across <br>emerging technologies, <br>reinforcing revenue <br>and cost opportunity.<br>|

---

...delivering strong shareholder outcomes...

---

| | | | |
|:---|:---|:---|:---|
| **Strengthening** <br>**income**<br>| **Growing** <br>**balance sheet**<br>| **Stronger,** <br>**sustainable returns**<br>| **Increasing shareholder** <br>**distributions**<br>|
| **7%**<br>Year-on-year net <br>income growth<br>| **5%**<br>Year-on-year loan growth<br>| **12.9%**<br>Return on tangible equity<br>| **£3.9bn**<br>Dividend and share buyback<br>|

---

...and well positioned for 2026 and beyond.<br>

![StratRep_Contents.gif](lyg-20251231_g7.gif)

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

In this report

Our purpose of Helping Britain Prosper

has long guided how we support

customers to invest, grow and thrive.

**Strategic report** 

[01](#i3eaa7a3e529a46b3b97a88e05ad474bc_16) **to** [34](#i3eaa7a3e529a46b3b97a88e05ad474bc_94)

---

| | |
|:---|:---|
| **Chair's statement** | [02](#i3eaa7a3e529a46b3b97a88e05ad474bc_19) |
| **Group Chief Executive's review** | [03](#i3eaa7a3e529a46b3b97a88e05ad474bc_22) |
| **Our business model** | [06](#i3eaa7a3e529a46b3b97a88e05ad474bc_25) |
| **Our external environment** | [10](#i3eaa7a3e529a46b3b97a88e05ad474bc_37) |
| **Our strategy** | [14](#i3eaa7a3e529a46b3b97a88e05ad474bc_40) |
| **Our key performance indicators** | [18](#i3eaa7a3e529a46b3b97a88e05ad474bc_52) |
| **Our colleagues** | [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) |
| **Risk overview** | [24](#i3eaa7a3e529a46b3b97a88e05ad474bc_64) |
| **Section 172(1) statement** | [30](#i3eaa7a3e529a46b3b97a88e05ad474bc_82) |
| **Task Force on Climate-related Financial** <br>**Disclosures (TCFD)**<br>| [32](#i3eaa7a3e529a46b3b97a88e05ad474bc_88) |
| **Non-financial and sustainability** <br>**information statement**<br>| [33](#i3eaa7a3e529a46b3b97a88e05ad474bc_91) |
| **Viability statement and going concern** | [34](#i3eaa7a3e529a46b3b97a88e05ad474bc_94) |

---

**Sustainability review** 

[36](#i3eaa7a3e529a46b3b97a88e05ad474bc_100) **to** [49](#i3eaa7a3e529a46b3b97a88e05ad474bc_196)

---

| | |
|:---|:---|
| **Sustainability review introduction** | [36](#i3eaa7a3e529a46b3b97a88e05ad474bc_100) |
| **Our value chain** | [38](#i3eaa7a3e529a46b3b97a88e05ad474bc_112) |
| **Sustainability risks and opportunities**  | [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) |
| **Supporting the transition to net zero** | [42](#i3eaa7a3e529a46b3b97a88e05ad474bc_130) |

---

**Financial results** 

[51](#i3eaa7a3e529a46b3b97a88e05ad474bc_202) **to** [64](#i3eaa7a3e529a46b3b97a88e05ad474bc_289)

---

| | |
|:---|:---|
| **Results for the full year**  | [51](#i3eaa7a3e529a46b3b97a88e05ad474bc_202) |
| **Divisional results**  | [61](#i3eaa7a3e529a46b3b97a88e05ad474bc_274) |

---

**Governance**

[66](#i3eaa7a3e529a46b3b97a88e05ad474bc_295) **to** [136](#ib3569b81c6bb477f828633c1cfc09e16_16515)

---

| | |
|:---|:---|
| **Directors' report** | [66](#i3eaa7a3e529a46b3b97a88e05ad474bc_295) |
| **Committee reports**  | [85](#i3eaa7a3e529a46b3b97a88e05ad474bc_346) |
| **Directors' remuneration report**  | [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358) |
| **Other statutory and regulatory information**  | [134](#i3eaa7a3e529a46b3b97a88e05ad474bc_496) |

---

**Risk management** 

[138](#i3eaa7a3e529a46b3b97a88e05ad474bc_502) **to** [197](#ie6d562362828442c9d9e501f05837616_14795)

---

| | |
|:---|:---|
| **The Group's approach to risk**  | [138](#i3eaa7a3e529a46b3b97a88e05ad474bc_502) |
| **Risk governance structure** | [140](#i3eaa7a3e529a46b3b97a88e05ad474bc_505) |
| **Stress testing**  | [142](#i3eaa7a3e529a46b3b97a88e05ad474bc_508) |
| **Full analysis of principal risk categories**  | [144](#i10ecde00bd4e4ca99e46cc5accf7c35e_288) |

---

**Financial statements** 

[199](#i3eaa7a3e529a46b3b97a88e05ad474bc_580) **to** [304](#i3eaa7a3e529a46b3b97a88e05ad474bc_892)

---

| | |
|:---|:---|
| **Independent auditors' report**  | [199](#i3eaa7a3e529a46b3b97a88e05ad474bc_580) |
| **Consolidated financial statements**  | [211](#i3eaa7a3e529a46b3b97a88e05ad474bc_583) |
| **Parent company financial statements** | [297](#i3eaa7a3e529a46b3b97a88e05ad474bc_841) |

---

**Other information** 

[306](#i3eaa7a3e529a46b3b97a88e05ad474bc_907) **to** [324](#i3eaa7a3e529a46b3b97a88e05ad474bc_922)

---

| | |
|:---|:---|
| **Shareholder information**  | [306](#i3eaa7a3e529a46b3b97a88e05ad474bc_907) |
| **Alternative performance measures** | [308](#i3eaa7a3e529a46b3b97a88e05ad474bc_913) |
| **Subsidiaries and related undertakings**  | [313](#i3eaa7a3e529a46b3b97a88e05ad474bc_916) |
| **Forward-looking statements**  | [324](#i3eaa7a3e529a46b3b97a88e05ad474bc_922) |

---

The 2025 annual report and accounts

incorporates the strategic report, the

directors' report and the consolidated

financial statements, all of which have

been approved by the Board of directors.

**On behalf of the Board**

---

| |
|:---|
| ![Signature_RobinBudenberg.gif](lyg-20251231_g9.gif) |
| **Sir Robin Budenberg**<br>Chair, Lloyds Banking Group plc<br>13 February 2026<br>|

---

![StratRep_ContentsIllustration.gif](lyg-20251231_g10.gif)

---

| | |
|:---|:---|
| ![QR_Code_RegisterPaperless.gif](lyg-20251231_g11.gif) | Register here to go <br>paperless for 2026![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>|

---

**Going paperless**<br>Help reduce our environmental <br>impact by viewing shareholder <br>documents, including the <br>annual report, on our website .![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>

**Our reporting**<br>Our reporting suite helps us communicate clearly with a <br>wide range of stakeholders. The annual report and accounts <br>outlines our strategic direction, financial and operational <br>performance, and environmental and social impact. It <br>includes forward-looking statements on the Group's future <br>financial position, results and objectives. We use alternative <br>performance measures to complement statutory results, <br>with strategic report commentary on an underlying basis <br>unless stated. Additional disclosures, including our <br>sustainability report, are available online.<br>

---

| | |
|:---|:---|
| ![StratRep_Investors_QRCode.gif](lyg-20251231_g13.gif) | See our full reporting <br>suite including our <br>sustainability report <br>on the Investors page ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>of our website.<br>|

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Chair's statement

**Driving growth through** 

**purpose and innovation**

**Sir Robin** 

**Budenberg**

Chair

![ImageBlock_RobinBudenberg.gif](lyg-20251231_g15.gif)

![ImageBlock_ReadFullBiog_QRCode_Only.gif](lyg-20251231_g16.gif)

Read full biography ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>

**Delivering on our purpose-driven strategy**

Reflecting on 2025, it has been another year of significant progress

for the Group, delivering for customers, colleagues, communities

and shareholders. We have continued to invest and transform the

business, delivering strong progress against our strategic objectives

and further enhancing the customer proposition and our platform

for growth.

At the heart of our transformation is digital innovation, bringing

together transformative technologies and skilled people to

meet customer needs effectively. We are a digital and AI leader

with distinct competitive advantages and have taken action to

enhance our infrastructure and capabilities to create a platform for

innovation and business growth. This is enabling us to deliver leading

and innovative customer propositions and experiences across

the Group and we are now extending this to new and emerging

technologies such as digital assets. These steps will open up new

opportunities for our customers and maintain our commercial

leadership. Read more on **pages [14](#i3eaa7a3e529a46b3b97a88e05ad474bc_40) to [17](#i3eaa7a3e529a46b3b97a88e05ad474bc_49).**

At the same time, we are delivering on our purpose of Helping

Britain Prosper and creating a more sustainable and inclusive

future for people and businesses across the UK whilst accessing

new commercial growth opportunities. Embedding a positive,

values based performance culture remains important. The Board

places great emphasis on shaping and fostering this culture and,

throughout 2025, engaged with colleagues better to understand

their experiences. These insights informed Board discussions and

decision making, ensuring that we continue to build the culture

of the organisation. Read more on **page [79](#i3eaa7a3e529a46b3b97a88e05ad474bc_334)**.

The UK economy proved resilient to a volatile and uncertain global

economic and political environment in 2025, with growth similar to

its recent long-term trend rate. Regulatory developments have been

constructive from a prudential perspective where we now have

more clarity on capital requirements. We have taken an additional

provision of £800 million for Motor Finance as a result of our

assessment of the impact of the FCA's proposed redress scheme

and we await further clarity on the final rules. We welcome the

FCA's broader strategic focus on growth and simplifying regulation.

**Generating value for shareholders**

I was pleased to see our market value strengthen considerably

during the course of 2025, with the share price up more than 79%.

I believe this improvement reflects the Group's strategic progress,

consistent financial performance and the growing confidence

in our ability to deliver higher, more sustainable returns.

Following the financial progress made during the year, the Board

has recommended a final ordinary dividend of 2.43 pence per

share, bringing the total proposed ordinary dividend for 2025

to 3.65 pence per share, an increase of 15% compared with the

prior year. In addition, on 30 January 2026 the Group announced

the launch of a share buyback programme to repurchase up to

£1.75 billion of ordinary shares.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Shareholder returns** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **3.65p**<br>**total ordinary dividend** <br>**per share, up 15%** | **£3.9bn**<br>**returned to** <br>**shareholders for 2025** |
|  | **3.65p**<br>**total ordinary dividend** <br>**per share, up 15%** | **£3.9bn**<br>**returned to** <br>**shareholders for 2025** |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**Directors**

We regularly review the Board's composition and diversity to ensure

we maintain the right balance of skills, experience and perspectives

at the highest level. In June 2025, Chris Vogelzang was appointed

as a non-executive director and joined the Responsible Business

Committee. Scott Wheway stepped down from the Board in

October 2025. For more insight into our Board structure and

changes, refer to **page [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298)**.

**Remuneration**

As we advance our strategy, attracting and retaining talent across the

business remains essential. The Board's Remuneration Committee

carefully determines all awards, ensuring that they align with market

conditions, regulatory developments, Group performance and

shareholder expectations. The Group intends to implement a new

remuneration policy in 2026, designed to incentivise the leadership

team to deliver continued strategic and financial progress and guide

the Group into its next strategic cycle. The policy places greater

emphasis on sustainable high performance and shareholder value

creation. More information on our approach to remuneration can

be found on **page [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358)**.

**Summary**

I'm proud of what Lloyds Banking Group continues to deliver for

customers, colleagues and shareholders and of how we're doing it.

Through long-term investment in our business and communities,

we're driving sustainable growth and building resilience. I'd specifically

like to thank our colleagues for their continued dedication and focus

on meeting the evolving needs of our customers.

---

| |
|:---|
| ![Signature_RobinBudenberg.gif](lyg-20251231_g9.gif) |
| **Sir Robin Budenberg**<br>Chair<br>|

---

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Group Chief Executive's review

**Purpose-driven strategy** 

**delivering enhanced results**![ImageBlock_CharlieNunn.gif](lyg-20251231_g20.gif)

**Charlie Nunn**

Group Chief

Executive

![ImageBlock_ReadFullBiog_QRCode_Only.gif](lyg-20251231_g16.gif)

Read full biography ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>

2025 was a key year for the Group, entering the second phase of our

strategy, investing for the benefit of our customers and wider

stakeholders and guided by our purpose of Helping Britain Prosper.

As we enter 2026, our transformation is accelerating, supported by

strong business momentum as well as enhanced digital capabilities

and innovative propositions that are driving growth and efficiency

across the franchise.

The Group demonstrated sustained strength in financial

performance in 2025, with franchise, balance sheet and income

growth. Strong business performance drove capital generation

across the year of 147 basis points allowing total shareholder

distributions of £3.9 billion, even after an additional £800 million

charge for motor finance in the third quarter.

Given our continued strategic execution and sustained strength in

financial performance, we remain confident in meeting our 2026

commitments (including our upgraded target for return on tangible

equity) and the Group's outlook beyond 2026. We look forward to

setting out the next phase of the Group's strategy, beyond the

current plan, in July.

**Sustained strength in financial performance**

Statutory profit before tax was £6.7 billion, up 12% year-on-year,

with higher underlying profit of £6.8 billion, driven by 7% growth in

net income, partially offset by higher operating costs and a higher

underlying impairment charge. Net income of £18.3 billion

benefitted from a higher banking net interest margin of 3.06% and

continued broad-based growth in underlying other income of 9%.

Operating costs of £9.8 billion increased by 3%, reflecting strategic

investment (including an increased severance charge), business

growth costs and inflationary pressures, partially offset by increasing

cost savings from investment and business-as-usual cost discipline.

The impairment charge remained low at £795 million, with strong

and stable credit performance across our portfolios. Overall, this

resulted in a return on tangible equity of 12.9%, or 14.8% excluding

the motor finance charge.

The Group's franchise and balance sheet grew during 2025.

Underlying loans and advances to customers of £481.1 billion

were up £22.0 billion (5%), reflecting growth across all Retail

areas including UK mortgages and the European business, alongside

growth in Corporate and Institutional Banking. Customer deposits

of £496.5 billion increased by £13.8 billion (3%) across the year.

This included growth in Retail of £5.5 billion, driven by strength

in current accounts and savings, and Commercial Banking

of £8.5 billion, including growth in targeted sectors.

The Group delivered strong capital generation of 147 basis points in

2025 (178 basis points excluding the motor finance charge), and has

a pro forma CET1 ratio of 13.2%. Given the capital generation and

strength of the CET1 position, the Board has recommended an

increased final ordinary dividend of 2.43 pence per share, resulting

in a total dividend for the year of 3.65 pence per share, up 15% on

the prior year. In addition, the Group has announced its intention to

implement an ordinary share buyback of up to £1.75 billion, as we

continue to distribute excess capital to shareholders. Together this

represents distributions of £3.9 billion in respect of 2025. Going

forward, reflecting increasing confidence in our capital generation,

the Group will now review excess capital distributions in addition to

the ordinary dividend every half year.

**Guiding purpose of Helping Britain Prosper**

The fundamentals of the UK economy are constructive. Our purpose

allows us to play a key role in promoting UK prosperity, aligning our

strategy to support UK economic growth sectors. As part of this, we

recently committed to providing a further £35 billion of new finance

to companies investing and operating in the UK in 2026. Alongside,

we remain focused on improving access to quality and affordable

housing, lending £17 billion to first time buyers, as well as supporting

£3.2 billion of new finance to the social housing sector in 2025.

We continue to financially empower our customers. For example,

our Ready-Made Pensions product is a simple, long-term financial

planning solution benefitting customers including those who do not

participate in auto-enrolment. Of the over 7,000 accounts opened

since launch, c.40% are self-employed customers.

Supporting the net zero transition remains a significant strategic

and commercial opportunity. The Group has cumulatively delivered

over £70 billion of sustainable financing since 2022, including over

£21 billion in 2025.

**Second phase of purpose-driven strategy,** 

**continued strong momentum, on track for 2026**

In 2025, we entered the second phase of our five year strategic plan,

continuing to scale the core business, driving growth in high value

areas, deepening customer relationships and strengthening cross-

Group collaboration. Strong strategic momentum means we now

expect to generate c.£2 billion of additional revenues from strategic

initiatives by the end of 2026, exceeding our initial £1.5 billion target.

In 2025 we continued to grow our Retail franchise through

innovative new propositions and enhanced capabilities. We

maintained our focus on high-value segments, building our Mass

Affluent current account offering with the launch of our Lloyds

Premier product.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Group Chief Executive's review continued

As the UK's largest digital bank, we continued to accelerate the shift

to mobile-first. We now have c.21.5 million customers using our app,

an increase of c.45% since 2021. Alongside, we recently announced

the acquisition of Curve (subject to regulatory approval) which will

reinforce our leading digital experiences, including enhanced digital

wallet capabilities.

In Insurance, Pensions and Investments (IP&I), we are reinforcing our

competitive position in areas of strategic focus. We now have over

750,000 customers using our core app for workplace pension

customers, helping to drive regular workplace pension contributions

up 5% year-on-year. With the intention of capitalising on our

position as the UK's only scale integrated financial services provider,

we continue to embed IP&I products across banking journeys. The

protection take-up rate for mortgage customers is now at 20% in

2025, up from 15% in 2024. Alongside, the recent full acquisition of

Schroders Personal Wealth accelerates delivery of our Wealth

strategy and will deepen relationships in a high value segment.

In Commercial Banking, we are building a digitally-led relationship

bank and driving income diversification through capital efficient

growth. In Business and Commercial Banking, we have strengthened

deposit and lending growth capabilities through enhanced digital

propositions. This includes our new Gen AI powered application

which simplifies the Commercial Real Estate lending journey by

expediting the tenancy schedule process. In Corporate and

Institutional Banking, we are delivering on our ambition to become

a broader scale solution provider, meeting more of our customer

needs. For example, in 2025 we launched a market-leading FX

solution, supporting a c.21% increase in foreign exchange volumes

year-on-year.

Finally, within Equity Investments, alongside strong LDC

performance in 2025, our Lloyds Living business continues to be a

significant growth driver, with a portfolio of close to 8,000 homes,

up from c.5,500 this time last year.

As we deliver growth we are focused on improving operating

leverage through cost and capital efficiency. Since 2021 we have

delivered £1.9 billion of gross cost savings through both business-as-

usual management as well as more transformational initiatives

enabled by strategic investment. Alongside, we have driven

£24 billion of risk-weighted asset optimisation, primarily through

enhanced capabilities, data improvements and risk reduction

transactions.

**Leveraging our enablers to drive long-term competitive strength**

As highlighted in our recent Digital and AI seminar, our investment

in technology, data and people underpins our ambitions to grow the

business with innovation and improved operating leverage.

Advances in our infrastructure and capabilities allow us to deliver on

our strategic priorities, such as enabling a seven minute mobile

current account opening process, in line with the sector best, driving

c.85% of our current account openings in 2025. Digital investments

have also supported simplification of our technology estate and

helped improve productivity, with an increase of c.45% in active

customers served per distribution FTE since 2021. Finally, we are

extending our leadership across new and emerging technologies,

including Gen AI and digital assets, and are well-placed to succeed

in a period of potentially transformational change for the industry.

Our c.50 major live Gen AI use cases delivered c.£50 million of value

in 2025, as we built the foundations of our capabilities. We are now

targeting over £100 million of incremental P&L benefit from Gen AI

in 2026, as we start to scale the foundations.

Together, these developments drive improved operating leverage,

helping towards our target cost:income ratio of less than 50% in

2026. As we enter the final year of our current strategy, we remain

confident in our 2026 ambitions to generate higher, more

sustainable returns for our shareholders. Beyond 2026, we are

committed to continuing income growth, improving operating

leverage and stronger, sustainable returns.

**2026 guidance**

Based on our sustained strength in financial performance and our

current macroeconomic assumptions, for 2026 the Group expects:

• Underlying net interest income of c.£14.9 billion

• Cost:income ratio of less than 50% (including operating costs

of less than £9.9 billion)

• Asset quality ratio of c.25 basis points

• Return on tangible equity now of greater than 16%

• Capital generation of greater than 200 basis points<sup>1</sup>

• To pay down to a CET1 ratio of c.13.0%

1Excludes capital distributions.

---

| |
|:---|
| ![Signature_CharlieNunn_Black.gif](lyg-20251231_g21.gif) |
| **Charlie Nunn** <br>Group Chief Executive<br>|

---

![StratRep_CEOReview_WomanWithMug.jpg](lyg-20251231_g22.jpg)

---

| | | |
|:---|:---|:---|
| ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) | **Purpose in action** | ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) |
| **Empowering customers** <br>**for digital success**<br>The Consumer Digital Index is a comprehensive study <br>of digital and financial lives. As the nation's largest <br>digital bank, we use our unique data and expertise <br>to deliver powerful insights through this report.<br>Our 2025 findings reveal a major shift, with more than <br>28 million adults now using AI tools to manage their <br>money, from everyday budgeting and savings goals to <br>financial education. Further information can be found <br>on page 33 of our sustainability report .![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>We're committed to ensuring everyone has the tools, <br>confidence and access to thrive in a digital-first economy. <br>Through Lloyds Bank Academy, c.428,000 individuals have <br>benefitted from our digital and financial skills programmes <br>in 2025, empowering our customers with knowledge <br>and building a more resilient, inclusive financial future. | **Empowering customers** <br>**for digital success**<br>The Consumer Digital Index is a comprehensive study <br>of digital and financial lives. As the nation's largest <br>digital bank, we use our unique data and expertise <br>to deliver powerful insights through this report.<br>Our 2025 findings reveal a major shift, with more than <br>28 million adults now using AI tools to manage their <br>money, from everyday budgeting and savings goals to <br>financial education. Further information can be found <br>on page 33 of our sustainability report .![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>We're committed to ensuring everyone has the tools, <br>confidence and access to thrive in a digital-first economy. <br>Through Lloyds Bank Academy, c.428,000 individuals have <br>benefitted from our digital and financial skills programmes <br>in 2025, empowering our customers with knowledge <br>and building a more resilient, inclusive financial future. | **Empowering customers** <br>**for digital success**<br>The Consumer Digital Index is a comprehensive study <br>of digital and financial lives. As the nation's largest <br>digital bank, we use our unique data and expertise <br>to deliver powerful insights through this report.<br>Our 2025 findings reveal a major shift, with more than <br>28 million adults now using AI tools to manage their <br>money, from everyday budgeting and savings goals to <br>financial education. Further information can be found <br>on page 33 of our sustainability report .![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>We're committed to ensuring everyone has the tools, <br>confidence and access to thrive in a digital-first economy. <br>Through Lloyds Bank Academy, c.428,000 individuals have <br>benefitted from our digital and financial skills programmes <br>in 2025, empowering our customers with knowledge <br>and building a more resilient, inclusive financial future. |

---

---

| |
|:---|
| ![StratRep_CEORev_CaseStudy_QRCode_Only.gif](lyg-20251231_g24.gif) |
| Read our 2025 <br>UK Consumer <br>Digital Index ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>|

---

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | |
|:---|:---|:---|:---|
| Customers | Colleagues | Communities | Shareholders |
| ![StratRep_CEOReview_CustomersImage.jpg](lyg-20251231_g25.jpg) | ![StratRep_CEOReview_ColleaguesImage.jpg](lyg-20251231_g26.jpg) | ![StratRep_CEOReview_CommunitiesImage.jpg](lyg-20251231_g27.jpg) | ![StratRep_CEOReview_ShareholdersImage.jpg](lyg-20251231_g28.jpg) |
| **c.28m**<br>**customers with** <br>**23.6 million** <br>**digitally active**<br>| **>60,000**<br>**colleagues who take** <br>**pride in working for** <br>**an inclusive and** <br>**diverse Group**<br>| **>325 years**<br>**of supporting individuals** <br>**and communities** <br>**throughout the UK** | **2.1m**<br>**shareholders, one of** <br>**the UK's most widely** <br>**held companies**<br>|
| We're Helping Britain Prosper <br>whilst successfully delivering <br>for all stakeholders in 2025 | We're Helping Britain Prosper <br>whilst successfully delivering <br>for all stakeholders in 2025 | We're Helping Britain Prosper <br>whilst successfully delivering <br>for all stakeholders in 2025 | We're Helping Britain Prosper <br>whilst successfully delivering <br>for all stakeholders in 2025 |
| **£17bn**<br>**of lending to first time** <br>**buyers, supporting** <br>**greater access to** <br>**home ownership**<br>| **40.4%**<br>**of our executive** <br>**senior roles were** <br>**held by women**<br>| **£1bn**<br>**commitment to** <br>**finance opportunities** <br>**aligned to our Regional** <br>**Impact Fund**<br>|  |
| **£35bn**<br>**committed in new** <br>**finance to support** <br>**companies investing** <br>**and operating in** <br>**the UK during 2026**<br>| **>30,000**<br>**customer facing** <br>**colleagues actively** <br>**using AI to enhance** <br>**customer experiences**<br>| **c.£36m**<br>**donated to our** <br>**Charitable Foundations,** <br>**and more than** <br>**£800 million donated** <br>**over the last 40 years**<br>| **Many**<br>**UK pension funds** <br>**hold Group shares,** <br>**benefitting UK** <br>**pensioners**<br>|
| **£9.1bn**<br>**interest paid to** <br>**customers, of which** <br>**around £8.2 billion was** <br>**paid to savers**<br>| **c.£31m**<br>**invested in upskilling and** <br>**training our colleagues** <br>**for the future**<br>| **£2.8bn**<br>**cash taxes paid, one** <br>**of the UK's largest** <br>**corporate taxpayers**<br>| **147bps**<br>**of capital generation,** <br>**reinforcing stability** <br>**and long-term returns**<br>|
|  | **£5.4bn**<br>**paid in salaries,** <br>**investing in talent and** <br>**driving performance** <br>| **£4.4bn**<br>**paid to suppliers and** <br>**regulatory bodies,** <br>**supporting our ability** <br>**to serve customers** <br>**effectively**<br>| **£3.9bn**<br>**in dividends and** <br>**share buybacks** <br>**to shareholders**<br>|
| **See our key performance indicators on pages [18](#i3eaa7a3e529a46b3b97a88e05ad474bc_52) to [21](#i3eaa7a3e529a46b3b97a88e05ad474bc_58)** | **See our key performance indicators on pages [18](#i3eaa7a3e529a46b3b97a88e05ad474bc_52) to [21](#i3eaa7a3e529a46b3b97a88e05ad474bc_58)** | **See our key performance indicators on pages [18](#i3eaa7a3e529a46b3b97a88e05ad474bc_52) to [21](#i3eaa7a3e529a46b3b97a88e05ad474bc_58)** | **See our key performance indicators on pages [18](#i3eaa7a3e529a46b3b97a88e05ad474bc_52) to [21](#i3eaa7a3e529a46b3b97a88e05ad474bc_58)** |

---

![StratRep_CEO_Pg3_CreatingValueForStakeholders.gif](lyg-20251231_g29.gif)

![Our BusinessModelPage1.gif](lyg-20251231_g30.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our business model

**What we do**

**Our business model** 

**is focused on Helping** 

**Britain Prosper in** 

**a way that delivers** 

**sustainable profit** 

**and returns**

**Our competitive** 

**advantages**

**Leading UK customer franchise** 

**with deep customer insight**

c.28 million customers with unequalled

reach across the UK. Extensive customer

data and analysis ensures we can anticipate

and meet the needs of these customers

more effectively.

**All-channel distribution** 

**with digital leadership** 

**and trusted brands**

Operating through a range of brands

and distribution channels, including

the UK's largest digital bank.

**Unique customer proposition** 

Serving all our customers' banking,

investment and insurance needs

through a comprehensive product range.

**Innovation through modern** 

**and transformative technology**

Continued investment in our technology

platform, apps and change function enables

us to innovate in order to anticipate

and meet customers' needs.

**Operating at scale** 

**with cost discipline**

Our scale and efficiency enable us

to operate and invest more effectively.

**Focused and capital** 

**generative business model**

Allowing significant investment

while generating attractive returns

for shareholders.

**Our vision**

To be the UK customer-

focused digital leader and

integrated financial services

provider, capitalising on new

opportunities, at scale.

**Our purpose**

**Helping Britain Prosper.** 

We do this by creating a more

sustainable and inclusive

future for people and

businesses, shaping finance

as a force for good.

**Financial strength and** 

**robust risk management**

Strong capital position. Robust approach

to risk, as reflected in the quality of

our portfolio and underwriting criteria.

**Dedicated colleagues** 

**with strong values**

Highly engaged, skilled, customer

focused, diverse workforce with

significant expertise and experience.

---

| | |
|:---|:---|
| **See how our purpose is driving performance on page [14](#i3eaa7a3e529a46b3b97a88e05ad474bc_40) to [17](#i3eaa7a3e529a46b3b97a88e05ad474bc_49)** | ![Icon_Weblink.gif](lyg-20251231_g14.gif) |

---

![Our BusinessModelPage2.gif](lyg-20251231_g31.gif)

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| |
|:---|
| **Our structure** |
| We have three core divisions that have been structured <br>to serve our customers' needs effectively.  |

---

---

| |
|:---|
| ![Button_Retail.gif](lyg-20251231_g33.gif) |
| **Retail** |
| **Consumer relationships**<br>Current accounts<br>Savings accounts<br>Mass affluent proposition<br>UK private bank<br>|
| **Consumer lending**<br>Mortgages<br>Credit cards<br>Personal loans<br>Motor finance<br>|
| Read more on **page [61](#i3eaa7a3e529a46b3b97a88e05ad474bc_274)** |

---

---

| |
|:---|
| ![Button_Insurance.gif](lyg-20251231_g34.gif) |
| **Insurance,** <br>**Pensions and** <br>**Investments**<br>|
| **Insurance**<br>Home, Motor, Health, Pet <br>Protection<br>|
| **Pensions and retirement**<br>Workplace pensions<br>Direct to customer pensions<br>Retirement<br>|
| **Investments**<br>Ready-Made Investments<br>Share dealing<br>|
| Read more on **page [63](#i3eaa7a3e529a46b3b97a88e05ad474bc_286)** |

---

---

| |
|:---|
| ![Button_CommercialBank.gif](lyg-20251231_g35.gif) |
| **Commercial** <br>**Banking**<br>|
| **Business and** <br>**commercial banking**<br>Business loans<br>Transactional banking<br>Working capital<br>Merchant services<br>|
| **Corporate and** <br>**institutional banking**<br>Lending and debt capital markets<br>Cash liquidity <br>Risk management<br>|
| Read more on **page [62](#i3eaa7a3e529a46b3b97a88e05ad474bc_280)** |

---

In addition, **Equity Investments and Central Items** includes the Group's direct investments businesses. Read more on **page [64](#i3eaa7a3e529a46b3b97a88e05ad474bc_289)**<br>

---

| |
|:---|
| **Our trusted brands** |
| With over 325 years' heritage across our family of brands, we serve and support <br>the evolving needs of our customers and clients across the UK. |

---

![StratRep_TrustedBrands_Logos.gif](lyg-20251231_g36.gif)

---

| |
|:---|
| **Our values** |
| These values are at the heart of everything we do – guiding our decisions, <br>shaping our culture, and driving our purpose of Helping Britain Prosper. |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **People-first**<br>We listen and <br>care for people <br>as individuals.<br>| **Bold**<br>We innovate and <br>do things differently <br>to better serve our <br>customers and grow <br>with purpose.<br>| **Inclusive**<br>We learn about <br>and embrace our <br>differences, and <br>seek out diverse <br>perspectives.<br>| **Sustainable**<br>We take responsibility <br>for the impact of our <br>actions on nature and <br>Britain's transition to <br>net zero.<br>| **Trust**<br>We give each other <br>the space and support <br>to take things on and <br>see them through.<br>|

---

![Our BusinessModelPage3.gif](lyg-20251231_g37.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our business model continued

**How we do it**

---

| | |
|:---|:---|
| **We deliver for** <br>**our customers by** <br>**focusing on their needs,** <br>**continually innovating** <br>**the products and services** <br>**we offer, developing and** <br>**investing in new solutions,** <br>**and using our expertise** <br>**and influence to create** <br>**positive change.** |  |
| **We deliver for** <br>**our customers by** <br>**focusing on their needs,** <br>**continually innovating** <br>**the products and services** <br>**we offer, developing and** <br>**investing in new solutions,** <br>**and using our expertise** <br>**and influence to create** <br>**positive change.** |  |
| **We deliver for** <br>**our customers by** <br>**focusing on their needs,** <br>**continually innovating** <br>**the products and services** <br>**we offer, developing and** <br>**investing in new solutions,** <br>**and using our expertise** <br>**and influence to create** <br>**positive change.** | **Innovation, development** <br>**and influence**<br>|
| **We deliver for** <br>**our customers by** <br>**focusing on their needs,** <br>**continually innovating** <br>**the products and services** <br>**we offer, developing and** <br>**investing in new solutions,** <br>**and using our expertise** <br>**and influence to create** <br>**positive change.** | Driving innovation through effective <br>use of customer feedback, data and <br>technology ensures we remain relevant <br>to the customer whilst enhancing industry <br>standards. Our commitment to digital <br>transformation is critical for future growth <br>and sustainability.<br>|
| **We deliver for** <br>**our customers by** <br>**focusing on their needs,** <br>**continually innovating** <br>**the products and services** <br>**we offer, developing and** <br>**investing in new solutions,** <br>**and using our expertise** <br>**and influence to create** <br>**positive change.** |  |
| **We deliver for** <br>**our customers by** <br>**focusing on their needs,** <br>**continually innovating** <br>**the products and services** <br>**we offer, developing and** <br>**investing in new solutions,** <br>**and using our expertise** <br>**and influence to create** <br>**positive change.** | **Products, services** <br>**and solutions**<br>|
| **We deliver for** <br>**our customers by** <br>**focusing on their needs,** <br>**continually innovating** <br>**the products and services** <br>**we offer, developing and** <br>**investing in new solutions,** <br>**and using our expertise** <br>**and influence to create** <br>**positive change.** | Offering a comprehensive range of financial <br>products and services, increasingly through <br>digital channels. We tailor these offerings <br>to meet individual and business needs, <br>ensuring customers can access the right <br>financial solutions.<br>|
| **How we serve our customers**  | **Successful business** <br>**performance** |
|  | **Successful business** <br>**performance** |
|  | Delivering sustainable profit and growth <br>based on financial strength ensures we can <br>invest for the future, both in the business <br>and customer propositions, whilst returning <br>capital to our owners.<br>|
|  | **Funding, investment** <br>**and expertise**<br>|
|  | Ongoing investment in the business <br>ensures we can meet the evolving needs <br>of our customers in a commercial way. <br>Our significant funding helps people <br>and businesses invest and grow whilst <br>our expertise and tailored solutions <br>help clients navigate financial challenges, <br>fostering success and sustainable returns.<br>|

---

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| **Sustainable and inclusive growth** | **Sustainable and inclusive growth** | **Sustainable and inclusive growth** |
| **Customers** <br>We provide financial services <br>to over half of the UK adult <br>population and more than <br>one million businesses. <br>By meeting our customers' <br>needs we're unlocking <br>sustainable growth.<br>| **Colleagues**<br>We are committed to building <br>an inclusive and sustainable <br>organisation that is truly <br>representative of our customers. <br>We recognise that colleagues <br>who can be their authentic selves <br>at work are central to our success.<br>| **Communities**<br>Our success is intrinsically linked <br>with the success of all regions <br>across the whole of the UK. <br>When local people, local businesses <br>and their communities prosper, <br>so do we.<br>|
| **c.£14bn**<br>**of sustainable finance provided** <br>**for Commercial Banking** <br>**customers in 2025**<br>**£7.5bn**<br>**of new tax-free savings supported** <br>**through ISA propositions in 2025**<br>| **19.0%**<br>**of our senior roles were** <br>**held by colleagues with** <br>**disabilities in 2025**<br>**17.5%**<br>**of our executive roles held by** <br>**Black, Asian or Minority Ethnic** <br>**colleagues in 2025**<br>| **£3.2bn**<br>**of new finance supported** <br>**in the social housing sector** <br>**in 2025**<br>**>£1.8m**<br>**raised by our colleagues and** <br>**customers to support Crisis** <br>**and Simon Community in 2025**<br>|
| **Sustainable profit and returns** | **Sustainable profit and returns** | **Sustainable profit and returns** |
|  | **Shareholders**<br>Our strategic progress, coupled <br>with our financial results and <br>continued investment, reinforces <br>our confidence in achieving our <br>2026 guidance. <br>The Group's sustained strength in <br>financial performance has delivered <br>strong capital generation, enabling <br>an increased dividend and a share <br>buyback of up to £1.75 billion. <br>| **3.65p**<br>**total proposed ordinary dividend** <br>**per share for 2025, up 15%**<br>**£3.9bn**<br>**returned to shareholders** <br>**for 2025**<br>|

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our external environment

![ExternalContextPanel.gif](lyg-20251231_g40.gif)

![ExternalContextTintBox.gif](lyg-20251231_g41.gif)

**External** 

**context,** 

**opportunities** 

**and risks**

**We've adapted our business and** 

**strategy in response to the fast** 

**pace of change in our external** 

**environment and to address** 

**ever-evolving stakeholder** 

**needs. This helps ensure** 

**the Group can capitalise** 

**on opportunities and manage** 

**risks as they emerge, and is** 

**resilient over the longer term.**

---

| | |
|:---|:---|
| **Economy** | **Economy** |
| **Overview**<br>The UK economy proved resilient to global challenges in 2025. <br>Although elevated inflation and pay growth resulted in slower <br>interest rate cuts than in the US and Eurozone, real-wages <br>grew and households' spending growth rose. Lower inflation in <br>2026 is expected to allow further interest rate cuts to support <br>the economy while the government continues to address its <br>deficit. Low private sector indebtedness and high household <br>savings provide resilience and capacity for improving growth. | **Overview**<br>The UK economy proved resilient to global challenges in 2025. <br>Although elevated inflation and pay growth resulted in slower <br>interest rate cuts than in the US and Eurozone, real-wages <br>grew and households' spending growth rose. Lower inflation in <br>2026 is expected to allow further interest rate cuts to support <br>the economy while the government continues to address its <br>deficit. Low private sector indebtedness and high household <br>savings provide resilience and capacity for improving growth. |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif) |
| **Link to strategy** | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif) |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif) |

---

**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

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

![ExternalContextTintBox.gif](lyg-20251231_g41.gif)

**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

---

| | |
|:---|:---|
| **Customers** | **Customers** |
| **Overview**<br>Most customers continue to prefer digital engagement <br>channels which offer convenient and personalised financial <br>solutions with frictionless journeys, to proactively manage their <br>finances. AI is accelerating this shift by enabling customers <br>to rapidly evaluate the market and seek advice on the best <br>products to meet their needs. Alongside, financial health across <br>most households and businesses is strengthening, supported <br>by improving confidence and falling rates. | **Overview**<br>Most customers continue to prefer digital engagement <br>channels which offer convenient and personalised financial <br>solutions with frictionless journeys, to proactively manage their <br>finances. AI is accelerating this shift by enabling customers <br>to rapidly evaluate the market and seek advice on the best <br>products to meet their needs. Alongside, financial health across <br>most households and businesses is strengthening, supported <br>by improving confidence and falling rates. |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
| **Link to strategy** | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |

---

**Market context**

• Reducing rates have increased consumer confidence and

improved the outlook for mortgage holders, as the majority

of the market is currently financed on higher rates

• With one in three customers now using AI weekly to manage

their finances (UK Consumer Digital Index 2025, based on survey

of 5,000 customers, results may not be representative of all

customers), expectations for seamless and personalised digital

journeys continue to grow

• Customers are seeking to access financial solutions at their point

of need, supported by growth in embedded finance

• Corporates and SMEs are confident about future prospects

for their businesses, despite wider economic uncertainty

**Our response**

• Redesigned app with improved onboarding and servicing

journeys, empowering customers to achieve financial goals

• Integration of AI into servicing journeys, such as underwriting

for SME CRE lending, driving better and faster decisioning

• Branch co-servicing enabling Halifax, Bank of Scotland or Lloyds

customers to use any of our branches to manage their accounts

• Enhancements across our product suite, including launch of

Lloyds Premier, meeting more needs for Mass Affluent customers

• Improved mobile PCA onboarding journey. Launch of mobile

Business Banking loans journey

**2026 outlook**

• Launch of AI financial assistant bringing personalised,

round-the-clock financial guidance to mobile app customers

• Integration of digital wallet capabilities following our proposed

acquisition of the fintech Curve to provide greater payment

flexibility and access to advanced digital wallet features

• Scale digital journeys across Business Banking with extended digital

onboarding and origination and greater personalisation capacity

---

| | | | | |
|:---|:---|:---|:---|:---|
| **UK economic growth**% GDP growth | **UK economic growth**% GDP growth |  | **1.4%** | **1.4%** |
|  |  |  | **1.1** | **1.4** |
| **8.5** | **5.1** | **0.3** | **1.1** | **1.4** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Digitally active users**<br>m | **Digitally active users**<br>m |  | **23.6m** | **23.6m** |
| **18.3** | **19.8** | **21.5** | **22.7** | **23.6** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

![39](lyg-20251231_g42.gif)

![14](lyg-20251231_g43.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our external environment continued

![ExternalContextTintBox.gif](lyg-20251231_g41.gif)

---

| | |
|:---|:---|
| **Competitors** | **Competitors** |
| **Overview**<br>Competition remains intense with high street banks and <br>building societies maintaining their focus on share growth, <br>and building scale by consolidating smaller players. Alongside, <br>neobanks and fintechs continue to gain momentum by <br>leveraging their strong digital experiences and broadening their <br>customer offering across Retail and Commercial segments.  | **Overview**<br>Competition remains intense with high street banks and <br>building societies maintaining their focus on share growth, <br>and building scale by consolidating smaller players. Alongside, <br>neobanks and fintechs continue to gain momentum by <br>leveraging their strong digital experiences and broadening their <br>customer offering across Retail and Commercial segments.  |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
| **Link to strategy** | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |

---

![ExternalContextTintBox.gif](lyg-20251231_g41.gif)

**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

---

| | |
|:---|:---|
| **Technology** <br>**and data** | **Technology** <br>**and data** |
| **Overview**<br>Rapidly evolving technology landscape, accelerated <br>by developments in artificial intelligence and digital <br>transformation. These shifts are enabling new engagement <br>models, innovative propositions and greater cost efficiency. <br>Gen AI is enhancing customer interactions through more <br>personalised engagement, with digital asset innovation <br>creating opportunities for greater customer control <br>and faster, more efficient transactions.  | **Overview**<br>Rapidly evolving technology landscape, accelerated <br>by developments in artificial intelligence and digital <br>transformation. These shifts are enabling new engagement <br>models, innovative propositions and greater cost efficiency. <br>Gen AI is enhancing customer interactions through more <br>personalised engagement, with digital asset innovation <br>creating opportunities for greater customer control <br>and faster, more efficient transactions.  |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
| **Link to strategy** | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |

---

**Market context** 

• Digital banking with AI-powered functionality continues to lower

cost to serve, whilst increasing innovation and speed to market,

driving accelerated customer adoption and greater competition

• Incumbents are moving to modern and efficient platforms, which

unlock richer personalisation and proposition development

capabilities, enabling accelerated revenue growth through more

targeted and differentiated offerings

• Sophistication of cyber threats requires banks to continually

enhance security measures to protect customers

**Our response**

• Launched the UK's first in-app financial assistant

• Agile Platform operating model, increasing efficiency and speed

of change by combining our business and technology teams

• Increasing our technology hires, including the launch of Lloyds

Technology centre to bring talent in-house

• Continued enhancement of legacy infrastructure with more than

20% reduction in technology applications and c.50% reduction in

data centres since 2021

• Extending our capabilities in new and emerging technologies

through investment in Gen AI and digital assets, with 50 live Gen

AI use cases in 2025 generating c.£50 million incremental value

• UK first digital assets use-case with Aberdeen Investments

and Archax, using tokenised units as collateral for FX trades

**2026 outlook**

• Actively scaling Gen AI deployment, targeting over £100 million

in incremental P&L benefit in 2026 as we build seamless digital

journeys and personalised customer interactions

• Building capability to be at the forefront of agentic AI,

bridging the advice gap through in-app agents

• Position as the UK leader in digital assets, developing GB

Tokenised Deposits pilot use cases to build value add in

customer journeys

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Mortgage market share**<br>total gross lending – flow | **Mortgage market share**<br>total gross lending – flow | **Mortgage market share**<br>total gross lending – flow | **18.9%** | **18.9%** |
| **18.5** | **17.2** | **16.9** | **19.9** | **18.9** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **IT applications on cloud**% | **IT applications on cloud**% | **IT applications on cloud**% | **>50%** | **>50%** |
| **1** | **2** | **7** | **c.50** | **>50** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

![64](lyg-20251231_g44.gif)

![89](lyg-20251231_g45.gif)

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

![ExternalContextTintBox.gif](lyg-20251231_g41.gif)

![ExternalContextTintBox.gif](lyg-20251231_g41.gif)

---

| | |
|:---|:---|
| **Society and** <br>**environment** | **Society and** <br>**environment** |
| **Overview**<br>Evolving environmental and societal issues, along with new <br>regulations, require companies to clearly understand the <br>related risks and opportunities. This includes recognising <br>the role the Group can play through its products and <br>services in helping customers and their communities <br>respond to these developments. | **Overview**<br>Evolving environmental and societal issues, along with new <br>regulations, require companies to clearly understand the <br>related risks and opportunities. This includes recognising <br>the role the Group can play through its products and <br>services in helping customers and their communities <br>respond to these developments. |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
| **Link to strategy** | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |

---

**Market context**

• Organisations must have a clear understanding of environmental

and sustainability issues and integrate them in their strategies

and decision making, understanding their impacts,

dependencies, risks and opportunities

• Organisations need to respond to the evolving regulatory

and geopolitical landscape including evolving stakeholder

expectations, uncertainty and the acceleration of sustainability-

related financial risks and opportunities

**Our response**

• Since 2022, the Bank has financed £70.9 billion of sustainable

lending, with £21.9 billion of sustainable finance supported

in 2025

• Scottish Widows have achieved discretionary investments

of £81.3 billion in climate-aware strategies, with the

increase primarily driven by the launch of Scottish Widows

Lifetime Investment

• Issuance of the first sterling corporate blue bond by a UK

corporate for Thames Tideway

• Delivered £340 million of lending against our £500 million

financing commitment with the National Wealth Fund

• Empowered over 7,000 customers through our Ready-Made

Pensions since launch

• Over £800 million donated to our four charitable

Foundations across the UK since 1985

**2026 outlook**

• Integration of sustainability approach into the next stage of

our Group strategy, identifying risks and opportunities

• Continue to evolve our sustainable finance framework and

related financing activities and propositions, remaining aligned to

our sustainability pillars, whilst shaping finance as a force for good

• Enhance our disclosures through the use of data, to support

meeting evolving regulatory expectations

---

| | |
|:---|:---|
| **Regulation** | **Regulation** |
| **Overview**<br>The regulatory landscape continues to evolve rapidly <br>to support growth of the UK economy and innovation. <br>The Government's Leeds Reforms, announced in July 2025, <br>contained a number of proposals seeking to position the UK <br>as the number one destination for financial services companies <br>by 2035. The proposals announced by the Government and <br>regulators span a range of areas directly relevant to the Group.  | **Overview**<br>The regulatory landscape continues to evolve rapidly <br>to support growth of the UK economy and innovation. <br>The Government's Leeds Reforms, announced in July 2025, <br>contained a number of proposals seeking to position the UK <br>as the number one destination for financial services companies <br>by 2035. The proposals announced by the Government and <br>regulators span a range of areas directly relevant to the Group.  |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
| **Link to strategy** | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |
|  | ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif) |

---

**Market context**

• The Economic Secretary is reviewing the ring-fencing regime

to support growth and stability, while the Financial Policy

Committee has reviewed bank capital requirements

• The FCA will introduce a new regulated activity, 'targeted support'

in spring 2026. It will complement existing advice by letting firms

offer tailored suggestions to customer groups, aiming to broaden

access and help consumers manage their finances

• The Government, FCA and Financial Ombudsman Service consulted

on reforms to modernise the UK's redress system. In 2025, the FOS

introduced a case fee for professional representatives and announced

plans to change the interest rate on compensation awards

• The Government is reforming the Consumer Credit Act to create

a simpler, more agile regime that allows firms to deliver innovative

new products and services, and good consumer outcomes

• The Government has published the Strategy for Future Retail

Payments Infrastructure, and is progressing plans to abolish

the Payment Systems Regulator and consolidate its functions

primarily within the FCA

• The UK is rapidly developing a regulatory regime for digital assets;

crypto, stablecoins and tokenised assets, set for implementation

by late 2026

• The FCA launched a consultation process on a scheme

for motor finance compensation

**Our response**

• We will continue to engage constructively with the authorities on

the wide range of regulatory reforms currently being progressed

to ensure that tangible changes are delivered which will promote

better outcomes for consumers and the wider economy

• We're monitoring developments and contributing to consultations

to support innovation while ensuring market integrity and stability

• We responded to the FCA's consultation on a proposed motor

finance compensation scheme emphasising that a strong and

stable motor finance market is critical to ensuring that customers

have access to competitive finance to support their needs

**Sustainable lending (active targets)** <br>**and climate-aware investments**<br>

**Timeline of key regulatory changes**<br>

---

| | | | |
|:---|:---|:---|:---|
| ●  | Progress | **\|** | Target |

---

---

| | |
|:---|:---|
| **Early** <br>**2026**<br>| HM Treasury's ring-fencing review, conducted with the Bank of <br>England and reporting into the Economic Secretary to the Treasury<br>|
| **Spring** <br>**2026**<br>| Expected FCA Enhanced Accountability Rules |
| **Q2**<br>**2026**<br>| Ongoing consultation on ring-fencing rules |
| **Q1**<br>**2027**<br>| Basel 3.1 implementation |

---

![StratRep_ExtEnv_Timelinev2.gif](lyg-20251231_g46.gif)

**Commercial Banking** <br>

**Mortgages**<br>

![126](lyg-20251231_g47.gif)

![216](lyg-20251231_g48.gif)

![StratRep_ExtEnv_SustainableLending_TargetRule.gif](lyg-20251231_g49.gif)

![StratRep_ExtEnv_SustainableLending_TargetRule.gif](lyg-20251231_g49.gif)

---

| | |
|:---|:---|
| **2024/**<br>**2025**<br>| **£24.5bn** |

---

---

| | |
|:---|:---|
| **2025** | **£5.3bn** |

---

£30bn by 2026<br>

£11bn by 2027<br>

**Motor** <br>

**Scottish Widows** <br>

![267](lyg-20251231_g50.gif)

![StratRep_ExtEnv_SustainableLending_TargetRule.gif](lyg-20251231_g49.gif)

---

| | |
|:---|:---|
| **2025** | **£2.8bn** |

---

**£81.3bn** invested in <br>climate-aware strategies<br>

£10bn by 2027<br>

For further details on our sustainable finance progress see **page [45](#i0a4bd6cf33044bffa034e70143d9e15e_1-1-2-1-5233089)**.<br>

![Our StrategylPage1.gif](lyg-20251231_g51.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our strategy

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Our purpose-driven strategy is focused on <br>supporting the needs of our customers, colleagues and <br>communities, whilst delivering long-term, sustainable <br>returns and thereby creating value for our shareholders. | Our purpose-driven strategy is focused on <br>supporting the needs of our customers, colleagues and <br>communities, whilst delivering long-term, sustainable <br>returns and thereby creating value for our shareholders. | Our purpose-driven strategy is focused on <br>supporting the needs of our customers, colleagues and <br>communities, whilst delivering long-term, sustainable <br>returns and thereby creating value for our shareholders. | Our purpose-driven strategy is focused on <br>supporting the needs of our customers, colleagues and <br>communities, whilst delivering long-term, sustainable <br>returns and thereby creating value for our shareholders. | Our purpose-driven strategy is focused on <br>supporting the needs of our customers, colleagues and <br>communities, whilst delivering long-term, sustainable <br>returns and thereby creating value for our shareholders. | Our purpose-driven strategy is focused on <br>supporting the needs of our customers, colleagues and <br>communities, whilst delivering long-term, sustainable <br>returns and thereby creating value for our shareholders. |
| Our strategic priorities | Our strategic priorities | Our strategic priorities | Our strategic priorities | Our strategic priorities | Our strategic priorities |
| ![GrowIcon.gif](lyg-20251231_g4.gif) | **Grow**<br>Growth is a core focus of our <br>strategy. Around two-thirds <br>of our c.£3 billion strategic <br>investment over 2022 to <br>2025 was aligned to growing <br>and diversifying revenue. <br>There are four primary pillars <br>for growth.<br>Read more on **page [16](#i3eaa7a3e529a46b3b97a88e05ad474bc_46)**<br>| ![FocusIcon.gif](lyg-20251231_g5.gif) | **Focus**<br>We are investing to grow <br>and diversify our revenue, <br>alongside maintaining <br>our disciplined approach <br>to efficient cost and capital <br>management.<br>Read more on **page [17](#i3eaa7a3e529a46b3b97a88e05ad474bc_49)**<br>| ![ChangeIcon.gif](lyg-20251231_g6.gif) | **Change**<br>Delivering our strategy <br>requires the Group to <br>accelerate the intensity <br>with which we use digital <br>technologies and data to <br>support customers. Our <br>colleagues' expertise and <br>skills are instrumental <br>to our success.<br>Read more on **page [17](#i3eaa7a3e529a46b3b97a88e05ad474bc_49)**<br>|

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Our purpose pillars | Our purpose pillars | Our purpose pillars | Our purpose pillars | Our purpose pillars |
| **Our strategy is driven by our purpose, with each of the five pillars** <br>**below woven into our core strategic priorities and helping deliver shareholder value.** | **Our strategy is driven by our purpose, with each of the five pillars** <br>**below woven into our core strategic priorities and helping deliver shareholder value.** | **Our strategy is driven by our purpose, with each of the five pillars** <br>**below woven into our core strategic priorities and helping deliver shareholder value.** | **Our strategy is driven by our purpose, with each of the five pillars** <br>**below woven into our core strategic priorities and helping deliver shareholder value.** | **Our strategy is driven by our purpose, with each of the five pillars** <br>**below woven into our core strategic priorities and helping deliver shareholder value.** |
| ![Button_QualityHousing.gif](lyg-20251231_g52.gif) | ![Button_FinancialEmpowerment.gif](lyg-20251231_g53.gif) | ![Button_RegionalDevelopment.gif](lyg-20251231_g54.gif) | ![Button_Diversity.gif](lyg-20251231_g55.gif) | ![Button_TransitionNetZero.gif](lyg-20251231_g56.gif) |
| **Access to quality** <br>**and affordable** <br>**housing** <br>To help all UK <br>households regardless <br>of income or tenure<br>| **Empowering a** <br>**prosperous future**<br>For our customers <br>and businesses <br>| **Supporting regional** <br>**development and** <br>**communities**<br>As our success is <br>intrinsically linked <br>with their success <br>| **Building an** <br>**inclusive** <br>**organisation**<br>To better support <br>our customers <br>and communities<br>| **Supporting the** <br>**UK transition**<br>By providing <br>financial solutions <br>and building resilience |

---

Read more on **page [36](#i3eaa7a3e529a46b3b97a88e05ad474bc_100)**

---

| | | | |
|:---|:---|:---|:---|
| Increased confidence in delivering our<br> 2026 strategic commitments | Increased confidence in delivering our<br> 2026 strategic commitments | Increased confidence in delivering our<br> 2026 strategic commitments | Increased confidence in delivering our<br> 2026 strategic commitments |
| **c.£2bn** <br>**additional revenues** <br>**from strategic** <br>**initiatives**<br>| **<50%** <br>**cost:income ratio**<br>| **>16%** <br>**RoTE**<br>| **>200bps** <br>**capital generation**<br>|

---

![Strat_StrategyInActionHighlights.gif](lyg-20251231_g57.gif)

![SectionTabStratRepR.gif](lyg-20251231_g32.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | |
|:---|:---|
| Supporting <br>first time buyers<br>As the UK's largest mortgage lender we support <br>first time buyers to get on the housing ladder, <br>providing £17 billion of funding in 2025 to them.<br>Our 'First Time Buyer Boost' proposition <br>launched in August 2024, is helping more <br>customers by enhancing the amount they can <br>safely borrow by up to 22%. In 2025 we have <br>made available £5 billion of lending through this <br>proposition, helping 14,000 first time buyers <br>borrow more than 4.5 times their income. <br>In addition, our 'Your Credit Score' tool helped <br>over 500,000 customers improve their credit <br>score every quarter during 2025. We are <br>equipping our customers with the tools to <br>improve their financial wellbeing while gaining <br>insights to generate sustainable growth.<br>| **£17bn**<br>of funding to first time buyers<br>|

---

---

| |
|:---|
| ![StratRep_SupportingFirstTimeBuyers_QRCode.gif](lyg-20251231_g58.gif) |
| Read more on how <br>we're supporting the <br>UK housing market ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>|

---

Financing the transition <br>in the North West<br>In 2025 we acted as Mandated Lead Arranger in the provision of a <br>£154 million debt commitment as part of a wider £2.5 billion financing <br>package to support the HyNet CO₂ Transport and Storage Project in <br>the North West of England and North Wales.<br>Eni's Liverpool Bay Carbon Capture and Storage project is the <br>backbone of HyNet which will be critical in reducing emissions from <br>essential but hard-to-abate sectors such as energy-from-waste, <br>cement manufacturing, and low-carbon hydrogen production. Once <br>operational, HyNet will play a significant role in the UK government's <br>net zero strategy.<br>The project also expects to create over 2,000 jobs during its initial <br>construction phase and thousands more through wider investment <br>across the North West, demonstrating how finance can drive <br>commercial growth and supporting regional development, <br>aligned to our purpose of Helping Britain Prosper.<br>

Deepening our commitment <br>to social housing<br>We've supported over £22 billion of financing for social housing <br>since 2018 – including £3.2 billion this year alone. <br>In 2025, the Group announced a £100 million loan agreement <br>to fund the sustainable retrofit of thousands of social homes <br>across the South, West and East of England, with Sovereign <br>Network Group (SNG), one of the UK's leading housing <br>associations. This lending formed part of our £500 million <br>commitment to finance the retrofit of social housing in the UK. <br>Social housing continues to be a source of lending growth <br>for the Group. <br>**£100m**<br>loan agreement to fund sustainable <br>retrofit of social homes with SNG <br>

![Strat_StrategyInActionHighlights_WhitePanel.gif](lyg-20251231_g59.gif)

![Strat_StrategyInActionHighlights_Graphic.gif](lyg-20251231_g60.gif)

Helping more people <br>plan for the future<br>The UK has the largest pension market in Europe, <br>worth over £2 trillion, however our latest Scottish <br>Widows retirement report shows that 39% of <br>people will fail to meet basic living standards in <br>retirement, notably those who are self-employed <br>and younger workers.<br>In 2024 we launched our Ready-Made Pension <br>offering to help customers manage their pension <br>savings and plan for retirement, with this offering <br>now available to those who are not an existing <br>customer through our Scottish Widows website. <br>At the end of 2025 we now have over 7,000 <br>accounts opened, with 27% of our customers aged <br>35 and under and approximately 41% self-employed. <br>We are committed to designing products that <br>directly address our customers' needs and bridge <br>gaps in the market, ensuring we play a vital role <br>in supporting the prosperity and resilience of <br>communities across the UK while growing our <br>assets under management. <br>

---

| |
|:---|
| ![StratRep_EnergyTransition_QRCode.gif](lyg-20251231_g61.gif) |
| Read more on how we're supporting <br>the UK transition to net zero ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>|

---

---

| |
|:---|
| ![StratRep_PlanningForFuture_QRCode.gif](lyg-20251231_g62.gif) |
| Read more in our Women <br>and Retirement Report ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>|

---

![Our StrategylPage3.gif](lyg-20251231_g63.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our strategy continued

---

| | | | |
|:---|:---|:---|:---|
|  | **2025 progress** | **2026 priorities** | **2026 outcomes** |
| Deepen and <br>innovate in <br>Consumer<br>| •Completed a full redesign of the <br>app experience across Lloyds, <br>Bank of Scotland and Halifax <br>with improved onboarding <br>and servicing<br>•Expanded lending through <br>our new Ultra and Advance <br>credit cards and tailored <br>mortgage propositions for <br>limited companies<br>•Announced third-party <br>Motor and Health insurance <br>partnerships with Axa <br>and Vitality | •Continue to build personalised, <br>seamless experiences across <br>all channels, driving customer <br>value and simplifying <br>interactions<br>•Broaden and innovate across <br>our product range to meet <br>evolving customer needs and <br>the competitive challenge <br>•Accelerate our mobile-first <br>approach while reimagining <br>physical spaces to enhance <br>efficiency and deepen <br>engagement  | **3%**<br>**further increase in-depth of** <br>**relationship (versus 2024)**<br>**c.50%**<br>**increase in active customers** <br>**served per distribution FTE** <br>**(versus 2021)**  |
|  | •Completed a full redesign of the <br>app experience across Lloyds, <br>Bank of Scotland and Halifax <br>with improved onboarding <br>and servicing<br>•Expanded lending through <br>our new Ultra and Advance <br>credit cards and tailored <br>mortgage propositions for <br>limited companies<br>•Announced third-party <br>Motor and Health insurance <br>partnerships with Axa <br>and Vitality | •Continue to build personalised, <br>seamless experiences across <br>all channels, driving customer <br>value and simplifying <br>interactions<br>•Broaden and innovate across <br>our product range to meet <br>evolving customer needs and <br>the competitive challenge <br>•Accelerate our mobile-first <br>approach while reimagining <br>physical spaces to enhance <br>efficiency and deepen <br>engagement  | **3%**<br>**further increase in-depth of** <br>**relationship (versus 2024)**<br>**c.50%**<br>**increase in active customers** <br>**served per distribution FTE** <br>**(versus 2021)**  |

---

---

| | | | |
|:---|:---|:---|:---|
| Create a new <br>Mass Affluent <br>offering<br>| •Strengthened and grew <br>relationships with Mass Affluent <br>customers through Lloyds <br>Premier, supporting customers <br>who have a c.2 times greater <br>depth of relationship with <br>exclusive benefits, offers and <br>optimised digital experiences<br>•Strong uptake across our <br>Direct-to-Consumer investment <br>products with 84,000 accounts <br>opened to-date | •Continue to enhance our <br>Mass Affluent proposition, with <br>improved digital experiences, <br>supporting customers to achieve <br>their financial goals <br>•Integration of Schroders <br>Personal Wealth, offering full <br>advice propositions to Mass <br>Affluent customers across <br>Lloyds, Halifax, Bank of <br>Scotland and Scottish Widows | **>10%**<br>**increase in Mass Affluent** <br>**total relationship balances,** <br>**including assets under** <br>**administration** |
|  | •Strengthened and grew <br>relationships with Mass Affluent <br>customers through Lloyds <br>Premier, supporting customers <br>who have a c.2 times greater <br>depth of relationship with <br>exclusive benefits, offers and <br>optimised digital experiences<br>•Strong uptake across our <br>Direct-to-Consumer investment <br>products with 84,000 accounts <br>opened to-date | •Continue to enhance our <br>Mass Affluent proposition, with <br>improved digital experiences, <br>supporting customers to achieve <br>their financial goals <br>•Integration of Schroders <br>Personal Wealth, offering full <br>advice propositions to Mass <br>Affluent customers across <br>Lloyds, Halifax, Bank of <br>Scotland and Scottish Widows | **>10%**<br>**increase in Mass Affluent** <br>**total relationship balances,** <br>**including assets under** <br>**administration** |

---

---

| | | | |
|:---|:---|:---|:---|
| Digitise and <br>diversify our <br>BCB business<br>| •Strong progress towards <br>becoming a digital-first <br>relationship bank, with over <br>50% of products originated and <br>fulfilled digitally, and over 50% <br>of key servicing interactions <br>digitised, achieving our 2026 <br>target a year early<br>•Diversified our business, shifting <br>sector mix and enhancing <br>propositions across Merchant <br>Services, Cards, Trade and FX <br>to meet more client needs | •Deliver more personalised <br>and engaging digital solutions <br>through automating lending <br>decisions, expanding our <br>multi-currency capabilities, <br>and introducing tailored nudges <br>to support client goals<br>•Provide greater client flexibility <br>with enhanced data ingestion <br>capabilities and connecting the <br>Group to over 70 accounting <br>software packages | **Maintain**<br>**small business deposit** <br>**market share**<br>**>50%**<br>**of key servicing** <br>**interactions digitised** |
|  | •Strong progress towards <br>becoming a digital-first <br>relationship bank, with over <br>50% of products originated and <br>fulfilled digitally, and over 50% <br>of key servicing interactions <br>digitised, achieving our 2026 <br>target a year early<br>•Diversified our business, shifting <br>sector mix and enhancing <br>propositions across Merchant <br>Services, Cards, Trade and FX <br>to meet more client needs | •Deliver more personalised <br>and engaging digital solutions <br>through automating lending <br>decisions, expanding our <br>multi-currency capabilities, <br>and introducing tailored nudges <br>to support client goals<br>•Provide greater client flexibility <br>with enhanced data ingestion <br>capabilities and connecting the <br>Group to over 70 accounting <br>software packages | **Maintain**<br>**small business deposit** <br>**market share**<br>**>50%**<br>**of key servicing** <br>**interactions digitised** |

---

---

| | | | |
|:---|:---|:---|:---|
| Develop our <br>Corporate and <br>Institutional <br>business (CIB) | •Awarded a landmark cash <br>management and payments <br>contract with the government <br>to serve over 30 central <br>departments and public <br>sector bodies<br>•Delivered c.21% year-on-year <br>growth in foreign exchange <br>volumes <br>•Launched a market-leading <br>foreign exchange algorithmic <br>proposition | •Position ourselves as a broader <br>CIB partner, providing an <br>integrated Cash-Debt-Risk <br>offering to meet all client needs<br>•Disciplined expansion across <br>key client markets in the US <br>and Europe<br>•Connect CIB clients to wider <br>Group propositions to unlock <br>greater value  | **c.45%**<br>**increase in CIB other** <br>**operating income** <br>**(versus 2021)** <br>**>5.25%**<br>**income / average** <br>**risk-weighted assets**  |
| Develop our <br>Corporate and <br>Institutional <br>business (CIB) | •Awarded a landmark cash <br>management and payments <br>contract with the government <br>to serve over 30 central <br>departments and public <br>sector bodies<br>•Delivered c.21% year-on-year <br>growth in foreign exchange <br>volumes <br>•Launched a market-leading <br>foreign exchange algorithmic <br>proposition | •Position ourselves as a broader <br>CIB partner, providing an <br>integrated Cash-Debt-Risk <br>offering to meet all client needs<br>•Disciplined expansion across <br>key client markets in the US <br>and Europe<br>•Connect CIB clients to wider <br>Group propositions to unlock <br>greater value  | **c.45%**<br>**increase in CIB other** <br>**operating income** <br>**(versus 2021)** <br>**>5.25%**<br>**income / average** <br>**risk-weighted assets**  |

---

![Our StrategylPage4.gif](lyg-20251231_g64.gif)

![SectionTabStratRepR.gif](lyg-20251231_g32.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | |
|:---|:---|:---|:---|
|  | **2025 progress** | **2026 priorities** | **2026 outcomes** |
| Strengthen<br>cost and <br>capital <br>efficiency <br>| •Disciplined cost management <br>with a further c.£700 million <br>gross cost savings delivered in <br>2025, contributing towards <br>a total gross cost saving of <br>£1.9 billion since 2021<br>•Investment in digital journeys <br>continued to lower our cost <br>to serve with a c.45% increase <br>in customers served per <br>distribution FTE compared <br>to 2021<br>•Strong balance sheet <br>management with risk-weighted <br>assets optimisation of £24 billion <br>since 2021, including over <br>£5 billion in 2025<br>•Maintained strong capital <br>generation of 147 basis points <br>in 2025 | •Continued commitment to <br>enhance productivity and <br>cost saves through strategic <br>investment in simplification <br>and digitisation, driving an <br>improved cost:income ratio <br>of less than 50% in 2026<br>•Ongoing focus on growth <br>of capital-lite revenue and <br>other operating income from <br>strategic initiatives <br>•Maintain focus on risk-weighted <br>asset optimisation supported <br>by value-add securitisation <br>opportunities | **<50%**<br>**cost:income ratio**<br>**>200bps**<br>**capital generation** |
|  | •Disciplined cost management <br>with a further c.£700 million <br>gross cost savings delivered in <br>2025, contributing towards <br>a total gross cost saving of <br>£1.9 billion since 2021<br>•Investment in digital journeys <br>continued to lower our cost <br>to serve with a c.45% increase <br>in customers served per <br>distribution FTE compared <br>to 2021<br>•Strong balance sheet <br>management with risk-weighted <br>assets optimisation of £24 billion <br>since 2021, including over <br>£5 billion in 2025<br>•Maintained strong capital <br>generation of 147 basis points <br>in 2025 | •Continued commitment to <br>enhance productivity and <br>cost saves through strategic <br>investment in simplification <br>and digitisation, driving an <br>improved cost:income ratio <br>of less than 50% in 2026<br>•Ongoing focus on growth <br>of capital-lite revenue and <br>other operating income from <br>strategic initiatives <br>•Maintain focus on risk-weighted <br>asset optimisation supported <br>by value-add securitisation <br>opportunities | **<50%**<br>**cost:income ratio**<br>**>200bps**<br>**capital generation** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **2025 progress** | **2026 priorities** | **2026 outcomes** |
| Maximise <br>the potential <br>of people, <br>technology <br>and data<br>| **People**<br>•c.9,000 technology and data <br>hires since 2021, supporting our <br>growth and change delivery<br>•Deployed Gen AI colleague tools <br>at scale with over 30,000 <br>Copilot licences distributed <br>•Modernised our property estate, <br>supporting improved ways <br>of working | •Support strategic delivery by <br>increasing the number of new <br>hires in key skill areas<br>•Continue to scale enterprise <br>Gen AI support tools to enhance <br>productivity of our colleagues <br>•Ongoing commitments to <br>building a more inclusive <br>organisation<br>| **Maintain**<br>**strong employee** <br>**engagement index** <br>**(versus 2024)** <br>|
|  | **Technology and data**<br>•Continued mobile app and <br>digital journey investment, <br>enabling more than 95% of <br>Retail sales via digital channels<br>•Greater change efficiency; <br>c.30% gross reduction in run and <br>change tech costs since 2021<br>•Developed Gen AI foundations | •Continue to accelerate legacy <br>app decommissioning and <br>cloud migration<br>•Actively scale Gen AI in use <br>cases to support customers <br>and colleagues, including the <br>deployment of the UK's first <br>large-scale, multi-feature <br>agentic AI powered <br>financial assistant<br>| **>30%**<br>**applications on** <br>**modern technology**<br>**35%**<br>**gross reduction in run and** <br>**change technology costs** <br>**(versus 2021)** <br>|

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our key performance indicators

---

| |
|:---|
| Strategic progress and sustained <br>strength in financial performance<br>|
| **Financial** |

---

**Our key performance indicators** 

**highlight our progress in relation to** 

**the Group's most important priorities.** 

These encompass a range of measures designed to assess both

financial and non-financial performance, ensuring a balanced

consideration of the interests of all stakeholders**.**

The majority of these key performance indicators also inform

remuneration across the Group to ensure that our colleagues

are rewarded for delivering for both customers and shareholders.

This alignment considers the Group's financial performance as well

as specific conduct and risk management controls.

This year we have refined our financial key performance indicators

to ensure they more clearly reflect progress against our strategic

priorities and our approach to creating long-term shareholder

value. The former ordinary dividend chart has been replaced

with a broader shareholder distributions measure, which captures

both ordinary dividends and share buybacks, providing a more

comprehensive view of total capital returned to shareholders.

In addition, we have introduced capital generation, recognising its

importance as a key outcome of our strategy and a fundamental

driver of our ability to maintain sustainable distributions.

During 2025, the Group continued to perform well, demonstrating

strategic progress and sustained strength in financial performance.

Strong capital generation was delivered by income growth, cost

discipline and strong credit performance in 2025, despite the

impact of the additional motor finance charge in the third quarter.

Our strategic progress combined with this financial performance

gives us confidence in our 2026 guidance.

---

| | | | |
|:---|:---|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) |  |  | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) | Key performance indicators that are directly linked <br>to our remuneration are marked with this symbol. <br>More information can be found within our directors' <br>remuneration report from **page [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358)**. | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
|  | ![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) | Key performance indicators that are directly linked <br>to our remuneration are marked with this symbol. <br>More information can be found within our directors' <br>remuneration report from **page [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358)**. |  |
|  | ![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) | Key performance indicators that are directly linked <br>to our remuneration are marked with this symbol. <br>More information can be found within our directors' <br>remuneration report from **page [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358)**. |  |
|  | ![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) | Key performance indicators that are directly linked <br>to our remuneration are marked with this symbol. <br>More information can be found within our directors' <br>remuneration report from **page [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358)**. |  |
|  | ![StratRev_KPI_Circle_A.gif](lyg-20251231_g68.gif) | We use a number of alternative performance measures in <br>the description of our business performance and financial <br>position. These measures are labelled with this symbol. <br>See **page [308](#i3eaa7a3e529a46b3b97a88e05ad474bc_913)**for our alternative performance measures.<br>|  |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) |  |  | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) |  |  | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

---

| | | |
|:---|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) |  | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | 1Expectation based on the Group's current macroeconomic assumptions.<br>2Reported on a pro forma basis, reflecting declared share buybacks and any <br>dividends received from the Insurance business in the subsequent quarter prior to <br>the publication of the financial results. Excludes phased unwind of IFRS 9 relief.<br>3Capital generation excludes capital distributions and variable pension <br>contributions but includes dividends received from the Insurance business in the <br>subsequent quarter prior to the publication of the financial results.<br>4Excludes a decrease of 230 basis points related to regulatory changes that came <br>into effect on 1 January 2022.<br>5Excludes a decrease of 21 basis points related to the acquisition of Tusker. | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
|  | 1Expectation based on the Group's current macroeconomic assumptions.<br>2Reported on a pro forma basis, reflecting declared share buybacks and any <br>dividends received from the Insurance business in the subsequent quarter prior to <br>the publication of the financial results. Excludes phased unwind of IFRS 9 relief.<br>3Capital generation excludes capital distributions and variable pension <br>contributions but includes dividends received from the Insurance business in the <br>subsequent quarter prior to the publication of the financial results.<br>4Excludes a decrease of 230 basis points related to regulatory changes that came <br>into effect on 1 January 2022.<br>5Excludes a decrease of 21 basis points related to the acquisition of Tusker. |  |
|  | 1Expectation based on the Group's current macroeconomic assumptions.<br>2Reported on a pro forma basis, reflecting declared share buybacks and any <br>dividends received from the Insurance business in the subsequent quarter prior to <br>the publication of the financial results. Excludes phased unwind of IFRS 9 relief.<br>3Capital generation excludes capital distributions and variable pension <br>contributions but includes dividends received from the Insurance business in the <br>subsequent quarter prior to the publication of the financial results.<br>4Excludes a decrease of 230 basis points related to regulatory changes that came <br>into effect on 1 January 2022.<br>5Excludes a decrease of 21 basis points related to the acquisition of Tusker. |  |
|  | 1Expectation based on the Group's current macroeconomic assumptions.<br>2Reported on a pro forma basis, reflecting declared share buybacks and any <br>dividends received from the Insurance business in the subsequent quarter prior to <br>the publication of the financial results. Excludes phased unwind of IFRS 9 relief.<br>3Capital generation excludes capital distributions and variable pension <br>contributions but includes dividends received from the Insurance business in the <br>subsequent quarter prior to the publication of the financial results.<br>4Excludes a decrease of 230 basis points related to regulatory changes that came <br>into effect on 1 January 2022.<br>5Excludes a decrease of 21 basis points related to the acquisition of Tusker. |  |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) |  | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) |  | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

![StratRep_LinkToStrategy_Key.gif](lyg-20251231_g71.gif)

![StratRev_KPI_Lozenge.gif](lyg-20251231_g72.gif)

---

| |
|:---|
| **Statutory profit** <br>**after tax**<br>£m<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>|
| **4757** |

---

![25](lyg-20251231_g73.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **5,885** | **3,923** | **5,518** | **4,477** | **4,757** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>| Statutory profit after tax of £4,757 million is <br>6% higher than 2024 with higher total income <br>partially offset by higher operating expenses, <br>a higher impairment charge and a higher tax <br>expense. 2025 was impacted by a charge <br>relating to motor finance commission <br>arrangements of £800 million. Excluding the <br>motor finance charge, statutory profit after tax <br>was £5,428 million (2024: £5,035 million). |
|  | Statutory profit after tax of £4,757 million is <br>6% higher than 2024 with higher total income <br>partially offset by higher operating expenses, <br>a higher impairment charge and a higher tax <br>expense. 2025 was impacted by a charge <br>relating to motor finance commission <br>arrangements of £800 million. Excluding the <br>motor finance charge, statutory profit after tax <br>was £5,428 million (2024: £5,035 million). |

---

---

| |
|:---|
| **Net income** <br>£m<br>![StratRev_KPI_Circle_A.gif](lyg-20251231_g68.gif)<br>|
| **18301** |

---

![50](lyg-20251231_g74.gif)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **15,763** | **17,465** | **17,465** | **17,932** | **17,117** | **18,301** |
| 2021 |  | 2022 | 2023 | 2024 | **2025** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>| Net income of £18,301 million is 7% higher <br>than 2024, with higher underlying net interest <br>income, in line with guidance, and higher <br>underlying other income, partially offset <br>by increased operating lease depreciation.<br>|

---

---

| |
|:---|
| **Return on** <br>**tangible equity** %<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>![StratRev_KPI_Circle_A.gif](lyg-20251231_g68.gif)<br>|
| **12.9** |

---

![75](lyg-20251231_g75.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **13.8** | **9.8** | **15.8** | **12.3** | **12.9** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>| Return on tangible equity of 12.9%. Excluding <br>the charge for motor finance commission <br>arrangements, return on tangible equity was <br>14.8%, above guidance. This reflects the Group's <br>sustained strength in financial performance.<br>2026 guidance<sup>1</sup>: Return on tangible equity <br>of greater than 16%.<br>|

---

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

![StratRev_KPI_Lozenge.gif](lyg-20251231_g72.gif)

---

| |
|:---|
| **Operating costs** <br>£m<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>![StratRev_KPI_Circle_A.gif](lyg-20251231_g68.gif)<br>|
| **9761** |

---

![100](lyg-20251231_g76.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **8,312** | **8,672** | **9,140** | **9,442** | **9,761** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

---

| | |
|:---|:---|
| Link to strategy<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| Operating costs of £9,761 million rose 3% versus <br>2024, reflecting strategic investment, business <br>growth and inflationary pressures, partially <br>offset by cost savings from investment and <br>continued cost discipline. Delivery was in line <br>with guidance excluding the full acquisition of <br>Schroders Personal Wealth. <br>2026 guidance<sup>1</sup>: Cost:income ratio of less than <br>50% (including operating costs of less than <br>£9.9 billion).  |
|  | Operating costs of £9,761 million rose 3% versus <br>2024, reflecting strategic investment, business <br>growth and inflationary pressures, partially <br>offset by cost savings from investment and <br>continued cost discipline. Delivery was in line <br>with guidance excluding the full acquisition of <br>Schroders Personal Wealth. <br>2026 guidance<sup>1</sup>: Cost:income ratio of less than <br>50% (including operating costs of less than <br>£9.9 billion).  |

---

---

| |
|:---|
| **Common equity** <br>**tier 1 ratio (CET1)** %<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>![StratRev_KPI_Circle_A.gif](lyg-20251231_g68.gif)<br>|
| **13.2** |

---

![125](lyg-20251231_g77.gif)

---

| |
|:---|
| **16.3** |
| 2021<sup>2</sup><br>2022<sup>2</sup><br>2023<sup>2</sup><br>2024<sup>2</sup><br>**2025**<sup>2</sup> |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>| The pro forma CET1 ratio remains strong <br>at 13.2%, after an increased recommended <br>ordinary dividend and the announced share <br>buyback of up to £1.75 billion. <br>2026 guidance<sup>1</sup>: Expect to pay down to a CET1 <br>ratio of c.13.0% by end of 2026.<br>|

---

---

| |
|:---|
| **Total shareholder** <br>**return** %<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>|
| **87.9** |

---

![200](lyg-20251231_g78.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **35** | **0** | **10.9** | **21.2** | **87.9** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| Total in-year shareholder return was 87.9%. <br>The share price was 79.3% higher than one <br>year earlier, with the remaining return being <br>attributed to the ordinary dividend. <br>|

---

---

| |
|:---|
| **Underlying profit** <br>£m<br>![StratRev_KPI_Circle_A.gif](lyg-20251231_g68.gif)<br>|
| **6777** |

---

![150](lyg-20251231_g79.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **7,536** | **7,028** | **7,809** | **6,343** | **6,777** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>| Underlying profit of £6,777 million in 2025 <br>was 7% higher than in 2024 due to higher net <br>income partially offset by higher operating costs <br>and a higher underlying impairment charge. <br>Excluding the motor finance charge, underlying <br>profit was £7,577 million (2024: £7,043 million).<br>|

---

---

| |
|:---|
| **Capital generation**<sup>3</sup><br>bps<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>|
| **147** |

---

![175](lyg-20251231_g80.gif)

---

| | | |
|:---|:---|:---|
| **210** | **148** | **147** |
| 2021<br>2022<sup>4</sup><br>2023<sup>5</sup> | 2024 | **2025** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>| The Group delivered strong capital generation <br>of 147 basis points in 2025, in line with updated <br>guidance (178 basis points excluding the motor <br>finance provision). <br>2026 guidance<sup>1</sup>: Capital generation of greater <br>than 200 basis points.<br>|

---

![225](lyg-20251231_g81.gif)

---

| |
|:---|
| **Shareholder** <br>**distributions**<br>£bn<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>|
| **3.9** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| 2021 | 2022<sup>4</sup> | 2023<sup>5</sup> | 2024 | **2025** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **0.5** | **0.6** | **0.6** | **0.7** | **0.7** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif) | ●  | Interim dividend | ●  | Final dividend | ●  | Buyback |
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif) |  |  |  |  |  |  |
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![FocusIcon.gif](lyg-20251231_g5.gif) | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. |
|  | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. | For 2025, total distributions amounted to <br>£3.9 billion. This includes a total recommended <br>ordinary dividend of 3.65 pence per share, <br>up 15% versus last year and reflecting our <br>progressive and sustainable ordinary dividend <br>policy; this covers both interim and final <br>dividends. The Group has also announced <br>a share buyback of up to £1.75 billion. |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our key performance indicators continued

**Non-financial**<br>

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Customer** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| |
|:---|
| **Digitally active users** <br>m<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>|
| **23.6** |

---

![1](lyg-20251231_g82.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **18.3** | **19.8** | **21.5** | **22.7** | **23.6** |
| 2021 | 2022 | 2023 | 2024 | **2025** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| The Group operates the largest digital bank <br>in the UK and reflecting the pace of digital <br>adoption, the number of active digital users <br>increased in the year to 23.6 million, up 4% <br>year-on-year. Within this we had c.21.5 million <br>app users, which represents a 6% increase from <br>last year.<br>|

---

---

| |
|:---|
| **Customer satisfaction**<br>Relationship net <br>promoter score<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>|
| **16.1** |

---

![26](lyg-20251231_g83.gif)

---

| | | | |
|:---|:---|:---|:---|
|  | **17.2** | **19.7** | **16.1** |
| 2021<sup>1</sup><br>2022<sup>1</sup> | 2023 | 2024 | **2025** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| In 2025, we transitioned from an all-channel net <br>promoter score to a relationship net promoter <br>score, which measures the customer likelihood <br>of recommending us based on their overall <br>experience. We believe the year-on-year decline <br>is largely driven by changes to the mobile <br>banking app, with customers telling us that <br>there is more we can do to improve journeys <br>and experience. Actions are in place to support <br>improvement in 2026. |
|  | In 2025, we transitioned from an all-channel net <br>promoter score to a relationship net promoter <br>score, which measures the customer likelihood <br>of recommending us based on their overall <br>experience. We believe the year-on-year decline <br>is largely driven by changes to the mobile <br>banking app, with customers telling us that <br>there is more we can do to improve journeys <br>and experience. Actions are in place to support <br>improvement in 2026. |

---

---

| |
|:---|
| **Customer complaints**<br>FCA reportable <br>complaints per <br>1,000 accounts<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>|
| **4.84** |

---

![51](lyg-20251231_g84.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **2.60** | **2.57** | **3.33** | **5.10** | **4.84** |
| H1 2023 | H2 2023 | H1 2024 | H2 2024 | **H1 2025** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| We remain committed to delivering the highest <br>level of service to our customers, with our <br>colleagues working diligently to understand <br>and address the concerns raised. Despite <br>the ongoing impact of Motor commission <br>complaints, overall volumes fell from the second <br>half of 2024. Data for the second half of 2025 is <br>not available at time of publishing.<br>|

---

---

| | |
|:---|:---|
| **Group customer** <br>**dashboard (GCD)**<br>(November YTD)<br>Pts – 2024 to 2025% – 2021 to 2023 <br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) |  |
| **Group customer** <br>**dashboard (GCD)**<br>(November YTD)<br>Pts – 2024 to 2025% – 2021 to 2023 <br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) | **65** |

---

![76](lyg-20251231_g85.gif)

---

| | | |
|:---|:---|:---|
| **79** | **80** | **86** |
| 2021 | 2022 | 2023<br>2024<sup>2</sup><br>**2025**<sup>2</sup> |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| In 2025, the Group customer dashboard (GCD) <br>score declined to 65. This was down year-on-<br>year, in part due to a decline in our net promoter <br>score and elevated customer complaints, as <br>outlined on this page. While we improved or <br>maintained performance on 64% of our GCD <br>measures, we continue to strive to achieve more <br>of our customer ambitions in 2026.<br>|

---

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Climate** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| |
|:---|
| **Operational carbon** <br>**emissions** <br>tCO2e<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>|
| **103,148** |

---

![101](lyg-20251231_g86.gif)

---

| | |
|:---|:---|
| **112067** | **117671** |
| 20/21 | 21/22<br>22/23<sup>3</sup><br>23/24<sup>3</sup><br>**24/25**<sup>4</sup> |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![FocusIcon.gif](lyg-20251231_g5.gif)<br>| In 2024/25, our market-based carbon emissions <br>that form part of the balanced scorecard <br>were amended to exclude international travel. <br>Compared to previously reported numbers <br>there has been a 42% decrease since baseline <br>year 2018/19 when market-based carbon <br>emissions were 176,993 tCO2e and 16% decrease <br>since 2023/24. Restating prior year <br>comparatives to exclude international travel <br>gives a reduction of 39% from baseline year and <br>10% from 2023/24. With the decrease from the <br>prior period mainly driven by a reduction in <br>domestic employee commuting. Further details <br>of our market-based overall emissions including <br>international travel can be found in the <br>sustainability metrics datasheet .![Icon_Weblink.gif](lyg-20251231_g14.gif) |
|  | In 2024/25, our market-based carbon emissions <br>that form part of the balanced scorecard <br>were amended to exclude international travel. <br>Compared to previously reported numbers <br>there has been a 42% decrease since baseline <br>year 2018/19 when market-based carbon <br>emissions were 176,993 tCO2e and 16% decrease <br>since 2023/24. Restating prior year <br>comparatives to exclude international travel <br>gives a reduction of 39% from baseline year and <br>10% from 2023/24. With the decrease from the <br>prior period mainly driven by a reduction in <br>domestic employee commuting. Further details <br>of our market-based overall emissions including <br>international travel can be found in the <br>sustainability metrics datasheet .![Icon_Weblink.gif](lyg-20251231_g14.gif) |

---

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Colleague** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| |
|:---|
| **Employee** <br>**engagement index** % favourable<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>|
| **75** |

---

---

| | |
|:---|:---|
| **Link to strategy**<br>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| Our annual colleague survey, MyVoice, achieved <br>a record participation rate of 85%<sup>5</sup>, indicating <br>positive colleague sentiment. The employee <br>engagement index of 75% improved by <br>4 percentage points. This increase was driven by <br>career development opportunities, a supportive <br>and inclusive culture and reward, putting us in a <br>strong position to continue our transformation. <br>|

---

![1](lyg-20251231_g87.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **72** | **78** | **66** | **71** | **75** |
| 2021<sup>3</sup> | 2022 | 2023 | 2024 | **2025** |

---

**Inclusion** 

**Link to strategy**<br>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>

In 2025 we launched a suite of inclusion ambitions which include one gender and two UK ethnicity ambitions for our executive

colleagues. We believe that setting ambitions for our leadership team is important to provide role modelling and inspiration for

our colleagues and ensures more inclusive and better strategic decision making. The focus will continue to 2030. Read more on

**pages [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) to [23](#id5a09873a2b64b69bddd405c4c5c041e_1-2-1-1-5233089).** To understand the Group's approach on inclusion, please see our sustainability report **.**

![Icon_Weblink.gif](lyg-20251231_g14.gif)

---

| | |
|:---|:---|
| **Gender balance in executive roles**<sup>6</sup>%<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>| **40.4** |

---

![26](lyg-20251231_g88.gif)

![38](lyg-20251231_g89.gif)

**45% to 55%**

![](lyg-20251231_g90.gif)

![](lyg-20251231_g90.gif)

---

| | |
|:---|:---|
| **2025** | **40.4%** |

---

---

| | |
|:---|:---|
| ●  | **Progress** |
| **\|** | **2030 ambition range** |

---

---

| | |
|:---|:---|
| **Black heritage colleagues in executive roles**<sup>6</sup>%<br>| **4.3** |

---

**3.5% to 4%**

![](lyg-20251231_g90.gif)

![](lyg-20251231_g90.gif)

---

| | |
|:---|:---|
| **2025** | **4.3%** |

---

---

| | |
|:---|:---|
| ●  | **Progress** |
| **\|** | **2030 ambition range** |

---

---

| | |
|:---|:---|
| **Black, Asian and Minority Ethnic** <br>**colleagues in executive roles**<sup>6</sup>%<br>![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif)<br>| **17.5** |

---

![50](lyg-20251231_g91.gif)

![62](lyg-20251231_g89.gif)

**19% to 22%**

![](lyg-20251231_g90.gif)

![](lyg-20251231_g90.gif)

---

| | |
|:---|:---|
| **2025** | **17.5%** |

---

---

| | |
|:---|:---|
| ●  | **Progress** |
| **\|** | **2030 ambition range** |

---

---

| | |
|:---|:---|
| **Disability representation** <br>**in senior roles by 2025**<sup>7</sup>%<br>| **19.0** |

---

**12%**

![](lyg-20251231_g90.gif)

---

| | |
|:---|:---|
| **2025** | **19.0%** |

---

---

| | |
|:---|:---|
| ●  | **Progress** |
| **\|** | **2025 ambition** |

---

---

| | | | |
|:---|:---|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) |  |  | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) | Key performance indicators that are directly linked <br>to our remuneration are marked with this symbol. <br>More information can be found within our directors' <br>remuneration report from **page [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358)**.  | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
|  | ![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) | Key performance indicators that are directly linked <br>to our remuneration are marked with this symbol. <br>More information can be found within our directors' <br>remuneration report from **page [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358)**.  |  |
|  | ![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) | Key performance indicators that are directly linked <br>to our remuneration are marked with this symbol. <br>More information can be found within our directors' <br>remuneration report from **page [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358)**.  |  |
|  | ![StratRev_KPI_Circle_R.gif](lyg-20251231_g67.gif) | Key performance indicators that are directly linked <br>to our remuneration are marked with this symbol. <br>More information can be found within our directors' <br>remuneration report from **page [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358)**.  |  |
|  | ![StratRev_KPI_Circle_A.gif](lyg-20251231_g68.gif) | We use a number of alternative performance measures in <br>the description of our business performance and financial <br>position. These measures are labelled with this symbol. <br>See **page [308](#i3eaa7a3e529a46b3b97a88e05ad474bc_913)**for our alternative performance measures.<br>|  |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) |  |  | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) |  |  | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

![StratRep_LinkToStrategy_Key.gif](lyg-20251231_g71.gif)

---

| | | |
|:---|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) |  | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | 1Data for 2021 and 2022 is not available and has been excluded from the chart.<br>2Change in measurement approach from 2024, so comparison of 2024-2025 to prior <br>years is not like-for-like.<br>3Restated data to improve the accuracy of reporting, using actual data to replace <br>estimates and updates to historical emissions.<br>4Excludes international travel.<br>5Our annual survey (MyVoice) is sent to both UK and international colleagues.<br>6Executive roles include Grade X colleagues only. For gender, it includes UK and <br>international based colleagues, excluding US and subject to local laws and <br>regulations. For ethnicity it includes UK based colleagues only.<br>7Senior manager roles include grades F, G and X.  | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
|  | 1Data for 2021 and 2022 is not available and has been excluded from the chart.<br>2Change in measurement approach from 2024, so comparison of 2024-2025 to prior <br>years is not like-for-like.<br>3Restated data to improve the accuracy of reporting, using actual data to replace <br>estimates and updates to historical emissions.<br>4Excludes international travel.<br>5Our annual survey (MyVoice) is sent to both UK and international colleagues.<br>6Executive roles include Grade X colleagues only. For gender, it includes UK and <br>international based colleagues, excluding US and subject to local laws and <br>regulations. For ethnicity it includes UK based colleagues only.<br>7Senior manager roles include grades F, G and X.  |  |
|  | 1Data for 2021 and 2022 is not available and has been excluded from the chart.<br>2Change in measurement approach from 2024, so comparison of 2024-2025 to prior <br>years is not like-for-like.<br>3Restated data to improve the accuracy of reporting, using actual data to replace <br>estimates and updates to historical emissions.<br>4Excludes international travel.<br>5Our annual survey (MyVoice) is sent to both UK and international colleagues.<br>6Executive roles include Grade X colleagues only. For gender, it includes UK and <br>international based colleagues, excluding US and subject to local laws and <br>regulations. For ethnicity it includes UK based colleagues only.<br>7Senior manager roles include grades F, G and X.  |  |
|  | 1Data for 2021 and 2022 is not available and has been excluded from the chart.<br>2Change in measurement approach from 2024, so comparison of 2024-2025 to prior <br>years is not like-for-like.<br>3Restated data to improve the accuracy of reporting, using actual data to replace <br>estimates and updates to historical emissions.<br>4Excludes international travel.<br>5Our annual survey (MyVoice) is sent to both UK and international colleagues.<br>6Executive roles include Grade X colleagues only. For gender, it includes UK and <br>international based colleagues, excluding US and subject to local laws and <br>regulations. For ethnicity it includes UK based colleagues only.<br>7Senior manager roles include grades F, G and X.  |  |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) |  | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) |  | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our colleagues

Being inclusive allows us to be the best business

for colleagues and customers

**Our colleague engagement** 

In 2025, we extended how we listen to colleagues to create a more

regular and complete picture of sentiment across the year.

We ran six surveys at key points during the year and reintroduced

our joiners and leavers survey, giving us a continuous view across the

colleague lifecycle – from onboarding through to exit. With more

than 64,000 colleagues working across the Group, this cadence

ensures we hear from a broad cross-section of roles, locations and

tenure, and can take timely action where it matters most.

MyVoice, our annual colleague survey, achieved a record 85%

completion rate, delivering the widest view of sentiment so far.

Colleagues also shared over 200,000 comments, providing a rich,

nuanced evidence base to understand what is working well and

where we can strengthen our approach. Results this year show

robust improvements across themes, including our employee

engagement index (up four percentage points to 75%) and

employee net promoter score (up 15 points to +23). Taken together,

these outcomes indicate we are in a strong position to continue to

progress our transformation.

During the year the Group communicated directly with colleagues

detailing Group performance, changes in the economic and financial

environment, and updates on key strategic initiatives. Meetings

were held throughout the year between the Group and our

recognised unions. Please see **page [77](#i3eaa7a3e529a46b3b97a88e05ad474bc_328)**for further examples of how

the Board engages with the Group's workforce and why the Board

considers those arrangements to be effective.

For 2025, the Remuneration Committee approved Group

Performance Share awards for colleagues, and colleagues are

eligible to participate in HMRC-approved share plans which

promote share ownership by giving employees an opportunity to

invest in Group shares. The vast majority of our colleagues hold

shares in the Group.

**Our 2025 inclusion performance**

We aspire to be the UK's leading business for inclusion by

supporting our customers, colleagues and communities. In 2025,

we strengthened our commitment by laying strong foundations that

will enable long-term progress. We placed inclusion at the centre of

how we work, embedding it into our purpose, performance and

culture. This meant integrating inclusive governance principles into

organisational design, pay and recruitment processes to support

fair, transparent and consistent decision making.

Our progress was further supported by our inclusion plans which

we have developed with our Group Executive Allies and our

employee networks.

**Social mobility**

We remain committed to removing barriers and providing

opportunities for people from all socio-economic backgrounds

to reach their potential.

According to MyVoice, 65% of UK colleagues have shared their

socio-economic background with us. Notably, 22% of colleagues

overall and 21% of our senior colleagues come from low socio-

economic backgrounds, which compares favourably against other

organisations as per the Progress Together annual benchmarking.

We're proud to be named finalists in four categories at the 2025 UK

Social Mobility Awards, and one of our senior leaders was a finalist

of the Champion of the Year. In 2025, we supported young people

in education from primary to further and higher education. Our

Youth outreach helped over 100,000 young people across all

education levels (including school, college and university students).

They were supported with developing essential skills and

experiences to realise their potential.

Outreach extended to five UK regions, inclusive of regions where

opportunities for social mobility are significantly lower relative to

the UK as a whole.

**Gender** 

We are dedicated to advancing gender equality by strengthening

the talent pipeline and driving balanced representation.

In 2025 we set a new ambition to reach and maintain a gender

balance of between 45 to 55% in executive roles by the end of

2030<sup>1</sup>. Setting this ambition for our leadership team is important

in providing role modelling and inspiration for our colleagues and

ensures more inclusive strategic decision making. At the end of

2025, the number of women in executive level roles (X+) stands

at 40.4%, putting us on track to meet our 2030 ambitions.

Our award winning Elevate Programme, which develops leadership

capability among women across tech, data and security, continues

to grow, with over 100 women participating in 2025.

Our disclosures in relation to board diversity as required under the

UK Listing Rule UKLR6.6.6(9) are on **page [136](#ib3569b81c6bb477f828633c1cfc09e16_16514).** 

**Ethnicity**

We are committed to building an inclusive society and creating an

organisation that reflects the community we serve.

Building representation of colleagues of Black, Asian and Minority

Ethnic heritages, to reflect the society of which we are a part,

remains challenging, but we are focused on it and continue to make

progress. We have moved to range ambitions of 3.5 to 4% for

Black heritage and 19 to 22% for Black, Asian and Minority Ethnic

colleagues in executive roles<sup>1</sup>. These new 2030 UK ethnicity

ambitions reflect UK census data, the evolving diversity of society

and industry benchmarks.

We continue to exceed the Parker Review recommendation of

having at least one Black, Asian or Minority Ethnic Board member.

Guided by our Race Action Plan since 2020, we remain focused on

driving cultural change, improving recruitment and progression, and

unlocking potential for Black heritage communities across the UK.

**Disability and neurodiversity**

We aspire to be a best-in-class leader in disability and neuro-

inclusion. Last year, we publicly launched our Blueprint for disability

and neuro-inclusion, sharing our commitments.

Alongside our ambition, we've 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, we held a facilitated workshop for all

our talent acquisition managers, which tangibly increased their

confidence in supporting hiring managers and candidates with

disabilities and neurodivergent conditions, throughout the

recruitment process.

**Sexual orientation and gender identity** 

We continue to build a more inclusive environment for our LGBTQ+

colleagues. Our LGBTQ+ network, Rainbow, remains central to

this work and has supported colleagues for ten years. In 2025, we

partnered with our Employee Assistance Programme (EAP) provider

to launch an enhanced clinical pathway tailored to the needs of

LGBTQ+ colleagues and allies. We believe this is the first service of

its kind in the UK offered jointly by an employer and EAP provider.

Developed in response to colleague feedback, it was piloted in 2024

and is now a permanent offering. Staffed by people with lived

experience and specialist training, it provides a safe, empathetic

space for support, shared experiences and tailored resources.

1 Executive roles include Grade X colleagues only. For gender, it includes UK and

international based colleagues, excluding US and subject to local laws and regulations.

For ethnicity it includes UK based colleagues only.

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

![Our_Colleagues_Image.jpg](lyg-20251231_g92.jpg)

---

| | | |
|:---|:---|:---|
| ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) | **Purpose in action**  | ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) |
| **Upskilling colleagues** <br>**on neuro-inclusion**<br>Since its launch in September 2024, over 54,000 colleagues <br>have completed the 'This is Me' e-module and c.8,500 line <br>managers have attended the workshop. This programme <br>plays a pivotal role in helping us build a more disability and <br>neuro-inclusive organisation, driving better outcomes for our <br>colleagues, customers and communities. Our commitment <br>to neurodiversity was also honoured globally at the <br>2025 Davos Neurodiversity Summit, where we received the <br>Impact Award for Corporate Leadership in Neuro-inclusion. | **Upskilling colleagues** <br>**on neuro-inclusion**<br>Since its launch in September 2024, over 54,000 colleagues <br>have completed the 'This is Me' e-module and c.8,500 line <br>managers have attended the workshop. This programme <br>plays a pivotal role in helping us build a more disability and <br>neuro-inclusive organisation, driving better outcomes for our <br>colleagues, customers and communities. Our commitment <br>to neurodiversity was also honoured globally at the <br>2025 Davos Neurodiversity Summit, where we received the <br>Impact Award for Corporate Leadership in Neuro-inclusion. | **Upskilling colleagues** <br>**on neuro-inclusion**<br>Since its launch in September 2024, over 54,000 colleagues <br>have completed the 'This is Me' e-module and c.8,500 line <br>managers have attended the workshop. This programme <br>plays a pivotal role in helping us build a more disability and <br>neuro-inclusive organisation, driving better outcomes for our <br>colleagues, customers and communities. Our commitment <br>to neurodiversity was also honoured globally at the <br>2025 Davos Neurodiversity Summit, where we received the <br>Impact Award for Corporate Leadership in Neuro-inclusion. |

---

---

| |
|:---|
| ![Colleagues_QRCode_Only_NoKeyline.gif](lyg-20251231_g93.gif) |
| Read more from <br>our colleagues ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>|

---

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **2025 progress and performance on inclusion metrics** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Number 2025** | **% 2025** | **% 2024** |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Men | 5 | 50.0 | 50.0 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Women | 5 | 50.0 | 50.0 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Men | 3 | 75.0 | 75.0 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Women | 1 | 25.0 | 25.0 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Men | 8 | 61.5 | 53.8 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Women | 5 | 38.5 | 46.2 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Men | 199 | 59.6 | 61.4 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Women | 135 | 40.4 | 38.6 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Men | 4577 | 59.6 | 59.6 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Women | 3101 | 40.4 | 40.4 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Men | 29722 | 46.5 | 45.2 |
| **Gender**<sup>1</sup><br>**(UK and international** <br>**colleagues, excluding** <br>**colleagues who are** <br>**based in the US, subject to** <br>**local laws and regulations)** | Women | 34200 | 53.5 | 54.8 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)** | White British or other White | 8 | 80.0 | 80.0 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)** | Asian heritage | 1 | 10.0 | 10.0 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)** | Mixed/multiple ethnic groups | 1 | 10.0 | 10.0 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)**<br> Senior positions on the Board<sup>2</sup> | White British or other White | 4 | 100.0 | 100.0 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)** | White British or other White | 11 | 84.6 | 84.6 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)** | Asian heritage | 2 | 15.4 | 15.4 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)** | Black, Asian and Minority Ethnic representation | 57 | 17.5 | 14.6 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)** | Black heritage | 14 | 4.3 | 3.3 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)** | Black, Asian and Minority Ethnic representation | 996 | 13.6 | 12.6 |
| **Ethnicity**<sup>1</sup><br>**(UK based colleagues only)** | Black heritage | 139 | 1.9 | 1.8 |
| **Disability**<br>**(UK based colleagues only)** | Colleagues who disclose that they have a disability | 12776 | 21.6 | 18.7 |
| **Disability**<br>**(UK based colleagues only)** | Senior managers<sup>4</sup> who disclose that they have a disability | 1388 | 19.0 | 16.1 |
| **Sexual orientation** <br>**and gender identity**<br>**(UK based colleagues only)** | Colleagues who disclose their sexual orientation | 47560 | 80.4 | 77.8 |
| **Sexual orientation** <br>**and gender identity**<br>**(UK based colleagues only)** | Colleagues who disclose that they are LGBTQ+ | 2506 | 4.2 | 4.0 |
| **Sexual orientation** <br>**and gender identity**<br>**(UK based colleagues only)** | Colleagues who disclose their gender identity | 43897 | 74.2 | 69.9 |

---

1Data in the table above is collated and reported in compliance with the provisions of

section 414C(8)(c) Companies Act 2006. For Listing rule UKLR 6.6.6(10) please see

further information on our Board diversity and executive management on **page [136](#ib3569b81c6bb477f828633c1cfc09e16_16514).**

2 Senior positions on the Board refer to the roles of the Chief Executive Officer,

Chief Financial Officer, Senior Independent Director and Chair of the Board.

3The Group Executive Committee (GEC) assists the Group Chief Executive in strategic,

cross-business or Group-wide matters and inputs to the Board. The GEC includes the

Group Chief Executive and excludes colleagues who report to a member or attendee of

the GEC, including administrative or executive support roles (personal assistant,

executive assistant).

4Executive roles include grade X colleagues only.

5Senior manager roles include grades F, G and X.

Key definitions:

• All diversity information for ethnicity, disability, sexual orientation and gender identity

is based on voluntary self-declaration by colleagues. Our systems do not record diversity

data colleagues who have not declared this information and is for UK payroll only

• Gender data includes those on parental/maternity leave, absent without leave and

long-term sick and excludes contractors, temporary and agency staff. International

colleagues are included, except those based in the US, subject to local laws and

regulations

• LGBTQ+ includes Asexual / Ace Spectrum, Bisexual / Bi, Gay Man, Lesbian / Gay

Woman, Pansexual, Other Sexual Orientation and includes Trans\*

• A colleague is an individual who is paid via the Group's payroll and employed on a

permanent or fixed-term contract (employed for a limited period). Includes parental

leavers and internationals (UK includes Guernsey, Isle of Man, Jersey and Gibraltar

subject to and local laws and regulations). Excludes leavers, Group non-executive

directors, contractors, temps and agency staff

• Diversity calculations are based on headcount, not full-time employee value

![StratRep_RiskOverview.gif](lyg-20251231_g94.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk overview

Continuing our risk transformation

journey through 2025

**TheGroup's approach to risk**

---

| | |
|:---|:---|
| **Risk management framework** | **Risk management framework** |
| ![Button_Number1_Black.gif](lyg-20251231_g95.gif) | **Group and risk management strategies**<br>•The Group strategy is driven by strategic priorities <br>and informed by the Group's risk profile, <br>considering external economic, political and <br>regulatory threats. This shapes risk appetite <br>and risk management practices <br>•The risk management strategy supports delivery <br>of the Group strategy by ensuring principal risks <br>are managed consistently within appetite and the <br>target control environment<br>|
| ![Button_Number2_Black.gif](lyg-20251231_g96.gif) | **Culture, values and behaviours**<br>•The RMF provides tools for colleagues to make the <br>right decisions, balancing stakeholder needs, risks and <br>trade-offs and encouraging a culture of intellectual <br>curiosity, innovation and proactive risk management<br>|
| ![Button_Number3_Black.gif](lyg-20251231_g97.gif) | **Risk governance**<br>•Designed to enable sound decision making in line <br>with good corporate governance standards across <br>all legal entities. Board and executive committees <br>hold key decision-making authority, with clear <br>responsibilities for risk management, delegated <br>powers and reporting requirements<br>•The Board's responsibilities can be found on **page [73](#i3eaa7a3e529a46b3b97a88e05ad474bc_316)**<br>|
| ![Button_Number4_Black.gif](lyg-20251231_g98.gif) | **Three lines of defence**<br>•Aligned with industry best practice, the Group applies <br>a three lines of defence model, with all colleagues <br>accountable for managing risk in daily activities <br>and demonstrating behaviours consistent with <br>the Group's purpose, values and culture<br>|
| ![Button_Number5_Black.gif](lyg-20251231_g99.gif) | **Risk function mandate**<br>•Clarifies Risk's role as an oversight and control <br>function within the three lines of defence, supporting <br>the Chief Risk Officer in fulfilling accountabilities <br>defined in their role profile and delegated by the <br>Group Chief Executive and the Board<br>|
| ![Button_Number6_Black.gif](lyg-20251231_g100.gif) | **Risk appetite**<br>•The type and level of risk the Group is willing to <br>accept in pursuit of its strategic objectives, which <br>must operate within Board-approved parameters. <br>Set annually for the Group and its legal entities<br>|
| ![Button_Number7_Black.gif](lyg-20251231_g101.gif) | **Risk architecture and approach**<br>•The Group's risk architecture defines a consistent, <br>unified approach and a common language for all <br>principal risks. Risk principles and policies translate <br>risk appetite into actionable risk management<br>|

---

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 our 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 [284](#i8a4f77013fad493a9364f3edbc5016a5_9349)**.

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 the Group's legal entities, business units

and functions.

The RMF ensures processes are in place to facilitate robust risk

management and effective decision making.

The 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

th**e RMF and the Resetting Risk programme can be found on** 

**pages [138](#i4372b3517a3440e1a8c551d096b6082a_12718) to [139](#i4372b3517a3440e1a8c551d096b6082a_12701)**.

---

| |
|:---|
| Our approach<br>"We're on an exciting transformation <br>journey through our Resetting Risk <br>programme, allowing us to further <br>evolve our risk management <br>approach and accelerate decision <br>making to achieve improved <br>outcomes for our customers."<br>|
| **Stephen Shelley** <br>Chief Risk Officer<br>|

---

![StratRep_PrincipalRisk_pg1.gif](lyg-20251231_g102.gif)

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Principal risks**

**Summary table for 2025**<br>

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

---

| |
|:---|
| Capital |
| Climate |
| Compliance |
| Conduct |
| Credit |
| Economic crime |
| Insurance underwriting |
| Liquidity |
| Market |
| Model |
| Operational |

---

Committee and Board, and are reviewed at least annually to

ensure they remain fit for purpose.

Sustainability related risks are intrinsically linked to our principal

risks. **Pages [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) to [41](#ia285bd6242564a929335c15ef92f710e_66-0-1-2-5233089)**provide an overview of our sustainability

related risks and opportunities assessment, and highlight related

principal risks.

The risk management section on **pages [144](#i10ecde00bd4e4ca99e46cc5accf7c35e_287) to [197](#ie6d562362828442c9d9e501f05837616_14795)**provides a

detailed review of these risks, including definitions and how they are

identified, assessed, managed, mitigated, monitored and reported.

---

| | | |
|:---|:---|:---|
| See **page [16](#i3eaa7a3e529a46b3b97a88e05ad474bc_46)** | See **page [17](#i3eaa7a3e529a46b3b97a88e05ad474bc_49)** | See **page [17](#i3eaa7a3e529a46b3b97a88e05ad474bc_49)** |

---

---

| | |
|:---|:---|
| **Capital risk** |  |
| The Group continued to maintain its strong capital position in 2025 <br>with a CET1 capital ratio of 13.2% on a pro forma basis (2024: 13.5% pro <br>forma). This remains ahead of regulatory requirements and in excess of <br>the Group's ongoing target of c.13.0%, which includes a management <br>buffer of around 1%. Banking business profits for the year and the receipt <br>of dividends from the Insurance business, partially offset by risk-<br>weighted asset (RWA) increases and regulatory headwinds, have <br>continued to enable strong shareholder distributions.<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 setting <br>of capital risk appetite, capital planning and stress testing activities<br>•Regular refresh and monitoring of early warning indicators and <br>maintenance of a contingency framework to address emerging <br>capital concerns<br>•Robust risk management through prudent underwriting standards, <br>balance sheet and portfolio management and capital optimisation <br>|

---

---

| | |
|:---|:---|
| **Climate risk** |  |
| Climate risk remains stable, with no material adjustments to the <br>Group's financial statements required for the impact from physical <br>and transition risks, and ongoing monitoring of potential reputational <br>impacts, including performance of emission reduction targets against <br>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 other principal <br>risks, supporting embedding within Group policies and procedures<br>•This informs suitable consideration within the management of other <br>principal risks, including client engagement, assessment informed <br>by scenario analysis and relevant case management<br>|

---

---

| | |
|:---|:---|
| **Compliance risk** |  |
| 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 <br>and to enable strategic business growth within risk appetite.<br>| **Mitigating actions**<br>•Policies and standards setting out clear requirements and controls <br>that apply across the business, aligned to the Group's risk appetite <br>•Identification, assessment and implementation of regulatory and <br>legal requirements by risk specialists and legal colleagues as needed <br>•Local controls, processes, procedures and resources to ensure <br>appropriate governance and compliance by business units<br>|

---

![StratRep_PrincipalRisk_pg2.gif](lyg-20251231_g103.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk overview continued

---

| | |
|:---|:---|
| **Conduct risk** |  |
| Conduct risk remained elevated in 2025, recognising areas of <br>ongoing focus driven by legal decisions, regulatory changes and <br>complaint trends.<br>The Group continues to monitor the evolving situation in relation <br>to motor finance commission arrangements and potential impacts <br>to customers and its risk and control profile, liaising closely with <br>regulatory bodies.<br>Enhancements continue to be made to the Group's control <br>environment, with mitigating actions and controls in place to deliver <br>good outcomes for customers, protect market integrity, prevent <br>colleague misconduct and ensure effective management of concerns <br>raised through whistleblowing.<br>The Group remains focused on the treatment of vulnerable customers <br>and complaints performance.<br>| **Mitigating actions**<br>•Policies and strategies are in place to prevent colleague misconduct <br>and support good customer outcomes with ongoing focus on <br>utilising root cause insights to support the management and <br>mitigation of complaint volumes <br>•Active engagement with regulatory bodies and key stakeholders to <br>ensure that the Group's strategic conduct focus continues to meet <br>evolving stakeholder expectations <br>•Strengthening policies, controls and reporting capabilities to <br>demonstrate good outcomes for customers and markets <br>|

---

---

| | |
|:---|:---|
| **Credit risk** |  |
| Credit performance has remained strong and stable in 2025.<br>In the Group's retail portfolios, low and stable arrears have been <br>observed. The Group's commercial portfolio remains strong.<br>The underlying impairment charge in 2025 was £795 million, up from <br>£433 million in 2024, and includes a net charge from updates to the <br>Group's macroeconomic outlook of £74 million compared to a large <br>release of £394 million in 2024. Excluding macroeconomic updates, <br>the Group's underlying impairment charge remains low and similar to <br>2024.<br>The total underlying probability-weighted expected credit loss (ECL) <br>allowance was lower in 2025 at£3,353million (31 December 2024: <br>£3,651 million).<br>| **Mitigating actions**<br>•Appropriate and robust credit processes, strategies and controls to <br>ensure effective risk identification, management and oversight<br>•Significant monitoring in place, including early warning indicators <br>•Selective credit tightening reflective of forecast changes in the <br>macroeconomic environment, including updates to affordability <br>lending controls for forward-looking costs<br>|

---

---

| | |
|:---|:---|
| **Economic crime risk** |  |
| 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 <br>to deliver against action plans, which strengthened the control <br>environment, reduced residual risk and responded to changing <br>regulatory expectations. During the year, two new Board-level risk <br>appetite metrics were introduced to further enhance oversight of <br>sanctions and fraud. <br>Protecting customers remains a key priority, with ongoing <br>consideration of regulatory developments, data-sharing capabilities, <br>and interventions across the economic crime lifecycle.<br>| **Mitigating actions**<br>•Robust economic crime policy and standards<br>•Delivery of Group-wide Economic Crime Prevention Strategy, <br>supported by periodic reviews to address emerging risks and <br>regulatory developments<br>•Sustained progress in remediation activities to strengthen the <br>control environment and reduce residual risk<br>•Continued enhancements of our industry-leading fraud detection <br>capabilities to respond to evolving threats<br>|

---

---

| | |
|:---|:---|
| **Insurance underwriting risk** |  |
| Insurance underwriting risk remains stable. Life and Pensions <br>present value of new business premium increased to £21.0 billion <br>(2024: £18.2 billion), driven by higher contribution from workplace, <br>protection and Scottish Widows platform businesses, partially offset <br>by lower sales in the annuities business due to market conditions.<br>Gross written premiums increased to £762 million (2024: £737 million).<br>| **Mitigating actions**<br>•Underwriting quality is the primary mechanism used to manage <br>insurance risk<br>•Robust processes are embedded for underwriting, reinsurance, <br>claims management, pricing, product design and product <br>management<br>•Management through diversification and pooling of risks<br>|

---

![StratRep_PrincipalRisk_pg3.gif](lyg-20251231_g104.gif)

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | |
|:---|:---|
| **Liquidity risk** |  |
| The Group maintained its strong liquidity and funding position with <br>a loan to deposit ratio of 97% (2024: 95%). <br>The Group's liquid assets continue to exceed the regulatory minimum <br>and internal risk appetite, with a monthly simple average over the <br>previous 12-months' liquidity coverage ratio (LCR) of 145% (2024: 146%). <br>The Group maintains access to diverse sources and tenors of funding.<br>| **Mitigating actions**<br>•Maintenance of a portfolio of unencumbered high quality liquid <br>assets in excess of regulatory requirements<br>•Robust management and monitoring of liquidity risks to ensure <br>systems and arrangements are adequate with regard to internal risk <br>appetite, Group strategy and regulatory requirements<br>•Significant customer deposit base, driven by inflows to trusted brands<br>•Participation in term issuance programmes<br>|

---

---

| | |
|:---|:---|
| **Market risk** |  |
| Market conditions have remained stable in 2025. The Group remains <br>well hedged, ensuring near-term interest rate exposure is appropriately <br>managed. The Group's structural hedge has increased to £244 billion in <br>2025 (2024: £242 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, <br>there are no further deficit contributions payable for this triennial <br>period (to 31 December 2025). The IAS 19 accounting surplus has <br>reduced to £2.6 billion 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, all asset <br>and liability matching and hedging<br>•Monitoring of the credit allocation in the defined benefit pension <br>schemes, as well as the hedges in place against adverse movements <br>in nominal rates, inflation and longevity<br>|

---

---

| | |
|:---|:---|
| **Model risk** |  |
| 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 <br>and further development of our CRD IV models. The Group continues <br>to 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, <br>meeting both internal and regulatory requirements to support the safe <br>and strategic development of AI and machine learning applications <br>within the Group. <br>Investment in model risk management remains a priority for the <br>Group to further improve risk management and as an enabler to drive <br>strategic developments.<br>| **Mitigating actions**<br>•Continued enhancement and embedding of the model risk <br>management framework for managing and mitigating model risk<br>•The Group's independent model validation process provides <br>ongoing, independent, and effective challenge to model <br>development and use<br>•Establishment of a governance framework for the management <br>of AI model risks across principal risk categories<br>•Introduction of a wider range of model status categories to provide <br>more transparent and informative reporting of model risk<br>|

---

---

| | |
|:---|:---|
| **Operational risk** |  |
| Operational risk remained stable in 2025, with key risks relating to <br>change execution risk, data and privacy, supplier risk, IT systems and <br>information, cyber and physical security. Operational loss event volumes <br>continue to be low, primarily relating to transaction and data processing, <br>IT systems and 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 <br>robust 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, such as <br>avoidance, mitigation, transfer (including insurance) and acceptance<br>•Ongoing focus on people risk measures including culture, capability <br>and capacity to support strategic growth plans<br>•The Group continues to invest strategically to mitigate operational <br>risks, strengthen controls and to meet operational resilience <br>regulatory requirements <br>•Internal reviews and industry engagement on IT outages to drive <br>control improvement and ensure effective supplier assurance<br>|

---

![StratRep_EmergingRisk_pg1.gif](lyg-20251231_g105.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk overview continued

**Emerging and topical risks**

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.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Emerging and topical risk themes** | **Emerging and topical risk themes** | **Emerging and topical risk themes** | **Emerging and topical risk themes** |
|  |  |  | **Consumer** <br>**and market** <br>**dynamics**<br>| Market offerings are increasingly personalised, simple and transparent through <br>digital means. Increased competition from traditional and non-traditional <br>competitors means brand loyalty is under pressure, and the influence of social <br>media heightens the risk of poor customer outcomes against an uncertain <br>societal backdrop. Similarly, digital exclusion, particularly among older or less <br>digitally literate groups, requires balancing investment in innovation with <br>inclusive service delivery. Rapid growth in new, often loss-leading financial <br>products intensifies market competition, raising concerns around sustainability, <br>mis-selling, data ethics and product suitability.<br>|
|  |  |  | **Evolution of** <br>**technology,** <br>**AI and** <br>**cybercrime**<br>| The accelerating pace of technological innovation, spanning AI, blockchain, cloud <br>computing and digital currencies, is reshaping the financial landscape. While these <br>developments offer significant opportunities to enhance customer experiences <br>and operational efficiency, they also introduce new risks. Balancing the adoption <br>of emerging technologies with the need to maintain digital sovereignty, protect <br>against evolving cybercrime and uphold data privacy and ethical standards is <br>increasingly complex. At the same time, cloud vulnerabilities and the rapid <br>evolution of AI and tokenisation challenge traditional business models, requiring <br>firms to remain agile, transparent and resilient in the face of disruption.<br>|
|  |  | **Emerging and topical** <br>**risk themes** |  |  |
| **Principal risks** | **Principal risks** | **Emerging and topical** <br>**risk themes** | **Geopolitical** <br>**and economic** <br>**environment**<br>| Global uncertainty continues to reshape the regulatory and operating <br>environment, with shifting geopolitical alliances, economic fragmentation, <br>and evolving health dynamics challenging traditional models of cross-border <br>engagement. Organisations must navigate a complex web of international <br>regulations, sanctions and trade compliance while responding to the impacts <br>of extreme weather events, financial market volatility and unexpected events, <br>in order to manage the impacts to operations, customers and suppliers. <br>|
|  |  | **Emerging and topical** <br>**risk themes** |  |  |
|  |  |  | **Regulatory** <br>**agenda and** <br>**expectations**<br>| The regulatory landscape is evolving rapidly, shaped by political priorities, shifting <br>expectations of regulatory bodies, and growing awareness of environmental and <br>ethical responsibilities. Sudden market interventions, calls for enhanced consumer <br>protections and the need for greater transparency in disclosures are encouraging <br>firms to demonstrate compliance, ethical integrity and adaptability. New entrants, <br>without legacy challenges and benefitting from lower regulatory constraints <br>present competitive pressures. The increasing importance of responsible corporate <br>behaviour is prompting a more proactive and thoughtful approach to governance, <br>underpinned by a commitment to legal integrity and sustainable business practices.<br>|
|  |  |  | **Strategic and** <br>**operational** <br>**adaptability**<br>| Disruption from supplier dependencies, infrastructure outages, or severe data <br>loss can significantly impact service delivery and trust. Evolving business models, <br>workforce transformation, and the need to attract and retain future-ready <br>talent places pressure on organisational culture and capability. Balancing <br>operational efficiency with colleague wellbeing, while adapting to a dynamic risk <br>landscape shaped by network vulnerabilities, is critical to sustaining performance <br>and delivering strong customer outcomes. Growing mental health concerns <br>among customers and employees demand an adaptive, resilient and inclusive <br>approach to risk management and strategic planning.<br>|

---

![StratRep_EmergingRisk_pg2.gif](lyg-20251231_g106.gif)

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| **Emerging and topical risk theme** | **Drivers** | **Key mitigating actions** |
| **Consumer** <br>**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 <br>financial services institutions<br>•Societal polarisation<br>| •Review of customer propositions, participation choices <br>by business area. Continued focus on consumer duty, <br>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 <br>demographics<br>|
| **Evolution of** <br>**technology, AI** <br>**and 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 our Group data and model risk policies<br>•Establishing feature teams focused on emerging technology <br>trends such as tokenisation and exploring new partnerships <br>to deliver new capabilities<br>|
| **Geopolitical** <br>**and economic** <br>**environment**<br>| •Extreme weather events<br>•Financial market volatility<br>•Geopolitical influences<br>•Quantitative tightening and <br>fiscal 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** <br>**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 <br>of our colleagues to work remotely where possible, <br>supported by 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>|

---

![StratRep_S172_PageA.gif](lyg-20251231_g107.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Section 172(1) statement

Effective stakeholder

engagement underpins

decision making by the Board

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 boardroom

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.

Further detail on stakeholder engagement is contained within

the directors' report on **pages [76](#i3eaa7a3e529a46b3b97a88e05ad474bc_325) to [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331)**.

Section 172(1) <br>statement<br>This section (**pages [30](#i3eaa7a3e529a46b3b97a88e05ad474bc_82) to [31](#i3eaa7a3e529a46b3b97a88e05ad474bc_85)**) is our Section 172(1) statement <br>for the purposes of the Companies Act 2006 (the Act), <br>describing how the directors have had regard to the matters <br>set out in section 172(1) (a) to (f) of the Act when performing <br>their duty to promote the success of the Company under <br>section 172. Further detail on key stakeholder interaction is <br>also contained within the directors' report on **pages [76](#i3eaa7a3e529a46b3b97a88e05ad474bc_325) to [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331)**.<br>The directors remain mindful in all their deliberations of the <br>long-term consequences of their decisions, as well as the <br>importance of Lloyds Banking Group plc (the Company) <br>maintaining a reputation for high standards of business <br>conduct and the Board engaging with, and taking account of <br>the interests of, stakeholders.<br>The three key Board decisions outlined in this section <br>(Empowering customers through technology and innovation, <br>Growing wealth strategy and unlocking bancassurance <br>potential and Delivering financial reporting at greater pace) <br>illustrate this in practice.<br>

Empowering <br>customers <br>through <br>technology <br>and innovation<br>

**Board considerations:** 

In 2025, in line with the Group's customer-focused strategy, the

Board considered initiatives aimed at accelerating and broadening

the Group'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 Group 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.

![StratRep_S172_PageB.gif](lyg-20251231_g108.gif)

![SectionTabStratRepR.gif](lyg-20251231_g32.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Growing <br>wealth strategy <br>and unlocking <br>bancassurance <br>potential<br>

**Board considerations:** 

The Board has an ongoing commitment to the Group's focus on the

customer, including through its wealth strategy and the offering of

personalised propositions to customers for everyday value and key

life events, both within Insurance, Pensions and Investments (IP&I)

and across the Group more broadly.

**Board initiatives:** 

• In July, the Board approved the acquisition of the outstanding

interest in Schroders Personal Wealth (SPW), the wealth

management and advice business previously operated as a joint

venture with Schroders Group

• The Board engaged with the executive on the transaction's

strategic rationale and the benefits for customers with SPW

subsequently rebranding as Lloyds Wealth

• In May and June, the Board considered the steps being taken

within IP&I to develop the Group's bancassurance model and

enhance customer services

**Future focus:** 

The Board will continue to support the executive to grow and

diversify revenue by strengthening bancassurance and transforming

the Group's wider wealth business with a full advice proposition

available to mass affluent banking customers across brands as well

as to new customers.

Delivering <br>financial <br>reporting at <br>greater pace<br>

**Board considerations:** 

In 2025, the Board and its Audit Committee considered whether

the Group should move to preliminary reporting, reflecting the

Group's strategic ambition to deliver at pace and enhance

transparency with stakeholders.

**Board initiatives:** 

• In June, the Board and its Audit Committee considered the

strategic benefits of preliminary reporting which included earlier

market messaging and focusing senior management on driving

the organisation forwards earlier in 2026, as well as the risks,

such as audit limitations and initial increased implementation

workload for colleagues

• In July, the Board, upon recommendation from the Audit

Committee, approved the half year results announcement,

including disclosure related to the announcement of the

intention to start preliminary reporting at year end

**Future focus:** 

The Board will monitor the impact of this changed approach to

financial reporting on stakeholders. Ongoing engagement with

shareholders, colleagues and external audit will remain a priority

for the Board.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Task Force on Climate-related Financial Disclosures (TCFD)

Creating a sustainable and inclusive future is core to our purpose

of Helping Britain Prosper. We report on sustainability matters

throughout this annual report and accounts (ARA), in particular

in the following sections: (i) Strategic report, **pages [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) to [23](#i73797c7a2a854c7380f32cd0f5fa32f3_9522)**

and **[32](#i3eaa7a3e529a46b3b97a88e05ad474bc_88) to [33](#i3eaa7a3e529a46b3b97a88e05ad474bc_91)**; (ii) Sustainability review on **pages [35](#i3eaa7a3e529a46b3b97a88e05ad474bc_97) to [49](#ie3b988292ad3485cbc6fd2e21427b631_2277)**;

(iii) Risk management on **pages [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i151ae0777a7c4add948f1908eaf3fa7f_12194);** (iv) Governance

**pages [80](#i3eaa7a3e529a46b3b97a88e05ad474bc_337) to [81](#i57de01fbf3504aa88534a76accb93584_0-1-1-3-5233089)**and (v) in the supplementary sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

We comply with the UKLR 6.6.6R(8) and Sections 414CA and

414CB of the UK Companies Act 2006. Our disclosures which

are presented consistent with the 2021 TCFD recommendations

and recommended disclosures across all four of the TCFD pillars:

strategy; governance; risk management; and metrics and targets,

requirements under Sections 414CA and 414CB have been

considered by cross-reference.

Additional detail on our progress against our metrics and targets

can be found in our sustainability report and sustainability

![Icon_Weblink.gif](lyg-20251231_g14.gif)

metrics data sheet . Our separate supplements ensure we

![Icon_Weblink.gif](lyg-20251231_g14.gif)

can provide a comprehensive response, that is presented in

a decision-useful manner for users of the reports.

In addition to the compliance below, in-scope entities within

our Insurance, Pensions and Investments business, which are

incorporated as part of Scottish Widows Group, are required

to report in compliance with FCA ESG Sourcebook Chapter 2

'Disclosures on climate-related financial information' (set out

via FCA PS21/24) reporting requirements for the period ending

31 December 2025. This additional compliance will be met

through Entity and Product level reporting to be published

on the Scottish Widows website in June 2026.

We will continue to assess and develop our disclosures against

the TCFD recommendations and recommended disclosures,

considering relevant TCFD guidance and materials along with

expected disclosure requirements such as UK Sustainability

Reporting Standards: SRS S1 'General requirements' and

SRS S2 'Climate-related disclosures'.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **TCFD and Climate-related financial disclosures cross-reference table** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
| **Recommendations** | **Recommendations** | **Reference (ARA unless specified otherwise)** |
| **Strategy** | **Strategy** | **Strategy** |
| A. Describe the climate-related risks and opportunities the organisation has identified over the short, <br>medium and long term. (Companies Act 2006 – Sections 414CA and 414CB 2A (b) and (d)) | A. Describe the climate-related risks and opportunities the organisation has identified over the short, <br>medium and long term. (Companies Act 2006 – Sections 414CA and 414CB 2A (b) and (d)) | Pages [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) to [41](#ia285bd6242564a929335c15ef92f710e_66-0-1-2-5233089)<br>Pages 44 to 47<br>Pages [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i151ae0777a7c4add948f1908eaf3fa7f_12194) |
| B. Describe the impact of climate-related risks and opportunities on the organisation's business, <br>strategy and financial planning. (Companies Act 2006 – Sections 414CA and 414CB 2A (e)) | B. Describe the impact of climate-related risks and opportunities on the organisation's business, <br>strategy and financial planning. (Companies Act 2006 – Sections 414CA and 414CB 2A (e)) | Pages [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) to [41](#ia285bd6242564a929335c15ef92f710e_66-0-1-2-5233089)<br>Pages [42](#i3eaa7a3e529a46b3b97a88e05ad474bc_127) to [47](#i3eaa7a3e529a46b3b97a88e05ad474bc_166)<br>Pages [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i151ae0777a7c4add948f1908eaf3fa7f_12194)<br>Notes to financial statements<br>Page [228](#i2787c9a6364b4b568558725bd5b1df3c_3078) and pages [278](#i822751746e7a40d08d6d40a4de142911_26681) to [279](#i822751746e7a40d08d6d40a4de142911_26704) |
| C. Describe the resilience of the organisation's strategy, taking into consideration different climate-<br>related scenarios, including a 2°C or lower scenario. (Companies Act 2006 – Sections 414CA and <br>414CB 2A (f)) | C. Describe the resilience of the organisation's strategy, taking into consideration different climate-<br>related scenarios, including a 2°C or lower scenario. (Companies Act 2006 – Sections 414CA and <br>414CB 2A (f)) | Page [48](#i3eaa7a3e529a46b3b97a88e05ad474bc_190) to [49](#ie3b988292ad3485cbc6fd2e21427b631_2277)<br>Pages [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i151ae0777a7c4add948f1908eaf3fa7f_12194)<br>Page [228](#i2787c9a6364b4b568558725bd5b1df3c_3078) and pages [278](#i822751746e7a40d08d6d40a4de142911_26681) to [279](#i822751746e7a40d08d6d40a4de142911_26704) |
| **Governance** | **Governance** |  |
| A. Describe the Board's oversight of climate-related risks and opportunities. (Companies Act 2006 – <br>Sections 414CA and 414CB 2A (a)) | A. Describe the Board's oversight of climate-related risks and opportunities. (Companies Act 2006 – <br>Sections 414CA and 414CB 2A (a)) | Pages [80](#i3eaa7a3e529a46b3b97a88e05ad474bc_337) to [81](#i57de01fbf3504aa88534a76accb93584_0-1-1-3-5233089) |
| B. Describe management's role in assessing and managing climate-related risks and opportunities. <br>(Companies Act 2006 – Sections 414CA and 414CB 2A (a)) | B. Describe management's role in assessing and managing climate-related risks and opportunities. <br>(Companies Act 2006 – Sections 414CA and 414CB 2A (a)) | Pages [80](#i3eaa7a3e529a46b3b97a88e05ad474bc_337) to [81](#i57de01fbf3504aa88534a76accb93584_0-1-1-3-5233089) |
| **Risk Management** | **Risk Management** |  |
| A. Describe the organisation's processes for identifying and assessing climate-related risks. <br>(Companies Act 2006 – Sections 414CA and 414CB 2A (b) | A. Describe the organisation's processes for identifying and assessing climate-related risks. <br>(Companies Act 2006 – Sections 414CA and 414CB 2A (b) | Page [25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67)<br>Pages [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) to [40](#ia285bd6242564a929335c15ef92f710e_42-0-1-2-5233089)<br>Pages [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i151ae0777a7c4add948f1908eaf3fa7f_12194) |
| B. Describe the organisation's processes for managing climate-related risks. (Companies Act 2006 – <br>Sections 414CA and 414CB 2A (b)) | B. Describe the organisation's processes for managing climate-related risks. (Companies Act 2006 – <br>Sections 414CA and 414CB 2A (b)) | Pages [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) to [40](#ia285bd6242564a929335c15ef92f710e_42-0-1-2-5233089)<br>Pages [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i151ae0777a7c4add948f1908eaf3fa7f_12194) |
| C. Describe how processes for identifying, assessing, and managing climate-related risks <br>are integrated into the organisation's overall risk management. (Companies Act 2006 – <br>Sections 414CA and 414CB 2A (c)) | C. Describe how processes for identifying, assessing, and managing climate-related risks <br>are integrated into the organisation's overall risk management. (Companies Act 2006 – <br>Sections 414CA and 414CB 2A (c)) | Pages [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i151ae0777a7c4add948f1908eaf3fa7f_12194) |
| **Metrics and Targets** | **Metrics and Targets** |  |
| A. Disclose the metrics used by the organisation to assess climate-related risks and opportunities in <br>line with its strategy and risk management process (Companies Act 2006 – Sections 414CA and <br>414CB 2A (h)) | A. Disclose the metrics used by the organisation to assess climate-related risks and opportunities in <br>line with its strategy and risk management process (Companies Act 2006 – Sections 414CA and <br>414CB 2A (h)) | Pages [42](#i3eaa7a3e529a46b3b97a88e05ad474bc_130) to [49](#ie3b988292ad3485cbc6fd2e21427b631_2277), [110](#ib4c1e49092864c17a59f364cf8be517d_1187) and [122](#i1792a4c4b9904cb1b50f7f537afee362_1-1-1-3-5233089)<br>Sustainability report pages 62 to 81 and <br>118 to 120  |
| B. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the <br>related risks. (Companies Act 2006 – Sections 414CA and 414CB 2A (h)) | B. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the <br>related risks. (Companies Act 2006 – Sections 414CA and 414CB 2A (h)) | Pages [42](#i3eaa7a3e529a46b3b97a88e05ad474bc_130) to [49](#ie3b988292ad3485cbc6fd2e21427b631_2277)<br>Sustainability report pages 62 to 81 and <br>118 to 120 |
| C. Describe the targets used by the organisation to manage climate-related risks and opportunities <br>and performance against targets. (Companies Act 2006 – Sections 414CA and 414CB 2A (g)) | C. Describe the targets used by the organisation to manage climate-related risks and opportunities <br>and performance against targets. (Companies Act 2006 – Sections 414CA and 414CB 2A (g)) | Pages [42](#i3eaa7a3e529a46b3b97a88e05ad474bc_130) to [49](#ie3b988292ad3485cbc6fd2e21427b631_2277)<br>Sustainability report pages 62 to 81 and <br>118 to 120 |

---

![SectionTabStratRep.gif](lyg-20251231_g8.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Non-financial and sustainability information statement

The Non-Financial Reporting requirements contained in Sections 414CA, 414CB and 414C(7)(b)(i)(iii) of the Companies Act 2006 are

addressed within this section. The table below signposts the information necessary to understand our Group's development, performance

and position and the impact of our activity relating to environmental matters, our employees, social matters, our respect for human rights,

and anti-corruption and anti-bribery matters. We provide cross references to indicate in which part of the Group's reporting the respective

requirements are embedded.

---

| | | | |
|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Non-financial and sustainability information reference table** | **Non-financial and sustainability information reference table** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
| **Statement** | **Statement** | **Information necessary to understand our Group** <br>**and its impact, policies, due diligence and outcomes**<br>| **Reference to the** <br>**annual report and accounts** |
| **Business model** | **Business model** | Our business model | Pages [06](#i3eaa7a3e529a46b3b97a88e05ad474bc_25) to [09](#i3eaa7a3e529a46b3b97a88e05ad474bc_34) |
| **Business model** | **Business model** | Our approach to sustainability materiality and value chain  | Page [38](#i3eaa7a3e529a46b3b97a88e05ad474bc_112) |
| **Business model** | **Business model** | Our strategy  | Page [36](#i3eaa7a3e529a46b3b97a88e05ad474bc_100) |
| **Business model** | **Business model** | Progress and performance based on key non-financial metrics | Pages [20](#i3eaa7a3e529a46b3b97a88e05ad474bc_55) to [21](#i3eaa7a3e529a46b3b97a88e05ad474bc_58) and [42](#i3eaa7a3e529a46b3b97a88e05ad474bc_130) to [49](#ie3b988292ad3485cbc6fd2e21427b631_2276) |
| **Principal risks**  | **Principal risks**  | Risk overview including risk management framework  | Pages [24](#i3eaa7a3e529a46b3b97a88e05ad474bc_64) to [29](#i17b65e487f044c15a4887da9a330401d_10-8-1-1-5233089) |
| **Principal risks**  | **Principal risks**  | Climate risk  | Pages [25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67) and [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i151ae0777a7c4add948f1908eaf3fa7f_12194) |
| **Principal risks**  | **Principal risks**  | Economic crime risk | Pages [26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70) and [179](#i3eaa7a3e529a46b3b97a88e05ad474bc_547) |
| **Principal risks**  | **Principal risks**  | Operational risk  | Pages [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73) and [195](#i3eaa7a3e529a46b3b97a88e05ad474bc_562) to [197](#ie6d562362828442c9d9e501f05837616_14849) |
| **Principal risks**  | **Principal risks**  | Conduct risk  | Pages [26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70) and [153](#i3eaa7a3e529a46b3b97a88e05ad474bc_535) |
| **Our stakeholders** | **Our stakeholders** | Stakeholder engagement | Pages [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61), [30](#i3eaa7a3e529a46b3b97a88e05ad474bc_82) to [31](#i3eaa7a3e529a46b3b97a88e05ad474bc_85) and <br>[76](#i3eaa7a3e529a46b3b97a88e05ad474bc_325) to [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331) |
| **Our stakeholders** | **Our stakeholders** | Further information on how we support our stakeholders is included within <br>the Code of ethics and responsibility and internal colleague policies including ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>Colleague policy<sup>1</sup>, Health and Safety policy<sup>1</sup> and Speak Up policy<sup>1</sup> which are <br>summarised in our sustainability report ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>|  |
| **Climate and** <br>**environmental** <br>**sustainability**  | **Climate and** <br>**environmental** <br>**sustainability**  | Supporting the UK transition and our progress on ambitions and targets | Pages [42](#i3eaa7a3e529a46b3b97a88e05ad474bc_130) to [49](#ie3b988292ad3485cbc6fd2e21427b631_2277) |
| **Climate and** <br>**environmental** <br>**sustainability**  | **Climate and** <br>**environmental** <br>**sustainability**  | Identification, assessment and management of climate risk | Pages [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) to [40](#i3eaa7a3e529a46b3b97a88e05ad474bc_121) and [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i151ae0777a7c4add948f1908eaf3fa7f_12194) |
| **Climate and** <br>**environmental** <br>**sustainability**  | **Climate and** <br>**environmental** <br>**sustainability**  | Task Force on Climate-related Financial Disclosures (TCFD) | Page [32](#i3eaa7a3e529a46b3b97a88e05ad474bc_88) |
| **Climate and** <br>**environmental** <br>**sustainability**  | **Climate and** <br>**environmental** <br>**sustainability**  | Climate-related financial disclosures (CFD)  | Page [32](#i3eaa7a3e529a46b3b97a88e05ad474bc_88) |
| **Climate and** <br>**environmental** <br>**sustainability**  | **Climate and** <br>**environmental** <br>**sustainability**  | Policies which support our approach to environmental sustainability include our <br>sector statements During 2025, we recorded no material environmental incidents ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>or regulatory enforcement actions and reduced operational greenhouse gas emissions <br>year-over-year<br>|  |
| **Social matters** | **Social matters** | Social sustainability risk arises through operational, conduct and credit risk with <br>identified risks and opportunities disclosed along with associated metrics <br>| Pages [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) to [41](#ia285bd6242564a929335c15ef92f710e_66-0-1-2-5233089) |
| **Social matters** | **Social matters** | Core to our purpose, our sustainability strategy identified four social sustainability <br>focus areas, where we can make the biggest difference, while creating opportunities <br>for our future growth. Further detail is included in the sustainability report ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>| Pages [14](#i3eaa7a3e529a46b3b97a88e05ad474bc_40) to [15](#i3eaa7a3e529a46b3b97a88e05ad474bc_43), [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) to [23](#i73797c7a2a854c7380f32cd0f5fa32f3_9522) and <br>[36](#i3eaa7a3e529a46b3b97a88e05ad474bc_100) to [38](#i3eaa7a3e529a46b3b97a88e05ad474bc_115) |
| **Anti-bribery and** <br>**corruption** | **Anti-bribery and** <br>**corruption** | The Group has a dedicated Economic Crime Prevention (ECP) function. The ECP <br>policy sets out the minimum requirements to which all Group businesses must <br>comply across anti-bribery and corruption (ABC); anti-money laundering and <br>counterterrorist financing (AML); fraud; sanctions; and tax evasion. Economic crime <br>is treated as a principal risk. During the year, no bribery or corruption incidents were <br>substantiated, and 99% of in-scope employees completed anti-bribery training<br>| Pages [26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70), [94](#i25738900fd8b45908f4a59d17c8a0218_0-0-10-3-5233089) and [179](#i3eaa7a3e529a46b3b97a88e05ad474bc_547) |
| **Anti-bribery and** <br>**corruption** | **Anti-bribery and** <br>**corruption** | Further policies which support our approach include: Anti-bribery policy statement ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>and Code of ethics and responsibility ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>|  |
| **Respect for** <br>**human rights**  | **Respect for** <br>**human rights**  | The Group is committed to operating in accordance with internationally accepted <br>human rights standards and with all relevant legislation including the UK Modern <br>Slavery Act 2015. The Group's approach to human rights is supported by several <br>Group policies and programmes including: Our Code of Supplier Responsibility ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>which sets out the key social, ethical and environmental values and behaviours that <br>we want our suppliers to abide by. Human rights policy statement , Modern slavery ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>and human trafficking statement and our colleague policy<sup>1</sup>, data privacy policy<sup>1</sup>, ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>data ethics policy<sup>1</sup> and information, cyber and physical security policy<sup>1</sup> which has <br>been summarised within the sustainability report During 2025, we had no ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>substantiated reports of modern slavery across our business and supply chain, and <br>strengthened controls through training and assurance, including continued rollout of <br>our group-wide modern slavery module and executive/Board training.<br>|  |
| **Respect for** <br>**human rights**  | **Respect for** <br>**human rights**  | Topic is considered as part of conduct, economic crime and operational risk | Pages [25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67) to [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73) |
| **Respect for** <br>**human rights**  | **Respect for** <br>**human rights**  | Activities to support our colleagues and promote Inclusion | Pages [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) to [23](#i73797c7a2a854c7380f32cd0f5fa32f3_9522) |
| **Governance** | **Governance** | Key Board discussions and decisions | Pages [30](#i3eaa7a3e529a46b3b97a88e05ad474bc_82) to [31](#i3eaa7a3e529a46b3b97a88e05ad474bc_85) |
| **Governance** | **Governance** | Sustainability governance | Pages [80](#i3eaa7a3e529a46b3b97a88e05ad474bc_337) to [81](#i57de01fbf3504aa88534a76accb93584_0-1-1-3-5233089) |

---

1Certain Group policies, internal standards and guidelines are not published externally.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Viability statement and going concern

**Viability statement**

The directors have an obligation under the UK Corporate

Governance Code to state whether they believe the Company

and the Group will be able to continue in operation and meet their

liabilities as they fall due over a specified period determined by the

directors, taking account of the current position and the principal

risks of the Company and the Group.

In making this assessment, the directors have considered a wide

range of information, including:

• The principal risks and emerging and topical risks which could

impact the performance of the Group

• The 2022 Strategic Review which sets out the Group's customer

and business strategy for the period from 2022 to 2026

• The Group's operating plan which comprises detailed financial,

capital and funding projections together with an assessment

of relevant risk factors for the period from 2026 to 2028

Group, legal entities and divisional operating plans are produced

and subject to rigorous stress testing on an annual basis.

The planning process takes account of the Group's business

objectives, the risks taken to seek to meet those objectives and

the controls in place to mitigate those risks to ensure they remain

within the Group's overall risk appetite.

The Group's annual planning process comprises the following

key stages:

• The Board reviews and agrees the Group's strategy, risk appetite

and objectives in the context of the operating environment and

external market commitments

• The divisional teams develop their operating plans, ensuring

that they are in line with the Group's strategy and risk appetite

• The financial projections and underlying assumptions in respect

of expected market and business changes, emerging and future

expected legal, accounting and regulatory changes, are subject

to rigorous review and challenge from both divisional and

Group executives

• In addition, the Board obtains independent assurance from the

Risk function over the alignment of the plan with Group strategy

and the Board's risk appetite. This assessment performed by the

Risk function also identifies the key risks to delivery of the

Group's operating plan

• The planning process is also underpinned by robust capital and

funding stress testing management policies and toolkits. These

allow the Group to assess compliance of the operating plan with

the Group's risk appetite

The scenarios used for stress testing are designed to consider

a range of plausible risks, vulnerabilities and severities, and take

account of the availability and likely effectiveness of mitigating

actions that could be taken by management to avoid or reduce the

impact or occurrence of the underlying risks. The Group conducts

internal stress testing and completes the PRA regulatory exercises.

In 2025, stress tests have considered a range of economic scenarios

covering multiple outlooks and economic paths, including differing

interest rates paths and a range of severity in other key economic

factors. Group stress results are segmented to provide insight,

inform risk appetite, and allow for development of mitigating

actions. In considering the likely effectiveness of such actions, the

conclusions of the Board's regular monitoring and review of risk and

internal control systems, as discussed on **pages [137](#i3eaa7a3e529a46b3b97a88e05ad474bc_499) to [197](#ie6d562362828442c9d9e501f05837616_14849)**, is taken

into account. Further information on stress testing and reverse

stress testing is provided on **pages [142](#i3eaa7a3e529a46b3b97a88e05ad474bc_508) and [143](#i077679723f76432faf2f84848a081557_6693)**.

• Stress testing outputs are presented to the Board Risk

Committee for review and challenge. All regulatory exercises

are approved by the Board

• The final operating plan, Risk function assessment and the

results of the stress testing are presented to the Board for

approval. Once approved, the operating plan drives detailed

divisional and Group targets for the following year

The directors have specifically assessed the prospects of the

Company and the Group over the current plan period. The Board

considers that a three-year period continues to present a reasonable

degree of confidence over expected events and macroeconomic

assumptions, while still providing an appropriate longer-term

outlook. Information relevant to the assessment can be found in the

following sections of the annual report and accounts:

• The Group's principal activities, business and operating models

and strategic direction are described in the strategic report on

**pages [01](#i3eaa7a3e529a46b3b97a88e05ad474bc_16) to [34](#i3eaa7a3e529a46b3b97a88e05ad474bc_94)**

• Emerging and topical risks are disclosed on **pages [28](#i3eaa7a3e529a46b3b97a88e05ad474bc_76) and [29](#i3eaa7a3e529a46b3b97a88e05ad474bc_79)**

• The principal risks, including the Group's objectives, policies and

processes for managing credit, capital, liquidity and funding, are

provided in the risk management section on **pages [137](#i3eaa7a3e529a46b3b97a88e05ad474bc_499) to [197](#ie6d562362828442c9d9e501f05837616_14849)**

• The Group's approach to stress testing and reverse stress testing,

including both regulatory and internal stresses, is described on

**pages [142](#i3eaa7a3e529a46b3b97a88e05ad474bc_508) and [143](#i077679723f76432faf2f84848a081557_6693)**

Based upon this assessment, the directors have a reasonable

expectation that the Company and the Group will be able to

continue in operation and meet their liabilities as they fall due

over the next three years to 31 December 2028.

---

| | | | |
|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Going concern** |  | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | The going concern of the Company and the Group is dependent <br>on successfully funding their respective balance sheets and <br>maintaining adequate levels of capital.<br>In order to satisfy themselves that the Company and the Group <br>have adequate resources to continue to operate for the <br>foreseeable future, the directors have reviewed the Group's <br>operating plan and its funding and capital positions, including <br>a consideration of the implications of climate change. | The directors have also taken into account the impact of further <br>stress scenarios as well as a number of other key dependencies <br>which are set out in the risk management section under principal <br>risks and uncertainties: funding and liquidity on **pages [181](#i3eaa7a3e529a46b3b97a88e05ad474bc_553) to [186](#i60edd65bad6d4aebb7b62f5dd34077bf_13299)**<br>and capital position on **pages [144](#i3eaa7a3e529a46b3b97a88e05ad474bc_523) to [150](#i8acf0bddbc7d4617a6419c15266da538_18622)**. Additionally, the <br>directors have considered the capital and funding projections <br>of the Company.<br>Accordingly, the directors conclude that the Company and <br>the Group have adequate resources to continue in operational <br>existence for a period of at least 12 months from the date of <br>the approval of the financial statements and therefore it is <br>appropriate to continue to adopt the going concern basis in <br>preparing the accounts. |  |
|  | The going concern of the Company and the Group is dependent <br>on successfully funding their respective balance sheets and <br>maintaining adequate levels of capital.<br>In order to satisfy themselves that the Company and the Group <br>have adequate resources to continue to operate for the <br>foreseeable future, the directors have reviewed the Group's <br>operating plan and its funding and capital positions, including <br>a consideration of the implications of climate change. | The directors have also taken into account the impact of further <br>stress scenarios as well as a number of other key dependencies <br>which are set out in the risk management section under principal <br>risks and uncertainties: funding and liquidity on **pages [181](#i3eaa7a3e529a46b3b97a88e05ad474bc_553) to [186](#i60edd65bad6d4aebb7b62f5dd34077bf_13299)**<br>and capital position on **pages [144](#i3eaa7a3e529a46b3b97a88e05ad474bc_523) to [150](#i8acf0bddbc7d4617a6419c15266da538_18622)**. Additionally, the <br>directors have considered the capital and funding projections <br>of the Company.<br>Accordingly, the directors conclude that the Company and <br>the Group have adequate resources to continue in operational <br>existence for a period of at least 12 months from the date of <br>the approval of the financial statements and therefore it is <br>appropriate to continue to adopt the going concern basis in <br>preparing the accounts. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

![Divider_SusRev.gif](lyg-20251231_g109.gif)

![SectionTabSusRev.gif](lyg-20251231_g110.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Sustainability

review

---

| | |
|:---|:---|
| Sustainability review introduction | [36](#i3eaa7a3e529a46b3b97a88e05ad474bc_100) |
| Our value chain | [38](#i3eaa7a3e529a46b3b97a88e05ad474bc_112) |
| Sustainability risks and opportunities | [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) |
| Supporting the transition to net zero  | [42](#i3eaa7a3e529a46b3b97a88e05ad474bc_130) |

---

Creating a

sustainable

and inclusive

future

**We deliver on our purpose through creating** 

**a more sustainable and inclusive future**

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Sustainability review introduction

**Charlie Nunn**

Group Chief

Executive

![ImageBlock_CharlieNunn.gif](lyg-20251231_g20.gif)

![ImageBlock_ReadFullBiog_QRCode_Only.gif](lyg-20251231_g16.gif)

Read full biography ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>

The Group is committed to a purpose-driven strategy that

supports the needs of our customers, colleagues and communities,

while delivering long-term sustainable returns and creating value

for shareholders.

**Access to quality and affordable housing**

We are proud to play a leading role in the UK's housing market,

working with communities, developers and local partners to

accelerate the delivery of quality, affordable homes for people who

need them most.

In 2025, we provided £17 billion to first-time buyers, supporting

business growth and helping 70,000 customers onto the property

ladder. Last year, we strengthened our mortgage offering with the

launch of 'First Time Buyer Boost', making an additional £5 billion

available to customers who may previously have missed out on

securing a mortgage. By making home ownership possible for

thousands more people, 'Boost' is helping customers realise their

ambitions of home ownership, while driving income growth in

a competitive market.

The Group has a long-standing commitment to support the social

housing sector and our financing is helping more people access

secure, affordable homes, while strengthening lending growth.

A brilliant example is our £100 million financing agreement with

the Sovereign Network Group, which will fund the retrofit of

4,500 social homes. This support will improve energy efficiency,

aiming to make these homes cost-effective, comfortable and

quality places to live.

Beyond championing the social housing sector, we are broadening

access to home ownership and making it easier to access new,

energy-efficient family homes. Through Lloyds Living, we now

operate a growing portfolio of over 5,450 professionally managed

homes, offering more rental and shared ownership options to

customers across the UK. Through our market-leading role in the UK's

housing sector, we are successfully growing our business, while

helping more people move into quality homes and build their futures.

**Empowering a prosperous future**

As the UK's only integrated financial services provider, we are deeply

committed to empowering our customers to achieve their financial

ambitions.

Since launching Ready-Made Pensions in 2024, we've opened over

7,000 accounts, helping customers access simple, flexible ways to

build their retirement savings. Our Ready-Made Investments are

empowering people to take control of their finances, with c.84,000

customers starting to invest since launch. With a market-leading

fund charge, more of our customers' money is invested directly into

their futures, with over £500 million invested to date. Both offerings

mean we're supporting a growing customer base, while contributing

to an increase in other operating income through management fees.

We are using our extensive data and digital capabilities to

strengthen customers' credit health and improve access to

borrowing. Over 500,000 customers improved their credit scores

every quarter last year, building resilience and confidence.

Our Benefits Calculator highlighted £93.3 million of support payable

to customers, and we paid £9.1 billion in interest payments in 2025,

supporting everyday resilience and deepening customer and

client relationships.

**Supporting regional development** 

**and communities**

We are committed to supporting growth and creating opportunities

in regions and communities across the UK. In the North West, we

acted as mandate lead arranger for a £154 million debt commitment

to a critical carbon capture infrastructure project that creates 2,000

jobs, demonstrating how our finance delivers commercial growth and

regional development, while reducing emissions.

Last year, we supported the Community Development Finance sector

as it continues to scale. Our initial £43 million investment in 2024,

delivered through the £1 billion Regional Impact Fund, has since

supported over 370 regional businesses and helped unlock new

capital in local economies.

Our Lloyds Bank Foundations are another useful community

asset and we marked their 40th anniversary in 2025. Since the

Foundations were established in 1985, we have donated over

£800 million and countless hours of our colleagues' time in support

of small and local charities across the UK. Beyond our Foundations,

our colleagues also spent more than 11,000 hours volunteering for

national homelessness charity Crisis, raising almost £5 million since

the start of our partnership in 2023. Our deep-rooted presence in UK

communities reflects the enduring impact of our charitable initiatives

and the strength of our commercial success, working together to

create lasting value for customers and communities.

**Building an inclusive organisation**

We are clear that our workforce needs to reflect the customers and

communities we serve. Over the past year, we have continued to

advance our 2030 inclusion ambitions, strengthening our focus on

increasing representation in executive roles. We remain committed

to removing barriers and providing opportunities for people to reach

their potential regardless of their socio-economic backgrounds. In

2025, our youth outreach programmes supported over 100,000

people across school, college and university, building essential skills

and strengthening the Group's talent pipeline. Ensuring that

we build an inclusive workforce means we can attract – and retain –

the exceptional talent we need to deliver on our strategy and build

a business that meets evolving customer needs.

**Supporting the UK transition**

We continue to strengthen the resilience of our balance sheet and

investment portfolios by deploying capital to support the UK's

transition. Since 2022, we have provided £70.9 billion of sustainable

finance and we have now invested £81.3 billion in climate-aware

strategies since 2020.

We are structuring new forms of finance that link institutional capital

to critical national infrastructure. One example is our support for the

first corporate issuance of a blue bond in sterling, co-coordinating

£250 million for London's Thames Tideway Tunnel. Once completed,

we expect that the tunnel will reduce pollution, support the capital's

long-term water resilience. It showcases how innovation in

sustainable finance can drive positive societal impact and robust

financial outcomes. Alongside this leadership in nature-based

finance, we continue to play a critical role in strengthening the UK's

energy security. Our support for major national projects, including

Sizewell C, reflects our commitment to backing large-scale, clean

power that will help secure reliable, affordable energy for the UK.

These examples underline how we are supporting the long-term

resilience of critical infrastructure, while unlocking significant

commercial growth opportunities aligned to the UK's transition.

**Continuing to deliver in 2026**

We continue 2026 from a position of strength with a clear focus on

purposeful growth. By combining positive impact with sustainable,

long-term returns, we will continue to deliver on our purpose of

Helping Britain Prosper.

![SusRev_OurPurposeInActionHighlights.gif](lyg-20251231_g111.gif)

![SectionTabSusRevR.gif](lyg-20251231_g112.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**>£93m**<br>of benefits highlighted <br>as payable to customers <br>since the launch of our <br>Benefits Calculator<br>

Championing sustainable <br>infrastructure finance<br>The Group played a pivotal role in supporting Tideway's issuance of the <br>first sterling corporate blue bond by a UK corporate, raising £250 million <br>to finance the final stages of London's Thames Tideway Tunnel.<br>This innovative financing accelerates the UK's environmental goals by <br>reducing sewage pollution spills in the River Thames by around 95%, <br>while generating returns for investors and the Group. <br>By connecting institutional capital to critical infrastructure, Lloyds Bank <br>helps ensure long-term water resilience, supports local jobs, and fosters a <br>cleaner environment, demonstrating how sustainable finance can deliver <br>both positive societal impact and robust financial outcomes for the UK.<br>

![SusRev_OurPurposeInAction_Graphic.gif](lyg-20251231_g113.gif)

Group financing secures <br>regional water supply<br>The Haweswater Aqueduct Resilience Programme (HARP) demonstrates <br>how collaboration across the Group delivers value for customers and <br>sustainable returns.<br>By leveraging expertise from multiple teams, the Group committed <br>£100 million in long-term financing, as part of a £3 billion deal, a project <br>to safeguard the daily supply of clean drinking water for up to 2.5 million <br>people across Cumbria, Lancashire and Greater Manchester. <br>The project will create up to 1,200 local jobs, and channels annuity <br>customers' investments into impactful projects. The result is a model <br>that benefits communities, facilitates competitive pricing and generates <br>sustainable returns. <br>

Partnerships to <br>deliver more social <br>and supported <br>housing <br>In 2025, the Group partnered with <br>Homewards, a programme led by HRH The <br>Prince of Wales and The Royal Foundation, <br>to help make homelessness rare, brief and <br>unrepeated in six locations across the UK.<br>Aligned with the Group's purpose of Helping <br>Britain Prosper, we committed £50 million <br>in new lending to support small and <br>medium-sized housing providers and <br>charities in the Homewards locations <br>and Liverpool, including those offering <br>wrap-around support for individuals <br>with complex needs. <br>This partnership will combine funding <br>with sector expertise, increasing access <br>to good quality housing.<br>

**c.1,800**<br>colleagues enrolled in <br>new reskilling pathways <br>to develop future skills<br>

![SusRev_OurPurposeInAction_LinkToStrategy_Partnerships.gif](lyg-20251231_g114.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our value chain

Developing our value chain

and materiality approach

**Our value chain**

At the heart of our purpose of Helping Britain Prosper is a desire

to create value for all our stakeholders by understanding what

matters to them. Engaging with and listening to our stakeholders

is intrinsic to our business in order for us to act in a trusted

and responsible manner.

As one of the largest UK financial services organisations with the

majority of our operations and exposure in the UK, we are impacted

by the country's macroeconomic, regulatory, political and physical

environment – which poses challenges and creates dependencies

as well as opportunities for the business. Our role is to facilitate

the flow of funds between participants in the economy, act as

custodians of financial assets and protect value for our customers,

all while considering long-term trends and their impact on what

we do and the value we create for the society and communities

in which we operate.

Our customers, clients and shareholders input into our operations

by trusting us with their savings and investments. We, in turn, ensure

that capital is allocated efficiently to support borrowing needs and

deliver value for those we serve.

Access to credit supports economic growth, as customers and

clients use their borrowings to make investments and purchases,

propelling production and infrastructure development, supporting

communities and wider society. We work with our customers and

clients to make sure we help them fulfil their ambitions delivering

products in a responsible manner.

Our operations are built around this management of capital for our

stakeholders requiring safeguarding of our customers' money and

data. We know our colleagues are the key ingredient to our success

and we aim to create an inclusive and supportive environment in

which everyone can thrive. Suppliers are asked to comply with

specific Third Party Supplier Policies when applicable to the services

they provide. All suppliers are expected to conform to our Code of

Supplier Responsibility. We operate with prudent and appropriate

internal risk management, together with our regulators, ensuring

we protect our customers and clients, colleagues and communities.

We deliver sustainable returns to our shareholders while maintaining

a safe, stable and prosperous financial system for the UK.

We consider 'materiality' to be the threshold at which a

sustainability matter becomes sufficiently important to our

investors and other stakeholders that it should be reported. We

also consider disclosure standards and other applicable rules and

regulations as part of our materiality assessment for determining

material topics and the associated risks and opportunities arising

from these topics. Further detail on how we apply materiality in

determining our climate risks can be found within our risk

management section on **page [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529).**

![SusRev_OurValueChain_WePrioritiseBox.gif](lyg-20251231_g115.gif)

![SusRev_OurValueChain_MaterialTopicsBox.gif](lyg-20251231_g116.gif)

**Our material sustainability topics**

Our material topics list considers both our external and internal

environments, which includes our value chain, markets in which we

operate, products, services and activities, as well as horizon scanning

and stakeholder engagement. Our internal environment includes

colleagues, processes and policies, culture and management.

---

| | | |
|:---|:---|:---|
| **We prioritise our material topics based on:** | **We prioritise our material topics based on:** | |
| **We prioritise our material topics based on:** | **We prioritise our material topics based on:** | |
| **We prioritise our material topics based on:** | **We prioritise our material topics based on:** |  |
| **We prioritise our material topics based on:** | **We prioritise our material topics based on:** | ![Button_Number1_Black.gif](lyg-20251231_g95.gif) |
| The strategic importance of the issue to the Group |  | ![Button_Number1_Black.gif](lyg-20251231_g95.gif) |
| ![Button_Number2_Black.gif](lyg-20251231_g96.gif) |  |  |
| ![Button_Number2_Black.gif](lyg-20251231_g96.gif) | The importance of the issue to our stakeholders |  |
| ![Button_Number3_Black.gif](lyg-20251231_g97.gif) |  |  |
| ![Button_Number3_Black.gif](lyg-20251231_g97.gif) | The social, economic and environmental impact of each <br>topic in relation to the core activities, products and <br>services provided by the Group <br>|  |

---

Our materiality review and impact analysis was initially undertaken

in line with the UNEP FI Principles for Responsible Banking and

among other inputs, the UN Sustainability Development Goals

(SDGs) in 2020 and is refreshed and reviewed annually. In 2025,

we reviewed our commercial exposures and operations to refresh

both our positive and negative impacts and sustainability-related

risks and opportunities. We confirmed our analysis and advanced

our approach to financial materiality, integrating sustainability

considerations into existing materiality processes and tools.

Identifying and assessing our material sustainability risks allows us

to understand where we have the opportunities to deliver impact.

The assessment of our opportunities drives our strategy and

business model through our purpose pillars, with progress measured

against our ambitions, targets and pledges.

---

| | |
|:---|:---|
| **Our assessment has identified the following material topics:** | **Our assessment has identified the following material topics:** |
| •Artificial intelligence<br>•Biodiversity and nature <br>•Climate change <br>and transition<br>•Cyber security and <br>data privacy <br>•Diversity, equity <br>and inclusion<br>| •Financial crime<br>•Financial inclusion <br>and resilience<br>•Governance and <br>conduct<br>•Health and wellbeing <br>of colleagues<br>•Human rights<br>•Regional inequalities |
| Further details on these material <br>topics and our responses to managing <br>these areas can be found on page 2 in <br>our sustainability report ![Icon_Weblink_White.gif](lyg-20251231_g12.gif) | Further details on these material <br>topics and our responses to managing <br>these areas can be found on page 2 in <br>our sustainability report ![Icon_Weblink_White.gif](lyg-20251231_g12.gif) |

---

**Future developments to our materiality approach** 

We are leveraging the knowledge gained from our understanding

of our value chain and material topics to enhance our materiality

approach in readiness for upcoming reporting standards. The Group

is reviewing the regulatory landscape and preparing for readiness to

report in alignment with expected UK government endorsement of

UK Sustainability Reporting Standards. Our current expectation is

that the Group will be required to report under EU CSRD for the

financial year 2028.

![SusRev_SustainabilityRisks.gif](lyg-20251231_g117.gif)

![SectionTabSusRev.gif](lyg-20251231_g110.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Sustainability risks and opportunities

**Integrating material topics into risk management** 

Our material topics have helped inform our understanding

of the Group's key sustainability risks and opportunities,

across a range of Environmental, Social and Governance topics.

Identifying and assessing our material sustainability topics and

associated risks and opportunities allows us to align them to, and

consider their impact on, our strategy and purpose pillars, and be

cognisant of their impact on our business model both now and in

the future.

**Sustainability risks** 

As shown in the table on the next page, the impacts from

sustainability risks largely manifest through other principal risks that

the Group faces (including credit, conduct and operational risks).

Our approach to principal risk identification, assessment and

management as part of our risk management framework can

be found on **page [141](#i222c505da66444c19d8b691fc1c1f853_5321)**. For sustainability-related risks our ambition

is to embed consideration of these risks into our wider risk

management processes.

Risks covering social and governance matters are considered

in line with the material topics we have identified. In addition,

environmental risks (encompassing Climate and Nature) are primarily

considered to arise through two channels, physical or transition risks:

• Physical risks arising from changes in climate or weather

patterns, or the degradation of nature. These can either be acute

(event driven such as floods, storms or pest outbreaks), or

chronic (longer-term shifts such as rising sea levels or droughts)

• Transition risks due to societal changes or those associated with

moving towards a low carbon economy and nature recovery,

including changes to policy, legislation and regulation, technology

and market, or legal risks from failing to manage the transition

Consideration of sustainability-related risks within our risk

management framework continues to develop, with our approach

most mature in our established approach to ESG credit risk

management. Further details on this process can be found within

oursustainability report **.**

![Icon_Weblink.gif](lyg-20251231_g14.gif)

We will continue to enhance our overall approach to credit and

other risks as part of further development of the Group's approach

to risk management and principal risks we face.

**Sustainability opportunities** 

Our biggest opportunities to support business growth, our

colleagues and our customers, are in relation to the areas where

we have the largest lending and investment portfolios.

Understanding our risks and impacts helps us to identify key

opportunities to support our customers. Identifying and assessing

our material risks (including climate) allows us to understand where

we have the opportunities to deliver impact.

The identification, assessment and management of our

opportunities is undertaken on a regular basis by our functional-level

and divisional teams, and approval of new initiatives governed in line

with our sustainability governance structure, as detailed on**pages [80](#i3eaa7a3e529a46b3b97a88e05ad474bc_337)**

**to [81](#i57de01fbf3504aa88534a76accb93584_0-1-1-3-5233089)**.

Through this work we have identified opportunities aligned to our

purpose pillars outlined on **page [14](#i3eaa7a3e529a46b3b97a88e05ad474bc_40)**, such as responding to increasing

customer preference for sustainable products and lending,

supporting investment in transition-related technology, embracing

opportunities to reduce our carbon footprint, increasing the supply

of social and affordable housing as well as empowering and

supporting our customers and clients to build financial resilience.

The assessment of our opportunities drives our strategy

and business model through our purpose pillars, with progress

measured against our ambitions, targets and pledges.

We assess material risks and opportunities over the short,

medium and long term as sustainability-related matters materialise

over time. The timings of these will also be impacted by external

factors, such as government policy and regulation, technology

developments, as well as our customers' response. We have aligned

time frames to those used for business planning:

![SusRev_SustainabilityRisks_TermBar.gif](lyg-20251231_g118.gif)

The table within this section provides an overview of our

sustainability risks and opportunities assessment.

---

| | | |
|:---|:---|:---|
| ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) | **Purpose in action** | ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) |

---

Supporting our agricultural

clients to transition

Moor Farm, a 154-hectare enterprise in Baschurch, Shropshire,

demonstrates how sustainability and profitability can work

hand in hand.

After experiencing financial challenges in the cattle business,

they adopted regenerative practices inspired by Gabe Brown.

Key actions included eliminating ad-lib feed, saving £30,000

annually and transitioning to a grass-based system with

strip grazing.

Participation in the Soil Association Exchange baselining

audit, funded by Lloyds Bank, enables Moor Farm to measure

sustainability performance, track progress, and make targeted

improvements. Adoption of regenerative practices, quantified

through the SAX tool, opens access to premium markets. With

demand for ethical, low-carbon food rising, the farm is well

positioned to capture new revenue streams. Moor Farm

illustrates how regenerative agriculture can deliver cost savings,

climate resilience, and market differentiation, offering significant

potential for profitability and sustainability when scaled across

the sector.

We are committed to supporting customers on their transition

journeys, recognising that sustainable business practices are

essential for long-term prosperity.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Sustainability risks and opportunities continued

![SusRev_SustainabilityRisksDrivers_Key.gif](lyg-20251231_g119.gif)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Risks** | **Risks** | **Risks** | **Risks** | **Risks** | **Risks** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
| **Risk description**  | **Risk description**  | **Principal risk** | **Driver** | **Time** <br>**horizon**<br>| **How this is monitored**  | **Sustainability** <br>**Material Topic**<br>|  |
| Deterioration in customers' creditworthiness, <br>affordability or valuations of assets and <br>investments from the transition towards <br>a low-carbon economy and/or the impact of <br>extreme weather events or natural hazards | Deterioration in customers' creditworthiness, <br>affordability or valuations of assets and <br>investments from the transition towards <br>a low-carbon economy and/or the impact of <br>extreme weather events or natural hazards | **Credit,** <br>**Market**<br>| ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>![SusRev_Icon_TransitionPolicyAndLegal.gif](lyg-20251231_g121.gif)<br>![SusRev_Icon_TransitionTechnology.gif](lyg-20251231_g122.gif)<br>![SusRev_Icon_TransitionMarket.gif](lyg-20251231_g123.gif)<br>![SusRev_Icon_PhysicalAcute.gif](lyg-20251231_g124.gif)<br>![SusRev_Icon_PhysicalChronic.gif](lyg-20251231_g125.gif)<br>| Short, <br>Medium, <br>Long <br>| Elements of climate change incorporated into annual <br>ECL assessment, see **page [278](#i822751746e7a40d08d6d40a4de142911_26681)**, along with a range of <br>quantitative metrics across portfolios, for example, <br>EPC ratings and flood risk for residential mortgages. <br>Qualitative updates on nature, although <br>measurement capability is still evolving<br>| Climate change, <br>Biodiversity and <br>nature | Climate change, <br>Biodiversity and <br>nature |
| General insurance – greater losses from higher <br>volume of home insurance claims  | General insurance – greater losses from higher <br>volume of home insurance claims  | **Insurance** <br>**underwriting**<br>| ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>![SusRev_Icon_PhysicalAcute.gif](lyg-20251231_g124.gif)<br>![SusRev_Icon_PhysicalChronic.gif](lyg-20251231_g125.gif)<br>| Short, <br>Medium,<br>Long <br>| Defined risk appetite. For further details of insurance <br>risk and policy, please see page 133 of our <br>sustainability report ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>| Climate change  | Climate change  |
| Life insurance – changes in mortality, morbidity <br>and longevity risks driven by climate and <br>environment, such as changes in air quality, <br>temperature and vector-borne diseases  | Life insurance – changes in mortality, morbidity <br>and longevity risks driven by climate and <br>environment, such as changes in air quality, <br>temperature and vector-borne diseases  | **Insurance** <br>**underwriting**<br>| ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>![SusRev_Icon_PhysicalAcute.gif](lyg-20251231_g124.gif)<br>![SusRev_Icon_PhysicalChronic.gif](lyg-20251231_g125.gif)<br>| Short, <br>Medium,<br>Long<br>| Deaths, critical illness, sickness inception and <br>recovery rates, policy lapses and paid-up rates for <br>material business lines are monitored and managed. <br>Pricing and product terms and conditions are <br>designed to reduce risk<br>| Climate change, <br>Biodiversity and <br>nature<br>|  |
| Disruption to the Group's supply chain or <br>damage to premises due to increased frequency <br>and severity of extreme weather events, such <br>as floods and storms affecting services | Disruption to the Group's supply chain or <br>damage to premises due to increased frequency <br>and severity of extreme weather events, such <br>as floods and storms affecting services | **Operational** | ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>![SusRev_Icon_PhysicalAcute.gif](lyg-20251231_g124.gif)<br>![SusRev_Icon_PhysicalChronic.gif](lyg-20251231_g125.gif)<br>| Short, <br>Medium,<br>Long<br>| Invocation of Group Incident Management (GIM) <br>Operational Framework. Incident reports reviewed <br>monthly at Group Incident Operating Forum (GIOF) <br>| Climate change, <br>Biodiversity and <br>nature | Climate change, <br>Biodiversity and <br>nature |
| Failure to deliver on our voluntary sustainability <br>commitments including supporting the <br>transition to net zero | Failure to deliver on our voluntary sustainability <br>commitments including supporting the <br>transition to net zero | **Compliance** | ![SusRev_Icon_TransitionReputation.gif](lyg-20251231_g126.gif) | Short, <br>Medium, <br>Long<br>| Progress against our emission reduction targets and <br>sustainable lending and investments. For further <br>details please see **pages [43](#i3eaa7a3e529a46b3b97a88e05ad474bc_142) to [47](#ib3406494d6f4496991f9739e54439915_1392)**<br>| Climate change,<br>Governance and <br>conduct | Climate change,<br>Governance and <br>conduct |
| Material errors in external sustainability <br>reporting, or failure to meet the relevant <br>disclosure requirements  | Material errors in external sustainability <br>reporting, or failure to meet the relevant <br>disclosure requirements  | **Operational** | ![SusRev_Icon_TransitionPolicyAndLegal.gif](lyg-20251231_g121.gif) | Short, <br>Medium<br>| Qualitative updates provided to Group executive <br>committees. Further details can be found on <br>**pages [80](#i3eaa7a3e529a46b3b97a88e05ad474bc_337) to [81](#i57de01fbf3504aa88534a76accb93584_0-1-1-3-5233089)**<br>| Climate change, <br>Diversity, equity <br>and inclusion, <br>Human rights | Climate change, <br>Diversity, equity <br>and inclusion, <br>Human rights |
| External perception of greenwashing in the <br>Group's disclosures, marketing or product <br>communications | External perception of greenwashing in the <br>Group's disclosures, marketing or product <br>communications | **Conduct**  | ![SusRev_Icon_TransitionPolicyAndLegal.gif](lyg-20251231_g121.gif)<br>![SusRev_Icon_TransitionReputation.gif](lyg-20251231_g126.gif)<br>| Short, <br>Medium<br>| Qualitative updates as part of executive governance <br>on the Group's communications strategy and <br>associated policy framework<br>| Governance and <br>conduct | Governance and <br>conduct |
| Financial hardship as a result of <br>macroeconomic pressures resulting <br>in delinquencies | Financial hardship as a result of <br>macroeconomic pressures resulting <br>in delinquencies | **Credit,** <br>**Market**<br>| ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium<br>| Scenario updates are presented to executive <br>committees on a regular basis. See **page [92](#i3eaa7a3e529a46b3b97a88e05ad474bc_352)**<br>| Financial inclusion <br>and resilience | Financial inclusion <br>and resilience |
| Financial education gaps in society resulting in <br>lower engagement with financial products and <br>lower level of financial resilience | Financial education gaps in society resulting in <br>lower engagement with financial products and <br>lower level of financial resilience | **Credit,** <br>**Conduct**<br>| ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium<br>| Purpose pillar updates are provided to Responsible <br>Business Committee. See **page [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355)**<br>| Financial inclusion <br>and resilience | Financial inclusion <br>and resilience |
| Artificial intelligence impacting customer <br>service experience and presenting limitations <br>for customers with accessibility needs | Artificial intelligence impacting customer <br>service experience and presenting limitations <br>for customers with accessibility needs | **Conduct** | ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium<br>| Qualitative updates given to Board Risk Committee <br>see **page [81](#i57de01fbf3504aa88534a76accb93584_0-1-1-3-5233089)**<br>| Financial inclusion <br>and resilience, <br>Governance and <br>conduct | Financial inclusion <br>and resilience, <br>Governance and <br>conduct |
| Colleague wellbeing – the failure to provide <br>an appropriate colleague culture, reward, <br>talent management and wellbeing policies <br>and process | Colleague wellbeing – the failure to provide <br>an appropriate colleague culture, reward, <br>talent management and wellbeing policies <br>and process | **Operational** | ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium<br>| Quantitative and qualitative indicators, such as <br>succession, diversity, retention see **pages [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) to [23](#id5a09873a2b64b69bddd405c4c5c041e_1-2-1-1-5233089)**<br>| Diversity, equity and <br>inclusion, Health and <br>wellbeing of <br>colleagues | Diversity, equity and <br>inclusion, Health and <br>wellbeing of <br>colleagues |
| Changes in social sentiment and expectations <br>of the Group in relation to sustainability topics | Changes in social sentiment and expectations <br>of the Group in relation to sustainability topics | **Conduct** | ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Medium, <br>Long<br>| Scenario updates are presented to executive <br>committees on a regular basis. See **page [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355)**<br>| Financial inclusion <br>and resilience, <br>Health and <br>wellbeing of <br>colleagues | Financial inclusion <br>and resilience, <br>Health and <br>wellbeing of <br>colleagues |
| Losses incurred by our customers and <br>organisation due to economic crime. | Losses incurred by our customers and <br>organisation due to economic crime. | **Economic** <br>**crime**<br>| ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium<br>| Risks monitored through regular updates to <br>executive committees, key indicators and risk <br>appetite reviews. See **page [179](#i3eaa7a3e529a46b3b97a88e05ad474bc_547)**<br>| Financial crime | Financial crime |
| Ineffective technology implementation could <br>result in service disruption due to internal <br>failure or cyber-attack, threatening business <br>continuity and customer experience | Ineffective technology implementation could <br>result in service disruption due to internal <br>failure or cyber-attack, threatening business <br>continuity and customer experience | **Operational** | ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium, <br>Long <br>| Qualitative updates given to Responsible Business <br>Committee see **page [81](#i57de01fbf3504aa88534a76accb93584_0-1-1-3-5233089)**<br>| Cyber security and <br>data privacy, <br>Governance and <br>conduct  | Cyber security and <br>data privacy, <br>Governance and <br>conduct  |

---

![SectionTabSusRev.gif](lyg-20251231_g110.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Opportunities**  | **Opportunities**  | **Opportunities**  | **Opportunities**  | **Opportunities**  | **Opportunities**  | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
| **Opportunity description**  | **Opportunity description**  | **Principal risk** | **Driver** | **Time** <br>**horizon**<br>| **How this is monitored** | **Sustainability** <br>**Material Topic**<br>|  |
| Reducing the emissions and improving the <br>resilience of our own operations | Reducing the emissions and improving the <br>resilience of our own operations | **Operational,** <br>**Climate**<br>| ![SusRev_Icon_TransitionTechnology.gif](lyg-20251231_g122.gif)<br>![SusRev_Icon_TransitionMarket.gif](lyg-20251231_g123.gif)<br>![SusRev_Icon_TransitionReputation.gif](lyg-20251231_g126.gif)<br>| Short, <br>Medium<br>| Our own operational pledges. For further details, see <br>page 70 of our sustainability report ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>| Climate change | Climate change |
| Providing finance to support investment in <br>climate-related technology and solutions | Providing finance to support investment in <br>climate-related technology and solutions | **Market,** <br>**Climate,** <br>**Credit**<br>| ![SusRev_Icon_TransitionTechnology.gif](lyg-20251231_g122.gif)<br>![SusRev_Icon_TransitionMarket.gif](lyg-20251231_g123.gif)<br>| Short, <br>Medium<br>| Our Commercial Banking sustainable lending target <br>see **page [45](#i0a4bd6cf33044bffa034e70143d9e15e_1-1-2-1-5233089)**<br>| Climate change | Climate change |
| Develop products to support sustainable <br>projects including loans and green bonds | Develop products to support sustainable <br>projects including loans and green bonds | **Market,** <br>**Credit**<br>| ![SusRev_Icon_TransitionTechnology.gif](lyg-20251231_g122.gif)<br>![SusRev_Icon_TransitionMarket.gif](lyg-20251231_g123.gif)<br>![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium<br>| Our sustainable lending targets. For further details <br>please see **page [45](#i0a4bd6cf33044bffa034e70143d9e15e_1-1-2-1-5233089)**<br>| Climate change, <br>Regional inequalities | Climate change, <br>Regional inequalities |
| Increasing consumer preference for <br>sustainable products | Increasing consumer preference for <br>sustainable products | **Market** | ![SusRev_Icon_TransitionTechnology.gif](lyg-20251231_g122.gif)<br>![SusRev_Icon_TransitionMarket.gif](lyg-20251231_g123.gif)<br>![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium<br>| Our Scottish Widows Lifetime Investments default <br>proposition for workplace customers includes <br>funds that integrate ESG-tilts and apply our <br>exclusions policy<br>| Climate change, <br>Regional <br>inequalities, <br>Financial inclusion <br>and resilience | Climate change, <br>Regional <br>inequalities, <br>Financial inclusion <br>and resilience |
| Develop industry partnerships to help drive <br>sustainable, low carbon and nature positive <br>solutions for our customers to transition | Develop industry partnerships to help drive <br>sustainable, low carbon and nature positive <br>solutions for our customers to transition | **Conduct,** <br>**Climate**<br>| ![SusRev_Icon_TransitionTechnology.gif](lyg-20251231_g122.gif)<br>![SusRev_Icon_TransitionMarket.gif](lyg-20251231_g123.gif)<br>![SusRev_Icon_TransitionReputation.gif](lyg-20251231_g126.gif)<br>| Short, <br>Medium<br>| Our sustainable lending targets. For further details <br>please see **page [45](#i0a4bd6cf33044bffa034e70143d9e15e_1-1-2-1-5233089)**. For details on our partnerships <br>that support the UK transition see our website ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>| Climate change, <br>Biodiversity <br>and nature, <br>Regional inequalities | Climate change, <br>Biodiversity <br>and nature, <br>Regional inequalities |
| Supporting nature recovery projects as a test <br>and learning on how we can leverage green <br>finance to support nature restoration in <br>the future | Supporting nature recovery projects as a test <br>and learning on how we can leverage green <br>finance to support nature restoration in <br>the future | **Market,** <br>**Credit**<br>| ![SusRev_Icon_TransitionMarket.gif](lyg-20251231_g123.gif) | Medium, <br>Long<br>| Internal KPIs set at a project level  | Biodiversity and <br>nature | Biodiversity and <br>nature |
| Transforming the inclusion of our business <br>to support our colleagues and enable us <br>to develop more inclusive and accessible <br>products to serve our customers | Transforming the inclusion of our business <br>to support our colleagues and enable us <br>to develop more inclusive and accessible <br>products to serve our customers | **Operational** | ![SusRev_Icon_TransitionReputation.gif](lyg-20251231_g126.gif)<br>![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium<br>| Colleague inclusion performance see **page** **[23](#id5a09873a2b64b69bddd405c4c5c041e_1-2-1-1-5233089)**<br>and support provided to businesses owned <br>by Black, disabled and women entrepreneurs, see <br>page 28 of our sustainability report ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>| Diversity, equity and <br>inclusion, Human <br>Rights | Diversity, equity and <br>inclusion, Human <br>Rights |
| Digital and artificial intelligence tools to <br>support, empowering customers financial <br>resilience and to identify customer <br>vulnerabilities while ensuring good outcomes <br>for customers  | Digital and artificial intelligence tools to <br>support, empowering customers financial <br>resilience and to identify customer <br>vulnerabilities while ensuring good outcomes <br>for customers  | **Conduct,** <br>**Operational**<br>| ![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif) | Short, <br>Medium<br>| Qualitative updates given to Responsible Business <br>Committee see **page [81](#i57de01fbf3504aa88534a76accb93584_1-1-1-3-5233089)**<br>| Artificial Intelligence, <br>Financial inclusion <br>and resilience, <br>Governance and <br>conduct | Artificial Intelligence, <br>Financial inclusion <br>and resilience, <br>Governance and <br>conduct |
| Opportunities to invest in the UK's regions and <br>develop products and services that support <br>regeneration, job creation and productivity, <br>collaborating with government | Opportunities to invest in the UK's regions and <br>develop products and services that support <br>regeneration, job creation and productivity, <br>collaborating with government | **Conduct,** <br>**Operational**<br>| ![SusRev_Icon_TransitionReputation.gif](lyg-20251231_g126.gif)<br>![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium<br>| Funding provided to support communities and <br>regions within the UK. See pages 37 to 47 of our <br>sustainability report ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>| Regional inequalities | Regional inequalities |
| Support the government ambitions increasing <br>accessibility and availability of affordable <br>quality and sustainable housing  | Support the government ambitions increasing <br>accessibility and availability of affordable <br>quality and sustainable housing  | **Conduct,** <br>**Operational**<br>| ![SusRev_Icon_TransitionMarket.gif](lyg-20251231_g123.gif)<br>![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium, <br>Long <br>| First time buyer performance and sustainable <br>or sustainability-linked social housing financing <br>to the social housing sector. See page 14 of our <br>sustainability report ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>| Regional <br>inequalities, <br>Financial inclusion <br>and resilience | Regional <br>inequalities, <br>Financial inclusion <br>and resilience |
| Develop products that support customer <br>lifestyle needs (e.g. pension products; income <br>protection) so the Group can support our <br>customers to plan for the future, and grow our <br>customer base and assets under management  | Develop products that support customer <br>lifestyle needs (e.g. pension products; income <br>protection) so the Group can support our <br>customers to plan for the future, and grow our <br>customer base and assets under management  | **Conduct,** <br>**Operational** <br>| ![SusRev_Icon_TransitionTechnology.gif](lyg-20251231_g122.gif)<br>![SusRev_Icon_TransitionMarket.gif](lyg-20251231_g123.gif)<br>![SusRev_Icon_SocialRisk.gif](lyg-20251231_g120.gif)<br>| Short, <br>Medium <br>| Our workplace pension, Ready-Made Pension, <br>Ready-Made Investments and insurance offerings. <br>See pages 31 to 32 of our sustainability report ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>| Financial inclusion <br>and resilience <br>|  |

---

![SusRev_SustainabilityRisksAndOpsTable_Stats.gif](lyg-20251231_g127.gif)

---

| | | |
|:---|:---|:---|
| **£633m** | **£3.2bn** | **>84,000** |
| financing for <br>Sizewell C energy <br>security project<br>| of new finance <br>supporting social <br>housing in 2025 <br>| customers empowered <br>through our ready-<br>made investments<br>|

---

![SusRev_ReductionCO2Emissions_NoType.gif](lyg-20251231_g128.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Supporting the transition to net zero

How sustainability is factored

into our internal reporting and

planning process

Climate considerations form part of our planning and forecasting

activities. We consider climate effects in our base case economic

scenario and forecast financed emissions alongside climate risks and

opportunities within the Group's operating plan, primarily across

four key areas: Bank financed emissions, Scottish Widows

investment carbon intensity, own operations and supply chain.

Our planning process acknowledges the dependencies on external

factors such as policies, technology developments and customer

behaviour. We continue to monitor the impact of these external

factors on our Group ambitions and targets alongside working

in partnership with our customers and other stakeholders

to support the UK transition.

**How we monitor and report sustainability-related matters:** 

• We forecast Bank financed emissions to 2030, including

high-carbon sectors, own operations, and, since 2025,

the Scottish Widows carbon investment footprint

• Internally, we report quarterly on sustainable lending and

investments, and regularly on financed emissions, with 2025

seeing the inclusion of wider social sustainability metrics;

these processes inform executive remuneration and Board

risk appetite

• The majority of our sustainability costs incurred by the Group

form part of business-as-usual activities. In addition, finance

tracks specific project-related sustainability investments across

climate, nature and social initiatives, engaging directly with

business units to ensure strategic alignment, with around

c.£28 million dedicated in 2025 to support customer transition,

alongside ongoing activities

• Financial statement preparation considers climate change

impacts on the Group's financial position, with no material

impact forecasted to expected credit loss, see **page [278](#i822751746e7a40d08d6d40a4de142911_26681)**

**Progress in reduction of our Group's emissions (MtCO2e)**<sup>1</sup><br>

**Our environmental strategy**

Our environmental strategy supports growth and balance sheet

resilience by supporting our customers, clients and the broader

economy transition. We do this by managing our impacts, mitigating

our risks, and seeking growth opportunities through financing and

investment activities.

Our strategy is based on understanding the changes and solutions

needed to enable the transition, the associated opportunities, risks and

dependencies; supported by scenario analysis. It is supported by our

engagement with clients on Client Transition Plans, investees through

our stewardship approach and suppliers helping us to understand what

this means in reality for them and the wider economy.

Recognising the global shortfall in the pace of transition, our

systems-led approach identifies material risks and opportunities,

prioritising actions to unlock progress. We address interdependencies

across sectors and extend our focus beyond climate to nature and

social considerations, aiming for a Just Transition, with the actions

we take closely aligning with our purpose pillars.

**Our emissions reduction ambitions** 

The Group have set four ambitions across our own operations,

supply chain and lending and investments to support the

decarbonisation of our business in line with limiting global warming

to 1.5°C. We recognise that there are significant challenges and

external dependencies in many areas of the economy, including the

technologies, solutions and policies required, that will need to be

addressed for us to achieve these. The progress we have made

against our ambitions are shown within each section.

To date, our emissions footprint has guided where we have the

biggest role to play. We calculate our emissions in line with the

Greenhouse Gas Protocol, further detail is in our sustainability metrics

basis of reporting . The makeup of our lending portfolio means our

![Icon_Weblink.gif](lyg-20251231_g14.gif)

biggest exposure to sectors at increased climate risk is in relation to

our residential mortgages, real estate sector and agriculture. The scale

of our emissions varies across different areas of the business.

A breakdown of our Group's absolute emissions is shown to the right.

**What this looks like for the Group**

The scale of our current emissions varies across

different areas of the business.

Bank <br>financed<br>

**Baseline year**<sup>2</sup><br>**MtCO2e**<br>**29.2**<br>

**2024 MtCO2e**<br>**18.6**<br>

**Baseline year**<sup>2</sup><br>**MtCO2e**<br>**12.5**<br>

Scottish <br>Widows <br>financed<sup>3</sup><br>

**2024 MtCO2e**<br>**8.8**<br>

**Baseline year**<sup>2</sup><br>**MtCO2e**<br>**0.53**<br>

Supply <br>chain<sup>4</sup><br>

**2024/25**<br>**0.51**<br>**MtCO2e**<br>

Own <br>operations <br>

**Baseline year**<sup>2</sup><br>**MtCO2e**<br>**0.18**<br>

**2024/25**<br>**0.11**<br>**MtCO2e**<br>

1Based on 2024 data available for Bank and Scottish Widows financed emissions Scope 1 <br>and 2 emissions only. 2024/25 period end data for supply chain emissions and own <br>operations includes Scope 1, 2 and 3 categories and is reported on a market basis.<br>2Baseline year determined by ambition (2018 for Bank, 2019 for Scottish Widows, 2021/22 for <br>Supply Chain and 2018/2019 for Own Ops) MtCO2e – Megatonnes Carbon Dioxide equivalents.<br>3Scottish Widows ambition is intensity based for details on progress see **page [45](#i0a4bd6cf33044bffa034e70143d9e15e_1-1-2-1-5233089)**. The <br>difference to the amount shown in the diagram is due to rounding differences.<br>4Supply chain emissions are calculated from supplier spend totalling £4.4 billion (net of VAT). <br>In addition there is a further £5.7 billion (gross spend) spread across other business areas. <br>For further details on our methodology see sustainability metrics basis of reporting .![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>

1Baseline year determined by ambition (2018 for Bank, 2019 for Scottish Widows, 2021/22 <br>for Supply Chain and 2018/2019 for Own Ops) MtCO2e – Megatonnes Carbon Dioxide <br>equivalents.<br>2Based on 2024 data available for Bank and Scottish Widows financed emissions Scope 1 <br>and 2 emissions only. 2024/25 period end data for supply chain emissions and own <br>operations includes Scope 1, 2 and 3 categories and is reported on a market basis.<br>3Supply Chain emissions are calculated from supplier spend totalling £4.4 billion (net of <br>VAT). In addition there is a further £5.7 billion (including VAT) spread across other business <br>areas. Further details on our methodology see sustainability metrics basis of reporting <br>2025.<br>Further details on our methodology see <u>sustainability metrics basis of reporting 2025</u> .![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>

![SusRev_Bank_TransitionNetZero.gif](lyg-20251231_g129.gif)

![SectionTabSusRev.gif](lyg-20251231_g110.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| |
|:---|
| **Bank**<br>**Our ambition** <br>Work with customers, government and <br>the market to help reduce the carbon <br>emissions we finance by more than 50% <br>by 2030 on the path to net zero by <br>2050 or sooner.<br>1From a 2018 baseline, covering Scope 1 and 2 emissions.  |
| **Bank**<br>**Our ambition** <br>Work with customers, government and <br>the market to help reduce the carbon <br>emissions we finance by more than 50% <br>by 2030 on the path to net zero by <br>2050 or sooner.<br>1From a 2018 baseline, covering Scope 1 and 2 emissions.  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Our progress** |  |  |  |  |
| **MtCO2e reduction (%)** | ●  | Progress![SusRev_Icon_Auditedv2.gif](lyg-20251231_g130.gif)<br>| ●  | 2030 ambition |

---

Our latest estimate shows a 36% reduction in our Bank financed

emissions from our 2018 baseline of 29.2 MtCO2e.

Our net zero ambition was set in 2020 and informed by the

UK CCC's assessment then of UK sectoral emissions reductions

pathways.While we have made progress to date, achieving

this ambition depends on how quickly the underlying sectors

transition given the challenges and external dependencies

that exist in many areas of the economy. These challenges

and dependencies are related to policy and regulatory support,

market readiness and public awareness, technology availability

and infrastructure, supply chains and workforce skills and grid

decarbonisation. We explain specific dependencies by system

in our transition plan, see our sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

We are committed to supporting clients and the wider economy

through this transition, but variability in policy, technology

deployment and market conditions will influence the outcomes

![1](lyg-20251231_g131.gif)

we are able to achieve.

2018 Baseline<br>

**Our actions**

Our overall Bank financed emissions reduction ambition is

supported by ten sector-specific NZBA targets covering our

highest emitting sectors.

These targets are supported by sector-specific transition plans

which detail how we are supporting our customers and clients

to transition in these areas.

![Heritage_singleRow_Flat_full width_2mm_margin.gif](lyg-20251231_g132.gif)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Sector target summary** | **Sector target summary** | **Sector target summary** | **Sector target summary** | **Sector target summary** |  |
| **System and targets**<sup>1</sup> | **Baseline year of target** | **Target baseline**<sup>2</sup> | **2024 Target progress** | **Divergence from pathway**<sup>3</sup> | **Divergence from pathway**<sup>3</sup> |
| **Greening the built environment** | **Greening the built environment** | **Greening the built environment** | **Greening the built environment** | **Greening the built environment** |  |
| UK mortgages – 35% reduction in emissions <br>intensity to 30kgCO2e/m<sup>2</sup> by 2030<br>| 2020 | 46kgCO2e/m<sup>2</sup> | 42kgCO2e/m<sup>2</sup> | 2.0% | ![Icon_ArrowDown.gif](lyg-20251231_g133.gif) |
| Commercial and residential real estate (C&RRE) – <br>43% reduction in emissions intensity to 22kgCO2e/<br>m<sup>2</sup> by 2030<br>| 2021 | 38kgCO2e/m<sup>2</sup> | 34kgCO2e/m<sup>2</sup> | 5.6% | ![Icon_ArrowDown.gif](lyg-20251231_g133.gif) |
| **Low carbon transport** | **Low carbon transport** | **Low carbon transport** | **Low carbon transport** | **Low carbon transport** |  |
| Retail motor (cars and LCVs) – 48% reduction in <br>emissions intensity to 82gCO2e/km by 2030<br>| 2018 | 157gCO2e/km | 132gCO2e/km | (1.8%) | ![Icon_ArrowUp.gif](lyg-20251231_g134.gif) |
| Road passenger transport – 47% reduction in <br>emissions intensity to 67gCO2e/pkm by 2030<br>| 2019 | 125gCO2e/pkm | 109gCO2e/pkm | 0.6% | ![Icon_ArrowDown.gif](lyg-20251231_g133.gif) |
| Automotive (OEMs) – 47% reduction in emissions <br>intensity to 131gCO2e/vkm by 2030<br>| 2020 | 246gCO2e/vkm | 234gCO2e/vkm | 18.7% | ![Icon_ArrowDown.gif](lyg-20251231_g133.gif) |
| Aviation – 31% reduction in emissions intensity to <br>788gCO2e/rtk by 2030<br>| 2019 | 1,143gCO2e/rtk | 743gCO2e/rtk | (24.4)% | ![Icon_ArrowUp.gif](lyg-20251231_g134.gif) |
| **Sustainable farming and food** | **Sustainable farming and food** | **Sustainable farming and food** | **Sustainable farming and food** | **Sustainable farming and food** |  |
| Agriculture – 23% reduction of absolute emissions <br>to 5.1MtCO2e by 2030<br>| 2021 | 6.6MtCO2e | 5.4MtCO2e | (13.3)% | ![Icon_ArrowUp.gif](lyg-20251231_g134.gif) |
| **Energy transition** | **Energy transition** | **Energy transition** | **Energy transition** | **Energy transition** |  |
| Oil and gas – 50% reduction in absolute emissions <br>to 3.6MtCO2e by 2030<br>| 2019 | 7.2MtCO2e | 1.6MtCO2e | (59.3)% | ![Icon_ArrowUp.gif](lyg-20251231_g134.gif) |
| Power generation – 81% reduction in emissions <br>intensity to 51gCO2e/kWh by 2030<br>| 2020 | 264gCO2e/kWh | 6gCO2e/kWh | (96.4)% | ![Icon_ArrowUp.gif](lyg-20251231_g134.gif) |
| Thermal coal – Full exit of thermal coal power in <br>the UK by 2023. Full exit from all entities that <br>operate thermal coal facilities by 2030<br>| – | – | – | –% |  |
| 1There are rounding differences between target baseline, percentage reduction and 2030 target. Targets cover on-balance sheet assets. The scope of our target has been defined <br>within the sustainability metrics basis of reporting 2025 available at sustainability downloads .![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2C&RRE, Retail motor, Road passenger transport, Automotive (OEMs), Aviation, Agriculture, Power and Oil and gas baselines have been updated due to methodology changes, <br>correction of misstatements due to error and revised client data. <br>3Shows divergence between 2024 actual and 2024 reference pathway emission intensity. Arrow up – performance for 2024 ahead of reference pathway. Arrow down – <br>performance for 2024 behind reference pathway. Retail motor divergence is based on divergence from scenario pathway as no reference pathway is available. | 1There are rounding differences between target baseline, percentage reduction and 2030 target. Targets cover on-balance sheet assets. The scope of our target has been defined <br>within the sustainability metrics basis of reporting 2025 available at sustainability downloads .![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2C&RRE, Retail motor, Road passenger transport, Automotive (OEMs), Aviation, Agriculture, Power and Oil and gas baselines have been updated due to methodology changes, <br>correction of misstatements due to error and revised client data. <br>3Shows divergence between 2024 actual and 2024 reference pathway emission intensity. Arrow up – performance for 2024 ahead of reference pathway. Arrow down – <br>performance for 2024 behind reference pathway. Retail motor divergence is based on divergence from scenario pathway as no reference pathway is available. | 1There are rounding differences between target baseline, percentage reduction and 2030 target. Targets cover on-balance sheet assets. The scope of our target has been defined <br>within the sustainability metrics basis of reporting 2025 available at sustainability downloads .![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2C&RRE, Retail motor, Road passenger transport, Automotive (OEMs), Aviation, Agriculture, Power and Oil and gas baselines have been updated due to methodology changes, <br>correction of misstatements due to error and revised client data. <br>3Shows divergence between 2024 actual and 2024 reference pathway emission intensity. Arrow up – performance for 2024 ahead of reference pathway. Arrow down – <br>performance for 2024 behind reference pathway. Retail motor divergence is based on divergence from scenario pathway as no reference pathway is available. | 1There are rounding differences between target baseline, percentage reduction and 2030 target. Targets cover on-balance sheet assets. The scope of our target has been defined <br>within the sustainability metrics basis of reporting 2025 available at sustainability downloads .![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2C&RRE, Retail motor, Road passenger transport, Automotive (OEMs), Aviation, Agriculture, Power and Oil and gas baselines have been updated due to methodology changes, <br>correction of misstatements due to error and revised client data. <br>3Shows divergence between 2024 actual and 2024 reference pathway emission intensity. Arrow up – performance for 2024 ahead of reference pathway. Arrow down – <br>performance for 2024 behind reference pathway. Retail motor divergence is based on divergence from scenario pathway as no reference pathway is available. | 1There are rounding differences between target baseline, percentage reduction and 2030 target. Targets cover on-balance sheet assets. The scope of our target has been defined <br>within the sustainability metrics basis of reporting 2025 available at sustainability downloads .![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2C&RRE, Retail motor, Road passenger transport, Automotive (OEMs), Aviation, Agriculture, Power and Oil and gas baselines have been updated due to methodology changes, <br>correction of misstatements due to error and revised client data. <br>3Shows divergence between 2024 actual and 2024 reference pathway emission intensity. Arrow up – performance for 2024 ahead of reference pathway. Arrow down – <br>performance for 2024 behind reference pathway. Retail motor divergence is based on divergence from scenario pathway as no reference pathway is available. | 1There are rounding differences between target baseline, percentage reduction and 2030 target. Targets cover on-balance sheet assets. The scope of our target has been defined <br>within the sustainability metrics basis of reporting 2025 available at sustainability downloads .![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2C&RRE, Retail motor, Road passenger transport, Automotive (OEMs), Aviation, Agriculture, Power and Oil and gas baselines have been updated due to methodology changes, <br>correction of misstatements due to error and revised client data. <br>3Shows divergence between 2024 actual and 2024 reference pathway emission intensity. Arrow up – performance for 2024 ahead of reference pathway. Arrow down – <br>performance for 2024 behind reference pathway. Retail motor divergence is based on divergence from scenario pathway as no reference pathway is available. |

---

![Calm_singleRow_full width_2mm_margin.gif](lyg-20251231_g135.gif)

![Calm_singleRow_full width_2mm_margin.gif](lyg-20251231_g135.gif)

![Calm_singleRow_full width_2mm_margin.gif](lyg-20251231_g135.gif)

![Calm_singleRow_full width_2mm_margin.gif](lyg-20251231_g135.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Supporting the transition to net zero continued

**Overview of decarbonising by system** 

As part of our planning process, we forecast our Bank financed

emissions to 2030 for our priority sector targets, comparing this

to our 2030 target outcome. Within the sustainability report our

progress updates include insights on the key risks, dependencies and

progress on achieving our 2030 targets. For further details please

see individual sector updates within our sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

![SusRev_NetTransition_SolarPanels.jpg](lyg-20251231_g136.jpg)

**Energy** 

Energy contributes to 19.2%<sup>1,2,3</sup> of UK emissions, and makes up 1.6%

of the Group's Bank financed emissions. This system enables the

decarbonisation of society and other systems or sectors such as the

electrification of passenger transport or domestic heating.

**To support the transition of this system our activities include:** 

• Continuing to engage with clients on their net zero transition,

reviewing and considering their transition-related targets,

commitments and progress

• Aligning current and future growth strategy to the UK

government's Clean Power 2030 ambition, in order to continue

playing a role in the transition

![SusRev_NetTransition_WomanInDoor.jpg](lyg-20251231_g137.jpg)

**Greening the built environment**

Contributing to 25.1%<sup>1,2</sup> of UK emissions and 26.3% of the Group's

Bank financed emissions the built environment touches a number of

areas across the Group, including our residential mortgages portfolio

and our commercial real estate clients.

The energy system is intrinsically linked to decarbonisation of the

built environment with decarbonisation of electricity, a critical

enabler alongside a switch away from gas boilers to lower carbon

heating alternatives.

**To support the transition of this system our activities include:**

• Continuing to enhance data capability across the system to

understand risks and impacts and target actions effectively

• Identifying finance models to support customers and make

retrofit affordable

• Enhancing customer education to understand options available

• Encouraging development of policy frameworks to support

retrofitting at scale

• Unlocking skills through our participation in industry-leading

skills and diveristy initiatives

![SusRev_NetTransition_WomanPhone.jpg](lyg-20251231_g138.jpg)

**Low carbon transport**

Surface transport is the highest emitting sector in the UK,

accounting for 23.2%<sup>1,2</sup> of total emissions and 15.1% of the Bank's

financed emissions. Our low carbon transport system addresses

transport by road and by air, with surface transport the highest

emitting sector in the UK.

**To support the transition of this system our activities include:** 

• Considering innovative financing models, such as cashback

incentives, to encourage customer uptake of low carbon

transport, with the Group financing 1 in 8 electric vehicles

on UK roads

• Using data to highlight benefits to customers of switching

to low carbon vehicles

• Facilitating the move to greener vehicles by considering support

for the required support infrastructure and associated new

financing opportunities

![SusRev_NetTransition_ManWithLamb.jpg](lyg-20251231_g139.jpg)

**Sustainable farming and food**

Responsible for 12.4%<sup>1,2</sup> of UK emissions and 29.0% of Bank financed

emissions. Our system addresses primary agriculture and the food

value chain and plays an important role in ensuring food security

in the UK.

**To support the transition of this system our activities include:** 

• Articulating the challenges through policy engagement with

government and industry bodies

• Investing in tools that will support our customers, including

collaborating with Soil Association Exchange and Finance Earth

to pilot new financing models that reward farmers for prioritising

environmental outcomes

• Engaging with our most material food, drink and retail clients

though our Client Transition Plan assessments for the sector

• Launching the Agriculture Transition Finance loan to help

farmers adopt regenerative practices

1Sourced from Department for Energy Security and Net Zero – 2023 UK greenhouse

gas emissions.

2UK emissions from 2023, including energy supply were 96.6MtCO2e for built

environment, 89.1MtCO2e for Passenger Car, Electric Vehicle, Buses and Light Duty

Vehicles, and aviation transport and 47.7MtCO2e for sustainable farming and food.

Total UK emissions from 2023, including energy supply where 385.0MtCO2e for the

entire UK.

3UK emissions from energy supply in 2023 were 74.0MtCO2e. Emissions for the Energy

transition system relate to UK energy supply emissions including emissions from power

generation and fuel supply.

![SusRev_FinancingAndTargets.gif](lyg-20251231_g140.gif)

![SectionTabSusRev.gif](lyg-20251231_g110.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| |
|:---|
| **Sustainable financing** <br>**and investment targets**<sup>1</sup><br>We have established sustainable <br>finance and investment targets <br>aligned to our core business areas. |
| **Sustainable financing** <br>**and investment targets**<sup>1</sup><br>We have established sustainable <br>finance and investment targets <br>aligned to our core business areas. |

---

Since 2022 our cumulative sustainable lending is £70.9 billion

covering our Commercial Banking, Motor and Mortgages

businesses. Our active targets for these areas are £30 billion

sustainable finance for Commercial Banking customers by the

end of 2026, £10 billion of financing for electric vehicles and

£11 billion of mortgage lending for EPC A and B rated properties

both by the end of 2027. We achieved our original target to

invest in climate-aware strategies at the end of 2024. At year

end 2025 we have £81.3 billion invested in climate-aware

strategies. This is a significant rise compared to the prior period,

driven by the launch of our new workplace proposition, Scottish

Widows Lifetime Investment, which includes a higher proportion

of climate-aware ESG-tilted investment strategies.

**Our Sustainable finance and investment targets**<br>

---

| | | | |
|:---|:---|:---|:---|
| Group-wide sustainable finance<br>**Commercial Banking**<sup>1,2,3</sup><br>|  |  |  |
|  | ![White_top left7.gif](lyg-20251231_g141.gif) |  | ![White_topright7.gif](lyg-20251231_g142.gif) |
|  | ![White_top left7.gif](lyg-20251231_g141.gif) | **Total £45bn** <br>(cumulative target) | ![White_topright7.gif](lyg-20251231_g142.gif) |
|  |  | **Total £45bn** <br>(cumulative target) |  |
| **Mortgages**<sup>1,4</sup> |  | £40.3bn <br>Current progress<br>|  |
| **Mortgages**<sup>1,4</sup> | ![White_bottom_left9.gif](lyg-20251231_g143.gif) |  | ![White_bottom_right9.gif](lyg-20251231_g144.gif) |
| **Mortgages**<sup>1,4</sup> | ![White_bottom_left9.gif](lyg-20251231_g143.gif) |  | ![White_bottom_right9.gif](lyg-20251231_g144.gif) |
| **Mortgages**<sup>1,4</sup> |  |  |  |
|  | ![White_top left7.gif](lyg-20251231_g141.gif) |  | ![White_topright7.gif](lyg-20251231_g142.gif) |
|  | ![White_top left7.gif](lyg-20251231_g141.gif) | **Total £21bn** <br>(cumulative target) | ![White_topright7.gif](lyg-20251231_g142.gif) |
|  |  | **Total £21bn** <br>(cumulative target) |  |
| **Motor**<sup>1,5</sup> |  | £18.5bn <br>Current progress<br>|  |
| **Motor**<sup>1,5</sup> | ![White_bottom_left9.gif](lyg-20251231_g143.gif) |  | ![White_bottom_right9.gif](lyg-20251231_g144.gif) |
| **Motor**<sup>1,5</sup> | ![White_bottom_left9.gif](lyg-20251231_g143.gif) |  | ![White_bottom_right9.gif](lyg-20251231_g144.gif) |
| **Motor**<sup>1,5</sup> |  |  |  |
|  | ![White_top left7.gif](lyg-20251231_g141.gif) |  | ![White_topright7.gif](lyg-20251231_g142.gif) |
|  | ![White_top left7.gif](lyg-20251231_g141.gif) | **Total £18bn**<br>(cumulative target) | ![White_topright7.gif](lyg-20251231_g142.gif) |
|  |  | **Total £18bn**<br>(cumulative target) |  |
|  |  | £12.1bn <br>Current progress<br>|  |
|  | ![White_bottom_left9.gif](lyg-20251231_g143.gif) |  | ![White_bottom_right9.gif](lyg-20251231_g144.gif) |
|  | ![White_bottom_left9.gif](lyg-20251231_g143.gif) |  | ![White_bottom_right9.gif](lyg-20251231_g144.gif) |
| **Total sustainable finance achieved since 2022** |  | **£70.9bn** | **£70.9bn** |
|  |  | **£70.9bn** | **£70.9bn** |

---

---

| | | | |
|:---|:---|:---|:---|
| ●  | Performance against previous target | ![SusRev_Target hatching_key.gif](lyg-20251231_g145.gif) | Target outperformance |
| ●  | Performance against current target |  | Target |

---

![](lyg-20251231_g146.gif)

![14](lyg-20251231_g147.gif)

---

| | | | |
|:---|:---|:---|:---|
|  | Target |  |  |
|  | Target |  |  |
|  | Target |  |  |
| 2022 | **£15bn** | ◄ **£15.8bn** |  |
| **2024** |  |  | ◄**£24.5bn £30bn** |
| Progress (£bn lending) | Progress (£bn lending) |  | 2026 target |
| Progress (£bn lending) | Progress (£bn lending) |  | 2026 target |
| Progress (£bn lending) | Progress (£bn lending) |  | 2026 target |
| Progress (£bn lending) | Progress (£bn lending) |  | 2026 target |

---

![SusRev_Target hatching.gif](lyg-20251231_g148.gif)<br>

![52](lyg-20251231_g149.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Target | Target | Target |  |
|  | Target | Target | Target |  |
|  | Target | Target | Target |  |
| 2022 |  |  | **£10bn** | ◄ **£13.3bn** |
| **2025** |  | ◄ **£5.3bn** | **£11bn** |  |
| Progress (£bn lending) | Progress (£bn lending) |  | 2027 target |  |
| Progress (£bn lending) | Progress (£bn lending) |  | 2027 target |  |
| Progress (£bn lending) | Progress (£bn lending) |  | 2027 target |  |
| Progress (£bn lending) | Progress (£bn lending) |  | 2027 target |  |

---

![SusRev_Target hatching.gif](lyg-20251231_g148.gif)<br>

![77](lyg-20251231_g150.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Target | Target | Target |  |
|  | Target | Target | Target |  |
|  | Target | Target | Target |  |
| 2022 |  |  | **£8bn** | ◄ **£9.4bn** |
| **2025** |  | ◄ **£2.8bn** |  | **£10bn** |
| Progress (£bn lending) | Progress (£bn lending) |  | 2027 target | 2027 target |
| Progress (£bn lending) | Progress (£bn lending) |  | 2027 target | 2027 target |
| Progress (£bn lending) | Progress (£bn lending) |  | 2027 target | 2027 target |
| Progress (£bn lending) | Progress (£bn lending) |  | 2027 target | 2027 target |

---

![SusRev_Target hatching.gif](lyg-20251231_g148.gif)<br>

---

| | |
|:---|:---|
| Scottish Widows<sup>6</sup> |  |
| **Discretionary investment in climate-aware strategies**  | **£81.3bn** |
| **Discretionary investment in climate-aware strategies**  | **£81.3bn** |

---

1As defined within the Sustainable Financing Framework available in our sustainability downloads

2The new Commercial Banking target (1 January 2024 onwards) relates to both Corporate and Institutional Banking customers and Business and Commercial Banking customers. From 1

January 2022 to 31 December 2023 the target applied to corporate and institutional customers only, and was measured against the criteria set out in the 2023 Sustainable Financing

Framework.

3Includes £0.6bn lending to SMEs located in the most socio-economically disadvantaged areas in the UK and to female-led businesses, both of which form part of the social eligibility

criteria, included for the first time in 2025.

4New mortgage lending on UK (excluding Channel Islands) residential property that meets an EPC rating of B or higher. The target includes remortgages but excludes further advances.

£18.5 billion covers the period from January 2022 to September 2025. £5.3 billion was achieved from 1 January 2025 to 30 September 2025. There are rounding differences between the

cumulative total and the individual target positions.

5From 1 January 2025 the new target includes new lending advances and operating leases for EVs; includes cars and vans. From 1 January 2022 to 31 December 2024 the target covered

EVs and plug-in hybrid vehicles new lending advances for Black Horse and operating leases for Lex Autolease (gross) and operating leases for Tusker (gross, post-acquisition by the

Group (February 2023)); includes cars and vans. There are rounding differences between the cumulative total and the individual target positions.

6This refers to funds that have a focus on investment in companies that are either adapting their business to reduce carbon emissions or developing solutions to address climate change.

![SusRev_ScottishWiddows_SupplyChain_NetTransitionBorder.gif](lyg-20251231_g151.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Supporting the transition to net zero continued

---

| |
|:---|
| **Scottish Widows**<br>**Our ambition**<br>Achieving net zero emissions across our <br>investment portfolio by 2050, with the <br>interim target of halving our carbon <br>footprint by 2030. |
| **Scottish Widows**<br>**Our ambition**<br>Achieving net zero emissions across our <br>investment portfolio by 2050, with the <br>interim target of halving our carbon <br>footprint by 2030. |
| To support our ambition we set ourselves the following targets: <br>•Invest between £20 billion to £25 billion in climate-aware <br>investment strategies<sup>1</sup>, with at least £1 billion invested into climate <br>solutions investments by 2025<br>•Halving the carbon footprint<sup>2,3</sup> of our investment portfolios by 2030<br>|

---

---

| | | | |
|:---|:---|:---|:---|
| **Our progress** |  |  |  |
| **tCO2e/£m invested** |  |  |  |
|  | **2024** | **2023**<sup>4</sup> | **Baseline**<sup>4</sup> |
| Carbon footprint <br>(where data is available)<br>(tCO2e/£m)<br>| 55.2 | 64.7 | 116.1 |
| 1Climate-aware investment strategies: This refers to funds that have a focus on <br>investment in companies that are either adapting their businesses to reduce carbon <br>emissions or developing solutions to address climate change. We will invest in climate <br>solution investments either within these strategies or other funds. For more information <br>on our calculation methodology for these targets please see the sustainability metrics <br>basis of reporting 2025 which is available on our sustainability downloads . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2From a 2019 baseline. <br>3Carbon footprint is a measure of carbon intensity calculated as absolute value <br>of emissions applicable to an investment divided by the value of investment. <br>The carbon footprint measured, where data is available, for year end 2024 was <br>55.2 tCO2e/£m against a 2019 baseline of 116.1 tCO2e/£m. <br>4The metrics for 2019 and 2023 have not been restated in the current period.  | 1Climate-aware investment strategies: This refers to funds that have a focus on <br>investment in companies that are either adapting their businesses to reduce carbon <br>emissions or developing solutions to address climate change. We will invest in climate <br>solution investments either within these strategies or other funds. For more information <br>on our calculation methodology for these targets please see the sustainability metrics <br>basis of reporting 2025 which is available on our sustainability downloads . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2From a 2019 baseline. <br>3Carbon footprint is a measure of carbon intensity calculated as absolute value <br>of emissions applicable to an investment divided by the value of investment. <br>The carbon footprint measured, where data is available, for year end 2024 was <br>55.2 tCO2e/£m against a 2019 baseline of 116.1 tCO2e/£m. <br>4The metrics for 2019 and 2023 have not been restated in the current period.  | 1Climate-aware investment strategies: This refers to funds that have a focus on <br>investment in companies that are either adapting their businesses to reduce carbon <br>emissions or developing solutions to address climate change. We will invest in climate <br>solution investments either within these strategies or other funds. For more information <br>on our calculation methodology for these targets please see the sustainability metrics <br>basis of reporting 2025 which is available on our sustainability downloads . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2From a 2019 baseline. <br>3Carbon footprint is a measure of carbon intensity calculated as absolute value <br>of emissions applicable to an investment divided by the value of investment. <br>The carbon footprint measured, where data is available, for year end 2024 was <br>55.2 tCO2e/£m against a 2019 baseline of 116.1 tCO2e/£m. <br>4The metrics for 2019 and 2023 have not been restated in the current period.  | 1Climate-aware investment strategies: This refers to funds that have a focus on <br>investment in companies that are either adapting their businesses to reduce carbon <br>emissions or developing solutions to address climate change. We will invest in climate <br>solution investments either within these strategies or other funds. For more information <br>on our calculation methodology for these targets please see the sustainability metrics <br>basis of reporting 2025 which is available on our sustainability downloads . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>2From a 2019 baseline. <br>3Carbon footprint is a measure of carbon intensity calculated as absolute value <br>of emissions applicable to an investment divided by the value of investment. <br>The carbon footprint measured, where data is available, for year end 2024 was <br>55.2 tCO2e/£m against a 2019 baseline of 116.1 tCO2e/£m. <br>4The metrics for 2019 and 2023 have not been restated in the current period.  |

---

Our Scottish Widows Group 2024 carbon footprint was

55.2 tCO2e/£m, down from our 2019 baseline of 116.1 tCO2e/£m,

which represents a 52% decrease. Whilst financed emissions

continued to decline over 2024, the more significant driver of the

fall in footprint was the rise in the market value of the investment

portfolio in line with market performance over the year. We consider

the long-term trend of our carbon footprint to avoid the impact of

short-term market volatility on results and decision making.

We achieved our original target to invest in climate-aware

strategies at the end of 2024. At year end 2025 we have

£81.3 billion invested in climate-aware strategies. This is a

significant rise from what we've already achieved, driven by

the launch of our new workplace proposition, Scottish Widows

Lifetime Investment, which includes a higher proportion of

climate-aware ESG-tilted investment strategies.

Our updated transition plan – The Road to 2030 and Beyond –

was released in October 2025 and reaffirms our commitment

to investing for a net zero by 2050 transition that delivers good

customer outcomes. In this new plan, we detail how we invest and

influence to drive the transition, and monitor our progress. The

Plan shifts focus from just looking at portfolio decarbonisation

towards enabling real-world emissions reduction and delivering

resilient, responsible investment outcomes for customers.

Key areas of focus include:

• Investing in climate leaders that are aligned to the goals of the Paris

Agreement, and influence climate laggards that are not aligned

• Seek new climate and nature solutions opportunities,

particularly through private markets

• Take a holistic, systems-level approach to net zero that

connects climate, nature and social issues

Further details on this activity is included on pages 112-113 in our

sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

---

| |
|:---|
| **Supply chain**<br>**Our ambition** <br>Reduce our supply chain emissions <br>by 50% by 2030, on a path to net zero <br>by 2050<sup>1</sup>. |
| **Supply chain**<br>**Our ambition** <br>Reduce our supply chain emissions <br>by 50% by 2030, on a path to net zero <br>by 2050<sup>1</sup>. |

---

---

| | | | |
|:---|:---|:---|:---|
| **Our progress** |  |  |  |
| **tCO2e** |  |  |  |
|  | **Current year** <br>**2024/25**<br>| **Restated**<sup>2</sup><br>**2023/24**<br>| **Restated**<sup>2</sup><br>**baseline year** <br>**2021/22**<br>|
| Scope 3 supply chain <br>emissions GHG Protocol <br>Categories 1,2,4 and 8<br>| 511909 | 504299 | 530621 |
| 1From a 2021/22 baseline. <br>2Our baseline and prior period comparative were restated due to <br>methodology changes.  | 1From a 2021/22 baseline. <br>2Our baseline and prior period comparative were restated due to <br>methodology changes.  | 1From a 2021/22 baseline. <br>2Our baseline and prior period comparative were restated due to <br>methodology changes.  | 1From a 2021/22 baseline. <br>2Our baseline and prior period comparative were restated due to <br>methodology changes.  |

---

For the period, October 2024 to September 2025, our emissions

are calculated from supplier spend totalling £4.4 billion (net of

VAT). This represents an 11% increase in spend compared to our

baseline year, with absolute emissions decreasing by 4%, and

emissions intensity by 13%.

Whilst we have seen a reduction in emissions, progress has

been impacted by an increase in category 2 emissions reflecting

the Group's investment in our new data centre, as well as capital

expenditure to maintain and transform our office and branch

network. In addition, an increase in category 4 emissions primarily

due to increased spend with a single supplier. The pace of

decarbonisation by our supply chain also plays a factor,

emphasising the need for collective progress.

The calculation of our category 2 and category 4 emissions

relies predominantly on less accurate calculation methodologies.

These activities are also more carbon intensive. Whilst we expect

this spend to decrease as our investment programme concludes,

we will continue to encourage our key suppliers to disclose their

full scope of material emissions and collaborate with them

through our Emerald Standard programme. This year, we have

had direct engagement with 170 suppliers who make the biggest

contribution to our supply chain emissions.

In October 2025, Comprehensive Environmental Data Archive

(CEDA) released an update to carbon emissions factors for 2023

onwards. As a result, we have restated baseline year + 1 and

baseline year + 2.

To maintain consistency and comparability between our

disclosures, we also re-aligned some of our previous CEDA

mappings based upon improved understanding of descriptions

and corrected immaterial findings identified in prior years. These

changes have been applied retrospectively, to our baseline year,

to ensure our data reflects the most accurate and up-to-date

information available.

Additional details on our supply chain emissions and our Emerald

Standard are included within our sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

![SusRev_OurOperations_NetTransitionBorder.gif](lyg-20251231_g152.gif)

![SectionTabSusRev.gif](lyg-20251231_g110.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| |
|:---|
| **Our operations**<br>**Our ambition**<br>Achieve net zero own operations by <br>2030, based on our 2018/19 baseline. |
| **Our operations**<br>**Our ambition**<br>Achieve net zero own operations by <br>2030, based on our 2018/19 baseline. |
| The delivery of our ambition is supported by five pledges:<br>•Reduce our direct carbon emissions by at least 90% by 2030<sup>1</sup><br>•Reduce total energy consumption across our operations by 50% <br>by 2030<sup>1</sup><br>•Maintain travel-related carbon emissions below 50%<sup>1,2</sup><br>•Zero waste by 2030 (includes our legacy waste reduction pledge)<sup>3</sup><br>•Water neutrality by 2030<sup>4</sup><br>|

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Our progress** |  |  |  |  |
| **Net zero ambition progress** | ●  | Progress | ●  | 2030 ambition |
| Net zero carbon operations by 2030 | Net zero carbon operations by 2030 | Net zero carbon operations by 2030 | Net zero carbon operations by 2030 | Net zero carbon operations by 2030 |
| 1From a 2018/19 baseline.<br>2From 2023/24 our travel related carbon emissions pledge considers domestic <br>travel only.<br>3Reduce operation waste by 80% by 2025 from a 2014/2015 baseline. Zero waste is <br>defined as 90% diversion from landfill and incineration.<br>4Water neutrality across our buildings, reducing our water consumption as much <br>as possible, and offsetting the residual volume. Includes water consumption across <br>our full operational estate.  | 1From a 2018/19 baseline.<br>2From 2023/24 our travel related carbon emissions pledge considers domestic <br>travel only.<br>3Reduce operation waste by 80% by 2025 from a 2014/2015 baseline. Zero waste is <br>defined as 90% diversion from landfill and incineration.<br>4Water neutrality across our buildings, reducing our water consumption as much <br>as possible, and offsetting the residual volume. Includes water consumption across <br>our full operational estate.  | 1From a 2018/19 baseline.<br>2From 2023/24 our travel related carbon emissions pledge considers domestic <br>travel only.<br>3Reduce operation waste by 80% by 2025 from a 2014/2015 baseline. Zero waste is <br>defined as 90% diversion from landfill and incineration.<br>4Water neutrality across our buildings, reducing our water consumption as much <br>as possible, and offsetting the residual volume. Includes water consumption across <br>our full operational estate.  | 1From a 2018/19 baseline.<br>2From 2023/24 our travel related carbon emissions pledge considers domestic <br>travel only.<br>3Reduce operation waste by 80% by 2025 from a 2014/2015 baseline. Zero waste is <br>defined as 90% diversion from landfill and incineration.<br>4Water neutrality across our buildings, reducing our water consumption as much <br>as possible, and offsetting the residual volume. Includes water consumption across <br>our full operational estate.  | 1From a 2018/19 baseline.<br>2From 2023/24 our travel related carbon emissions pledge considers domestic <br>travel only.<br>3Reduce operation waste by 80% by 2025 from a 2014/2015 baseline. Zero waste is <br>defined as 90% diversion from landfill and incineration.<br>4Water neutrality across our buildings, reducing our water consumption as much <br>as possible, and offsetting the residual volume. Includes water consumption across <br>our full operational estate.  |

---

![1](lyg-20251231_g153.gif)

2018/19 Baseline<br>

**Net Zero**<br>

**Our actions**

We continue to make strong progress against our ambition and

pledges. We recognise that in order to maintain progress, we will

need to keep investing in our buildings, as well as supporting

colleagues in the transition towards a greener future.

We continued reducing our carbon emissions associated with

heating fuel across our branches through a targeted programme

to remove gas burning appliances. This year several branches

were assessed for gas removal, with four buildings having

their gas boilers replaced with more carbon-friendly electric

heating systems.

We will continue rolling out our heating decarbonisation

programme across the branch estate. To reduce our reliance

on grid electricity, we will investigate suitable locations for

the installation of solar arrays and take action on these

where suitable.

The Group promotes sustainable travel through our sustainable

car scheme and refreshed travel and expenses colleague

guidance. We have continued our activities this year to provide

our colleagues with more sustainable travel choices. To increase

awareness of the sustainable travel options available to

colleagues, we hosted a series of sustainable travel roadshows

including virtual lunch and learn sessions for liftshare and cycle

to work schemes.

Further details of progress against our operation pledges

can be found within our sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

Streamlined energy carbon reporting

**Methodology** 

The Group follows the principles of the Greenhouse Gas (GHG)

Protocol Corporate Accounting and Reporting Standard to

calculate Scope 1, 2 and 3 emissions from our worldwide operations.

Energy consumption is calculated according to guidance set out by

the Department for Energy Security and Net Zero. The reporting

period is 1 October 2024 to 30 September 2025.

Emissions are reported based on the operational control approach.

• Reported Scope 1 emissions are from activities for which the

Group is responsible, including those generated from gas and

oil used in buildings, emissions from fuels used in UK company

owned vehicles used for business travel, and fugitive emissions

from the use of air conditioning and chiller/refrigerant plant

• Reported Scope 2 emissions are generated from the use and

purchase of electricity and imported heat through heat networks

which are calculated in line with GHG protocol using both the

location and market-based methodologies

• Reported Scope 3 emissions relate to business travel (category 6)

and commuting (category 7) undertaken by colleagues, emissions

from colleagues working from home (category 7), operational

waste (category 5) and the extraction and distribution of each

of our energy sources – electricity, imported heating, gas and

oil (category 3). Scope 3 emissions do not include purchased

goods and services, capital goods, upstream transportation and

distribution and upstream leased assets (category 1, 2, 4 and 8) and

investments (category 15), these figures are included in our supply

chain and financed emissions reporting shown on **pages [43](#i3eaa7a3e529a46b3b97a88e05ad474bc_142)to [46](#i3eaa7a3e529a46b3b97a88e05ad474bc_163)**

• The methodology to derive reported Scope 1, 2 and 3 emissions

is provided in our sustainability metrics basis of reporting 2025

![Icon_Weblink.gif](lyg-20251231_g14.gif)

**Exclusions**

Emissions associated with our joint ventures and investments

are not currently calculated as they fall outside the scope of our

operational boundary. The Group does not have any emissions

associated with the purchase of steam or dedicated cooling,

aside from that provided through heat networks for its own use.

We are not aware of any other material sources of omissions from

our reporting.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Intensity ratio** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **October 2024 to** <br>**September 2025**<br>| **October 2023 to** <br>**September 2024**<br>| **October 2022 to** <br>**September 2023**<sup>1</sup><br>|
| GHG emissions (CO2e) <br>per £m of underlying <br>income (location based)<br>| 8.4 | 10.2 | 9.8 |
| GHG emissions (CO2e) <br>per £m of underlying <br>income (market based)<br>| 6.2 | 7.2 | 6.8 |

---

Our overall location-based carbon emissions<sup>2</sup> were 154,198 tonnes

CO2e; an 11.5% decrease year-on-year. While our overall market-

based<sup>3</sup> carbon emissions were 112,750 tonnes CO2e; an 8.7% decrease

since 2023/24. Group energy consumption (electricity and gas)

has continued to reduce in line with reduction in the number of

properties, extensive investment in energy efficiency across our

buildings and adaptations; this has been offset by an increase in our

emissions from business travel with the Group drawing more select

skills from the global market. The operating model evolution has

impacted our carbon emissions through a need for increased

international travel by our colleagues.

1Intensities have been restated for 2022/23 and 2023/24 emissions data to improve the

accuracy of reporting, using actual data to replace estimates and improvements to

fugitive gas calculations. Underlying income figures for those years have not changed.

2Includes Scope 1, 2 emissions and Scope 3 categories 3, 5, 6 and 7. Scope 3 categories 1,

2, 4, 8 and 15 are excluded.

3Since January 2019, our Scope 2 market-based emissions relating to electricity

consumption are zero tCO2e as we have procured renewable electricity mainly through

our Power Purchase Agreement (PPA) and Green Tariff, and renewable certificates

equivalent to the remainder to make up the total electricity consumption in each of the

markets in which we operate.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Supporting the transition to net zero continued

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Carbon emissions** (tonnes CO2e) | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **October 2024 to** <br>**September 2025**<br>**tonnes CO2e** | **October 2023 to** <br>**September 2024**<br>**tonnes CO2e**<sup>4</sup> | **October 2022 to** <br>**September 2023**<br>**tonnesCO2e**<sup>4</sup><br>|
| Total tCO2e <br>(location based)<br>| 154198 | 174230 | 176372 |
| Total tCO2e <br>(market based)<br>| 112750 | 123449 | 122616 |
| Total Scope 1 and 2 <br>(location based)<br>| 60537 | 70825 | 75508 |
| Of which: UK Scope 1 <br>and 2 (location based)<br>| 57229 | 69055 | 74735 |
| Total Scope 1 and 2 <br>(market based)<br>| 19089 | 20044 | 21751 |
| Of which: UK Scope 1 <br>and 2 (market based)<br>| 18946 | 19881 | 21541 |
| Total Scope 1 | 19084 | 20040 | 21740 |
| Total Scope 2 <br>(market based)<br>| 5 | 4 | 11 |
| Of which: Electricity | – | – | – |
| Total Scope 2 <br>(location based)<br>| 41453 | 50785 | 53768 |
| Total Scope 3 | 93660 | 103405 | 100865 |

---

4Metrics have been restated for 2022/23 and 2023/24 emissions data to improve the

accuracy of reporting, using actual data to replace estimates and improvements to

fugitive gas calculations.

Further information covering our baseline year 2021/22 to 2024/25 is

available in our sustainability metrics datasheet 2025.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Global energy use** (kWhs) | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **October 2024 to** <br>**September 2025**<br>**kWhs** | **October 2023 to** <br>**September 2024**<br>**kWhs**<sup>1</sup> | **October 2022 to** <br>**September 2023**<br>**kWhs**<sup>1</sup><br>|
| **Total global** <br>**energy use**<br>| 297278022 | 332775377 | 362706349 |
| Of which: <br>UK energy use<br>| 290342633 | 327700875 | 358791923 |
| **Total building** <br>**energy**<br>| 279207852 | 313952935 | 344118916 |
| **Total Company** <br>**owned vehicle** <br>**energy**<br>| 6502390 | 8704843 | 10108961 |
| **Total grey fleet**<sup>2</sup><br>**vehicle energy**<br>| 4632390 | 5043096 | 4564047 |

---

1Restated data since 2022/23 to improve the accuracy of reporting, using actual data

to replace estimates and updates to historical emissions. Scope 3 – Business Travel

(category 6) also restated to reflect improving data coverage for Air and Rail emissions.

2Grey fleet refers to colleague and hired road vehicles being used for a business purpose.

**Energy efficiency** 

We have continued our efforts to reduce our energy consumption

through the delivery of energy efficiency project works. Our

connected energy management contract with Mitie has produced

a combined energy reduction of 4,751,980 kWhs across 29 sites. This

year the programme focused on ensuring our building management

systems controlled our internal environments appropriately and

reduce energy waste through plant overrides.

---

| | | |
|:---|:---|:---|
| ![Green_top left7.gif](lyg-20251231_g154.gif) |  | ![Green_topright7.gif](lyg-20251231_g155.gif) |
| ![Green_top left7.gif](lyg-20251231_g154.gif) | **Assessing our resilience** <br>**to climate risk**<br>The risks associated with climate change <br>and the transition to a low carbon <br>economy can potentially expose the <br>Group to financial losses and therefore <br>present an important consideration for <br>the resilience of the Group's strategy.<br>Our Assessment for 2025 continues <br>to support our view that our strategy <br>remains resilient to the challenges <br>of climate risk. | ![Green_topright7.gif](lyg-20251231_g155.gif) |
|  | **Assessing our resilience** <br>**to climate risk**<br>The risks associated with climate change <br>and the transition to a low carbon <br>economy can potentially expose the <br>Group to financial losses and therefore <br>present an important consideration for <br>the resilience of the Group's strategy.<br>Our Assessment for 2025 continues <br>to support our view that our strategy <br>remains resilient to the challenges <br>of climate risk. |  |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |

---

We continue to review our strategy to support the transition to net

zero to ensure it captures our current view of potential risks and

opportunities, as reflected in the previous sections.

To inform our latest assessment of the resilience of the Group's

strategy we have:

• Updated our understanding of the areas of our business facing

the greatest risk, based on the size of the Group's exposure and

the potential relative impact across key sectors

• Completed additional analysis to understand the potential

impacts from these risks if they were to occur

![SusRev_NetTransition_ManInWellingtons.jpg](lyg-20251231_g158.jpg)

Areas at greater risk

Understanding the potential impact of climate risk is initially

informed by identifying which areas of the Group's portfolios could

be affected. We assess both physical and transition risk, noting that

our physical risk assessment is currently more focused on our

mortgage and home insurance books.

Climate change can increase the likelihood and severity of flood

events, which could negatively impact property valuations and

increase insurance costs. Our assessment tells us that approximately

1 in 6 properties within our mortgage portfolio are at risk of flooding,

and just over 1 in 100 meet our very high risk criteria for the present

day time horizon. We continue to work closely with the government

to mitigate the risks around flood resilience and have integrated

property level controls into our originations process. Stricter energy

efficiency regulations rendering properties non-compliant could

also have a negative impact on property valuations and lead

to increased affordability pressures on customers to transition.

For our Commercial Banking lending and investments portfolios,

we have undertaken further analysis to inform which sectors are

most exposed to climate risk using different models and scenarios,

including bespoke scenarios and the Network for Greening the

Financial System (NGFS) scenarios.

![SectionTabSusRev.gif](lyg-20251231_g110.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our latest analysis has assessed the potential financial impacts

across key sectors under a range of scenarios, including the NGFS

Net Zero 2050 and Delayed Transition scenarios. Our analysis here

however focuses on the Net Zero 2050 scenario as this analysis

describes the ideal outcome that the Group's net zero strategy and

targets are aiming for. This level of analysis is focused on identifying

where more detailed assessment is required. Recent flaws

acknowledged in the NGFS scenarios have been reviewed and

mitigated where necessary within assessments using these scenarios,

including as part of ECL assessment (see Note 21, **page [278](#i822751746e7a40d08d6d40a4de142911_26746)).**

We recognise the actions required under these scenarios' assumptions

now tend to generate increased transition risks compared to previous

iterations, reflecting the lack of sufficient progress to date and

external dependencies such as government policy.

Our analysis shows the sectors most impacted in the Net Zero 2050

scenario include coal mining, oil and gas, transport, automotive and

utilities. These remain broadly unchanged from last year, noting

higher impacts observed in the automotive sector, driven by the

lower projections of EV uptake. Further detail is provided on analysis

for our investments portfolio in the sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

A summary of bank lending to sectors with increased climate risk

is shown in the table on page 78 of our sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

The make-up of the Group's lending portfolio means the biggest

exposures are in the residential mortgages and real estate sector,

although short-term risks are expected to be limited based on the

current policy landscape. Our exposure to other sectors with higher

sensitivity to transition risk is lower and the Group continues to

monitor loans and advances in these sectors. A similar sectoral

analysis of Scottish Widows' assets under management is provided

on page 117 of our sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

Analysis of potential impacts

Climate-related risks are complex, forward-looking and uncertain,

and unlike traditional financial models, there is no historic dataset

to test climate model outcomes against. Therefore, our approach

to assessing the impact of these risks continues to evolve as our

understanding matures and develop, including our scenario analysis

capabilities and we're continuing to embed these, as detailed

within the risk management section on page [150](#ic29467eacc3d4fd7ac799c01d0a92950_0-1-1-1-5233089) and page 124 in

our sustainability report . The following assessments have been

![Icon_Weblink.gif](lyg-20251231_g14.gif)

undertaken to evaluate our resilience to the impacts of the risks

related to climate change.

**Lending**

For the last two years, we have incorporated consideration of some

impacts of climate risk into our calculation of expected credit losses,

as outlined in Note 21, **page [278](#i822751746e7a40d08d6d40a4de142911_26746).** This exercise was repeated in 2025

with similar results. This continues to support management's view

that there is a low residual risk of material error or omission in the

Group's financial statements due to climate-related risks and as

a result no adjustments have been made to ECL measured as at

31 December 2025.

We have also performed a stress exercise on the largest credit

portfolio, retail mortgages, and quantified the impact on losses

and implication on capital. The transition risk stress explored

affordability shocks due to retrofitting and valuation impacts

for properties falling below hypothetical future minimum energy

efficiency standards. The climate impact was immaterial in relation

to both impairment and capital effect.

**Investment and insurance** 

We continue to assess risks to the achievement of our strategic

objectives over the short to medium term by stress testing our

business plan. Amongst other stress tests, we considered a bespoke

climate scenario and compared this to the base planning scenario.

Over the past few years these stress tests against the base plan have

assessed scenarios capturing different climate risk drivers, for 2025

we considered acute physical risk events and subsequent social,

economic and governmental actions.

This analysis showed us the variation in projected profitability

caused by an adverse climate scenario and the potential for it to

impact Scottish Widows Group's capital position.

![SusRev_NetTransition_GroupAroundTable_FullWidth.jpg](lyg-20251231_g159.jpg)

![Divider_FinRes.gif](lyg-20251231_g160.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Financial

results

---

| | |
|:---|:---|
| **Results for the full year** |  |
| Income statement – underlying basis<sup>A</sup> | [51](#i3eaa7a3e529a46b3b97a88e05ad474bc_202) |
| Key balance sheet metrics | [51](#i3eaa7a3e529a46b3b97a88e05ad474bc_205) |
| Balance sheet analysis | [52](#i3eaa7a3e529a46b3b97a88e05ad474bc_211) |
| Summary of Group results | [53](#i3eaa7a3e529a46b3b97a88e05ad474bc_220) |
| Segmental analysis – underlying basis<sup>A</sup> | [60](#i3eaa7a3e529a46b3b97a88e05ad474bc_271) |

---

---

| | |
|:---|:---|
| **Divisional results**  |  |
| Retail | [61](#i3eaa7a3e529a46b3b97a88e05ad474bc_274) |
| Commercial Banking | [62](#i3eaa7a3e529a46b3b97a88e05ad474bc_280) |
| Insurance, Pensions and Investments | [63](#i3eaa7a3e529a46b3b97a88e05ad474bc_286) |
| Equity Investments and Central Items | [64](#i3eaa7a3e529a46b3b97a88e05ad474bc_289) |

---

Delivering

long-term,

sustainable

returns

**We are Helping Britain Prosper in a way** 

**that delivers sustainable profit and growth**

![SectionTabFinRes.gif](lyg-20251231_g161.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Income statement – underlying basis<sup>A</sup>

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| Change%<br>|
| Underlying net interest income | **13635** | 12845 | 6 |
| Underlying other income | **6120** | 5597 | 9 |
| Operating lease depreciation | **(1454)** | (1325) | (10) |
| **Net income** | **18301** | 17117 | 7 |
| Operating costs | **(9761)** | (9442) | (3) |
| Remediation | **(968)** | (899) | (8) |
| **Total costs** | **(10729)** | (10341) | (4) |
| **Underlying profit before impairment** | **7572** | 6776 | 12 |
| Underlying impairment charge | **(795)** | (433) | (84) |
| **Underlying profit** | **6777** | 6343 | 7 |
| Restructuring | **(46)** | (40) | (15) |
| Market and other volatility | **72** | (144) |  |
| Amortisation of purchased intangibles | **(86)** | (81) | (6) |
| Fair value unwind | **(56)** | (107) | 48 |
| Volatility and other items | **(70)** | (332) | 79 |
| **Statutory profit before tax** | **6661** | 5971 | 12 |
| Tax expense | **(1904)** | (1494) | (27) |
| **Statutory profit after tax** | **4757** | 4477 | 6 |
| Earnings per share | **7.0p** | 6.3p | 0.7p |
| Dividends per share – ordinary | **3.65p** | 3.17p | 15 |
| Share buyback value | **£1.75bn** | £1.70bn | 3 |
| Banking net interest margin<sup>A</sup> | **3.06%** | 2.95% | 11bp |
| Average interest-earning banking assets<sup>A</sup> | **£462.9bn** | £451.2bn | 3 |
| Cost:income ratio<sup>A</sup> | **58.6%** | 60.4% | (1.8)pp |
| Asset quality ratio<sup>A</sup> | **0.17%** | 0.10% | 7bp |
| Return on tangible equity<sup>A</sup> | **12.9%** | 12.3% | 0.6pp |

---

ASee **page [308](#i3eaa7a3e529a46b3b97a88e05ad474bc_913).**

Key balance sheet metrics

---

| | | | |
|:---|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>| At 31 Dec<br>2024<br>| Change%<br>|
| Underlying loans and advances to customers<sup>A</sup> | **£481.1bn** | £459.1bn | 5 |
| Customer deposits | **£496.5bn** | £482.7bn | 3 |
| Loan to deposit ratio<sup>A</sup> | **97%** | 95% | 2pp |
| CET1 ratio | **14.0%** | 14.2% | (0.2)pp |
| Pro forma CET1 ratio<sup>A,1</sup> | **13.2%** | 13.5% | (0.3)pp |
| UK leverage ratio | **5.4%** | 5.5% | (0.1)pp |
| Risk-weighted assets | **£235.5bn** | £224.6bn | 5 |
| Wholesale funding<sup>2</sup> | **£99.4bn** | £92.5bn | 7 |
| Wholesale funding <1 year maturity<sup>2</sup> | **£37.0bn** | £31.3bn | 18 |
| of which: money market funding <1 year maturity<sup>2</sup> | **£26.6bn** | £16.9bn | 57 |
| Liquidity coverage ratio – eligible assets<sup>3</sup> | **£131.4bn** | £134.4bn | (2) |
| Liquidity coverage ratio<sup>4</sup> | **145%** | 146% | (1)pp |
| Net stable funding ratio<sup>5</sup> | **124%** | 129% | (5)pp |
| Tangible net assets per share<sup>A</sup> | **57.0p** | 52.4p | 4.6p |

---

131 December 2025 and 31 December 2024 pro forma CET1 ratios reflect the full impact of the share buybacks announced in respect of 2025 and 2024. 31 December 2024 pro forma

CET1 ratio also reflects the ordinary dividend received from the Insurance business in February 2025. The CET1 and pro forma CET1 ratios at 31 December 2025 both reflect an ordinary

dividend received from the Insurance business in December 2025, that would previously have been received in February of the following year.

2Excludes balances relating to cash collateral of £1.5 billion (31 December 2024: £2.8 billion).

3Eligible assets are calculated as a monthly rolling simple average of month-end observations over the previous 12 months post any liquidity haircuts.

4The liquidity coverage ratio is calculated as a simple average of month-end observations over the previous 12 months.

5The net stable funding ratio is calculated as a simple average of month-end observations over the previous four quarter-ends.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Balance sheet analysis

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>**£bn**<br>| At 30 Sep<br>2025<br>£bn<br>| Change%<br>| At 30 Jun<br>2025<br>£bn<br>| Change%<br>| At 31 Dec<br>2024<br>£bn<br>| Change%<br>|
| UK mortgages | **323.1** | 321.0 | 1 | 317.9 | 2 | 312.3 | 3 |
| Credit cards | **17.3** | 16.8 | 3 | 16.4 | 5 | 15.7 | 10 |
| UK Retail unsecured loans | **10.5** | 10.3 | 2 | 9.9 | 6 | 9.1 | 15 |
| UK Motor Finance<sup>1</sup> | **16.4** | 16.1 | 2 | 16.0 | 3 | 15.3 | 7 |
| Overdrafts | **1.3** | 1.2 | 8 | 1.2 | 8 | 1.2 | 8 |
| Retail Europe<sup>2</sup> | **20.4** | 19.9 | 3 | 19.0 | 7 | 16.8 | 21 |
| Retail other<sup>2</sup> | **1.3** | 1.4 | (7) | 1.2 | 8 | 1.1 | 18 |
| Business and Commercial Banking | **28.3** | 28.8 | (2) | 29.1 | (3) | 29.7 | (5) |
| Corporate and Institutional Banking | **62.0** | 61.3 | 1 | 59.7 | 4 | 57.9 | 7 |
| Central Items<sup>3</sup> | **0.5** | 0.3 | 67 | 0.6 | (17) | – |  |
| **Underlying loans and advances to customers**<sup>A</sup> | **481.1** | 477.1 | 1 | 471.0 | 2 | 459.1 | 5 |
| Retail current accounts | **102.8** | 101.8 | 1 | 100.6 | 2 | 101.3 | 1 |
| Retail savings accounts | **212.5** | 212.4 |  | 213.1 |  | 208.2 | 2 |
| Wealth | **9.9** | 9.5 | 4 | 9.7 | 2 | 10.2 | (3) |
| Commercial Banking | **171.1** | 172.6 | (1) | 170.2 | 1 | 162.6 | 5 |
| Central Items | **0.2** | 0.4 | (50) | 0.3 | (33) | 0.4 | (50) |
| **Customer deposits** | **496.5** | 496.7 |  | 493.9 | 1 | 482.7 | 3 |
| **Total assets** | **944.1** | 937.5 | 1 | 919.3 | 3 | 906.7 | 4 |
| **Total liabilities** | **896.2** | 891.8 |  | 872.4 | 3 | 860.8 | 4 |
| Ordinary shareholders' equity | **41.8** | 40.2 | 4 | 40.4 | 3 | 39.5 | 6 |
| Other equity instruments | **5.9** | 5.2 | 13 | 6.3 | (6) | 6.2 | (5) |
| Non-controlling interests | **0.2** | 0.2 |  | 0.2 |  | 0.2 |  |
| **Total equity** | **47.9** | 45.6 | 5 | 46.9 | 2 | 45.9 | 4 |
| Ordinary shares in issue, excluding own shares | **58,799m** | 59,196m | (1) | 59,938m | (2) | 60,491m | (3) |

---

1UK Motor Finance balances on an underlying basis<sup>A</sup> exclude a finance lease gross up. See **page** **[308](#i3eaa7a3e529a46b3b97a88e05ad474bc_913)**.

2Within underlying loans and advances, Retail Europe, previously presented within Retail other, is reported separately. The comparatives are represented on a consistent basis.

Retail other primarily includes the Wealth business.

3Central Items includes central fair value hedge accounting adjustments.

![SectionTabFinRes.gif](lyg-20251231_g161.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Summary of Group results

**Statutory results**

**Income statement**

The Group's statutory profit before tax for 2025 was £6,661 million, 12% higher than in 2024. This included higher total income,

partially offset by higher operating expenses and a higher impairment charge. Profit after tax was £4,757 million and earnings per share

were 7.0 pence (2024: £4,477 million and 6.3 pence respectively).

Total income for 2025 was £19,422 million, an increase of 8% on the prior year (2024: £18,003 million). Net interest income of

£13,230 million was up 8% (2024: £12,277 million), driven by higher average interest-earning assets and a higher margin, benefitting from

franchise led volume growth and stronger structural hedge income as eligible balances were reinvested in a higher rate environment,

partially offset by continued mortgage and deposit headwinds.

Other income increased by 8% to £6,192 million (2024: £5,726 million), with higher other operating income and a higher insurance service

result, partially offset by lower net trading income. Other operating incomeincreased by 22% to £2,367 million (2024: £1,934 million) as a

result of vehicle fleet growth and higher average vehicle rental values in UK Motor Finance within Retail. The insurance service result

increased by 56% to £756 million (2024: £486 million), benefitting from higher income in the workplace pensions business, higher general

insurance income net of claims and the full acquisition of Schroders Personal Wealth in the fourth quarter. This was alongside the gain on

sale of the Group's bulk annuities portfolio to Rothesay Life plc in the first half of the year. Net trading income reduced to £1,485 million

(2024: £1,812 million), largely due to market movements partially offset by strong income growth from Lloyds Living.

Total operating expenses of £11,966 million (2024: £11,601 million) included a higher remediation charge relating to motor finance

commission arrangements. Excluding remediation, the impact of strategic investment (including planned higher severance), business

growth costs (including the full acquisition of Schroders Personal Wealth) and inflationary pressures were 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 £968 million was recognised by the Group in 2025 (2024: £899 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 2025 impairment charge was £795 million, up from £431 million 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 Group recognised a tax expense of £1,904 million in 2025 (2024: £1,494 million).

**Balance sheet**

As at 31 December 2025, total assets were £944,072 million, £37,375 millionhigher than the prior year (31 December 2024:

£906,697 million). Financial assets at amortised cost were £553,672 million, £21,895 millionhigher versus the prior year (31 December 2024:

£531,777 million), supported by increases in loans and advances to customers. This included growth of £10,806 millionin 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 £2,707 million in Commercial Banking, with higher Institutional balances including securitised products,

alongside corporate infrastructure growth, partially offset by repayments of government-backed lending.

Financial assets held at fair value through profit or loss at £240,413 millionincreased by £24,488 million during the year, with increased

holdings in the Insurance business as a result of market gains on investments held to back insurance and investment contract liabilities as

well as increased reverse repurchase agreements in the banking business.

Derivative financial assets were £4,338 millionlower at £19,727 million versus the prior year (31 December 2024: £24,065 million), driven by

market movements in the year. Financial assets at fair value through other comprehensive income of £36,320 million increased by

£5,630 million in the year reflecting increases in liquid asset holdings. Cash and balances at central banks reduced by £6,044 million to

£56,661 million (31 December 2024: £62,705 million) reflecting a change in the mix of liquidity holdings. Other assets were £4,256 million

lower, primarily reflecting the disposal of the Group's bulk annuity business in the second quarter, partially offset by increased operating

lease assets resulting from fleet growth and higher value vehicles in UK Motor Finance and increased investment properties from business

growth in Lloyds Living.

Total liabilities were £896,205 million, £35,396 millionhigher over the year (31 December 2024: £860,809 million). Customer deposits

of £496,457 million increased in the year by £13,712 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 £8,418 million, resulting from growth in targeted sectors. Repurchase agreements at amortised cost increased by

£810 million to £38,570 million (31 December 2024: £37,760 million), following £13 billion of repayments of drawings from the Bank of

England's Term Funding Scheme with additional incentives for SMEs (TFSME), more than offset by increased repurchase agreements.

Financial liabilities at fair value through profit or loss were stable at £27,909 million at 31 December 2025 and derivative financial liabilities

decreased by £5,544 million to £16,132 million as a result of market movements. Liabilities arising from insurance and investment contracts

increased by £23,632 million reflecting the increase in policyholder investments. Other liabilities decreased by £4,375 million to

£26,269 million and included the effects of the disposal of the Group's bulk annuity business, partially offset by increased provisions

primarily driven by the provision increase in relation to motor finance commission arrangements. Debt securities in issue at amortised cost

increased by £7,437 million to £78,271 million, with new issuances in the year, while subordinated liabilities remained stable at

£9,894 million.

Total equity of £47,867 million at 31 December 2025increased by £1,979 million from £45,888 million at 31 December 2024. Profit for the

year, the unwind of the cash flow hedge reserve and issuance of AT1 capital instruments in February 2025 and November 2025 were

partially offset by the impact of the ordinary share buyback programme, the dividends paid in May 2025 and September 2025, as well as

the impact of redemptions of AT1 capital instruments in June 2025 and September 2025, alongside a lower pension surplus.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Summary of Group results continued

**Underlying results**<sup>A</sup>

The Group's underlying profit was £6,777 million in 2025, up 7% versus the prior year (2024: £6,343 million). Higher underlying net interest

income and higher underlying other income were partially offset by higher operating costs and a higher underlying impairment charge given

a significant release in 2024 driven by the improved economic outlook. Underlying profit for the fourth quarter was £1,926 million versus

£1,290 million in the third quarter of the year.

**Net income**<sup>A</sup>

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| Change%<br>|
| Underlying net interest income | **13635** | 12845 | 6 |
| Underlying other income | **6120** | 5597 | 9 |
| Operating lease depreciation<sup>1</sup> | **(1454)** | (1325) | (10) |
| **Net income**<sup>A</sup> | **18301** | 17117 | 7 |
| Banking net interest margin<sup>A</sup> | **3.06%** | 2.95% | 11bp |
| Average interest-earning banking assets<sup>A</sup> | **£462.9bn** | £451.2bn | 3 |

---

1Net of losses on disposal of operating lease assets of £10 million (2024: profit of £59 million).

Net income of £18,301 million was up 7% compared to 2024, driven by higher underlying net interest income and higher underlying other

income, partially offset by an increased charge for operating lease depreciation. Net income in the fourth quarter of £4,744 million was up

2% compared to the third quarter reflecting the same trends.

Within net income, underlying net interest income of £13,635 million was up 6% versus the prior year (2024: £12,845 million). This was

supported by a banking net interest margin of 3.06% (2024: 2.95%). The net interest margin benefitted from franchise led volume growth

and stronger structural hedge income as eligible balances were reinvested in a higher rate environment, partially offset by continued

mortgage and deposit headwinds. Average interest-earning banking assets in 2025 of £462.9 billion (2024: £451.2 billion) reflect strong

customer led growth, primarily driven by UK mortgages, credit cards, UK Retail unsecured loans and the European retail business. In

Commercial Banking, average interest-earning banking assets reduced, impacted by continued repayments of government-backed lending

within Business and Commercial Banking and lower lending to banks offsetting non government-backed lending growth. Underlying net

interest income in 2025 also included a non-banking net interest expense of £515 million (2024: £469 million), increasing as a result of

growth in the Group's other operating income activities and the refinancing of these activities at higher rates. The Group expects underlying

net interest income for 2026 to be c.£14.9 billion.

Underlying net interest income of £3,529 million in the fourth quarter of 2025 was 2% higher than the third quarter (three months to 30

September 2025: £3,451 million). A growing structural hedge contribution more than offset the impact of continued headwinds from asset

margin compression and a reduced UK Bank Rate. This resulted in an increase in the banking net interest margin to 3.10% (three months to

30 September 2025: 3.06%). Average interest-earning banking assets were higher in the fourth quarter at £470.3 billion (three months to

30 September 2025: £465.5 billion), driven by UK mortgages, the European retail business and the Corporate and Institutional Banking

business.

The Group manages the risk to earnings and capital from movements in interest rates by hedging the net liabilities which are stable or

less sensitive to movements in rates. As at 31 December 2025, the notional balance of the sterling structural hedge was £244 billion

(31 December 2024: £242 billion) with a weighted average life of approximately 3.75 years (31 December 2024: approximately

3.5 years). The Group generated £5.5 billion of total income from sterling structural hedge balances in 2025, an increase of £1.3 billion

over the prior year (2024: £4.2 billion). The Group expects sterling structural hedge earnings to be c.£7.0 billion in 2026, to be c.

£8.0 billion in 2027, with earnings growth from the structural hedge expected to continue thereafter.

Underlying other income of £6,120 million in 2025 grew by 9% compared to the prior year (2024: £5,597 million), driven by strengthening

customer activity and the benefit of investments in strategic initiatives. This included an increase of 12% in Retail, driven by UK Motor

Finance from fleet growth and higher average vehicle rental values, alongside strength in income from current accounts and credit cards.

Commercial Banking increased by 1% from higher transaction banking and markets income, partially offset by lower loan markets activity,

with 2024 benefitting from one-off gains. Insurance, Pensions and Investments underlying other income was up 11% from strengthening

performance in the workplace pensions business, higher general insurance income net of claims and the full acquisition of Schroders

Personal Wealth in the fourth quarter. Equity Investments and Central Items benefitted from strong business growth in Lloyds Living.

Underlying other income in the fourth quarter was up 2% compared to the third quarter. This was supported by continued growth in UK

Motor Finance within Retail, higher transaction banking income in Commercial Banking, alongside the full acquisition of Schroders Personal

Wealth in Insurance, Pensions and Investments and continued business growth in Lloyds Living.

Operating lease depreciation of £1,454 million in 2025 was 10% higher than in the prior year (2024: £1,325 million), due to fleet growth,

the depreciation of higher value vehicles and declines in used electric car prices, partially offset by risk mitigation actions. Compared to

the third quarter of 2025, operating lease depreciation was 4% higher, in line with the continued growth in fleet size and year-end

valuations. The Group continues to mitigate the risk of used car price movements through a number of market and customer initiatives

to both improve performance and reduce volatility, including lease extensions, used car leasing, remarketing agreements and residual

value insurance.

![SectionTabFinRes.gif](lyg-20251231_g161.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Total costs**<sup>A</sup>

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| Change%<br>|
| Operating costs<sup>A</sup> | **9761** | 9442 | (3) |
| Remediation | **968** | 899 | (8) |
| **Total costs**<sup>A</sup> | **10729** | 10341 | (4) |
| Cost:income ratio<sup>A</sup> | **58.6%** | 60.4% | (1.8)pp |

---

Operating costs of £9,761 million increased by 3% in 2025 reflectingstrategic investment (including an increased severance charge),

business growth costs (including the full acquisition of Schroders Personal Wealth) and inflationary pressures. These factors were partially

mitigated by cost savings from investment and continued business-as-usual cost discipline. Operating costs in the fourth quarter increased

by 12% as expected, which includes the Bank Levy, additional investment spend and costs associated with the full acquisition of Schroders

Personal Wealth.

A remediation charge of £968 million was recognised by the Group in 2025 (2024: £899 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 FCA published Consultation Paper CP25/27 in October 2025 setting out detailed proposals for a scheme to

redress unfair customer relationships, including a more generous redress methodology than anticipated in the previous scenario-based

provision. The Group has made representations to the FCA on a number of aspects of the proposed scheme, including that the proposed

redress methodology does not reflect the loss to the customer. The Group will assess developments and potential impacts on the provision

following the announcement of the final scheme rules, which are expected by the end of March 2026. The current provision represents the

Group's best estimate. In the fourth quarter the Group recognised a remediation charge of £56 million across a small number of

rectification programmes.

Total costs, including remediation, of £10,729 million were 4% higher than the prior year, with net income up 7%. The cost:income ratio was

58.6% (2024: 60.4%) and the cost:income ratio excluding remediation was 53.3%. For 2026, the cost:income ratio is expected to be less

than 50%, with operating costs expected to beless than £9.9 billion.

**Underlying impairment**<sup>A</sup>

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| Change%<br>|
| Charges (credits) pre-updated MES<sup>1</sup> |  |  |  |
| Retail | **734** | 789 | 7 |
| Commercial Banking | **(14)** | 48 |  |
| Other | **1** | (10) |  |
|  | **721** | 827 | 13 |
| Updated economic outlook |  |  |  |
| Retail | **–** | (332) |  |
| Commercial Banking | **74** | (62) |  |
|  | **74** | (394) |  |
| **Underlying impairment charge**<sup>A</sup> | **795** | 433 | (84) |
| Asset quality ratio<sup>A</sup> | **0.17%** | 0.10% | 7bp |

---

1Impairment charges excluding the impact from the updated economic outlook (multiple economic scenarios, MES) taken each quarter.

The underlying impairment charge was £795 million (2024: £433 million), resulting in an asset quality ratio of 17 basis points. The higher

charge includes a £74 million net charge from updated multiple economic scenarios (MES), compared to a credit from MES of £394 million

in 2024 which benefitted from an improved economic outlook, notably house price growth.

The pre-updated MES charge of £721 million for 2025 is equivalent to an asset quality ratio of 15 basis points. This was lower compared to

the prior year due to strong credit performance, with arrears low and stable across portfolios, alongside one-off benefits primarily from

model refinements and calibrations. 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 impairment charge in the fourth quarter of £177 million, equivalent to an asset quality ratio of 14 basis points, includes a £47 million

MES charge reflecting a higher short term unemployment outlook. The low pre-updated MES charge for the quarter includes model

refinement benefits and a large debt sale write back in Retail which together reduced the charge. The asset quality ratio excluding the

model and debt sale benefits is considered to be closer to 25 basis points, both for the full year and the fourth quarter. The Group expects

the asset quality ratio to be c.25 basis points in 2026.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Summary of Group results continued

**Restructuring, volatility and other items**

Volatility and other items consists of market and other volatility, amortisation of purchased intangibles and fair value unwind.

Restructuring costs

Restructuring costs for 2025 were £46 million (2024: £40 million).

Market and other volatility

Market and other volatility resulted in a net gain of £72 million (2024: net loss of £144 million), as a result of the gain on sale of the Group's

bulk annuities portfolio to Rothesay Life plc in the first half of the year and the gain following the full acquisition of Schroders Personal

Wealth in the fourth quarter, partially offset by negative market volatility, primarily insurance related.

Amortisation of purchased intangibles

The Group incurred a charge of £86 million (2024: £81 million) for the amortisation of intangible assets.

Fair value unwind

The results include the impact of the fair value adjustments arising from historical acquisitions. In 2025 the principal financial effect of the

fair value unwind is to reflect the effective interest rates applicable at the date of acquisition, on liabilities that were acquired at values

that differed from their original book value. The Group incurred a charge of £56 million (2024: £107 million) relating to fair value unwind,

with the reduction resulting from the maturity of debt instruments, fair valued as part of the HBOS acquisition.

Further information on the reconciliation of statutory to underlying results is included on**page [308](#i3eaa7a3e529a46b3b97a88e05ad474bc_913)**.

**Return on tangible equity**<sup>A</sup> **and tangible net assets per share**<sup>A</sup>

The return on tangible equity for the year was 12.9%, or 14.8%excluding the third quarter charge for motor finance commission

arrangements (2024: 12.3%), with 15.7% in the fourth quarter. The Group now expects the return on tangible equity for 2026 to be greater

than 16%.

Tangible net assets per share at 31 December 2025 were 57.0 pence, up 4.6 pence in the year (31 December 2024: 52.4 pence) and up

2.0 pence in the fourth quarter. The increase across 2025 resulted from attributable profit, the unwind of the cash flow hedge reserve

and a reduction in the number of shares in issue due to the ordinary share buyback announced in February 2025. This was partially

offset by capital distributions, a lower pension surplus and increased intangible assets following the full acquisition of Schroders

Personal Wealth.

**Tax**

The Group recognised a tax expense of £1,904 million in 2025 (2024: £1,494 million), representing an effective tax rate of 28.6%. Excluding

motor finance remediation costs, the tax rate would have been 27.2%. The Group expects a medium-term effective tax rate of around 27%

based on the banking surcharge rate of 3% and the corporation tax rate of 25%. An explanation of the relationship between the tax

expense and the Group's accounting profit for the year is set out in note 15 to the consolidated financial statements on **page [252](#i3eaa7a3e529a46b3b97a88e05ad474bc_694)**.

**Balance sheet**

The Group saw strong customer lending growth in the year, with underlying loans and advances to customers increasing by £22.0 billion (or 5%)

to £481.1 billion. This included growth of £10.8 billion in UK mortgages alongside growth across UK Retail unsecured loans, credit cards, UK

Motor Finance and the European retail business totalling £7.7 billion. Lending balances increased by £2.7 billion in Commercial Banking, with

higher Institutional balances including securitised products, alongside corporate infrastructure growth, partially offset by repayments of

£1.4 billion of government-backed lending within Business and Commercial Banking. Underlying loans and advances increased by £4.0 billion in

the fourth quarter, including growth in UK mortgages, Retail unsecured products and the European retail business.

Customer deposits of £496.5 billion increased significantly in the year, by £13.8 billion, or 3%. Retail deposits were up £5.5 billion in the year,

including £4.0 billion 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 £8.5 billion in the year (31 December 2024: £162.6 billion), resulting from growth in targeted sectors.

In the fourth quarter, customer deposits reduced £0.2 billion, with growth in Retail current accounts of £1.0 billion, offset by a reduction of

£1.5 billion in Commercial Banking, given seasonal flows and balance sheet management.

The Group saw growth of £7.9 billion net new money during 2025 in Insurance, Pensions and Investments open book assets under

administration (AuA). In total, open book AuA stand at £232 billion at 31 December 2025. This included £0.5 billion of net new money and

£18 billion of AuA relating to the full acquisition of Schroders Personal Wealth.

The Group has a large, high quality liquid asset portfolio held mainly in cash and government bonds, with all assets hedged for interest rate

risk. The Group's liquid assets continue to significantly exceed regulatory requirements and internal risk appetite, with a strong, stable

liquidity coverage ratio of 145% at 31 December 2025 (31 December 2024: 146%) and a net stable funding ratio of 124% (31 December 2024:

129%). The loan to deposit ratio of 97%, slightly up versus 31 December 2024, continues to reflect a robust funding and liquidity position,

with significant capacity to grow lending. Wholesale funding increased to £99.4 billion (2024: £92.5 billion), with money market funding

returning to normalised levels following the repayment of £13.1 billion of drawings from the Bank of England's Term Funding Scheme with

additional incentives for SMEs (TFSME).

The underlying expected credit loss (ECL) allowance reduced to £3.4 billion at 31 December 2025 (31 December 2024: £3.7 billion). The

uplift from the base case to probability-weighted ECL is £0.4 billion (31 December 2024: £0.4billion). The ECL allowance includes

judgemental adjustments which increase the ECL by £242 million (31 December 2024: £15million decrease to ECL). The increase compared

to 2024 is primarily due to the removal of negative ECL adjustments previously held for loss given default adjustments in both Retail

Unsecured and Commercial Banking, where respective model enhancements have removed the need for an adjustment. The ECL allowance

continues to include a £50 million judgemental adjustment taken in the first half of the year in respect of the global tariff and geo-political

disruption risks to specific drivers across various corporate sectors not reflected in broad macroeconomic model variables.

![SectionTabFinRes.gif](lyg-20251231_g161.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Capital**

**Capital generation**

---

| | |
|:---|:---|
| **Pro forma CET1 ratio as at 31 December 2024**<sup>A,1</sup> | **13.5%** |
| Banking build (bps)<sup>2</sup> | 228 |
| Insurance dividend (bps) | 9 |
| Risk-weighted assets (bps) | (54) |
| Other movements (bps)<sup>3</sup> | 14 |
| Retail secured CRD IV increases (bps)<sup>4</sup> | (19) |
| Capital generation excluding provision charge for motor finance commission arrangements (bps) | 178 |
| Provision charge for motor finance commission arrangements (bps) | (31) |
| **Capital generation (bps)** | **147** |
| Ordinary dividend (bps) | (97) |
| Share buyback accrual (bps) | (79) |
| **Pro forma CET1 ratio as at 31 December 2025**<sup>A,1</sup> | **13.2%** |

---

131 December 2025 and 31 December 2024 pro forma CET1 ratios reflect the full impact of the share buybacks announced in respect of 2025 and 2024. 31 December 2024 pro forma

CET1 ratio also reflects the ordinary dividend received from the Insurance business in February 2025. The CET1 and pro forma CET1 ratios at 31 December 2025 both reflect an ordinary

dividend received from the Insurance business in December 2025, that would previously have been received in February of the following year.

2Includes impairment charge and excess regulatory expected losses, excludes the charge for motor finance commission arrangements.

3Includes share-based payments and market volatility.

4Retail secured CRD IV increases include additional risk-weighted assets as well as related excess regulatory expected losses.

The Group's pro forma CET1 capital ratio at 31 December 2025 was 13.2% (31 December 2024: 13.5% pro forma). Capital generation during

the year was 147 basis points, in line with updated guidance. Excluding the provision charge for motor finance commission arrangements in

the third quarter, capital generation was 178 basis points.

Capital generation reflects strong banking build and the £200 million of dividends received from the Insurance business across July and

December 2025, partially offset by risk-weighted asset increases and the charge for motor finance. Regulatory headwinds of 19 basis

points in the year reflect an uplift for the CRD IV model outcomes on Retail secured. The impact of the interim ordinary dividend paid in

September 2025 and the accrual for the recommended final ordinary dividend equates to 97 basis points, with a further 79 basis points

to cover the accrual for the announced ordinary share buyback programme of up to £1.75 billion. Capital generation in the fourth quarter

of 37 basis points reflects strong banking build and the dividend received from the Insurance business in December 2025, partially offset

by risk-weighted asset increases and regulatory headwinds.The Group reaffirms guidance for capital generation in 2026 of greater than

200 basis points.

Excluding the full impact of the announced ordinary share buyback programme, the Group's CET1 capital ratio at 31 December 2025 was

14.0% (31 December 2024: 14.2%).

Risk-weighted assets increased by £10.9 billion to £235.5 billion at 31 December 2025 (31 December 2024: £224.6 billion). This reflects the

impact of strong customer lending growth, Retail secured CRD IV increases and other movements, partially offset by continued

optimisation activity. In the fourth quarter, risk-weighted assets increased by £3.2 billion following lending growth and Retail secured CRD

IV increases, partially offset by optimisation activity. In the context of the Retail secured CRD IV models, an additional risk-weighted asset

increase of £2.0 billion was recognised in the fourth quarter. This reflects model outcomes, in line with previous guidance on the anticipated

impact and remains subject to review and approval by the PRA.

The Group expects the initial impact of Basel 3.1 implementation on 1 January 2027 to result in a Day 1 risk-weighted assets reduction in the

range of c.£6 billion to c.£8 billion.

The PRA provided an update to the Group's Pillar 2A CET1 capital requirement during the third quarter, with the requirement reducing

slightly to c.1.4% of risk-weighted assets from the previous requirement of c.1.5% of risk-weighted assets. The Group's total regulatory CET1

capital requirement remains c.12% of risk-weighted assets. The Board's view of the ongoing level of total CET1 capital required to grow the

business, meet current and future regulatory requirements and cover economic and business uncertainties remains c.13.0%. This includes a

management buffer of c.1%. The Board intends to pay down to the CET1 capital target of c.13.0% by the end of 2026.

**Pensions**

The 31 December 2022 triennial valuation for the main defined benefit schemes was completed in 2023. Following the contributions paid in

2023, no further deficit contributions have been paid for this triennial period (to 31 December 2025). Any future contributions will be

conditional on the 31 December 2025 triennial valuation which is expected to be completed during 2026.

**Dividend and share buyback**

The Group has a progressive and sustainable ordinary dividend policy whilst maintaining the flexibility to return further surplus capital

through share buybacks or special dividends. In February 2025, the Board decided to return surplus capital in respect of 2024 through

an ordinary share buyback programme of up to £1.7 billion. This commenced on 21 February and completed on 8 December 2025, with

c.2.2 billion (c.4%) ordinary shares repurchased at an average price of 77.13 pence per share.

In respect of 2025, the Board has recommended a final ordinary dividend of 2.43 pence per share, which, together with the interim

ordinary dividend of 1.22 pence per share totals 3.65 pence per share, an increase of 15% compared to 2024, in line with the Board's

commitment to a progressive and sustainable ordinary dividend. On 30 January 2026, the Group announced the launch of an ordinary

share buyback of up to £1.75 billion which is expected to be completed, subject to continued authority from the PRA, by 31 December

2026. Based on the combined interim and proposed final ordinary dividends and the announced ordinary share buyback, the total capital return

in respect of 2025 will be up to £3.9 billion, equivalent to c.6% (as at 26 January 2026) of the Group's market capitalisation value. The

Group intends to pay down to its CET1 capital target of c.13.0% by the end of 2026.Going forward, given the Board's continued confidence

in capital generation, the Group will now review excess capital distributions in addition to the ordinary dividend every half year.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Summary of Group results continued

**Other financial information**

**Post-tax return on average assets**

---

| | | |
|:---|:---|:---|
|  | **2025%**<br>| 2024%<br>|
| **Post-tax return on average assets** | **0.51** | 0.50 |

---

**Share buyback in respect of 2024 results**

During 2025, the Group completed a £1.7 billion share buyback programme, in respect of 2024 results, with c.2.2 billion shares purchased at

an average price of 77.13 pence per share. Through a reduction in the weighted average number of ordinary shares in issue, share buybacks

have the effect of increasing earnings per share and, depending on the average price paid per share, can either increase or decrease the

tangible net assets per share. The share buyback in respect of 2024 results had the effect of increasing the earnings per share by 0.1 pence

and increasing the tangible net assets per share by 2.1 pence, compared to the equivalent distribution through an ordinary dividend.

**Insurance, Pensions and Investments performance summary**<sup>A</sup>

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| Change%<br>|
| Life and pensions sales (PVNBP)<sup>A,1</sup> | **21047** | 18249 | 15 |
| New business value of insurance and participating investment contracts recognised in the year<sup>A,2</sup> |  |  |  |
| of which: deferred to contractual service margin and risk adjustment | **93** | 126 | (26) |
| of which: losses recognised on initial recognition | **(13)** | (15) | 13 |
|  | **80** | 111 | (28) |
| Assets under administration (net flows)<sup>A,3</sup> | **£7.9bn** | £5.7bn | 39 |
| General insurance underwritten new gross written premiums<sup>A</sup> | **175** | 197 | (11) |
| General insurance underwritten total gross written premiums<sup>A</sup> | **762** | 737 | 3 |
| General insurance combined ratio<sup>A</sup> | **89%** | 97% | (8)pp |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>| At 31 Dec<br>2024<br>| Change%<br>|
| Insurance Solvency II ratio (pre-dividend)<sup>4</sup> | **144%** | 158% | (14)pp |
| Total customer assets under administration<sup>A,3</sup> | **£279.6bn** | £247.1bn | 13 |

---

1Present value of new business premiums can fluctuate due to timing of new schemes.

2New business value represents the value added to the contractual service margin and risk adjustment at the initial recognition of new contracts, net of acquisition expenses and any

loss component on onerous contracts (which is recognised directly in the income statement) but does not include existing business increments.

3The movement in asset inflows and outflows driven by business activity (excluding market movements). Following the full acquisition of Schroders Personal Wealth in the fourth

quarter of 2025, this presentation includes Wealth AuAs (previously reported within Retail). For 2025, total customer assets under administration and net flows now include £18 billion

and £0.5 billion respectively and the comparative period has been shown on a consistent basis. For 2024, excluding Wealth AuAs, total customer assets under administration were

£231.9 billion and net flows were £5.3 billion.

4Equivalent estimated regulatory view of ratio (including With-Profits funds and post dividend where applicable) was 140% (31 December 2024:148%, post-February 2025 dividend).

**Breakdown of net income**<sup>A</sup>

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
| **Deferred** <br>**profit release**<sup>1</sup><br>**£m** | **Deferred** <br>**profit release**<sup>1</sup><br>**£m** | **Other in-year** <br>**profit**<br>**£m**<br>| **Total**<br>**£m**<br>| Deferred <br>profit release<sup>1</sup><br>£m | Other in-year <br>profit<br>£m<br>| Total<br>£m<br>|
| Life open book (pensions, individual annuities, <br>Wealth and protection)<br>| **346** | **455** | **801** | 350 | 318 | 668 |
| Non-life (General insurance) | **–** | **277** | **277** | – | 229 | 229 |
| Other items<sup>2</sup> | **67** | **135** | **202** | 69 | 190 | 259 |
| **Net income**<sup>A</sup> | **413** | **867** | **1280** | 419 | 737 | 1156 |

---

1Total deferred profit release is represented by contractual service margin (CSM) and risk adjustment releases from holdings on the balance sheet. CSM is released as insurance contract

services are provided; risk adjustment is released as uncertainty within the calculation of the liabilities diminishes. Amounts are shown net of reinsurance.

2Other items represents the income from longstanding business, return on shareholder assets and interest on subordinated debt.

![SectionTabFinRes.gif](lyg-20251231_g161.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Movement in deferred profit**<sup>1</sup> **(contractual service margin (CSM) and risk adjustment)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Life open book**<br>**£m**<br>| **Other** <br>**products**<sup>2</sup><br>**£m**<br>| **Bulk annuities**<sup>3</sup><br>**£m**<br>| **Total**<sup>1</sup><br>**£m**<br>|
| Deferred profit at 1 January 2025 | **4216** | **686** | **118** | **5020** |
| New business | **93** | **–** | **–** | **93** |
| Release to income statement | **(346)** | **(67)** | **–** | **(413)** |
| Other movements | **486** | **157** | **(118)** | **525** |
| **Deferred profit at 31 December 2025** | **4449** | **776** | **–** | **5225** |
| Deferred profit at 1 January 2024 | 4025 | 702 | 578 | 5305 |
| New business | 126 | – | – | 126 |
| Release to income statement | (350) | (69) | – | (419) |
| Other movements | 415 | 53 | (460) | 8 |
| Deferred profit at 31 December 2024 | 4216 | 686 | 118 | 5020 |

---

1Total deferred profit is represented by CSM and risk adjustment, both held on the balance sheet. CSM is released as insurance contract services are provided; risk adjustment is

released as uncertainty within the calculation of the liabilities diminishes. Amounts are shown net of reinsurance.

2Other products includes longstanding business and European business.

3Bulk annuities for 2024 reflected the reinsurance agreement entered into as part of the agreed sale of the in-force bulk annuity portfolio to Rothesay Life plc, with the impact of the

reinsurance agreement included within Other movements. This sale has since completed.

**Volatility arising in the Insurance business**

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Insurance volatility | **36** | (56) |
| Policyholder interests volatility | **256** | 162 |
| **Total volatility** | **292** | 106 |
| Insurance hedging arrangements | **(537)** | (442) |
| **Total**<sup>1</sup> | **(245)** | (336) |

---

1Total insurance volatility is included within market and other volatility in the Group underlying basis income statement, which in total resulted in a gain of £72 million in 2025 (2024:

loss of £144 million). See **page [308](#i3eaa7a3e529a46b3b97a88e05ad474bc_913)**.

The most significant limitation associated with excluding insurance volatility from the underlying basis results is that insurance volatility

requires assumptions to be made for the normalised return on equities and other investments. Management compensates for this

limitation by monitoring closely the assumptions used to calculate the normalised return used within the calculation of insurance volatility.

Insurance volatility impacts statutory profit before tax (through market and other volatility) but does not impact underlying profit, which

is based on an expected return. The impact of the actual return differing from the expected return is included within insurance volatility.

This is because movements in their value can have a significant impact on the profitability of the Group. Management believes that it is

appropriate to disclose the results on the basis of an expected return.

The Group manages its Insurance business exposures to equity, interest rate, foreign currency exchange rate and inflation movements

within the Insurance, Pensions and Investments division. It does so by balancing the importance of managing the impacts to both Solvency

capital and earnings volatility, as these factors can impact the dividend that the Insurance business can pay up to Lloyds Banking Group plc.

This approach can result in volatility in statutory profit before tax. Total insurance volatility resulted in losses of £245 million (2024: losses

of £336 million), driven by increases in interest rates and equity markets and decreases in inflation.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Segmental analysis – underlying basis<sup>A</sup>

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **2025** | **Retail**<br>**£m**<br>| **Commercial**<br>**Banking**<br>**£m**<br>| **Insurance,** <br>**Pensions and** <br>**Investments**<br>**£m** | **Equity** <br>**Investments** <br>**and Central** <br>**Items**<br>**£m** | **Group**<br>**£m**<br>|
| Underlying net interest income | **9637** | **3670** | **(151)** | **479** | **13635** |
| Underlying other income | **2636** | **1825** | **1431** | **228** | **6120** |
| Operating lease depreciation | **(1445)** | **(9)** | **–** | **–** | **(1454)** |
| **Net income** | **10828** | **5486** | **1280** | **707** | **18301** |
| Operating costs | **(5807)** | **(2853)** | **(933)** | **(168)** | **(9761)** |
| Remediation | **(931)** | **(27)** | **(15)** | **5** | **(968)** |
| **Total costs** | **(6738)** | **(2880)** | **(948)** | **(163)** | **(10729)** |
| **Underlying profit before impairment** | **4090** | **2606** | **332** | **544** | **7572** |
| Underlying impairment (charge) credit | **(734)** | **(60)** | **(2)** | **1** | **(795)** |
| **Underlying profit** | **3356** | **2546** | **330** | **545** | **6777** |
| Banking net interest margin<sup>A</sup> | **2.65%** | **4.93%** |  |  | **3.06%** |
| Average interest-earning banking assets<sup>A</sup> | **£384.6bn** | **£78.3bn** | **–** | **–** | **£462.9bn** |
| Asset quality ratio<sup>A</sup> | **0.19%** | **0.07%** |  |  | **0.17%** |
| Underlying loans and advances to customers<sup>A,1</sup> | **£390.3bn** | **£90.3bn** | **–** | **£0.5bn** | **£481.1bn** |
| Customer deposits | **£325.2bn** | **£171.1bn** | **–** | **£0.2bn** | **£496.5bn** |
| Risk-weighted assets | **£130.4bn** | **£78.5bn** | **£0.5bn** | **£26.1bn** | **£235.5bn** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| 2024 | Retail<br>£m<br>| Commercial<br>Banking<br>£m<br>| Insurance, <br>Pensions and <br>Investments<br>£m | Equity<br>Investments<br>and Central<br>Items<br>£m<br>| Group<br>£m<br>|
| Underlying net interest income | 8930 | 3434 | (136) | 617 | 12845 |
| Underlying other income<sup>2</sup> | 2354 | 1815 | 1292 | 136 | 5597 |
| Operating lease depreciation | (1319) | (6) | – | – | (1325) |
| Net income | 9965 | 5243 | 1156 | 753 | 17117 |
| Operating costs<sup>2</sup> | (5566) | (2752) | (924) | (200) | (9442) |
| Remediation | (750) | (104) | (19) | (26) | (899) |
| Total costs | (6316) | (2856) | (943) | (226) | (10341) |
| Underlying profit (loss) before impairment | 3649 | 2387 | 213 | 527 | 6776 |
| Underlying impairment (charge) credit | (457) | 14 | 7 | 3 | (433) |
| Underlying profit | 3192 | 2401 | 220 | 530 | 6343 |
| Banking net interest margin<sup>A</sup> | 2.54% | 4.51% |  |  | 2.95% |
| Average interest-earning banking assets<sup>A</sup> | £370.1bn | £81.1bn | – | – | £451.2bn |
| Asset quality ratio<sup>A</sup> | 0.12% | 0.00% |  |  | 0.10% |
| Underlying loans and advances to customers<sup>A,1</sup> | £371.5bn | £87.6bn | – | – | £459.1bn |
| Customer deposits | £319.7bn | £162.6bn | – | £0.4bn | £482.7bn |
| Risk-weighted assets | £125.1bn | £73.8bn | £0.4bn | £25.3bn | £224.6bn |

---

<sup>1</sup>Equity Investments and Central Items includes central fair value hedge accounting adjustments.

<sup>2</sup>In 2025, the Group revised its treatment of certain divisional variable payment related costs. Previously reported within divisional operating costs, these are now included within

divisional underlying other income. Comparative figures have been represented on a consistent basis, with no net impact on segmental profit or loss. Total Group comparatives are

unchanged.

<sup>3</sup>In 2025, the Group revised its capital transfer pricing methodology; comparative segmental banking net interest margin has been represented on a consistent basis.

**Number of employees (full-time equivalent)**

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>| At 31 Dec<br>2024<br>|
| Retail | **27781** | 29734 |
| Commercial Banking | **8126** | 8850 |
| Insurance, Pensions and Investments | **6254** | 5882 |
| Group functions and services | **18559** | 17544 |
|  | **60720** | 62010 |
| Agency staff | **(659)** | (782) |
| **Total number of employees** | **60061** | 61228 |

---

The Group has increased its non-permanent worker population by around 2.6% in 2025. Overall, the Group has reduced its permanent

workforce and invested in growth within the Lloyds Technology Office to increase skills in technology and data.

![SectionTabFinRes.gif](lyg-20251231_g161.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Retail

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. Its aim is to build enduring relationships meeting more of its customers'

financial needs and improving financial resilience throughout their lifetime. Retail operates the largest digital bank in the UK and is

improving digital experience through a mobile-first strategy. Retail delivers market-leading products and meets consumer duty

expectations, working within a prudent risk appetite. Outside of the UK, Retail has a growing mortgages and savings focused European

business. Through strategic investment and increased use of data, Retail aims to deepen consumer relationships, deliver personalised

propositions, broaden its intermediary offering, improve customer experience and increase operational efficiency.

**Strategic progress**

• UK's largest digital bank with c.21.5 million customers actively using the Group's mobile apps, engaging in c.6.5 billion logons in 2025,

with c.85% of current account openings via the seven minute mobile opening process

• Announced the planned acquisition of Curve, a leading digital wallet provider that combines customers' bank cards, with unique

features including enabling customers to retrospectively move transactions between accounts

• Lent £17 billion to over 70,000 first time buyers in 2025, supported by our first time buyer boost proposition

• Direct mortgage applications up c.32% versus 2024 with 20% protection insurance take up, up 5 percentage points

• In credit cards, launched Lloyds Ultra, a market leading 1% cashback product supporting a wide range of customer needs from travel and

rewards along with the launch of Lloyds Advance supporting existing customers starting their credit journey

• Introduced digital co-servicing, to allow customers to view accounts across Lloyds, Halifax and Bank of Scotland brands in one app and

online, with in branch co-serving reaching over 1 million transactions since launch

• Strengthened and grew relationships with Mass Affluent customers through Lloyds Premier, supporting customers who have a c.2 times

greater depth of relationship

• Launched an enhanced Digital Loan Refinance journey across Lloyds, Bank of Scotland, Halifax and MBNA, delivering greater flexibility

and convenience and meeting the needs of c.100,000 customers since launch

• Empowered customers financially by providing up-to-date insights on their credit report, resulting in over 500,000 customers improving

their credit score each quarter

• Made electric vehicles more accessible through Tusker, with the fleet now approaching 85,000 vehicles, up 49% versus 2024, supporting

the UK's ambition to transition to net zero by 2050

**Financial performance**

• Underlying net interest income increased 8%, with stronger structural hedge earnings and higher unsecured loan balances, partially

offset by continued mortgage refinancing and deposit churn headwinds

• Underlying other income up 12% from fleet growth and higher average vehicle rental values in UK Motor Finance, alongside strength in

current account and credit card income

• Operating lease depreciation charge increased by 10% due to fleet growth, the depreciation of higher value vehicles and declines in used

electric car prices. Used car price volatility and performance continue to be partly mitigated through lease extensions, used car leasing,

and remarketing agreements

• Operating costs up 4%, from strategic investment (including planned higher severance), business growth costs and inflationary

pressures, partially offset by cost savings from investment and continued business-as-usual cost discipline. Remediation costs of

£931 million include £800 million relating to the potential impact of motor finance commission arrangements taken in the third quarter

• Underlying impairment charge of £734 million, higher than 2024 which included a £332 million credit from the improved economic

outlook. 2025 benefits from model refinements and a debt sale write back in the fourth quarter. Strong credit performance with

ongoing improvement in UK mortgages and stability across unsecured

• Underlying loans and advances to customers of £390.3 billion, up £18.8 billion, with an increase of £10.8 billion in UK mortgages

alongside growth across UK Retail unsecured loans, credit cards, UK Motor Finance and the European retail business totalling £7.7 billion

• Customer deposits of £325.2 billion, up £5.5 billion with net inflows to limited withdrawal and fixed term UK savings including an

additional c.£7.5 billion ISA balances throughout 2025, alongside growth in European savings, supported by strength in current

accounts balances

• Risk-weighted assets up 4% in the year, given strong lending growth and Retail secured CRD IV model increases, partially offset by

optimisation activity

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Commercial Banking

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, whilst connecting the whole Group to clients. Through

investment in digitisation, product development and coverage capability, Commercial Banking is delivering an enhanced customer

experience via a digital-first model in Business and Commercial Banking and an expanded client proposition in Corporate and Institutional

Banking. This is meeting customer growth objectives, generating diversified capital efficient growth and supporting customers in their

transition to net zero.

**Strategic progress**

• Enhanced digital propositions including the fixed term deposits mobile journey, new mobile lending journey and enriched

personalisation, driving deposit and lending growth

• Scaled and improved digital servicing offering, enabling greater customer flexibility and efficiency, with over 1 million Business Banking

and SME customers now able to view and manage their mandate and signing authorities online

• Delivered c.£1.6 billion in sustainable finance to SME customers and provided targeted support to over 9,000 under-represented

business owner groups, while launching innovative propositions with industry partners

• Launched the first Gen AI powered application in Business and Commercial Banking, making the Commercial Real Estate lending

journey easier by simplifying and expediting the tenancy schedule process

• Awarded landmark UK Government banking services contract connecting us to the majority of UK households, with the bank

expected to handle around 400 million transactions a year

• Named 'Bank/Funder of the Year' at The North West Dealmakers Awards, supporting regional growth

• Delivered £24.5 billon<sup>1</sup>of sustainable financing towards the three year commitment of £30 billion between 2024 and 2026. Supported

the UK's initial three carbon capture projects

• Markets business achieving first ranking in all issuer Sterling Structured Finance<sup>2</sup>and second ranking in all issuer Sterling Debt Capital

Markets<sup>3</sup>. Ranked first for 'Overall Service Quality' in Coalition Greenwich Voice of Client UK Corporate Interest Rate Derivatives

Study for the second year running

• Delivered a c.21% year-on-year growth in foreign exchange volumes. Launched a market-leading foreign exchange execution

algorithmic solution

• Delivered UK's first tokenised collateral transfer on a public blockchain, awarded 'Best Bank for Digitalisation' by Global Trade Review

and enhanced the Markets Intelligence data product offering

• Strong growth in cross-Group collaboration, across pensions, vehicle leasing and workplace solutions, delivering Group products to

commercial clients

**Financial performance**

• Underlying net interest income of £3,670 million, up 7% on the prior year, underpinned by strength in deposit franchise including

structural hedge refinancing benefits

• Underlying other income increased 1% to £1,825 million, largely driven by higher transaction banking and markets income more than

offsetting lower loan markets activity, with 2024 benefitting from one-off gains

• Operating costs up 4% reflecting strategic investment (including planned higher severance), business growth costs and inflationary

pressures, partially offset by cost savings from investment and continued business-as-usual cost discipline. Remediation costs were

£27 million across a small number of rectification programmes

• Underlying impairment charge of £60 million compared to a credit in 2024 which benefitted from the improved economic outlook.

2025 included model calibration benefits alongside strong credit performance particularly in the second half of the year which more

than offset higher Stage 3 charges observed in the first half of the year

• Customer lending was 3% higher at £90.3 billion, reflecting growth in Institutional balances including securitised products, alongside

corporate infrastructure growth. This was partially offset by government-backed lending repayments in Business and Commercial

Banking

• Customer deposits 5%higher at £171.1 billion, with growth in targeted sectors

• Risk-weighted assets6% higher at £78.5 billion, reflecting lending growth in Corporate and Institutional Banking partially offset by

optimisation activity

1In line with the Group's Sustainable Financing Framework; sustainable financing since 1 January 2024.

2Source: LSEG Workspace: GBP Structured Finance (excluding collateralised debt obligations).

3Source: LSEG GBP Debt Capital Markets; Investment Grade bonds (excluding Sovereign, supranational and agency).

![SectionTabFinRes.gif](lyg-20251231_g161.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Insurance, Pensions and Investments

Insurance, Pensions and Investments (IP&I) serves over 10 million customers, holds a top three market share across Home, Workplace and

Individual Annuities businesses and has £280 billion in assets under administration. The Group continues to invest significantly in the

business. This includes enhancing investment propositions, supporting the Group's Wealth and Mass Affluent strategy, driving digitisation in

customer facing and operational platforms, innovating intermediary propositions and contributing to the transition to a low carbon

economy.

**Strategic progress**

• Announced the full acquisition of Schroders Personal Wealth (SPW), previously a joint venture with Schroders Group, becoming a fully

owned subsidiary and now rebranding to 'Lloyds Wealth'. The full acquisition of c.60,000 clients and c.£17 billion in AuA supports the

Group's ambitions for a market leading end-to-end wealth offering with financial advice offered to our banking and workplace

customer base

• Growth in Ready-Made Investments, with c.84,000 accounts opened to date. c.40% of customers under the age of 35. Launch of

managed growth funds, a range of multi-asset funds at market leading ongoing fund charges, bringing institutional pricing to customers

to support their long term investment goals

• Growth of 15% in open book AuA to £232 billion (31 December 2024: £201 billion) and AuA net flows of £7.9 billion, with a significant

contribution from the workplace pension business. The growth was helped in part by greater collaboration and penetration across

Commercial Banking clients. Excluding SPW, AuA grew 16%

• Climate-aware investments increased by £55.4 billion in 2025 driven by the launch of Scottish Widows Lifetime Investment, bringing

overall investments to £81.3 billion, with the original target met at the end of 2024<sup>1</sup>

• Industry leading Trustpilot scores of 4.5 stars for Scottish Widows and 4.7 for Lloyds Insurance, driven by increased investment in

automation, AI adoption and training, following the completion of the migration of 4 million policies to modern infrastructure

• More than 1.75 million digitally registered Scottish Widows customers, with the core app for workplace pension customers growing by

more than 75% year-on-year to over 750,000 users, c.60% of which are active users

• Increased partnerships product offering with relaunch of the Group's motor insurance product through AXA and the recent launch of

the Health Partnership with Vitality, helping to complement the insurance ecosystem in a low risk, low capital intensity manner

• Captured over 14% of new home insurance policy market, leveraging the Group's trusted brands and digitising customer journeys with

some claims being settled in as little as five minutes<sup>2</sup>

• Increased Protection market share to 7.8% (30 September 2024: 5.8%) following successful launch of refreshed advisor proposition in

2024. New business IFA applications more than double those in 2024<sup>2</sup>

**Financial performance**

• Underlying profit of £330 million was up 50%. This included underlying other income of £1,431 million, up 11%, driven by strong business

performance including higher general insurance net of claims, strengthening performance in the workplace pension business and the

integration of Schroders Personal Wealth in the fourth quarter. Excluding Schroders Personal Wealth, underlying profit was £303 million,

up 38%

• Operating costs were up 1%. Excluding Schroders Personal Wealth operating costs were down 2% with costs savings from investment

and continued business-as-usual cost discipline partially offset by strategic investment and inflationary pressures

• Balance of deferred profits (including the risk adjustment) grew to £5.2 billion (after release to income of £413 million), including

£93 million from new business, reflecting value generation in the workplace pensions business

• Life and pensions sales (PVNBP) up 15%, driven by higher contribution from Workplace, Protection and Scottish Widows Platform

businesses, partially offset by lower sales in the Annuities business due to market conditions

• Payment of a further £50 million interim dividend in December 2025 to Lloyds Banking Group plc, after the £150 million interim dividend

paid in July 2025, supported by a strong capital position with an estimated Insurance Solvency II ratio of 144%and reflected in the

robust result in the recent PRA Life Insurance Stress Test

1This refers to funds that have a focus on investment in companies that are either adapting their business to reduce carbon emissions or developing solutions to address climate change.

Scottish Widows Lifetime Investment has climate aware ESG-tilted indices developed in partnership with Robeco.

2Home insurance Market Share information as per internal analysis of eBenchmarkers data, Protection as per the ABI. Home Insurance Shares reflect information at 30 November 2025,

Protection shares as at 30 September 2025.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Equity Investments and Central Items

Equity Investments and Central Items includes the Group's equity investment businesses, including LDC, Lloyds Living, the Housing Growth

Partnership (HGP), the Group's share of the Business Growth Fund (BGF) and the MADE Partnership joint venture. LDC is a leading private

equity investor, supporting more than 90 growing SMEs that span all regions and sectors of the UK economy and employ over 25,000

people. LDC has almost £2.3 billion assets under management. Lloyds Living is the Group's residential landlord business with 7,750 homes in

operation or contracted as at 31 December 2025. Equity Investments and Central Items also includes income and expenses not attributed

to the divisions, including residual underlying net interest income after transfer pricing.

**Strategic progress**

• Invested almost £250 million in 2025 through LDC, taking total capital deployed since the start of 2020 to over £2 billion

• More than half of LDC transactions took place in the fourth quarter of the year, signalling positive momentum

• Supported LDC portfolio companies to make 45 acquisitions, helping them to grow despite challenging market conditions

• Exited 11 successful investments where the businesses grew revenues by an average of 155% and created more than 1,200 jobs.

Generated more than £600 million of exit proceeds and an average money multiple return of 3.3 times

• Lloyds Living portfolio saw significant expansion in 2025 with a completed portfolio of c.5,450 homes, with c.2,300 additional homes

under development

• Completed scheme occupancy in Lloyds Living of 95% and rental growth tracking at over 4% (annualised basis)

• Helped support transition to a low-carbon economy with c.850 all-electric homes, of which 285 completed in 2025 and a 25 home zero

bills pilot with Octopus Energy

• HGP committed to build a further c.2,000 homes taking total homes committed since investment started in 2016 to over 15,000 and

homes sold of c.5,500. Homes committed in 2025 have high energy efficiency standards, with 100% target rated as EPC B or above and

1 in 4 rated as EPC A

• HGP awarded Specialist Financier of the year by the 2025 RESI Awards and dedicated 300 days of the senior advisor network of

industry leaders time to support SMEs in the current housing cycle challenge

• The first full year of the MADE Partnership, the LBG/Barratt Redrow/Homes England master developer joint venture saw MADE

progress master plan opportunities with potential to deliver up to 7,350 new homes

**Financial performance**

• Net income of £707 million 6% lower compared to 2024, with higher underlying other income more than offset by lower underlying net

interest income. Underlying net interest income was lower given increased funding costs to support volume growth in the Group's equity

and direct investment business, alongside lower divisional recharges from a reduction in structured medium-term note and AT1

distribution costs

• Underlying other income includes £579 million (2024: £502 million) generated by the Group's equity and direct investment businesses,

increasing 15% versus 2024 as a result of strong income growth from Lloyds Living (up £69 million), partially offset by lower income from

LDC (down £15 million)

• Total costs of £163 million in 2025 decreased 28% on the prior year, including lower remediation costs

Within this, the performance of the Group's equity investment businesses, including LDC, Lloyds Living, the Housing Growth Partnership

(HGP), the Group's share of the Business Growth Fund (BGF) and the MADE Partnership joint venture, is summarised as follows:

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>**£m**<br>| At 31 Dec<br>2024<br>£m<br>|
| Underlying net interest expense | **(132)** | (109) |
| Underlying other income | **579** | 502 |
| Net income | **447** | 393 |
| Total costs | **(96)** | (78) |
| Underlying profit | **351** | 315 |

---

![Divider_Gov.gif](lyg-20251231_g162.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Governance

---

| | |
|:---|:---|
| **Directors' report** |  |
| Chair's statement | [66](#i3eaa7a3e529a46b3b97a88e05ad474bc_295) |
| UK Corporate Governance Code | [67](#i2761a345a4384812bb0aad844a2bdff0_0-1-1-1-5233089) |
| Our Board | [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) |
| Our Board composition at a glance | [70](#i3eaa7a3e529a46b3b97a88e05ad474bc_304) |
| Boards of the Ring-Fenced Banks and Group Executive Committee | [71](#i3eaa7a3e529a46b3b97a88e05ad474bc_307) |
| Our governance structure and responsibilities | [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313) |
| Board activities | [74](#i3eaa7a3e529a46b3b97a88e05ad474bc_319) |
| Engaging with our stakeholders | [76](#i3eaa7a3e529a46b3b97a88e05ad474bc_325) |
| Our culture in action | [79](#i3eaa7a3e529a46b3b97a88e05ad474bc_334) |
| Sustainability governance | [80](#i3eaa7a3e529a46b3b97a88e05ad474bc_337) |
| Board performance | [82](#i3eaa7a3e529a46b3b97a88e05ad474bc_340) |
| Internal control | [84](#i3eaa7a3e529a46b3b97a88e05ad474bc_343) |

---

---

| | |
|:---|:---|
| **Committee reports**  |  |
| Nomination and Governance Committee report | [85](#i3eaa7a3e529a46b3b97a88e05ad474bc_346) |
| Audit Committee report | [88](#i3eaa7a3e529a46b3b97a88e05ad474bc_349) |
| Board Risk Committee report | [92](#i3eaa7a3e529a46b3b97a88e05ad474bc_352) |
| Responsible Business Committee report | [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355) |
| **Directors' remuneration report** | [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358) |
| **Other statutory and regulatory information** | [134](#i3eaa7a3e529a46b3b97a88e05ad474bc_496) |

---

Governance

with purpose

**Effective and proportionate governance underpins**

**our ability to deliver long-term value and** 

**maintain trust with our stakeholders**

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Chair's statement

![ImageBlock_RobinBudenberg.gif](lyg-20251231_g15.gif)

**Sir Robin** 

**Budenberg**

Chair

![ImageBlock_ReadFullBiog_QRCode_Only.gif](lyg-20251231_g16.gif)

Read full biography ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>

**Good governance has underpinned the** 

**transformation of the Group and is** 

**helping achieve our 2026 goals with** 

**precision and pace.**

---

| | |
|:---|:---|
| **Board membership and attendance at scheduled meetings**<sup>1</sup> | **Board membership and attendance at scheduled meetings**<sup>1</sup> |
| Sir Robin Budenberg | **10/10** |
| Charlie Nunn | **10/10** |
| William Chalmers | **10/10** |
| Cathy Turner | **10/10** |
| Nathan Bostock | **9/10**<sup>2</sup> |
| Sarah Legg | **10/10** |
| Amanda Mackenzie | **10/10** |
| Harmeen Mehta | **10/10** |
| Chris Vogelzang | **5/5**<sup>3</sup> |
| Scott Wheway | **8/8**<sup>4</sup> |
| Catherine Woods | **10/10** |
| 1Where a director is unable to attend a Board or Committee meeting he/she <br>receives papers in advance and has the opportunity to provide comments to the <br>Chair of the Board or to the relevant Committee Chair.<br>2Nathan Bostock was unable to attend one meeting due a commitment scheduled <br>prior to Nathan joining the Board.<br>3Chris Vogelzang was appointed to the Board on 16 June 2025.<br>4Scott Wheway stepped down from the Board on 31 October 2025.<br>**Other attendees**<br>Nigel Hinshelwood (the Senior Independent Director of <br>the Ring-Fenced Banks), Sarah Bentley and Brendan Gilligan <br>(both independent non-executive directors of the Ring-Fenced <br>Banks) attend meetings as observers to provide insight on the <br>Ring-Fenced Banks when required. The Company Secretary <br>and Chief Risk Officer also attend Board meetings. | 1Where a director is unable to attend a Board or Committee meeting he/she <br>receives papers in advance and has the opportunity to provide comments to the <br>Chair of the Board or to the relevant Committee Chair.<br>2Nathan Bostock was unable to attend one meeting due a commitment scheduled <br>prior to Nathan joining the Board.<br>3Chris Vogelzang was appointed to the Board on 16 June 2025.<br>4Scott Wheway stepped down from the Board on 31 October 2025.<br>**Other attendees**<br>Nigel Hinshelwood (the Senior Independent Director of <br>the Ring-Fenced Banks), Sarah Bentley and Brendan Gilligan <br>(both independent non-executive directors of the Ring-Fenced <br>Banks) attend meetings as observers to provide insight on the <br>Ring-Fenced Banks when required. The Company Secretary <br>and Chief Risk Officer also attend Board meetings. |

---

![KeylineBox_GovChairIntro_Membership.gif](lyg-20251231_g164.gif)

---

| | |
|:---|:---|
| **Read more** | **Read more** |
| Skills and experience  | **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#ic21ecd5abeee42fba0245379e7aec046_4520)** |
| Role of the Board (and on the corporate <br>governance page of the Group's website)![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>| **page [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313)** |
| Board performance review | **pages [82](#i3eaa7a3e529a46b3b97a88e05ad474bc_340) to [83](#i0e26aa109821404bbb34f969046a1e20_0-1-1-1-5233089)** |

---

![KeylineBox_GovChairIntro_ReadMore.gif](lyg-20251231_g165.gif)

I'm pleased to present this 2025 corporate governance report.

Looking back on the year, I'm proud of the significant progress

the Group has made in delivering on our purpose-driven and

customer-focused strategy. The Board has overseen the continued

transformation of the Group and has considered initiatives to

accelerate the Group's digital transformation, deepen customer

relationships and enhance customer propositions. Good governance

underpins this progress and is fundamental to enabling the Group

to continue to move towards achieving its 2026 goals with precision

and pace.

In terms of boardroom dynamics, I have been impressed by the

quality of reporting by executives and by the diverse contributions

and constructive challenge made by directors at Board meetings.

The 2025 Board performance review was facilitated externally

and the review concluded that the Board is highly functioning and

deeply engaged.

Beyond Board level, the ongoing embedding of a healthy culture

at the Group is considered vital by the Board, particularly amidst

ongoing organisational change and political and economic

uncertainty. During 2025, the Board engaged with colleagues

to better understand their experiences and support the fostering

of a values-led and performance-based culture throughout

the organisation.

Below are key governance activities that took place in 2025. Going

forward, the Board will maintain its focus on effective governance

and accelerating decision making for the benefit of stakeholders.

**Board oversight of strategy**

The Board continued to oversee the executive's progress on

delivering the 2025 strategic commitments. In June and November,

as part of separate two-day off-sites, the Board participated in

dedicated sessions on the Group's proposed strategic vision beyond

2026. Read more on **page [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331).**

**Cultural transformation**

In January and July, the Board discussed the Group's ongoing cultural

transformation progress. As mentioned above, in 2025, Board

members engaged in quarterly listening sessions with colleagues,

insights from which were reviewed by the Responsible Business

Committee and shared with the Board for consideration. Read

more on **page [79](#i3eaa7a3e529a46b3b97a88e05ad474bc_334)**.

**Empowering customers through innovation** 

In June, the Board approved the Consumer Duty Annual Report

and considered how good customer outcomes remain critical as

the Group focuses on customer experience and differentiation.

Throughout 2025, the Board received updates on co-servicing which

makes banking simpler by enabling customers to service products

across our brands seamlessly – whether in branch, online or when

they need extra support. Read more on **pages [74](#i3eaa7a3e529a46b3b97a88e05ad474bc_319), [75](#i3eaa7a3e529a46b3b97a88e05ad474bc_322) and [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355)**.

**Growing wealth strategy and bancassurance**

In July, the Board approved the acquisition of the outstanding

interest in Schroders Personal Wealth, the wealth management

and advice business previously operated as a joint venture with

Schroders Group. In May and June, the Board considered the steps

being taken within Insurance, Pensions and Investments to develop

the Group's bancassurance model and enhance customer services.

Read more on **pages [31](#i3eaa7a3e529a46b3b97a88e05ad474bc_85) and [75](#i3eaa7a3e529a46b3b97a88e05ad474bc_322)**.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Board performance review**

As mentioned on the previous page, the 2025 Board performance

review was externally facilitated by board review specialist, Lisa

Thomas of Independent Board Evaluation. Key findings can be

found on **page [82](#i3eaa7a3e529a46b3b97a88e05ad474bc_340).**

**Board and Committee changes**

Chris Vogelzang was appointed as a non-executive director

of the Company and a member of the Responsible Business

Committee on 16 June 2025.

Scott Wheway retired from the Board and as Chair of Scottish

Widows Group on 31 October 2025.

Chris Vogelzang will be appointed as a member of the Board Risk

Committee with effect from 1 April 2026.

**Ring-fencing governance**

Although this is Lloyds Banking Group plc's corporate governance

report, I would like to thank Nigel Hinshelwood, Sarah Bentley

and Brendan Gilligan for their contribution to the Group as non-

executive directors of Lloyds Bank plc and Bank of Scotland plc

(the Ring-Fenced Banks). Read more on **pages [71](#i3eaa7a3e529a46b3b97a88e05ad474bc_307) and [73](#i31358bbf6f4747898e2895be1a723f03_0-1-1-2-5233089)**.

**Stakeholder engagement**

The Board considers understanding and meeting the Group's

![Gov_PrinciplesOfCode_Box.gif](lyg-20251231_g166.gif)

responsibilities and duties to shareholders, customers and the

communities we serve to be central to our purpose and of vital

importance. Read more on **pages [76](#i3eaa7a3e529a46b3b97a88e05ad474bc_325) to [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331).**

---

| |
|:---|
| ![Signature_RobinBudenberg.gif](lyg-20251231_g9.gif) |
| **Sir Robin Budenberg**<br>Chair<br>|

---

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **UK Corporate Governance Code** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Compliance statement**<br>The UK Corporate Governance Code 2024 (the Code) applied to <br>the financial year ended 31 December 2025 with the exception of <br>Provision 29, which applies to the Company's financial year which <br>began on 1 January 2026. The Company will report against <br>Provision 29 of the Code in its annual report and accounts for the <br>year ending 31 December 2026. Read more about the Group's <br>preparation for Provision 29 coming into force on **pages [84](#i3eaa7a3e529a46b3b97a88e05ad474bc_343), [91](#i7152dff1ab6542ad939d2df1d0232c57_13800)**<br>**and [93](#i3129aebdba1a44efb55553b060a82ba4_9363)**. Provision 29 of the UK Corporate Governance Code 2018 <br>(2018 Code) applied to the financial year ended 31 December 2025.<br>This directors' report is set out in a way that helps shareholders <br>and investors to evaluate how the Company has applied the <br>principles and complied with the provisions of the Code during <br>2025. The table below signposts parts of the annual report and <br>accounts which relate to the principles and provisions of the <br>Code and provision 29 of the 2018 Code, including where the <br>relevant information is not in the directors' report.<br>The Company confirms that it applied the principles <br>and complied with all relevant provisions of the Code and with <br>provision 29 of the 2018 Code throughout 2025. The Code is <br>available at www.frc.org.uk. |  |
|  | **Compliance statement**<br>The UK Corporate Governance Code 2024 (the Code) applied to <br>the financial year ended 31 December 2025 with the exception of <br>Provision 29, which applies to the Company's financial year which <br>began on 1 January 2026. The Company will report against <br>Provision 29 of the Code in its annual report and accounts for the <br>year ending 31 December 2026. Read more about the Group's <br>preparation for Provision 29 coming into force on **pages [84](#i3eaa7a3e529a46b3b97a88e05ad474bc_343), [91](#i7152dff1ab6542ad939d2df1d0232c57_13800)**<br>**and [93](#i3129aebdba1a44efb55553b060a82ba4_9363)**. Provision 29 of the UK Corporate Governance Code 2018 <br>(2018 Code) applied to the financial year ended 31 December 2025.<br>This directors' report is set out in a way that helps shareholders <br>and investors to evaluate how the Company has applied the <br>principles and complied with the provisions of the Code during <br>2025. The table below signposts parts of the annual report and <br>accounts which relate to the principles and provisions of the <br>Code and provision 29 of the 2018 Code, including where the <br>relevant information is not in the directors' report.<br>The Company confirms that it applied the principles <br>and complied with all relevant provisions of the Code and with <br>provision 29 of the 2018 Code throughout 2025. The Code is <br>available at www.frc.org.uk. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) | **Compliance statement**<br>The UK Corporate Governance Code 2024 (the Code) applied to <br>the financial year ended 31 December 2025 with the exception of <br>Provision 29, which applies to the Company's financial year which <br>began on 1 January 2026. The Company will report against <br>Provision 29 of the Code in its annual report and accounts for the <br>year ending 31 December 2026. Read more about the Group's <br>preparation for Provision 29 coming into force on **pages [84](#i3eaa7a3e529a46b3b97a88e05ad474bc_343), [91](#i7152dff1ab6542ad939d2df1d0232c57_13800)**<br>**and [93](#i3129aebdba1a44efb55553b060a82ba4_9363)**. Provision 29 of the UK Corporate Governance Code 2018 <br>(2018 Code) applied to the financial year ended 31 December 2025.<br>This directors' report is set out in a way that helps shareholders <br>and investors to evaluate how the Company has applied the <br>principles and complied with the provisions of the Code during <br>2025. The table below signposts parts of the annual report and <br>accounts which relate to the principles and provisions of the <br>Code and provision 29 of the 2018 Code, including where the <br>relevant information is not in the directors' report.<br>The Company confirms that it applied the principles <br>and complied with all relevant provisions of the Code and with <br>provision 29 of the 2018 Code throughout 2025. The Code is <br>available at www.frc.org.uk. | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

---

| | | |
|:---|:---|:---|
| **Principles of the Code** | **Principles of the Code** |  |
| **1** | **Board leadership and company purpose** | Pages |
| **1** | **Board leadership and company purpose** | Pages |
| A | Effective board | [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [70](#i3eaa7a3e529a46b3b97a88e05ad474bc_304) and <br>[72](#i3eaa7a3e529a46b3b97a88e05ad474bc_310) to [84](#i3eaa7a3e529a46b3b97a88e05ad474bc_343)<br>|
| B | Purpose, values and strategy  | [02](#i3eaa7a3e529a46b3b97a88e05ad474bc_19) to [17](#i3eaa7a3e529a46b3b97a88e05ad474bc_49), <br>[74](#i3eaa7a3e529a46b3b97a88e05ad474bc_319) to [75](#i3eaa7a3e529a46b3b97a88e05ad474bc_322) and [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331)<br>|
|  | Culture | [79](#i3eaa7a3e529a46b3b97a88e05ad474bc_334) |
| C | Board decisions and outcomes | [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_310) to [86](#i8b0fcad84a6e413caebd1e9e1a7455ff_9603) |
| D | Stakeholder engagement | [76](#i3eaa7a3e529a46b3b97a88e05ad474bc_325) to [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331) and [108](#i3eaa7a3e529a46b3b97a88e05ad474bc_382) |
| E | Workforce policies and practice | [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) and [91](#i7152dff1ab6542ad939d2df1d0232c57_13799) |
| **2** | **Division of responsibilities** |  |
| F | Role of Chair | [73](#i3eaa7a3e529a46b3b97a88e05ad474bc_316) |
| G | Independence  | [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301) and [86](#i8b0fcad84a6e413caebd1e9e1a7455ff_9602) |
|  | Division of responsibilities | [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313) to [73](#i3eaa7a3e529a46b3b97a88e05ad474bc_316) |
| H | Role of non-executive directors and time <br>commitments<br>| [73](#i3eaa7a3e529a46b3b97a88e05ad474bc_316) and [86](#i8b0fcad84a6e413caebd1e9e1a7455ff_9601) |
| I | Policies, processes, information, time <br>and resources<br>| [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313) to [73](#i3eaa7a3e529a46b3b97a88e05ad474bc_316) and [86](#i8b0fcad84a6e413caebd1e9e1a7455ff_9601) |
| **3** | **Composition, succession and evaluation** | **Composition, succession and evaluation** |
| J | Board appointments and succession plans | [85](#i3eaa7a3e529a46b3b97a88e05ad474bc_346) to [86](#i3cce87f9fc4647a1808051c1679ddb8d_0-1-1-1-5233089) |
| K | Board skills, experience and knowledge | [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [70](#i3eaa7a3e529a46b3b97a88e05ad474bc_304) |
| L | Annual board performance review | [82](#i3eaa7a3e529a46b3b97a88e05ad474bc_340) to [83](#i0e26aa109821404bbb34f969046a1e20_0-1-1-1-5233089) |
| **4** | **Audit, risk and internal control** | **Audit, risk and internal control** |
| M | External auditor and internal audit | [91](#i7152dff1ab6542ad939d2df1d0232c57_13796) |
|  | Integrity of financial reporting | [88](#i3eaa7a3e529a46b3b97a88e05ad474bc_349) to [91](#i7152dff1ab6542ad939d2df1d0232c57_13794) |
| N | Fair, balanced and understandable assessment | [136](#ib3569b81c6bb477f828633c1cfc09e16_16519) |
| O | Risk management framework | [138](#i3eaa7a3e529a46b3b97a88e05ad474bc_502) to [197](#ie6d562362828442c9d9e501f05837616_14795)<br>and [90](#i7152dff1ab6542ad939d2df1d0232c57_13798)<br>|
|  | Internal financial controls | [84](#i3eaa7a3e529a46b3b97a88e05ad474bc_343) and [90](#i7152dff1ab6542ad939d2df1d0232c57_13798) |
| **5** | **Remuneration** |  |
| P | Linking remuneration with purpose, <br>values and strategy<br>| [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358) to [133](#i87a02fe89a1b410cbfaf3a119b620c05_0-1-1-3-5233089) |
| Q | Remuneration policy | [106](#i3eaa7a3e529a46b3b97a88e05ad474bc_376) to [133](#i87a02fe89a1b410cbfaf3a119b620c05_0-1-1-3-5233089) |
| R | Performance outcomes in 2025 | [106](#i3eaa7a3e529a46b3b97a88e05ad474bc_376) to [123](#idc6d1d1267354465b3e6caf9650ac526_0-1-1-1-5233089) |

---

![Gov_Board_pg1_nudged.gif](lyg-20251231_g167.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our Board

**Sir Robin** <br>**Budenberg CBE**<br>**Chair** <br>

**Appointed:** October 2020 (Board), **January 2021** 

**(Chair)**

**Skills, experience and contribution:**

**•Extensive financial services and investment** 

**banking experience**

**•Strong governance and strategic advisory skills in** 

**relation to companies and government**

**•Regulatory, public policy and stakeholder** 

**management experience**

**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.**

**Key external appointments:**

**None**

**Charlie Nunn**<br>**Executive** <br>**director and** <br>**Group Chief** <br>**Executive**<br>

**Appointed: August 2021**

**Skills, experience and contribution:**

**•Extensive financial services experience including** 

**in chief executive and other leadership roles**

**•Strategic planning and implementation**

**•Extensive experience of digital transformation**

**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. 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.**

**Key external appointments:**

**None**

**William Chalmers**<br>**Executive director** <br>**and Chief Financial** <br>**Officer**<br>

**Appointed: August 2019**

**Skills, experience and contribution:**

**•Significant board-level strategic and financial** 

**leadership experience**

**•Strategic planning and development, mergers and** 

**acquisitions, equity and debt capital structuring** 

**and risk management**

**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.**

**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.**

**Key external appointments:**

**None**

**Cathy Turner**<br>**Senior Independent** <br>**Director**<br>

**Appointed: November 2022 (Board), September** 

**2023 (Senior Independent Director)**

**Skills, experience and contribution:**

**•Significant executive and non-executive financial** 

**services experience**

**•Knowledge of complex remuneration matters**

**•Communications expertise with a broad range of** 

**stakeholders including investors, regulators,** 

**government, media and unions**

**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.**

**Key external appointments:**

**Non-Executive Director of Rentokil Initial plc and** 

**Partner on a part-time basis at Manchester Square** 

**Partners LLP.**

**Nathan Bostock**<br>**Independent non-**<br>**executive director** <br>**and Chair of Lloyds** <br>**Bank Corporate** <br>**Markets plc and** <br>**Lloyds Bank GmbH**<br>

**Appointed: August 2024**

**Skills, experience and contribution:**

**•A wealth of financial, risk and regulatory expertise**

**•Extensive experience in large-scale customer and** 

**corporate facing businesses**

**•Significant executive experience in the financial** 

**services industry**

**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.**

**Key external appointments:**

**Non-Executive Director of Centrica plc**<sup>1</sup>**.**

**Sarah Legg**<br>**Independent** <br>**non-executive** <br>**director**<br>

**Appointed: December 2019**

**Skills, experience and contribution:**

**•Strong financial leadership and regulatory** 

**reporting skills**

**•Significant audit and risk experience in financial** 

**leadership**

**•Strong transformation programme experience**

**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.**

**Key external appointments:**

**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.**

![Gov_Board_pg2.gif](lyg-20251231_g168.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Amanda** <br>**Mackenzie LVO OBE** <br>**Independent** <br>**non-executive director** <br>

**Appointed: October 2018**

**Skills, experience and contribution:**

**•Extensive experience in ESG matters including** 

**responsible business and sustainability**

**•Strong customer engagement and digital** 

**technology experience**

**•Significant marketing and brand background**

**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.**

**Key external appointments:**

**Non-Executive Director of The British Land Company** 

**plc, Chair of The Queen's Reading Room and Chair** 

**and partner of Otherwise Partners LLP.**

**Harmeen Mehta**<br>**Independent** <br>**non-executive** <br>**director**<br>

**Appointed: November 2021**

**Skills, experience and contribution:**

**•Over 25 years' experience leading digital, AI-**

**driven, complex transformation**

**•Experience of building and running technology-led** 

**businesses and creating new ventures**

**•A wealth of international and financial services** 

**knowledge having lived in 11 countries and worked** 

**across 30 countries on six continents**

**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.**

**Key external appointments:**

**Chief Digital and Innovation Officer at Equinix and** 

**Non-Executive Director, UK Parliament, Information** 

**& Digital Board.**

**Chris Vogelzang**<br>**Independent**<br>**non-executive**<br>**director**<br>

**Appointed: June 2025**

**Skills, experience and contribution:**

**•Extensive experience in retail and** 

**commercial banking** 

**•Strong understanding of technology's role** 

**in financial services**

**•Track record of driving transformation** 

**within organisations**

**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.**

**Key external appointments:**

**Non-Executive Director of Wolters Kluwer N.V.**

**Catherine Woods**<br>**Independent** <br>**non-executive** <br>**director**<br>

**Appointed: March 2020**

**Skills, experience and contribution:**

**•Extensive executive experience of international** 

**financial institutions**

**•Deep experience of risk and transformation** 

**oversight**

**•Strong focus on culture and corporate** 

**governance**

**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.**

**Key external appointments:**

**Deputy Chair of BlackRock Asset Management** 

**Ireland Limited.**

**Kate Cheetham**<br>**Chief Legal Officer** <br>**and Company** <br>**Secretary**<br>

**Appointed: July 2019 (Company Secretary)**

**Skills, experience and contribution:**

**•Significant legal and governance leadership** 

**experience within financial services**

**•Strategic functional planning and development,** 

**corporate, mergers and acquisitions, regulation** 

**and risk management**

**Kate became Group General Counsel (now Chief** 

**Legal Officer) in May 2015 and Company Secretary** 

**in July 2019. Kate joined the Group in 2005 from** 

**Linklaters, where she was a corporate lawyer** 

**specialising in mergers and acquisitions transactions.** 

**Before her current roles, Kate held a number of senior** 

**positions including Deputy Group General Counsel** 

**and General Counsel for Group Legal.**

---

| | |
|:---|:---|
| ![Gov_Board_CircleLetter_A_Key.gif](lyg-20251231_g169.gif) | **Audit Committee member** |
| ![Gov_Board_CircleLetter_BR_Key.gif](lyg-20251231_g170.gif) | **Board Risk Committee member** |
| ![Gov_Board_CircleLetter_NG_Key.gif](lyg-20251231_g171.gif) | **Nomination and Governance Committee member** |
| ![Gov_Board_CircleLetter_Re_Key.gif](lyg-20251231_g172.gif) | **Remuneration Committee member** |
| ![Gov_Board_CircleLetter_RB_Key.gif](lyg-20251231_g173.gif) | **Responsible Business Committee member** |
| ![Gov_Board_CircleNoLetter_Green.gif](lyg-20251231_g174.gif) | **Committee Chair** |

---

---

| |
|:---|
| **Board changes during the year** |
| **16 June 2025** <br>Chris Vogelzang joined the Board <br>as a non-executive director<br>**31 October 2025**<br>Scott Wheway retired as a non-executive <br>director of the Board and as Chair of <br>Scottish Widows Group<sup>3</sup><br>|

---

1Nathan will continue to serve on the Centrica plc board until no later than the end of July 2026. Nathan will join the board of Jupiter Asset Management plc as a non-executive director

and Chair designate on 1 March 2026 and will take on the role of Chair of that company, subject to regulatory approval, with effect from 1 April 2026.

2Chris Vogelzang will be appointed as a member of the Board Risk Committee with effect from 1 April 2026.

3Chris Moulder, the Senior Independent Director of Scottish Widows Group, assumed the role of interim Chair of Scottish Widows Group while a process is run for the appointment of

the next Chair of Scottish Widows Group.

![Governance_BoardAtAGlance.gif](lyg-20251231_g175.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our Board composition at a glance

---

| | | |
|:---|:---|:---|
| ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) | **Our Board in 2025** | ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) |

---

**Skills and experience**

Collective view of the skills and experience of the non-executive directors<sup>1</sup>

![127](lyg-20251231_g176.gif)

---

| |
|:---|
| **Retail/commercial banking** |
| **Financial markets/wholesale banking industry** |
| **Insurance** |
| **Audit and finance** |
| **Risk – in financial institutions** |
| **Technology/digital** |
| **Consumer/marketing/distribution** |
| **Major change programmes** |
| **ESG: environment, sustainability and climate change** |
| **ESG: social, inclusion and diversity, and governance** |
| **Government/regulator interface** |
| **Listed board governance, including investor relations and remuneration** |
| **Strategic thinking** |

---

● Number of non-executive directors (out of 8) with deep experience/distinctive strength

● Number of non-executive directors (out of 8) with deep experience/distinctive strength or with good experience and knowledge

**Gender balance**<sup>2</sup><br>**A.**Female – 5 (50%)<br>**B.**Male – 5 (50%)<br>

![14](lyg-20251231_g177.gif)

**Ethnicity**<sup>2</sup><br>**A.**Black, Asian or Minority <br>Ethnic – 2 (20%)<br>**B.**White – 8 (80%)<br>

![39](lyg-20251231_g178.gif)

**Tenure**<sup>2</sup><br>**A.**0-2 years – 2 (20%)<br>**B.**2-4 years – 1 (10%)<br>**C.**4-6 years – 4 (40%)<br>**D.**6-8 years – 3 (30%)<br>

![64](lyg-20251231_g179.gif)

**Age**<sup>2</sup><br>**A.**51-55 – 2 (20%)<br>**B.**56-60 – 2 (20%)<br>**C.**61-65 – 5 (50%)<br>**D.**66+ – 1 (10%)<br>

![89](lyg-20251231_g180.gif)

1Assessment by the Nomination and Governance Committee in respect of Board members in office as at 31 December 2025.<br>2As at 31 December 2025 and remains correct as at the date of publication of the annual report.<br>

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Boards of the Ring-Fenced Banks and Group Executive Committee

Boards of the Ring-Fenced Banks<br>

Each of the directors of Lloyds Banking Group plc is also a director

of Lloyds Bank plc and Bank of Scotland plc, which are the banks

within the Group that have been included within the ring-fence

(together, the Ring-Fenced Banks). The boards of the Ring-Fenced

Banks have three additional independent non-executive directors:

Nigel Hinshelwood (Senior Independent Director), Sarah Bentley

and Brendan Gilligan. Read more about the role of the Ring-Fenced

Bank-only directors and the Group's structure on **page [73](#i31358bbf6f4747898e2895be1a723f03_0-1-1-2-5233089)**.

Read the full biographies of the Ring-Fenced Bank-only directors

on ourcorporate governance page.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

![Gov_NigelHinshelwood_Block.gif](lyg-20251231_g181.gif)

**Nigel Hinshelwood**<br>**Senior Independent** <br>**Director** <br>**Lloyds Bank plc** <br>**and Bank of** <br>**Scotland plc** <br>

**Appointed: January 2019**

**Skills, experience and contribution**

**•Extensive experience in the financial services** 

**sector in the UK and worldwide**

**•Significant experience of large-scale** 

**transformation, operations and technology**

**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.**![Gov_SarahBentley_Block.gif](lyg-20251231_g182.gif)

**Sarah Bentley**<br>**Non-executive** <br>**director**<br>**Lloyds Bank plc** <br>**and Bank of** <br>**Scotland plc**<br>

**Appointed: January 2019**

**Skills, experience and contribution**

**•Extensive digital and digital transformation** 

**experience**

**•Strong customer and marketing skills**

**Sarah was formerly Chief Executive Officer and** 

**Executive Director of Thames Water Utilities Limited.** 

**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.**

![Gov_BrendanGilligan_Block.gif](lyg-20251231_g183.gif)

**Brendan Gilligan**<br>**Non-executive** <br>**director**<br>**Lloyds Bank plc** <br>**and Bank of** <br>**Scotland plc**<br>

**Appointed: January 2019**

**Skills, experience and contribution**

**•Extensive experience in core strategic finance** 

**and controllership roles in the financial** 

**services industry**

**•Significant experience of serving on the boards of** 

**regulated financial services businesses in the UK,** 

**France, Switzerland and Poland**

**Brendan worked in commercial and consumer** 

**banking services and financing with Woodchester** 

**Investments plc and, after its acquisition by General** 

**Electric Company, with GE Capital.**

Our Group Executive Committee<br>

![Gov_ExCom_CharlieNunn_Block.gif](lyg-20251231_g184.gif)

![Gov_ExCom_WillChalmers_Block.gif](lyg-20251231_g185.gif)

![Gov_ExCom_ChiBarua_Block.gif](lyg-20251231_g186.gif)

![Gov_ExCom_KateCheetham_Block.gif](lyg-20251231_g187.gif)

---

| |
|:---|
| **Charlie Nunn**<br>**Executive director** <br>**and Group Chief** <br>**Executive**<br>**Appointed:**<br>**August 2021**<br>|
| ![Gov_ExCom_CircleLetter_C.gif](lyg-20251231_g188.gif) |

---

---

| |
|:---|
| **William Chalmers**<br>**Executive director** <br>**and Chief Financial** <br>**Officer**<br>**Appointed:**<br>**June 2019**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

---

| |
|:---|
| **Chirantan Barua**<br>**Chief Executive Officer,** <br>**Scottish Widows and** <br>**Insurance, Pensions** <br>**and Investments**<br>**Appointed:**<br>**May 2023**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

---

| |
|:---|
| **Kate Cheetham**<br>**Chief Legal Officer** <br>**and Company** <br>**Secretary**<br>**Appointed:**<br>**July 2017**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

![Gov_ExCom_ElynCorfield_Block.gif](lyg-20251231_g190.gif)

![Gov_ExCom_SharonDoherty_Block.gif](lyg-20251231_g191.gif)

![Gov_ExCom_RonKemenade_Block.gif](lyg-20251231_g192.gif)

![Gov_ExCom_LauraNeedham_Block.gif](lyg-20251231_g193.gif)

---

| |
|:---|
| **Elyn Corfield**<sup>1</sup><br>**Chief Executive** <br>**Officer, Business and** <br>**Commercial Banking**<br>**Appointed:**<br>**July 2022**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

---

| |
|:---|
| **Sharon Doherty**<br>**Chief People and** <br>**Places Officer**<br>**Appointed:**<br>**June 2022**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

---

| |
|:---|
| **Ron van Kemenade**<br>**Chief Operating** <br>**Officer**<br>**Appointed:**<br>**June 2023**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

---

| |
|:---|
| **Laura Needham**<br>**Chief Internal** <br>**Auditor**<br>**Appointed:**<br>**October 2022**<br>|
| ![Gov_ExCom_CircleLetter_A.gif](lyg-20251231_g194.gif) |

---

![Gov_ExCom_JayneOpperman_Block.gif](lyg-20251231_g195.gif)

![Gov_ExCom_StephenShelley_Block.gif](lyg-20251231_g196.gif)

![Gov_ExCom_JasjyotSingh_Block_nudged.gif](lyg-20251231_g197.gif)

![Gov_ExCom_AndrewWalton_Block.gif](lyg-20251231_g198.gif)

---

| |
|:---|
| **Jayne Opperman**<br>**Chief Executive** <br>**Officer, Consumer** <br>**Lending**<br>**Appointed:**<br>**January 2023**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

---

| |
|:---|
| **Stephen Shelley**<br>**Chief Risk Officer**<br>**Appointed:**<br>**September 2017**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

---

| |
|:---|
| **Jasjyot Singh OBE**<br>**Chief Executive** <br>**Officer, Consumer** <br>**Relationships**<br>**Appointed:**<br>**July 2022**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

---

| |
|:---|
| **Andrew Walton**<br>**Chief Sustainability** <br>**Officer and Chief** <br>**Corporate Affairs** <br>**Officer**<br>**Appointed:**<br>**September 2018**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

![Gov_ExCom_Key.gif](lyg-20251231_g199.gif)

![Gov_ExCom_JohnWinter_Block_nudged.gif](lyg-20251231_g200.gif)

---

| |
|:---|
| **John Winter**<sup>2</sup><br>**Chief Executive** <br>**Officer, Corporate** <br>**and Institutional** <br>**Banking**<br>**Appointed:**<br>**September 2022**<br>|
| ![Gov_ExCom_CircleLetter_M.gif](lyg-20251231_g189.gif) |

---

1Elyn Corfield will step down as

Chief Executive Officer for Business

and Commercial Banking and be

succeeded by Amanda Murphy at

the end of February 2026, subject

![Gov_ExCom_QR_CodeInKeylineBox.gif](lyg-20251231_g201.gif)

Read the full biographies <br>of the Group Executive <br>Committee ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>

to regulatory approval.

2John Winter will step down as Chief

Executive Officer for Corporate and

Institutional Banking and be succeeded

by John Langley in March 2026, subject

to regulatory approval.

![Gov_RoleOfBoard.gif](lyg-20251231_g202.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our governance structure and responsibilities

**The role of the Board**

The Board is responsible for promoting and assessing the Group's

long-term sustainable success, generating value for shareholders

and contributing to wider society. It sets the Group's purpose,

values and strategy, with the aim of Helping Britain Prosper –

read more on **pages [74](#i3eaa7a3e529a46b3b97a88e05ad474bc_319) to [75](#i3eaa7a3e529a46b3b97a88e05ad474bc_322) and [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331)**.

The Board is also responsible for establishing and promoting

a culture of customer focus (including treating customers fairly),

risk awareness and ethical behaviours through the Group values,

and monitoring how that culture has been embedded.

Read more about the Board's customer focus on **pages [30](#i3eaa7a3e529a46b3b97a88e05ad474bc_82) to [31](#i3eaa7a3e529a46b3b97a88e05ad474bc_85) and** 

**[74](#i3eaa7a3e529a46b3b97a88e05ad474bc_319) to [76](#i3eaa7a3e529a46b3b97a88e05ad474bc_325)**and about its monitoring of culture on **page [79](#i3eaa7a3e529a46b3b97a88e05ad474bc_334)**.

The Board is also responsible for ensuring that the Group's culture is

aligned with its purpose, values and strategy – read more on **pages**

**[74](#i3eaa7a3e529a46b3b97a88e05ad474bc_319) to [75](#i3eaa7a3e529a46b3b97a88e05ad474bc_322) and [79](#i3eaa7a3e529a46b3b97a88e05ad474bc_334)**.

The Board believes that engaging with stakeholders is crucial for

achieving the Group's strategy and long-term goals. Details on

stakeholder engagement are on **pages [76](#i3eaa7a3e529a46b3b97a88e05ad474bc_325) to [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331)**and the directors'

section 172(1) statement is on **pages [30](#i3eaa7a3e529a46b3b97a88e05ad474bc_82) to [31](#i3eaa7a3e529a46b3b97a88e05ad474bc_85)**.

**Our Board and governance structure**<br>

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Lloyds Banking Group Board | Lloyds Banking Group Board | Lloyds Banking Group Board | Lloyds Banking Group Board | Lloyds Banking Group Board | Lloyds Banking Group Board |
| ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif) | ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif) | ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif) | ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif) | ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif) | ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif) |
| Chair | Executive <br>directors | Executive <br>directors | Non-executive <br>directors | Non-executive <br>directors | Company <br>Secretary<br>|
| Sir Robin <br>Budenberg<br>| Group Chief <br>Executive:<br>Charlie Nunn<br>| Chief Financial <br>Officer:<br>William Chalmers<br>| Senior <br>Independent <br>Director: <br>Cathy Turner | Nathan Bostock<br>Sarah Legg<br>Amanda Mackenzie<br>Harmeen Mehta<br>Chris Vogelzang<br>Catherine Woods | Kate <br>Cheetham |
|  |  |  | Senior <br>Independent <br>Director: <br>Cathy Turner | Nathan Bostock<br>Sarah Legg<br>Amanda Mackenzie<br>Harmeen Mehta<br>Chris Vogelzang<br>Catherine Woods | Kate <br>Cheetham |
|  | Group Chief<br>Executive<br>Committees<br>See page [140](#i3eaa7a3e529a46b3b97a88e05ad474bc_505)<br>|  | Senior <br>Independent <br>Director: <br>Cathy Turner | Nathan Bostock<br>Sarah Legg<br>Amanda Mackenzie<br>Harmeen Mehta<br>Chris Vogelzang<br>Catherine Woods |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Board Committees | Board Committees | Board Committees | Board Committees | Board Committees |
| **Nomination** <br>**and Governance** <br>**Committee**<br>| **Audit** <br>**Committee**<br>| **Board Risk**<br>**Committee**<br>| **Remuneration**<br>**Committee**<br>| **Responsible**<br>**Business Committee**<br>|
| ![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>| ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif)<br>| ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif)<br>| ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif)<br>| ![Button_CustomersAndClients.gif](lyg-20251231_g203.gif)<br>![Button_Colleagues.gif](lyg-20251231_g204.gif)<br>![Button_Shareholders.gif](lyg-20251231_g205.gif)<br>![Button_CommunitiesAndEnvironment.gif](lyg-20251231_g206.gif)<br>![Button_RegulatorsAndGovernment.gif](lyg-20251231_g207.gif)<br>![Button_Suppliers.gif](lyg-20251231_g208.gif)<br>|
| Responsible for keeping <br>the Board's governance <br>arrangements under review, <br>ensuring there is a formal, <br>rigorous and transparent <br>procedure for the <br>appointment of new <br>directors, ensuring Board <br>and senior management <br>succession plans are in <br>place, leading the process <br>for Board appointments <br>and assisting the Board in <br>ensuring its composition <br>is regularly reviewed <br>and refreshed.<br>| Responsibilities include <br>monitoring and reviewing <br>the formal arrangements <br>established by the Board in <br>respect of the integrity of <br>the financial reporting and <br>narrative reporting of the <br>Group and the Company, <br>the independence and <br>effectiveness of the <br>internal and external <br>audit functions and the <br>effectiveness of the internal <br>controls and the risk <br>management framework.<br>| Responsible for assisting the <br>Board in fulfilling its risk <br>governance and oversight <br>responsibilities, including <br>oversight of the <br>development, <br>implementation and <br>maintenance of the <br>Company's risk appetite, <br>risk principles and overall <br>risk management and <br>internal control framework.<br>| Responsibilities include <br>reviewing and approving <br>the remuneration policy <br>and framework for the <br>directors of the Group and <br>the overall remuneration <br>policy for the Group <br>and overseeing the <br>implementation of <br>those policies.<br>| Responsibilities include <br>providing oversight of and <br>support for the Group's <br>strategy and plans for <br>delivering the Company's <br>aspirations to become a truly <br>purpose-driven organisation, <br>considering and recommending <br>to the Board for approval <br>the Group's reporting relating <br>to purpose and sustainability <br>matters, oversight of the <br>Group's Consumer Duty <br>responsibilities and being <br>the designated body for <br>workforce engagement. |
| See page [85](#i3eaa7a3e529a46b3b97a88e05ad474bc_346) | See page [88](#i3eaa7a3e529a46b3b97a88e05ad474bc_349) | See page [92](#i3eaa7a3e529a46b3b97a88e05ad474bc_352) | See pages [98](#i3eaa7a3e529a46b3b97a88e05ad474bc_358) to [102](#i511d13e656b04c0881cebb5ece7565b0_26651) and [105](#i3eaa7a3e529a46b3b97a88e05ad474bc_367) | See page [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355) |

---

The terms of reference for the Board Committees can be found on our corporate governance page ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>

![Gov_CorpGovFramework.gif](lyg-20251231_g209.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Division of responsibilities**

There is a clear, written division of responsibilities which is

documented in the Group's Corporate Governance Framework

and provides that:

• The Chair has overall responsibility for the leadership of the

Board and ensuring its effectiveness in all aspects of its operation

• The Senior Independent Director acts as a sounding board for

the Chair on Board and shareholder matters and as a conduit for

the views of non-executive directors. The Senior Independent

Director is available to help resolve shareholders' concerns where

necessary and attends meetings with major shareholders to

understand issues and concerns

• The Group Chief Executive manages and leads the business

The Chair and the independent non-executive directors challenge

management constructively and help develop and set the Group's

strategy. They actively participate in Board decision making.

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**Board meetings**

There are separate boards and board committees of Lloyds Banking

Group plc, Lloyds Bank plc, Bank of Scotland plc and HBOS plc,

but most meetings are held concurrently under the 'Aligned Board

Model'. As most of the Group's business sits within the Ring-Fenced

Banks, the interests of the Ring-Fenced Banks, Lloyds Banking

Group plc and HBOS plc are aligned in most circumstances. This

model is supported by a number of safeguards to enable the Group

to operate in this way including the appointment of three Ring-

Fenced Bank-only non-executive directors and a Ring-Fenced Bank

Risk Officer, all of whose primary focus is on protecting the interests

of the Ring-Fenced Banks.

Lloyds Banking Group plc has a continuous agenda-setting and

escalation process to ensure the Board receives timely and relevant

information for decision making. Led by the Chair, with support

from the Group Chief Executive and the Company Secretary, this

ensures that sufficient time is allocated for strategic discussions and

Read more about the roles of the Chair, <br>the Senior Independent Director, <br>the Group Chief Executive and the Board <br>on our corporate governance page ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>

business critical items. The process for escalating issues and setting

agendas is regularly reviewed and enhanced as needed. Read more

about Board activities on **pages [74](#i3eaa7a3e529a46b3b97a88e05ad474bc_319) to [75](#i3eaa7a3e529a46b3b97a88e05ad474bc_322) and [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331)**.

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| | |
|:---|:---|
| **Group structure and ring-fencing governance arrangements** |  |
| Since 1 January 2019, UK legislation has required large UK banks <br>to separate personal banking services, such as current and savings <br>accounts, from riskier activities, such as investment banking, <br>in other parts of their business. This is called ring-fencing. <br>The Group's structure and governance arrangements meet <br>these regulatory requirements. <br>As mentioned on **page [71](#i3eaa7a3e529a46b3b97a88e05ad474bc_307)**, Lloyds Bank plc and Bank of Scotland <br>plc are the banks within the Group which have been included <br>within the ring-fence (together, the Ring-Fenced Banks). <br>The governance structure focuses on ensuring:<br>•Independent decision making by the Ring-Fenced Banks' <br>boards – on any matters where there might be a conflict <br>between the interests of the Ring-Fenced Banks and the <br>interests of another part of the Group and that any such <br>conflicts are identified and appropriately managed<br>•Risks affecting the Ring-Fenced Banks are considered and <br>managed from the Ring-Fenced Banks' perspective – including <br>maintenance of the capital adequacy and liquidity of the <br>Ring-Fenced Banks<br>•Clear and effective governance at both Ring-Fenced Bank <br>level and Lloyds Banking Group plc level – including second <br>and third lines of defence in respect of risk management<br>| The subsidiaries in the Group are structured into the following <br>sub-groups under Lloyds Banking Group plc, providing effective <br>governance for the business undertaken in each sub-group:<br>•Ring-Fenced Banks sub-group containing Lloyds Bank plc <br>and Bank of Scotland plc (including the Halifax and <br>MBNA businesses), serving both their personal and commercial <br>customers<br>•Non-Ring-Fenced Bank sub-group – Lloyds Bank Corporate <br>Markets plc – which provides products and services to Group <br>customers that are not allowed within the ring-fence, as well <br>as serving financial institutions' customers and holding certain <br>of the Group's subsidiaries and branches outside the UK<br>•Insurance sub-group under Scottish Widows Group Limited <br>(including Scottish Widows Limited)<br>•Equity sub-group under LBG Equity Investments Limited <br>(including Lloyds Development Capital (Holdings) Limited)<br>The boards of the Ring-Fenced Banks comprise all of the Group <br>directors plus three additional independent non-executive <br>directors: Nigel Hinshelwood (Senior Independent Director), <br>Sarah Bentley and Brendan Gilligan – read their biographies on <br>**page [71](#i3eaa7a3e529a46b3b97a88e05ad474bc_307)**. These Ring-Fenced Bank-only directors are independent <br>of the management and the rest of the Group and their role is to <br>act exclusively in the best interests of the Ring-Fenced Banks. <br>They therefore play a crucial role in the governance structure, <br>with an enhanced role in managing any potential conflicts <br>between the Ring-Fenced Banks and the Group.<br>|

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**Lloyds Banking Group plc simplified sub-group structure**<br>

**Lloyds Banking Group plc Board**<br>

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| | | | |
|:---|:---|:---|:---|
| **Aligned boards**<br>**Lloyds Bank plc**<sup>1</sup><br>**HBOS plc**<br>**Bank of Scotland plc**<sup>1</sup><br>1 Ring-Fenced Banks<br>| **Lloyds Bank** <br>**Corporate** <br>**Markets plc**<br>**Non-Ring-Fenced Bank**<br>| **Scottish** <br>**Widows Group** <br>**Limited**<br>**Insurance**<br>| **LBG Equity** <br>**Investments** <br>**Limited**<br>**Equity Investments**<br>|

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

Board activities

Overview

**These pages highlight some of the Board's main** 

**activities throughout the year, with a timeline** 

**of key discussions, outcomes, in-depth sessions** 

**and external insights**

**Agenda planning**

Each Board meeting agenda includes standing updates and

other items for consideration by the Board. The Board regularly

receives reports from the Group Chief Executive, Chief Financial

Officer, Chief Operating Officer and Chief Risk Officer,

providing insights on important strategic, financial, operational

and risk matters for the Group. Chairs of Board Committees

and major subsidiaries deliver regular updates to the Board on

recent meetings and activities. The Board also receives a

standing corporate governance update, covering emerging

governance developments, annual governance framework

and policy reviews and governance-related approvals. Agendas

provide for other items to be considered by the Board as

relevant including certain topics at different stages as

management's thinking evolves.

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January

**Discussion matters included** 

• Preview of 2024 results and year end distribution options

• Progress against strategic transformation metrics

• Culture transformation progress

**Key decisions/outcomes included**

• Approved ESG-related disclosures and targets

• Approved matters relating to the risk management

framework, risk appetite and risk metrics

• Approved directors' suitability for election/re-election and

non-executive directors' independence

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February

**Discussion matters included**

• Performance against customer engagement goals and

an update on co-servicing strategy

• An update on the 'Speak Up' whistleblowing programme

• Insights from Internal Audit on the Group's control

**Board training**<br>During the year, Board members had the opportunity to <br>attend training sessions, which were designed to keep the <br>Board informed on a range of relevant topics and emerging <br>focus areas. Training topics are selected and agreed <br>through a collaborative process involving key executive <br>teams, the Company Secretary and the Nomination and <br>Governance Committee. For more detail on the training <br>programme and the topics covered, see **page [87](#i93055cc5cbd6453ba5909861e73e1071_0-1-1-2-5233089)**.<br>

environment

**Key decisions/outcomes included**

• Approved the Group's operating plan, which sets out the

Group's business forecast

• Agreed proposed 2025 metrics for assessing customer

experience outcomes

• Approved the 2024 annual report and accounts and

capital distributions

• Approved the Modern Slavery and Human Trafficking

Statement

• Approved an updated policy on Board and Group Executive

Committee share dealing

• Adopted recommendations from the 2024 Board

performance review

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| |
|:---|
| **Topics key:** |
| **Strategy**<br>**Customers and clients**<br>**Purpose, culture and values** <br>**Sustainability**<br>**Risk management and regulatory**<br>**Financial**<br>**Governance**<br>**Political and economic environment**<br>|

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April

**Discussion matters included**

• An update on the reputational and political environment

• Business unit performance and strategy updates

• Aspects of the Group's proposed strategic vision beyond 2026

**Key decisions/outcomes included**

• Approved the operational resilience self-assessment

• Approved the refreshed Corporate Governance Framework

• Approved the Q1 2025 financial results

**External insights**

The Group's brokers joined the Board for a discussion on the

financial services market, including the competitive landscape,

as well as shareholder engagement activities.

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

May

**Discussion matters included**

• Business unit performance and strategy updates

• An update on geopolitical developments

• An update on the economic crime prevention programme

**Key decisions/outcomes included**

• Provided feedback to management on discussions around

the Group's proposed strategic vision beyond 2026

**In-depth session/external insights**

At a session presented by external speakers, the Board discussed

developments in the private credit market. A joint session was also

held with the Lloyds Bank Corporate Markets and Scottish

Widows boards to discuss business growth and strategic progress.

The Board also attended the annual general meeting.

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June

**Discussion matters included**

• Further discussion on progress against strategic

transformation metrics

• Business unit performance and strategy updates, including

further consideration of co-servicing strategy developments

• Customer insights and performance against Group metrics

for assessing customer experience outcomes

• An update on generative AI initiatives

• A briefing on the proposed acquisition of Curve

• The format of financial results reporting from 2026

**Key decisions/outcomes included**

• Approved the appointment of Chris Vogelzang as a director

• Approved the annual Consumer Duty report

• Approved the Bank Capital Stress Test results

**In-depth session and external insights**

As part of a two-day offsite event, the Board held a dedicated

session on the Group's proposed strategic vision beyond 2026

(read more on **page [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331)**) and a session on geopolitical

developments, facilitated by an external speaker.

![Button_Gov_BoardActivity_Strategy_WhiteBlackKey.gif](lyg-20251231_g213.gif)

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July

**Discussion matters included**

• Progress with risk and culture transformation programmes

• The Chief Internal Auditor's views on the control environment

• Business unit performance updates

• The FCA's firm evaluation letter and, with the FCA in

attendance, the FCA's regulatory strategy

• The PRA's periodic summary review letter with the PRA

in attendance

**Key decisions/outcomes included**

• Approved the 2025 interim dividend and half year results,

including the announcement of changes to the format of

financial reporting from 2026, as discussed by the Board in June

• Approved the acquisition of the outstanding interest in

Schroders Personal Wealth and discussed customer benefits

and experience as part of the proposals

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September

**Discussion matters included**

• Strategic vision and operational transformation beyond 2026

• An updated view of the reputational and political environment

• Business unit performance and strategy updates, including

further review of co-servicing strategy

• Performance against Group metrics for assessing customer

experience outcomes

• Key outcomes and conclusions from the annual Group

incident exercise

**Key decisions/outcomes included**

• Approved the proposed cost of equity metric for 2025

• Approved updates to certain risk appetite metrics

• In October, the Board approved the Q3 2025 financial results

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November

**Discussion matters included**

• Business unit performance and strategy updates

• An update on workforce engagement activities during

the year

**Key decisions/outcomes included**

• Further discussed the proposed acquisition of Curve and the

opportunity to offer broader differentiation for customers

• Discussed changes to colleague defined contribution pensions

• Approved annual ring-fencing compliance matters

• Approved the Board Inclusion Policy

**In-depth session**

The Board held a two-day offsite event which included a

dedicated session to continue to explore the strategic vision

beyond 2026 (read more on **page [78](#i3eaa7a3e529a46b3b97a88e05ad474bc_331)**).

![Button_Gov_BoardActivity_Strategy_WhiteBlackKey.gif](lyg-20251231_g213.gif)

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December

**Discussion matters included**

• Updates from business unit CEOs, Finance, the Chief

Operating Office and Risk on the operating plan approach

• Economic considerations and assumptions for the

operating plan

• Customer insights and the development of the Group's 2026

metrics for assessing customer experience outcomes

• Recommendations from the Board performance review

**Key decisions/outcomes included**

• Provided feedback on the operating plan, which sets out

the Group's business forecast, and confirmed support for

the approach

• Approved further changes to the share dealing policy and

a new share dealing portal for Board and Group Executive

Committee members

**External insights**

A Board development session (supported by an external

facilitator) followed on from a previous session held

in November 2024 and included a discussion focused

on digital assets.

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![Button_Gov_BoardActivity_Customers_WhiteBlackKey.gif](lyg-20251231_g219.gif)

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![Button_Gov_BoardActivity_Financial_WhiteBlackKey.gif](lyg-20251231_g217.gif)

![Button_Gov_BoardActivity_Governance_WhiteBlackKey.gif](lyg-20251231_g218.gif)

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

Engaging with our 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 here.

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 **pages [30](#i3eaa7a3e529a46b3b97a88e05ad474bc_82) to [31](#i3eaa7a3e529a46b3b97a88e05ad474bc_85)**.

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| | |
|:---|:---|
| **Customers** <br>**and clients** | **How does that engagement** <br>**impact Board decisions?** <br>•Hearing directly from customers and clients helps better <br>determine the action the Group takes now and in the future <br>to best support our customers' needs<br>•Direct engagement helps the Board in ensuring the Group can <br>best meet its Consumer Duty obligations<br>•Regular updates from the executive team help to identify <br>opportunities for innovation and improvement to better <br>support our customers and clients<br>•Review of the Group customer dashboard gives the Board the <br>opportunity to ensure meaningful changes are delivered to <br>further improve customer outcomes |
| **Customers** <br>**and clients** | **How does that engagement** <br>**impact Board decisions?** <br>•Hearing directly from customers and clients helps better <br>determine the action the Group takes now and in the future <br>to best support our customers' needs<br>•Direct engagement helps the Board in ensuring the Group can <br>best meet its Consumer Duty obligations<br>•Regular updates from the executive team help to identify <br>opportunities for innovation and improvement to better <br>support our customers and clients<br>•Review of the Group customer dashboard gives the Board the <br>opportunity to ensure meaningful changes are delivered to <br>further improve customer outcomes |
|  | **How does that engagement** <br>**impact Board decisions?** <br>•Hearing directly from customers and clients helps better <br>determine the action the Group takes now and in the future <br>to best support our customers' needs<br>•Direct engagement helps the Board in ensuring the Group can <br>best meet its Consumer Duty obligations<br>•Regular updates from the executive team help to identify <br>opportunities for innovation and improvement to better <br>support our customers and clients<br>•Review of the Group customer dashboard gives the Board the <br>opportunity to ensure meaningful changes are delivered to <br>further improve customer outcomes |
| **Why does the Board engage?**<br>The Board's engagement with customers is central to the <br>Group's customer-centric approach, including the Group's ability <br>to evolve to meet changing customer needs and support our <br>customers in achieving their financial ambitions. <br>**How did the Board engage?** <br>•Sessions providing deeper insight into the issues faced by <br>specific customer groups, including single person households, <br>small businesses and later life including retirement<br>•Holding events with clients in Edinburgh, Manchester and <br>London to hear directly from them on the issues their <br>businesses are facing<br>•Regular updates to the Board by the executive team gave <br>insight into the Group's performance in delivering on its <br>customer and client-related objectives, including customer <br>insight sessions and ongoing consideration of the Group <br>customer dashboard<br>•Concerns relevant to customers and clients were identified <br>for consideration in wider proposals put to the Board<br>| **How does that engagement** <br>**impact Board decisions?** <br>•Hearing directly from customers and clients helps better <br>determine the action the Group takes now and in the future <br>to best support our customers' needs<br>•Direct engagement helps the Board in ensuring the Group can <br>best meet its Consumer Duty obligations<br>•Regular updates from the executive team help to identify <br>opportunities for innovation and improvement to better <br>support our customers and clients<br>•Review of the Group customer dashboard gives the Board the <br>opportunity to ensure meaningful changes are delivered to <br>further improve customer outcomes |

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|:---|:---|:---|
| ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) | **Engagement in action** | ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) |
| Pension <br>engagement<br>During the year, the Board and its Remuneration Committee <br>consulted with colleagues on proposals to move the Group's UK <br>defined contribution pension provision from Your Tomorrow and <br>Your Retirement Plan to the Scottish Widows Master Trust. <br>The Board engaged with colleagues to understand their views <br>through a comprehensive digital first consultation process. <br>This included around 1,800 items of feedback formally submitted <br>by colleagues across all grades, business units and age groups. <br>Trade union partners, including Accord and Unite, were also <br>consulted, along with the Group's People Consultation Forum, <br>allowing collective consultation and a number of relevant <br>questions to be raised, resulting in no formal objections or <br>requests for further action. <br>The Board was pleased to have the opportunity to hear from <br>colleagues and representatives so as to be able to take their <br>views into account prior to making the decision to transfer the <br>future pension provision of the Group's UK colleagues to the <br>Scottish Widows Master Trust from 2026. | Pension <br>engagement<br>During the year, the Board and its Remuneration Committee <br>consulted with colleagues on proposals to move the Group's UK <br>defined contribution pension provision from Your Tomorrow and <br>Your Retirement Plan to the Scottish Widows Master Trust. <br>The Board engaged with colleagues to understand their views <br>through a comprehensive digital first consultation process. <br>This included around 1,800 items of feedback formally submitted <br>by colleagues across all grades, business units and age groups. <br>Trade union partners, including Accord and Unite, were also <br>consulted, along with the Group's People Consultation Forum, <br>allowing collective consultation and a number of relevant <br>questions to be raised, resulting in no formal objections or <br>requests for further action. <br>The Board was pleased to have the opportunity to hear from <br>colleagues and representatives so as to be able to take their <br>views into account prior to making the decision to transfer the <br>future pension provision of the Group's UK colleagues to the <br>Scottish Widows Master Trust from 2026. | Pension <br>engagement<br>During the year, the Board and its Remuneration Committee <br>consulted with colleagues on proposals to move the Group's UK <br>defined contribution pension provision from Your Tomorrow and <br>Your Retirement Plan to the Scottish Widows Master Trust. <br>The Board engaged with colleagues to understand their views <br>through a comprehensive digital first consultation process. <br>This included around 1,800 items of feedback formally submitted <br>by colleagues across all grades, business units and age groups. <br>Trade union partners, including Accord and Unite, were also <br>consulted, along with the Group's People Consultation Forum, <br>allowing collective consultation and a number of relevant <br>questions to be raised, resulting in no formal objections or <br>requests for further action. <br>The Board was pleased to have the opportunity to hear from <br>colleagues and representatives so as to be able to take their <br>views into account prior to making the decision to transfer the <br>future pension provision of the Group's UK colleagues to the <br>Scottish Widows Master Trust from 2026. |

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

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| | |
|:---|:---|
| **Colleagues** | •Helps the Board gain additional insight on matters which <br>colleagues have raised as part of wider engagement activity <br>and allows progress against matters raised to be monitored |
| **Colleagues** | •Helps the Board gain additional insight on matters which <br>colleagues have raised as part of wider engagement activity <br>and allows progress against matters raised to be monitored |
|  | •Helps the Board gain additional insight on matters which <br>colleagues have raised as part of wider engagement activity <br>and allows progress against matters raised to be monitored |
| **Why does the Board engage?**<br>The Board's ambition is that the Group continues to be a place <br>where people who are passionate about our purpose wish to <br>work. Engagement with colleagues helps to understand better <br>how they remain motivated to achieve our purpose with the <br>skills needed to deliver on the Group's wider strategic objectives.<br>**How did the Board engage?** <br>•Held a number of colleague engagement and recognition <br>events with the opportunity to hear directly from colleagues <br>and recognise their achievements in supporting our customers<br>•Considered reports on key themes raised during colleague <br>engagement activity, including the work of the People Forum, <br>the People Consultation Forum and the Management <br>Advisory Forum<br>•Review by its Responsible Business Committee of findings <br>from surveys of colleague sentiment and other colleague <br>engagement reports<br>**How does that engagement** <br>**impact board decisions?** <br>•Allows the Board to understand directly colleague views on <br>the Group's progress against its strategy, including what could <br>improve this progress, and colleague observations from <br>interacting with customers, further informing wider Board <br>decision making<br>| •Helps the Board gain additional insight on matters which <br>colleagues have raised as part of wider engagement activity <br>and allows progress against matters raised to be monitored |

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| | | |
|:---|:---|:---|
| ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) | **Engagement in action** | ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) |
| Engaging with our workforce<br>The Board's Responsible Business Committee is the <br>designated body for workforce engagement, providing <br>focus, but with the Board retaining a commitment for <br>individual Board members to engage with colleagues directly <br>throughout the year. The Responsible Business Committee <br>reports regularly to the Board on its colleague engagement <br>agenda. The Board considers these arrangements to <br>be effective as the work of the Responsible Business <br>Committee combined with the other colleague engagement <br>methods in this section allows engagement with diverse <br>colleague groups. | Engaging with our workforce<br>The Board's Responsible Business Committee is the <br>designated body for workforce engagement, providing <br>focus, but with the Board retaining a commitment for <br>individual Board members to engage with colleagues directly <br>throughout the year. The Responsible Business Committee <br>reports regularly to the Board on its colleague engagement <br>agenda. The Board considers these arrangements to <br>be effective as the work of the Responsible Business <br>Committee combined with the other colleague engagement <br>methods in this section allows engagement with diverse <br>colleague groups. | Engaging with our workforce<br>The Board's Responsible Business Committee is the <br>designated body for workforce engagement, providing <br>focus, but with the Board retaining a commitment for <br>individual Board members to engage with colleagues directly <br>throughout the year. The Responsible Business Committee <br>reports regularly to the Board on its colleague engagement <br>agenda. The Board considers these arrangements to <br>be effective as the work of the Responsible Business <br>Committee combined with the other colleague engagement <br>methods in this section allows engagement with diverse <br>colleague groups. |
| Engaging with our workforce<br>The Board's Responsible Business Committee is the <br>designated body for workforce engagement, providing <br>focus, but with the Board retaining a commitment for <br>individual Board members to engage with colleagues directly <br>throughout the year. The Responsible Business Committee <br>reports regularly to the Board on its colleague engagement <br>agenda. The Board considers these arrangements to <br>be effective as the work of the Responsible Business <br>Committee combined with the other colleague engagement <br>methods in this section allows engagement with diverse <br>colleague groups. | Engaging with our workforce<br>The Board's Responsible Business Committee is the <br>designated body for workforce engagement, providing <br>focus, but with the Board retaining a commitment for <br>individual Board members to engage with colleagues directly <br>throughout the year. The Responsible Business Committee <br>reports regularly to the Board on its colleague engagement <br>agenda. The Board considers these arrangements to <br>be effective as the work of the Responsible Business <br>Committee combined with the other colleague engagement <br>methods in this section allows engagement with diverse <br>colleague groups. | Engaging with our workforce<br>The Board's Responsible Business Committee is the <br>designated body for workforce engagement, providing <br>focus, but with the Board retaining a commitment for <br>individual Board members to engage with colleagues directly <br>throughout the year. The Responsible Business Committee <br>reports regularly to the Board on its colleague engagement <br>agenda. The Board considers these arrangements to <br>be effective as the work of the Responsible Business <br>Committee combined with the other colleague engagement <br>methods in this section allows engagement with diverse <br>colleague groups. |

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| | |
|:---|:---|
| **Shareholders** | •The Board's Nomination and Governance Committee <br>considered correspondence from institutional shareholders and <br>non-governmental organisations along with market feedback. <br>The Committee also reviewed initiatives aimed at enhancing <br>shareholder processes to ensure they remain effective and <br>aligned with regulatory and shareholder expectations<br>•Directors engaged with shareholders at the Group's annual <br>general meeting and encouraged shareholder participation <br>by inviting questions and facilitating open discussion<br>**How does that engagement** <br>**impact Board decisions?**<br>•Shareholder feedback helped the Board to better understand <br>investor sentiment, in turn informing relevant discussions <br>and decision making, including in relation to the Group's <br>strategic progress<br>•Feedback also helped to inform the ongoing development of <br>the Group's approach to communicating with external parties |
| **Shareholders** | •The Board's Nomination and Governance Committee <br>considered correspondence from institutional shareholders and <br>non-governmental organisations along with market feedback. <br>The Committee also reviewed initiatives aimed at enhancing <br>shareholder processes to ensure they remain effective and <br>aligned with regulatory and shareholder expectations<br>•Directors engaged with shareholders at the Group's annual <br>general meeting and encouraged shareholder participation <br>by inviting questions and facilitating open discussion<br>**How does that engagement** <br>**impact Board decisions?**<br>•Shareholder feedback helped the Board to better understand <br>investor sentiment, in turn informing relevant discussions <br>and decision making, including in relation to the Group's <br>strategic progress<br>•Feedback also helped to inform the ongoing development of <br>the Group's approach to communicating with external parties |
|  | •The Board's Nomination and Governance Committee <br>considered correspondence from institutional shareholders and <br>non-governmental organisations along with market feedback. <br>The Committee also reviewed initiatives aimed at enhancing <br>shareholder processes to ensure they remain effective and <br>aligned with regulatory and shareholder expectations<br>•Directors engaged with shareholders at the Group's annual <br>general meeting and encouraged shareholder participation <br>by inviting questions and facilitating open discussion<br>**How does that engagement** <br>**impact Board decisions?**<br>•Shareholder feedback helped the Board to better understand <br>investor sentiment, in turn informing relevant discussions <br>and decision making, including in relation to the Group's <br>strategic progress<br>•Feedback also helped to inform the ongoing development of <br>the Group's approach to communicating with external parties |
| **Why does the Board engage?**<br>With one of the largest shareholder bases in the UK, the Board <br>remains committed to understanding the needs and expectations <br>of our shareholders, both private and institutional, helping to <br>further inform Board decision making. <br>**How did the Board engage?** <br>•Directors including the Chair, Group Chief Executive and <br>Chief Financial Officer met regularly with institutional <br>shareholders, both in the UK and internationally<br>•Considered updates from Investor Relations on market views <br>and shareholder sentiment, including an annual presentation <br>from our corporate brokers on matters including perceptions <br>of the Group<br>| •The Board's Nomination and Governance Committee <br>considered correspondence from institutional shareholders and <br>non-governmental organisations along with market feedback. <br>The Committee also reviewed initiatives aimed at enhancing <br>shareholder processes to ensure they remain effective and <br>aligned with regulatory and shareholder expectations<br>•Directors engaged with shareholders at the Group's annual <br>general meeting and encouraged shareholder participation <br>by inviting questions and facilitating open discussion<br>**How does that engagement** <br>**impact Board decisions?**<br>•Shareholder feedback helped the Board to better understand <br>investor sentiment, in turn informing relevant discussions <br>and decision making, including in relation to the Group's <br>strategic progress<br>•Feedback also helped to inform the ongoing development of <br>the Group's approach to communicating with external parties |

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| | |
|:---|:---|
| **Communities** <br>**and environment** | •The Board continues to be supported in environmental matters <br>by its Responsible Business Committee, which considers <br>stakeholder views on matters relating to the Group's ambition <br>to be a trusted, sustainable, inclusive and responsible business. <br>The report of that Committee can be found on**page [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355)**<br>**How does that engagement** <br>**impact Board decisions?** <br>•Engagement with the Group's charitable partners allowed <br>the Board to better understand the Group's impact within <br>local communities<br>•The work of the Responsible Business Committee gives <br>the Board deeper insight into its role as both an employer <br>and a collaborator within the communities in which the Group <br>is present |
| **Communities** <br>**and environment** | •The Board continues to be supported in environmental matters <br>by its Responsible Business Committee, which considers <br>stakeholder views on matters relating to the Group's ambition <br>to be a trusted, sustainable, inclusive and responsible business. <br>The report of that Committee can be found on**page [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355)**<br>**How does that engagement** <br>**impact Board decisions?** <br>•Engagement with the Group's charitable partners allowed <br>the Board to better understand the Group's impact within <br>local communities<br>•The work of the Responsible Business Committee gives <br>the Board deeper insight into its role as both an employer <br>and a collaborator within the communities in which the Group <br>is present |
|  | •The Board continues to be supported in environmental matters <br>by its Responsible Business Committee, which considers <br>stakeholder views on matters relating to the Group's ambition <br>to be a trusted, sustainable, inclusive and responsible business. <br>The report of that Committee can be found on**page [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355)**<br>**How does that engagement** <br>**impact Board decisions?** <br>•Engagement with the Group's charitable partners allowed <br>the Board to better understand the Group's impact within <br>local communities<br>•The work of the Responsible Business Committee gives <br>the Board deeper insight into its role as both an employer <br>and a collaborator within the communities in which the Group <br>is present |
| **Why does the Board engage?**<br>The Group's presence in a large number of communities across <br>the UK continues to reinforce the importance of engagement <br>and action to help these communities prosper, while also helping <br>to build a more sustainable and inclusive future.<br>**How did the Board engage?**<br>•Members of the Board met with representatives of <br>charities and community groups supported by the Group's <br>charitable foundations<br>| •The Board continues to be supported in environmental matters <br>by its Responsible Business Committee, which considers <br>stakeholder views on matters relating to the Group's ambition <br>to be a trusted, sustainable, inclusive and responsible business. <br>The report of that Committee can be found on**page [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355)**<br>**How does that engagement** <br>**impact Board decisions?** <br>•Engagement with the Group's charitable partners allowed <br>the Board to better understand the Group's impact within <br>local communities<br>•The work of the Responsible Business Committee gives <br>the Board deeper insight into its role as both an employer <br>and a collaborator within the communities in which the Group <br>is present |

---

![Governance_StakeEng_Page3.gif](lyg-20251231_g228.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Engaging with our stakeholders continued

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| | |
|:---|:---|
| **Regulators and** <br>**government** | •Discussions included the Board's role in oversight of the <br>Group's key risks and the execution of its strategy<br>•The PRA and FCA attended a meeting of the Board during <br>which progress against actions from their Periodic Summary <br>Meeting and Firm Evaluation letters were discussed<br>•Directors engaged with the Government during the year <br>on matters relating to the impact of policy on the financial <br>services sector<br>**How does that engagement** <br>**impact Board decisions?** <br>•Ongoing direct discussions allow the Board to better <br>understand the regulators' and the Government's priorities <br>and how these are best acknowledged in the Board's wider <br>decision making |
| **Regulators and** <br>**government** | •Discussions included the Board's role in oversight of the <br>Group's key risks and the execution of its strategy<br>•The PRA and FCA attended a meeting of the Board during <br>which progress against actions from their Periodic Summary <br>Meeting and Firm Evaluation letters were discussed<br>•Directors engaged with the Government during the year <br>on matters relating to the impact of policy on the financial <br>services sector<br>**How does that engagement** <br>**impact Board decisions?** <br>•Ongoing direct discussions allow the Board to better <br>understand the regulators' and the Government's priorities <br>and how these are best acknowledged in the Board's wider <br>decision making |
|  | •Discussions included the Board's role in oversight of the <br>Group's key risks and the execution of its strategy<br>•The PRA and FCA attended a meeting of the Board during <br>which progress against actions from their Periodic Summary <br>Meeting and Firm Evaluation letters were discussed<br>•Directors engaged with the Government during the year <br>on matters relating to the impact of policy on the financial <br>services sector<br>**How does that engagement** <br>**impact Board decisions?** <br>•Ongoing direct discussions allow the Board to better <br>understand the regulators' and the Government's priorities <br>and how these are best acknowledged in the Board's wider <br>decision making |
| **Why does the Board engage?**<br>The Board recognises the importance of its ongoing constructive <br>relationships and dialogue with both government and the <br>regulatory authorities in markets in which the Group operates, <br>in particular in achieving the Group's strategic ambitions, <br>and continuing to deliver for the Group's wider stakeholders.<br>**How did the Board engage?** <br>•Directors held ongoing discussions with the FCA and PRA on <br>various aspects of the regulatory agenda<br>| •Discussions included the Board's role in oversight of the <br>Group's key risks and the execution of its strategy<br>•The PRA and FCA attended a meeting of the Board during <br>which progress against actions from their Periodic Summary <br>Meeting and Firm Evaluation letters were discussed<br>•Directors engaged with the Government during the year <br>on matters relating to the impact of policy on the financial <br>services sector<br>**How does that engagement** <br>**impact Board decisions?** <br>•Ongoing direct discussions allow the Board to better <br>understand the regulators' and the Government's priorities <br>and how these are best acknowledged in the Board's wider <br>decision making |

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| | |
|:---|:---|
| **Suppliers** | •The Board continued to oversee resilience in the supply chain <br>ensuring the Group's most important supplier relationships <br>were not impacted by potential material events<br>**How does that engagement** <br>**impact Board decisions?** <br>•Ensures the Group's approach continues to meet wider <br>industry standards on supplier management, in particular <br>supplier payment practices<br>•Allows a deeper understanding of our supply chain and the <br>degree to which our suppliers' operations align to the strategy <br>and purpose of the Group |
| **Suppliers** | •The Board continued to oversee resilience in the supply chain <br>ensuring the Group's most important supplier relationships <br>were not impacted by potential material events<br>**How does that engagement** <br>**impact Board decisions?** <br>•Ensures the Group's approach continues to meet wider <br>industry standards on supplier management, in particular <br>supplier payment practices<br>•Allows a deeper understanding of our supply chain and the <br>degree to which our suppliers' operations align to the strategy <br>and purpose of the Group |
|  | •The Board continued to oversee resilience in the supply chain <br>ensuring the Group's most important supplier relationships <br>were not impacted by potential material events<br>**How does that engagement** <br>**impact Board decisions?** <br>•Ensures the Group's approach continues to meet wider <br>industry standards on supplier management, in particular <br>supplier payment practices<br>•Allows a deeper understanding of our supply chain and the <br>degree to which our suppliers' operations align to the strategy <br>and purpose of the Group |
| **Why does the Board engage?**<br>The Board recognises the importance of the partners the <br>Group relies on for key aspects of the Group's operations and <br>strengthening these relationships to achieve both the Group's <br>and its suppliers' wider ambitions. <br>**How did the Board engage?** <br>•The Audit Committee considered reports from the Group's <br>Sourcing and Finance teams on the efficiency of supplier <br>payment practices, including those relating to the Group's <br>key suppliers<br>| •The Board continued to oversee resilience in the supply chain <br>ensuring the Group's most important supplier relationships <br>were not impacted by potential material events<br>**How does that engagement** <br>**impact Board decisions?** <br>•Ensures the Group's approach continues to meet wider <br>industry standards on supplier management, in particular <br>supplier payment practices<br>•Allows a deeper understanding of our supply chain and the <br>degree to which our suppliers' operations align to the strategy <br>and purpose of the Group |

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| | |
|:---|:---|
| **Strategy discussions** |  |
| While strategy was regularly discussed at Board meetings <br>throughout the year, the Board also participated in two <br>dedicated strategy sessions which were held offsite. These <br>sessions provided the opportunity for iterative engagement <br>on strategy between the Board and the executive team, <br>enabling early input on emerging plans and ongoing dialogue <br>as the strategy developed. The sessions also allowed the Board <br>to test strategic assumptions from a stakeholder perspective.<br>**June**<br>Topics discussed at the June offsite session included the complex <br>external environment, its potential evolution beyond 2026 and <br>key considerations for the Group. The Board also discussed the <br>development of the Group's purpose ambitions and focus areas, <br>scope for efficiencies in the Group's operating model and <br>the potential strategic vision beyond 2026 for the Group <br>and specific businesses. | **November**<br>At the offsite session in November, the Board continued to <br>explore the potential strategic vision beyond 2026. Discussion <br>topics included consideration of potential strategic focus <br>areas for each of the Group's business units as well as further <br>refinement of the Group's purpose outcomes. The Board also <br>considered changes in the market and external environment <br>since the offsite discussion in June, with a particular focus <br>on the pace of development and impact of generative AI.  |
| While strategy was regularly discussed at Board meetings <br>throughout the year, the Board also participated in two <br>dedicated strategy sessions which were held offsite. These <br>sessions provided the opportunity for iterative engagement <br>on strategy between the Board and the executive team, <br>enabling early input on emerging plans and ongoing dialogue <br>as the strategy developed. The sessions also allowed the Board <br>to test strategic assumptions from a stakeholder perspective.<br>**June**<br>Topics discussed at the June offsite session included the complex <br>external environment, its potential evolution beyond 2026 and <br>key considerations for the Group. The Board also discussed the <br>development of the Group's purpose ambitions and focus areas, <br>scope for efficiencies in the Group's operating model and <br>the potential strategic vision beyond 2026 for the Group <br>and specific businesses. | **November**<br>At the offsite session in November, the Board continued to <br>explore the potential strategic vision beyond 2026. Discussion <br>topics included consideration of potential strategic focus <br>areas for each of the Group's business units as well as further <br>refinement of the Group's purpose outcomes. The Board also <br>considered changes in the market and external environment <br>since the offsite discussion in June, with a particular focus <br>on the pace of development and impact of generative AI.  |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ![GrowIcon.gif](lyg-20251231_g4.gif) | **Grow** | ![FocusIcon.gif](lyg-20251231_g5.gif) | **Focus** | ![ChangeIcon.gif](lyg-20251231_g6.gif) | **Change** |
|  | **Drive revenue growth** <br>**and diversification**<br>|  | **Strengthen cost and** <br>**capital efficiency**<br>|  | **Maximise the** <br>**potential of people,** <br>**technology and data**<br>|

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![Gov_OurCultureInAction.gif](lyg-20251231_g229.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Our culture in action

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| |
|:---|
| **How the Board monitors and assesses culture** |
| The directors continue to engage with colleagues to deepen <br>their understanding of how culture is experienced across the <br>Group. Colleague listening is a core part of the Group's culture, <br>using an ongoing feedback system to inform transformation and <br>performance. Methods used by the Board to monitor and assess <br>culture in 2025 included: <br>•Board participation in quarterly 'listening sessions', part of <br>the Group's 'Closer to Customers, Clients and Colleagues' <br>programme of engagement, where colleagues shared views <br>with the Board on key topics such as culture, collaboration <br>and risk. Groups of colleagues interacted with this year <br>include Next Generation Talent, Leaders and Lloyds <br>Technology Centre colleagues<br>•Board consideration of the results of surveys (annual and <br>regular pulse) designed to understand colleague sentiment and <br>highlight any cultural issues focus areas such as simplification<br>•Feedback from focus groups whereby colleagues shared <br>views on our ways of working, inclusion, decision making <br>and AI and technology<br>•Branch visits and colleague breakfasts attended by <br>non-executive directors and the Chair, which gave colleagues <br>the opportunities to share their views<br>•Review of the Group culture dashboard – read more below<br>The Chair and Group Chief Executive have comprehensive <br>colleague engagement programmes throughout the year. |
| The directors continue to engage with colleagues to deepen <br>their understanding of how culture is experienced across the <br>Group. Colleague listening is a core part of the Group's culture, <br>using an ongoing feedback system to inform transformation and <br>performance. Methods used by the Board to monitor and assess <br>culture in 2025 included: <br>•Board participation in quarterly 'listening sessions', part of <br>the Group's 'Closer to Customers, Clients and Colleagues' <br>programme of engagement, where colleagues shared views <br>with the Board on key topics such as culture, collaboration <br>and risk. Groups of colleagues interacted with this year <br>include Next Generation Talent, Leaders and Lloyds <br>Technology Centre colleagues<br>•Board consideration of the results of surveys (annual and <br>regular pulse) designed to understand colleague sentiment and <br>highlight any cultural issues focus areas such as simplification<br>•Feedback from focus groups whereby colleagues shared <br>views on our ways of working, inclusion, decision making <br>and AI and technology<br>•Branch visits and colleague breakfasts attended by <br>non-executive directors and the Chair, which gave colleagues <br>the opportunities to share their views<br>•Review of the Group culture dashboard – read more below<br>The Chair and Group Chief Executive have comprehensive <br>colleague engagement programmes throughout the year. |

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| |
|:---|
| **Outcomes of the Board's monitoring and assessment**  |
| Insights gained from the Board's engagement with colleagues <br>and from colleague feedback more generally are reviewed <br>by the Responsible Business Committee as the designated <br>workforce engagement body and key themes and results <br>are shared with the Board on a quarterly basis. During 2025, <br>these insights enabled the Board to consider progress on, and <br>actions required to continue to advance towards, workforce <br>and cultural transformation ambitions and also to satisfy itself <br>that workforce engagement methods and associated updates <br>remain appropriate and effective. As a result, the Board <br>provided input into 2026 cultural focus areas across simplicity, <br>accountability and performance and requested the executive <br>establish a methodology and metrics to track the Group's <br>cultural and behavioural change. <br>The 2025 Board listening sessions provided the Board with <br>colleague views on crucial topics such as the Group's approach <br>to risk, collaboration between teams, use of AI and simplification. <br>This feedback enabled the Board to input into the iteration of <br>key transformation and culture programmes, for example helping <br>shape the Group's programme of work to remove barriers and <br>blockers so we can deliver more value to customers at pace. <br>The 2025 annual colleague survey demonstrated observable <br>cultural outcomes whereby key metrics across all indices <br>improved, including the Group's employee engagement <br>index improving and its colleague advocacy (net promoter) <br>score increasing.  |
| Insights gained from the Board's engagement with colleagues <br>and from colleague feedback more generally are reviewed <br>by the Responsible Business Committee as the designated <br>workforce engagement body and key themes and results <br>are shared with the Board on a quarterly basis. During 2025, <br>these insights enabled the Board to consider progress on, and <br>actions required to continue to advance towards, workforce <br>and cultural transformation ambitions and also to satisfy itself <br>that workforce engagement methods and associated updates <br>remain appropriate and effective. As a result, the Board <br>provided input into 2026 cultural focus areas across simplicity, <br>accountability and performance and requested the executive <br>establish a methodology and metrics to track the Group's <br>cultural and behavioural change. <br>The 2025 Board listening sessions provided the Board with <br>colleague views on crucial topics such as the Group's approach <br>to risk, collaboration between teams, use of AI and simplification. <br>This feedback enabled the Board to input into the iteration of <br>key transformation and culture programmes, for example helping <br>shape the Group's programme of work to remove barriers and <br>blockers so we can deliver more value to customers at pace. <br>The 2025 annual colleague survey demonstrated observable <br>cultural outcomes whereby key metrics across all indices <br>improved, including the Group's employee engagement <br>index improving and its colleague advocacy (net promoter) <br>score increasing.  |

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| |
|:---|
| **Embedding the desired culture** |
| The Group culture dashboard is a key element of how <br>the Group embeds the desired culture throughout the <br>organisation. Introduced in November 2023 and shared <br>twice yearly with the Board, the dashboard tracks <br>insights related to performance, change and customer <br>outcomes and identifies blockers to our cultural goals. <br>The dashboard's outcomes are a key input to culture plans, <br>driving action towards cultural transformation and creating <br>a strong culture that drives good customer outcomes. <br>This, alongside our Group cultural framework, which aligns <br>values throughout the organisation and promotes colleague <br>listening activity and culture and people plans, plays a key <br>role in embedding the Group's culture.  |
| The Group culture dashboard is a key element of how <br>the Group embeds the desired culture throughout the <br>organisation. Introduced in November 2023 and shared <br>twice yearly with the Board, the dashboard tracks <br>insights related to performance, change and customer <br>outcomes and identifies blockers to our cultural goals. <br>The dashboard's outcomes are a key input to culture plans, <br>driving action towards cultural transformation and creating <br>a strong culture that drives good customer outcomes. <br>This, alongside our Group cultural framework, which aligns <br>values throughout the organisation and promotes colleague <br>listening activity and culture and people plans, plays a key <br>role in embedding the Group's culture.  |

---

**Employee** 

**engagement index** 

**75%**

up 4pts vs 2024

**Colleague advocacy** 

**(net promoter) score**

**+23**

up 15pts vs 2024

**Manager net** 

**promoter score**

**+62**

up 7pts vs 2024

**MyVoice annual survey** 

**response rate**

**85%**

up 4pts vs 2024

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Sustainability governance

**Sustainability governance** 

Given the strategic importance of our sustainability ambitions

and commitments in managing the impacts arising from climate

change and broader social issues, the Group's governance structure

provides clear oversight and ownership of the Group's sustainability

strategy and management of risks and opportunities.

Sustainability-related responsibilities at Board level are overseen

by the Responsible Business Committee, with specific reporting,

remuneration and risk management responsibilities in relation to

sustainability-related matters (including climate) shared with the

Audit Committee, Remuneration Committee and the Board Risk

Committee. This ensures appropriate Board-level coordination

and cooperation on these matters.

Climate risks and opportunities are identified, assessed and

managed by business unit level teams governed via functional and

divisional level steering groups and committees including the Group

Risk Committee. For further details on the control environment

operating at a business unit level for climate-related controls,

please see page 125 of our sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

The Responsible Business Committee oversees the Group's delivery

of its purpose including the delivery of our sustainability strategy.

It conducts deep dives into current priority areas and escalates for

review and discussion to the Board as appropriate. The Group's

purpose pillars are outlined on **page [14](#i3eaa7a3e529a46b3b97a88e05ad474bc_40)**.

![Gov_SustainabilityStructure.gif](lyg-20251231_g230.gif)

The Committee also makes recommendations to the Board for

social strategies and environmental sustainability activities.

The Remuneration Committee plays a key role in embedding

sustainability into executive performance management. It oversees

the integration of ESG performance measures into the Group's

balanced scorecard and LTIP frameworks, thereby aligning

remuneration outcomes with the Group's sustainability ambitions

and climate-related goals.

We engage proactively with investors and other key stakeholders

throughout the year on our sustainability priorities and plans. Given

sustainability is at the heart of our purpose-driven strategy, with

ambitious climate targets reflected in strategic objectives, the

progress already being made in this area and the Group's existing

focus on enhanced disclosure, transparency and engagement, the

Board does not believe it is necessary to propose a separate climate

vote at our 2026 annual general meeting at this time. We will

continue to be transparent on our support for the UK's transition,

our ambitions and targets, plans and progress and to consider on a

regular basis whether to propose a climate vote.

**Executive-level governance**

The accountable executive for the Group's sustainability strategy is

the Chief Sustainability Officer and Chief Corporate Affairs Officer,

with relevant teams in place to drive this strategy forward. There

are four key committees that provide management oversight at

an executive level: the Group Sustainability Committee, the Group

Risk Committee, the Group Disclosure Committee and the Group

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| | | | |
|:---|:---|:---|:---|
| **Our sustainability governance structure** | **Our sustainability governance structure** | **Our sustainability governance structure** | **Our sustainability governance structure** |
| **Board level** | **Board level** | **Board level** | **Board level** |
| **Lloyds Banking Group plc Board**<sup>1</sup> | **Lloyds Banking Group plc Board**<sup>1</sup> | **Lloyds Banking Group plc Board**<sup>1</sup> | **Lloyds Banking Group plc Board**<sup>1</sup> |
| **Responsible** <br>**Business** <br>**Committee** <br>**(RBC)**<sup>2</sup> | **Board Risk** <br>**Committee** <br>**(BRC)** | **Audit** <br>**Committee** <br>**(AC)** | **Remuneration** <br>**Committee** <br>**(RemCo)** |
| **Executive level** | **Executive level** | **Executive level** | **Executive level** |
| **Group** <br>**Sustainability** <br>**Committee** <br>**(GSC)** | **Group Risk** <br>**Committee** <br>**(GRC)** | **Group** <br>**Disclosure** <br>**Committee** <br>**(GDC)** | **Group** <br>**Executive** <br>**Committee** <br>**(GEC)**<sup>1</sup> |
| **Business and functional level** | **Business and functional level** | **Business and functional level** | **Business and functional level** |
|  | **Divisional and functional-level** <br>**climate and sustainability** <br>**steering groups or committees** | **Divisional and functional-level** <br>**climate and sustainability** <br>**steering groups or committees** | **Divisional and functional-level** <br>**climate and sustainability** <br>**steering groups or committees** |
| 1The Chair of the Scottish Widows Board (except for any Interim Chair) sits on the <br>Lloyds Banking Group plc Board. The Scottish Widows CEO sits on the Group <br>Executive Committee and updates the Group Executive Committee on relevant <br>insurance matters which can include papers for Group Executive Committee <br>consideration. <br>2The Chair of the Responsible Business Committee, Amanda Mackenzie, is a non-<br>executive director on the Board, a member of the Remuneration Committee, the <br>Nomination and Governance Committee and the Audit Committee. Amanda helps <br>ensure that sustainability is discussed and considered by the Board. Amanda has <br>extensive experience in ESG matters, including helping launch the United Nations <br>Sustainable Development Goals. | 1The Chair of the Scottish Widows Board (except for any Interim Chair) sits on the <br>Lloyds Banking Group plc Board. The Scottish Widows CEO sits on the Group <br>Executive Committee and updates the Group Executive Committee on relevant <br>insurance matters which can include papers for Group Executive Committee <br>consideration. <br>2The Chair of the Responsible Business Committee, Amanda Mackenzie, is a non-<br>executive director on the Board, a member of the Remuneration Committee, the <br>Nomination and Governance Committee and the Audit Committee. Amanda helps <br>ensure that sustainability is discussed and considered by the Board. Amanda has <br>extensive experience in ESG matters, including helping launch the United Nations <br>Sustainable Development Goals. | 1The Chair of the Scottish Widows Board (except for any Interim Chair) sits on the <br>Lloyds Banking Group plc Board. The Scottish Widows CEO sits on the Group <br>Executive Committee and updates the Group Executive Committee on relevant <br>insurance matters which can include papers for Group Executive Committee <br>consideration. <br>2The Chair of the Responsible Business Committee, Amanda Mackenzie, is a non-<br>executive director on the Board, a member of the Remuneration Committee, the <br>Nomination and Governance Committee and the Audit Committee. Amanda helps <br>ensure that sustainability is discussed and considered by the Board. Amanda has <br>extensive experience in ESG matters, including helping launch the United Nations <br>Sustainable Development Goals. | 1The Chair of the Scottish Widows Board (except for any Interim Chair) sits on the <br>Lloyds Banking Group plc Board. The Scottish Widows CEO sits on the Group <br>Executive Committee and updates the Group Executive Committee on relevant <br>insurance matters which can include papers for Group Executive Committee <br>consideration. <br>2The Chair of the Responsible Business Committee, Amanda Mackenzie, is a non-<br>executive director on the Board, a member of the Remuneration Committee, the <br>Nomination and Governance Committee and the Audit Committee. Amanda helps <br>ensure that sustainability is discussed and considered by the Board. Amanda has <br>extensive experience in ESG matters, including helping launch the United Nations <br>Sustainable Development Goals. |

---

Executive Committee. These are supported by a number of divisional

and function-level teams who consider sustainability topics.

**Group Sustainability Committee governance** 

The Group Sustainability Committee provides direction and

oversight of the Group's sustainability strategy, as well as oversight

of the Group's approach to meeting external environmental and

social ambitions and targets. Through regular meetings the Group

Sustainability Committee reviews sustainability opportunities and

makes recommendations to the Group Executive Committee and

the Responsible Business Committee where appropriate.

The Group Sustainability Committee is supported by divisional and

functional-level teams; further details on their role can be found on

pages 120 of our sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

**Group Risk Committee governance**

Responsibility for overseeing the management of financial risks

from climate change rests with the relevant Chief Risk Officers

across the Group, who have Senior Management Function (SMF)

responsibility covering the Ring-Fenced Banks (Lloyds Bank plc

and Bank of Scotland plc), Lloyds Bank Corporate Markets and

the Solvency UK regulated entities in Scottish Widows Group

(under Scottish Widows Group, its Finance Director has additional

SMF responsibilities to manage the risks while the Chief Risk Officer

has oversight).

The Group Risk Committee oversees the Group's management of

emerging and principal risks such as climate risk, operational risk,

conduct risk and economic crime. Climate risk is considered

regularly through the Group's risk reporting to the Group Risk

Committee in addition to standalone updates on an annual basis

which inform discussions at the Board Risk Committee. Relevant

updates are also provided across the Group's key legal entities,

as required. Additional engagement on relevant climate-related

matters is undertaken through the existing risk governance

structure, for example sector risks and opportunities related

to climate are presented and discussed at senior credit forums.

**Group Disclosure Committee governance** 

The Group Disclosure Committee provides oversight of the

accuracy, completeness and timeliness of disclosures made to the

market and/or prospective investors. This includes sustainability

disclosures in our annual report and accounts, sustainability

report and separate sustainability supplements .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

![Icon_Weblink.gif](lyg-20251231_g14.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) | **Sustainability in action** | ![CalmGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g23.gif) |
| Modern slavery Board training<br>In 2025, the Group delivered targeted human rights and <br>modern slavery training for senior leaders, including the <br>Board and Group Executive Committee. The Board <br>undertook a voluntary session on the evolving global legal <br>landscape, highlighting financial sector responsibilities and <br>the strategic importance of embedding human rights into <br>core business practices. The training, supported by Unseen <br>UK, explored risks across operations, supply chains, lending <br>and investments, and it shared practical examples of how <br>integration strengthens resilience and integrity. This initiative <br>reinforces the Group's commitment to responsible business <br>conduct, equipping leaders to manage human rights risks and <br>supporting long-term sustainability objectives. | Modern slavery Board training<br>In 2025, the Group delivered targeted human rights and <br>modern slavery training for senior leaders, including the <br>Board and Group Executive Committee. The Board <br>undertook a voluntary session on the evolving global legal <br>landscape, highlighting financial sector responsibilities and <br>the strategic importance of embedding human rights into <br>core business practices. The training, supported by Unseen <br>UK, explored risks across operations, supply chains, lending <br>and investments, and it shared practical examples of how <br>integration strengthens resilience and integrity. This initiative <br>reinforces the Group's commitment to responsible business <br>conduct, equipping leaders to manage human rights risks and <br>supporting long-term sustainability objectives. | Modern slavery Board training<br>In 2025, the Group delivered targeted human rights and <br>modern slavery training for senior leaders, including the <br>Board and Group Executive Committee. The Board <br>undertook a voluntary session on the evolving global legal <br>landscape, highlighting financial sector responsibilities and <br>the strategic importance of embedding human rights into <br>core business practices. The training, supported by Unseen <br>UK, explored risks across operations, supply chains, lending <br>and investments, and it shared practical examples of how <br>integration strengthens resilience and integrity. This initiative <br>reinforces the Group's commitment to responsible business <br>conduct, equipping leaders to manage human rights risks and <br>supporting long-term sustainability objectives. |
| Modern slavery Board training<br>In 2025, the Group delivered targeted human rights and <br>modern slavery training for senior leaders, including the <br>Board and Group Executive Committee. The Board <br>undertook a voluntary session on the evolving global legal <br>landscape, highlighting financial sector responsibilities and <br>the strategic importance of embedding human rights into <br>core business practices. The training, supported by Unseen <br>UK, explored risks across operations, supply chains, lending <br>and investments, and it shared practical examples of how <br>integration strengthens resilience and integrity. This initiative <br>reinforces the Group's commitment to responsible business <br>conduct, equipping leaders to manage human rights risks and <br>supporting long-term sustainability objectives. | Modern slavery Board training<br>In 2025, the Group delivered targeted human rights and <br>modern slavery training for senior leaders, including the <br>Board and Group Executive Committee. The Board <br>undertook a voluntary session on the evolving global legal <br>landscape, highlighting financial sector responsibilities and <br>the strategic importance of embedding human rights into <br>core business practices. The training, supported by Unseen <br>UK, explored risks across operations, supply chains, lending <br>and investments, and it shared practical examples of how <br>integration strengthens resilience and integrity. This initiative <br>reinforces the Group's commitment to responsible business <br>conduct, equipping leaders to manage human rights risks and <br>supporting long-term sustainability objectives. | Modern slavery Board training<br>In 2025, the Group delivered targeted human rights and <br>modern slavery training for senior leaders, including the <br>Board and Group Executive Committee. The Board <br>undertook a voluntary session on the evolving global legal <br>landscape, highlighting financial sector responsibilities and <br>the strategic importance of embedding human rights into <br>core business practices. The training, supported by Unseen <br>UK, explored risks across operations, supply chains, lending <br>and investments, and it shared practical examples of how <br>integration strengthens resilience and integrity. This initiative <br>reinforces the Group's commitment to responsible business <br>conduct, equipping leaders to manage human rights risks and <br>supporting long-term sustainability objectives. |

---

![Gov_SustainabilityGov_ModernSlaveryBox.gif](lyg-20251231_g231.gif)

**Group Executive Committee governance**

Climate considerations form part of our planning and forecasting

activities. This includes forecasting of our Bank financed emissions

to 2030 for our high-carbon-intensive sectors. These emissions

forecasts are included as part of our operating plan process, shared

with the Group Executive Committee and the Board.

**Business and functional level** 

Executive-level governance of sustainability risk is supported by

existing governance structures across our divisions that are used

to oversee decisions related to sustainability risk that impact

the divisions, ensuring sustainability risks are managed as part

of regular activity.

---

| | |
|:---|:---|
| **Key sustainability topics discussed at the Board's Committee meetings in 2025** | **Key sustainability topics discussed at the Board's Committee meetings in 2025** |
| Across the Group's governance structure, key areas of discussion at Board Committee level are detailed below in relation to the <br>Group's sustainability strategy, targets and approach to managing climate-related risk. These Committees meet at least quarterly <br>with sustainability matters, including climate, discussed at a number of these meetings. There were 12 specific updates given <br>to the Board in 2025 on climate-related matters. | Across the Group's governance structure, key areas of discussion at Board Committee level are detailed below in relation to the <br>Group's sustainability strategy, targets and approach to managing climate-related risk. These Committees meet at least quarterly <br>with sustainability matters, including climate, discussed at a number of these meetings. There were 12 specific updates given <br>to the Board in 2025 on climate-related matters. |
| **Lloyds Banking Group plc Board** | **Lloyds Banking Group plc Board** |
| **Committee** | **Sustainability topics discussed** |
| Responsible <br>Business <br>Committee <br>See the Responsible <br>Business Committee <br>report on **page [97](#i3eaa7a3e529a46b3b97a88e05ad474bc_355)**<br>| •The Committee recommended to the Board the Group's updated Consumer Lending Sustainable Finance <br>targets for Mortgages and Motor and restatement of the Group's operational carbon targets ahead of <br>publication of the 2024 Sustainability Report<br>•Purpose pillar deep dives on regional development, inclusion, financial empowerment and environmental <br>sustainability<br>•Monitoring progress against climate ambitions, targets, pledges and strategic levers <br>•Discussion on plans and progress across environmental sustainability strategy and our approach for nature<br>•Recommended to the Board the approval of the external sector statement, modern slavery and human <br>trafficking statement and annual Consumer Duty Board report<br>•Review of sustainable finance framework updates<br>•Review of colleague engagement strategy, feedback and outcomes<br>•Discussion on community engagement<br>|
| Board Risk <br>Committee <br>See the Board Risk <br>Committee report on <br>**pages [92](#i3eaa7a3e529a46b3b97a88e05ad474bc_352) to [96](#i750ff8a9abed43cda6121dd67a0cbdee_7-2-1-1-5233089)**<br>| •Review of the key climate risks facing the Group, including uncertainty of the transition to a low-carbon <br>economy, especially for sectors which are heavily dependent on technological development and <br>government policy <br>•Update on the PRA's expectations for managing climate-related risks, as outlined in Consultation Paper <br>10/25, noting this aligns with the Group's direction, including in relation to the development of internal <br>scenario modelling and capabilities to assess these <br>•Review of the Board climate risk appetite, while looking to ensure the Group avoids risks from potential <br>economic and social misalignment in material sectors such as homes and agriculture <br>•Wider sustainability topics included: the Group's treatment of vulnerable customers, generative AI deep <br>dive which outlined the Group's AI ethics principles and how use cases are overseen via the Data and AI <br>Ethics Committee, economic crime deep dive and key drivers of people risk and mitigating action<br>|
| Audit <br>Committee<br>See the Audit <br>Committee report on <br>**pages [88](#i3eaa7a3e529a46b3b97a88e05ad474bc_349)to [91](#i7152dff1ab6542ad939d2df1d0232c57_13794)**<br>| •Review of developments with regulations including UK Sustainability Reporting Standards, US and EU <br>regulations, including Corporate Sustainability Reporting Directive<br>•Activity to assess impacts of climate-related risks and opportunities on the financial statements including <br>quantification of impacts of climate risk on Expected Credit Loss<br>•Updates on the control environment embedded to support 2025 sustainability reporting, including <br>assurance<br>•Review of sustainability reporting approach and integrated sustainability disclosures for the Group in 2025<br>|
| Remuneration <br>Committee<br>See the Director's <br>remuneration report <br>on **pages [121](#i44b6b64cc881479188ad14875c6d34a2_1-1-1-3-5233089) and [122](#i1792a4c4b9904cb1b50f7f537afee362_1-1-1-3-5233089)**<br>| •Review and approve performance measures, weightings and targets used in the scorecards that inform <br>the remuneration of executive directors. Executive remuneration is linked to the successful delivery <br>of the Group's long-term strategy and considers measures relating to financial and non-financial <br>performance, including sustainability measures aligned to our public commitments on climate change, <br>promoting inclusion and diversity and colleague engagement<br>•Regularly discuss Group performance, including relevant headwinds/tailwinds underlying that <br>performance, in the context of both all-colleague and executive remuneration, ensuring reward <br>outcomes appropriately properly reflect overall stakeholder experience<br>|

---

![Gov_SustainabilityTopicsDiscussed.gif](lyg-20251231_g232.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Board performance

**Board performance review**

**How the Board performs and is evaluated**

The annual Board performance review provides an opportunity

to identify improvements to its effectiveness, maximise strengths

and highlight areas of further development, enabling the Board to

continuously improve its own performance and the performance of

the Group. The Board is committed to the independent evaluation

of its own performance and that of its Committees at least once

every three years, as recommended by the UK Corporate

Governance Code 2024. An externally facilitated evaluation

was conducted in 2022, with internal evaluations having been

conducted in 2023 and 2024, and therefore the Board

performance review was externally facilitated in 2025.

The Chair of the Board, with the support of the Nomination and

Governance Committee, leads the Board in considering and

responding to the review of the Board's effectiveness, which

includes a review of its Committees and individual directors.

Performance evaluation of the Chair is carried out by the

non-executive directors, led by the Senior Independent Director,

considering the views of the executive directors.

**Progress against actions from the** 

**2024 evaluation of the Board's performance**

A summary of progress against the feedback from the

2024 evaluation is set out on **page [83](#i0e26aa109821404bbb34f969046a1e20_0-1-1-1-5233089)**.

**2025 Board performance review**

The 2025 evaluation was facilitated externally by Lisa Thomas of

Independent Board Evaluation (IBE) in September and October

2025. IBE is an independent external service provider with no other

connection to the Group or any individual directors. The evaluation

took into account the findings from the 2024 evaluation as well as

an externally facilitated Board development session.

The 2025 Board performance review concluded that the Board is

highly functioning and deeply engaged. The Group intends to report

back in its next annual report on the actions taken as a result of the

evaluation. The strengths and areas for growth and continued focus

are outlined below.

![StratRep_LinkToStrategy_Key.gif](lyg-20251231_g71.gif)

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Process for 2025 performance review** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

![Gov_EvaluationTimeline.gif](lyg-20251231_g233.gif)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Appointed IBE** <br>**following a** <br>**competitive** <br>**tender process**<br>| **Evaluation** <br>**brief** <br>**provided** <br>**to IBE**<br>| **One-to-one** <br>**interviews** <br>**conducted**<br>| **Board and** <br>**Committee** <br>**meetings** <br>**observed** <br>**by IBE**<br>| **Observations** <br>**discussed** <br>**with the Group** <br>**Chair and** <br>**Committee** <br>**chairs**<br>| **Reports** <br>**presented to** <br>**the Board and** <br>**Committees** <br>**and actions** <br>**agreed**<br>|

---

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Key findings from the 2025 performance review** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

The 2025 Board performance review concluded that the Board is highly functioning and deeply engaged.

---

| | | |
|:---|:---|:---|
| **Theme and link to strategy** | **Strengths** | **Areas for improvement/continued focus** |
| Board composition, <br>skills and relevance<br><sup>Grow</sup>![GrowIcon.gif](lyg-20251231_g4.gif)<br>| •The way in which the Group Chair orchestrates <br>meetings and continues to deliver Board <br>improvement<br>•Executive directors who model transparency and <br>collaboration and are considered exceptional <br>leaders for the business<br>•The quality and rigour demonstrated in the process <br>for selecting new Board members<br>| •Continue to consider Board skills against future needs <br>of the Group, focusing on the next two to five years<br>•Take a more fluid approach to non-executive <br>director terms to match skills to strategy and keep <br>relevance as the bar, not a nine-year term<br>•Continue refining succession plans for the Board <br>and executive directors, ensuring ideal sequencing <br>and contingencies<br>|
| Board culture, focus, <br>engagement and <br>agenda<br><sup>Focus</sup>![FocusIcon.gif](lyg-20251231_g5.gif)<br>| •The embedding of the Group's purpose into Board <br>thinking and how that is tested<br>•The way in which the Group Chair fosters <br>relationships to sustain boardroom culture<br>•The Board's remit and accountability and the way <br>the agenda balances different stakeholder <br>interests, supported by sound values to do the <br>right thing<br>•The progressive approach to Board development<br>| •Consider Board and Committee meeting focus <br>areas and agenda shape based on materiality and <br>forward-looking matters<br>•Assess the need for additional external data or <br>input to inform Board or Committee discussions<br>•Board members to role model performance culture <br>by encouraging more in-room group discussion <br>focused on challenge and accountability<br>|
| Board governance<br><sup>Change</sup>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| •The quality of the governance overall, including <br>oversight through the rigour seen at Board <br>Committees, which are considered to be very well <br>chaired and to be effective in fulfilling their remit<br>•Decision making processes are well handled and <br>discussions well trailed<br>•The support provided by the Corporate <br>Governance team<br>| •Implement short-form Board papers to support <br>the Board's focus on key areas <br>•Continue to shape Board materials to ensure a <br>balanced and relevant mix of content, including <br>useful external perspectives<br>•Consider further development of individualised <br>induction and education plans, with dedicated <br>budgets if needed<br>|

---

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Progress against the 2024 evaluation** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

The main focus in improvements to Board effectiveness in 2025 has centred around bringing in more external perspectives to facilitate

insightful Board discussions and continuing to address the rapidly evolving external environment through the strategy. The Board also

focused on driving the implementation of cultural change across the organisation to deliver the right outcomes, as well as Board

recruitment and development.

---

| | | |
|:---|:---|:---|
| **Theme and link to strategy** | **Feedback from the 2024 evaluation** | **Actions taken in 2025** |
| Board leadership <br>and contribution<br><sup>Grow</sup>![GrowIcon.gif](lyg-20251231_g4.gif)<br>| •Explore opportunities to increase external <br>perspectives and time for informal discussions to <br>take place outside of Board meetings, enhancing <br>the richness of content and views<br>•Continue to consider Board composition and focus <br>on skills required for future Board recruitment<br>| •Opportunities to share external perspectives and <br>engagement with the Board in a variety of formal <br>and informal settings, including meetings, offsites <br>and dinners covering such topics as private credit, <br>geopolitical developments and market insights<br>•Board composition and skills reviewed by the <br>Nomination and Governance Committee, with <br>priority skills for recruitment identified. The Board's <br>breadth of skills was enhanced through the <br>appointment of Chris Vogelzang in June 2025<br>•Engaged Spencer Stuart to facilitate a Board <br>development session involving a strategic <br>discussion on digital assets in December 2025, <br>building on the successful session delivered in <br>November 2024<br>|
| Risk and control<br><sup>Focus</sup>![FocusIcon.gif](lyg-20251231_g5.gif)<br>| •Continue to enhance the quality of materials <br>to the Board to ensure they highlight the key <br>messages, risks, challenges and expected outcomes <br>so as to optimise the efficiency of meetings<br>•Expand the extent to which presentations <br>demonstrate iterative thinking as well as <br>lessons learned<br>| •Following input from a wide variety of <br>stakeholders, the Board paper template, guidance <br>and training programme were reviewed. This <br>guidance sets out the requirement for stakeholders <br>to consider potential risks, how they will be <br>addressed and that executives' priorities are to be <br>presented for discussion in a structured and <br>consistent format<br>•There was focus on the quality control of Board <br>papers through ongoing guidance and training <br>provided to stakeholders by the Corporate <br>Governance team throughout the year<br>•Board meetings provided time for Committee <br>Chairs to highlight constructive challenge, feedback <br>and outcomes from Committee meetings<br>•Iterative thinking was demonstrated through <br>management's presentation of early views on <br>a number of topics, such as the strategic vision <br>beyond 2026<br>|
| Strategy<br><sup>Change</sup>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| •Continued focus on both the opportunities <br>and threats resulting from a fast-evolving <br>external environment <br>•Ensure customer and colleague perspectives <br>and insights shared with the Board are presented <br>in a comprehensive way, including as part of <br>the strategy<br>| •The Board has spent dedicated time on a range of <br>fast-changing topics both at Board meetings and at <br>the strategy offsite meetings in June and November. <br>Topics included business unit strategy and <br>competitive landscape, the fast-evolving external <br>environment and its reputational, geopolitical and <br>economic implications and data, digital assets, <br>technology and use of artificial intelligence<br>•The Board regularly received updates on customer <br>and colleague perspectives during the year, <br>including as part of strategy updates. The new <br>Board paper template also reminds stakeholders <br>to consider both customer and colleague impacts <br>in their papers<br>|
| People, culture <br>and environment<br><sup>Change</sup>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| •The Board to support and challenge management <br>further on the implementation of cultural <br>change throughout the organisation to deliver <br>the right outcomes<br>| •There were regular updates to the Board and <br>relevant Committees from the People and Places <br>function to understand colleague views and <br>progress of the cultural transformation agenda<br>•The Board had the opportunity to continue to <br>develop a deeper understanding of customer <br>and colleague views through various activities, <br>including engagement and events at offsites <br>and participation in the 'Closer to Customers, <br>Clients and Colleagues' programme<br>|

---

![Governance_AuditRiskIntControl.gif](lyg-20251231_g234.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Internal control

**Internal control**

**Board responsibility**

The Board is responsible for, and monitors, the Lloyds Banking

Group Risk Management Framework (LBG RMF) and internal

control framework. The LBG RMF and internal control framework

is designed to facilitate effective and efficient operations and to

ensure the quality and integrity of internal and external reporting

and compliance with applicable laws and regulations. It is also

used to assist the Board in determining the nature and extent of

the principal risks the Group is willing to take to achieve its strategy,

and in putting in place appropriate controls to maintain those

risks within the Group's risk appetite. The directors and senior

management are committed to maintaining a robust control

framework as the foundation for the delivery of effective risk

management. The directors acknowledge their responsibilities

in relation to LBG's RMF and internal control framework,

and for reviewing its effectiveness.

In establishing and reviewing the LBG RMF and internal control

framework, the directors carried out a robust assessment of the

emerging and principal risks facing the Group, including those that

might threaten its business model, future performance, solvency

or liquidity and reputation, the potential impact and likelihood of

a risk event occurring, the timescale over which risk events might

occur and the costs of control. The process for identification,

evaluation and management of the emerging and principal risks

faced by the Group is integrated into the Group's overall enterprise

framework for risk and is designed to also identify whether the

controls in place result in an acceptable level of risk. At Group level,

the Enterprise-Wide Risk Management (EWRM) report and risk

appetite dashboard are reviewed and regularly debated by the

Group Risk Committee and the Board Risk Committee, with formal

updates provided by those committees to the Board to ensure that

the Board is satisfied with the overall risk profile, risk

accountabilities and mitigating actions. The report and dashboard

together provide a view of the Group's overall risk profile, key risks

and management actions, together with performance against risk

appetite and an overview of emerging risks which could affect the

Group's performance over the life of the operating plan. Information

regarding the main features of the internal control and risk

management systems in relation to the financial reporting process

---

| |
|:---|
| **Audit and Risk Committee Forum for non-executive directors** |
| The audit and risk committee Forum is now an established <br>annual event in the Board calendar and was most recently held <br>in November 2025. Members of the Group, Insurance and Lloyds <br>Bank Corporate Markets audit committees and board risk <br>committees as well as colleagues from the business attended. <br>The aims of this informal forum are to have interactive <br>discussion to gain a shared understanding and appreciation <br>of common areas of interest. The topics discussed were:<br>•the Group's approach to complying with provision 29 of the <br>UK Corporate Governance Code 2024, which relates to the <br>effectiveness of material controls<br>•Political and economic environments and future implications <br>for the Group<br>•AI: use and opportunities across Audit, Risk and Finance <br>and views of associated risks |
| The audit and risk committee Forum is now an established <br>annual event in the Board calendar and was most recently held <br>in November 2025. Members of the Group, Insurance and Lloyds <br>Bank Corporate Markets audit committees and board risk <br>committees as well as colleagues from the business attended. <br>The aims of this informal forum are to have interactive <br>discussion to gain a shared understanding and appreciation <br>of common areas of interest. The topics discussed were:<br>•the Group's approach to complying with provision 29 of the <br>UK Corporate Governance Code 2024, which relates to the <br>effectiveness of material controls<br>•Political and economic environments and future implications <br>for the Group<br>•AI: use and opportunities across Audit, Risk and Finance <br>and views of associated risks |

---

is provided within the risk management report on**pages [138](#i3eaa7a3e529a46b3b97a88e05ad474bc_502) to [197](#ie6d562362828442c9d9e501f05837616_14795)**.

The LBG RMF is currently being refreshed and the revised design

will cover risk management for the entirety of the Group whilst

providing sufficient flexibility to allow for legal entity and local

jurisdiction requirements.

**Control effectiveness review**

All material controls are reviewed and assessed in response to

material triggers. Control assessments consider both the adequacy

of their design and operating effectiveness. In the event a control

is not effective, action plans are implemented to improve control

design or performance. Control effectiveness against all residual

risks is aggregated by risk category, monitored and reported via the

monthly EWRM report. The EWRM report is produced by the EWRM

team and reviewed and challenged by the Risk Function Executive

Committee and Group Risk Committee. On an annual basis, a point-

in-time assessment is made for control effectiveness against each risk

category and across the sub-groups. The Operational Risk System,

Key Risk Insights or EWRM are the sources used for this point-in-time

assessment and a year-on-year comparison on control effectiveness

is reported to the Board Risk Committee and the Board.

**Reviews by the Board**

The effectiveness of the LBG RMF and internal control framework is

reviewed at least annually by the Board, the Board Risk Committee

and the Audit Committee, which also receive reports of reviews

undertaken by the Risk Function and Group Audit.

The Audit Committee receives reports from the Group's external

auditor, Deloitte LLP (which include details of significant internal

control matters that they have identified) and has a discussion

with the auditor at least once a year without executives present,

to ensure that there are no unresolved issues of concern. The

Group's risk management and internal control systems are regularly

reviewed by the Board Risk Committee and the Board and are

consistent with the Corporate Governance Code Guidance on

Audit, Risk, and Internal Control issued by the Financial Reporting

Council. There is also an annual independent Control Effectiveness

review by Group Audit which is reviewed by the Board Risk

Committee and Audit Committee. These reports have confirmed

appropriate risk and internal control systems have been in place

for principal risks in the year under review and up to the date of

the approval of the annual report. The Group, Ring-Fenced Bank

sub-group and Lloyds Bank Corporate Markets have achieved full

compliance with BCBS 239 risk data aggregation and risk reporting

requirements, and actively continue to maintain this status.

Throughout the year both the Board Risk Committee and Audit

Committee have reviewed and approved proposals from the

Executive in relation to our preparations to comply with the

updated requirements of Provision 29 of the FRC's UK Corporate

Governance Code 2024, relating to our approach to identifying and

reporting on the effectiveness of material controls ahead of

implementation from our financial year that began on 1 January

2026. **Conclusion**

The 2025 LBG RMF and internal control framework review provides

reasonable assurance that the Group's risks and controls are

effective or that where any control weaknesses are identified, they

are subject to management oversight and action plans.

The Board in conjunction with the Audit Committee and the Board

Risk Committee concluded that the Group's risk management

arrangements throughout 2025 were adequate overall. The Board

is confident that the continuous improvements underway will

ensure that the Group's risk management arrangements will remain

sufficiently robust to meet developing risk management best

practice for the future, including assessing, and making a declaration

of, effectiveness of material controls.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Nomination and Governance Committee report

**Sir Robin** 

**Budenberg**

Chair, Nomination

and Governance

Committee

![ImageBlock_RobinBudenberg.gif](lyg-20251231_g15.gif)

![ImageBlock_ReadFullBiog_QRCode_Only.gif](lyg-20251231_g16.gif)

Read full biography ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>

**Effective succession planning and** 

**ongoing development of Board** 

**members ensure the Board retains** 

**a diverse mix of skills, qualities** 

**and strengths.** 

---

| |
|:---|
| **Key activities in 2025** |
| •Board and senior executive succession planning<br>•Board and Committee composition, skills and training <br>•Board performance review outcomes<br>•Shareholder relations<br>•Corporate governance framework review<br>•Subsidiary governance<br>•Board Inclusion Policy<br>|

---

![KeylineBox_NomComm_KeyActivities.gif](lyg-20251231_g235.gif)

---

| | |
|:---|:---|
| **Membership and attendance at scheduled meetings** | **Membership and attendance at scheduled meetings** |
| Sir Robin Budenberg (Committee Chair) | **5/5** |
| Amanda Mackenzie | **5/5** |
| Cathy Turner | **5/5** |
| Scott Wheway | **4/4**<sup>1</sup> |
| 1Scott Wheway stepped down from the Committee on 31 October 2025.<br>**Other attendees**<br>Nigel Hinshelwood, the Senior Independent Director of the <br>Ring-Fenced Banks, attends meetings as an observer to provide <br>insight on the Ring-Fenced Banks when required. The Group <br>Chief Executive also attends as appropriate. | 1Scott Wheway stepped down from the Committee on 31 October 2025.<br>**Other attendees**<br>Nigel Hinshelwood, the Senior Independent Director of the <br>Ring-Fenced Banks, attends meetings as an observer to provide <br>insight on the Ring-Fenced Banks when required. The Group <br>Chief Executive also attends as appropriate. |

---

![KeylineBox_NomComm_Membership.gif](lyg-20251231_g236.gif)

---

| | | |
|:---|:---|:---|
| **Read more** | **Read more** | **Read more** |
| **Skills and experience**  | **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#ic21ecd5abeee42fba0245379e7aec046_4520)** | **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#ic21ecd5abeee42fba0245379e7aec046_4520)** |
| **Board composition** | **page [70](#i3eaa7a3e529a46b3b97a88e05ad474bc_304)** | **page [70](#i3eaa7a3e529a46b3b97a88e05ad474bc_304)** |
| Responsibilities (and its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | Responsibilities (and its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | **page [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313)** |
| Board performance review | **pages [82](#i3eaa7a3e529a46b3b97a88e05ad474bc_340) to [83](#i0e26aa109821404bbb34f969046a1e20_0-1-1-1-5233089)** | **pages [82](#i3eaa7a3e529a46b3b97a88e05ad474bc_340) to [83](#i0e26aa109821404bbb34f969046a1e20_0-1-1-1-5233089)** |

---

![KeylineBox_NomComm_ReadMore.gif](lyg-20251231_g237.gif)

**Introduction**

During 2025, the Committee continued to focus on succession

planning at both Board and executive level, playing a key role in

the composition and diversity of the Board. The Committee also

focused on training and development of Board members and on

Board performance, including implementation of actions arising

from the 2024 Board evaluation process and the outcome of the

2025 externally facilitated Board performance review. These areas

and the Committee's other key activities are covered in more detail

in this report.

**Board and Committee changes**

Scott Wheway retired from the Board with effect from 31 October

2025. The Board is grateful for the contribution Scott made to the

Group and for the leadership and commercial acumen he brought

to the Board and in his role as Chair of Scottish Widows Group.

As part of the Committee's strategic recruitment for core skills,

Chris Vogelzang was appointed as a non-executive director and

as a member of the Responsible Business Committee with effect from

16 June 2025 to supplement the Board's existing retail and commercial

banking experience. Details of the selection process for Chris's

appointment can be found below.Chris will be appointed as a

member of the Board Risk Committee with effect from 1 April 2026.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Appointment process – non-executive directors** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | The Committee oversees the process for appointing non-<br>executive directors, providing recommendations to the Board <br>for the selection of a preferred candidate. In early 2025, the <br>Committee initiated a search to recruit for an additional non-<br>executive director based on a role specification which included <br>retail and commercial banking experience. <br>The search involved open advertising as well as the <br>appointment of Spencer Stuart, an executive search and <br>leadership consulting firm. The search process resulted in a <br>shortlist of potential candidates, who were interviewed by the <br>Chair and other non-executive directors. Further interviews <br>were then conducted with preferred candidates. Following this, <br>a recommendation was made to the Committee and, in turn, <br>the Committee recommended to the Board Chris Vogelzang's <br>appointment as a non-executive director. This formal, rigorous <br>and transparent appointment process was based on merit <br>and objective criteria and sought to promote diversity, inclusion <br>and equal opportunity by considering a broad range of factors <br>including gender balance, social and ethnic backgrounds, <br>cognitive and personal strengths and the Group's future <br>strategic direction. <br>Spencer Stuart, who were engaged in the recruitment that led <br>to Chris Vogelzang's appointment, have no connection with the <br>Group or individual directors other than providing leadership <br>search and succession planning services and facilitating Board <br>development sessions. |  |
|  | The Committee oversees the process for appointing non-<br>executive directors, providing recommendations to the Board <br>for the selection of a preferred candidate. In early 2025, the <br>Committee initiated a search to recruit for an additional non-<br>executive director based on a role specification which included <br>retail and commercial banking experience. <br>The search involved open advertising as well as the <br>appointment of Spencer Stuart, an executive search and <br>leadership consulting firm. The search process resulted in a <br>shortlist of potential candidates, who were interviewed by the <br>Chair and other non-executive directors. Further interviews <br>were then conducted with preferred candidates. Following this, <br>a recommendation was made to the Committee and, in turn, <br>the Committee recommended to the Board Chris Vogelzang's <br>appointment as a non-executive director. This formal, rigorous <br>and transparent appointment process was based on merit <br>and objective criteria and sought to promote diversity, inclusion <br>and equal opportunity by considering a broad range of factors <br>including gender balance, social and ethnic backgrounds, <br>cognitive and personal strengths and the Group's future <br>strategic direction. <br>Spencer Stuart, who were engaged in the recruitment that led <br>to Chris Vogelzang's appointment, have no connection with the <br>Group or individual directors other than providing leadership <br>search and succession planning services and facilitating Board <br>development sessions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**Board and Committee performance review**

This year, in line with the UK Corporate Governance Code's

recommendation of an externally facilitated Board performance

review every three years, the performance of the Board was

reviewed by an external board review specialist, Lisa Thomas

of Independent Board Evaluation. The Committee considered

the outcomes of Lisa Thomas's review, including those

outcomes specific to the Committee, agreed the action plan and

recommended it to the Board for approval. Details of the review,

its outcomes and the action plan are provided on **page [82](#i3eaa7a3e529a46b3b97a88e05ad474bc_340).**

The Committee subsequently undertook an annual review of its

own performance, the findings of which were considered by the

Committee at its January 2026 meeting with the conclusion reached

that the performance of the Committee continues to be effective.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Nomination and Governance Committee report continued

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Succession planning** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | Succession planning, at both Board level and across key senior <br>management roles, remained a core area of focus for the <br>Committee during 2025. Effective succession planning assists <br>the Group in delivering on its long-term strategic objectives by <br>ensuring the desired mix of knowledge, skills, experience and <br>diversity of Board members and executives.<br>**Board succession planning**<br>The Committee supports the Chair in reviewing the composition <br>of the Board and its Committees with attention given to the <br>skills, diversity and tenure of members. The Committee gives <br>consideration to further non-executive representation on the <br>Board, keeping in view the current and future needs of the <br>business. The promotion of inclusivity in gender, ethnicity, <br>background and thought, as well as the outcomes of <br>performance reviews, are also considered.<br>A Board skills matrix, a summary of which is on **page [70](#i3eaa7a3e529a46b3b97a88e05ad474bc_304)**, <br>assists the Committee in tracking individual member and Group <br>strengths and identifying any gaps in the desired collective skills <br>profile of the Board. As discussed on the prior page in relation <br>to the appointment process, the Committee identified the <br>desire for enhanced retail and commercial banking experience <br>on the Board, resulting in the recruitment of Chris Vogelzang. <br>The Committee has also identified the need for additional <br>consumer, digital and insurance experience resulting in ongoing <br>recruitment processes to address those needs.<br>A search for Scott Wheway's successor as a non-executive <br>director of the Company and Chair of Scottish Widows Group <br>was initiated following announcement of Scott's decision <br>to retire from the Group. The Committee reviewed the draft <br>role specification at its meeting in November 2025 as part <br>of the search.<br>As part of the Committee's formal succession planning <br>approach, the Committee reviewed the rotation-based <br>recruitment activity timetable, emergency cover plans and <br>Board Succession Protocol (including the Emergency Succession <br>Protocol for the Chair), with the aim of facilitating orderly <br>transitions and mitigating risks from unexpected departures.<br>**Executive succession planning**<br>At an executive level, the Chair is responsible for developing and <br>maintaining a succession plan for the Group Chief Executive <br>who is, in turn, primarily responsible for developing and <br>maintaining succession plans for key leadership positions in the <br>senior executive team. As part of its oversight of succession <br>planning for executive directors and members of the senior <br>executive team, the Committee received and discussed regular <br>updates from the Group Chief Executive covering executive <br>succession arrangements. These discussions demonstrated the <br>continuing effectiveness of the Group's approach to executive <br>succession planning, whereby the Board recognises the <br>importance of the ongoing development of a diverse pipeline <br>of current and future leaders across the Group's executive and <br>management levels. This is supported by a range of policies <br>across the Group which promote the engagement of under-<br>represented groups within the business to help continue to <br>build a diverse talent pipeline. Further details can be found <br>on **page [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61)**. |  |
|  | Succession planning, at both Board level and across key senior <br>management roles, remained a core area of focus for the <br>Committee during 2025. Effective succession planning assists <br>the Group in delivering on its long-term strategic objectives by <br>ensuring the desired mix of knowledge, skills, experience and <br>diversity of Board members and executives.<br>**Board succession planning**<br>The Committee supports the Chair in reviewing the composition <br>of the Board and its Committees with attention given to the <br>skills, diversity and tenure of members. The Committee gives <br>consideration to further non-executive representation on the <br>Board, keeping in view the current and future needs of the <br>business. The promotion of inclusivity in gender, ethnicity, <br>background and thought, as well as the outcomes of <br>performance reviews, are also considered.<br>A Board skills matrix, a summary of which is on **page [70](#i3eaa7a3e529a46b3b97a88e05ad474bc_304)**, <br>assists the Committee in tracking individual member and Group <br>strengths and identifying any gaps in the desired collective skills <br>profile of the Board. As discussed on the prior page in relation <br>to the appointment process, the Committee identified the <br>desire for enhanced retail and commercial banking experience <br>on the Board, resulting in the recruitment of Chris Vogelzang. <br>The Committee has also identified the need for additional <br>consumer, digital and insurance experience resulting in ongoing <br>recruitment processes to address those needs.<br>A search for Scott Wheway's successor as a non-executive <br>director of the Company and Chair of Scottish Widows Group <br>was initiated following announcement of Scott's decision <br>to retire from the Group. The Committee reviewed the draft <br>role specification at its meeting in November 2025 as part <br>of the search.<br>As part of the Committee's formal succession planning <br>approach, the Committee reviewed the rotation-based <br>recruitment activity timetable, emergency cover plans and <br>Board Succession Protocol (including the Emergency Succession <br>Protocol for the Chair), with the aim of facilitating orderly <br>transitions and mitigating risks from unexpected departures.<br>**Executive succession planning**<br>At an executive level, the Chair is responsible for developing and <br>maintaining a succession plan for the Group Chief Executive <br>who is, in turn, primarily responsible for developing and <br>maintaining succession plans for key leadership positions in the <br>senior executive team. As part of its oversight of succession <br>planning for executive directors and members of the senior <br>executive team, the Committee received and discussed regular <br>updates from the Group Chief Executive covering executive <br>succession arrangements. These discussions demonstrated the <br>continuing effectiveness of the Group's approach to executive <br>succession planning, whereby the Board recognises the <br>importance of the ongoing development of a diverse pipeline <br>of current and future leaders across the Group's executive and <br>management levels. This is supported by a range of policies <br>across the Group which promote the engagement of under-<br>represented groups within the business to help continue to <br>build a diverse talent pipeline. Further details can be found <br>on **page [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61)**. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**Independence**

The Nomination and Governance Committee monitors whether

there are any relationships or circumstances which may affect a

director's independence. Based on its assessment for 2025, the

Committee is satisfied that, throughout the year, all non-executive

directors remained independent<sup>1</sup> in character and judgement and

are independent directors for the purposes of the Code.

**Time commitments**

Non-executive directors are advised of time commitments for the

Board and relevant Committees prior to their appointment and are

required to devote such time as is necessary to discharge their

duties effectively. The time commitments of the directors are

considered by the Board on appointment and annually thereafter.

The outcome of the most recent review was that the Board is

satisfied that there are no directors whose time commitments are

considered to be a matter for concern.

Directors are asked to agree new external appointments, which may

affect existing time commitments to the Board and its Committees,

with the Chair and to seek Board approval before the proposed

start date. During 2025, Harmeen Mehta was appointed as the

Chief Digital and Innovation Officer of Equinix and Nathan Bostock

accepted the role of non-executive director and chair designate of

Jupiter Fund Management plc with effect from 1 March 2026 and,

subject to regulatory approval, will take on the role of Chair of that

company with effect from 1 April 2026. The Committee and the

Board considered the time commitments and potential conflicts

involved prior to Harmeen and Nathan accepting their respective

roles and were satisfied that they would both continue to have

sufficient time to commit to their Board appointments. Following

recommendation from the Committee, the Board approved the

two additional appointments.

In recommending directors for election and/or re-election at the

annual general meeting, the Committee has reviewed the

performance of each non-executive director and his/her ability to

continue meeting the time commitments required. This takes into

consideration individual capabilities, skills and experiences and any

potential conflicts of interest that have been disclosed. The external

roles held by all directors were considered to be appropriate. Details

of the Board process in relation to actual and potential conflicts of

interest can be found on**page [134](#i3eaa7a3e529a46b3b97a88e05ad474bc_496)**.

**The Group's Corporate Governance Framework**

The Group's Corporate Governance Framework is reviewed each

year and efforts are made to continue to simplify and improve the

framework. In February 2025, the Committee considered changes

to reflect the UK Corporate Governance Code 2024 and also a

significant updating of the content to provide a more proportionate

and user-friendly governance approach and to facilitate more

effective decision making throughout the Group. The current review

of the Group's Corporate Governance Framework is in progress and

will build on the simplification made as part of the 2025 review.

**Subsidiary governance**

The Committee considered changes to the Group's subsidiary

governance framework, which focused on proportionate

governance and simplification. The Committee also considered the

governance of Lloyds Bank GmbH in the context of chair succession

for that company.

The Committee approved the list of the Group's material

subsidiaries and the appointment of a number of individuals to the

boards of those subsidiaries including to the Scottish Widows Group

Limited and Lloyds Bank Corporate Markets plc boards.

**Shareholder relations and** 

**corporate governance developments** 

The Committee considered the Group's engagement with

shareholders, key investor focus areas and correspondence with

shareholders on governance issues.

As part of its broader governance responsibilities, the Committee

considered updates on developments in corporate governance

during the year. This included reviewing and considering aspects

of the implementation of the Economic Crime and Corporate

Transparency Act and legislative changes to reduce the corporate

reporting burden on companies.

1The Chair was independent on appointment. Under the Code, thereafter the test of

independence is not appropriate in relation to the Chair.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

![Gov_NomCo_TrainingAndDevlopment.gif](lyg-20251231_g238.gif)

---

| |
|:---|
| **Training and development** |
| To ensure the Board remains effective and able to continue to <br>support the delivery of our strategy, it is essential that directors <br>stay informed about recent and upcoming developments and <br>maintain up-to-date knowledge and skills. <br>The Board continued to focus on its development throughout <br>the year with external insight and training sessions offered <br>across a range of topics which complement the Board agenda, <br>examples of which are set out below. In addition to the below <br>topics, there was mandatory training, including on Speak Up <br>(the Group's whistleblowing programme) and on the Financial <br>Conduct Authority's Conduct Rules. <br>At its meetings in November 2025 and January 2026, the <br>Committee looked back at the 2025 Board training plan and <br>also considered the learnings from the external Board <br>performance review to help inform the 2026 training schedule. <br>The Committee discussed priority areas and topics for Board <br>training as well as what types of external inputs and stimulus <br>would be most useful for Board members. |
| Q1 2025<br>•Generative AI: maximising opportunities <br>while navigating the complexities around <br>governance and risk<br>|
| Q2 2025<br>•Resolution and recovery plan<br>•Private credit<br>•Geopolitical global developments<br>|
| Q3 2025<br>•Environmental markets<br>•Model risk<br>•FCA redress schemes<br>|
| Q4 2025<br>•Operational resilience (including cyber security risk) <br>and third party implications<br>•Modern slavery and human rights – read more on <br>**page [81](#id19831f1c7ee483b90f0a17ae49748eb_3-1-2-4-5233089)**<br>•Digital assets<br>|

---

---

| | | |
|:---|:---|:---|
| **Exceeded or met the UK Listing Rules targets**<sup>1</sup> | **Exceeded or met the UK Listing Rules targets**<sup>1</sup> | **Exceeded or met the UK Listing Rules targets**<sup>1</sup> |
| **50%** <br>**of the board** <br>**being women**<br>| **One** <br>**of the senior** <br>**board positions** <br>**being held by** <br>**a woman**<sup>2</sup><br>| **Two** <br>**members of the** <br>**board being from** <br>**a minority ethnic** <br>**background**<br>|
| 1 UK Listing Rule 6.6.6(9) targets are at least 40% and, for the latter two targets, <br>at least one. Data as at 31 December 2025 and remains correct as at the date of <br>publication of the annual report.<br>2 Cathy Turner is the Senior Independent Director.  | 1 UK Listing Rule 6.6.6(9) targets are at least 40% and, for the latter two targets, <br>at least one. Data as at 31 December 2025 and remains correct as at the date of <br>publication of the annual report.<br>2 Cathy Turner is the Senior Independent Director.  | 1 UK Listing Rule 6.6.6(9) targets are at least 40% and, for the latter two targets, <br>at least one. Data as at 31 December 2025 and remains correct as at the date of <br>publication of the annual report.<br>2 Cathy Turner is the Senior Independent Director.  |

---

**Board Inclusion Policy**

The Board Inclusion Policy (the Policy) sets out the Board's

approach to diversity and inclusion and provides a high-level

indication of the Board's approach to this in respect of senior

management roles. This is governed in greater detail through the

Group's policies. A copy of the Policy is available on the

sustainability page on our website.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

The Board places great emphasis on ensuring that its membership

reflects inclusion in its broadest sense. Consideration is given to

the combination of diversity demographics, skills, experience,

educational, socio-economic and professional background and

other relevant personal attributes on the Board to provide the range

of perspectives, insights and challenge needed to support good

decision making.

In order to achieve a broad representation of diversity, the Board

ensures inclusive appointment practices and promotes equal

opportunities. New appointments and succession plans are made

on merit, taking account of the specific skills and experience,

independence and knowledge needed to ensure a rounded Board

and the diverse benefits each candidate can bring to the overall

Board composition.

Objectives for achieving an inclusive Board are reviewed on a regular

basis. On gender balance, the Board is committed to maintaining

at least four women Board members and aspires to maintain 45 to

55% female representation on their Boards, higher than the FTSE

Women Leaders recommendation of 40%, while recognising the

limited numbers involved. The representation of women on the

Board is currently 50%. On ethnicity, the Board is committed to

meeting the Parker Review recommendation of having at least one

Black, Asian or Minority Ethnic Board member.

Currently, the Policy is not applied to Board Committees

individually because of their small membership, although the Board

strives to apply similar representation across the Committees. Four

of the five Board Committees are chaired by women. The Board

is comfortable that the diversity of the Board is reflected across

Committee memberships and that this remains an ongoing

consideration. As at 31 December 2025, the Group meets all three

board diversity targets specified under UK Listing Rule 6.6.6(9) –

read more at the bottom of this page. Further information disclosed

in accordance with UK Listing Rule 6.6.6(9), (10) and (11) can be

found on **page [136](#ib3569b81c6bb477f828633c1cfc09e16_16514).** The gender balance of the Group's senior

management and their direct reports can be found on on **page [23](#id5a09873a2b64b69bddd405c4c5c041e_1-2-1-1-5233089)**.

The Board places high emphasis on not only its own diversity but on

the oversight of the Group's inclusion approach and ambitions and

is kept updated on progress. Any material changes to the Group's

inclusion approach are approved by the Group Executive

Committee, reviewed by the Responsible Business Committee

and approved at Board level. This includes material changes in

the Group's inclusion ambitions and supporting plans. The Group's

policies are subject to local laws and regulations and the aspirations

identified in the fourth paragraph above reflect targets set out in

the UK Listing Rules LR6.6.6(9).

Further information on the current approach to the Group's

inclusion ambitions, progress and performance can be found

on **pages [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) to [23](#id5a09873a2b64b69bddd405c4c5c041e_1-2-1-1-5233089)**.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Audit Committee report

**Sarah Legg**

Chair, Audit

Committee

![ImageBlock_SarahLegg.gif](lyg-20251231_g239.gif)

![ImageBlock_ReadFullBiog_QRCode_Only.gif](lyg-20251231_g16.gif)

Read full biography ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>

**Rigorous challenge of key judgements** 

**and oversight of continuous** 

**improvement in financial reporting** 

**on an end-to-end basis.** 

---

| |
|:---|
| **Key activities in 2025** |
| •Monitoring the integrity of the financial statements and <br>non-financial (including narrative) reporting<br>•Overseeing the continuous improvement in financial and <br>regulatory reporting including associated controls<br>•Reviewing the findings of the Group Internal Audit function <br>and challenging the internal audit plan on a forward <br>looking basis<br>•Engaging with the subsidiary audit committees on their <br>activities in the year<br>|

---

![KeylineBox_AuditComm_KeyActivities.gif](lyg-20251231_g240.gif)

---

| | |
|:---|:---|
| **Membership and attendance at scheduled meetings** | **Membership and attendance at scheduled meetings** |
| Sarah Legg (Committee Chair) | **7/7** |
| Nathan Bostock | **7/7** |
| Amanda Mackenzie | **7/7** |
| Catherine Woods | **7/7** |
| **Other attendees**<br>Nigel Hinshelwood and Brendan Gilligan, the Senior <br>Independent Director and an independent non-executive <br>director respectively of the Ring-Fenced Banks, attend meetings <br>as observers to provide insight on the Ring-Fenced Banks when <br>required. The Group Chief Executive, the Chief Financial Officer, <br>the Chief Risk Officer, the Group Financial Controller, the Chief <br>Internal Auditor and the external auditor also attend meetings <br>as appropriate. While the Committee's membership comprises <br>the non-executive directors noted above, all non-executive <br>directors may attend meetings as agreed with the Chair of <br>the Committee | **Other attendees**<br>Nigel Hinshelwood and Brendan Gilligan, the Senior <br>Independent Director and an independent non-executive <br>director respectively of the Ring-Fenced Banks, attend meetings <br>as observers to provide insight on the Ring-Fenced Banks when <br>required. The Group Chief Executive, the Chief Financial Officer, <br>the Chief Risk Officer, the Group Financial Controller, the Chief <br>Internal Auditor and the external auditor also attend meetings <br>as appropriate. While the Committee's membership comprises <br>the non-executive directors noted above, all non-executive <br>directors may attend meetings as agreed with the Chair of <br>the Committee |

---

![KeylineBox_AuditComm_Membership.gif](lyg-20251231_g241.gif)

---

| | | |
|:---|:---|:---|
| **Read more** | **Read more** | **Read more** |
| Skills and experience  | **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)** | **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)** |
| Responsibilities (and its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | Responsibilities (and its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | **page [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313)** |

---

![KeylineBox_AuditComm_ReadMore.gif](lyg-20251231_g242.gif)

**Introduction**

I am pleased to report on the Committee's activities over the past

year. I thank the Committee members for their contributions and

support. The participation of Ring-Fenced Bank-only directors as

observers has provided valuable insights.

In 2025, the Committee collaborated closely with other Board

Committees, especially with the Board Risk Committee on

preparations for Provision 29 of the UK Corporate Governance

Code 2024, which relates to our approach to identifying and

reporting on the effectiveness of material controls. The joint Audit

and Risk Forum established in 2022 met again in 2025 to discuss

topics of mutual interest and consider common themes on a

forward-looking basis (read more **on page [84](#i3eaa7a3e529a46b3b97a88e05ad474bc_343))**. Looking forward to

2026, in addition to our core responsibilities, the Committee will

continue to provide rigorous challenge and monitor areas of

continuous improvement on an end-to-end basis.

**Committee purpose and responsibilities**

The Committee's purpose is to oversee the integrity of the Group's

and Company's financial and narrative reporting. It also reviews the

independence and effectiveness of the internal and external audit

functions, internal controls, the risk management framework and

whistleblowing arrangements. This includes the statutory audit of

consolidated financial statements and the independence of the

external auditor.

The Committee reports to the Board on its responsibilities and

recommendations, all of which were accepted during the year.

In satisfying its purpose, the Committee undertakes the functions

detailed within Disclosure Guidance and Transparency Rule 7.1.3R.

During the year the Committee considered a number of matters

relating to the Group's financial reporting, which are summarised

on the following pages. In addition, the Committee considered a

number of other matters not related directly to financial reporting.

These matters are discussed in detail on the final page of this report.

**Committee composition, skills,** 

**experience and operation**

The Committee operates independently of the executive to safeguard

shareholders' interests in financial reporting and internal control.

All members of the Committee are independent non-executive

directors with competence in the financial sector and their

biographies can be found on **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)**. Sarah Legg is a Fellow

of the Chartered Institute of Management Accountants and of the

Association of Corporate Treasurers, with extensive knowledge of

financial markets, treasury, risk management and international

accounting standards. She is a member having recent and relevant

financial experience for the purposes of the UK Corporate

Governance Code and is the Audit Committee financial expert

for SEC purposes.

During the course of the year, the Committee held separate sessions

with the internal and external audit teams without members of the

executive management present.

The Committee undertook an annual review of its own

performance, the findings of which, together with the outcomes

of the externally facilitated Board performance review process as

relevant to the Committee, were considered by the Committee

members with the conclusion reached that the performance of

the Committee continues to be effective.

**Audit Partner**

Mike Lloyd has been Deloitte LLP (Deloitte) lead audit partner for

the Group since Deloitte was appointed auditor for the 2021 year

end. Following completion of the audit for the year ended 31

December 2025, Ben Jackson will be the lead audit partner for the

Group, with a related transition period, supported by the

Committee.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Matters considered during 2025** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Jan** | **Feb** | **Apr** | **Jun** | **Jul** | **Oct** | **Dec** |
| **Reporting** | **Reporting** | **Reporting** | **Reporting** | **Reporting** | **Reporting** | **Reporting** |  |
| Review of external reporting <br>documents<br>| 🟇 | 🟇 | 🟇 | ⯄ | 🟇 | 🟇 | 🟇 |
| Significant accounting judgements | 🟇 | 🟇 | 🟇 | 🟇 | 🟇 | 🟇 | 🟇 |
| Going concern assumption/viability <br>statement<br>| ⯄ | 🟇 | ⯄ | ⯄ | 🟇 | ⯄ | ⯄ |
| Regulatory reporting | 🟇 | ⯄ | 🟇 | 🟇 | ⯄ | 🟇 | ⯄ |
| Sustainability-related reporting | ⯄ | 🟇 | ⯄ | 🟇 | ⯄ | 🟇 | ⯄ |
| Activities of subsidiary audit <br>committees<br>| 🟇 | 🟇 | ⯄ | ⯄ | 🟇 | 🟇 | ⯄ |
| Corporate governance and the Audit <br>and Assurance Framework<br>| ⯄ | ⯄ | 🟇 | ⯄ | ⯄ | 🟇 | ⯄ |
| **Control environment** | **Control environment** | **Control environment** | **Control environment** | **Control environment** | **Control environment** | **Control environment** |  |
| Control update <br>(including Sarbanes-Oxley)<br>| 🟇 | 🟇 | 🟇 | 🟇 | 🟇 | 🟇 | 🟇 |
| Annual review of risk management <br>framework and control effectiveness <br>review summary<br>| 🟇 | ⯄ | ⯄ | ⯄ | ⯄ | ⯄ | ⯄ |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Jan** | **Feb** | **Apr** | **Jun** | **Jul** | **Oct** | **Dec** |
| **Group Audit** | **Group Audit** | **Group Audit** | **Group Audit** | **Group Audit** | **Group Audit** | **Group Audit** |  |
| Reports from Group Audit, including <br>Speak Up (whistleblowing)<br>| 🟇 | ⯄ | 🟇 | 🟇 | 🟇 | 🟇 | 🟇 |
| **External audit** | **External audit** | **External audit** | **External audit** | **External audit** | **External audit** | **External audit** |  |
| Reports from the external auditor <br>(including external audit plan)<br>| 🟇 | 🟇 | 🟇 | 🟇 | 🟇 | 🟇 | 🟇 |
| Reappointment, remuneration, <br>non-audit services and effectiveness<br>| ⯄ | 🟇 | 🟇 | ⯄ | 🟇 | ⯄ | ⯄ |
| **Other** | **Other** | **Other** | **Other** | **Other** | **Other** | **Other** |  |
| Audit committee effectiveness review | 🟇 | ⯄ | ⯄ | ⯄ | ⯄ | 🟇 | ⯄ |
| Finance strategy and transformation | ⯄ | 🟇 | 🟇 | ⯄ | ⯄ | 🟇 | ⯄ |

---

![Calm_singleRow_2Col.gif](lyg-20251231_g243.gif)

![Calm_singleRow_2Col.gif](lyg-20251231_g243.gif)

![Calm_singleRow_2Col.gif](lyg-20251231_g243.gif)

![Calm_singleRow_2Col.gif](lyg-20251231_g243.gif)

![Calm_singleRow_2Col.gif](lyg-20251231_g243.gif)

**Financial reporting**

During the year, and in relation to the year ended 31 December 2025, the Committee considered the following issues in relation to the

Group's financial statements and disclosures, with input from management, the risk function and Group Audit.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Areas of focus** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | |
|:---|:---|:---|
|  | **Key issues** | **Committee review and conclusion** |
| **Allowance for** <br>**impairments on** <br>**loans and advances**<br>31 December 2025: <br>£3,228 million<br>31 December 2024: <br>£3,481 million<br>| The Group's impairment <br>provision is dependent on <br>management's judgements <br>on matters such as future <br>interest rates, house prices <br>and unemployment rates, as <br>well as its assessment of the <br>current financial position of <br>its customers.<br>| During the year, the Committee has reviewed the level of provision held for <br>expected credit losses (ECL) by the Group and the judgements and estimates <br>used to calculate the provision. The Committee has monitored underlying <br>credit performance trends and the evolution of the Group's economic outlook <br>and Multiple Economic Scenario (MES) approach in a year where ECL assessment <br>has needed to respond quickly and appropriately to significant domestic and <br>international events. The Committee has overseen further progress on ECL modelling <br>and the corresponding reduction in the number of judgemental adjustments for <br>model limitations where mitigated by model development.<br>Note 21 to the financial statements includes details of the Group's ECLs allowances, <br>including those resulting from judgemental adjustments (31 December 2025: <br>£224 million credit; 31 December 2024: £44 million debit). The Committee has <br>reviewed management's rationale for these provisions and has challenged whether <br>their inclusion and quantification are appropriate. It also considered management's <br>assessment of climate risk impacts on ECL and the conclusion that no adjustment <br>was required.<br>**Conclusion:** The Committee was satisfied that the impairment provision and the <br>disclosures provided in the financial statements were appropriate.<br>|
| **Uncertain tax** <br>**provisions**<br>| The Group has open tax <br>matters which require it to <br>make judgements about the <br>most likely outcome for the <br>purposes of calculating its <br>tax position.<br>| The Committee reviewed management's assessment of the Group's uncertain <br>tax positions, which took into account the views of the relevant tax authorities <br>and any external advice it received. In particular, following the conclusion of the <br>First Tier Tribunal in favour of HMRC, it considered the Group's assessment of its <br>continued likelihood of success in its claim for group relief of losses in its former <br>Irish banking subsidiary.<br>**Conclusion:** The Committee was satisfied that the provisions and disclosures made <br>in respect of uncertain tax positions were appropriate.<br>|
| **Retirement benefit** <br>**obligations**<br>31 December 2025: <br>£26,571 million<br>31 December 2024: <br>£27,118 million<br>| The value of the Group's <br>defined benefit pension plan <br>obligations is determined <br>using both financial and <br>demographic assumptions.<br>| The Committee reviewed the process used by management to determine <br>appropriate assumptions to calculate the Group's defined benefit liabilities. <br>These included the discount rate, the future rate of inflation and expected <br>mortality rates.<br>**Conclusion:** The Committee was satisfied that management had used appropriate <br>assumptions that reflected the Group's most recent experience and were consistent <br>with market data and other information.<br>|

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Audit Committee report continued

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Areas of focus** continued | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | |
|:---|:---|:---|
|  | **Key issues** | **Committee review and conclusion** |
| **Insurance liabilities** <br>**and participating** <br>**investment** <br>**contracts**<br>31 December 2025: <br>£135,284 million<br>31 December 2024: <br>£127,332 million<br>| Determining the value of the <br>Group's liabilities arising from <br>insurance and participating <br>investment contracts <br>requires management to <br>make significant estimates <br>for both economic and <br>non-economic actuarial <br>assumptions.<br>| The Committee considered updates from management and from the Group's <br>Insurance Audit Committee summarising its activities, which included a review of <br>the economic and non-economic assumptions made by management to determine <br>the carrying value of Group's liabilities arising from insurance and participating <br>investment contracts. The assumptions discussed were in respect of maintenance <br>expenses, investment expenses allowance, lapse and paid-up assumptions on <br>Workplace business and updated mortality projections.<br>**Conclusion:** The Committee was satisfied that the assumptions used to calculate <br>the Group's liabilities arising from insurance and participating investment contracts <br>were appropriate.<br>|
| **Conduct risk** <br>**provisions**<br>31 December 2025: <br>£2,276 million<br>31 December 2024: <br>£1,600 million<br>| Management judgement <br>is used to determine <br>the expected costs of <br>remediation and, where <br>appropriate, the related <br>administration costs.<br>| The Committee has received regular updates on the Group's conduct risk matters <br>and the progress it has made including updates in relation to the Supreme Court <br>judgment handed down on 1 August 2025 on motor commission arrangements, the <br>FCA consultation paper published on 7 October 2025 on an industry-wide redress <br>scheme for motor finance, HBOS Reading and Responsible Lending.<br>**Conclusion:** The Committee has considered management's assessment of the <br>Group's provision for conduct-related matters and was satisfied that the provisions <br>held at 31 December 2025 were appropriate.<br>|
| **Going concern** <br>**statement**<br>| The directors are required to <br>confirm whether they have a <br>reasonable expectation that <br>the Company and the Group <br>will be able to continue to <br>operate and meet their <br>liabilities as they fall due <br>for a specified period.<br>| The Committee assisted the Board in determining the appropriateness of adopting <br>the going concern basis of accounting. This assessment was based on the Group's <br>operating, funding and capital plans which included consideration of climate-related <br>matters on the Group's performance and its projected funding and capital position. <br>The Committee also took into account the results of the Group's stress testing <br>activities (**pages [142](#i077679723f76432faf2f84848a081557_6706) and [143](#i077679723f76432faf2f84848a081557_6693)**), its principal risks (**pages [25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67) to [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73)**) and its emerging <br>and topical risks (**pages [28](#i3eaa7a3e529a46b3b97a88e05ad474bc_76) and [29](#i3eaa7a3e529a46b3b97a88e05ad474bc_79)**).<br>**Conclusion:** The Committee determined that the going concern basis of accounting <br>was appropriate.<br>|
| **Financial assets** <br>**held at fair value** <br>**through profit or** <br>**loss classified as** <br>**level 3**<br>31 December 2025: <br>£10,251 million<br>31 December 2024: <br>£9,889 million<br>| Determining the fair value of <br>the Group's financial assets <br>classified as level 3 requires <br>management to make <br>significant estimates.<br>| Financial assets held at fair value through profit or loss are classified into three levels <br>according to the quality and reliability of information used to determine their fair <br>values. Those classified as level 1 or level 2 are valued using observable market data, <br>either directly or within models. Assets classified as level 3 are those where at least <br>one input which could have a significant effect on the instrument's valuation is not <br>based on observable market data and as such involves significant judgement. During <br>the year, the Committee reviewed the valuations of the Group's level 3 financial <br>assets held at fair value through profit or loss, the valuation techniques and the <br>Group's governance processes.<br>**Conclusion:** The Committee was satisfied that the valuations and disclosures made <br>in respect of the Group's level 3 financial assets classified at fair value through profit <br>or loss were appropriate.<br>|

---

**Other significant issues**

The following matters were also considered by the Committee.

**Viability statement**

The viability statement must disclose the basis for the directors'

conclusions and explain why the period chosen is appropriate.

The Committee assisted the Board in performing the assessment

of the viability of the Company and the Group. This assessment

considered a wide range of information including principal,

emerging and topical risks that could impact the performance of

the Group and its operating plan which comprises detailed financial,

capital and funding projections together with an assessment of the

relevant risk factors for the period from 2026 to 2028 inclusive. The

Committee advised the Board that three years was a suitable period

of review for the viability statement and that the viability statement

could be provided. The viability statement is disclosed within the

strategic report on **page [34](#i3eaa7a3e529a46b3b97a88e05ad474bc_94).**

**Risk management and internal control systems**

Full details of the internal control and risk management framework

in relation to the financial reporting process are given within the risk

management section on **pages 138 to 197**. Specific related matters

that the Committee considered for the year included:

• The effectiveness of systems for internal control, financial

reporting and risk management

• The extent of the work undertaken across the Group to ensure

that the control environment continued to operate effectively

• The major findings of internal investigations into control

weaknesses, fraud or misconduct and management's response,

along with any control deficiencies identified through the

assessment of the effectiveness of the internal controls over

financial reporting under the US Sarbanes-Oxley Act (SOX).

Specifically, the Committee continued to closely monitor the

deficiencies identified in respect of privileged access to the IT

infrastructure and the Group's remediation activity to address

the control findings identified. The Committee was satisfied that

internal controls over financial reporting were appropriately

designed and operating effectively

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Risk-weighted assets and regulatory reporting**

The focus on the quality of regulatory reporting continues to be

high on the PRA's agenda. Across the first, second and third lines

of defence, management continues to focus on strengthening

the control environment in regulatory reporting with a link to

longer-term and strategic initiatives also being considered.

The ongoing programme of external assurance on regulatory

reporting commissioned by the Committee has been extended

to provide coverage across both capital (including risk-weighted

assets) and liquidity reporting. Management have provided regular

updates to the Committee over the year to highlight progress made

in improving the reporting control environment across regulatory

reporting. In addition, KPMG gave an external perspective so

Committee members could hear a wider view on control matters.

**UK Corporate Governance Code 2024 Provision 29**

The Committee, in conjunction with the Board Risk Committee,

has been preparing for the introduction of Provision 29 of the UK

Corporate Governance Code 2024 effective for the financial year

that began on 1 January 2026. Further details on the Group's

approach to internal controls, and the review of their effectiveness,

are set out on **page [84](#i3eaa7a3e529a46b3b97a88e05ad474bc_343)**.

**Speak Up (the Group's whistleblowing service)**

The Committee reviewed management reports on the Group's

whistleblowing arrangements, ensuring colleagues can report issues

confidentially and without fear of retaliation. These well-publicised

arrangements allow reporting of inappropriate practices with

independent investigations or follow-ups. The Committee reported

on its consideration of whistleblowing arrangements to the Board.

**Sustainability reporting**

The Committee was updated on the Group's responses to UK

Government consultations on matters such as UK Sustainability

Reporting Standards and Transition Plans. Compliance with existing

UK companies regulation requirements for climate-related financial

disclosure has been considered when assessing external disclosures.

The Committee continues to monitor Group capabilities and

progress with the production of sustainability reporting, the linkage

to financial statements, the enhanced control environment and the

developments with governance and assurance. Further discussion

can be found on **pages 36 to 49**.

**Group Internal Audit**

In monitoring the activity, role and effectiveness of the internal

audit function and its audit programme the Committee:

• Approved the updated Audit Charter, which sets out the

purpose, role and mandate of internal audit

• Approved the annual audit plan and budget, including resources

• Reviewed progress against the plan through quarterly updates

• Reviewed the annual audit opinion on the control framework

• Considered the major findings of significant internal audits,

management's response and themes by major risk type

• Assessed and concluded upon the quality of Group Audit's

work through review of quality assurance reporting on a six-

monthly basis

Based on the above and through regular interactions by all Audit

Committee members with the Chief Internal Auditor and an

informal networking session with Group Audit colleagues in July,

the Committee is satisfied with the effectiveness and impact of

the internal audit function and the appropriateness of its resources.

**Finance strategy and transformation**

Significant investment has been made to transform the Finance

function, including the launch of a new Group-wide General

Ledger in 2025. The Group also improved cost and investment

management processes, procurement tools and colleague expenses

systems. Enhancements in cost planning and reporting, alongside

continuous investment in the Group's financial data, will boost

planning and commercial insights. Further investment in the control

infrastructure and use of emerging AI technology will enhance the

colleague experience and provide commercial benefits.

The Committee received timely updates on progress, risk

management, proposed plans and the associated financial and

non-financial benefits.

**Auditor independence and remuneration**

The Committee is responsible for establishing the Group's policies

and procedures designed to protect the independence and

objectivity of the external auditor. In April 2025, the Committee

reviewed its non-audit services policy; no substantive changes were

made to the policy.

The policy details those services that the auditor is permitted to

carry out and pre-approves certain of these services provided the

fee is below a threshold; all other permitted services must be

specifically approved in advance by the Committee. Prior to the

engagement of the auditor for a permitted service, the policy

requires that senior management confirms whether the Committee

has pre-approved the service or specific approval is required.

The total amount of fees paid to the auditor for both audit and

non-audit related services in 2025 and further information on the

policy is disclosed in note 13 to the financial statements.

**External auditor**

Following an external audit tender in 2018, Deloitte was appointed

as auditor of the Company and the Group with effect from the 2021

financial year. Mike Lloyd is the statutory audit partner for the

Group and attends all meetings of the Committee. The Committee

oversees the relationship with the external auditor including its

terms of engagement and remuneration and monitors its

independence and objectivity. In 2025 the Chair of the Committee

met with the Deloitte leaders responsible for the key subsidiary

audits to hear directly from them about the approach to these

component parts. This enhanced the overall understanding of the

external audit and provided a further opportunity to engage with

important aspects of the process. The Committee also reviewed

Deloitte's audit plan, including the underlying methodology and

Deloitte's risk identification processes. In its assessment of Deloitte's

performance and effectiveness, the Committee has considered:

Deloitte's interactions with the Committee; the responses to a

questionnaire issued to the Group's businesses, Finance, Risk,

Internal Audit and non-executive directors; and the FRC's Audit

Quality Inspection Report published in July 2025. In addition, the

FRC's Audit Quality Review team reviewed Deloitte's audit of the

Group's 2024 financial statements as part of its latest annual

inspection of audit firms and noted several areas of good practice.

The Committee received a copy of the report and discussed it with

Deloitte. There were no key or other findings. The Committee

concluded that it was satisfied with the auditor's performance and

recommended to the Board a proposal for the reappointment of

the auditor at the Company's annual general meeting.

**Statutory Audit Services compliance**

The Company and the Group confirm compliance with the

provisions of The Statutory Audit Services for Large Companies

Market Investigation (Mandatory Use of Competitive Tender

Processes and Audit Committee Responsibilities) Order 2014,

which relates to the frequency and governance of tenders for

the appointment of the external auditor and Audit Committee

responsibilities including negotiating and agreeing the statutory

audit fee and the setting of a policy on the provision of non-audit

services for the year to 31 December 2025. There are no plans as

at the date of this report to conduct a tender exercise for external

audit services.

**Audit Committees and the External Audit:** 

**Minimum Standard**

The Group is compliant with Audit Committees and the External

Audit: Minimum Standard published by the FRC in May 2023 and

this report explains the activities we have undertaken to meet the

requirements of this Standard.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Board Risk Committee report

**Catherine Woods**

Chair, Board Risk

Committee

![ImageBlock_CatherineWoods.gif](lyg-20251231_g244.gif)

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**Strengthening operational resilience is** 

**essential to safeguarding the Group's** 

**services to customers in a continuously** 

**changing external threat landscape.**

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|:---|
| **Key activities in 2025** |
| •Oversight of enhancements to risk management and <br>embedding of changes to the three lines of defence model<br>•Ongoing oversight of operational resilience risks and <br>continuous enhancements to controls, particularly in relation <br>to cybersecurity, IT stability and supplier risk<br>•Oversight and challenge of change management and <br>execution risks, focusing on strategic transformation progress<br>•Reviewed progress on strengthening economic crime <br>prevention controls<br>•Continued oversight and challenge on model and data risk, <br>ensuring effective risk management of artificial intelligence<br>•Considered management of climate risk, particularly <br>greenwashing controls and scenario modelling capabilities<br>•Reviewed management of capital, funding and liquidity risks, <br>including structural hedge activity and provided challenge on <br>stress testing design and execution<br>•Ongoing assessment of emerging and topical risks |
| •Oversight of enhancements to risk management and <br>embedding of changes to the three lines of defence model<br>•Ongoing oversight of operational resilience risks and <br>continuous enhancements to controls, particularly in relation <br>to cybersecurity, IT stability and supplier risk<br>•Oversight and challenge of change management and <br>execution risks, focusing on strategic transformation progress<br>•Reviewed progress on strengthening economic crime <br>prevention controls<br>•Continued oversight and challenge on model and data risk, <br>ensuring effective risk management of artificial intelligence<br>•Considered management of climate risk, particularly <br>greenwashing controls and scenario modelling capabilities<br>•Reviewed management of capital, funding and liquidity risks, <br>including structural hedge activity and provided challenge on <br>stress testing design and execution<br>•Ongoing assessment of emerging and topical risks |

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|:---|:---|
| **Membership and attendance at scheduled meetings** | **Membership and attendance at scheduled meetings** |
| Catherine Woods (Committee Chair) | **9/9** |
| Nathan Bostock | **8/9**<sup>1</sup> |
| Sarah Legg | **9/9** |
| Cathy Turner | **9/9** |
| Scott Wheway | **6/7**<sup>1,2</sup> |
| 1Nathan Bostock and Scott Wheway were each unable to attend one meeting due <br>to scheduling conflicts. <br>2Scott Wheway stepped down from the Committee on 31 October 2025.<br>**Other attendees**<br>Nigel Hinshelwood and Brendan Gilligan, the Senior Independent <br>Director and an independent non-executive director respectively <br>of the Ring-Fenced Banks, attend meetings as observers to <br>provide insight on the Ring-Fenced Banks when required. The <br>Chief Risk Officer has full access to the Committee and attends <br>all meetings. The Chief Internal Auditor and members of the <br>executive also attend meetings as appropriate.  | 1Nathan Bostock and Scott Wheway were each unable to attend one meeting due <br>to scheduling conflicts. <br>2Scott Wheway stepped down from the Committee on 31 October 2025.<br>**Other attendees**<br>Nigel Hinshelwood and Brendan Gilligan, the Senior Independent <br>Director and an independent non-executive director respectively <br>of the Ring-Fenced Banks, attend meetings as observers to <br>provide insight on the Ring-Fenced Banks when required. The <br>Chief Risk Officer has full access to the Committee and attends <br>all meetings. The Chief Internal Auditor and members of the <br>executive also attend meetings as appropriate.  |

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|:---|:---|:---|
| **Read more** | **Read more** | **Read more** |
| Skills and experience  | **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)** | **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)** |
| Responsibilities (and its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | Responsibilities (and its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | **page [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313)** |

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**Introduction**

I am pleased to report on how the Committee has discharged its

responsibilities during 2025. The year has been marked by persistent

macroeconomic and geopolitical uncertainties, compounded by

ongoing cost of living pressures, which continue to influence a range

of risks faced by both the Group and the wider economy.

The Committee maintained regular oversight of the embedding of

the Group's enhanced risk management framework and the three

lines of defence approach. It also reviewed and recommended

Board approval of the evolved risk appetite approach. Significant

time was dedicated to considering changes to the Group's risk and

control profile. Separate reviews of risk and control plans for

specific business units were also undertaken. These activities remain

central to the ongoing transformation and strengthening of the

Group's risk management.

Operational resilience was a key area of focus, including IT outages

and cybersecurity, both from a Group and supplier standpoint.

Consideration was given to the increased external cyber threat

landscape and industry challenges, together with further

improvements to controls. A deep dive into payments systems

was also conducted, with a focus on the security and resilience

of these core systems. The review of a self-assessment of the

Group's supplier risk management framework against regulatory

requirements provided a broader perspective on business

continuity, complemented by a deep dive into supplier risk,

emphasising the importance of minimum resilience standards.

The Committee continued to regularly review credit risk

performance across commercial and consumer portfolios. Deep

dives offered further insights into specific portfolios during the year,

covering the Group's mortgage business, consumer unsecured

portfolio, derivative exposures and project finance business.

Broader credit management information was reviewed at each

meeting, with the Chief Risk Officer providing perspectives on the

overall credit environment. Oversight of model risk included a deep

dive on generative and agentic AI together with implementation of

the associated assurance framework.

Good customer outcomes remained a priority, with the Committee

overseeing the effectiveness of controls and seeking additional

structured updates on evolving conduct risk matters. Areas of

particular focus included the Group's treatment of vulnerable

customers, Financial Ombudsman Service complaint overturn

rates and oversight of the delivery and reconciliation of critical

communications to retail customers. The Committee, and the

Board, has considered the potential impact of the FCA's motor

finance commission redress scheme and will continue to assess

developments following the announcement by the FCA of the final

scheme rules.

The Committee assessed several other key areas, including

economic crime prevention, change execution risk and people

risk. Consideration was also given to climate risk, reviewing

enhanced greenwashing controls, regulatory expectations and

the development of climate scenario modelling capabilities. All

these areas are explored in greater detail throughout this report.

I look forward to welcoming Chris Vogelzang as a member of the

Committee, with his appointment being effective from 1 April 2026.

Chris will bring strong retail and commercial banking experience

to the Committee's deliberations. I would also like to take this

opportunity to formally thank Scott Wheway for his valuable

contribution to the Committee's work over the past three years and

wish him every success in his new role, following his decision to step

down from his Group position on 31 October 2025. The challenge

and commercial insight Scott brought to the Committee have been

immensely beneficial.

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Committee purpose and responsibilities**

The Committee assists the Board in fulfilling its risk governance

and oversight roles and responsibilities. It is responsible for ensuring

the risk culture is fully embedded and supports at all times the

Group's agreed risk appetite. The Committee is also responsible for

reviewing and recommending to the Board the nature and extent of

principal risks the Company is willing to take in order to achieve its

long-term objectives and oversees current risk exposures.

The Committee oversees the development, implementation and

maintenance of the Group's overall risk management framework

and internal control framework. It reviews and recommends to the

Audit Committee the assessment of the effectiveness of the Group's

risk management framework and internal controls, covering

material controls, other than financial reporting controls which

are covered by the Audit Committee.

The Committee, in conjunction with the Audit Committee, has been

preparing for the introduction of Provision 29 of the UK Corporate

Governance Code 2024. Further details on the Group's approach to

internal controls, and the review of their effectiveness, are set out

on **page [84](#i3eaa7a3e529a46b3b97a88e05ad474bc_343)**. During the year, the Committee's terms of reference

were reviewed and updated, including changes to responsibilities

driven by the implementation of Provision 29.

More details on the Group's wider approach to risk management

can be found in the risk management section on **pages [137](#i3eaa7a3e529a46b3b97a88e05ad474bc_499) to [197](#ie6d562362828442c9d9e501f05837616_14795)**.

Full details of the Committee's responsibilities are set out

in its terms of reference, which can be found on the corporate

governance page on our website.

**Committee composition, skills,** 

**experience and operation**

Two of the three designated independent non-executive directors

of the Ring-Fenced Banks attend meetings as observers in order to

provide insights on matters relevant to the Ring-Fenced Banks when

required and as part of their role in the Group's overall governance

structure. For the majority of the year, prior to Scott Wheway's

departure, membership of the Committee included the Chairs of

both Lloyds Bank Corporate Markets plc and Scottish Widows

Group Limited. Committee membership is kept under regular

review by the Nomination and Governance Committee.

The Committee undertook an annual review of its own

performance, the findings of which, together with the outcomes

of the externally facilitated Board performance review process

as relevant to the Committee, were considered by Committee

members with the conclusion reached that the performance of

the Committee continues to be effective.

During the year, Committee members attended various training

sessions and briefings as part of the Board's ongoing training

schedule, with a number of these covering matters particularly

relevant to the Committee's considerations. These sessions continue

to help deepen Committee members' knowledge on specific topics,

further enhancing discussion and challenge at subsequent

Committee meetings.

**Interaction with other Board** 

**and Executive Committees**

As the most senior risk committee in the Group, the Committee

interacts with other related risk committees, including the executive

Group Risk Committee. This helps ensure the appropriate escalation

of relevant matters to the Committee for review and consideration.

The Committee continues to be supported by the IT and Cyber

Advisory Forum, which dedicates additional time and resource to

reviewing and challenging risks associated with IT infrastructure, IT

strategy, IT resilience and cyber risks. The Chair and other members

of the Committee attend this Forum.

Regular interaction between Board Committees is maintained,

helping to strengthen relationships and facilitate broader

perspectives and discussion on relevant topics. The Chair of the

Board Risk Committee is a member of the Audit Committee, and

conversely, the Chair of the Audit Committee is a member of the

Board Risk Committee. The Chair of the Remuneration Committee

is also a member of the Committee, further enhancing discussion on

alignment of remuneration to risk performance and the Chair of the

Responsible Business Committee attends Committee meetings for

matters of specific interest.

The annual Group-wide Audit and Risk Forum was held in

November 2025, providing an opportunity for members of both

Committees to discuss key areas of common interest, further

strengthening the debate and challenge of matters provided

by these Committees. Themes this year included a focus on the

Group's approach to implementation of Provision 29 of the UK

Corporate Governance Code 2024.

The Committee continues to review regular updates from the Non-

Ring-Fenced Bank and Insurance sub-groups, headed up by Lloyds

Bank Corporate Markets plc and Scottish Widows Group Limited

respectively, summarising key discussions and decisions taken at the

relevant entities' risk committees.

**Matters considered by the Committee**

During 2025, the Committee considered a broad range of current

and forward-looking risks across all key areas of risk management,

in addition to a continued focus on risk culture and risk appetite.

The Committee regularly uses deep dives to focus on key risk topics,

enabling greater analysis of particular topics and associated risks.

The following pages provide a summary of the risks considered by

the Committee, its role and an outline of the conclusions which

were ultimately reached.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Board Risk Committee report continued

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| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Key activities for the year** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

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| **Area of focus** | **Key role of Committee** | **Key outcomes** |
| **Risk management framework** | **Risk management framework** | **Risk management framework** |
|  | •The Committee received regular updates <br>on the effectiveness of the Group risk <br>management framework to enable <br>oversight of its development and ensure <br>it aligns with emerging regulatory, corporate <br>governance and industry best practice<br>| •In January, the Committee recommended that the Board approve <br>an enhanced risk management framework. The Committee received <br>regular updates on its implementation across the Group throughout <br>the year, driving clarity and consistency in the management of both <br>financial and non-financial risks<br>•The Committee has overseen enhancements made to the Group's <br>approach to risk appetite and operational risk management<br>•The effectiveness of the Group risk management framework <br>was supported in November<br>|
| **Risk and control profile** | **Risk and control profile** | **Risk and control profile** |
|  | •Significant time was spent reviewing the <br>Group's risk and control profile<br>•Detailed insights were provided to the <br>Committee throughout the year, with an <br>enhanced consolidated Enterprise-Wide Risk <br>Management report introduced to improve <br>the Committee's visibility of material risk <br>and control issues<br>| •The Group's Risk and Control Self-Assessment approach has been <br>enhanced. The new risk scoring assessment, which ensures a focus <br>on the most significant risks was welcomed by the Committee<br>•The Committee has been preparing for the introduction of Provision <br>29 of the UK Corporate Governance Code 2024 for our financial year <br>that began on 1 January 2026 and supported the proposed approach<br>•The Committee continued to review three-year risk and control <br>improvement plans for both Business and Commercial Banking <br>and Corporate and Institutional Banking, together with a deep dive <br>on the markets control environment<br>•In November, the Committee reviewed and supported the Risk <br>function and Group Audit's report on the effectiveness of internal <br>controls required to manage risk<br>|
| **Non-financial risks** | **Non-financial risks** | **Non-financial risks** |
| **Conduct and** <br>**compliance**<br>| •The Committee is responsible for <br>overseeing that effective controls are <br>in place to ensure that good outcomes <br>are realised for customers and that <br>the Group complies with its existing <br>regulatory obligations<br>•Emphasising conduct and compliance's <br>importance to the Group and the scale of <br>regulatory attention, the Committee <br>requested more frequent updates<br>| •Customer treatment has been the subject of a number of discussions <br>at the Committee in 2025. Focus areas included:<br>–The Group's treatment of vulnerable customers, including <br>outcomes from the FCA's market survey and case study analysis<br>–Complaints brought to the Financial Ombudsman Service (FOS), <br>including understanding the root causes<br>–Oversight of the delivery and reconciliation of critical <br>communications to Retail customers<br>▪Detailed reports on legal developments and litigation risks were <br>considered on a half-yearly basis<br>▪The Committee reviewed the Group's ring-fencing arrangements <br>in November, including implementation of near term reforms earlier <br>in the year, and supported the Board in their confirmation of overall <br>compliance with ring-fencing governance requirements<br>|
| **Economic** <br>**crime**<br>| •Recognising the significant external threat <br>from economic crime to the Group and its <br>customers, the Committee received updates <br>on its exposure and prevention<br>| •Sanctions, politically exposed persons (PEPs) payment and customer <br>screening alerts were the focus of an update to the Committee <br>in January<br>•In April, the Committee considered an economic crime deep <br>dive, which included progress updates on enhancing the control <br>environment. The progress made to strengthen capability and <br>capacity was recognised<br>•The Committee reviewed the Money Laundering Reporting Officer's <br>annual report<br>|
| **Strategic** <br>**transformation** <br>**oversight**<br>| •The Committee received quarterly updates <br>on the performance of the Group's extensive <br>current and future strategic change agenda. <br>This enabled the Committee to assess the <br>impact of any material change programmes <br>on the Group<br>| •The Committee continued with its focus on ensuring effective <br>management of change execution risk, with a strong emphasis on <br>analysing strategic transformation delivery progress, challenging how <br>the Group assesses the value derived and lessons learned from the <br>platform-based operating model<br>|
| **Operational** <br>**resilience**<br>| •Oversight of operational resilience was <br>a continued key focus area in 2025, with <br>regular updates on IT service stability<br>•A deep dive was undertaken on payments <br>with a focus on the security and resilience <br>of these core systems<br>| •In March, the Committee reviewed the Group's operational <br>resilience self-assessment, which detailed scenario testing, recovery <br>timeframes and regulatory expectations. The self-assessment <br>was subsequently recommended to the Board for approval<br>•The Committee covered IT service stability, particularly in response <br>to outages experienced in the first half of the year, and oversaw <br>improved performance<br>•A comprehensive review of payment systems was conducted, <br>focusing on the continuity and resilience of core operations<br>|

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

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| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Key activities for the year** continued | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

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|:---|:---|:---|
| **Area of focus** | **Key role of Committee** | **Key outcomes** |
| **Non-financial risks** continued | **Non-financial risks** continued | **Non-financial risks** continued |
| **Cybersecurity** | •The Committee acknowledges the <br>importance of cybersecurity and has <br>received regular updates from the Group's IT <br>and Cyber Advisory Forum (ITCAF)<br>| •In light of the increased threat landscape and market events in 2025, <br>the Committee was briefed on cyber-related issues and efforts to <br>reduce IT vulnerabilities and enhance the control environment<br>|
| **Supplier risk** <br>**management**<br>| •Close attention has been paid to the <br>Group's suppliers to ensure resilience of <br>service to the Group's customers<br>| •In January, the Committee scrutinised a self-assessment of the <br>Group's supplier risk framework against the Prudential Regulation <br>Authority's Supervisory Statement 2/21 and questioned the status <br>of compliance with new critical third-party regulations<br>•A deep dive on supplier risk was conducted in October. The <br>Committee emphasised the importance of ensuring all suppliers <br>meet minimum resilience standards<br>•Despite not having a significant impact on the Group, following the <br>Amazon Web Services outage in October, the Committee discussed <br>lessons learned to drive control enhancements <br>|
| **People and** <br>**health, safety** <br>**and premises** <br>**risks**<br>| •The performance and safety of colleagues <br>is of utmost importance to the Committee, <br>which has provided advice, oversight and <br>challenge during the year<br>| •Key drivers of people risk, mitigating actions and current and future <br>areas of focus were considered by the Committee. Discussions <br>focused on measuring culture, capability and capacity, and <br>supporting strategic growth plans<br>•The Committee recognised the progress made on health, safety <br>and premises risk, noting improved automation of controls and data <br>insights. Further focus is required given increasing levels of verbal <br>abuse faced by branch colleagues<br>|
| **Data and** <br>**privacy risk**<br>| •Data and privacy risk is a continuing area <br>of focus for the Committee<br>•The Committee received updates on the <br>data management risk profile and data <br>privacy breaches<br>| •A deep dive on the data and privacy risk profile was undertaken <br>in July, with a follow-up in October. The Committee recognised <br>that the Group is progressing towards a mature data management <br>state with issues prioritised by impact, supported by AI-driven data <br>quality monitoring<br>•Alongside the deep dive, a proposal to revise the Group-wide Data <br>Retention Schedule was noted<br>•Compliance with the principles for effective risk data aggregation <br>and risk reporting (BCBS 239) was discussed in July<br>|
| **Financial risks** | **Financial risks** | **Financial risks** |
| **Credit risk** | •The Committee has frequently reviewed and <br>challenged the performance of the Group's <br>commercial and consumer credit portfolios <br>through regular credit management <br>information and deep dives on portfolios <br>requiring additional focus<br>| •The Committee was pleased to note that the Group's credit <br>performance remained strong and stable in 2025<br>•A deep dive of the Group's mortgages portfolio was completed, <br>which considered an overview of the portfolio's credit performance, <br>market outlook and evolving risks. The Committee noted the <br>material reduction in legacy assets that were originated before 2009<br>•A deep dive on the Group's derivatives portfolio was undertaken, <br>which included a sensitivity analysis. The overall high credit quality <br>of the counterparties was noted by the Committee<br>•A consumer lending credit risk deep dive highlighted the Group's <br>focus on sustainable growth. The Committee considered <br>macroeconomic trends, performance and customers' <br>financial resilience<br>•Infrastructure and project finance was also the focus of a deep dive, <br>providing the Committee with a detailed overview of the business <br>strategy and credit risks within the portfolio, such as concentration <br>risk and growth in US exposures<br>|
| **Motor finance** | •With significant external factors impacting <br>the motor finance sector, the Committee <br>has carefully monitored the transport <br>portfolio's performance, its exposure to <br>residual value risk and the evolving situation <br>in relation to motor finance commission <br>arrangements<br>| •The Committee received a detailed update on motor finance residual <br>value risk. The Committee noted the significant focus on building <br>capabilities to mitigate residual value risk given ongoing volatility, <br>particularly in relation to battery electric vehicles (BEVs)<br>•The Group has considered the potential impact of the FCA's motor <br>finance commission redress scheme and will continue to assess <br>developments following the announcement by the FCA of the final <br>scheme rules<br>|

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

Board Risk Committee report continued

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| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Key activities for the year** continued | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

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| **Area of focus** | **Key role of Committee** | **Key outcomes** |
| **Financial risks** continued | **Financial risks** continued | **Financial risks** continued |
| **Capital and** <br>**liquidity**<br>| •The Committee has closely monitored <br>the associated risks from capital, liquidity <br>and funding<br>| •After challenge and discussion from the Committee, the 2025 ICAAP <br>was approved in March. The Committee was satisfied that the <br>Group's current and planned capital adequately covers the risk <br>of financial loss it is, or might be, exposed to. During the year, the <br>Committee also considered the approach and methodology for the <br>2026 ICAAP, including scrutinising the specific scenarios that help set <br>operational risk capital for the Group<br>•In April, the Committee approved the Group's ILAAP. This included <br>compliance with the PRA's Overall Liquidity Adequacy Rules (OLAR) <br>and refreshed Pillar 2 assessments<br>•A capital optimisation deep dive took place in May, which focused <br>on managing capital demand. The Committee expressed its support <br>on plans and improvement of the Group's capabilities<br>•Updates on customer deposit trends and mix and the subsequent <br>impacts this has for structural hedge activity were also provided <br>to the Committee<br>|
| **Other** | **Other** | **Other** |
| **Model risk** | •Model risk continued to be an area of <br>significant internal and external focus, <br>with the Committee overseeing the <br>Group's current model risk landscape <br>and proposed improvements<br>•The validation process for AI models also <br>remained an area of importance in 2025<br>| •During 2025, the Committee continued its oversight of model risk <br>management, with regular updates being provided<br>•The Committee gave particular focus to the implementation of <br>Capital Requirements Directive (CRD) IV models and embedding <br>of the PRA's Supervisory Statement 1/23 principles on Model <br>Risk Management<br>•November's update included an assessment of the effectiveness <br>of the model risk framework with details of future enhancements<br>•A deep dive on generative and agentic AI took place in July, <br>which outlined the development and implementation of an <br>AI assurance framework<br>|
| **Climate risk** | •The Committee oversaw the impact of <br>climate risk on the Group's activities and <br>considered the latest activity to assess and <br>mitigate these risks<br>| •A deep dive on climate risk was discussed in May. The Committee <br>considered the Group's key climate risks, the PRA's Consultation <br>Paper CP10/25 and continued development of internal climate <br>scenario modelling capabilities<br>|
| **Recovery plans** <br>**and resolution**<br>| •Recovery planning and resolution remained <br>an important area of focus for the <br>Committee throughout 2025<br>•The Committee has periodically reviewed <br>the Group's recovery and resolution plans<br>| •Prior to the Committee's approval of the approach to the 2025 <br>Recovery Plan, a dedicated training session on recovery and <br>resolution was held. The recovery plan focused on updating the <br>recovery stress scenarios and aligning these to recovery strategy <br>to the stress scenarios used in the 2025 ICAAP<br>•As part of the recovery plan, the Committee considered a <br>comprehensive Trading Activity Wind Down (TWD) analysis, <br>which uses the severe stress scenario to evaluate TWD stress<br>•The approach to the Group's Resolution Integrated Scenario Test <br>was approved by the Committee in May 2025 and will take place <br>in the first half of 2026<br>|
| **Emerging and** <br>**topical risks**<br>| •Emerging risk and topical risk themes have <br>been regularly monitored by the Committee <br>during 2025<br>| •The Group's approach to emerging risks has been refined further <br>during 2025. In November, the Committee reviewed an updated <br>register of emerging and topical risk themes<br>|

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

Responsible Business Committee report

**Amanda** 

**Mackenzie**

Chair, Responsible

Business Committee

![ImageBlock_AmandaMackenzie.gif](lyg-20251231_g248.gif)

![ImageBlock_ReadFullBiog_QRCode_Only.gif](lyg-20251231_g16.gif)

Read full biography ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>

**By embedding purpose, sustainability** 

**and inclusion, we are determined to** 

**create lasting positive impact for** 

**customers, colleagues and communities** 

**accross the UK.**

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|:---|
| **Key activities in 2025** |
| •Driving the Group's ambitions to build a sustainable and <br>inclusive future <br>•Engaging our colleagues to deliver cultural change<br>•Delivering on our duty to customers and stakeholders<br>|

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|:---|:---|
| **Membership and attendance at scheduled meetings** | **Membership and attendance at scheduled meetings** |
| Amanda Mackenzie (Committee Chair) | **4/4** |
| Sir Robin Budenberg | **4/4** |
| Sarah Legg | **4/4** |
| Chris Vogelzang | **1/1**<sup>1</sup> |
| 1Chris Vogelzang joined the Committee on 16 June 2025<br>**Other attendees**<br>Sarah Bentley, an independent non-executive director of the <br>Ring-Fenced Banks, attends meetings as an observer to provide <br>insight on the Ring-Fenced Banks when required. The Group <br>Chief Executive and, as appropriate, representatives from <br>Group Audit also attend. | 1Chris Vogelzang joined the Committee on 16 June 2025<br>**Other attendees**<br>Sarah Bentley, an independent non-executive director of the <br>Ring-Fenced Banks, attends meetings as an observer to provide <br>insight on the Ring-Fenced Banks when required. The Group <br>Chief Executive and, as appropriate, representatives from <br>Group Audit also attend. |

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|:---|:---|:---|
| **Read more** | **Read more** | **Read more** |
| Skills and experience  | **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)** | **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)** |
| Responsibilities (and in its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | Responsibilities (and in its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | **page [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313)** |

---

![KeylineBox_RespBusComm_ReadMore.gif](lyg-20251231_g251.gif)

**Introduction**

I am pleased to report on the Committee's work in 2025 and I

would like to thank members for their contributions. Over the past

12 months, our focus has been resolute: driving the actions that will

help build a more sustainable and inclusive future for the people

and communities the Group serves. By concentrating on the areas

where we can have the greatest positive impact, we continue to

strengthen our business, deepen trust and deliver long-term,

sustainable value for both shareholders and other stakeholders.

**Committee operation**

The Committee met four times during 2025. As part of our ongoing

commitment to governance, the Committee undertook an annual

review of its own performance, the findings of which, together

with the outcomes of the externally facilitated Board performance

review process as relevant to the Committee, were considered by

the Committee at its January 2026 meeting; it was considered that

the performance of the Committee continues to operate effectively

with a strong focus on governance and responsible oversight.

**Purpose in action**

Throughout 2025, the Committee focused on how the Group is

making the most meaningful difference for customers, colleagues

and communities. This approach not only supports long-term

business resilience but also helps impact the people and places

that need it most.

This year, we considered the Group's efforts to empower prosperous

futures for customers and its continued leadership in improving

access to quality and affordable housing, reinforcing our longstanding

commitment to the UK's social housing sector. We also considered

the Group's work with UK universities to advance regional growth

across the country. Demonstrating our continued commitment to

supporting the UK's transition, we approved updates to financed

emission sector targets in line with the Government's Seventh Carbon

Budget. The Group also achieved the highest ISS ESG QualityScore,

reflecting our strong ESG governance and transparent disclosures.

And with the launch of new products, including the Agricultural

Transition Finance loan, the Group continued to showcase its

determination to turn intention into action on sustainability.

More detail on our responsible business activity can be found

on **pages [35](#i3eaa7a3e529a46b3b97a88e05ad474bc_97) to [49](#ie3b988292ad3485cbc6fd2e21427b631_2277)**and in oursustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

In 2025, we also celebrated 40 years since the launch of our

four independent Charitable Foundations. Since 1985, more than

£800 million has been donated to almost 70,000 charities across

the UK, a powerful legacy of collaboration and impact in the

communities we serve.

The Committee also reviewed the progress towards the Group's

2030 inclusion ambitions. We saw encouraging steps in increasing

senior representation and reaffirmed the importance of using data

to build an inclusive organisation that recognises the business value

of social mobility. The Committee remains fully supportive of the

work underway to increase representation from key demographics.

I remain inspired by the Group's actions and its commitment

to ensure its workforce reflects the communities it serves.

More detail can be found on **pages [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) to [23](#id5a09873a2b64b69bddd405c4c5c041e_1-2-1-1-5233089).**

**Colleague engagement**

Our colleagues are central to the delivery of the Group's strategic

ambitions. As the designated body for workforce engagement, the

Committee supports the Group's engagement strategy, reporting

to the Board on the key themes and issues we are hearing from

colleagues. This year, we focused on culture and collaboration,

accountability and empowerment, as well as skills and growth.

More details on our colleague engagement activities can be found

on **page [77](#i3eaa7a3e529a46b3b97a88e05ad474bc_328).**

**Consumer Duty**

The Committee continues to fulfil the Board's responsibilities

for Consumer Duty and I remain the Board's Consumer Duty

Champion. During 2025, we received regular progress updates from

business units and reviewed the annual Consumer Duty Report

ahead of its submission to the Board. Consumer Duty underpins

how the Group serves customers and sits at the heart of our

strategy, ensuring we deliver good, fair and responsible outcomes.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report

**Cathy Turner**

Chair, Remuneration

Committee

![ImageBlock_CathyTurner.gif](lyg-20251231_g252.gif)

![ImageBlock_ReadFullBiog_QRCode_Only.gif](lyg-20251231_g16.gif)

Read full biography ![Icon_Weblink_White.gif](lyg-20251231_g12.gif)<br>

**Our proposed 2026 Policy places** 

**greater emphasis on sustainable** 

**high performance and the creation** 

**of shareholder value, pivoting** 

**from guaranteed fixed pay to** 

**performance-related variable pay.**

---

| |
|:---|
| **Key activities in 2025** |
| •Agreed a multi-year pay deal with a fixed award approach <br>for the majority of our colleagues, which includes a £1,200<sup>1</sup><br>pay award for 2026 and 2027<br>•Conducted a thorough review of the Directors' <br>Remuneration Policy to ensure it supports the Group's <br>strategic priorities<br>•Completed an extensive shareholder consultation on <br>executive remuneration<br>|

---

![KeylineBox_RemComm_KeyActivities.gif](lyg-20251231_g253.gif)

---

| | |
|:---|:---|
| **Membership and attendance** | **Membership and attendance** |
| Cathy Turner (Committee Chair) | **6/6** |
| Sir Robin Budenberg | **6/6** |
| Amanda Mackenzie | **6/6** |
| Catherine Woods | **6/6** |
| **Other attendees**<br>Nigel Hinshelwood and Sarah Bentley, the Senior Independent <br>Director and an independent non-executive director <br>respectively of the Ring-Fenced Banks, attend meetings as <br>observers to provide insight on the Ring-Fenced Banks when <br>required. In addition, the Committee engaged with and received <br>updates from the Group Chief Executive, Chief People and <br>Places Officer, Total Reward Director and the Chief Risk Officer. | **Other attendees**<br>Nigel Hinshelwood and Sarah Bentley, the Senior Independent <br>Director and an independent non-executive director <br>respectively of the Ring-Fenced Banks, attend meetings as <br>observers to provide insight on the Ring-Fenced Banks when <br>required. In addition, the Committee engaged with and received <br>updates from the Group Chief Executive, Chief People and <br>Places Officer, Total Reward Director and the Chief Risk Officer. |

---

![KeylineBox_RemComm_Membership.gif](lyg-20251231_g254.gif)

---

| | | |
|:---|:---|:---|
| **Read more** | **Read more** | **Read more** |
| Remuneration at a glance |  | **page [103](#i2e0d4d5d52b745919e8d9f281f3d44c1_218)** |
| 2025 annual report on remuneration | **pages [105](#i6f9bdbeae39f4fff852d995fb2b1f647_2536) to [123](#i3eaa7a3e529a46b3b97a88e05ad474bc_454)** | **pages [105](#i6f9bdbeae39f4fff852d995fb2b1f647_2536) to [123](#i3eaa7a3e529a46b3b97a88e05ad474bc_454)** |
| 2026 Directors' Remuneration Policy | **pages [124](#i6a7c53311e2b4e579c4656af53f4d90c_5399) to [133](#i87a02fe89a1b410cbfaf3a119b620c05_0-1-1-3-5233089)** | **pages [124](#i6a7c53311e2b4e579c4656af53f4d90c_5399) to [133](#i87a02fe89a1b410cbfaf3a119b620c05_0-1-1-3-5233089)** |
| Responsibilities (and in its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | Responsibilities (and in its terms of reference, <br>which are on our corporate governance page)![Icon_Weblink.gif](lyg-20251231_g14.gif) | **page [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313)** |

---

**Dear shareholder**

On behalf of the Board, I am pleased to present the directors'

remuneration report (DRR) for the year ended 31 December 2025

and the proposed Directors' Remuneration Policy (Policy), for which

we are seeking approval at our annual general meeting (AGM) in

May 2026.

I would also like to take this opportunity to thank our shareholders

for the strong support received at the 2025 AGM, with 94%

approval of our 2024 DRR.

**Sustained strength in financial performance** 

**and how we have delivered for our customers,** 

**communities and shareholders in 2025**

2025 has been another year of significant progress for the Group,

delivering for our customers, communities, and shareholders. Given

our continued strategic execution and sustained strength in

financial performance, this enabled a total proposed ordinary

dividend for 2025 of3.65 pence per share, an increase of 15%

compared with the prior year. In addition, the Group announced

the launch of a share buyback programme to repurchase up to £1.75

billion of ordinary shares, reinforcing our commitment to creating

long-term value for our 2.1 million shareholders, including around

80% of our employees.

In 2025, we continued to deliver on our purpose of Helping Britain

Prosper. We remain focused on improving access to quality and

affordable housing, lending £17 billion to first time buyers in 2025

and supporting £3.2 billion of new finance to the social housing

sector. Additionally, we recently committed to providing a further

£35 billion of new finance to companies investing and operating in

the UK in 2026.

Supporting the net zero transition remains a significant strategic and

commercial opportunity. The Group has cumulatively delivered over

£70 billion of sustainable financing since 2022, including over

£21 billion in 2025.

**Continuing to support colleagues** 

**through our transformation**

I am immensely proud of the role our colleagues have played in

delivering for our customers, communities and shareholders in 2025.

We have continued our significant transformation and the

commitment of our colleagues remains critical to its success.

In 2024 and 2025, we provided a two-year pay deal to give

colleagues certainty during a fast-changing economic environment

as we continued to transform our Group. This year, we have

agreed another multi-year pay deal for junior colleagues with our

recognised unions, Accord and Unite, continuing our support for

colleagues by keeping things simple and providing certainty. In

2026, this includes a pay award of £1,200<sup>1</sup>, with a new minimum

salary of £26,200<sup>1</sup>, and in 2027, a further pay increase of £1,200<sup>1</sup>

will apply, with the minimum salary rising to £27,400<sup>1</sup>. Our new

minimum salary from 1 April 2026 will be 7.0% above the national

Real Living Wage; our London rates will be 10.9% above the London

Real Living Wage.

As set out last year, in continuing to consider arrangements for

engaging with the Group's workforce, the Board approved an

evolved approach to colleague engagement, implemented during

![KeylineBox_RemComm_ReadMore.gif](lyg-20251231_g255.gif)

2025. This new approach built on existing colleague listening activity

and introduced three colleague-led forums designed to increase

colleague voice, particularly at grades where trade union

representation is low.

For colleagues not included in the two-year pay-deal, we shared our

approach with the People Forum and listened to and acted on their

feedback, providing higher increases for those lower in their pay

range. For our more senior colleagues, we continued our

discretionary pay approach, maintaining a strong emphasis on

individual impact and contribution, peer pay comparisons and

position within the pay range.

1Pro-rated for reduced hours.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Finally, I'm delighted to celebrate the success of the 2022

Sharesave, a savings scheme combined with a share option plan

which enables our colleagues to save for their future and then buy

shares in the Group at a discounted price. The scheme launched

in December 2022 with an option price of 39 pence and matured

on 1 January 2026 at a price of 99 pence. Around 15,000 of our

colleagues, approximately 25% of the Group's employees, have

shared in the significant value they helped create for shareholders

through Sharesave. The typical savings amount from colleagues

participating in the 2022 Sharesave was £112 per month, and at the

above gain would see a final realisation benefit of around £6,000.

**PRA/FCA remuneration reform**

In October 2025, the PRA and FCA published a joint policy

statement which made significant, positive changes to the delivery

of variable pay for Material Risk Takers (MRTs); these changes

better align the UK with global norms and make it easier for UK

firms to attract and retain global talent.

Excluding our executive directors, we implemented these changes

with immediate effect. For our executive directors, we are mindful

that additional considerations apply. As a consequence, for

our executive directors, we will be subjecting variable pay to a

greater level of deferral and delivery of shares than required by the

regulatory rules; this is detailed as part of our implementation report.

**2025 Group-wide variable reward outcomes**

2025 was a key year for the Group, entering the second phase of our

strategy demonstrating sustained strength in financial performance

with franchise, balance sheet and income growth.

In determining the 2025 Group Performance Share (GPS) annual

bonus pool outcome, the Committee has considered a range of

factors, including the Group's underlying financial performance,

its reward market positioning, our Group balanced scorecard (BSC)

outcome and our risk management. The Group BSC contains

measures of financial and non-financial performance, reflecting a

range of stakeholders including shareholders, customers and clients,

colleagues, and our communities and the environment. The

scorecard is described in more detail on **pages [110](#ib4c1e49092864c17a59f364cf8be517d_1187) and [111](#i4780f70fd9a641bdbe4dc5821afef6b0_0-0-1-1-5233089).**

The Committee has approved a 2025 GPS pool of £405 million,

representing a year-on-year increase of 10% compared to 2024.

The increased pool in 2025 shows continuing alignment to the

underlying financial performance of the Group.

In 2023, Long Term Share Plan (LTSP – a restricted share plan with

underpins) awards were granted to approximately 840 colleagues,

including our executive directors. The decision to award LTSP

awards in 2023 was based on performance relating to 2022. To

ensure that subsequent performance has been sustained, a 'pre-vest

test' consisting of three financial underpins and four key questions

has been considered by the Committee. Based on the outcome of

that test, the Committee has determined that the awards should

vest in full. The Committee also considered whether there was

any requirement to adjust the final outcome for windfall gains,

particularly as share price appreciation (c.75% share price growth

over the life of the plan) accounts for such a significant proportion

of the value realised by colleagues. The Committee concluded that

the share price growth over the period was reflective of underlying

performance and shareholder experience and as a consequence

determined that no adjustment is necessary. The 2023 LTSP is the

final long-term incentive in the form of an award under a restricted

share plan to vest having been replaced by a performance-based

Long Term Incentive Plan (LTIP) from 2024.

**2025 Executive director variable** 

**reward outcomes**

In 2025, our Group Chief Executive (GCE), Charlie Nunn, has

overseen the continued delivery of the Group's strategy, financial

targets, investment priorities, and market share growth in priority

areas, which will set the Group up for success in 2026, the final year

of the first strategic phase.

He has demonstrated strong leadership throughout another

challenging year for consumers while working closely with the UK

Regulators and UK Government on several key areas.

Our Chief Financial Officer (CFO), William Chalmers, has played a

critical role in the execution of the Group's strategy and maintained

positive engagement with investors and regulators on the Group's

performance and strategic direction, while showing strong financial

and risk management.

The Group BSC, comprising seven financial and non-financial

performance measures, is the principal input into the annual bonus

awards for the GCE and CFO. As I set out in my Chair statement

in 2024, the impact of any motor finance provision in 2025 on

financial metrics would be excluded, with any impact considered

on a discretionary case-by-case basis, to allow the Committee to

set robust financial targets aligned to the financial planning and

budgeting process.

A detailed breakdown of the outcome of the Group BSC is set out

on **page [110](#ib4c1e49092864c17a59f364cf8be517d_1187)**. After careful consideration, the Committee does not

consider that the mechanical outcome of 81.9% properly reflects

the performance of the Group given the additional provision taken

for motor finance this year (see**page [283](#i8a4f77013fad493a9364f3edbc5016a5_9359)**). In assessing the impact

of the provision on the Group's financial performance with due

consideration to the fact that it relates to issues that took place

prior to the appointment of the current management team, the

Committee has agreed a 74% outcome is appropriate which has

resulted in a 7.9 percentage point reduction from the mechanical

outcome. Taken with the impact on the Group BSC in 2023

and 2024, the Committee is satisfied that the total provisions

taken by the Group to date have been appropriately reflected

in executive variable pay outcomes.

On the basis of a Group BSC outcome of 74.0% the final

2025 GPS awards for the GCE and CFO were £1,424,895

and £908,835 respectively.

**2026 Directors' Remuneration Policy**

The current Policy, which received 96% support from our

shareholders at the 2023 AGM, is due for renewal in 2026. In

preparation, the Committee has undertaken a thorough review

to ensure the Policy acts as a strong incentive to our management

team, who are well regarded by our shareholders, to deliver

continued strategic and financial progress and guide the Group

into its next strategic cycle. The Policy places greater emphasis

on sustainable high performance and shareholder value creation.

The 2026 Policy proposes a material reduction in guaranteed

fixed pay for our executive directors alongside a higher

performance-related variable reward opportunity to enhance

our pay-for-performance proposition and further align executive

reward outcomes with the experience of our shareholders. The

scorecards which drive variable reward outcomes have also been

reviewed, with an increased weighting towards quantitative

financial measures, and 2026 financial targets have been set

substantially higher than in previous years reflecting the Group's

ambitious growth plans.

**Shareholder consultation**

We place significant emphasis on our shareholders' views and have

undertaken a comprehensive consultation, across both 2024 and

2025, on executive pay to ensure those views are well understood

and properly reflected in the proposed Policy.

In 2024, I consulted with a range of shareholders and proxy

rating agencies to discuss their views on executive pay ahead of

Policy implementation in 2025. The feedback was valuable and

indicated broad support for the management of executive pay

at the Group which our shareholders consider is undertaken

responsibly. Our shareholders clearly understood our rationale

for the fixed pay changes and the importance of rewarding our

executive directors, who are well regarded amongst our investors,

fairly for their roles in the short and long term.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

One area of particular discussion during the 2024 consultation

was the timing of fixed pay increases ahead of the Policy review in

2025. As I set out in my Chair statement in 2024, the Committee

considered the feedback carefully and determined to take a two-

step approach to ensure the executive directors were paid fairly

ahead of the 2026 Policy review. Appropriate fixed pay changes

were implemented in 2025.

In the 2024 DRR, I noted that fixed pay would be reconsidered

as part of the 2026 Policy review, where we anticipated that,

consistent with likely market movements, the fixed share award

(FSA) element would be significantly reduced and a higher,

performance-related, variable reward opportunity recommended.

I once again consulted with shareholders in 2025 to ensure our early

Policy thinking was reflective of shareholder views. In October 2025,

I spoke with our largest shareholders, representing around 25% of

issued share capital (ISC), followed in November 2025 by engaging

with the main proxy rating agencies whose recommendations are

considered by a significant portion of our register.

During those meetings, we specifically focused on the significant

pivot from fixed to variable pay, the increased weighting of financial

measures across our scorecards, and how we benchmarked our

proposals to test them against an appropriate range of peers.

Feedback from shareholders during the consultation was positive.

In particular, shareholders welcomed the early engagement,

acknowledged the clear and well-articulated rationale for the

changes and the market alignment of the proposed package.

Following our initial consultation, we issued a letter to a number

of institutional shareholders who were not part of the initial

consultation, seeking their input on the proposals discussed as well

as sharing feedback received to date. In total, approximately 60%

of the Group's ISC were contacted on the proposed 2026 Policy.

Taken as a whole, the Committee determined that the course we

are on is appropriate for our business. However, our shareholders

were also clear on three areas where they wanted the Committee

to reflect:

• Future-proofing – shareholders expect the Policy to provide

sufficient flexibility to last the cycle and do not expect the Group

to seek a new Policy before 2029

• Performance targets – recognising the potential increase in

quantum, shareholders expect performance measures to be

transparent and targets should continue to be stretching

• Benchmarking – clear and transparent benchmarking, including

consideration of the choice of peer group, particularly where

firms have exposure to the US which has influenced their

remuneration structure or overall quantum and those of similar

size and performance to the Group

How the Committee has considered and addressed these key points

is discussed in more detail below.

**Policy background and context**

Since the appointment of Charlie Nunn as our GCE in August 2021,

£43 billion of shareholder value has been created through a

combination of growth in our market capitalisation of c.£25 billion

and through distributions of c.£18 billion, c.131% of the value of the

Company in August 2021.

In February 2022, the Group launched its new strategy, building on

our strong foundations and our purpose of Helping Britain Prosper.

At that time, the Committee conducted a thorough review of the

Group's Policy to ensure it supported the Group's strategic priorities

and the interests of our shareholders.

Following this review, as part of our refreshed 2023 Policy, we made

significant changes to our executive reward package to drive a high-

performing culture and create a stronger link between performance,

reward, and the creation of shareholder value. Principal amongst

those changes was the return to a performance-related LTIP,

providing an increased variable opportunity but with significantly

greater downside risk than the restricted share plan it replaced.

We also increased shareholding requirements for our executive

directors to further strengthen alignment with our shareholders by

requiring them to hold a higher multiple of salary in Group shares,

increasing the requirement from 350% to 400% and from 250% to

300% for the GCE and CFO, respectively. The shareholding policy

applies for two years post-employment.

The Committee believes that the current Policy, despite greater

design constraints applicable at the time, has served the Group

well and we continue to make strong progress in delivering our

purpose-driven strategy, building differentiated customer outcomes

and growing our business as we build towards our ambitious targets

for 2026.

The Committee is also mindful of external factors which impact

the 2026 Policy design, in particular the removal of the regulatory

2:1 bonus cap, FCA/PRA reforms, updated Investment Association

Principles of Remuneration, and the new directors' remuneration

policies approved by the shareholders of the Group's main UK

banking peers.

The Committee has reflected on the 2023 Policy and has

concluded that a simple annual bonus/LTIP structure remains

most appropriate for our business, providing the closest alignment

with the shareholder experience as well as transparency in terms

of targets and outcomes for both our executive directors and our

shareholders. During our consultations, investors have been

supportive of this approach.

After careful consideration throughout 2025, the Committee

has concluded that the direction set out in the 2024 DRR,

pivoting towards a more leveraged, performance-oriented package,

remains the right one to place more emphasis on sustainable high

performance and shareholder value creation.

**Fixed pay**

The new Policy removes FSAs (currently set at 100% of salary),

reduces our executive directors' pension contributions from 15% to

10% of salary to better align to the market and at a level lower than

the majority of the wider workforce, and removes the flexible

benefits allowance and the CFO's company car allowance.

The base salaries of our GCE and CFO will be increased by 3%, in

line with wider workforce fixed pay funding for 2026 to £1,416,642

and £903,572, respectively, effective 1 April 2026. Subject to

approval of the Policy at the 2026 AGM, also effective 1 April 2026,

salaries will be increased by an additional £112,531 and £82,684

to reflect the partial consolidation of FSAs and flexible benefits

allowance. Taken together, these changes will reduce our executive

director fixed pay by approximately 44%.

As acknowledged by the UK regulators at the time the bonus cap

was removed, the regulations did not limit total remuneration but

placed upward pressure on banking fixed pay which is not

performance related and cannot be subsequently adjusted or

clawed back. The fixed pay changes proposed as part of the 2026

Policy will bring the GCE's fixed pay as a percentage of total

maximum compensation in line with FTSE 30 norms; down from

33% to 12%, compared to the FTSE 30 median of 14%. For the CFO,

this would be down from 33% to 14%, compared to the FTSE 30

median of 15%.

**Variable pay**

Alongside the reduction in fixed pay, the Committee also intends to

make responsible use of the Group's 8:1 variable-to-fixed pay ratio

to increase the executive directors' variable pay opportunity to

place further emphasis on a high-performing culture and create a

stronger link between performance, reward, and the creation of

shareholder value.

For the GCE, the Committee is proposing to increase the maximum

annual bonus award from 140% to 300% of base salary and the

maximum LTIP opportunity from 300% to 500%; for the Group

CFO, the proposed increases are to 250% and 450%, respectively.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

These changes will place significantly more of the executive

directors' pay at risk, increasing the variable pay component

to over 85% of total maximum remuneration from 67% today.

**Reward structure change**<br>

![Rem_RewardStructureChange.gif](lyg-20251231_g256.gif)

---

| | |
|:---|:---|
| **Group Chief Executive** <br>Charlie Nunn<br>| **Total** <br>**maximum** <br>**remuneration** |
| **2025** | **Total** <br>**maximum** <br>**remuneration** |

---

![37](lyg-20251231_g257.gif)

---

| | | | |
|:---|:---|:---|:---|
| **100%** | **140%** | **300%** | **£9.1m** |
| ▲ |  |  |  |
| **£3.0m** |  |  |  |

---

![25](lyg-20251231_g258.gif)

---

| | | | |
|:---|:---|:---|:---|
| **2026** |  |  |  |
|  | **300%** | **500%** | **£13.9m** |
| ▲ |  |  |  |
| **£1.7m** |  |  |  |
| **44% fixed pay reduction** | **44% fixed pay reduction** | **44% fixed pay reduction** |  |

---

---

| | |
|:---|:---|
| **Chief Financial Officer** <br>William Chalmers<br>| **Total** <br>**maximum** <br>**remuneration** |
| **2025** | **Total** <br>**maximum** <br>**remuneration** |

---

![1](lyg-20251231_g259.gif)

---

| | | | |
|:---|:---|:---|:---|
| **100%** | **140%** | **300%** | **£5.8m** |
| ▲ |  |  |  |
| **£1.9m** |  |  |  |

---

![13](lyg-20251231_g260.gif)

---

| | | | |
|:---|:---|:---|:---|
| **2026** |  |  |  |
|  | **250%** | **450%** | **£8.0m** |
| ▲ |  |  |  |
| **£1.1m** |  |  |  |
| **44% fixed pay reduction** | **44% fixed pay reduction** | **44% fixed pay reduction** |  |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| ●  | Base <br>salary<br>| ●  | Fixed share <br>awards<br>| ●  | Pension/<br>Benefits<br>| ●  | Short term <br>variable<br>| ●  | Long term <br>variable<br>|

---

The Committee is satisfied that the maximum total compensation

opportunity under the proposed Policy is appropriately positioned

relative to the market to create a strong incentive to the current

management team to lead the Group into its next strategic cycle

without needing to revisit the Policy ahead of 2029.

Subject to shareholder approval of the new Policy and following a

pre-grant test based on 2025 performance, including the outcome

of the 2025 Group BSC, 2026 LTIP awards will be granted following

the AGM under the terms of the 2026 Policy at 500% of salary for

the GCE and 450% of salary for the Group CFO.

**Shareholding requirement**

To further strengthen the alignment between executive directors'

interests and those of our shareholders, we are also proposing to

increase the Group's shareholding requirement from 400% to 500%

of base salary for the GCE and from 300% to 450% for the Group

CFO as part of the 2026 DRP, aligned to their respective maximum

proposed LTIP opportunities. As is currently the case, the

shareholding policy applies for two years post-employment.

**Performance scorecards and targets**

The Committee is clear that the performance targets which drive

both GPS and LTIP outcomes are key in driving executive director

behaviour and ensuring focus on sustainable high performance and

the creation of shareholder value. For that reason, the Committee

has dedicated significant time to both the Group BSC and the LTIP

performance measures and is making substantive changes.

Our 2023 Policy rightly placed significant emphasis on strategic

transformation, and that was reflected in the 35% weighting to the

Strategic Delivery block in our LTIP scorecard. Under the new 2026

Policy, the Committee is clear that the Group's transformation and

change must translate into sustainable high performance and the

creation of value for our shareholders. To reflect that pivot we plan

to significantly increase the financial weighting of the LTIP scorecard

from not less than 50% to not less than 75%, to focus the vesting

outcome of the LTIP on the financial results of our transformation.

For 2026, the LTIP measures will be return on tangible equity

(RoTE) (30% weighting), capital generation (15% weighting)

and relative total shareholder return (TSR) (30% weighting).

Recognising the importance of stretching financial targets to our

shareholders, we have increased our RoTE target range for the 2026

LTIP award by two full percentage points from 13% to 16% to 15% to

18% and our capital generation range from 185 to 230 basis points

to 200 to 250 basis points. Both the RoTE and capital generation

targets are on a three-year average basis from 2026 to 2028.

**Group RoTE target progression within the LTIP** <br>

![Rem_RoTE_Chart.gif](lyg-20251231_g261.gif)

![524](lyg-20251231_g262.gif)

---

| | | | |
|:---|:---|:---|:---|
| **2026 to 2028** | **+2ppt** | ◄**15%** | **18%** ► |

---

---

| | | | |
|:---|:---|:---|:---|
| **2025 to 2027** | **+1ppt** | ◄ **13%** | **16%** ► |

---

---

| | | |
|:---|:---|:---|
| **2024 to 2026** | ◄ **12%** | **15%** ► |

---

---

| | |
|:---|:---|
| ●●  | Performance range |

---

The remaining weight will remain aligned to strategic delivery (15%)

and environmental sustainability commitments (10%), which we

intend to maintain as a separate block to ensure clarity and visibility

over our climate-related performance.

Our current Group BSC, which is a key input into annual GPS

decisions for our executive directors and informs the level of annual

LTIP grant, has, for a number of years, included a strong weighting

to financial measures; for that reason, the Committee is not

proposing to change the current 60% weighting for 2026.

However, to recognise the longer-term nature of the Group's

ambitions on decarbonisation, the Committee will use the LTIP

as the principal measure of the Group's progress on environmental

sustainability by moving the Reduction in our Operational Carbon

Emissions measure from the short-term to the long-term scorecard.

To reflect the criticality of continued transformation of our

workforce to enable delivery of Group strategy, our 2026 Group

BSC will include a broader and more comprehensive 'People

measure' weighted 15%; this will retain our current focus on

inclusion and colleague engagement but also include a wider range

of people transformation metrics considered by the Board. These

will include, for example, colleague upskilling and the adoption of

AI, a first we believe amongst our peers.

To recognise the importance of our customers and to ensure

executive variable reward outcomes reflect their experience,

the remaining 25% weight will be aligned to the Group Customer

Dashboard (an increase of 5 percentage points from 2025).

Collectively, these changes will represent a significant pivot toward

financial performance, with over 60% of total reward opportunity

being linked to financial measures versus approximately 35% under

the previous Policy.

**Market benchmarking**

Benchmarking was one of the key discussion points during our

shareholder engagement; from those conversations it was clear

that our investors expected us to use benchmarking to test our

proposals, rather than be led by it, and also to be thoughtful over

our choice of peers.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

To satisfy itself that the increased total reward package on offer to

the executive directors is reasonable, the Committee has carefully

tested its proposals against our main UK banking peers and a subset

of the FTSE 30 which excludes firms whose pay structures are

heavily influenced by the US market where pay practices are

markedly different to the UK. For similar reasons, the Committee

has decided not to consider a specific European peer set as part of

the exercise.

Based on the benchmarking data set out below, the Committee is

satisfied that the proposed Policy is well positioned versus market:

**Group Chief Executive** Charlie Nunn<br>

![KeylineBox_HeritageGreenHeader_1col_47mm.gif](lyg-20251231_g263.gif)

![Rem_ExectiveDirector_Fixed_AboveLine.gif](lyg-20251231_g264.gif)

![Rem_ExectiveDirector_TotalMaximum_AboveLine.gif](lyg-20251231_g265.gif)

![49](lyg-20251231_g266.gif)

---

| |
|:---|
| **UK banking** <br>**peer** <br>**median**<br>|
| **FTSE** <br>**30 peer** <br>**median**<br>|
| **LBG** <br>**2026**<br>|
| **LBG** <br>**2025**<br>|

---

---

| | | |
|:---|:---|:---|
| **£1.8m** | **260%** | **520%** |

---

---

| |
|:---|
| **£14.2m** |
| **£11.0m** |
| **£13.9m** |
| **£9.1m** |

---

---

| | | |
|:---|:---|:---|
| **£1.7m** | **210%** | **490%** |

---

---

| | | |
|:---|:---|:---|
| **£1.7m** | **300%** | **500%** |

---

---

| | | |
|:---|:---|:---|
| **£3.0m** | **140%** | **300%** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ●●  | Fixed pay | ●●  | Short-term variable  | ●●  | Long-term variable |

---

**Chief Financial Officer** William Chalmers <br>

![KeylineBox_HeritageGreenHeader_1col_47mm.gif](lyg-20251231_g263.gif)

![Rem_ExectiveDirector_Fixed_AboveLine.gif](lyg-20251231_g264.gif)

![Rem_ExectiveDirector_TotalMaximum_AboveLine.gif](lyg-20251231_g265.gif)

![344](lyg-20251231_g267.gif)

---

| |
|:---|
| **UK banking** <br>**peer** <br>**median**<br>|
| **FTSE** <br>**30 peer** <br>**median**<br>|
| **LBG** <br>**2026**<br>|
| **LBG** <br>**2025**<br>|

---

---

| | | |
|:---|:---|:---|
| **£1.2m** | **235%** | **435%** |

---

---

| |
|:---|
| **£8.2m** |
| **£5.9m** |
| **£8.0m** |
| **£5.8m** |

---

---

| | | |
|:---|:---|:---|
| **£1.0m** | **200%** | **375%** |

---

---

| | | |
|:---|:---|:---|
| **£1.1m** | **250%** | **450%** |

---

---

| | | |
|:---|:---|:---|
| **£1.9m** | **140%** | **300%** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ●●  | Fixed pay | ●●  | Short-term variable  | ●●  | Long-term variable |

---

UK banking peers: Barclays, HSBC, NatWest and Standard Chartered.

FTSE 30 firms included: 3i Group, Anglo American, BAE Systems, Barclays, BP, Compass

Group, Diageo (CFO only), Experian, Glencore (GCE only), Haleon, HSBC, Imperial Brands,

NatWest, RELX, Rio Tinto, Rolls-Royce, Shell, SSE, Standard Chartered, Tesco, Unilever and

Vodafone Group.

FTSE 30 firms excluded for having pay structures heavily influenced by the US market:

Ashtead, Astrazeneca, BAT, GSK, LSEG, National Grid and Reckitt Benckiser.

Peer 2025 data aged 3% for comparison purposes.

A key discussion point with shareholders during the consultation

was how the Committee considers peers closest to the Group in

terms of size, complexity and performance, given the diverse nature

of the companies comprising the FTSE 30.

The Committee has also considered a narrower subset of the FTSE

30 which are more comparable to the Group in terms of market

capitalisation (as a useful proxy for size and complexity) as well

as TSR performance and has, again, concluded that the proposals

are reasonable.

**Renewal of the North America Employee** 

**Stock Purchase Plan 2016 Rules**

We will also be recommending a resolution to the AGM to renew

our US Employee Stock Purchase plan, which is similar to our UK

Sharematch scheme, to ensure its continued operation beyond

the current approval period, which is due to expire in 2026.

**Conclusion**

Together with my Committee members, I would like to thank our

shareholders for their continued support and critical engagement on

executive pay during 2025, and our people for their commitment to

our customers and communities, and for delivering another set of

robust results in 2025.

On behalf of the Board

---

| |
|:---|
| ![SusRev_CathyTurnerSignature.gif](lyg-20251231_g268.gif) |
| **Cathy Turner**<br>Chair, Remuneration Committee<br>|

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Directors' Remuneration Policy design process and approach to consultation** | **Directors' Remuneration Policy design process and approach to consultation** | **Directors' Remuneration Policy design process and approach to consultation** | **Directors' Remuneration Policy design process and approach to consultation** | **Directors' Remuneration Policy design process and approach to consultation** | **Directors' Remuneration Policy design process and approach to consultation** | **Directors' Remuneration Policy design process and approach to consultation** | **Directors' Remuneration Policy design process and approach to consultation** |
| **October to** <br>**November** <br>**2024**<br>| **December** <br>**2024**<br>| **January** <br>**2025**<br>| **May to** <br>**September** <br>**2025**<br>| **October to** <br>**November** <br>**2025**<br>| **November** <br>**2025**<br>| **December** <br>**2025**<br>| **January to** <br>**February**<br>**2026**<br>|

---

![Rem_ChairsIntro_Timeline.gif](lyg-20251231_g269.gif)

---

| |
|:---|
| **Consultation on** <br>**2025 fixed pay** <br>**implementation**<br>|
| **Attendees**<br>Major institutional <br>shareholders <br>representing c.25% <br>of the shareholder <br>register<br>Proxy rating agencies<br>|

---

---

| |
|:---|
| **Board Governance** <br>**Event**<br>|
| **Attendees**<br>Shareholders <br>representing c.31% <br>of the shareholder <br>register attended <br>the event<br>|

---

---

| |
|:---|
| **Follow-up** <br>**consultation on** <br>**2025 fixed pay** <br>**implementation**<br>|
| **Attendees**<br>Proxy rating agencies<br>|

---

**Review of existing** <br>**Policy and proposals** <br>**for new Policy**<br>

---

| |
|:---|
| **Consultation on** <br>**2026 proposed** <br>**Policy**<br>|
| **Attendees**<br>Major institutional <br>shareholders <br>representing c.25% <br>of the shareholder <br>register<br>Proxy rating agencies<br>|

---

**Remuneration** <br>**Committee meeting** <br>**to discuss investor** <br>**feedback**<br>

---

| |
|:---|
| **Letter issued setting** <br>**out proposed Policy,** <br>**feedback from initial** <br>**consultation and** <br>**inviting feedback**<br>|
| **Recipients**<br>Major institutional <br>shareholders <br>representing c.60% <br>of the shareholder <br>register<br>|

---

---

| |
|:---|
| **Discuss further** <br>**shareholder** <br>**feedback and** <br>**approve proposed** <br>**Policy for** <br>**shareholder vote** <br>**at 2026 AGM**<br>|
| Engaged with <br>shareholders in <br>response to <br>feedback <br>|

---

![Rem_RemAtAGlance.gif](lyg-20251231_g270.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**2025Remuneration at a glance**

This section provides a summary of key 2025 remuneration outcomes for the Group and its executive directors and how they align to our

strategic delivery and wider stakeholder experience.

---

| |
|:---|
| **Strategy and Stakeholder key** |
| Our reward outcomes reflect our strategic delivery and wider stakeholder experience as demonstrated by our Group balanced <br>scorecard and Long Term Share Plan scorecard, as shown below. |

---

---

| | |
|:---|:---|
| **2025 Single total figure of remuneration (£000)** |  |
| **Group Chief Executive** Charlie Nunn | **Chief Financial Officer** William Chalmers |
| The Group Chief Executive's total remuneration for 2025 was £7.4 million, up 20% from 2024. The Chief Financial Officer's total <br>remuneration for 2025 was £5.0 million, an 18% increase from the previous year. The year-on-year increases were primarily driven by <br>fixed pay changes implemented in 2025, described in detail on **page [106](#if1708a315fb0408099bb1d546e3fd295_603)**, higher short-term variable reward outcomes of 74.0% of <br>maximum compared to 68.1% in 2024 and finally the share price appreciation linked to the vesting of the long-term variable awards <br>which benefitted from share price increase over the period from 52 to 91 pence. For full details please see **page [109](#ib7941e5419304ab08e025d2111062c9b_0-1-1-1-5233089)**. | The Group Chief Executive's total remuneration for 2025 was £7.4 million, up 20% from 2024. The Chief Financial Officer's total <br>remuneration for 2025 was £5.0 million, an 18% increase from the previous year. The year-on-year increases were primarily driven by <br>fixed pay changes implemented in 2025, described in detail on **page [106](#if1708a315fb0408099bb1d546e3fd295_603)**, higher short-term variable reward outcomes of 74.0% of <br>maximum compared to 68.1% in 2024 and finally the share price appreciation linked to the vesting of the long-term variable awards <br>which benefitted from share price increase over the period from 52 to 91 pence. For full details please see **page [109](#ib7941e5419304ab08e025d2111062c9b_0-1-1-1-5233089)**. |

---

![1](lyg-20251231_g271.gif)

![26](lyg-20251231_g272.gif)

---

| |
|:---|
| **2025** |
| 2024 |

---

---

| |
|:---|
| **Total £7,407** |
| **Total £6,169** |

---

---

| |
|:---|
| **Total £4,976** |
| **Total £4,212** |

---

---

| |
|:---|
| **2025** |
| 2024 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| ●  | Fixed | ●  | Short Term Variable | ●  | Long Term Variable | ●  | Value from share price appreciation |

---

---

| | | |
|:---|:---|:---|
| **2025 Group balanced scorecard outcome** | **2025 Group balanced scorecard outcome** | **2025 Group balanced scorecard outcome** |
| **Financial**(60%) | **Profit after tax** | **21.8% / 25%** |
| **Financial**(60%) |  |  |
| **Financial**(60%) | **Return on tangible equity** | **22.1% / 25%** |
| **Financial**(60%) |  |  |
| **Financial**(60%) | **Operating costs** | **5.8% / 10%** |
| **Non-financial**(40%) | **Group customer dashboard** | **13% / 20%** |
| **Non-financial**(40%) |  |  |
| **Non-financial**(40%) | **Reducing our operational** <br>**carbon emissions**<br>| **5% / 5%** |
| **Non-financial**(40%) |  |  |
| **Non-financial**(40%) | **Increasing gender and ethnic** <br>**representation in executive roles**<br>| **6.75% / 7.5%** |
| **Non-financial**(40%) |  |  |
| **Non-financial**(40%) | **Culture and colleague** <br>**engagement**<br>| **7.5% / 7.5%** |
| **Mechanical balanced scorecard outcome** | **Mechanical balanced scorecard outcome** | **81.9%** |
| **Discretionary Committee adjustment** | **Discretionary Committee adjustment** | **-7.9** |
| **Discretionary Committee adjustment** | **Discretionary Committee adjustment** | **-7.9** |
| **Revised balanced scorecard outcome** | **Revised balanced scorecard outcome** | **74.0%** |
| For full details please see **pages [110](#ib4c1e49092864c17a59f364cf8be517d_1187) and [111](#i4780f70fd9a641bdbe4dc5821afef6b0_0-0-1-1-5233089)**. | For full details please see **pages [110](#ib4c1e49092864c17a59f364cf8be517d_1187) and [111](#i4780f70fd9a641bdbe4dc5821afef6b0_0-0-1-1-5233089)**. | For full details please see **pages [110](#ib4c1e49092864c17a59f364cf8be517d_1187) and [111](#i4780f70fd9a641bdbe4dc5821afef6b0_0-0-1-1-5233089)**. |

---

---

| | | |
|:---|:---|:---|
| **2023 Long Term Share Plan outcome** | **2023 Long Term Share Plan outcome** | **2023 Long Term Share Plan outcome** |
| **Financial**(100%) | **CET1 ratio – Group CET1** <br>**ratio above the guided** <br>**management target** <br>**each year, including all** <br>**regulatory buffers**<br>| **Met** |
| **Financial**(100%) |  |  |
| **Financial**(100%) | **RoTE – Group RoTE exceeds** <br>**the average for UK peer** <br>**banks over the three years**<br>| **Met** |
| **Financial**(100%) |  |  |
| **Financial**(100%) | **Ordinary dividend** <br>**– Increased ordinary** <br>**dividend payments** <br>**over the plan period**<br>| **Met** |
| **Award (% max) vesting** | **Award (% max) vesting** | **100%** |
| For full details on the 'pre-vest test' please see **page [112](#i4d8ec4ee19ff409ca3030d949c34c188_1492)**. | For full details on the 'pre-vest test' please see **page [112](#i4d8ec4ee19ff409ca3030d949c34c188_1492)**. | For full details on the 'pre-vest test' please see **page [112](#i4d8ec4ee19ff409ca3030d949c34c188_1492)**. |

---

---

| | |
|:---|:---|
| **2025 Group Performance Share pool** |  |
|  | The underlying profitability of the Group is the key driver of our <br>GPS pool, ensuring strong pay-for-performance alignment. The <br>Group BSC is also considered in setting the pool and therefore <br>the final outcome considers our strategic delivery and wider <br>stakeholder experience.<br>The Committee determined a pool for 2025 of £405 million, up <br>10% from 2024, recognising increased underlying performance. |
|  | The underlying profitability of the Group is the key driver of our <br>GPS pool, ensuring strong pay-for-performance alignment. The <br>Group BSC is also considered in setting the pool and therefore <br>the final outcome considers our strategic delivery and wider <br>stakeholder experience.<br>The Committee determined a pool for 2025 of £405 million, up <br>10% from 2024, recognising increased underlying performance. |

---

10% ![Icon_ArrowUp.gif](lyg-20251231_g134.gif)<br>

![129](lyg-20251231_g273.gif)

---

| |
|:---|
| **2025** |
| 2024 |

---

![Rem_2024_PolicyOverview.gif](lyg-20251231_g274.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**Revised Policy overview** 

The below table sets out the revised Directors' Remuneration Policy which will be put forward to shareholders at the 2026 AGM. The full

Policy can be found on **pages [124](#i6a7c53311e2b4e579c4656af53f4d90c_5399) to [133](#i87a02fe89a1b410cbfaf3a119b620c05_0-1-1-3-5233089)**.

---

| | |
|:---|:---|
| **Current 2023 Policy** | **Proposed changes in 2026 Policy and rationale** |

---

---

| | | |
|:---|:---|:---|
| ![Button_BaseSalary.gif](lyg-20251231_g275.gif)<br>Base <br>Salary<br>| •Reflective of individual role, taking account <br>of responsibilities, experience and pay in <br>the wider Group<br>•Base salaries are typically reviewed <br>annually with any increases normally taking <br>effect from 1 April for executive directors<br>| No change to Policy. |
| ![Button_FixedShareAward.gif](lyg-20251231_g276.gif)<br>Fixed Share <br>Award<br>| •Delivered entirely in Lloyds Banking Group <br>shares, released over three years with 33% <br>being released annually following the year <br>of the award<br>•The maximum award is 100% of base salary<br>| **Change:**<br>•Fixed share awards have been removed from the <br>2026 Policy<br>**Why:**<br>To set fixed pay at an appropriate level in line with market <br>standard for executive directors and further align executive <br>remuneration with stakeholder experience.<br>|
| ![Button_Pension.gif](lyg-20251231_g277.gif)<br>Pension<br>| •Provides cost-effective and market <br>competitive retirement benefits<br>•Maximum allowance for executive directors <br>is 15% of salary, aligned with that available <br>to the majority of the workforce<br>| **Change:**<br>•Maximum allowance of 10% of salary for executive directors<br>**Why:**<br>To set fixed pay at an appropriate level in line with market <br>standard for executive directors. This will move from being <br>in line with to less than the majority of the wider workforce.<br>|
| ![Button_Benefits_KeyLine.gif](lyg-20251231_g278.gif)<br>Benefits<br>| •Flexible benefit allowance of 4% of salary<br>•Other benefits include medical insurance, <br>car allowance and transportation<br>| **Change:**<br>•Flexible benefit allowance has been removed<br>•Car allowance has been removed<br>**Why:**<br>To align executive director remuneration package with the <br>wider workforce where these allowances were consolidated <br>in previous years and to set fixed pay at an appropriate level.<br>|
| ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>Group <br>Performance <br>Share<br>(Short Term Variable)<br>| •Maximum opportunity of 140% of salary <br>for executive directors, with normal target <br>level at 50% of maximum opportunity<br>•Performance adjustment including malus <br>and clawback provisions apply<br>| **Change:**<br>•Maximum opportunity of 300% of salary for GCE and <br>250% for other executive directors<br>**Why:**<br>To place further emphasis on a high-performing culture and <br>create a stronger link between performance, reward, and the <br>creation of shareholder value. The increase in maximum <br>variable reward opportunity should be considered alongside <br>the reduction in fixed pay described above.<br>|
| ![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Long Term <br>Incentive Plan<br>(Long Term Variable)<br>| •The maximum LTIP opportunity is 300% <br>of salary for all executive directors<br>•A minimum of 50% of the award being <br>dependent on financial measures<br>•Performance adjustment including malus <br>and clawback provisions apply<br>| **Change:**<br>•Maximum opportunity of 500% of salary for GCE and <br>450% for other executive directors<br>•A minimum of 75% of the award being dependent on <br>financial measures<br>**Why:**<br>To place further emphasis on a high-performing culture and <br>create a stronger link between performance, reward, and the <br>creation of shareholder value. The increase in maximum <br>variable reward opportunity should be considered alongside <br>the reduction in fixed pay described above.<br>|

---

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Remuneration Committee**

The Committee comprises of four non-executive directors including

Sir Robin Budenberg, Group Chair. The non-executive directors are

from a wide background to provide a balanced and independent

view on remuneration matters.

Two of the three designated independent non-executive directors

of the Ring-Fenced Banks, including the Senior Independent

Director, also attend meetings of the Committee as observers in

order to provide insights on matters relevant to the Ring-Fenced

Banks and as part of their role in the Group's overall governance

structure. For further details of Committee membership and

attendance at meetings, please see **page [98](#i52b8c2d3944e4acbaaa4316fc1ff10da_1-1-1-1-5233089)**.

During the year, Charlie Nunn, as the GCE provided regular briefings

to the Committee. In addition, the Committee engaged with

and received updates from the Chief People and Places Officer,

Total Reward Director and the Chief Risk Officer.

The purpose of the Committee is to set the remuneration for all

executive directors and the Chair, including pensions rights and

any compensation payments. It recommends and monitors the level

and structure of remuneration for senior management and material

risk takers.

It also considers and approves an overall remuneration policy and

philosophy for the Group that is aligned with its long-term business

strategy, its business objectives, its risk appetite, purpose and

values and the long-term interests of the Group and recognises the

interests of the relevant stakeholders including the wider workforce.

The Committee's operation is designed to ensure that no conflicts

of interest arise and in particular, the Committee ensures that no

individual is present when matters relating to their own

remuneration are discussed.

**Advisers**

PwC was appointed by the Committee in May 2022 following

a competitive tender process and was retained for 2025.

The Committee is of the view that PwC provides independent

remuneration advice to the Committee and does not have any

connections with the Group or any director that may impair

its independence.

More broadly, PwC provides unrelated professional services to

the Group in the ordinary course of business including tax, advisory,

internal audit and non-audit assurance services. PwC attended

Committee meetings upon invitation and fees payable for the

provision of services in respect of directors' remuneration in 2025

amounted to £134,625 excluding VAT.

Fees paid to PwC for advising the Committee are based partly

on a fixed fee and partly on a time and materials basis.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Committee activities in the year** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Jan** | **Feb** | **May** | **Sep** | **Nov** | **Dec** |
| **Executive directors' remuneration** |  |  |  |  |  |  |
| Executive directors' fixed pay proposals | ●  | ⚪ | ⚪ | ●  | ⚪ | ⚪ |
| Executive directors' performance and variable <br>remuneration<br>| ●  | ●  | ⚪ | ●  | ●  | ●  |
| Directors' remuneration report | ●  | ●  | ⚪ | ⚪ | ⚪ | ●  |
| Directors' Remuneration Policy design | ⚪ | ⚪ | ⚪ | ●  | ●  | ●  |
| **All employee remuneration** |  |  |  |  |  |  |
| Fixed pay proposals | ⚪ | ⚪ | ⚪ | ●  | ●  | ⚪ |
| Group performance and GPS pool | ●  | ●  | ●  | ●  | ●  | ●  |
| Employee insights | ⚪ | ●  | ⚪ | ⚪ | ⚪ | ⚪ |
| Remuneration for other senior executives | ●  | ●  | ⚪ | ⚪ | ⚪ | ●  |
| **Reward governance** |  |  |  |  |  |  |
| Consideration of policy and conduct matters | ●  | ●  | ●  | ●  | ●  | ●  |

---

![Calm_singleRow_full width.gif](lyg-20251231_g281.gif)

![Calm_singleRow_full width.gif](lyg-20251231_g281.gif)

![Calm_singleRow_full width.gif](lyg-20251231_g281.gif)

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Statement of voting at annual general meeting** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| The table below sets out the voting outcome at the annual general meeting in May 2025 in relation to the annual report on remuneration. <br>The Directors' Remuneration Policy was subject to a binding vote at the annual general meeting in May 2023. | The table below sets out the voting outcome at the annual general meeting in May 2025 in relation to the annual report on remuneration. <br>The Directors' Remuneration Policy was subject to a binding vote at the annual general meeting in May 2023. | The table below sets out the voting outcome at the annual general meeting in May 2025 in relation to the annual report on remuneration. <br>The Directors' Remuneration Policy was subject to a binding vote at the annual general meeting in May 2023. | The table below sets out the voting outcome at the annual general meeting in May 2025 in relation to the annual report on remuneration. <br>The Directors' Remuneration Policy was subject to a binding vote at the annual general meeting in May 2023. | The table below sets out the voting outcome at the annual general meeting in May 2025 in relation to the annual report on remuneration. <br>The Directors' Remuneration Policy was subject to a binding vote at the annual general meeting in May 2023. | The table below sets out the voting outcome at the annual general meeting in May 2025 in relation to the annual report on remuneration. <br>The Directors' Remuneration Policy was subject to a binding vote at the annual general meeting in May 2023. |
|  | Votes <br>cast in favour | Votes <br>cast in favour | Votes <br>cast against | Votes <br>cast against | Votes <br>withheld<br>|
|  | Number of <br>shares <br>(millions)<br>| Percentage of <br>votes cast<br>| Number of <br>shares <br>(millions)<br>| Percentage of <br>votes cast<br>| Number of <br>shares <br>(millions)<br>|
| 2024 annual report on remuneration (advisory vote) | **37913** | **94.23%** | **2323** | **5.77%** | **28** |
| Directors' Remuneration Policy (binding vote in 2023) | **39002** | **96.00%** | **1623** | **4.00%** | **68** |

---

![2024_DirectorsRemunerationPolicySummary_Fixed.gif](lyg-20251231_g282.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**2023 Directors' Remuneration Policy** 

**summary and 2025 implementation**

The 2023 Directors' Remuneration Policy, which applied during

2025, was approved by shareholders at the AGM on 18 May 2023

with 96% of votes cast and took effect from that date. The full

Policy is set out in the 2022 annual report and accounts (pages 125

to 133) which is available on our website.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

Details of the new Policy being proposed to shareholders at the

2026 AGM are set out on **pages [124](#i6a7c53311e2b4e579c4656af53f4d90c_5399) to [133](#i87a02fe89a1b410cbfaf3a119b620c05_0-1-1-3-5233089)**.

A summary of the 2023 Policy for the executive directors and how

it was implemented during 2025 is shown below.

**Read more** <br>2023 Directors' Remuneration Policy in full ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>

---

| | |
|:---|:---|
| **Directors' remuneration** | **Wider workforce alignment** |

---

---

| | | |
|:---|:---|:---|
| ![Button_BaseSalary.gif](lyg-20251231_g275.gif)<br>Base <br>Salary<br>| •Base salaries are reviewed annually with increases typically taking effect from <br>1 April<br>•Increases will normally be no more than the increase awarded to the overall <br>employee population<br>With effect from 1 January 2025, the 13% discount applied to the GCE's salary on <br>appointment was reversed, taking his salary to £1,335,321, and from 1 April 2025, <br>salaries for the executive directors increased by 3%, less than the wider <br>workforce, to £1,375,381 for the GCE and £877,254 for the CFO.<br>| The pay deal for the wider <br>workforce in 2025 reflected <br>a 4.1% budget.<br>The approach focused on <br>lower paid colleagues with <br>junior colleagues receiving <br>a minimum £1,500 award <br>in 2025 (pro-rated for <br>reduced hours).<br>|
| ![Button_FixedShareAward.gif](lyg-20251231_g276.gif)<br>Fixed Share <br>Award<br>| •Delivered entirely in Lloyds Banking Group shares, released over three years <br>with 33% being released annually following the year of the award<br>•The maximum award is 100% of base salary<br>From 1 January 2025, fixed share awards were increased to align with the <br>executive directors salaries.<br>| To maintain an appropriate <br>balance between fixed and <br>variable remuneration, and <br>to further align the interests <br>of executive directors and <br>shareholders, a portion of <br>fixed pay was delivered in <br>the form of shares.<br>Fixed share awards were <br>only granted to the GCE <br>and the CFO.<br>|
| ![Button_Pension.gif](lyg-20251231_g277.gif)<br>Pension<br>| •The maximum allowance for executive directors is set at 15% of base salary<br>•Any director may elect to receive some or all of their pension allowance <br>as cash in lieu of pension<br>Pension allowances for all executive directors for 2025 was set at 15% <br>of base salary.<br>| The maximum allowance <br>for all executive directors <br>for 2025 was set at 15% of <br>base salary in line with the <br>majority of the workforce.<br>|
| ![Button_Benefits_KeyLine.gif](lyg-20251231_g278.gif)<br>Benefits<br>| Benefits may include those currently provided and disclosed in the annual report <br>on remuneration. Core benefits include a company car or car allowance, private <br>medical insurance, life insurance and other benefits that may be selected <br>through the Group's flexible benefits plan. <br>Benefits for 2025 were unchanged from 2024. Executive directors received <br>a flexible benefit allowance of 4% of base salary. The CFO also received a car <br>allowance.<br>| Flexible benefit allowance <br>of 4% of base salary was <br>consolidated into base <br>salary in July 2023 for <br>colleagues, simplifying <br>their reward package and <br>benefitting from pension <br>contribution entitlement.<br>|

---

![2024_DirectorsRemunerationPolicySummary_Variable.gif](lyg-20251231_g283.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | |
|:---|:---|
| **Directors' remuneration** | **Wider workforce alignment** |

---

---

| | | |
|:---|:---|:---|
| ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>Group <br>Performance <br>Share<br>(Short Term Variable)<br>| •The normal 'target' level of the GPS is 50% of maximum opportunity<br>•The maximum GPS opportunity is 140% of salary for the executive directors<br>The GCE and CFO received 2025 GPS awards of 74.0% of maximum in line with <br>the final Group balanced scorecard outcome as shown on **page [110](#ib4c1e49092864c17a59f364cf8be517d_1187)**.<br>The Group's policy is to apply deferral to variable reward in line with minimum <br>regulatory requirements. However, to recognise market practice and shareholder <br>expectations for executive directors, we will apply deferral to 2025 annual bonus <br>awards above our Policy minimum. <br>Our default position is to award GPS 50% in cash and 50% in shares released <br>over three years in equal tranches; however, as both executive directors have <br>met their respective shareholding requirements we will award 75% in cash and <br>25% in shares released over three years in equal tranches.<br>| All Group employees <br>are eligible to receive an <br>award through the Group <br>Performance Share scheme. <br>The Committee determined <br>a GPS pool of £405 million <br>for 2025.<br>|
| ![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Long Term <br>Incentive Plan<br>(Long Term Variable)<br>| •Awards will be granted in the form of conditional rights to shares in <br>the Group<br>•The maximum LTIP opportunity is 300% of salary for the executive directors<br>2025 LTIP awards were granted in March 2025 at 300% of salary for executive <br>directors. Awards were deferred over seven years to be released in five equal <br>tranches, each with a one-year hold.<br>The 2023 LTSP award vested in full as shown on **page [112](#i4d8ec4ee19ff409ca3030d949c34c188_1492).**<br>| The wider workforce are <br>not eligible for LTIP awards, <br>consistent with <br>market practice.<br>|

---

---

| | | | |
|:---|:---|:---|:---|
| ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif) | ![Button_LongTermVariable.gif](lyg-20251231_g280.gif) | **Deferral of variable remuneration and holding periods** | **Deferral of variable remuneration and holding periods** |
| The GPS and LTIP are both considered variable remuneration for the <br>purpose of regulatory and deferral requirements. Deferral levels are <br>determined at the time of award in compliance with regulatory <br>requirements which currently require that, for executive directors, at <br>least 40% of the first £660,000 of total variable remuneration and 60%  | The GPS and LTIP are both considered variable remuneration for the <br>purpose of regulatory and deferral requirements. Deferral levels are <br>determined at the time of award in compliance with regulatory <br>requirements which currently require that, for executive directors, at <br>least 40% of the first £660,000 of total variable remuneration and 60%  | The GPS and LTIP are both considered variable remuneration for the <br>purpose of regulatory and deferral requirements. Deferral levels are <br>determined at the time of award in compliance with regulatory <br>requirements which currently require that, for executive directors, at <br>least 40% of the first £660,000 of total variable remuneration and 60%  | of any excess to be deferred for up to four years with pro-rata vesting, <br>at least 50% of total variable remuneration to be delivered in shares <br>or equity-linked instruments and where a portion of variable <br>remuneration is delivered upfront and in shares it is subject to <br>a minimum one-year holding period.<br>|

---

---

| | | | |
|:---|:---|:---|:---|
| ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif) | ![Button_LongTermVariable.gif](lyg-20251231_g280.gif) | **Performance adjustment** | Judgement on individual performance adjustment is informed by taking <br>into account the severity of the issue, the individual's proximity to the <br>issue and the individual's behaviour in relation to the issue. Individual <br>adjustment may be applied through adjustments to balanced scorecard <br>assessments and/or through reducing the variable remuneration outcome.<br>Awards are subject to clawback for a period of up to seven years after <br>the date of award, which may be extended to ten years where there <br>is an ongoing internal or regulatory investigation. The Committee <br>has considered the time period of up to ten years and believes that <br>is an appropriate length of time for performance adjustment to apply. <br>The application of clawback will generally be considered when:<br>•There is reasonable evidence of employee misbehaviour <br>or material error <br>•There is material failure of risk management at a Group, business <br>area, division and/or business unit level |
| Performance adjustment may result in a reduction of up to 100% of the <br>variable remuneration opportunity for the relevant period. It can be <br>applied on a collective or individual basis. The application of malus will <br>generally be considered when:<br>•There is reasonable evidence of employee misbehaviour or material <br>error or that they participated in conduct which resulted in losses <br>for the Group or failed to meet appropriate standards of fitness <br>and propriety<br>•There is material failure of risk management <br>•The Committee determines that the financial results for a given year <br>do not support the level of variable remuneration awarded<br>•Any other circumstances where the Committee consider <br>adjustments should be made | Performance adjustment may result in a reduction of up to 100% of the <br>variable remuneration opportunity for the relevant period. It can be <br>applied on a collective or individual basis. The application of malus will <br>generally be considered when:<br>•There is reasonable evidence of employee misbehaviour or material <br>error or that they participated in conduct which resulted in losses <br>for the Group or failed to meet appropriate standards of fitness <br>and propriety<br>•There is material failure of risk management <br>•The Committee determines that the financial results for a given year <br>do not support the level of variable remuneration awarded<br>•Any other circumstances where the Committee consider <br>adjustments should be made | Performance adjustment may result in a reduction of up to 100% of the <br>variable remuneration opportunity for the relevant period. It can be <br>applied on a collective or individual basis. The application of malus will <br>generally be considered when:<br>•There is reasonable evidence of employee misbehaviour or material <br>error or that they participated in conduct which resulted in losses <br>for the Group or failed to meet appropriate standards of fitness <br>and propriety<br>•There is material failure of risk management <br>•The Committee determines that the financial results for a given year <br>do not support the level of variable remuneration awarded<br>•Any other circumstances where the Committee consider <br>adjustments should be made | Judgement on individual performance adjustment is informed by taking <br>into account the severity of the issue, the individual's proximity to the <br>issue and the individual's behaviour in relation to the issue. Individual <br>adjustment may be applied through adjustments to balanced scorecard <br>assessments and/or through reducing the variable remuneration outcome.<br>Awards are subject to clawback for a period of up to seven years after <br>the date of award, which may be extended to ten years where there <br>is an ongoing internal or regulatory investigation. The Committee <br>has considered the time period of up to ten years and believes that <br>is an appropriate length of time for performance adjustment to apply. <br>The application of clawback will generally be considered when:<br>•There is reasonable evidence of employee misbehaviour <br>or material error <br>•There is material failure of risk management at a Group, business <br>area, division and/or business unit level |

---

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **2023 Directors' Remuneration Policy and Group remuneration policy alignment** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Executive** <br>**directors**<br>| **Group Executive**<br>**Committee**<br>| **Other material**<br>**risk takers**<br>| **Other** <br>**employees**<br>|
| **Fixed** |  |  |  |  |
| Base salary![Button_BaseSalary.gif](lyg-20251231_g275.gif)<br>| ●  | ●  | ●  | ●  |
| Fixed share award / Role-based allowance ![Button_FixedShareAward.gif](lyg-20251231_g276.gif)<br>| ●  | ●  | ●  | ⚪ |
| Pension and benefits![Button_Pension.gif](lyg-20251231_g277.gif)<br>![Button_Benefits.gif](lyg-20251231_g284.gif)<br>| ●  | ●  | ●  | ●  |
| **Variable** |  |  |  |  |
| Short term incentive![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>| ●  | ●  | ●  | ●  |
| Long term incentive![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>| ●  | ●  | ⚪ | ⚪ |

---

![Calm_singleRow_full width.gif](lyg-20251231_g281.gif)

![Calm_singleRow_full width.gif](lyg-20251231_g281.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**Explore life at Lloyds Banking Group**

In addition to our core reward offering, we also offer a range of

wider benefits.

![Rem_ExploreLife_QRCode.gif](lyg-20251231_g285.gif)

**<u>Read more</u>** <br>A guide to life at Lloyds Banking Group ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Sharesave** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

Sharesave is a savings account combined with a share option plan,

it enables our colleagues to save for their future and then buy shares

in the Group at a discounted price.

**48%** 

**of colleagues participate in Sharesave**

![RemReport_ExploreLifeWomanPinkJumper.jpg](lyg-20251231_g286.jpg)

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Sharematch** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | Sharematch allows our colleagues to invest in Lloyds Banking <br>Group shares in a tax-efficient way. For every two shares <br>bought, we give three matching shares completely free up to a <br>maximum colleague investment of £30 per month. This allows <br>our colleagues to share in the success of the Group through <br>share price growth as well as dividend income.<br>**59%**<br>**of colleagues participate in Sharematch** |  |
|  | Sharematch allows our colleagues to invest in Lloyds Banking <br>Group shares in a tax-efficient way. For every two shares <br>bought, we give three matching shares completely free up to a <br>maximum colleague investment of £30 per month. This allows <br>our colleagues to share in the success of the Group through <br>share price growth as well as dividend income.<br>**59%**<br>**of colleagues participate in Sharematch** |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Colleague Sustainable Cars** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | Colleague Sustainable Cars is a salary sacrifice scheme that <br>enables colleagues to drive a brand-new Ultra Low Emission <br>Vehicle (ULEV) through a reduction in salary. In 2025 we <br>partnered with Tusker, the Group's own specialist in salary <br>sacrifice schemes, and will now offer only Zero Emission <br>Vehicles (ZEV), further reducing our environmental impact <br>and improving urban air quality in support of the Group's <br>sustainability ambitions. <br>**>4,200 cars**<br>**As of 31 December 2025, the scheme has grown to 4,213 cars** <br>**since its launch in 2021, making it one of the largest in the** <br>**UK private sector** |  |
|  | Colleague Sustainable Cars is a salary sacrifice scheme that <br>enables colleagues to drive a brand-new Ultra Low Emission <br>Vehicle (ULEV) through a reduction in salary. In 2025 we <br>partnered with Tusker, the Group's own specialist in salary <br>sacrifice schemes, and will now offer only Zero Emission <br>Vehicles (ZEV), further reducing our environmental impact <br>and improving urban air quality in support of the Group's <br>sustainability ambitions. <br>**>4,200 cars**<br>**As of 31 December 2025, the scheme has grown to 4,213 cars** <br>**since its launch in 2021, making it one of the largest in the** <br>**UK private sector** |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Colleague wellbeing including Bupa cover** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

At Lloyds Banking Group, the health and wellbeing of our colleagues

is central to how we work and succeed. We want every colleague

to thrive, at work and in life, whatever their role, or personal

circumstances. Our approach focuses on creating an inclusive

culture and providing access to appropriate support for physical,

mental, and financial wellbeing, alongside tools and resources that

help colleagues make healthy, sustainable choices.

Colleagues can access a range of wellbeing resources, including our

Employee Assistance Programme, colleague wellbeing events, and

digital wellbeing tools. This includes access to the Headspace app,

which provides interactive and self-guided content for meditation,

stress management and sleep support.

All employees are entitled to company-paid, Bupa-administered

Private Medical Benefit (UK Mainland) or Private Medical Insurance

(Offshore), regardless of grade. Cover includes a neurodiversity

assessment and coaching, support for gender reaffirmation, and

from 1 January 2026 access to a range of cancer screening options

for colleagues and their dependants.

**Engagement with the wider workforce**

The Board's ambition is that the Group continues to be a place

where people who are passionate about our purpose wish to work.

Engagement with colleagues helps to better understand how they

remain motivated to achieve our purpose, with the skills needed

to deliver on the Group's wider strategic objectives. In 2024 the

Board approved an evolved approach to workforce engagement,

implemented during 2025. This approach built on existing listening

activities and introduced three new forums – the People Forum,

People Consultation Forum, and Management Advisory Forum –

designed to increase colleague voice, particularly at grades where

trade union membership is low. Where appropriate, these forums

will be engaged on matters of remuneration, including how

executive remuneration aligns to the wider workforce.

In 2025, the Board held a number of colleague engagement events,

with the opportunity to hear directly from colleagues. We also

continue to engage colleagues through regular surveys and

townhalls. In 2025, the Group Chief Executive hosted two virtual

all-colleague townhall sessions, where colleagues were invited to

submit questions in advance.

The most popular questions were addressed, including those under

the 'People and culture' category where colleagues can submit

questions around remuneration.

Meetings were also held with our recognised trade unions to ensure

open dialogue on pay and reward. These activities collectively

support transparency and help the Board understand colleague

sentiment on remuneration, ensuring executive pay decisions align

with the wider workforce.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Colleague engagement survey – reward** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | We ask our colleagues a simple question each year – <br>"Overall, I believe my reward package fairly reflects my role."<br>**67%**<br>**of colleagues answered this favourably (up 3 points from 2024** <br>**and 19 points above the financial services industry average)** |  |
|  | We ask our colleagues a simple question each year – <br>"Overall, I believe my reward package fairly reflects my role."<br>**67%**<br>**of colleagues answered this favourably (up 3 points from 2024** <br>**and 19 points above the financial services industry average)** |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Executive director single total figure of remuneration** (audited) |  |  |  | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  |  | **Charlie Nunn** | **Charlie Nunn** | **William Chalmers** | **William Chalmers** |
| £000 | £000 | **2025** | 2024 | **2025** | 2024 |
| Base salary | Base salary | **1365** | 1170 | **871** | 844 |
| Fixed share award<sup>1</sup> | Fixed share award<sup>1</sup> | **1365** | 1082 | **871** | 519 |
| Benefits | Benefits | **71** | 52 | **48** | 63 |
| Pension | Pension | **205** | 176 | **131** | 127 |
| **Total fixed pay** | **Total fixed pay** | **3006** | 2480 | **1921** | 1553 |
| Group Performance Share<sup>2</sup> | Group Performance Share<sup>2</sup> | **1425** | 1127 | **909** | 812 |
| Long-term incentive<sup>3,4</sup> | Long-term incentive<sup>3,4</sup> |  |  |  |  |
| –Value excluding share price appreciation | –Value excluding share price appreciation | **1704** | 1687 | **1228** | 1216 |
| –Share price appreciation | –Share price appreciation | **1272** | 875 | **917** | 631 |
| **Total variable pay** | **Total variable pay** | **4401** | 3689 | **3054** | 2659 |
| Other remuneration<sup>5</sup> | Other remuneration<sup>5</sup> | **–** | – | **1** | – |
| **Total remuneration** | **Total remuneration** | **7407** | 6169 | **4976** | 4212 |
| Less: Performance adjustment<sup>6</sup> | Less: Performance adjustment<sup>6</sup> | **–** | – | **–** | – |
| **Total remuneration less performance adjustment** | **Total remuneration less performance adjustment** | **7407** | 6169 | **4976** | 4212 |

---

1The fixed share award is part of fixed remuneration and is not subject to any performance conditions (see **page [106](#if1708a315fb0408099bb1d546e3fd295_603)**).

2Awards for Charlie Nunn and William Chalmers will be made in March 2026 in a combination of cash and shares.

3The 2023 Long Term Share Plan (LTSP) vesting (see **page [112](#i4d8ec4ee19ff409ca3030d949c34c188_1492)**) at 100% was confirmed by the Remuneration Committee at its meeting on 12 February 2026. The total number of shares

vesting will be 3,283,896 for Charlie Nunn and 2,366,848 for William Chalmers. The average share price between 1 October 2025 and 31 December 2025 of 90.64 pence has been used

to indicate the value. The shares were awarded in 2023 based on a share price of 51.901 pence. The amount of the long-term incentive vesting attributable to share price appreciation is

shown in the table above.

4The long-term incentive figures for 2024 have been adjusted to reflect the vesting share price of 71.42 pence instead of the average price of 55.969 pence reported in the 2024 report.

5Other remuneration payments comprise income from all-employee share plans, which arises through employer matching or discounting of employee purchases.

6No malus or clawback provisions were applied in relation to the executive directors during the year.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |  | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
| £ | £**Charlie Nunn** | **William Chalmers** |
| **Pension/Benefits** |  |  |
| Pension | **204805** | **130630** |
| Car or car allowance<sup>1</sup> | **14718** | **12000** |
| Flexible benefits payments | **54615** | **34835** |
| Private medical insurance | **1205** | **1205** |
| **Subtotal for Total Benefits less pension** | **70538** | **48040** |

---

1For Charlie Nunn this includes the benefit associated with the Colleague Sustainable Car Scheme (salary sacrifice) and for William Chalmers this includes a car allowance.

**Defined benefits pension arrangements (audited)**

There are no executive directors with defined benefit pension entitlements.

**Payments for loss of office (audited)**

No payments for loss of office were made in 2025.

**Payments within the reporting year to past directors (audited)**

There were no payments made to past directors in 2025.

**External appointments**

No executive director served as a non-executive director on the board of another company in 2025.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**2025 Group balanced scorecard**

The balanced scorecard provides transparency on how our

executive directors' remuneration outcomes for 2025 GPS directly

align with our performance, strategy and stakeholder experience.

Strong performance across both financial and non-financial

measures has resulted in an overall mechanical outcome of 81.9%

as set out in the scorecard assessment table below.

For 2025, any impact relating to motor finance provisions on

financial metrics was excluded, to allow the Committee to set

robust targets aligned to the financial planning and budgeting

process, as described in our 2024 directors' remuneration report.

Instead, the Committee would assess and determine an appropriate

impact to the scorecard and resulting executive directors 2025

annual GPS outcomes.

In assessing the impact of the provision on the Group's financial

performance with due consideration to the fact that it relates to

issues that took place prior to the appointment of the current

management team, the Committee has decided to exercise its

discretion to adjust the BSC to a more appropriate outcome of

74.0%.

Commentary on non-financial performance is described on **page [111](#i4780f70fd9a641bdbe4dc5821afef6b0_0-0-1-1-5233089)**.

![Rem_LinkToStrategyAndStrategy_WithoutWordKey_Infographic.gif](lyg-20251231_g287.gif)

**Our 2025 Group balanced scorecard**<br>

![Rem_2024_BalancedScorecard_WithStakeholders_NoType.gif](lyg-20251231_g288.gif)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Financial**(60%) | **Profit** <br>**after tax**<sup>1</sup><br>| **25%** | **£4,054m** | **£5,712m** | **£5,428m** | **87%** | **21.8%** |
| **Financial**(60%) |  |  |  |  |  |  |  |
| **Financial**(60%) | **Return on** <br>**tangible equity**<sup>1</sup><br>| **25%** | **11%** | **15.5%** | **14.8%** | **88%** | **22.1%** |
| **Financial**(60%) |  |  |  |  |  |  |  |
| **Financial**(60%) | **Operating costs**<sup>2</sup> | **10%** | **£9,411m** | **£9,132m** | **£9,288m** | **58%** | **5.8%** |
| **Non-financial**(40%) | **Group**<br>**customer** <br>**dashboard**<br>| **20%** | **25** | **100** | **65** | **65%** | **13.0%** |
| **Non-financial**(40%) |  |  |  |  |  |  |  |
| **Non-financial**(40%) | **Reducing our**<br>**operational**<br>**carbon emissions**<sup>3</sup><br>| **5%** | **27%** | **36%** | **39%** | **100%** | **5.0%** |
| **Non-financial**(40%) |  |  |  |  |  |  |  |
| **Non-financial**(40%) | **Increasing our gender**<br>**& ethnic representation** <br>**in executive roles**<sup>4</sup> | **3.75%** | **36.0%** | **42.0%** | **40.4%** | **80%** | **3.00%** |
| **Non-financial**(40%) | **Increasing our gender**<br>**& ethnic representation** <br>**in executive roles**<sup>4</sup> |  |  |  |  |  |  |
| **Non-financial**(40%) | **Increasing our gender**<br>**& ethnic representation** <br>**in executive roles**<sup>4</sup> | **3.75%** | **14.4%** | **16.1%** | **17.5%** | **100%** | **3.75%** |
| **Non-financial**(40%) |  |  |  |  |  |  |  |
| **Non-financial**(40%) | **Culture and**<br>**colleague** <br>**engagement**<br>| **7.5%** | **60%** | **75%** | **75%** | **100%** | **7.5%** |
|  | **Mechanical balanced scorecard outcome** | **Mechanical balanced scorecard outcome** | **Mechanical balanced scorecard outcome** | **Mechanical balanced scorecard outcome** |  |  | **81.9%** |
|  | **Discretionary Committee adjustment** | **Discretionary Committee adjustment** | **Discretionary Committee adjustment** | **Discretionary Committee adjustment** |  |  | **-7.9** |
|  | **Revised balanced scorecard outcome** | **Revised balanced scorecard outcome** | **Revised balanced scorecard outcome** | **Revised balanced scorecard outcome** |  |  | **74.0%** |
|  | 1Profit after tax and return on tangible equity measures exclude the £800 million <br>provision in 2025 in relation to motor finance commission arrangements.<br>2Operating costs exclude remediation and in-year GPS expense.  | 1Profit after tax and return on tangible equity measures exclude the £800 million <br>provision in 2025 in relation to motor finance commission arrangements.<br>2Operating costs exclude remediation and in-year GPS expense.  | 1Profit after tax and return on tangible equity measures exclude the £800 million <br>provision in 2025 in relation to motor finance commission arrangements.<br>2Operating costs exclude remediation and in-year GPS expense.  | 3Reducing our operational carbon emissions excludes international travel.<br>4Executive roles include grade X colleagues only, subject to local laws <br>and regulation. | 3Reducing our operational carbon emissions excludes international travel.<br>4Executive roles include grade X colleagues only, subject to local laws <br>and regulation. | 3Reducing our operational carbon emissions excludes international travel.<br>4Executive roles include grade X colleagues only, subject to local laws <br>and regulation. | 3Reducing our operational carbon emissions excludes international travel.<br>4Executive roles include grade X colleagues only, subject to local laws <br>and regulation. |

---

---

| | |
|:---|:---|
| **Charlie Nunn** – Group Chief Executive |  |
| Maximum award | £1,925,533 |
| Group balanced scorecard outcome | 74.0% |
| Annual GPS award | £1,424,895 |
| •Continued delivery of the Group's strategy, financial targets, <br>investment priorities, and market share growth in priority areas, <br>which will set the Group up for success in 2026, the final year of the <br>first strategic phase<br>•Demonstrated strong leadership throughout another challenging <br>year for consumers, proactively managing risk issues and the <br>strategic direction of the Group<br>•Worked closely with the UK Regulators and UK Government on <br>several key areas (e.g. motor finance and UK growth ambitions) <br>•Group financials remain robust, with the Group delivering 2025 and <br>on-track for 2026, driven by strong income performance, strategic <br>delivery, and effective risk management – contributing to the <br>strong share price performance in 2025  | •Continued delivery of the Group's strategy, financial targets, <br>investment priorities, and market share growth in priority areas, <br>which will set the Group up for success in 2026, the final year of the <br>first strategic phase<br>•Demonstrated strong leadership throughout another challenging <br>year for consumers, proactively managing risk issues and the <br>strategic direction of the Group<br>•Worked closely with the UK Regulators and UK Government on <br>several key areas (e.g. motor finance and UK growth ambitions) <br>•Group financials remain robust, with the Group delivering 2025 and <br>on-track for 2026, driven by strong income performance, strategic <br>delivery, and effective risk management – contributing to the <br>strong share price performance in 2025  |

---

---

| | |
|:---|:---|
| **William Chalmers** – Chief Financial Officer |  |
| Maximum award | £1,228,156 |
| Group balanced scorecard outcome | 74.0% |
| Annual GPS award | £908,835 |
| •Played a critical role in the execution of the Group's strategy and <br>maintained positive engagement with investors and regulators <br>on the Group's performance and strategic direction <br>•Strong financial and risk management, delivering the plan <br>throughout 2025 and on-track for 2026 commitments, with <br>continued focus on cost and investment management, alongside <br>net interest income and other operating income growth<br>•Sustained strength in financial performance and strong capital, <br>funding, and balance sheet growth, enabling strong share <br>price performance in 2025, a 15% increase in dividend and <br>an increased buyback | •Played a critical role in the execution of the Group's strategy and <br>maintained positive engagement with investors and regulators <br>on the Group's performance and strategic direction <br>•Strong financial and risk management, delivering the plan <br>throughout 2025 and on-track for 2026 commitments, with <br>continued focus on cost and investment management, alongside <br>net interest income and other operating income growth<br>•Sustained strength in financial performance and strong capital, <br>funding, and balance sheet growth, enabling strong share <br>price performance in 2025, a 15% increase in dividend and <br>an increased buyback |

---

![KeylineBox_HeritageGreenHeader_1col_64mm.gif](lyg-20251231_g289.gif)

![KeylineBox_HeritageGreenHeader_1col_64mm.gif](lyg-20251231_g289.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Group balanced scorecard non-financial measures performance in 2025**

The table below outlines the Committee's assessment of the non-financial elements of the scorecard.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Non-financial measures (40% weighting) commentary** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | |
|:---|:---|:---|:---|
| **Measure** | **Link to** <br>**strategy**<br>| **Link to** <br>**stakeholder**<br>| **Commentary** |
| **Group customer** <br>**dashboard**<br>20% weighting<br>Our assessment of how <br>effectively we are serving <br>customers across our brands, <br>products and services.<br>It brings together survey based <br>measures (such as net promoter <br>score and customer satisfaction) <br>and operational indicators <br>(including digital engagement <br>and performance of key <br>customer journeys).<br>| ![GrowIcon.gif](lyg-20251231_g4.gif)<br>![ChangeIcon.gif](lyg-20251231_g6.gif)<br>| ![Button_CustomersAndClients_6_276mm_Keyline.gif](lyg-20251231_g290.gif) | •The 2025 dashboard contains 135 measures spanning products, services, <br>customer segments and business areas, with 46 driving the overall outcome <br>within the Group balanced scorecard<br>•The 2025 score is 65, on a 0-100 scale, with the score moving up or down <br>depending on how many measures exceed or fall short of stretching targets <br>at an aggregated level. This means less favourable performance in some <br>areas can be offset by strong performance in others, and vice versa<br>•We have made good progress on our strategic transformation, with <br>performance on 64% of measures improved or maintained year-on-year. <br>However, we have seen an increase in customer complaints reflective of <br>broader market changes and a small decline in our net promoter scores with <br>customers telling us that there is more we can do to improve mobile app <br>journeys and experiences, finding support when needed and making their <br>money work harder for them<br>|
| ![Rem_CustomerDashboardInfographic.gif](lyg-20251231_g291.gif) | ![Rem_CustomerDashboardInfographic.gif](lyg-20251231_g291.gif) | ![Rem_CustomerDashboardInfographic.gif](lyg-20251231_g291.gif) | ![Rem_CustomerDashboardInfographic.gif](lyg-20251231_g291.gif) |
| **Reducing our** <br>**operational carbon** <br>**emissions**<br>5% weighting<br>Reported vs 2018/2019 baseline. <br>Includes Scope 1, Scope 2 and <br>Scope 3 carbon emissions, <br>excluding international travel. <br>Reporting year is October to <br>September.<br>| ![FocusIcon.gif](lyg-20251231_g5.gif) | ![Button_CommunitiesAndEnvironment_6_276mm_Keyline.gif](lyg-20251231_g292.gif) | •A 39% reduction has been achieved year to date from our 2018/19 baseline, <br>demonstrating continued strong progress in reducing the Group's <br>operational carbon footprint<br>•Performance has been supported by improved energy management <br>practices, investment in more efficient office spaces and colleagues making <br>conscious decisions to travel less frequently and in more sustainable, lower <br>emission modes of transport<br>•These actions underpin our pathway to net zero carbon operations by 2030 <br>and our ambition to reduce energy use by 50%<br>|
| **Increasing our** <br>**gender and ethnic** <br>**representation in** <br>**executive roles**<br>7.5% weighting<br>Executive roles include grade X <br>colleagues only, subject to local <br>laws and regulation.<br>| ![ChangeIcon.gif](lyg-20251231_g6.gif) | ![Button_CommunitiesAndEnvironment_6_276mm_Keyline.gif](lyg-20251231_g292.gif)<br>![Button_Colleagues_6_276mm_Keyline.gif](lyg-20251231_g293.gif)<br>| •We have seen an increase in women in executive roles to 40.4% during <br>2025. This is against our ambition to achieve 45% to 55% women in <br>executive roles by year end 2030<br>•Throughout 2025, we also saw continued improvement in the <br>representation of Black, Asian and Minority Ethnic colleagues in executive <br>positions. At year end, 17.5% of executive roles were held by Black, Asian <br>and Minority Ethnic colleagues, representing strong progress toward our <br>ambition of reaching 19% to 22% by 2030<br>|
| **Culture** <br>**and colleague** <br>**engagement**<br>7.5% weighting<br>Our employee engagement <br>index score.<br>| ![ChangeIcon.gif](lyg-20251231_g6.gif) | ![Button_Colleagues_6_276mm_Keyline.gif](lyg-20251231_g293.gif) | •Our employee engagement index (EEI) encompasses pride and satisfaction <br>working for the Group, and also recommending the Group as a great place <br>to work<br>•Our 2025 EEI results highlight our supportive and inclusive culture, alongside <br>the opportunities for learning, development and internal mobility that shape <br>colleagues' experiences at the Group. A key factor driving the year-on-year <br>improvement in engagement was colleagues' increased confidence in our <br>reward and benefits package, which many cite as an important reason for <br>staying with the Group<br>|

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Measuring customer experience** <br>**across five priority pillars.** | **Measuring customer experience** <br>**across five priority pillars.** | **Measuring customer experience** <br>**across five priority pillars.** | **Measuring customer experience** <br>**across five priority pillars.** |  |  |  |  |  |  | **Across the Group's** <br>**trusted brands**<br>|
| How did <br>customers <br>**feel** about the <br>brand? | How did <br>customers <br>**feel** about the <br>brand? | Were our <br>**propositions**<br>compelling? | Were our <br>**propositions**<br>compelling? | Did we <br>deliver on <br>**service**<br>expectations? | Did we <br>deliver on <br>**service**<br>expectations? | Did we <br>**attract** new <br>customers? | Did we <br>**attract** new <br>customers? | Did we <br>**deepen**<br>relationships? | Did we <br>**deepen**<br>relationships? |  |
| **Link to** <br>**strategy**<br>| ![GrowIcon.gif](lyg-20251231_g4.gif) | **Link to** <br>**strategy**<br>| ![ChangeIcon.gif](lyg-20251231_g6.gif) | **Link to** <br>**strategy**<br>| ![ChangeIcon.gif](lyg-20251231_g6.gif) | **Link to** <br>**strategy**<br>| ![GrowIcon.gif](lyg-20251231_g4.gif) | **Link to** <br>**strategy**<br>| ![GrowIcon.gif](lyg-20251231_g4.gif) |  |
|  |  |  |  |  |  |  |  |  |  | **See page [07](#i3e79a3b9874d4b5c98a6e9f4d6da1a55_1-1-1-5-5233089)** |

---

![Rem_LongTermSharePlan_WithStrategyAndStakeholders_NoType.gif](lyg-20251231_g294.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**2023 Long Term Share Plan**

A Long Term Share Plan award was granted in relation to 2022

performance under the terms of the previous Policy.

It is an important feature of the LTSP that performance is assessed

and appropriately recognised upfront in the award size during the

'pre-grant test'.

A final 'pre-vest test' of financial underpins and consideration

of four key questions takes place prior to vesting to ensure

performance over the period has been sustainable. The Committee

has completed the full assessment and there is nothing known now

which, had it been known at the time of grant, would have changed

the initial award levels.

The outcome of the 'pre-vest test' of both financial underpin

performance and consideration of the four key questions

is shown below.

**Pre-vest test – underpins**<br>

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Financial** (100%) | **CET1 ratio** – Group CET1 ratio above the guided management target each year <br>(c.13.5% by 2024 and c.13.0% by 2026), including all regulatory buffers | **2023** | **13.7%** | **Met** |
| **Financial** (100%) | **CET1 ratio** – Group CET1 ratio above the guided management target each year <br>(c.13.5% by 2024 and c.13.0% by 2026), including all regulatory buffers |  |  | **Met** |
| **Financial** (100%) | **CET1 ratio** – Group CET1 ratio above the guided management target each year <br>(c.13.5% by 2024 and c.13.0% by 2026), including all regulatory buffers | **2024** | **13.5%** | **Met** |
| **Financial** (100%) | **CET1 ratio** – Group CET1 ratio above the guided management target each year <br>(c.13.5% by 2024 and c.13.0% by 2026), including all regulatory buffers |  |  | **Met** |
| **Financial** (100%) | **CET1 ratio** – Group CET1 ratio above the guided management target each year <br>(c.13.5% by 2024 and c.13.0% by 2026), including all regulatory buffers | **2025** | **13.2%** | **Met** |
| **Financial** (100%) |  |  |  |  |
| **Financial** (100%) | **RoTE** – Group RoTE exceeds the average for UK peer banks<sup>1</sup>over the <br>three years. Average RoTE for peer banks: 11.9% (2023), 11.6% (2024) <br>and 11.8% (2025<sup>2</sup>) | **2023** | **15.8%** | **Met** |
| **Financial** (100%) | **RoTE** – Group RoTE exceeds the average for UK peer banks<sup>1</sup>over the <br>three years. Average RoTE for peer banks: 11.9% (2023), 11.6% (2024) <br>and 11.8% (2025<sup>2</sup>) |  |  | **Met** |
| **Financial** (100%) | **RoTE** – Group RoTE exceeds the average for UK peer banks<sup>1</sup>over the <br>three years. Average RoTE for peer banks: 11.9% (2023), 11.6% (2024) <br>and 11.8% (2025<sup>2</sup>) | **2024** | **12.3%** | **Met** |
| **Financial** (100%) | **RoTE** – Group RoTE exceeds the average for UK peer banks<sup>1</sup>over the <br>three years. Average RoTE for peer banks: 11.9% (2023), 11.6% (2024) <br>and 11.8% (2025<sup>2</sup>) |  |  | **Met** |
| **Financial** (100%) | **RoTE** – Group RoTE exceeds the average for UK peer banks<sup>1</sup>over the <br>three years. Average RoTE for peer banks: 11.9% (2023), 11.6% (2024) <br>and 11.8% (2025<sup>2</sup>) | **2025** | **12.9%** | **Met** |
| **Financial** (100%) |  |  |  |  |
| **Financial** (100%) | **Ordinary dividend** – Increased ordinary dividend payments over the <br>plan period (subject to any further sector-wide regulatory constraints). <br>Starting point in 2022 was a dividend of 2.40p | **2023**<sup>3</sup> | **2.76p** | **Met** |
| **Financial** (100%) | **Ordinary dividend** – Increased ordinary dividend payments over the <br>plan period (subject to any further sector-wide regulatory constraints). <br>Starting point in 2022 was a dividend of 2.40p |  |  | **Met** |
| **Financial** (100%) | **Ordinary dividend** – Increased ordinary dividend payments over the <br>plan period (subject to any further sector-wide regulatory constraints). <br>Starting point in 2022 was a dividend of 2.40p | **2024**<sup>3</sup> | **3.17p** | **Met** |
| **Financial** (100%) | **Ordinary dividend** – Increased ordinary dividend payments over the <br>plan period (subject to any further sector-wide regulatory constraints). <br>Starting point in 2022 was a dividend of 2.40p |  |  | **Met** |
| **Financial** (100%) | **Ordinary dividend** – Increased ordinary dividend payments over the <br>plan period (subject to any further sector-wide regulatory constraints). <br>Starting point in 2022 was a dividend of 2.40p | **2025**<sup>3</sup> | **3.65p** | **Met** |
|  | **Award (% maximum) vesting** |  |  | **100%** |

---

1Peers: Barclays Group, HSBC Holdings, NatWest Group, Santander UK and Virgin Money UK.<br>22025 peer bank average based on latest company published consensus as of 5 February 2026 where full-year results not available. In October 2024, <br>Nationwide completed its acquisition of Virgin Money; therefore no Virgin Money UK 2025 RoTE available. Instead, 2024 RoTE has been used as a proxy. <br>3Dividend shown includes both interim and final for the respective performance year. For 2025, this is the proposed final dividend.<br>

---

| | | |
|:---|:---|:---|
| **Pre-vest test – additional consideration by the Committee** | **Pre-vest test – additional consideration by the Committee** |  |
| In conjunction with the assessment of performance against the <br>financial underpins above, the Committee considered the four <br>questions below to satisfy itself that there is nothing known now <br>which, had it been known at the time of grant, would have <br>changed the initial award levels: | In conjunction with the assessment of performance against the <br>financial underpins above, the Committee considered the four <br>questions below to satisfy itself that there is nothing known now <br>which, had it been known at the time of grant, would have <br>changed the initial award levels: | The Group continues to make meaningful progress in supporting <br>the UK's transition to a low carbon economy. Our progress is <br>monitored through updates and deep dives at a Group Executive <br>Committee and Board level providing visibility of achievements, <br>learnings, and the external dependencies shaping the Group's <br>transition pathway and performance. Progress against our <br>ambitions, targets, and commitments can be found on **pages [35](#i3eaa7a3e529a46b3b97a88e05ad474bc_97)**<br>**to [49](#ie3b988292ad3485cbc6fd2e21427b631_2276)**, and in our sustainability report . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>During the 2023 to 2025 performance period, there have been no <br>serious external conduct matters or severe reputational damage.<br>While there continues to be uncertainty around motor finance <br>issue, the Committee has determined that it should not impact <br>the 2023 LTSP vesting outcome.<br>The Committee concluded that performance considered in the <br>'pre-grant test' has been sustainable and therefore no discretion <br>has been applied. The 2023 LTSP awards will vest at 100%, <br>as the outcome represents a fair reflection of performance <br>during the period.  |
| Q | Has the Bank lived up to its ambition to be the Best Bank <br>for Customers? <br>| The Group continues to make meaningful progress in supporting <br>the UK's transition to a low carbon economy. Our progress is <br>monitored through updates and deep dives at a Group Executive <br>Committee and Board level providing visibility of achievements, <br>learnings, and the external dependencies shaping the Group's <br>transition pathway and performance. Progress against our <br>ambitions, targets, and commitments can be found on **pages [35](#i3eaa7a3e529a46b3b97a88e05ad474bc_97)**<br>**to [49](#ie3b988292ad3485cbc6fd2e21427b631_2276)**, and in our sustainability report . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>During the 2023 to 2025 performance period, there have been no <br>serious external conduct matters or severe reputational damage.<br>While there continues to be uncertainty around motor finance <br>issue, the Committee has determined that it should not impact <br>the 2023 LTSP vesting outcome.<br>The Committee concluded that performance considered in the <br>'pre-grant test' has been sustainable and therefore no discretion <br>has been applied. The 2023 LTSP awards will vest at 100%, <br>as the outcome represents a fair reflection of performance <br>during the period.  |
| Q | Do the Group's financial results and capital position <br>adequately reflect risk, conduct and any other non-financial <br>considerations, including ESG?<br>| The Group continues to make meaningful progress in supporting <br>the UK's transition to a low carbon economy. Our progress is <br>monitored through updates and deep dives at a Group Executive <br>Committee and Board level providing visibility of achievements, <br>learnings, and the external dependencies shaping the Group's <br>transition pathway and performance. Progress against our <br>ambitions, targets, and commitments can be found on **pages [35](#i3eaa7a3e529a46b3b97a88e05ad474bc_97)**<br>**to [49](#ie3b988292ad3485cbc6fd2e21427b631_2276)**, and in our sustainability report . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>During the 2023 to 2025 performance period, there have been no <br>serious external conduct matters or severe reputational damage.<br>While there continues to be uncertainty around motor finance <br>issue, the Committee has determined that it should not impact <br>the 2023 LTSP vesting outcome.<br>The Committee concluded that performance considered in the <br>'pre-grant test' has been sustainable and therefore no discretion <br>has been applied. The 2023 LTSP awards will vest at 100%, <br>as the outcome represents a fair reflection of performance <br>during the period.  |
| Q | Has the Group made meaningful progress in supporting the <br>UK's transition to net zero? <br>| The Group continues to make meaningful progress in supporting <br>the UK's transition to a low carbon economy. Our progress is <br>monitored through updates and deep dives at a Group Executive <br>Committee and Board level providing visibility of achievements, <br>learnings, and the external dependencies shaping the Group's <br>transition pathway and performance. Progress against our <br>ambitions, targets, and commitments can be found on **pages [35](#i3eaa7a3e529a46b3b97a88e05ad474bc_97)**<br>**to [49](#ie3b988292ad3485cbc6fd2e21427b631_2276)**, and in our sustainability report . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>During the 2023 to 2025 performance period, there have been no <br>serious external conduct matters or severe reputational damage.<br>While there continues to be uncertainty around motor finance <br>issue, the Committee has determined that it should not impact <br>the 2023 LTSP vesting outcome.<br>The Committee concluded that performance considered in the <br>'pre-grant test' has been sustainable and therefore no discretion <br>has been applied. The 2023 LTSP awards will vest at 100%, <br>as the outcome represents a fair reflection of performance <br>during the period.  |
| Q | Has the Group suffered a serious conduct event or has severe <br>reputational damage arisen from the Group not living <br>its values?<br>| The Group continues to make meaningful progress in supporting <br>the UK's transition to a low carbon economy. Our progress is <br>monitored through updates and deep dives at a Group Executive <br>Committee and Board level providing visibility of achievements, <br>learnings, and the external dependencies shaping the Group's <br>transition pathway and performance. Progress against our <br>ambitions, targets, and commitments can be found on **pages [35](#i3eaa7a3e529a46b3b97a88e05ad474bc_97)**<br>**to [49](#ie3b988292ad3485cbc6fd2e21427b631_2276)**, and in our sustainability report . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>During the 2023 to 2025 performance period, there have been no <br>serious external conduct matters or severe reputational damage.<br>While there continues to be uncertainty around motor finance <br>issue, the Committee has determined that it should not impact <br>the 2023 LTSP vesting outcome.<br>The Committee concluded that performance considered in the <br>'pre-grant test' has been sustainable and therefore no discretion <br>has been applied. The 2023 LTSP awards will vest at 100%, <br>as the outcome represents a fair reflection of performance <br>during the period.  |
| A | The Group has maintained its strong capital position and <br>delivery for customers, communities and shareholders since <br>making awards in 2023. Risk management is essential to <br>our business model and strategy, helping us to embrace <br>opportunities responsibly and drive sustainable growth for <br>the Group.<br>| The Group continues to make meaningful progress in supporting <br>the UK's transition to a low carbon economy. Our progress is <br>monitored through updates and deep dives at a Group Executive <br>Committee and Board level providing visibility of achievements, <br>learnings, and the external dependencies shaping the Group's <br>transition pathway and performance. Progress against our <br>ambitions, targets, and commitments can be found on **pages [35](#i3eaa7a3e529a46b3b97a88e05ad474bc_97)**<br>**to [49](#ie3b988292ad3485cbc6fd2e21427b631_2276)**, and in our sustainability report . ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>During the 2023 to 2025 performance period, there have been no <br>serious external conduct matters or severe reputational damage.<br>While there continues to be uncertainty around motor finance <br>issue, the Committee has determined that it should not impact <br>the 2023 LTSP vesting outcome.<br>The Committee concluded that performance considered in the <br>'pre-grant test' has been sustainable and therefore no discretion <br>has been applied. The 2023 LTSP awards will vest at 100%, <br>as the outcome represents a fair reflection of performance <br>during the period.  |

---

In determining the final vesting outcome of the 2023 Long Term

Share Plan, the Committee carefully considered alignment with

shareholder experience and whether adjustments were required

for windfall gains.

Awards were granted in March 2023 at 51.901 pence, around 10%

higher than awards granted in March 2022.

The award price is considered a fair reflection of the share price in

the 12 months leading up to grant. The share price used to calculate

indicative value is 90.64 pence, detailed on **page [109](#ib7941e5419304ab08e025d2111062c9b_0-1-1-1-5233089)**. While 75%

higher, the Committee considers it reasonably represents

performance over the period.

The Committee concluded there was no windfall gain over the

period and as such no adjustment was required.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Relative importance of spend on pay** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

The graphs below illustrate the total remuneration of all Group employees compared with returns of capital to shareholders in the form of

dividends and share buyback.

**Dividend and share buyback**<sup>1</sup><br>£bn<br>

**7%** ![Icon_ArrowUp.gif](lyg-20251231_g134.gif)<br>

![1](lyg-20251231_g295.gif)

![13](lyg-20251231_g296.gif)

---

| |
|:---|
| **2025** |
| 2024 |

---

12025: Proposed ordinary dividend in respect of the financial year ended 31 December

2025, partly paid in 2025 and partly to be paid in 2026 and share buyback.

2024: Ordinary dividend in respect of the financial year ended 31 December 2024,

partly paid in 2024 and partly paid in 2025 and share buyback.

**Salaries and performance-based compensation**<sup>2</sup><br>£bn<br>

**0%**<br>

![50](lyg-20251231_g297.gif)

![38](lyg-20251231_g295.gif)

---

| |
|:---|
| **2025** |
| 2024 |

---

2Performance-based compensation includes expense for the following plans: Group

Performance Share (2025: £412 million, 2024: £368 million), Long Term Incentive Plan,

Long Term Share Plan and Executive Group Ownership Share (2025: £24 million,

2024: £28 million), Executive Share Awards (2025: £0.00 million, 2024: £0.03 million).

For the 2025 performance year, the value of awards was £405 million for Group

Performance Share and £26 million for Long Term Incentive Plan.

**Comparison of returns to shareholders and Group Chief Executive total remuneration**

The required chart below shows the historical total shareholder return (TSR) of Lloyds Banking Group plc compared with the FTSE 100.

The FTSE 100 Index has been chosen as it is a widely recognised equity index of which Lloyds Banking Group plc has been a constituent

throughout this period.

**Historical TSR Performance**<br>Growth in the value of a hypothetical £100 holding since 31 December 2015 (to 31 December 2025)<br>

---

| | |
|:---|:---|
| Lloyds Banking Group | FTSE 100 Index |
| Lloyds Banking Group | FTSE 100 Index |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Value of £100 invested on 31 December 2015** | 250 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 250 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** |  |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 200 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 200 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** |  |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 150 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 150 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** |  |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 100 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 100 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** |  |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 50 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 50 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** |  |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 0 |  |  |  |  |  |  |  |  |  |  |  |
| **Value of £100 invested on 31 December 2015** | 0 | \| | \| | \| | \| | \| | \| | \| | \| | \| | \| | \| |
| **Value of £100 invested on 31 December 2015** | 0 | Dec<br>2015 | Dec<br>2016 | Dec<br>2017 | Dec<br>2018 | Dec<br>2019 | Dec<br>2020 | Dec<br>2021 | Dec<br>2022 | Dec<br>2023 | Dec<br>2024 | **Dec**<br>**2025** |
|  |  | Dec<br>2015 | Dec<br>2016 | Dec<br>2017 | Dec<br>2018 | Dec<br>2019 | Dec<br>2020 | Dec<br>2021 | Dec<br>2022 | Dec<br>2023 | Dec<br>2024 | **Dec**<br>**2025** |
|  |  | Dec<br>2015 | Dec<br>2016 | Dec<br>2017 | Dec<br>2018 | Dec<br>2019 | Dec<br>2020 | Dec<br>2021 | Dec<br>2022 | Dec<br>2023 | Dec<br>2024 | **Dec**<br>**2025** |

---

![14](lyg-20251231_g298.gif)

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Group Chief Executive remuneration over the last ten years** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Group Chief <br>Executive<br>| Sir António Horta-Osório<sup>1</sup> | Sir António Horta-Osório<sup>1</sup> | Sir António Horta-Osório<sup>1</sup> | Sir António Horta-Osório<sup>1</sup> | Sir António Horta-Osório<sup>1</sup> | Sir António Horta-Osório<sup>1</sup> | William <br>Chalmers<sup>2</sup><br>| Charlie Nunn<sup>3,4</sup> | Charlie Nunn<sup>3,4</sup> | Charlie Nunn<sup>3,4</sup> | Charlie Nunn<sup>3,4</sup> | Charlie Nunn<sup>3,4</sup> |
| Year | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2021 | 2021 | 2022 | 2023 | 2024 | **2025** |
| GCE single figure of <br>remuneration £000<br>| 5791 | 6434 | 6544 | 4424 | 3604 | 2444 | 819 | 5523 | 3767 | 3681 | 6169 | **7407** |
| Annual bonus/GPS <br>payout (% of <br>maximum <br>opportunity)<br>| 77% | 77% | 67.6% | n/a | n/a | 57.8% | 78.2% | 57.8% | 84.1% | 80.3% | 68.1% | **74.0%** |
| Long-term incentive <br>vesting (% of <br>maximum <br>opportunity)<br>| 55% | 66.3% | 68.7% | 49.7% | 33.75% | 41.8% | n/a | n/a | n/a | n/a | 100% | **100%** |

---

1Sir António Horta-Osório independently requested that he be withdrawn from consideration for a Group Performance Share award in 2019 and 2020. There were no GPS awards for

2020 performance.

2William Chalmers was the Interim Group Chief Executive from 1 May 2021 until 15 August 2021, remuneration in the table above is for this period.

3Charlie Nunn succeeded Sir António Horta-Osório as Group Chief Executive with effect from 16 August 2021 and the single figure total remuneration for 2021 includes a one-off buy-out

of £4.231 million.

4The single figure of remuneration figure for 2024 has been adjusted from what was reported in the 2024 report as per detail set out on **page [109](#ib7941e5419304ab08e025d2111062c9b_0-1-1-1-5233089)**.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Single total figure of remuneration and shareholding for Chair and non-executive directors**(audited) | **Single total figure of remuneration and shareholding for Chair and non-executive directors**(audited) | **Single total figure of remuneration and shareholding for Chair and non-executive directors**(audited) | **Single total figure of remuneration and shareholding for Chair and non-executive directors**(audited) | **Single total figure of remuneration and shareholding for Chair and non-executive directors**(audited) | **Single total figure of remuneration and shareholding for Chair and non-executive directors**(audited) | **Single total figure of remuneration and shareholding for Chair and non-executive directors**(audited) | **Single total figure of remuneration and shareholding for Chair and non-executive directors**(audited) | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  |  | **Fees (£000)** | **Fees (£000)** | **Benefits (£000)**<sup>4</sup> | **Benefits (£000)**<sup>4</sup> | **Total (£000)** | **Total (£000)** | **Total** <br>**shareholding**<sup>5</sup> | **Total** <br>**shareholding**<sup>5</sup> |
|  |  | **2025** | 2024 | **2025** | 2024 | **2025** | 2024 | **at 31 December** <br>**2025** | **at 31 December** <br>**2025** |
| **Chair and non-executive directors** | **Chair and non-executive directors** |  |  |  |  |  |  |  |  |
| Sir Robin Budenberg | Sir Robin Budenberg | **750** | 655 | **1** | 1 | **751** | 656 | **2500000** | **2500000** |
| Nathan Bostock | Nathan Bostock | **359** | 140 | **4** | – | **363** | 140 | **430** | **430** |
| Sarah Legg | Sarah Legg | **254** | 232 | **6** | 13 | **260** | 245 | **200000** | **200000** |
| Amanda Mackenzie | Amanda Mackenzie | **239** | 219 | **3** | 3 | **242** | 222 | **63567** | **63567** |
| Harmeen Mehta | Harmeen Mehta | **117** | 106 | **7** | 5 | **124** | 111 | **20000** | **20000** |
| Cathy Turner | Cathy Turner | **285** | 277 | **3** | 2 | **288** | 279 | **424113** | **424113** |
| Chris Vogelzang<sup>1</sup> | Chris Vogelzang<sup>1</sup> | **77** | – | **1** | – | **78** | – | **80500** | **80500** |
| Scott Wheway<sup>2</sup> | Scott Wheway<sup>2</sup> | **407** | 475 | **18** | 17 | **425** | 492 | **168356** | **168356** |
| Catherine Woods<sup>3</sup> | Catherine Woods<sup>3</sup> | **264** | 250 | **12** | (9) | **276** | 241 | **124262** | **124262** |

---

1Chris Vogelzang was appointed on 16 June 2025.

2 Scott Wheway retired on 31 October 2025. The number of shares shown is as of the day of leaving.

3The value of benefits in respect of 2024 includes the correction of previous tax treatment from 2023. Excluding the correction, the benefits figure for 2024 is £7,047.

4Benefits for the non-executive directors relates to reimbursement for expenses incurred in the course of duties. The Chair's benefits also include private medical insurance.

Non-executive directors do not receive variable pay.

5Shares owned outright. Includes holdings of any Person Closely Associated. There has been no change in shareholdings from 31 December 2025 to 13 February 2026. Directors are not

permitted to enter into any hedging arrangements in relation to share awards. No director uses shareholding as collateral.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Directors' share interests and share awards** (audited) | **Directors' share interests and share awards** (audited) | **Directors' share interests and share awards** (audited) | **Directors' share interests and share awards** (audited) | **Directors' share interests and share awards** (audited) | **Directors' share interests and share awards** (audited) | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  |  | Number of shares | Number of shares | Number of shares | Number of options | Number of options | Total shareholding |
|  |  | Owned outright<sup>1</sup> | Unvested<br>subject to<br>continued<br>employment<br>| Unvested<br>subject to<br>performance<br>| Unvested<br>subject to<br>continued<br>employment<br>| Vested<br>unexercised<br>| Totals at<br>31 December<br>2025<sup>2</sup> |
| **Executive directors**<sup>3</sup> | **Executive directors**<sup>3</sup> |  |  |  |  |  |  |
| Charlie Nunn | Charlie Nunn | 10140467 | 2987208 | 20208631 | 2599919 | – | 35936225 |
| William Chalmers | William Chalmers | 10740854 | 3858710 | 14565244 | 39701 | – | 29204509 |

---

1Includes holdings of any Person Closely Associated, of which there are currently none.

2There has been no change in shareholdings from 31 December 2025 to 13 February 2026.

3Directors are not permitted to enter into any hedging arrangements in relation to share awards. No director uses shareholding as collateral.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Outstanding share plan interests** (audited) | **Outstanding share plan interests** (audited) | **Outstanding share plan interests** (audited) | **Outstanding share plan interests** (audited) | **Outstanding share plan interests** (audited) | **Outstanding share plan interests** (audited) | **Outstanding share plan interests** (audited) | **Outstanding share plan interests** (audited) | **Outstanding share plan interests** (audited) | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  |  | At 1 January <br>2025 | Granted/<br>awarded | Vested/<br>released/<br>exercised | Lapsed | At 31 <br>December <br>2025 | Exercise <br>price | Exercise periods | Exercise periods |  |
|  |  | At 1 January <br>2025 | Granted/<br>awarded | Vested/<br>released/<br>exercised | Lapsed | At 31 <br>December <br>2025 | Exercise <br>price | From | To | Notes |
| **Charlie Nunn** | **Charlie Nunn** |  |  |  |  |  |  |  |  |  |
| LTSP 2022 – 2024 | LTSP 2022 – 2024 | 3588364 | – | 717672 | – | 2870692 |  |  |  | 2 |
| LTSP 2023 – 2025 | LTSP 2023 – 2025 | 3283896 | – | – | – | 3283896 |  |  |  | 2 |
| LTIP 2024 – 2026 | LTIP 2024 – 2026 | 10376712 | – | – | – | 10376712 |  |  |  | 2 |
| LTIP 2025 – 2027 | LTIP 2025 – 2027 | – | 6548023 | – | – | 6548023 |  |  |  | 234 |
| Deferred GPS awarded in 2023 (2022 GPS) | Deferred GPS awarded in 2023 (2022 GPS) | 335442 | – | 218926 | – | 116516 |  |  |  | 5 |
| Deferred GPS awarded in 2025 (2024 GPS) | Deferred GPS awarded in 2025 (2024 GPS) | – | 788076 | 788076 | – | – |  |  |  | 67  |
| Share Buy-Out | Share Buy-Out | 1368990 | – | 1368990 | – | – | – | 11/03/2025 | 10/03/2030 | 1 |
|  |  | 1369012 | – | – | – | 1369012 | – | 11/03/2026 | 10/03/2031 | 1 |
|  |  | 891217 | – | – | – | 891217 | – | 11/03/2027 | 10/03/2032 | 1 |
|  |  | 339690 | – | – | – | 339690 | – | 11/03/2028 | 10/03/2033 | 1 |
| **William Chalmers** | **William Chalmers** |  |  |  |  |  |  |  |  |  |
| GOS 2020 – 2022 | GOS 2020 – 2022 | 1291908 | – | 430636 | – | 861272 |  |  |  | 2 |
| LTSP 2021 – 2023 | LTSP 2021 – 2023 | 1237872 | – | 309468 | – | 928404 |  |  |  | 2 |
| LTSP 2022 – 2024 | LTSP 2022 – 2024 | 2586292 | – | 517258 | – | 2069034 |  |  |  | 2 |
| LTSP 2023 – 2025 | LTSP 2023 – 2025 | 2366848 | – | – | – | 2366848 |  |  |  | 2 |
| LTIP 2024 – 2026 | LTIP 2024 – 2026 | 7478949 | – | – | – | 7478949 |  |  |  | 2 |
| LTIP 2025 – 2027 | LTIP 2025 – 2027 | – | 4719447 | – | – | 4719447 |  |  |  | 234 |
| Deferred GPS awarded in 2023 (2022 GPS) | Deferred GPS awarded in 2023 (2022 GPS) | 132703 | – | 132703 | – | – |  |  |  | 5 |
| Deferred GPS awarded in 2025 (2024 GPS) | Deferred GPS awarded in 2025 (2024 GPS) | – | 568000 | 568000 | – | – |  |  |  | 67  |
| 2021 Sharesave | 2021 Sharesave | 17177 | – | 17177 | – | – | 39.40p | 01/01/2025 | 30/06/2025 |  |
| 2023 Sharesave | 2023 Sharesave | 20171 | – | – | – | 20171 | 38.55p | 01/01/2027 | 30/06/2027 |  |
| 2024 Sharesave | 2024 Sharesave | 19530 | – | – | – | 19530 | 52.35p | 01/01/2028 | 30/06/2028 |  |

---

![Calm_singleRow_full width.gif](lyg-20251231_g281.gif)

![Calm_singleRow_full width.gif](lyg-20251231_g281.gif)

1When Charlie Nunn joined the Group on 16 August 2021 as Group Chief Executive and executive director, he was granted deferred share awards and deferred cash to replace unvested

awards from his previous employer, HSBC. Options vested on 10 March 2025 and Charlie Nunn exercised the options on 21 March 2025, acquiring 725,564 shares, after the settlement

of income tax and national insurance contributions. The shares received are subject to holding periods that mirror those of the replaced HSBC shares, with 288,328 shares having no

holding period and 437,236 a 12-month holding period.

2All GOS, LTSP and LTIP awards have a three-year performance/underpin period ending 31 December. Awards were made in the form of conditional rights to free shares.

3In line with regulatory requirements, LTIPs awarded during 2025 were ineligible for dividend equivalents. In accordance with the 2023 Directors' Remuneration Policy, the LTIP award

was determined at 300% of salary for Charlie Nunn and William Chalmers. The number of shares to be granted was determined by taking the average share price over the five days

prior to grant (25 February 2025 to 3 March 2025), which was 71.48 pence and applying a discount based on Lloyds Banking Group's expected dividend yield for the vesting period

(54.14 pence).

42025 LTIP vesting is subject to performance conditions applicable for the first three years from grant as detailed on page 132 of the 2024 directors' remuneration report. Each year the

Remuneration Committee will monitor the Group's progress in relation to the performance conditions.

5The third tranche of the 2022 GPS deferred award, vested on 5 March 2025. The closing market price of Lloyds Banking Group shares on that date was 73.08 pence. The awards were

settled in shares net of tax, with the resulting shares subject to a one-year holding period.

6The 2024 GPS is delivered half in an immediately vested share award with shares subject to a holding period until March 2026, and half paid in cash. The value of the shares awarded

in respect of the GPS granted in March 2025 was £563,316 (788,076 shares) for Charlie Nunn; and £406,007 (568,000 shares) for William Chalmers. The awards are not subject to

performance conditions. The number of shares granted was determined by taking the average Lloyds Banking Group share price over the five days prior to grant (25 February 2025

to 3 March 2025), which was 71.48 pence.

7The 2024 GPS share award vested on 5 March 2025. The closing market price of the Lloyds Banking Group shares on that date was 73.08 pence. The award was settled in shares net

of tax, with the resulting shares subject to a one-year holding period.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Outstanding cash awards** (audited) |  |  |  |  | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  |  | At 1 January<br>2025<br>£<br>| Granted/<br>awarded<br>£<br>| Vested /<br>released /<br>exercised<br>£<br>| At 31<br>December<br>2025<br>£<br>| Notes |
| **Charlie Nunn** | **Charlie Nunn** |  |  |  |  |  |
| Deferred GPS cash awarded in 2023 (2022 GPS) | Deferred GPS cash awarded in 2023 (2022 GPS) | 174096 | – | 113625 | 60471 | 1 |
| **William Chalmers** | **William Chalmers** |  |  |  |  |  |
| Deferred GPS cash awarded in 2023 (2022 GPS) | Deferred GPS cash awarded in 2023 (2022 GPS) | 68874 | – | 68874 | – | 1 |

---

1Half of the deferred portion of the 2022 GPS awards are delivered in cash.

2£2,000 of 2024 GPS was delivered in cash in March 2025 for both executive directors. Half of the remaining 2024 GPS was delivered in cash on 20 June 2025. Charlie Nunn received

£561,316 and William Chalmers received £404,007.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**Shareholding requirement**

To further strengthen the alignment between executive directors'

interests and those of our shareholders, executives are expected to

build and maintain a significant shareholding in the Group in direct

proportion to their salary.

The minimum shareholding requirements applicable to executive

directors at 31 December 2025 are 400% of salary for the Group

Chief Executive and 300% of salary for the Chief Financial Officer.

Executive directors have five years from the date of appointment

to meet the requirement. In the event that exceptional individual

circumstances exist resulting in an executive not being able to

comply with the Policy, the Remuneration Committee will consider

whether an exception should apply.

Charlie Nunn met the requirement ahead of the required date

of 15 August 2026 and currently holds 656% of salary in Group

shares at 31 December 2025. This is an increase from 344%

which was published in the 2024 directors' remuneration report.

William Chalmers met the requirement by 2 June 2024 and currently

holds 1128% of salary in Group shares at 31 December 2025,

significantly exceeding his shareholding requirement. This is an

increase from 656% which was published in the 2024 directors'

remuneration report.

**Increase in shareholding requirements**

In recognition of the increased variable opportunity offered by the

proposed 2026 Directors' Remuneration Policy, the shareholding

requirement applicable to the GCE will increase from 400%

to 500% of salary and from 300% to 450% for the CFO.

**Post-employment shareholding requirement**

Executive directors are contractually bound to a post-employment

shareholding requirement of two years at a level equal to the lower

of the shareholding requirements immediately prior to departure

or the actual shareholding on departure. The post-employment

requirement will be maintained through self-certification,

with the Committee keeping this approach under review.

None of those who were directors at the end of the year had

any other interest in the capital of Lloyds Banking Group plc

or its subsidiaries.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Shareholding requirement** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

**£5.50m**<br>

![](lyg-20251231_g299.gif)

![1](lyg-20251231_g300.gif)

**Charlie Nunn**<br>**Actual:** 656% of salary <br>**Requirement:** 400% <br>of salary by 15/08/26<br>

---

| |
|:---|
| **31/12/25** |
| 31/12/24 |

---

<sup>1</sup><br>

**£2.63m**<br>

![](lyg-20251231_g299.gif)

![42](lyg-20251231_g301.gif)

---

| |
|:---|
| **31/12/25** |
| 31/12/24 |

---

**William Chalmers**<br>**Actual:** 1128% of salary <br>**Requirement:** 300% <br>of salary by 02/06/24<br>

![Rem_ShareholderingRequirement_Key.gif](lyg-20251231_g302.gif)

<sup>1</sup><br>

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Requirement | ●  | Actual<sup>2</sup> | ●  | Unvested subject to <br>continued employment<sup>3</sup><br>| ●  | Unvested subject <br>to performance<sup>4</sup><br>|

---

![](lyg-20251231_g303.gif)

12024 shareholding has been recalculated using the average share price for the period 1 January 2025 to 31 December 2025 (77.42 pence).

2Calculated using the average share price for the period 1 January 2025 to 31 December 2025 (77.42 pence). Includes ordinary shares, net of tax where appropriate, acquired through the

vesting of the deferred Group Performance Share plan, fixed share awards as the shares have no performance conditions, awards in the form of options which have vested but have not

been exercised, unvested performance tested Executive Group Ownership Share awards and Long Term Share Plan awards, shares held in the Share Incentive Plan (SIP) Trust, i.e. Free,

Partnership, Matching and Dividend shares which are no longer subject to forfeiture, as defined in the SIP Rules. Shares held by persons closely associated, broadly meaning spouse

or partner and children, are also included, of which there are currently none.

3Unvested shares subject to continued employment do not count towards the shareholding requirement and are shown after deduction of estimated income tax and national insurance.

4Unvested shares subject to performance are shown with an assumed 100% vesting outcome and after deduction of estimated income tax and national insurance. The final vesting

outcome could range between 0-100%. Shares subject to performance are also subject to continued employment.

![Rem_GenderAndEthnicityPay.gif](lyg-20251231_g304.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Gender and ethnicity pay**

![Rem_GenderAndEthnicity_QRCode.gif](lyg-20251231_g305.gif)

The publication of our Gender and Ethnicity Pay Gap report each

year is an opportunity to pause and reflect on the progress we're

making towards our inclusion ambitions. Helping Britain Prosper

means creating opportunity for everyone, and inclusion is how we

make that happen. This year, we're pleased to share that we've

continued to make encouraging strides.

**<u>Read more</u>** <br>Gender and Ethnicity Pay Gap Report <br>April 2024 to April 2025 ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>

---

| |
|:---|
| **Gender pay gap – April 2024 to April 2025** |
| Progress has continued to close the mean Gender pay gap; this has <br>reduced 1.0 percentage point to 24.9%. As of April 2025, 38.8% of <br>executive roles were held by women.<br>**Overview**<br>The Gender pay gap reflects the different representation of men and <br>women across levels in the organisation. This does highlight a clear <br>opportunity to keep strengthening career progression and <br>representation, with a particular focus on supporting women to <br>progress into more senior roles.<br>**What the data shows**<br>Continued progress has been made in closing the mean Gender pay <br>gap, with the gap reducing by 1.0 percentage point to 24.9%. This <br>improvement demonstrates that our actions are moving us in the right <br>direction, however, we remain committed to accelerating our progress. <br>**Our commitments to gender inclusion**<br>Integrating inclusion into the way we run our business has been core to <br>our success to date. Holding our Group executives to account is <br>paramount. Our data led approach, which is grounded in key metrics <br>and insight gathered through colleague feedback, allows our business <br>area executives to identify opportunities to accelerate progress and to <br>also address any gaps. How our executives bridge identified <br>opportunities, forms a core part of performance conversations.<br>We take active steps to drive inclusion through all stages of our <br>colleague lifecycle from recruitment, to progression and retention.<br>In 2025 we set a new ambition to reach and maintain a gender balance <br>of between 45% to 55% in executive roles by the end of 2030.<br>Setting this ambition for our leadership team is important in providing <br>role modelling and inspiration for our colleagues and ensures more <br>inclusive strategic decision making. It also supports greater innovation <br>and adaptability, both vital as we continue to transform our business <br>for the future.<br>At the end of 2025, the number of women in executive level roles (X+) <br>stands at 40.4%, putting us on track to meet our 2030 ambitions.<br>We proudly co-sponsor the Government-backed FTSE Women Leaders <br>Review which sets recommendations to increase the representation of <br>women on boards and in leadership. We achieved all the Review's <br>recommendations in 2023, two years ahead of the deadline. In 2025 <br>we achieved 13th place.<br>In 2025, our continued commitment has once again been recognised <br>externally, with our inclusion in the Times Top 50 Employers for <br>Gender Equality for the 14th consecutive year. |
| Progress has continued to close the mean Gender pay gap; this has <br>reduced 1.0 percentage point to 24.9%. As of April 2025, 38.8% of <br>executive roles were held by women.<br>**Overview**<br>The Gender pay gap reflects the different representation of men and <br>women across levels in the organisation. This does highlight a clear <br>opportunity to keep strengthening career progression and <br>representation, with a particular focus on supporting women to <br>progress into more senior roles.<br>**What the data shows**<br>Continued progress has been made in closing the mean Gender pay <br>gap, with the gap reducing by 1.0 percentage point to 24.9%. This <br>improvement demonstrates that our actions are moving us in the right <br>direction, however, we remain committed to accelerating our progress. <br>**Our commitments to gender inclusion**<br>Integrating inclusion into the way we run our business has been core to <br>our success to date. Holding our Group executives to account is <br>paramount. Our data led approach, which is grounded in key metrics <br>and insight gathered through colleague feedback, allows our business <br>area executives to identify opportunities to accelerate progress and to <br>also address any gaps. How our executives bridge identified <br>opportunities, forms a core part of performance conversations.<br>We take active steps to drive inclusion through all stages of our <br>colleague lifecycle from recruitment, to progression and retention.<br>In 2025 we set a new ambition to reach and maintain a gender balance <br>of between 45% to 55% in executive roles by the end of 2030.<br>Setting this ambition for our leadership team is important in providing <br>role modelling and inspiration for our colleagues and ensures more <br>inclusive strategic decision making. It also supports greater innovation <br>and adaptability, both vital as we continue to transform our business <br>for the future.<br>At the end of 2025, the number of women in executive level roles (X+) <br>stands at 40.4%, putting us on track to meet our 2030 ambitions.<br>We proudly co-sponsor the Government-backed FTSE Women Leaders <br>Review which sets recommendations to increase the representation of <br>women on boards and in leadership. We achieved all the Review's <br>recommendations in 2023, two years ahead of the deadline. In 2025 <br>we achieved 13th place.<br>In 2025, our continued commitment has once again been recognised <br>externally, with our inclusion in the Times Top 50 Employers for <br>Gender Equality for the 14th consecutive year. |
| **Mean pay gap**%<br>|

---

---

| |
|:---|
| **Ethnicity pay gap – April 2024 to April 2025** |
| Continued progress has been made with the mean gap reducing by 1.3 <br>percentage points from 3.0% to 1.7% from last year.<br>**Overview**<br>We remain committed to publishing our Ethnicity pay gap report on a <br>voluntary basis. We have chosen to publish for the past six years <br>because we recognise the importance of transparency in encouraging <br>focus and inspiring purposeful, action-led change. It helps to hold us <br>accountable to delivering on our commitment and we believe it will <br>lead to sustainable positive change for our people.<br>**What the data shows**<br>As at April 2025, 91.5% of our colleagues have chosen to disclose their <br>ethnicity with us, an encouraging increase from 88.2% in April 2023.<br>Whilst we have more to do to close the gap, we have seen <br>improvements within the representation of our senior leadership <br>teams which has had a significant impact on gap closure to date.<br>**Our commitments to ethnic diversity**<br>In an increasingly multicultural society, we can only truly be the best <br>bank for our customers if our workforce reflects the diversity of the UK <br>population and ultimately our customers. Our goal is to increase our <br>workforce diversity and unlock the full potential of our Black, Asian, <br>and Minority Ethnic colleagues.<br>We remain guided by the principles of our Race Action Plan, launched <br>in 2020, which focuses on driving cultural change, improving <br>recruitment and progression across the Group, and setting out the <br>steps we are taking to deliver sustainable change for our people, <br>customers, and the communities we serve.<br>In 2025, we reset our UK ambition: to increase representation of Black, <br>Asian, and Minority Ethnic colleagues in executive roles to between <br>19% and 22%, and to grow Black representation in executive positions <br>to between 3.5% and 4% by the end of 2030.<br>We have seen steady growth in ethnic representation across the <br>Group, particularly at senior levels. To accelerate this progress, we <br>launched a series of Regional Thought Leadership and Networking <br>events. These are designed to build external professional communities <br>with the skills, insights, and experience aligned to our business needs, <br>centred around our strategic locations. This approach helps create a <br>diverse talent pool for today and the future.<br>Recognising opportunities to improve the progression of colleagues from <br>Black heritage backgrounds, we continue to invest in career initiatives. <br>These focus on understanding colleagues' career experiences and <br>aspirations, while promoting existing support that is available to all our <br>colleagues such as mentorship and sponsorship opportunities.<br>In addition, we remain committed to supporting Black business <br>communities through our Black Entrepreneur Programme, where trust <br>has more than doubled from 36% in 2022 to 84% today.<br>At the 2025 Ethnicity Awards we were once again recognised overall <br>'Outstanding Employer' for the fourth time since the launch of the <br>awards in 2018. |
| Continued progress has been made with the mean gap reducing by 1.3 <br>percentage points from 3.0% to 1.7% from last year.<br>**Overview**<br>We remain committed to publishing our Ethnicity pay gap report on a <br>voluntary basis. We have chosen to publish for the past six years <br>because we recognise the importance of transparency in encouraging <br>focus and inspiring purposeful, action-led change. It helps to hold us <br>accountable to delivering on our commitment and we believe it will <br>lead to sustainable positive change for our people.<br>**What the data shows**<br>As at April 2025, 91.5% of our colleagues have chosen to disclose their <br>ethnicity with us, an encouraging increase from 88.2% in April 2023.<br>Whilst we have more to do to close the gap, we have seen <br>improvements within the representation of our senior leadership <br>teams which has had a significant impact on gap closure to date.<br>**Our commitments to ethnic diversity**<br>In an increasingly multicultural society, we can only truly be the best <br>bank for our customers if our workforce reflects the diversity of the UK <br>population and ultimately our customers. Our goal is to increase our <br>workforce diversity and unlock the full potential of our Black, Asian, <br>and Minority Ethnic colleagues.<br>We remain guided by the principles of our Race Action Plan, launched <br>in 2020, which focuses on driving cultural change, improving <br>recruitment and progression across the Group, and setting out the <br>steps we are taking to deliver sustainable change for our people, <br>customers, and the communities we serve.<br>In 2025, we reset our UK ambition: to increase representation of Black, <br>Asian, and Minority Ethnic colleagues in executive roles to between <br>19% and 22%, and to grow Black representation in executive positions <br>to between 3.5% and 4% by the end of 2030.<br>We have seen steady growth in ethnic representation across the <br>Group, particularly at senior levels. To accelerate this progress, we <br>launched a series of Regional Thought Leadership and Networking <br>events. These are designed to build external professional communities <br>with the skills, insights, and experience aligned to our business needs, <br>centred around our strategic locations. This approach helps create a <br>diverse talent pool for today and the future.<br>Recognising opportunities to improve the progression of colleagues from <br>Black heritage backgrounds, we continue to invest in career initiatives. <br>These focus on understanding colleagues' career experiences and <br>aspirations, while promoting existing support that is available to all our <br>colleagues such as mentorship and sponsorship opportunities.<br>In addition, we remain committed to supporting Black business <br>communities through our Black Entrepreneur Programme, where trust <br>has more than doubled from 36% in 2022 to 84% today.<br>At the 2025 Ethnicity Awards we were once again recognised overall <br>'Outstanding Employer' for the fourth time since the launch of the <br>awards in 2018. |
| **Mean pay gap**%<br>|

---

![64](lyg-20251231_g306.gif)

![39](lyg-20251231_g307.gif)

![89](lyg-20251231_g308.gif)

![1](lyg-20251231_g307.gif)

---

| |
|:---|
| **2025** |
| 2024 |

---

---

| |
|:---|
| **2025** |
| 2024 |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Percentage change in remuneration levels** | **Percentage change in remuneration levels** | **Percentage change in remuneration levels** | **Percentage change in remuneration levels** | **Percentage change in remuneration levels** | **Percentage change in remuneration levels** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
| The table below sets out the change in the directors' base salary/fees, taxable benefits and annual bonus compared with the change in <br>our UK-based colleagues' pay. Lloyds Banking Group plc is not an employing entity, and therefore the disclosure below is made on a <br>voluntary basis to compare any change with all employees of the wider Group based in the UK. This population has been chosen as the <br>majority of our workforce are based in the UK and is considered to be the most appropriate group of employees. The same population is <br>used for the purposes of the Chief Executive Officer pay ratio disclosure on **page [119](#if0fddc8164924f538ae58842c6871a4a_0-1-1-8-5233089)**of the report. | The table below sets out the change in the directors' base salary/fees, taxable benefits and annual bonus compared with the change in <br>our UK-based colleagues' pay. Lloyds Banking Group plc is not an employing entity, and therefore the disclosure below is made on a <br>voluntary basis to compare any change with all employees of the wider Group based in the UK. This population has been chosen as the <br>majority of our workforce are based in the UK and is considered to be the most appropriate group of employees. The same population is <br>used for the purposes of the Chief Executive Officer pay ratio disclosure on **page [119](#if0fddc8164924f538ae58842c6871a4a_0-1-1-8-5233089)**of the report. | The table below sets out the change in the directors' base salary/fees, taxable benefits and annual bonus compared with the change in <br>our UK-based colleagues' pay. Lloyds Banking Group plc is not an employing entity, and therefore the disclosure below is made on a <br>voluntary basis to compare any change with all employees of the wider Group based in the UK. This population has been chosen as the <br>majority of our workforce are based in the UK and is considered to be the most appropriate group of employees. The same population is <br>used for the purposes of the Chief Executive Officer pay ratio disclosure on **page [119](#if0fddc8164924f538ae58842c6871a4a_0-1-1-8-5233089)**of the report. | The table below sets out the change in the directors' base salary/fees, taxable benefits and annual bonus compared with the change in <br>our UK-based colleagues' pay. Lloyds Banking Group plc is not an employing entity, and therefore the disclosure below is made on a <br>voluntary basis to compare any change with all employees of the wider Group based in the UK. This population has been chosen as the <br>majority of our workforce are based in the UK and is considered to be the most appropriate group of employees. The same population is <br>used for the purposes of the Chief Executive Officer pay ratio disclosure on **page [119](#if0fddc8164924f538ae58842c6871a4a_0-1-1-8-5233089)**of the report. | The table below sets out the change in the directors' base salary/fees, taxable benefits and annual bonus compared with the change in <br>our UK-based colleagues' pay. Lloyds Banking Group plc is not an employing entity, and therefore the disclosure below is made on a <br>voluntary basis to compare any change with all employees of the wider Group based in the UK. This population has been chosen as the <br>majority of our workforce are based in the UK and is considered to be the most appropriate group of employees. The same population is <br>used for the purposes of the Chief Executive Officer pay ratio disclosure on **page [119](#if0fddc8164924f538ae58842c6871a4a_0-1-1-8-5233089)**of the report. | The table below sets out the change in the directors' base salary/fees, taxable benefits and annual bonus compared with the change in <br>our UK-based colleagues' pay. Lloyds Banking Group plc is not an employing entity, and therefore the disclosure below is made on a <br>voluntary basis to compare any change with all employees of the wider Group based in the UK. This population has been chosen as the <br>majority of our workforce are based in the UK and is considered to be the most appropriate group of employees. The same population is <br>used for the purposes of the Chief Executive Officer pay ratio disclosure on **page [119](#if0fddc8164924f538ae58842c6871a4a_0-1-1-8-5233089)**of the report. | The table below sets out the change in the directors' base salary/fees, taxable benefits and annual bonus compared with the change in <br>our UK-based colleagues' pay. Lloyds Banking Group plc is not an employing entity, and therefore the disclosure below is made on a <br>voluntary basis to compare any change with all employees of the wider Group based in the UK. This population has been chosen as the <br>majority of our workforce are based in the UK and is considered to be the most appropriate group of employees. The same population is <br>used for the purposes of the Chief Executive Officer pay ratio disclosure on **page [119](#if0fddc8164924f538ae58842c6871a4a_0-1-1-8-5233089)**of the report. | The table below sets out the change in the directors' base salary/fees, taxable benefits and annual bonus compared with the change in <br>our UK-based colleagues' pay. Lloyds Banking Group plc is not an employing entity, and therefore the disclosure below is made on a <br>voluntary basis to compare any change with all employees of the wider Group based in the UK. This population has been chosen as the <br>majority of our workforce are based in the UK and is considered to be the most appropriate group of employees. The same population is <br>used for the purposes of the Chief Executive Officer pay ratio disclosure on **page [119](#if0fddc8164924f538ae58842c6871a4a_0-1-1-8-5233089)**of the report. |
| % change | % change | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | **2024 to 2025** | **2024 to 2025** |
| **Base salary**<sup>8</sup> | **Base salary**<sup>8</sup> | **Base salary**<sup>8</sup> | **Base salary**<sup>8</sup> | **Base salary**<sup>8</sup> | **Base salary**<sup>8</sup> | **Base salary**<sup>8</sup> | **Base salary**<sup>8</sup> |
| Charlie Nunn<sup>2</sup> | Charlie Nunn<sup>2</sup> | n/a | 1 | – | 3 | **17** | **17** |
| William Chalmers<sup>3</sup> | William Chalmers<sup>3</sup> | 12 | (9) | – | 3 | **3** | **3** |
| All employees<sup>1</sup> | All employees<sup>1</sup> | 4 | 6 | 13 | 10 | **5** | **5** |
| **GPS**<sup>4,8</sup> | **GPS**<sup>4,8</sup> | **GPS**<sup>4,8</sup> | **GPS**<sup>4,8</sup> | **GPS**<sup>4,8</sup> | **GPS**<sup>4,8</sup> | **GPS**<sup>4,8</sup> | **GPS**<sup>4,8</sup> |
| Charlie Nunn<sup>2</sup> | Charlie Nunn<sup>2</sup> | n/a | 47 | (5) | (12) | **26** | **26** |
| William Chalmers<sup>3</sup> | William Chalmers<sup>3</sup> | n/a | (2) | 34 | (12) | **12** | **12** |
| All employees<sup>1</sup> | All employees<sup>1</sup> | n/a | 12 | (14) | (4) | **10** | **10** |
| **Benefits**<sup>6,8</sup> | **Benefits**<sup>6,8</sup> | **Benefits**<sup>6,8</sup> | **Benefits**<sup>6,8</sup> | **Benefits**<sup>6,8</sup> | **Benefits**<sup>6,8</sup> | **Benefits**<sup>6,8</sup> | **Benefits**<sup>6,8</sup> |
| Charlie Nunn<sup>2</sup> | Charlie Nunn<sup>2</sup> | n/a | 4 | (37) | 8 | **37** | **37** |
| William Chalmers<sup>3</sup> | William Chalmers<sup>3</sup> | 2 | 35 | – | 2 | **(24)** | **(24)** |
| Sir Robin Budenberg  | Sir Robin Budenberg  | n/a | – | 100 | (50) | **–** | **–** |
| All employees<sup>1</sup> | All employees<sup>1</sup> | 1 | 5 | (43) | (71) | **(12)** | **(12)** |
| **Fees**<sup>5</sup> | **Fees**<sup>5</sup> | **Fees**<sup>5</sup> | **Fees**<sup>5</sup> | **Fees**<sup>5</sup> | **Fees**<sup>5</sup> | **Fees**<sup>5</sup> | **Fees**<sup>5</sup> |
| Sir Robin Budenberg | Sir Robin Budenberg | 243 | 1 | 1 | 4 | **15** | **15** |
| Nathan Bostock<sup>10</sup> | Nathan Bostock<sup>10</sup> | n/a | n/a | n/a | n/a | **3** | **3** |
| Sarah Legg | Sarah Legg | 28 | 6 | 2 | 2 | **9** | **9** |
| Amanda Mackenzie | Amanda Mackenzie | (1) | 7 | 2 | 22 | **9** | **9** |
| Harmeen Mehta | Harmeen Mehta | n/a | 2 | 4 | 4 | **10** | **10** |
| Cathy Turner | Cathy Turner | n/a | n/a | 38 | 76 | **3** | **3** |
| Chris Vogelzang<sup>7</sup> | Chris Vogelzang<sup>7</sup> | n/a | n/a | n/a | n/a | **n/a** | **n/a** |
| Scott Wheway<sup>9</sup> | Scott Wheway<sup>9</sup> | n/a | n/a | 1 | 4 | **3** | **3** |
| Catherine Woods | Catherine Woods | 43 | 4 | 2 | 2 | **6** | **6** |

---

1Lloyds Banking Group plc is not a contracting entity but considers all UK-based employees to be appropriate for purposes of an 'All employees' calculation.

2Charlie Nunn became the Group Chief Executive in August 2021. Figures for 2021 have been annualised based on the single total figure table.

3William Chalmers was the Interim Group Chief Executive from May to August 2021 and received a deputisation payment for this period.

4No Group Performance Share (annual bonus) was paid for 2020 performance.

5In some instances, non-executive directors may change membership or become the Chair of a Committee during the year, resulting in year-on-year percentage changes in fees.

6Some non-executive directors have received other benefits that relate to reimbursement for expenses incurred in the course of duties. Reimbursements of these expenses do not

provide an accurate comparison to benefits received by colleagues and are therefore not included.

7Chris Vogelzang was appointed on 16 June 2025 and therefore no year-on-year comparison shown.

82022 to 2023 and 2023 to 2024 variance was impacted by the consolidation of variable pay and Flex cash allowance into base salary.

9Scott Wheway retired on 31 October 2025. Figures for 2025 have been annualised based on the single total figure table.

10Nathan Bostock was appointed on 1 August 2024. Figures for 2024 have been annualised based on the single total figure table.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Chief Executive Officer pay ratio** | **Chief Executive Officer pay ratio** | **Chief Executive Officer pay ratio** | **Chief Executive Officer pay ratio** | **Chief Executive Officer pay ratio** | **Chief Executive Officer pay ratio** | **Chief Executive Officer pay ratio** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
| The Remuneration Committee views pay ratios as a useful reference point to inform policy-setting, but also takes into consideration a <br>number of other factors. The table below shows the ratios of the GCE's total remuneration to the remuneration of colleagues since 2017. <br>The change in the pay ratios for 2025 is explained in more detail below. | The Remuneration Committee views pay ratios as a useful reference point to inform policy-setting, but also takes into consideration a <br>number of other factors. The table below shows the ratios of the GCE's total remuneration to the remuneration of colleagues since 2017. <br>The change in the pay ratios for 2025 is explained in more detail below. | The Remuneration Committee views pay ratios as a useful reference point to inform policy-setting, but also takes into consideration a <br>number of other factors. The table below shows the ratios of the GCE's total remuneration to the remuneration of colleagues since 2017. <br>The change in the pay ratios for 2025 is explained in more detail below. | The Remuneration Committee views pay ratios as a useful reference point to inform policy-setting, but also takes into consideration a <br>number of other factors. The table below shows the ratios of the GCE's total remuneration to the remuneration of colleagues since 2017. <br>The change in the pay ratios for 2025 is explained in more detail below. | The Remuneration Committee views pay ratios as a useful reference point to inform policy-setting, but also takes into consideration a <br>number of other factors. The table below shows the ratios of the GCE's total remuneration to the remuneration of colleagues since 2017. <br>The change in the pay ratios for 2025 is explained in more detail below. | The Remuneration Committee views pay ratios as a useful reference point to inform policy-setting, but also takes into consideration a <br>number of other factors. The table below shows the ratios of the GCE's total remuneration to the remuneration of colleagues since 2017. <br>The change in the pay ratios for 2025 is explained in more detail below. | The Remuneration Committee views pay ratios as a useful reference point to inform policy-setting, but also takes into consideration a <br>number of other factors. The table below shows the ratios of the GCE's total remuneration to the remuneration of colleagues since 2017. <br>The change in the pay ratios for 2025 is explained in more detail below. | The Remuneration Committee views pay ratios as a useful reference point to inform policy-setting, but also takes into consideration a <br>number of other factors. The table below shows the ratios of the GCE's total remuneration to the remuneration of colleagues since 2017. <br>The change in the pay ratios for 2025 is explained in more detail below. | The Remuneration Committee views pay ratios as a useful reference point to inform policy-setting, but also takes into consideration a <br>number of other factors. The table below shows the ratios of the GCE's total remuneration to the remuneration of colleagues since 2017. <br>The change in the pay ratios for 2025 is explained in more detail below. |
|  |  | **Total compensation** | **Total compensation** | **Total compensation** | **Total compensation** | **Fixed pay** | **Fixed pay** | **Fixed pay** |
| Year | Year | Methodology | P25 (Lower<br>Quartile)<br>| P50<br>(Median)<br>| P75 (Upper<br>Quartile)<br>| P25 (Lower<br>Quartile)<br>| P50<br>(Median)<br>| P75 (Upper<br>Quartile) |
| **2025** | **2025** | **A** | 205:1 | 141:1 | 81:1 | 87:1 | 60:1 | 34:1 |
| **2024** | **2024** | **A** | 165:1 | 114:1 | 63:1 | 75:1 | 53:1 | 29:1 |
| **2023** | **2023** | **A** | 112:1 | 80:1 | 45:1 | 76:1 | 54:1 | 31:1 |
| **2022** | **2022** | **A** | 120:1 | 86:1 | 48:1 | 81:1 | 59:1 | 35:1 |
| **2021** | **2021** | **A** | 316:1 | 225:1 | 120:1 | 93:1 | 66:1 | 38:1 |
| **2020** | **2020** | **A** | 132:1 | 95:1 | 54:1 | 103:1 | 75:1 | 42:1 |
| **2019** | **2019** | **A** | 179:1 | 128:1 | 71:1 | 114:1 | 82:1 | 47:1 |
| **2018** | **2018** | **A** | 237:1 | 169:1 | 93:1 | 113:1 | 81:1 | 48:1 |
| **2017** | **2017** | **A** | 245:1 | 177:1 | 97:1 | 113:1 | 82:1 | 48:1 |
| Y-o-Y (2024 vs 2025) | Y-o-Y (2024 vs 2025) |  |  | 24% |  |  | 13% |  |

---

**Notes to the table:**

• The 2025 total remuneration for the colleagues identified at P25, P50 and P75 are as follows: £36,157, £52,638, £91,900

• The 2025 base salary for the colleagues identified at P25, P50 and P75 are as follows: £26,819, £42,756, £75,606

• The P25, P50 and P75 colleagues were determined on 31 December 2025 based on calculating total remuneration for all UK employees

for the 2025 financial year. Payroll data from 1 January 2025 to 31 December 2025

• Colleague total remuneration has been calculated in line with the single total figure of remuneration. The single total figure of

remuneration has been calculated for 55,280 UK colleagues within the Group for a full year including full-time equivalent base pay,

2025 Group Performance Share awards, vesting 2023 Long Term Share Plan awards (for eligible colleagues), core benefits, pension,

overtime and shift payments, travel/relocation payments (for eligible colleagues) and private medical benefit

• The average share price between 1 October 2025 and 31 December 2025 of 90.64 pence has been used to indicate the value of vesting

2023 Long Term Share Plan awards

• Due to operational constraints, the calculation of the colleague Pension Input Figure excludes inflationary adjustments for those

on the defined benefit scheme. The omission of this factor does not materially affect the outcome of the ratio and/or distort the validity

of the valuation

• All other data has been calculated in line with the methodology for the single total figure of remuneration for the GCE

Our ratios have been calculated using Methodology option A on the basis that it provided the most accurate means of identifying the

median, lower and upper quartile colleagues. The ratio has been calculated taking into account the pay and benefits of 55,280 UK

employees, other than the individual performing the role of GCE.

The change in total remuneration ratios since 2017 is largely driven by the more volatile nature of variable pay for the GCE. Explanations

for the year-on-year change in pay ratios prior to 2023 can be found in previous directors' remuneration reports for the relevant period.

The reduction in 2023 was attributed to three key factors. Recognising the desire to focus on the remuneration of lower paid colleagues,

no annual pay award was proposed for the GCE for 2023 while the pay budget for the wider workforce was 6.3%. Given the approach

focused on lower paid colleagues and colleagues lower in their pay range, this resulted in pay increases of between 8% and 13% for around

43,000 colleagues. In addition, from July 2023 we consolidated a significant portion of our Group Performance Share into base salary for

around 32,000 colleagues, further increasing the fixed pay element. Finally, the GCE received a lower annual short-term variable award

for 2023 compared to 2022.

In 2024, the total compensation ratio increased by 43% largely driven by the 2022 LTSP award vesting for Charlie Nunn, the first vesting

of a long-term incentive award for our Group Chief Executive since appointment. Excluding this, the year-on-year comparison would have

been down 9% on 2023. The fixed pay ratio reduced by 2% as colleagues realised a full-year impact of Group Performance Share

consolidation from July 2023.

For 2025, the total compensation ratio has increased primarily due to two factors. The first is the fixed pay changes set out in the 2024

directors' remuneration report which included reversing the impact of the discount applied to the GCE's salary on appointment (13%) and

increasing the fixed share awards to match base salary; thus setting the fixed pay at an appropriate level ahead of the 2026 Policy review.

The second is the increase in variable pay outcomes in 2025; firstly the short-term annual bonus outcome of 74% of maximum in 2025 was

higher than corresponding 68.1% in 2024 and, the portion of the long-term incentive vesting attributed to share price appreciation was

45% higher than the prior year (c.52 pence at grant to c.91 pence used to calculate indicative value). The fixed pay ratio has increased due

to the same reasons as set out for the total compensation ratio.

For the majority of colleagues, year-on-year changes in remuneration are principally driven by pay increases and the impacts of Group

performance and collective adjustment. The Group has a commitment to pay progression and a continued focus on ensuring higher

pay awards for colleagues who are lower paid or paid lower within their pay range. We are committed to ensuring all colleagues are

rewarded fairly.

The Committee is thoughtful of the volatility in pay ratios due to variable reward outcomes. Although the pay ratio is used as a useful

reference point to inform policy-setting, the Committee takes into account a number of other factors to assess colleague pay progression.

![Rem_2023_DirectorsRemPolSummary_2025_Imp_pg1.gif](lyg-20251231_g309.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**Implementation of Policy in 2026** 

The 2026 Directors' Remuneration Policy is subject to approval at the annual general meeting in May 2026. The Group proposes to

implement the Policy in the following way subject to shareholder approval.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Performance year** | **Year 1** | **Year 2** | **Year 3** | **Year 4** | **Year 5** | **Year 6** |
| **Base Salary** | Paid in cash |  |  |  |  |  |  |
| **Pension/**<br>**Benefits**<br>| Paid in performance year |  |  |  |  |  |  |
| **Short Term** <br>**Variable**<br>| Performance period | 75% in cash <br>upfront<br>| 25% paid in shares and released <br>over three years in equal tranches | 25% paid in shares and released <br>over three years in equal tranches | 25% paid in shares and released <br>over three years in equal tranches |  |  |
| **Long Term** <br>**Variable** | Pre-grant test | Performance period | Performance period | Performance period | 75% shares | Two-year holding period | Two-year holding period |
| **Long Term** <br>**Variable** | Pre-grant test | Performance period | Performance period | Performance period |  |  |  |
| **Long Term** <br>**Variable** | Pre-grant test | Performance period | Performance period | Performance period |  | 25% shares | One-year <br>holding period<br>|

---

**How our remuneration is delivered**<br>

**Directors' remuneration**<br>

---

| | |
|:---|:---|
| ![Button_BaseSalary.gif](lyg-20251231_g275.gif)<br>Base Salary<br>|  |
| As set out in the Chair statement on **pages [98](#i52b8c2d3944e4acbaaa4316fc1ff10da_1-1-1-1-5233089) to [102](#i511d13e656b04c0881cebb5ece7565b0_26651)**, the new <br>2026 Policy removes fixed share awards (currently set at 100% of <br>salary), reduces executive director pension contributions from <br>15% to 10% of salary and removes the flexible benefits allowance <br>and the CFO's car allowance.<br>The base salaries of our Group Chief Executive and Chief <br>Financial Officer will be increased by 3% respectively effective <br>1 April 2026. Subject to approval of the Policy at the 2026 AGM, <br>also effective 1 April 2026, salaries will be increased by an <br>additional £112,531 and £82,684 to reflect the partial <br>consolidation of fixed share awards and flexible benefits <br>allowance.<br>Taken together, these changes will reduce our executive director <br>fixed pay by approximately 44%.<br>| The on-cycle 3% annual increase, effective 1 April 2026, to the <br>salary of both executive directors is in line with the 2026 3.1% <br>budget as part of the pay deal for wider workforce. <br>For further context and detail, please refer to **pages [98](#i52b8c2d3944e4acbaaa4316fc1ff10da_1-1-1-1-5233089) to [102](#i511d13e656b04c0881cebb5ece7565b0_26651)**. <br>**Salaries from 1 April 2026 will therefore be as follows:** <br>GCE: £1,416,642 <br>CFO: £903,572<br>**Subject to approval of the Policy at the 2026 AGM, salaries** <br>**will be increased to the following, also effective 1 April 2026:** <br>GCE: £1,529,174<br>CFO: £986,256<br>|

---

---

| | |
|:---|:---|
| ![Button_Pension.gif](lyg-20251231_g277.gif)<br>Pension<br>|  |
| Pension allowances for all executive directors are set at 10% of <br>base salary.<br>Around 52,000 colleagues participate in the Group's Defined <br>Contribution (DC) Pension scheme where the maximum <br>opportunity for the workforce is 15% of base salary.<br>| Executive directors' employer pension contributions are <br>therefore less than those available to the majority of the <br>workforce.<br>|

---

---

| | |
|:---|:---|
| ![Button_Benefits_KeyLine.gif](lyg-20251231_g278.gif)<br>Benefits<br>|  |
| As described above, the flexible benefit allowance of 4% of base <br>salary has been removed as part of the 2026 Policy. The CFO's <br>car allowance has also been removed.<br>Executive directors can continue to select benefits including <br>life assurance and critical illness cover from the flexible <br>benefits catalogue. <br>| The cost of any selection will come from the executive directors' <br>base salary. Other benefits include transportation and private <br>medical cover.<br>|

---

![Rem_2023_DirectorsRemPolSummary_2025_Imp_pg2_WithStakeholders_NoTypev2.gif](lyg-20251231_g310.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Directors' remuneration** continued<br>

---

| | |
|:---|:---|
| ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>Group Performance Share (Short Term Variable) | ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>Group Performance Share (Short Term Variable) |
| **Overview**<br>Maximum opportunities for executive directors for 2026 are 300% <br>of base salary for the Group Chief Executive and 250% for the Chief <br>Financial Officer. For the 2026 performance year, any GPS opportunity <br>will be awarded in March 2027 in a combination of cash and shares. <br>Individual awards as a percentage of maximum will directly relate to <br>the overall Group balanced scorecard performance assessment <br>outcome in the first instance.<br>The Group's policy is to apply deferral to variable reward in line with <br>minimum regulatory requirements. However, we are mindful that <br>additional considerations apply when it comes to executive director <br>remuneration in the UK. We will set out our deferral position each year, <br>at award, in the annual report on remuneration, taking into account <br>shareholder expectations, market practice and emerging trends. Our <br>current approach to GPS delivery is set out on **page [120](#i3eaa7a3e529a46b3b97a88e05ad474bc_433)**.<br>**2026 Group balanced scorecard**<br>The performance measures for determining any individual 2026 GPS <br>awards for executive directors are outlined in the table below.<br>The measures and targets are set annually by the Committee to reflect <br>the strategic priorities of the Group and take into account both the <br>annual financial plan and operating plan against the backdrop of the <br>rapidly evolving external economic and societal landscape.<br>**Performance measures and weightings**<br>The 2026 scorecard metrics have been reviewed alongside the 2026 LTIP <br>measures, shown on **page [122](#i3eaa7a3e529a46b3b97a88e05ad474bc_439)**, to ensure they are complementary and <br>there is minimal overlap which would risk duplication of outcomes.<br>Whilst a RoTE measure is also included in the LTIP performance metrics, it <br>is considered a fundamental indicator of Group performance and creation <br>of shareholder value. The RoTE within the annual scorecard focuses on <br>in-year performance while the LTIP assesses long-term performance.<br>As discussed in the Chair statement on **pages [98](#i52b8c2d3944e4acbaaa4316fc1ff10da_1-1-1-1-5233089) to [102](#i511d13e656b04c0881cebb5ece7565b0_26651)**, to recognise <br>the longer-term nature of the Group's ambitions on decarbonisation, <br>the Committee will use the LTIP as the principal measure of the Group's <br>progress on environmental sustainability by moving the Reduction in <br>our Operational Carbon Emissions measure from the short-term to the <br>long-term scorecard for 2026.<br>To recognise the importance of our customers and to ensure executive <br>variable reward outcomes reflect their experience, the Group customer <br>dashboard weighting will be increased to 25%.<br>| To reflect the criticality of continued transformation of our workforce <br>to enable delivery of Group strategy, our 2026 Group balanced <br>scorecard will include a broader 'People measure' weighted 15%; this <br>will retain our current focus on inclusion and colleague engagement but <br>also include a wider range of people transformation metrics considered <br>by the Board. These will include, for example, colleague upskilling and <br>the adoption of AI, a first we believe amongst our peers.<br>**Targets and methodology**<br>Setting stretching targets is a key component of our demanding <br>performance-driven culture. The Committee has undertaken a <br>thorough exercise to ensure targets are sufficiently stretching, <br>taking into consideration our operating plan and, where applicable, <br>forward-looking guidance.<br>The Committee agreed targets to evaluate performance in 2026 and <br>these will be disclosed retrospectively in the 2026 annual report <br>alongside the level of performance achieved, as the Committee <br>considers such targets to be commercially sensitive.<br>To recognise exceptional items are not budgeted, profit after tax, <br>return on tangible equity and cost:income ratio measures will exclude <br>these from 2026. Instead, the Committee will consider any impact <br>on a case-by-case basis taking account of the impact on the full range <br>of the Group's stakeholders including its customers, colleagues, <br>shareholders and communities.<br>**Discretion**<br>When determining the final outcome, the Committee may consider <br>any personal or business area objectives and whether there has been <br>effective, consistent and proactive risk management and conduct <br>outcomes across all dimensions.<br>When assessing performance, the Committee can exercise its <br>judgement to determine the appropriate outcome. This helps to <br>avoid any potential unintended outcomes that might arise from <br>the application of formulaic performance criteria.<br>![Rem_GroupPerformShare_2024_LinkToStrategy_WithStakeholders_Key.gif](lyg-20251231_g311.gif)<br>|

---

**Our 2026 Group balanced scorecard**<br>

---

| | | |
|:---|:---|:---|
| **Financial**(60%) | Profit after tax<sup>1</sup> | **25%** |
| **Financial**(60%) |  |  |
| **Financial**(60%) | Return on tangible equity<sup>1</sup> | **25%** |
| **Financial**(60%) |  |  |
| **Financial**(60%) | Cost:income ratio<sup>1</sup> | **10%** |
| **Non-financial**(40%) | **Customer**<br>Our assessment of how effectively we are serving customers across all brands, <br>products and services as measured by our Group Customer Dashboard<br>| **25%** |
| **Non-financial**(40%) |  |  |
| **Non-financial**(40%) | **People**<br>A holistic assessment of our gender and ethnic representation in executive roles<sup>2</sup>, <br>culture and colleague engagement and a wider range of people transformation metrics<br>| **15%** |

---

1Profit after tax, return on tangible equity and cost:income ratio measures will exclude any exceptional items. Instead, items will be reviewed on a case-by-case basis by the

Remuneration Committee.

2 Executive roles include grade X colleagues only, subject to local laws and regulation.

![Rem_2023_DirectorsRemPolSummary_2025_Imp_pg3_WithStakeholders_NoTypev2.gif](lyg-20251231_g312.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**Directors' remuneration** continued<br>

---

| | |
|:---|:---|
| ![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Long Term Incentive Plan (Long Term Variable) | ![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Long Term Incentive Plan (Long Term Variable) |
| **Overview**<br>The Group's demanding, high performance culture is critical to delivering <br>our ambitious strategy. LTIP awards will be granted in relation to 2025 <br>performance under the terms of the new 2026 Policy. The Committee <br>concluded that 2025 performance, including assessment of our 2025 <br>Group balanced scorecard and other factors, was at a level to make <br>awards. This is known as the 'pre-grant test'.<br>To ensure strong alignment between variable reward outcomes and the <br>creation of shareholder value, the Committee has determined that LTIP <br>awards will be granted with a value of 500% of base salary to the GCE <br>and 450% of base salary to the CFO to reflect the Group's performance <br>in 2025.<br>LTIP grants are normally made in March. However, for 2026 for the <br>executive directors the grants will be made, subject to approval of the <br>2026 Policy, shortly after the 2026 AGM, by reference to the same <br>grant date, grant price and performance and vesting periods used in <br>March 2026 for the Group's other LTIP participants.<br>**Performance measures and weightings**<br>As discussed in the Chair statement on **pages [98](#i52b8c2d3944e4acbaaa4316fc1ff10da_1-1-1-1-5233089) to [102](#i511d13e656b04c0881cebb5ece7565b0_26651)**, the financial <br>block has been increased to 75% weight for 2026. Return on tangible <br>equity emphasises the efficient use of capital and ensures focus on long-<br>term value creation, capital generation recognises the importance of <br>maintaining a strong financial foundation for the Group and prioritises <br>capital-accretive decision making for the long term, and rTSR compares <br>the value delivered to a shareholder in the Group over the performance <br>period with the value delivered to shareholders by our peers.<br>| A dedicated 15% weighting will assess our strategic delivery; the final stage <br>of the current strategy in 2026; and the progress of our new strategy <br>(which we look forward to setting out in July 2026) in 2027 and 2028.<br>Finally, 10% weight is attributed to sustainability measures, reflecting that <br>the transition to a low carbon economy is at the core of our strategy and <br>aligns with our purpose of Helping Britain Prosper. For 2026 this will also <br>include assessment of our operational carbon reduction.<br>Recognising exceptional items are not budgeted, RoTE and capital <br>generation will exclude these from 2026. Instead, the Committee will <br>consider any impact on a case-by-case basis taking account of the <br>impact on the full range of the Group's stakeholders including its <br>customers, colleagues, shareholders and communities.<br>**Target setting**<br>Setting targets is a critical focus area for the Committee and a rigorous <br>exercise has been undertaken to ensure our targets are sufficiently <br>stretching. We have taken into account our long-term strategic ambitions, <br>commitments to our sustainability agenda, comparable industry returns <br>and the higher variable reward opportunity available to our executive <br>directors through our 2026 Policy.<br>**Operation**<br>Awards made in 2026 will be subject to the Group's performance <br>between January 2026 and December 2028.<br>Awards will vest in two tranches; 75% after three years, subject to a <br>two-year post-vesting retention period, 25% after four years subject to <br>a one-year post-vesting retention period.<br>|

---

**2026-2028 LTIP scorecard**<br>

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Financial**(75%) | Return on tangible equity (RoTE)<sup>1,2</sup> – <br>average over three years<br>| **30%** | **15%** | **18%** |
| **Financial**(75%) |  |  |  |  |
| **Financial**(75%) | Capital generation<sup>1,3</sup> – <br>average over three years<br>| **15%** | **200 bps** | **250 bps** |
| **Financial**(75%) |  |  |  |  |
| **Financial**(75%) | Relative Total Shareholder Return<sup>4</sup> – <br>cumulative over three years<br>| **30%** | Median of the peer group | Upper quartile of the peer group |
| **Strategic**(15%) | Delivery of the Group's strategic objectives <br>by the end of 2028<br>| **15%** | Assessment of the Group's delivery against our current five-year <br>strategic plan, ending in 2026, alongside the Group's progress <br>toward delivering on our next strategic cycle through 2028, <br>which will be outlined in July 2026.<br>The assessment will include, but not be limited by, how the Group <br>continues to Grow, Focus and Change its business to achieve our <br>purpose of Helping Britain Prosper. After undertaking this review, <br>the Committee will exercise its judgement to determine the vesting <br>outcome on a holistic basis. | Assessment of the Group's delivery against our current five-year <br>strategic plan, ending in 2026, alongside the Group's progress <br>toward delivering on our next strategic cycle through 2028, <br>which will be outlined in July 2026.<br>The assessment will include, but not be limited by, how the Group <br>continues to Grow, Focus and Change its business to achieve our <br>purpose of Helping Britain Prosper. After undertaking this review, <br>the Committee will exercise its judgement to determine the vesting <br>outcome on a holistic basis. |
| **Sustainability**<sup>5</sup>(10%) | Sustainable finance and investment | **10%** | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. |
| **Sustainability**<sup>5</sup>(10%) |  | **10%** | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. |
| **Sustainability**<sup>5</sup>(10%) | Achievement of 2030 sector targets and <br>Scottish Widows' emissions reduction ambition <br>| **10%** | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. |
| **Sustainability**<sup>5</sup>(10%) |  | **10%** | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. |
| **Sustainability**<sup>5</sup>(10%) | Reducing our operational carbon emissions<sup>6</sup> | **10%** | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. | The Committee will assess the Group's performance against its <br>publicly disclosed environmental targets aligned to cumulative <br>sustainable finance and investment provided over the <br>performance period, 2028 progress towards 2030 sector targets <br>and Scottish Widows emissions reduction ambition, and our own <br>operational carbon reduction. After this assessment the <br>Committee will holistically determine a vesting outcome. |

---

1Return on tangible equity and capital generation measures will exclude exceptional items. Instead, items will be reviewed on a case-by-case basis by the Remuneration Committee.

2If average RoTE reaches 15% then 7.5% of the award vests. If average RoTE reaches 18% then 30% of the award vests. If average RoTE is between the threshold and maximum,

vesting is calculated on a straight-line basis between these two points.

3If average capital generation reaches 200 basis points then 3.75% of the award vests. If average capital generation reaches 250 basis points then 15% of the award vests.

If average capital generation is between the threshold and maximum, vesting is calculated on a straight-line basis between these two points.

4Peer group unchanged from 2025 grant: HSBC, Barclays, NatWest, BNP Paribas, Santander, ING, Intesa Sanpaolo, BBVA, UniCredit, Nordea, Crédit Agricole, Caixa, KBC Group,

Deutsche Bank, SocGen, Danske, ABN AMRO, Bank of Ireland. Where performance falls between threshold and maximum levels, an intermediate percentage will vest.

5See **pages [35](#i3eaa7a3e529a46b3b97a88e05ad474bc_97) to [49](#ie3b988292ad3485cbc6fd2e21427b631_2277)**for an overview of our ambitions, targets, and commitments.

6Includes Scope 1, Scope 2 and Scope 3 carbon emissions, excluding international travel.

![Rem_2023_DirectorsRemPolSummary_2025_Imp_pg4.gif](lyg-20251231_g313.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Directors' remuneration** continued<br>

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ![Button_TotalReward.gif](lyg-20251231_g314.gif)<br>Chair and non-executive director fees and benefits | ![Button_TotalReward.gif](lyg-20251231_g314.gif)<br>Chair and non-executive director fees and benefits | ![Button_TotalReward.gif](lyg-20251231_g314.gif)<br>Chair and non-executive director fees and benefits | ![Button_TotalReward.gif](lyg-20251231_g314.gif)<br>Chair and non-executive director fees and benefits | ![Button_TotalReward.gif](lyg-20251231_g314.gif)<br>Chair and non-executive director fees and benefits |  |
| Any increases normally take effect from 1 January of a given year.<br>The Committee is responsible for evaluating and approving the <br>Chair's fees. The Chair does not participate in these discussions. <br>The GCE and the Chair are responsible for evaluating and making <br>recommendations to the Board in relation to the fees of <br>the non-executive directors (NEDs).<br>The Chair receives an all-inclusive fee, which is reviewed <br>periodically plus benefits including life insurance, medical <br>insurance and transportation. The Committee retains <br>the right to provide additional benefits depending on <br>individual circumstances.<br>NEDs are paid a basic fee plus additional fees for the Chair/ <br>membership of Committees and for membership of Group <br>company Boards, non-Board level committees and/or other <br>specific responsibilities. | Any increases normally take effect from 1 January of a given year.<br>The Committee is responsible for evaluating and approving the <br>Chair's fees. The Chair does not participate in these discussions. <br>The GCE and the Chair are responsible for evaluating and making <br>recommendations to the Board in relation to the fees of <br>the non-executive directors (NEDs).<br>The Chair receives an all-inclusive fee, which is reviewed <br>periodically plus benefits including life insurance, medical <br>insurance and transportation. The Committee retains <br>the right to provide additional benefits depending on <br>individual circumstances.<br>NEDs are paid a basic fee plus additional fees for the Chair/ <br>membership of Committees and for membership of Group <br>company Boards, non-Board level committees and/or other <br>specific responsibilities. | Additional fees are also paid to the Senior Independent Director <br>to reflect additional responsibilities.<br>The Chair and the NEDs are not entitled to receive any payment <br>for loss of office (other than in the case of the Chair's fees for the <br>six-month notice period) and are not entitled to participate in <br>the Group's variable remuneration arrangements, all-employee <br>share plan or pension arrangements.<br>NEDs are reimbursed for expenses incurred in the course <br>of their duties, such as travel and accommodation expenses, <br>on a grossed-up basis (where applicable).<br>Non-executive directors may receive more than one of the <br>above fees. | Additional fees are also paid to the Senior Independent Director <br>to reflect additional responsibilities.<br>The Chair and the NEDs are not entitled to receive any payment <br>for loss of office (other than in the case of the Chair's fees for the <br>six-month notice period) and are not entitled to participate in <br>the Group's variable remuneration arrangements, all-employee <br>share plan or pension arrangements.<br>NEDs are reimbursed for expenses incurred in the course <br>of their duties, such as travel and accommodation expenses, <br>on a grossed-up basis (where applicable).<br>Non-executive directors may receive more than one of the <br>above fees. | Additional fees are also paid to the Senior Independent Director <br>to reflect additional responsibilities.<br>The Chair and the NEDs are not entitled to receive any payment <br>for loss of office (other than in the case of the Chair's fees for the <br>six-month notice period) and are not entitled to participate in <br>the Group's variable remuneration arrangements, all-employee <br>share plan or pension arrangements.<br>NEDs are reimbursed for expenses incurred in the course <br>of their duties, such as travel and accommodation expenses, <br>on a grossed-up basis (where applicable).<br>Non-executive directors may receive more than one of the <br>above fees. | Additional fees are also paid to the Senior Independent Director <br>to reflect additional responsibilities.<br>The Chair and the NEDs are not entitled to receive any payment <br>for loss of office (other than in the case of the Chair's fees for the <br>six-month notice period) and are not entitled to participate in <br>the Group's variable remuneration arrangements, all-employee <br>share plan or pension arrangements.<br>NEDs are reimbursed for expenses incurred in the course <br>of their duties, such as travel and accommodation expenses, <br>on a grossed-up basis (where applicable).<br>Non-executive directors may receive more than one of the <br>above fees. |
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Chair and non-executive director fees in 2026** |  |  |  | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
| As set out in the 2024 directors' remuneration report there is a £100,000 increase to the annual fee for the Chair from 1 January 2026 <br>taking the fee to £850,000. This is step two of the two-stage increase announced last year. <br>Following a detailed review of peer benchmarks and to ensure our non-executive directors are paid appropriately for the experience <br>and time requirements required, the table below sets out changes to non-executive director fees from 1 January 2026.  | As set out in the 2024 directors' remuneration report there is a £100,000 increase to the annual fee for the Chair from 1 January 2026 <br>taking the fee to £850,000. This is step two of the two-stage increase announced last year. <br>Following a detailed review of peer benchmarks and to ensure our non-executive directors are paid appropriately for the experience <br>and time requirements required, the table below sets out changes to non-executive director fees from 1 January 2026.  | As set out in the 2024 directors' remuneration report there is a £100,000 increase to the annual fee for the Chair from 1 January 2026 <br>taking the fee to £850,000. This is step two of the two-stage increase announced last year. <br>Following a detailed review of peer benchmarks and to ensure our non-executive directors are paid appropriately for the experience <br>and time requirements required, the table below sets out changes to non-executive director fees from 1 January 2026.  | As set out in the 2024 directors' remuneration report there is a £100,000 increase to the annual fee for the Chair from 1 January 2026 <br>taking the fee to £850,000. This is step two of the two-stage increase announced last year. <br>Following a detailed review of peer benchmarks and to ensure our non-executive directors are paid appropriately for the experience <br>and time requirements required, the table below sets out changes to non-executive director fees from 1 January 2026.  | As set out in the 2024 directors' remuneration report there is a £100,000 increase to the annual fee for the Chair from 1 January 2026 <br>taking the fee to £850,000. This is step two of the two-stage increase announced last year. <br>Following a detailed review of peer benchmarks and to ensure our non-executive directors are paid appropriately for the experience <br>and time requirements required, the table below sets out changes to non-executive director fees from 1 January 2026.  | As set out in the 2024 directors' remuneration report there is a £100,000 increase to the annual fee for the Chair from 1 January 2026 <br>taking the fee to £850,000. This is step two of the two-stage increase announced last year. <br>Following a detailed review of peer benchmarks and to ensure our non-executive directors are paid appropriately for the experience <br>and time requirements required, the table below sets out changes to non-executive director fees from 1 January 2026.  |
|  |  | **2026** | 2025 | % change <br>2025 to 2026 | % change <br>2025 to 2026 |
| Basic non-executive director fee | Basic non-executive director fee | **95000** | **92200** | 3.0% | 3.0% |
| Senior Independent Director | Senior Independent Director | **64200** | **64200** | —% | —% |
| Audit Committee Chair | Audit Committee Chair | **79180** | **77250** | 2.5% | 2.5% |
| Remuneration Committee Chair | Remuneration Committee Chair | **79180** | **77250** | 2.5% | 2.5% |
| Risk Committee Chair | Risk Committee Chair | **79180** | **77250** | 2.5% | 2.5% |
| Responsible Business Committee Chair | Responsible Business Committee Chair | **61500** | **60000** | 2.5% | 2.5% |
| IT and Cyber Advisory Forum Chair | IT and Cyber Advisory Forum Chair | **61500** | **60000** | 2.5% | 2.5% |
| Audit Committee member | Audit Committee member | **35875** | **35000** | 2.5% | 2.5% |
| Remuneration Committee member | Remuneration Committee member | **35875** | **35000** | 2.5% | 2.5% |
| Risk Committee member | Risk Committee member | **35875** | **35000** | 2.5% | 2.5% |
| Responsible Business Committee member | Responsible Business Committee member | **25625** | **25000** | 2.5% | 2.5% |
| IT and Cyber Advisory Forum member | IT and Cyber Advisory Forum member | **25625** | **25000** | 2.5% | 2.5% |
| Nomination and Governance Committee member | Nomination and Governance Committee member | **16750** | **16550** | 1.2% | 1.2% |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**2026 Directors' Remuneration Policy (proposed)**

Approval for this Directors' Remuneration Policy (Policy) will be

sought at the AGM on 14 May 2026 and, if approved, it will take

effect from that date.

It is intended that approval of the Policy will be sought at three-year

intervals, unless amendments to the Policy are required, in which

case further shareholder approval will be sought. Information on

how the Policy will be implemented in 2026 is included in the

annual report on remuneration.

**2026 Policy changes** 

As set out in detail in **pages [98](#i52b8c2d3944e4acbaaa4316fc1ff10da_1-1-1-1-5233089) to [102](#i511d13e656b04c0881cebb5ece7565b0_26651)**, over the course of 2025, the

Committee conducted a thorough review of the existing Policy to

ensure it supports the Group's strategic priorities. Input was sought

from a range of stakeholders including institutional shareholders,

the main proxy rating agencies, executive directors and the

Committee's external advisers, PricewaterhouseCoopers (PwC), to

ensure a broad range of views were sought as well as alignment with

market best practice and compliance with applicable regulations.

The Chair of the Committee engaged directly with a significant

number of the Group's largest shareholders both in one-on-one

dialogue and as part of a written communication programme and

ensured the full range of those views were represented and carefully

considered by the Committee as part of its discussions on proposed

changes to the Policy. In total, approximately 60% of the Group's

issued share capital were contacted on the proposed 2026 Policy.

The changes to Policy are set out in detail in the following pages.

The 2026 Policy will act as a strong incentive to the current

management team, who are well regarded by shareholders, to

deliver our ambitious 2026 targets and to lead the Group through

its next strategic cycle whilst also placing even greater emphasis

on sustainable high performance and the creation of shareholder

value. There will be a significant reduction in guaranteed fixed pay

alongside increased variable reward opportunity further

emphasising pay-for-performance. Underpinning this will be an

increased weighting to financial measures in our performance

conditions and an increase in shareholding requirements to ensure

the executives are closely aligned with shareholder experience.

During consultation, shareholders expressed broad support for

the proposals with no major concerns raised. Increased financial

weighting and shareholding requirements were received positively.

Shareholders continue to express their expectation that targets

should be transparent and stretching which has been and will be

given full consideration when approving targets for scorecards

which drive both short- and long-term award outcomes. During

consultation, it was heard, and acknowledged, that this Policy

should last the full three-year cycle with no desire from shareholders

to re-approve a Policy until the next on-cycle approval in 2029.

Benchmarking was one of the key discussion points during our

shareholder engagement; from those conversations it was clear

that our investors expected us to use benchmarking to test our

proposals, rather than be led by it, and also to be thoughtful over

our choice of peers. The approach which the Committee took to

benchmarking the Remuneration Policy is set out in the Chair's

statement.

While colleagues were not formally consulted on the Policy, the

Committee ensured that the pay and reward proposition of all

colleagues was taken into account in the process of developing the

Policy and the People Forum was engaged to explain the alignment

of executive reward to that of the rest of the Group.

No executive director has been involved in the determination of

their own remuneration. To manage conflicts of interests effectively,

executive directors were asked to step out of relevant committee

meetings and relevant papers were also redacted for individuals

if required.

**Performance measures and link to strategy** 

The performance measures selected for the GPS and LTIP will be set

annually by the Committee taking account of the Group's strategic

priorities and its most important financial measures. Performance

measures are selected to ensure an appropriate balance between

short- and long-term strategic goals and to align executive director

and shareholder interests. Rationale for performance measures

selected and their link to both strategic delivery and wider

stakeholder alignment will be shown in the annual report on

remuneration for the year under review. In determining the

appropriate set of measures and targets for annual bonus

and LTIP awards, the Committee has discretion to vary the

performance measures, or to substitute the metrics, over the

life of the Policy taking into account the Group's strategic plan

or emerging best practice.

**2026 Directors' Remuneration Policy and Group** 

**remuneration policy alignment**

The only significant difference between the Policy for executive

directors and colleagues outside the Group Executive Committee

is participation in the LTIP which is restricted to those most directly

accountable for the successful delivery of the Group's strategy.

LTIP awards are subject to forward-looking performance measures

and are granted in shares ensuring a strong pay-for-performance

link and alignment between executive director remuneration

and shareholder interests.

The table below summarises how the Policy applies across

the Group.

![Rem_2024_DirectorsRemPolTable_pg1.gif](lyg-20251231_g315.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **2026 Directors' Remuneration Policy and Group remuneration policy alignment** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Executive** <br>**directors**<br>| **Group Executive**<br>**Committee**<br>| **Other material**<br>**risk takers**<br>| **Other** <br>**employees**<br>|
| **Fixed**<sup>1</sup> |  |  |  |  |
| Base salary![Button_BaseSalary.gif](lyg-20251231_g275.gif)<br>| ●  | ●  | ●  | ●  |
| Pension ![Button_Pension.gif](lyg-20251231_g277.gif)<br>| ●  | ●  | ●  | ●  |
| Benefits![Button_Benefits.gif](lyg-20251231_g284.gif)<br>| ●  | ●  | ●  | ●  |
| **Variable** |  |  |  |  |
| Short term incentive![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>| ●  | ●  | ●  | ●  |
| Long term incentive![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>| ●  | ●  | ⚪ | ⚪ |

---

![Calm_singleRow_full width.gif](lyg-20251231_g281.gif)

![Calm_singleRow_full width.gif](lyg-20251231_g281.gif)

1Role-based allowances remain for Group Executive Committee members and certain other material risk takers. Executive directors are not eligible for a role-based allowance.

**Remuneration Policy table for executive directors**<br>

---

| | |
|:---|:---|
| ![Button_BaseSalary.gif](lyg-20251231_g275.gif)<br>Base Salary<br>|  |
| **Purpose and link to strategy**<br>To support the recruitment and retention of executive directors <br>of the calibre required to develop and deliver the Group's <br>strategic priorities. Base salary reflects the role of the individual, <br>taking account of market competitiveness, responsibilities and <br>experience, and pay in the Group as a whole.<br>**Operation**<br>Base salaries are typically reviewed annually with any increases <br>normally taking effect from 1 April for executive directors. When <br>determining and reviewing base salary levels, the Committee <br>takes into account base salary increases for employees <br>throughout the Group and ensures that decisions are made <br>within the following two parameters:<br>•An objective assessment of the individual's responsibilities <br>and the size and scope of their role, using objective job-sizing <br>methodologies<br>•Pay for comparable roles in comparable publicly listed firms <br>of a similar size<br>Salary may be paid in pounds sterling (GBP) or other currency <br>and at an exchange rate determined by the Committee.<br>| **Maximum potential** <br>The Committee will make no increase which it believes <br>is inconsistent with the two parameters. Increases will <br>normally be no more than the increase awarded to the <br>overall employee population. However, a greater salary increase <br>may be appropriate in certain circumstances, such as a new <br>appointment made on a salary below a market competitive level, <br>where phased increases are planned, or where there has been an <br>increase in the responsibilities of an individual. Where increases <br>are awarded in excess of the wider employee population, the <br>Committee will provide an explanation in the relevant annual <br>report on remuneration.<br>**Performance measures**<br>N/A<br>**Changes**<br>No change to Policy on base salary.<br>To set fixed pay at an appropriate level in line with market <br>standard for executive directors and further align executive <br>remuneration with stakeholder experience, fixed share awards <br>have been removed from the Policy.<br>|

---

---

| | |
|:---|:---|
| ![Button_Pension.gif](lyg-20251231_g277.gif)<br>Pension<br>|  |
| **Purpose and link to strategy**<br>To provide cost effective and market competitive retirement <br>benefits, supporting executive directors in building long-term <br>retirement savings.<br>**Operation**<br>Executive directors are entitled to participate in the Group's <br>defined contribution scheme with company contributions set <br>as a percentage of salary. <br>An executive director may elect to receive some or all of their <br>pension allowance as cash in lieu of pension contribution.<br>| **Maximum potential**<br>The maximum allowance for all executive directors is set at 10% <br>of base salary, which is lower than that of the majority of the <br>wider workforce.<br>**Performance measures**<br>N/A<br>**Changes**<br>To set fixed pay at an appropriate level in line with market <br>standard for executive directors, maximum employer pension <br>contribution available has been reduced from 15% to 10% of base <br>salary. This will move the executive directors from being in line <br>with, to less than the majority of the wider workforce.<br>|

---

![Rem_2024_DirectorsRemPolTable_pg2.gif](lyg-20251231_g316.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**Remuneration Policy table for executive directors** continued<br>

---

| | |
|:---|:---|
| ![Button_Benefits_KeyLine.gif](lyg-20251231_g278.gif)<br>Benefits<br>|  |
| **Purpose and link to strategy**<br>To provide flexible benefits as part of a competitive <br>remuneration package.<br>**Operation**<br>Benefits may include those currently provided and disclosed <br>in the annual report on remuneration. Core benefits include <br>private medical insurance, life insurance and other benefits <br>that may be selected through the Group's flexible benefits plan. <br>In certain circumstances, the Committee may provide additional <br>benefits to individuals, which may include, but are not limited to, <br>accommodation, relocation, and travel support.<br>| **Maximum potential**<br>N/A<br>**Performance measures**<br>N/A<br>**Changes**<br>To align executive director remuneration package with the wider <br>workforce where flex and car allowances were consolidated <br>in previous years and to set fixed pay at an appropriate level, <br>executive directors will no longer receive a flexible benefits <br>allowance. Car allowance has also been removed as a benefit.<br>|

---

---

| | |
|:---|:---|
| All-employee plans |  |
| **Purpose and link to strategy**<br>Executive directors are eligible to participate in HMRC tax <br>advantaged share plans which promote share ownership by <br>giving employees an opportunity to invest in Group shares.<br>**Operation**<br>Executive directors may participate in these plans in line with <br>HMRC guidelines currently prevailing (where relevant), on the <br>same basis as other eligible employees.<br>**Maximum potential**<br>Participation levels may be increased up to HMRC limits as <br>amended from time to time. The monthly savings limits for <br>Save As You Earn (SAYE) is currently £500. <br>| The maximum value of shares that may be purchased under the <br>Share Incentive Plan (SIP) in any year is currently £1,800 with a <br>two-for-one match. Currently a three-for-two match is operated <br>up to a maximum colleague investment of £30 per month. <br>The maximum value of free shares that may be awarded in <br>any year is £3,600.<br>**Performance measures**<br>N/A<br>**Changes**<br>No change to Policy.<br>|

---

![Rem_2024_DirectorsRemPolTable_pg3.gif](lyg-20251231_g317.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Remuneration Policy table for executive directors** continued<br>

---

| | |
|:---|:---|
| ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>Group Performance Share (Short Term Variable) | ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>Group Performance Share (Short Term Variable) |
| **Purpose and link to strategy**<br>To incentivise and reward the achievement of the Group's <br>annual financial and strategic targets whilst supporting the <br>delivery of higher, more sustainable returns.<br>**Operation**<br>Measures and targets are set annually and awards are <br>determined by the Committee after the year end based on <br>performance against the targets set. The GPS may be delivered <br>in cash, shares, notes or other debt instruments including <br>contingent convertible bonds. Where all or part of any award is <br>deferred, the Committee may adjust these deferred awards in <br>the event of any variation of share capital, demerger, special <br>dividend or distribution or amend the terms of the plan in <br>accordance with the plan rules. <br>Where an award or a deferred award is in shares or other share <br>linked instrument, dividends or dividend equivalents may accrue <br>over the vesting period and are payable in respect of awards that <br>vest. These will be paid in shares unless the individual has met <br>their shareholding requirement in which case they may be <br>payable in cash at the discretion of the Committee. Where <br>dividends or dividend equivalents are not accrued, the grant <br>price of shares to be awarded may be discounted to reflect the <br>lack of dividend equivalents.<br>The Committee applies its judgement to determine the payout <br>level commensurate with business and/or individual performance <br>or other factors as determined by the Committee. The <br>Committee may reduce the level of award (including to zero), <br>apply additional conditions to the vesting or delay the vesting of <br>deferred awards to a specified date or until conditions set by the <br>Committee are satisfied, where it considers it appropriate. <br>Awards may be subject to malus and clawback for a period of up <br>to seven years after the date of award which may be extended <br>to 10 years where there is an ongoing internal or regulatory <br>investigation.<br>| **Maximum potential**<br>The maximum GPS opportunities are 300% of base salary for <br>the Group Chief Executive and 250% of base salary for other <br>executive directors.<br>**Performance measures**<br>Measures and targets are set annually by the Committee <br>in line with the Group's strategic business plan and further <br>details are set out in the annual report on remuneration for <br>the relevant year.<br>Measures consist of both financial and non-financial measures <br>and the weighting of these measures will be determined <br>annually by the Committee. All assessments of performance are <br>ultimately subject to the Committee's judgement, but measures <br>will not vest if threshold performance is not met. The payout for <br>threshold performance will not exceed 25% of maximum. The <br>normal 'target' level of the GPS is 50% of maximum opportunity. <br>The Committee is committed to providing transparency in its <br>decision making in respect of GPS awards and will disclose <br>historic measures and target information together with <br>information relating to how the Group has performed against <br>those targets in the annual report on remuneration for the <br>relevant year except to the extent that this information is <br>deemed to be commercially sensitive, in which case it will be <br>disclosed once it is deemed not to be sensitive.<br>**Changes**<br>The maximum GPS for the GCE has been increased from <br>140% to 300% of base salary and the maximum GPS for other <br>executive directors has been increased from 140% to 250% <br>of base salary. <br>The Policy gives the Committee flexibility to permit dividends <br>or dividend equivalents to be awarded on deferred awards.<br>|

---

![Rem_2024_DirectorsRemPolTable_pg2.gif](lyg-20251231_g316.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**Remuneration Policy table for executive directors** continued<br>

---

| | |
|:---|:---|
| ![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Long Term Incentive Plan (Long Term Variable) | ![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Long Term Incentive Plan (Long Term Variable) |
| **Purpose and link to strategy**<br>To align executive directors' long-term variable remuneration <br>with the Group's strategic ambitions, while ensuring alignment <br>with shareholder interests.<br>**Operation**<br>Awards will be granted under the rules of the 2023 Long Term <br>Incentive Plan, which was approved by shareholders at the 2023 <br>AGM; awards will be granted in the form of conditional rights to <br>shares in the Group.<br>Dividends or dividend equivalents may accrue over the <br>vesting period and are payable in respect of awards that vest. <br>These will be paid in shares unless the individual has met their <br>shareholding requirement in which case they may be payable <br>in cash at the discretion of the Committee. Where dividends <br>or dividend equivalents are not accrued, the grant price of <br>shares to be awarded may be discounted to reflect the lack <br>of dividend equivalents.<br>The vesting and release of awards will comply with regulation <br>and shareholder expectations, which is currently a performance <br>period of at least three years, and a total performance and <br>holding period of least five years.<br>The Committee retains full discretion to amend the vesting levels <br>should the outcome not reflect business and/or individual <br>performance including risk and conduct outcomes. The <br>Committee may reduce (including to zero) the level of the <br>award, apply additional conditions to the vesting, or delay the <br>vesting of awards to a specified date or until conditions set by <br>the Committee are satisfied, where it considers it appropriate. <br>Awards may be subject to malus and clawback for a period <br>of up to seven years after the date of award which may <br>be extended to ten years where there is an ongoing internal <br>or regulatory investigation.<br>| **Maximum potential**<br>The maximum Long Term Incentive Plan opportunity is 500% <br>of base salary for the Group Chief Executive and 450% of base <br>salary for other executive directors. The actual award level <br>granted will be determined with reference to a pre-grant test <br>based on an assessment of performance by the Committee.<br>**Performance measures**<br>Awards will be subject to forward-looking performance measures <br>based on financial and non-financial measures, such as strategic <br>and sustainability, set out in the annual report on remuneration <br>each year; performance will be measured over a period of not <br>less than three years as determined by the Committee. <br>The Committee has the discretion to change the measures <br>or their weightings, from grant to grant, subject to a minimum <br>of 75% of the award being dependent on financial measures.<br>No more than 25% of the award will vest for threshold <br>performance. 100% of the award will vest for achieving the <br>maximum performance. Where performance falls between <br>threshold and maximum levels, an intermediate number of <br>awards will vest.<br>**Changes**<br>The maximum LTIP for the GCE has been increased from 300% <br>to 500% of base salary and the maximum LTIP for other executive <br>directors has been increased from 300% to 450% of base salary.<br>The minimum weighting to financial performance measures has <br>increased from 50% to 75%.<br>To provide alignment to shareholders, the Policy allows for the <br>grant of dividends or dividend equivalents to be awarded on <br>deferred awards.<br>|

---

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| | |
|:---|:---|
| ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Deferral of variable remuneration and holding periods | ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Deferral of variable remuneration and holding periods |
| **Operation**<br>Both the GPS and LTIP are treated as variable remuneration <br>for purpose of applicable remuneration regulation. <br>At award, payment and deferral levels must meet minimum rules <br>for executive directors. The current minimum requirements are:<br>•At least 40% of the first £660,000 of total variable <br>remuneration and 60% of any excess to be deferred for <br>up to four years with pro-rata vesting<br>•At least 50% of total variable remuneration to be delivered <br>in shares or equity-linked instruments<br>•Where a portion of variable remuneration is delivered <br>upfront and in shares it is subject to a minimum one-year <br>holding period<br>| **Changes**<br>No change to Policy that payment and deferral levels and the <br>operation of any holding period is determined annually at the <br>time of the award.<br>**Additional context**<br>To maintain flexibility across the period of our Policy, we believe <br>minimum regulatory requirements is the most appropriate Policy <br>position. However, we are mindful that additional considerations <br>apply when it comes to executive director remuneration in the UK. <br>We will set out our deferral position each year in the annual report <br>on remuneration, taking into account shareholder expectations, <br>market practice and emerging trends.<br>|

---

![Rem_2024_DirectorsRemPolTable_pg5.gif](lyg-20251231_g318.gif)

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Remuneration Policy table for executive directors** continued<br>

---

| | |
|:---|:---|
| ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Performance adjustment | ![Button_ShortTermVariable.gif](lyg-20251231_g279.gif)<br>![Button_LongTermVariable.gif](lyg-20251231_g280.gif)<br>Performance adjustment |
| Performance adjustment is determined by the Remuneration <br>Committee and may result in a reduction of up to 100% variable <br>remuneration opportunity for the relevant period. It can be <br>applied on a collective or individual basis.<br>The application of malus will generally be considered when:<br>•there is reasonable evidence of employee misbehaviour or <br>material error or that they participated in conduct which <br>resulted in losses for the Group or failed to meet appropriate <br>standards of fitness and propriety<br>•there is material failure of risk management at a Group, <br>business area, division and/or business unit level<br>•the Committee determines that the financial results for a <br>given year do not support the level of variable remuneration <br>awarded<br>•any other circumstances where the Committee consider <br>adjustments should be made<br>| Judgement on individual performance adjustment is informed <br>by taking into account the severity of the issue, the individual's <br>proximity to the issue and the individual's behaviour in relation <br>to the issue. Individual adjustment may be applied through <br>adjustments to balanced scorecard assessments and/or through <br>reducing the variable remuneration outcome.<br>Awards are subject to clawback for a period of up to seven years <br>after the date of award, which may be extended to ten years <br>where there is an ongoing internal or regulatory investigation. <br>The Committee has considered the time period of up to ten <br>years and believes that is an appropriate length of time for <br>performance adjustment to apply.<br>The application of clawback will generally be considered when:<br>•there is reasonable evidence of employee misbehaviour or <br>material error <br>•there is material failure of risk management at a Group, <br>business area, division and/or business unit level<br>|

---

**Discretion in relation to variable rewards**

The Committee retains discretion with regards to all variable

rewards plans. This relates to:

• The timing, size and type of awards and holding periods, subject

to Policy maxima, regulatory requirements and the annual

setting of targets

• Where performance measures are used and performance against

those measures is not commensurate with the Group's overall

financial or strategic performance over the performance period

• Adjustment of targets and measures if events occur which cause

it to determine that it is appropriate to do so. The Committee

also retains the right to change performance measures and the

weighting of measures, including following feedback from

regulators, shareholders and/or other stakeholders; and

amending the plan rules in accordance with their terms and or

amending the basis of operation (including but not limited to the

approach in respect of dividend equivalents) including in light of

any change to regulatory requirements or guidance or feedback

from regulators

• To exercise discretion in accordance with the rules, including in

relation to whether or not malus or clawback provisions would

apply, in connection with recruitment, or terminations of

employment, or corporate events affecting the Company

• Adjustments required in certain circumstances (e.g. rights issues,

corporate restructuring events and special dividends)

• The determination of how dividend equivalents should be

calculated and paid

The exercise of the Committee's discretion will be disclosed in

accordance with regulatory requirements.

**Legacy awards and restrictions on payments**

Awards in respect of the 2025 GPS will be granted in 2026 under

the terms of the 2023 Directors' Remuneration Policy approved by

shareholders on 18 May 2023. Awards in respect of the 2026 Long

Term Incentive Plan will be granted following the AGM in 2026

under the terms of the new Directors' Remuneration Policy (the

2026 Policy), subject to shareholder approval of the 2026 Policy.

The Committee reserves the right to make any remuneration

payments/awards and any payments/awards for loss of office,

notwithstanding that they are not in line with the Policy set

out above where the terms of the payment/award were agreed

(i) before the 2026 Policy came into effect or (ii) at a time when the

relevant individual was not a director of the Group and, in the

opinion of the Committee, the payment/award was not in

consideration for the individual becoming a director of the Group.

Such payments/awards will have been set out in the annual report

on remuneration for the relevant year and include awards and

payments made under previous approved remuneration Policies.

![Rem_ApplicationRemPolicy.gif](lyg-20251231_g319.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report continued

**Illustration of application of Remuneration Policy**<br>

The charts below illustrate possible remuneration outcomes under the following four scenarios:<br>1The maximum that may be paid, assuming full GPS payout and full vesting under the new LTIP with a share price appreciation of 50% for the <br>LTIP. The basis of the calculation of the share price appreciation is that the share price embedded in the calculation for the 'maximum' bar chart <br>is assumed to increase by 50%. <br>2The maximum that may be paid, assuming full GPS payout and full vesting under the new LTIP with no share price appreciation. <br>3The expected value of remuneration for performance midway between threshold and maximum, assuming 50% of maximum Group Performance <br>Share opportunity and 50% vesting of maximum Long Term Incentive Plan opportunity. <br>4The minimum that may be paid, where only the fixed element is paid (base salary, benefits and pension).<br>Amounts are based on base salaries as at 1 April 2026, 10% pension allowance and private medical cover. Implementation of the Policy in 2026 is set <br>out in the annual report on remuneration.<br>

---

| | | |
|:---|:---|:---|
|  | **Value of package** |  |
| **Charlie Nunn (GCE)** | **Charlie Nunn (GCE)** | **William Chalmers (CFO)** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Maximum – with share price appreciation | Maximum – with share price appreciation | Maximum – with share price appreciation | Maximum – with share price appreciation | Maximum – with share price appreciation | **Total** |
| **9%** | ◄ **1%** | **26%** | **43%** | **22%** | **£17.7m** |

---

![14](lyg-20251231_g320.gif)

![26](lyg-20251231_g321.gif)

---

| | | | | |
|:---|:---|:---|:---|:---|
| Maximum | Maximum | Maximum | Maximum |  |
| **11%** | ◄ **1%** | **33%** | **55%** | **£13.9m** |

---

---

| | | | |
|:---|:---|:---|:---|
| Mid-performance | Mid-performance | Mid-performance |  |
| **20%** ◄ **2%**  | ◄ **29%** | ◄ **49%** | **£7.8m** |

---

---

| | |
|:---|:---|
| Minimum |  |
| **91%** ◄ **9%**  | **£1.7m** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Maximum – with share price appreciation | Maximum – with share price appreciation | Maximum – with share price appreciation | Maximum – with share price appreciation | Maximum – with share price appreciation | **Total** |
| **10%** | ◄ **1%** | **24%** | **43%** | **22%** | **£10.2m** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Maximum | Maximum | Maximum | Maximum |  |
| **12%** | ◄ **1%** | **31%** | **56%** | **£8.0m** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| Mid-performance | Mid-performance | Mid-performance | Mid-performance |  |
| **22%** | ◄ **2%** | ◄ **27%** | ◄ **49%** | **£4.5m** |

---

---

| | | |
|:---|:---|:---|
| Minimum | Minimum |  |
| **91%** | ◄ **9%** | **£1.1m** |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| ●  | Salary | ●  | Pension/Benefits | ●  | Group Performance Share | ●  | Long Term Incentive Plan | ●  | Share price appreciation |

---

**Approach to recruitment and** 

**appointment to the Board**

In determining appropriate remuneration arrangements on hiring

a new executive director, the Committee will take into account

all relevant factors. This may include the experience and calibre

of the individual, local market practice, the existing remuneration

arrangements for other executives and the business circumstances.

The Committee will seek to ensure that arrangements are in the

best interests of both the Group and its shareholders and will seek

not to pay more than is necessary.

The Committee may make awards on hiring an external candidate

to 'buy out' remuneration arrangements forfeited, or opportunities

lost on leaving a previous employer. In doing so the Committee

will take account of relevant factors including any performance

conditions attached to these awards, the form in which they were

granted (e.g. cash or shares), the currency of the awards, and the

timeframe of awards. Any such award made will be made in

accordance with the PRA's Rulebook and made on a comparable

basis to those forfeited and, where required, will be subject to

malus and clawback at the request of the previous employer as

required by the PRA rules.

The package will normally be aligned with the Remuneration

Policy. However, the Committee retains the discretion to make

appropriate remuneration decisions outside the standard Policy to

facilitate the recruitment of an individual of the required calibre in

exceptional circumstances.

This may, for example, include the following circumstances:

• An interim recruit, appointed to fill an executive director role on

a short-term basis

• Exceptional circumstances requiring the Chair to take on an

executive function on a short-term basis

• An executive director recruited from a business or location

where benefits are provided that do not fall into the

definition of 'variable remuneration forfeited' but where the

Committee considers it reasonable to buy out these benefits,

or where the form of remuneration to be bought out requires

a differentiated approach

• Transitional arrangements for overseas hires, which might include

relocation expenses and accommodation

Variable remuneration awarded to a new executive director may

not exceed the multiple of annualised fixed pay specified by the

Remuneration Committee.

In making any such remuneration decisions, the Committee will

apply any appropriate performance measures in line with those

applied to other executive directors.

A full explanation will be provided of any buy-out award or

discretionary payment.

**Service agreements**

The service contracts of all current executive directors are terminable

on 12 months' notice from the Group and six months' notice from the

individual. The Chair also has a letter of appointment. The Chair's

engagement may be terminated on six months' notice by either party.

---

| | | |
|:---|:---|:---|
|  | **Notice to be given** <br>**by the Group**<br>| **Date of service** <br>**agreement**<br>|
| Sir Robin Budenberg | 6 months | 04 July 2020  |
| Charlie Nunn | 12 months | 29 November 2020 |
| William Chalmers | 12 months | 15 March 2019 |

---

The service contracts and letters of appointment are available for

inspection at the Company's registered office.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Notice periods**

Newly appointed executive directors will be employed on contracts

that include the following provisions:

• The individual will be required to give six months' notice if they

wish to leave and the Group will give 12 months' notice other

than for material misconduct, neglect or other circumstances

where the individual may be summarily dismissed by written

notice. In exceptional circumstances, new joiners will be offered

a longer notice period (typically reducing to 12 months within

two years of joining)

• In the event of long-term incapacity, if the executive director

does not perform their duties for a period of at least 26 weeks

(in aggregate over a 12-month period), the Group shall be

entitled to terminate the executive's employment by giving

three months' notice

• At any time after notice to terminate is given by either the Group

or the executive director, the Group may require the executive

director to take leave for some or all of the notice period

• At any time, at its absolute discretion, the Group may elect

to terminate the individual's employment by paying to the

executive director, in lieu of the notice period, an amount

equivalent to base salary, subject to mitigation as described

more fully in the termination payments section of this report

**Letters of appointment**

The non-executive directors all have letters of appointment and

are appointed for an initial term of three years after which their

appointment may continue subject to an annual review. Non-

executive directors may have their appointment terminated, in

accordance with statute, regulation and the articles of association,

at any time with immediate effect and without compensation.

All directors are subject to annual re-election by shareholders.

The service contracts and letters of appointments are available

for inspection at the Company's registered office.

---

| | | |
|:---|:---|:---|
| **NED** | **Date of letter of appointment** | **Date of appointment** |
| Sir Robin Budenberg<sup>1</sup> | 4 July 2020 | 1 October 2020 |
| Nathan Bostock | 29 July 2024 | 1 August 2024 |
| Sarah Legg | 21 October 2019 | 1 December 2019 |
| Amanda Mackenzie | 17 April 2018 | 1 October 2018 |
| Harmeen Mehta | 5 October 2021 | 1 November 2021 |
| Cathy Turner | 11 October 2022 | 1 November 2022 |
| Chris Vogelzang | 11 June 2025 | 16 June 2025 |
| Scott Wheway | 26 July 2022 | 1 August 2022 |
| Catherine Woods | 22 October 2019 | 1 March 2020 |

---

1Chair is subject to a six-month notice period.

---

| | | | |
|:---|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Remuneration Policy table for non-executive directors** |  | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | ![Button_TotalReward.gif](lyg-20251231_g314.gif)<br>Chair and non-executive director fees and benefits | ![Button_TotalReward.gif](lyg-20251231_g314.gif)<br>Chair and non-executive director fees and benefits |  |
|  | ![Button_TotalReward.gif](lyg-20251231_g314.gif)<br>Chair and non-executive director fees and benefits | ![Button_TotalReward.gif](lyg-20251231_g314.gif)<br>Chair and non-executive director fees and benefits |  |
|  | **Purpose and link to strategy**<br>To provide an appropriate reward to attract and retain a <br>high-calibre individual with the relevant skills, knowledge <br>and experience, and to reflect the time commitment required <br>to fulfil the role effectively.<br>**Operation**<br>The Committee is responsible for evaluating and approving the <br>Chair's fees. The Chair does not participate in these discussions. <br>The Group Chief Executive and the Chair are responsible for <br>evaluating and making recommendations to the Board in relation <br>to the fees of the non-executive directors (NEDs).<br>When determining and reviewing fee and benefit levels, <br>the Committee ensures that decisions are made within the <br>following parameters:<br>•The individual's skills and experience<br>•An objective assessment of the individual's responsibilities <br>and the size and scope of their role, using objective sizing <br>methodologies<br>•Fees and benefits for comparable roles in comparable <br>publicly listed firms of a similar size<br>The Chair receives an all-inclusive fee, which is reviewed <br>periodically plus benefits including life insurance, medical insurance <br>and transportation. The Committee retains the right to provide <br>additional benefits depending on individual circumstances.<br>| NEDs are paid a basic fee plus additional fees for the Chair/<br>membership of Committees and for membership of Group <br>company Boards, non-Board level committees and/or other <br>specific responsibilities.<br>An additional fee is also paid to the Senior Independent Director <br>to reflect the additional responsibilities.<br>Any increases normally take effect from 1 January of a given year.<br>The Chair and the NEDs are not entitled to receive any payment <br>for loss of office (other than in the case of the Chair's fees for the <br>six-month notice period) and are not entitled to participate in <br>the Group's variable remuneration arrangements, all-employee <br>share plan or pension arrangements.<br>NEDs are reimbursed for expenses incurred in the course of <br>their duties, such as travel and accommodation expenses, <br>on a grossed-up basis (where applicable).<br>**Maximum potential**<br>Any increase in fees or benefits currently provided will be <br>consistent with the parameters above.<br>**Performance measures**<br>N/A<br>**Changes**<br>No change to Policy.<br>|  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Directors' remuneration report 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,

normally mitigated in the event that alternative employment is

secured in line with executive directors' service contracts. Where it

is appropriate to make a GPS award to the individual, this should

relate to the period of active 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.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Termination payments** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | |
|:---|:---|:---|
|  | **Base salary** | **Pension and benefits**<sup>1</sup> |
| **Resignation** | Entitlement to base salary continues for full notice period. <br>If employment is terminated prior to end of notice period, <br>balance of notice pay is paid in monthly instalments, offset <br>by earnings from any new employment during this period. <br>If resignation is to take up a new employment, base salary <br>would continue during any period of garden leave but may <br>then cease if early release date agreed.<br>| Paid until date of termination including any period <br>of leave required by the Group (subject to <br>individual benefit scheme rules).<br>|
| **Redundancy or** <br>**termination by mutual** <br>**agreement**<br>| Entitlement to base salary continues for full notice period. <br>If employment is terminated prior to end of notice period, <br>balance of notice pay is paid in monthly instalments, offset <br>by earnings from any new employment during this period.<br>| Paid until date of termination including any period <br>of leave required by the Group (subject to <br>individual benefit scheme rules).<br>|
| **Retirement/ill health,** <br>**injury, permanent** <br>**disability/death**<br>| Paid until date of retirement/death. For ill health, injury or <br>permanent disability which results in the loss of employment, <br>paid for the applicable notice period (including any period of <br>leave required by the Group).<br>| Paid until date of death/ retirement (subject to <br>individual benefit scheme rules). For ill health, <br>injury, permanent disability, paid for the notice <br>period including any period of leave required by the <br>Group (subject to individual benefit scheme rules).<br>|
| **Change of control** <br>**or merger**<br>| N/A | N/A |
| **Other reason where the** <br>**Committee determines** <br>**that the executive should** <br>**be treated as a good leaver**<br>| Entitlement to base salary continues for full notice period. <br>If employment is terminated prior to end of notice period, <br>balance of notice pay is paid in monthly instalments, offset <br>by earnings from any new employment during this period.<br>| Paid until date of termination including any period <br>of leave required by the Group (subject to <br>individual benefit scheme rules).<br>|

---

1In certain circumstances, certain benefits may continue for a period post-termination.

**Chair and non-executive director fees**

Chair and non-executive director fees are paid until the date of leaving the Board in all circumstances set out above. The Chair is entitled to

six months' notice.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Termination payments** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |

---

---

| | | |
|:---|:---|:---|
|  | **Group Performance Share** <br>**(Annual bonus plan)**<sup>1,2,5</sup><br>| **Long Term Incentive Plan**<br>**(Long term variable reward plan)**<sup>2,3,4,5</sup><br>|
| **Resignation** | Unvested deferred GPS awards and entitlement <br>to be considered for in-year award are normally <br>forfeited on resignationunless the Committee <br>determines, in exceptional circumstances, to treat <br>as a good leaver, as set out below.<br>| Unvested awards normally lapse on date of leaving (or on notice of <br>leaving) unless the Committee determines otherwise in exceptional <br>circumstances that they will vest on the original vesting date <br>(or exceptionally on the date of leaving). <br>Where the award is to vest it will be subject to the original performance <br>conditions and time pro-rating (for months worked in the performance <br>period). Malus and clawback will apply.<br>|
| **Redundancy or** <br>**termination by** <br>**mutual agreement** <br>| For cases of redundancy, unvested deferred <br>GPS awards are retained and in-year GPS <br>awards are accrued until the date of termination <br>(or the commencement of garden leave if earlier). <br>Such awards would be subject to deferral, malus <br>and clawback.<br>| Awards vest on the original vesting date (or exceptionally on the date <br>of leaving). Vesting is subject to the performance conditions and time <br>pro-rating (for months worked in the performance period). Malus and <br>clawback provisions will continue to apply.<br>|
| **Retirement/ill health,** <br>**injury, permanent** <br>**disability**<br>| Unvested deferred GPS awards are retained and <br>in-year GPS awards are accrued until the date of <br>termination (or the commencement of garden <br>leave if earlier). Such awards would be subject to <br>deferral, malus and clawback.<br>| Awards vest on the original vesting date (or exceptionally on the date <br>of leaving). Vesting is subject to the performance conditions and time <br>pro-rating (for months worked in the performance period). Malus and <br>clawback provisions will continue to apply.<br>|
| **Death** | Unvested deferred GPS awards are retained and <br>in-year GPS awards are accrued until the date of <br>death. Deferred GPS awards vest on death in <br>cash, unless the Committee determines <br>otherwise.<br>| Awards vest in full on the date of death unless in exceptional <br>circumstances the Remuneration Committee determines that the <br>performance against targets set do not support full vesting.<br>|
| **Change of control** <br>**or merger**<br>| In-year GPS accrued up until date of change of <br>control or merger (current year). Where there is a <br>Corporate Event, deferred GPS awards vest to the <br>extent and timing determined by the Committee <br>in its absolute discretion.<br>| Awards vest on date of event. Vesting is subject to the performance <br>conditions and time pro-rating (for months worked in the performance <br>period unless determined otherwise). The Committee may decide <br>not to time pro-rate in its absolute discretion. Malus and clawback <br>provisions will continue to apply. Instead of vesting, awards may be <br>exchanged for equivalent awards over the shares of the acquiring <br>company or another company or equivalent cash based awards.<br>|
| **Other reason where** <br>**the Committee** <br>**determines that** <br>**the executive** <br>**should be treated** <br>**as a good leaver**<br>| Unvested deferred GPS awards retained and <br>in-year GPS awards are accrued until the date of <br>termination (or the commencement of garden <br>leave if earlier). Deferred GPS awards vest in line <br>with normal timeframes and are subject to malus <br>and clawback. The Committee may allow awards <br>to vest early if it considers it appropriate.<br>| Awards vest on the original vesting date (or exceptionally on the date <br>of leaving). Vesting is subject to the performance conditions and time <br>pro-rating (for months worked in the performance period). Malus and <br>clawback provisions will continue to apply.<br>|

---

1If 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).

2Reference to change of control or merger includes a compromise or arrangement under section 899 of the Companies Act 2006 or equivalent. Legacy 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.

3The terms applicable on a cessation of employment to GOS awards are as shown on page 97 of the 2017 Remuneration Policy. The terms applicable on a cessation of employment to

LTSP awards as shown on page 122 of the 2020 Remuneration Policy.

4In 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.

5Any 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.

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 publication no

current executive director is 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.

**Audited content**

All narrative and quantitative tables within the directors' remuneration report are unaudited unless otherwise stated. Where disclosures

have been audited, this has been carried out under International Standards on Auditing (ISAs).

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Other statutory and regulatory information

This directors' report on **pages [66](#i3eaa7a3e529a46b3b97a88e05ad474bc_295) to [136](#ib3569b81c6bb477f828633c1cfc09e16_16521)** is our

directors' report for the purposes of the Companies

Act 2006 and fulfils the requirements of the

corporate governance statement for the purposes

of the Financial Conduct Authority's Disclosure

Guidance and Transparency Rules (DTR).

**Profit and dividends**

The consolidated income statement shows a statutory profit

before tax for the year ended 31 December 2025 of £6,661 million

(2024: £5,971 million). The directors have recommended a final

ordinary dividend for 2025, which is subject to approval by the

shareholders at the annual general meeting (AGM), of 2.43 pence per

share, which together with the interim ordinary dividend of 1.22 pence

per share represents a total ordinary dividend for the year of

3.65 pence per share, equivalent to £2.2 billion. If approved by

shareholders, the final ordinary dividend will be paid on 19 May 2026.

A final ordinary dividend of 2.11 pence per share totalling

£1,271 million in respect of 2024 was paid on 20 May 2025 and

an interim ordinary dividend of 1.22 pence per share totalling

£729 million was paid on 9 September 2025. Further information

on dividends is shown in note 34 on **page [289](#ia80686b7e4964eaa83371bfd4742e942_2147)**and is incorporated

into this directors' report by reference.

For 2025, the Board intends to return up to £1.75 billion through

a share buyback programme in respect of the Company's ordinary

shares. This represents the return of capital over and above the

Board's view of the current level of capital required to grow the

business, meet regulatory requirements and cover uncertainties.

The share buyback programme commenced on 30 January 2026

and is expected to be completed by 31 December 2026. Based

on the total proposed ordinary dividend and the intended ordinary

share buyback the total capital return in respect of 2025 will be up

to £3.9 billion.

The Company intends to use the authority for the repurchase of

ordinary shares granted to it at the 2025 AGM to implement the

share buyback. Details of this existing authority are set out under

'Power of directors in relation to shares'. Shareholders will be

asked to renew the authority at the 2026 AGM, in line with

common practice.

Going forward, given the Board's continued confidence in capital

generation, the Group will now review excess capital distributions

in addition to the ordinary dividend every half year.

**Appointment and retirement of directors**

The appointment and retirement of directors is governed by the

Company's articles of association, the UK Corporate Governance

Code 2024 and the Companies Act 2006. The Company's articles

of association may only be amended by a special resolution of the

shareholders in a general meeting.

In the interests of good governance and in accordance with the

provisions of the UK Corporate Governance Code 2024, all directors

will retire at the 2026 AGM and those wishing to serve for the first

time or again will submit themselves for election or re-election

(as applicable). Biographies of the current directors are set

out on **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)**. Details of the directors seeking election

or re-election at the AGM are set out in the Notice of Meeting.

**Board composition** 

The names and biographical information of all current directors are

on **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)**. 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' and officers' liability insurance**

Throughout 2025 the Group had appropriate insurance cover

in place to protect directors, including the directors who retired

during the year, from liabilities that may arise against them

personally in connection with the performance of their role.

As well as insurance cover, the Group agrees to indemnify the

directors to the maximum extent permitted by law. Further

information on the Group's indemnity arrangements is provided

in the directors' indemnities section below.

**Directors' indemnities**

The directors of the Company have entered into individual

deeds of indemnity with the Company which constituted '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. Deeds for existing directors are available for inspection at the

Company's registered office.

The Company 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 to former directors

who retired during the year and since the year end, and to Group

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 the Group's pension schemes, which were in force

for the whole of the financial year and remain in force as at the date

of this report.

**Conflicts of interest**

The Board has a comprehensive procedure for reviewing, and as

permitted by the Companies Act 2006 and the Company'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. Any changes to the commitments of directors are

reported to the Nomination and Governance Committee and the

Board and a register of directors' interests is regularly reviewed and

authorised by the Board to ensure that the authorisation status

remains appropriate.

**Share capital**

Detail of the rights and obligations attaching to the Company's

issued share capital may be found in notes 29 and 30 to the

financial statements on **pages [285](#i6b9d7d4e1c9d414c934ee49a35d9c8b4_3569) and [287](#i9d46438e92ee44028507b700808b2cfc_3794)**.

**Power of directors in relation to shares**

The Board manages the business of the Company under the powers

set out in the articles of association, which include the directors'

ability to issue or buy back shares. The directors were granted

authorities to issue and allot shares and to buy back shares at the

2025 AGM. Shareholders will be asked to renew these authorities at

the 2026 AGM.

The authority in respect of purchase of the Company's ordinary

shares, as granted at the 2024 AGM, was limited to 6,377,697,127

ordinary shares, equivalent to 10% of the issued ordinary share

capital of the Company as at the latest practicable date prior to

publication of the 2024 AGM Notice of Meeting. Such authority

was used during the year under review in connection with the share

buyback programme described below and, as at 31 December 2025

and the date of this report, a total of 2,204,109,740 ordinary shares

had been repurchased under such authority.

![SectionTabGov.gif](lyg-20251231_g163.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

The Company undertook an ordinary share buyback programme,

which was launched on 21 February 2025 and ended on 8 December

2025. The programme repurchased in aggregate 2,204,109,740

ordinary shares, each with a nominal value of 10 pence, for an

aggregate consideration of c.£1.7 billion (aggregate nominal value

of the ordinary shares £220,410,974) as a means by which to return

surplus capital to shareholders and to reduce the ordinary share

capital of the Company.

All of the repurchased ordinary shares were cancelled and together

represented 3.74% of the called up share capital of the Company

as at 31 December 2025. Further information in relation to the

2025 ordinary share buyback programme is provided on **page [57](#i25a796333e3c480e887fbcb47ee5cf76_280)**.

The authority in respect of purchase of the Company's

ordinary shares, as granted at the 2025 AGM, was limited to

6,059,214,381 ordinary shares, none of which had been utilised

as at 31 December 2025, however will be utilised for the buyback

programme commenced on 30 January 2026. Information on

transactions in own shares is made publicly available via the

regulatory information service and on the Company's website at

www.lloydsbankinggroup.com

**Branches**

The Group provides a wide range of banking and financial services

through branches and offices in the UK and overseas.

**Research and development activities**

During the ordinary course of business, the Group develops new

products and services within the business units.

**Change of control**

The Company is not party to any significant agreements which take

effect, alter or terminate upon a change of control of the Company

following a takeover bid. There are no agreements between the

Company and its directors or employees providing compensation

for loss of office or employment resulting from a takeover, except

for the Company's employee share plans which contain provisions

relating to a change of control set out on **page [287](#i9d46438e92ee44028507b700808b2cfc_3794)**.

**Capital Requirements** 

**(Country-by-Country Reporting)**

As required under the Capital Requirements (Country-by-Country

Reporting) Regulations 2013, the Group's related disclosures may

be found online on the financial downloads page of our website.

**Post balance sheet events**

Details of events since the date of the balance sheet are provided

in note 41 on **page [296](#i3eaa7a3e529a46b3b97a88e05ad474bc_838).**

**Substantial shareholders**

Major shareholders do not have different voting rights from other

holders of ordinary shares. Information provided to the Company

by substantial shareholders pursuant to the DTR is published

via a Regulatory Information Service. As at 31 December 2025,

the Company had been notified by its substantial shareholders

under Rule 5 of the DTR of the following interests in the

Company's shares:

---

| | | |
|:---|:---|:---|
|  | Interest in shares | % of issued share capital with <br>rights to vote in all circumstances <br>at general meetings<sup>1</sup><br>|
| BlackRock, Inc. | 3668756765<sup>2</sup> | 5.14% |
| Norges Bank | 1935747756 | 3.02% |

---

1Percentage provided was correct at the date of notification. All holdings are direct

holdings unless stated to the contrary.

2The most recent notification provided by BlackRock, Inc. under Rule 5 of the DTR

identifies (i) an indirect holding of 3,599,451,380 shares in the Company representing

5.04% of the voting rights in the Company, and (ii) a holding of 69,305,385 in other

financial instruments in respect of the Company representing 0.09% of the voting

rights of the Company. As at 11 February 2026, BlackRock, Inc.'s holding most recently

notified to the Company under Rule 5 of the DTR varies from the holding disclosed in

BlackRock, Inc.'s Schedule 13-G filing with the US Securities and Exchange Commission

dated 8 February 2024, which identifies beneficial ownership of 5,352,886,800 shares

in the Company representing 8.4% of the issued share capital in the Company. This

variance is attributable to different notification and disclosure requirements between

these regulatory regimes.

Harris Associates L.P. held at last notification on 19 July 2021 pursuant to Rule 5 of the

DTR an indirect holding of 3,546,216,787 shares, representing 4.99%. It is understood

that Harris Associates L.P. disposed of their holding during the course of 2025.

No further notifications have been received under Rule 5 of the DTR

as at the date of this report.

**Information incorporated by reference**

---

| | | |
|:---|:---|:---|
| **Content** |  | **Pages** |
| Group results | Summary of Group results | 53 to 59 |
| Ordinary dividends | Dividends on ordinary shares | 289 |
| Directors' emoluments | Directors' remuneration report | 98 to 133 |
| Internal control and <br>financial risk management | Financial reporting risk | 141 |
| Internal control and <br>financial risk management | Risk management | 24 to 29<br>137 to 197<br>|
| Internal control and <br>financial risk management | Financial instruments | 255 to 266<br>294<br>|
| Information included in <br>the strategic report | Future developments | 1 to 29 |
| Information included in <br>the strategic report | Post balance sheet events | 2 and 3 |
| Information included in <br>the strategic report | Environmental disclosures | 32 <br>35 to 49<br>|
| Information included in <br>the strategic report | Supporting disability | 22 |
| Information included in <br>the strategic report | Engagement with colleagues | 22 and 77 |
| Information included in <br>the strategic report | Engagement with customers, <br>suppliers and others<br>| 76 to 78 |
| Disclosures required under <br>UK Listing Rule 6.6.1R | Significant contracts | 290 to 291 |
| Disclosures required under <br>UK Listing Rule 6.6.1R | Dividend waivers | 289 to 290 |
| Principal risks and <br>uncertainties | Funding and liquidity | 27<br>181 to 186<br>|
| Principal risks and <br>uncertainties | Capital position | 25<br>144 to 150<br>|
| Viability statement | Risk overview | 34 |
| Going concern statement | Risk overview | 34 |
| Share capital and control | Share capital and restrictions <br>on the transfer of shares or <br>voting rights<br>| 287 |
| Share capital and control | Employee share schemes – <br>exercise voting rights<br>| 287 |
| Share capital and control | Rights and obligations <br>attaching to the Company's <br>issued share capital<br>| 287 |
| Environmental disclosures | Carbon reporting | 47 to 48 |

---

**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 Company'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 Company'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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Other statutory and regulatory information continued

**Board and executive management diversity(these disclosures are made as at 31 December 2025, in compliance** 

**with UK Listing Rules UKLR 6.6.6(9) and UKLR 6.6.6(10))**

**Reporting table on gender representation**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Number of <br>Board members<br>| Percentage of <br>the Board<br>| Number of senior positions <br>on the Board (CEO, CFO, <br>SID and Chair)<br>| Number in executive <br>management <br>(GEC)<br>| Percentage in executive <br>management<br>(GEC)<br>|
| Men | 5 | 50% | 3 | 8 | 61.5% |
| Women | 5 | 50% | 1 | 5 | 38.5% |
| Other categories | 0 | 0% | 0 | 0 | 0.0% |
| Not specified/Prefer not to say | 0 | 0% | 0 | 0 | 0.0% |

---

**Reporting table on ethnicity representation**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Number of <br>Board members<br>| Percentage of <br>the Board<br>| Number of senior positions <br>on the Board (CEO, CFO, <br>SID and Chair)<br>| Number in executive <br>management <br>(GEC)<br>| Percentage in <br>executive management<br>(GEC)<br>|
| White British or other white | 8 | 80% | 4 | 11 | 84.6% |
| Mixed/Multiple ethnic groups | 1 | 10% | 0 | 0 | 0% |
| Asian/Asian British | 1 | 10% | 0 | 2 | 15.4% |
| Black/African/Caribbean/Black British | 0 | 0% | 0 | 0 | 0% |
| Other ethnic group | 0 | 0% | 0 | 0 | 0% |
| Not specified/prefer not to say | 0 | 0% | 0 | 0 | 0% |

---

**Methodology and definitions**

All data in the table above is disclosed as at 31 December 2025.

All diversity information for ethnicity is based on voluntary self-

declaration with Board and executive management asked to

disclose based on the categories shown in the table above. Our

systems do not record diversity data of colleagues who have not

declared this information and is for UK payroll only. Gender data

includes those on parental/maternity leave, absent without leave

and long-term sick and excludes contractors, Group non-executive

directors, temporary and agency staff. Executive management

numbers are based on members and attendees of the Group

Executive Committee. Diversity calculations are based on

headcount, not full-time employee value.

Further details on our gender and diversity data including progress

on our ambitions can be found on **pages [22](#i3eaa7a3e529a46b3b97a88e05ad474bc_61) to [23](#id5a09873a2b64b69bddd405c4c5c041e_1-2-1-1-5233089)**.

**Statement of directors' responsibilities**

The directors are responsible for preparing the annual report,

including the directors' remuneration 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 Group and parent company 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 Group and the Company and of

the profit or loss of the Company and 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 Company'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 Company's

transactions and disclose with reasonable accuracy at any time

the financial position of the Company and the Group and enable

them to ensure that the financial statements and the directors'

remuneration report comply with the Companies Act 2006. They

are also responsible for safeguarding the assets of the Company and

the Group and hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of

the corporate and financial information included on the Company's

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 **pages [68](#i3eaa7a3e529a46b3b97a88e05ad474bc_298) to [69](#i3eaa7a3e529a46b3b97a88e05ad474bc_301)**

of this annual report, confirm that, to the best of his or her knowledge:

• The Group and the Company 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 Company and the

undertakings included in the consolidation taken as a whole

• The strategic report and directors' report include 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

• The annual report and accounts, taken as a whole, are fair,

balanced and understandable and provide the information

necessary for shareholders to assess the Company and the

Group's position, performance, business model and strategy

This responsibility statement was approved by the Board of

directors on 13 February 2026.

![Signature_KateCheetham.gif](lyg-20251231_g322.gif)

**Kate Cheetham**

Company Secretary

On behalf of the Board

13 February 2026

Lloyds Banking Group plc

Registered in Scotland, No. SC095000

![Divider_RiskMan.gif](lyg-20251231_g323.gif)

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk

management

---

| | |
|:---|:---|
| The Group's approach to risk | [138](#i3eaa7a3e529a46b3b97a88e05ad474bc_502) |
| Risk governance structure | [140](#i3eaa7a3e529a46b3b97a88e05ad474bc_505) |
| Stress testing | [142](#i3eaa7a3e529a46b3b97a88e05ad474bc_508) |
| Full analysis of principal risk categories | [144](#i3eaa7a3e529a46b3b97a88e05ad474bc_523) |

---

Driving

opportunities

through a strong

risk culture

**A robust approach to risk management** 

**is integral to the Group's strategy of delivering** 

**sustainable growth**

**Lloyds Banking Group 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[24](#i7be0e8b5f0c04732b21e3d21bc0f22d9_2084) to [29](#i17b65e487f044c15a4887da9a330401d_10-1-1-1-5233089)**) 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.

**The 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

Group. TheGroup's Corporate Governance Framework applies

across Lloyds Banking Group plc, Lloyds Bank plc, Bank of Scotland

plc and HBOS plc. It is tailored where needed to meet the entity-

specific needs of Lloyds Bank plc and Bank of Scotland plc, within

the Ring-Fenced Bank sub-group (RFB) and supplementary

corporate governance frameworks are in place to address the

specific requirements of the other sub-groups (Non-Ring-Fenced

Bank, Insurance and Direct Investments).

The Group's Risk Management Framework (RMF) 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

that can be consistently applied across the Group. This enhanced

approach replaces previous legal entity and business-specific

frameworks, ensuring clarity, consistency and an ease of use.

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 across the Group and its legal

entities. 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**

The RMF has connectivity across its component parts, ensuring

processes are in place to facilitate risk management and decision-

making across the organisation. It provides a common structure

across the Group and can be appropriately calibrated for all legal

entities, business units and Group functions.

![Risk_RiskManagementFrameworkNoType.gif](lyg-20251231_g325.gif)

---

| |
|:---|
| ![Risk_Button_Number1_Black.gif](lyg-20251231_g326.gif) |
| **Group strategy** <br>**and the risk** <br>**management** <br>**strategy**<br>|

---

---

| |
|:---|
| ![Risk_Button_Number2_Black.gif](lyg-20251231_g327.gif) |
| **Culture,** <br>**values and** <br>**behaviours**<br>|

---

---

| |
|:---|
| ![Risk_Button_Number7_Black.gif](lyg-20251231_g328.gif) |
| **Risk** <br>**architecture** <br>**and approach**<br>|

---

**Risk** <br>**management** <br>**framework**<br>

---

| |
|:---|
| ![Risk_Button_Number6_Black.gif](lyg-20251231_g329.gif) |
| **Risk** <br>**appetite**<br>|

---

---

| |
|:---|
| ![Risk_Button_Number3_Black.gif](lyg-20251231_g330.gif) |
| **Risk** <br>**governance**<br>|

---

---

| |
|:---|
| ![Risk_Button_Number5_Black.gif](lyg-20251231_g331.gif) |
| **Risk function** <br>**mandate**<br>|

---

---

| |
|:---|
| ![Risk_Button_Number4_Black.gif](lyg-20251231_g332.gif) |
| **Three lines** <br>**of defence**<br>|

---

![Risk_Button_Number1_Black.gif](lyg-20251231_g326.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 Group and legal entity Chief Risk Officers (CROs) play 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, developed by sub-

groups, legal entities and business units, 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](lyg-20251231_g327.gif)

**Culture, values and behaviours**

The Group's culture, guided by the Group's values, is fundamental

to its 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, the Group's whistleblowing programme,

ensures colleagues' concerns are taken seriously and treated

sensitively.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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](lyg-20251231_g330.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

Group-wide risk issues atGroup Executive Committee level, 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** **[140](#i222c505da66444c19d8b691fc1c1f853_5300)**.

![Risk_Button_Number4_Black.gif](lyg-20251231_g332.gif)

**Three lines of defence**

In line with industry best practice, the 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** **[140](#i222c505da66444c19d8b691fc1c1f853_5300)**.

![Risk_Button_Number5_Black.gif](lyg-20251231_g331.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](lyg-20251231_g329.gif)

**Risk appetite**

The Group's approach to setting and the ongoing management of

risk appetite is an integral component of the 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. Risk appetite is documented for the

Group, as well as sub-groups and legal entities as required. All legal

entities, business units and Group functions must operate within the

risk appetite parameters set by the Group Board. 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 Group 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](lyg-20251231_g328.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.

The 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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

**Risk governance structure**

The risk governance structure below is integral to effective risk management across the Group. To meet ring-fencing requirements, the

Boards and Board Committees of the Group, and the Ring-Fenced Banks as well as relevant Committees of the Group, and the Ring-

Fenced Banks will sit concurrently and are referred to as the Aligned Board Model. Please see **page [73](#i31358bbf6f4747898e2895be1a723f03_0-1-1-2-5233089)** for further information on the

Group's approach to ring-fencing.

![RiskMan_RiskGovStructure_NoType.gif](lyg-20251231_g333.gif)

**Risk governance structure**<br>

---

| | | | |
|:---|:---|:---|:---|
| **Audit Committee** | **Board** | **Board** | **Board Risk Committee** |
| **Group Chief Executive** | **Group Chief Executive** | **Group Chief Executive** | **Group Chief Executive** |
|  | **Primary escalation** | **Primary escalation** |  |
| **Group and Ring-Fenced Banks Risk Committee** | **Group and Ring-Fenced Banks Risk Committee** | **Group and Ring-Fenced Banks Risk Committee** | **Group and Ring-Fenced Banks Risk Committee** |
|  | **Primary escalation** | **Primary escalation** |  |
| **Risk Function committees** <br>**and governance** | **Risk Function committees** <br>**and governance** | **Business area principal** <br>**enterprise risk committees** | **Business area principal** <br>**enterprise risk committees** |

---

---

| | | |
|:---|:---|:---|
| **Aggregation** | **Reporting** | **Escalation** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Three lines of defence model**<br>**The RMF establishes a 'three lines of defence' model defining clear responsibilities and accountabilities and ensuring effective independent oversight** <br>**and assurance on key decisions, while ensuring appropriate risk resource and capabilities for each area:** | **Three lines of defence model**<br>**The RMF establishes a 'three lines of defence' model defining clear responsibilities and accountabilities and ensuring effective independent oversight** <br>**and assurance on key decisions, while ensuring appropriate risk resource and capabilities for each area:** | **Three lines of defence model**<br>**The RMF establishes a 'three lines of defence' model defining clear responsibilities and accountabilities and ensuring effective independent oversight** <br>**and assurance on key decisions, while ensuring appropriate risk resource and capabilities for each area:** | **Three lines of defence model**<br>**The RMF establishes a 'three lines of defence' model defining clear responsibilities and accountabilities and ensuring effective independent oversight** <br>**and assurance on key decisions, while ensuring appropriate risk resource and capabilities for each area:** | **Three lines of defence model**<br>**The RMF establishes a 'three lines of defence' model defining clear responsibilities and accountabilities and ensuring effective independent oversight** <br>**and assurance on key decisions, while ensuring appropriate risk resource and capabilities for each area:** |
| **First line of defence** | ![Button_ArrowLeftBlack.gif](lyg-20251231_g334.gif)<br>**Independent** <br>**challenge of** <br>**first line of** <br>**defence** | **Second line of defence** | ![Button_ArrowLeftBlack.gif](lyg-20251231_g334.gif)<br>**Independent** <br>**challenge of** <br>**both first and** <br>**second lines** <br>**of defence** | **Third line of defence** |
| **Risk management** | ![Button_ArrowLeftBlack.gif](lyg-20251231_g334.gif)<br>**Independent** <br>**challenge of** <br>**first line of** <br>**defence** | **Risk oversight** | ![Button_ArrowLeftBlack.gif](lyg-20251231_g334.gif)<br>**Independent** <br>**challenge of** <br>**both first and** <br>**second lines** <br>**of defence** | **Risk assurance** |
| **Business areas have end-to-end** <br>**accountability for risks in their** <br>**processes and must ensure strong** <br>**governance and controls, both** <br>**internally and with third parties,** <br>**to manage risks appropriately** <br>**within Board-approved appetite** <br>**parameters. They identify, assess,** <br>**mitigate, monitor, and report risks,** <br>**maintain risk management skills, and** <br>**comply with Group policies and** <br>**relevant regulations.**<br>| ![Button_ArrowLeftBlack.gif](lyg-20251231_g334.gif)<br>**Independent** <br>**challenge of** <br>**first line of** <br>**defence** | **The Risk function, led by the Chief** <br>**Risk Officer, is independent from** <br>**the first line of defence. It advises** <br>**on, monitors, challenges, approves,** <br>**escalates, and reports to the Board** <br>**and Group Chief Executive on** <br>**first-line risk-taking. It oversees** <br>**governance, risk management,** <br>**controls and regulatory compliance,** <br>**ensuring these align to the RMF and** <br>**Board-set risk appetite.**<br>| ![Button_ArrowLeftBlack.gif](lyg-20251231_g334.gif)<br>**Independent** <br>**challenge of** <br>**both first and** <br>**second lines** <br>**of defence** | **Group Audit, led by the Chief** <br>**Internal Auditor, provide** <br>**independent assurance on the** <br>**effectiveness of the first and second** <br>**lines of defence's management of** <br>**risk, including assessing the design** <br>**and operation of key controls and** <br>**the adequacy and effectiveness of** <br>**internal controls. Their scope of** <br>**work is unrestricted based on their** <br>**independent assessment of the** <br>**Group's key risks.** <br>|

---

**Group Board and executive committees with risk management responsibilities**

Assisted by the Board Risk and Audit Committees, the Board approves the Group's overall governance, risk and control frameworks and

risk appetite.Refer to the corporate governance section on **pages [72](#i3eaa7a3e529a46b3b97a88e05ad474bc_313) to [73](#i31358bbf6f4747898e2895be1a723f03_0-1-1-2-5233089)** for further information on Board Committees.

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, stress <br>testing, and approves ICAAP and ILAAP. Inputs into <br>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>|
| **Group and Ring-**<br>**Fenced Banks** <br>**Risk 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:

• Group and Ring-Fenced Banks Asset and Liability Committees

• Group and Ring-Fenced Banks Strategic Delivery Committees

• Group and Ring-Fenced Banks Disclosure Committees

• Group Sustainability Committee

• Group Conduct Investigations Committee

• Group and Ring-Fenced Banks Cost Management Committees

• Group and Ring-Fenced Banks Contentious Regulatory Committees

The Group and Ring-Fenced Banks Risk Committee is supported by

business unit risk committees, cross-business unit committees addressing

specific matters of Group-wide significance, and second line of defence

Risk committees ensuring oversight of risk management. These include:

• Group Capital Risk Committee

• Group Financial Risk Committee

• Economic Crime Prevention Committee

• Group Liquidity Risk Committee

• Group Market Risk Committee

• Group Model Governance Committee

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**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 Group 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.

**Financial reporting and tax risk management** 

**systems and internal controls**

The Group has a Disclosure Committee which assists the Group

Chief Executive and Chief Financial Officer in fulfilling their

disclosure responsibilities under relevant listing and other regulatory

and legal requirements. In addition, the Audit Committee reviews

the quality and acceptability of the Group's financial disclosures.

For further information on the Audit Committee's responsibilities

relating to financial reporting see **pages [89](#i7152dff1ab6542ad939d2df1d0232c57_13795) to [91](#i7152dff1ab6542ad939d2df1d0232c57_13797)**.

**Risk and control cycle**<br>

![RiskMan_RiskManagementCycle.gif](lyg-20251231_g335.gif)

---

| | |
|:---|:---|
| ![Risk_Button_Number1_Black.gif](lyg-20251231_g326.gif)<br>**Risk identification and assessment**<br>Risk identification is conducted on a continuous <br>basis through the use of scenario analysis which <br>considers the most material and emerging risks the <br>Group faces, and identifies and assesses extreme, <br>but plausible instances which may occur.<br>| ![Risk_Button_Number2_Black.gif](lyg-20251231_g327.gif)<br>**Risk management and mitigation**<br>Risks are then managed with appropriate controls <br>or mitigation plans put in place, which are <br>reviewed to ensure their effectiveness. Any risks <br>which cannot be mitigated will then require risk <br>acceptance via the appropriate risk governance. <br>|
| ![Risk_Button_Number4_Black.gif](lyg-20251231_g332.gif)<br>**Risk reporting**<br>Risks are reported via appropriate Group, sub-Group <br>and Divisional level risk reports and committees, <br>allowing independent challenge by the Risk function. <br>When thresholds for risk appetite are breached, <br>committee minutes are clear on the actions and <br>time frames required to address the risk and bring <br>the exposure back within tolerance.<br>| ![Risk_Button_Number3_Black.gif](lyg-20251231_g330.gif)<br>**Risk monitoring**<br>Proactive monitoring or testing is established <br>to ensure that controls continue to be effective, <br>and that the Group remains within risk appetite. <br>|

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

**Exposure to risk arising from the business activities of the Group**

The table below provides a high level guide to how the Group's business activities are reflected through its risk-weighted assets (RWAs),

which are calculated in accordance with prudential banking capital requirements. There are a number of risks that are not captured in

RWAs such as pension obligation risk and interest rate risk in the banking book, which instead fall within the scope of the Group's Pillar 2A

capital requirements. Furthermore the risk relating to Insurance activities is not included in this table as Insurance is subject to a different

set of prudential rules (Solvency II regime). Business activities for each division are provided in the divisional results on **pages [61](#i39c1aaf812d945cf8efad4ddececf6a9_135) to [64](#i1409867ea1aa44988c38732ddaa4b8ca_69)**.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **At 31 December 2025** | **Retail**<br>**£bn**<br>| **Commercial**<br>**Banking**<br>**£bn**<br>| **Insurance, Pensions and** <br>**Investments**<sup>1</sup><br>**£bn**<br>| **Equity Investments and** <br>**Central Items**<sup>2</sup><br>**£bn**<br>| **Group**<br>**£bn**<br>|
| **Risk-weighted assets (RWAs)** |  |  |  |  |  |
| Credit risk | **113.1** | **59.9** | **0.2** | **13.2** | **186.4** |
| Counterparty credit risk<sup>3</sup> | **–** | **5.9** | **–** | **1.0** | **6.9** |
| Market risk | **–** | **3.8** | **–** | **–** | **3.8** |
| Operational risk | **17.3** | **8.9** | **0.3** | **1.3** | **27.8** |
| **Total (excluding threshold)** | **130.4** | **78.5** | **0.5** | **15.5** | **224.9** |
| Threshold<sup>4</sup> | **–** | **–** | **–** | **10.6** | **10.6** |
| **Total** | **130.4** | **78.5** | **0.5** | **26.1** | **235.5** |

---

1As a separate regulated business, the Insurance business maintains its own solvency requirements, including appropriate management buffers, and reports directly to the Insurance

Board. Insurance does not hold any RWAs as its assets are removed from the Group's banking regulatory capital calculations. However, in accordance with banking capital rules part of

the Group's equity investment in Insurance is included in the calculation of threshold RWAs, while the remainder is taken as a deduction from common equity tier 1 (CET1) capital.

2Equity Investments and Central Items includes the risk-weighted assets of the Group's equity investments businesses (including LDC and Lloyds Living) and Group Corporate Treasury,

in addition to other central amounts.

3Exposures relating to the default fund of a central counterparty and credit valuation adjustment risk are included in counterparty credit risk.

4Threshold RWAs reflect the proportion of significant investments and deferred tax assets that are permitted to be risk-weighted instead of deducted from CET1 capital. Significant

investments primarily arise from the investment in the Group's Insurance business.

**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[144](#i1a594c95344847cea16dae91da4837b5_0-1-1-1-5233089)**

**to [150](#i8acf0bddbc7d4617a6419c15266da538_18622)**) of the Group and its separately regulated legal entities

• Meeting the requirements of regulatory stress tests that are used

to inform the setting of PRA buffers

• 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

**Regulatory stress tests**

In 2025 the PRA completed the Bank Capital Stress Test. The

scenario was designed to test the resilience of the UK banking

system under severe global aggregate supply shock, which leads to

deep recessions across the world and escalation of geopolitical

tensions, resulting in a sharp increase in commodity and energy

prices, large falls in asset prices and higher global interest rates. The

results were published in December 2025 and the report concluded

that the UK banking system remains well capitalised. The Group

passed the stress test, performing strongly and was not required to

take any capital actions.

In addition, Scottish Widows Group Limited participated in the

PRA's Life Insurance Stress Test. The scenario was designed to test

the resilience of major UK annuity providers under severe, yet

plausible, market conditions. The scenario included falls in equities,

yields and credit events including downgrades and property crashes.

Permitted management actions were restricted. The results were

published in November 2025 and show that, having sold the bulk

annuity business in 2024 and hedged much of its equity exposure,

Scottish Widows Group Limited is resilient to the chosen scenario.

**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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**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. The 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 [150](#i8acf0bddbc7d4617a6419c15266da538_18698)**,

Insurance underwriting risk **page [180](#i3eaa7a3e529a46b3b97a88e05ad474bc_550)**, liquidity risk **page [184](#i60edd65bad6d4aebb7b62f5dd34077bf_13311)** and

market risk **page [188](#i488be3d12dce44a7b64b0310701877ca_29967)**).

**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 the Group 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 policy and related documentation, which is reviewed at

least annually.

The Group Financial Risk Committee (GFRC), 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 and Ring-

Fenced Banks' stress tests. A similar process is in place within Lloyds

Bank Corporate Markets (LBCM) and Scottish Widows for

governance of their specific results.

The review and challenge of the Group's and Ring-Fenced Banks'

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 GFRC and the Board

Risk Committee for review and challenge. With regulatory exercises

being approved at Board Risk Committee and Board where

appropriate. There is a similar process within LBCM for the

governance of the LBCM-specific results.

**Lloyds Banking Group 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, [144](#i10ecde00bd4e4ca99e46cc5accf7c35e_288) to [197](#ie6d562362828442c9d9e501f05837616_14795)**.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Capital risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>Capital risk is defined as the risk that an insufficient <br>quantity or quality of capital is held to meet <br>regulatory requirements or to support business <br>strategy, an inefficient level of capital is held or that <br>capital is inefficiently deployed across the Group.<br>The Risk overview, on **page [25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67)**, contains a summary of capital risk <br>performance and key mitigating actions. |  |
|  | **Definition**<br>Capital risk is defined as the risk that an insufficient <br>quantity or quality of capital is held to meet <br>regulatory requirements or to support business <br>strategy, an inefficient level of capital is held or that <br>capital is inefficiently deployed across the Group.<br>The Risk overview, on **page [25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67)**, contains a summary of capital risk <br>performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

---

| | | |
|:---|:---|:---|
| ![Green_top left7.gif](lyg-20251231_g154.gif) |  | ![Green_topright7.gif](lyg-20251231_g155.gif) |
| ![Green_top left7.gif](lyg-20251231_g154.gif) | **Financial risk indicators**<br>•CET1 ratio: 14.0% (2024: 14.2%)<br>•Total capital ratio: 18.9% (2024: 19.0%) <br>•MREL ratio: 32.2% (2024: 32.2%) | ![Green_topright7.gif](lyg-20251231_g155.gif) |
|  | **Financial risk indicators**<br>•CET1 ratio: 14.0% (2024: 14.2%)<br>•Total capital ratio: 18.9% (2024: 19.0%) <br>•MREL ratio: 32.2% (2024: 32.2%) |  |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |

---

**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.

Scottish Widows Group Limited sets capital risk appetite to remain

above insurance capital requirements in a mild stress.

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

Risk appetite for the Group is expressed through the CET1 capital

ratio and Tier 1 leverage ratio, whilst Scottish Widows Group

Limited mainly expresses its risk appetite under Solvency II

requirements, these being key measures of capital resilience.

**Identification and assessment**

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 2.5% of RWAs, of which the minimum amount

to be met by CET1 capital is the equivalent of around 1.4% 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 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, Ring-Fenced Bank (RFB) sub-

group or regulated entity level.

The Internal Capital Adequacy Assessment Process (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](lyg-20251231_g336.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 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 proposed dividend

payments and share buybacks, by raising new equity via, for

example, a rights issue or debt exchange and by raising additional

tier 1 or tier 2 capital securities. The cost and availability of

additional capital are dependent upon market conditions and

perceptions at the time.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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.

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, relevant sub-groups and legal entities regularly monitor

their 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, latest forecast and external

guidance. 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.

**CET1 target capital ratio**

The Board's view of the ongoing level of CET1 capital required by the

Group to grow the business, meet current and future regulatory

requirements and cover economic and business uncertainties is

c.13.0%, which includes a management buffer of around 1%. This

takes into account, amongst other considerations:

• The minimum Pillar 1 CET1 capital requirement of 4.5% of risk-

weighted assets

• The Group's Pillar 2A CET1 capital requirement, set by

the PRA, which is the equivalent of around 1.4% of risk-

weighted assets

• The Group's countercyclical capital buffer (CCyB) requirement,

which is around 1.8% of risk-weighted assets

• The capital conservation buffer (CCB) requirement of 2.5% of

risk-weighted assets

• The Ring-Fenced Bank (RFB) sub-group's other systemically

important institution (O-SII) buffer of 2.0% of risk-weighted

assets, which equates to 1.6% of risk-weighted assets at Group

level

• The Group's PRA Buffer, set after taking account of the results of

any regulatory stress tests and other information, as well as

outputs from the Group's own internal stress tests. The PRA

requires this buffer to remain confidential

• The likely performance of the Group in various potential stress

scenarios and ensuring capital remains resilient in these

• The economic outlook for the UK and business outlook for

the Group

• The desire to maintain a progressive and sustainable

ordinary dividend policy in the context of year-to-year

earnings movements

**Capital returns**

The Group has in place a progressive and sustainable ordinary

dividend policy which allows for flexibility to return surplus capital

to shareholders through share buybacks or special dividends.

Surplus capital represents capital over and above the amount

management wish to retain to grow the business, meet current and

future regulatory requirements and cover uncertainties. The amount

of required capital may vary from time to time depending on

circumstances and by its nature there can be no guarantee that any

return of surplus capital will be made.

Given the Group's sustained strength in financial performance and

strong capital position at the year end, the Board has recommended

a final ordinary dividend of 2.43 pence per share. This is in addition

to the interim ordinary dividend of 1.22 pence per share that was

announced as part of the 2025 half-year results and paid in

September 2025. The total proposed ordinary dividend for the year

is therefore 3.65 pence per share. On 30 January 2026, the Group

announced the launch of an ordinary share buyback of up to

£1.75 billion, which is expected to be completed, subject to

continued authority from the PRA, by 31 December 2026.

The Board remains committed to future capital returns and will

maintain its progressive and sustainable ordinary dividend policy

alongside further returns of surplus capital as appropriate. The

Board will continue to give due consideration at year end to the size

of the final dividend payment and to the return of any surplus

capital based upon the circumstances at the time. Going forward,

given the Board's continued confidence in capital generation, the

Group will now review excess capital distributions in addition to the

ordinary dividend every half year.

The ability of the Group to pay a dividend is also subject to

constraints including the availability of distributable reserves,

legal and regulatory restrictions and the Group's financial and

operating performance.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

Distributable reserves are determined as required by the

Companies Act 2006 by reference to a company's individual

financial statements. At 31 December 2025 Lloyds Banking

Group plc ('the Company') had accumulated distributable

reserves of approximately £13 billion. Substantially all of the

Company's merger reserve is available for distribution under UK

company law as a result of transactions undertaken to

recapitalise the Company in 2009.

Lloyds Banking Group plc acts as a holding company which also

issues capital and other securities to capitalise and fund the

activities of the Group. The profitability of the holding company,

and its ability to sustain dividend payments, is therefore dependent

upon the continued receipt of dividends and interest from its main

operating subsidiaries, including Lloyds Bank plc (the Ring-Fenced

Bank), Lloyds Bank Corporate Markets plc, LBG Equity Investments

Limited and Scottish Widows Group Limited (the Insurance

business). The principal operating subsidiary is Lloyds Bank plc

which, at 31 December 2025, had a consolidated CET1 capital ratio

that exceeded minimum regulatory requirements and internal risk

appetite levels.

A number of Group subsidiaries, principally those with banking and

insurance activities, are subject to regulatory capital requirements

which require minimum amounts of capital to be maintained

relative to their size and risk. The Group actively manages the

capital of its subsidiaries, which includes monitoring the regulatory

capital ratios for its banking and insurance subsidiaries and, on a

consolidated basis, the RFB sub-group against approved risk

appetite levels. The Group requires all subsidiary entities, subject to

agreement by their governing bodies, to remit surplus capital to

their parent companies at least annually.

**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).

Although the Group is not classified as a G-SIB it is subject to the

Bank of England's MREL framework, including the statement of

policy on MREL (the 'MREL SoP') which requires the Group to

maintain a minimum level of MREL resources.

Under the requirements of the framework, the Group operates a

single point of entry (SPE) resolution strategy, with Lloyds Banking

Group plc as the designated resolution entity.

Applying the MREL SoP to minimum capital requirements at

31 December 2025, the Group's MREL, excluding regulatory capital

and leverage buffers, is the higher of 2 times Pillar 1 plus 2 times

Pillar 2A, equivalent to 21.0% of risk-weighted assets, or 6.5% of the

UK leverage ratio exposure measure.

In addition, CET1 capital cannot be used to meet both MREL and

capital or leverage buffers.

Internal minimum requirements for own funds and eligible liabilities

(Internal MREL) also apply to the Group's material sub-groups and

entities, being the RFB sub-group, Lloyds Bank plc, Bank of Scotland

plc and Lloyds Bank Corporate Markets plc.

**Analysis of pro forma CET1 capital position** 

The Group's pro forma CET1 capital ratio at 31 December 2025 was

13.2% (31 December 2024: 13.5% pro forma). Capital generation

during the year was 147 basis points, in line with updated guidance.

Excluding the provision charge for motor finance commission

arrangements in the third quarter, capital generation was 178 basis

points. Capital generation reflects strong banking build and the

£200 million of dividends received from the Insurance business

across July and December 2025, partially offset by risk-weighted

asset increases and the charge for motor finance. Regulatory

headwinds of 19 basis points in the year reflect an uplift for the CRD

IV model outcomes on Retail secured. The impact of the interim

ordinary dividend paid in September 2025 and the accrual for the

recommended final ordinary dividend equates to 97 basis points,

with a further 79 basis points to cover the accrual for the announced

ordinary share buyback programme of up to £1.75 billion.

The full impact of the ordinary share buyback programme will be

accrued for through the Group's actual capital position during the

first quarter of 2026.

Excluding the full impact of the announced ordinary share buyback

programme, the Group's CET1 capital ratio at 31 December 2025

was 14.0% (31 December 2024: 14.2%).

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Capital resources (audited) and MREL resources (unaudited)**

An analysis of the Group's capital position and MREL resources 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: instruments and reserves** |  |  |
| Share capital and share premium account | **24686** | 24782 |
| Banking retained earnings<sup>1</sup> | **20671** | 19582 |
| Banking other reserves<sup>1</sup> | **4374** | 2786 |
| Adjustment to retained earnings for foreseeable dividends | **(1429)** | (1276) |
|  | **48302** | 45874 |
| **Common equity tier 1: regulatory adjustments** |  |  |
| Cash flow hedge reserve | **2062** | 3755 |
| Goodwill and other intangible assets | **(5996)** | (5679) |
| Prudent valuation adjustment | **(343)** | (354) |
| Excess of expected losses over impairment provisions and value adjustments | **(631)** | (270) |
| Removal of defined benefit pension surplus | **(1968)** | (2215) |
| Significant investments<sup>1</sup> | **(4708)** | (5024) |
| Deferred tax assets | **(3812)** | (4025) |
| Other regulatory adjustments | **24** | (83) |
| **Common equity tier 1 capital** | **32930** | 31979 |
| **Additional tier 1: instruments** |  |  |
| Other equity instruments | **5923** | 6170 |
| **Additional tier 1: regulatory adjustments** |  |  |
| Significant investments<sup>1</sup> | **(800)** | (800) |
| **Total tier 1 capital** | **38053** | 37349 |
| **Tier 2: instruments and provisions** |  |  |
| Subordinated liabilities | **7489** | 6366 |
| **Tier 2: regulatory adjustments** |  |  |
| Significant investments<sup>1</sup> | **(963)** | (964) |
| **Total capital resources (audited)** | **44579** | 42751 |
| Ineligible AT1 and tier 2 instruments<sup>2</sup> | **(79)** | (94) |
| Amortised portion of eligible tier 2 instruments issued by Lloyds Banking Group plc | **–** | 891 |
| Other eligible liabilities issued by Lloyds Banking Group plc<sup>3</sup> | **31232** | 28675 |
| **Total MREL resources (unaudited)** | **75732** | 72223 |
| **Risk-weighted assets (unaudited)** | **235513** | 224632 |
| **Common equity tier 1 capital ratio** **(unaudited)** | **14.0%** | 14.2% |
| **Tier 1 capital ratio (unaudited)** | **16.2%** | 16.6% |
| **Total capital ratio (unaudited)** | **18.9%** | 19.0% |
| **MREL ratio (unaudited)** | **32.2%** | 32.2% |

---

1In accordance with banking capital regulations, the Group's Insurance business is excluded from the scope of the Group's capital position. The Group's investment in the equity and

other capital instruments of the Insurance business are deducted from the relevant tier of capital ('Significant investments'), subject to threshold regulations that allow a portion of the

equity investment to be risk-weighted rather than deducted from capital. The risk-weighted portion forms part of threshold risk-weighted assets.

2Instruments not issued out of the holding company.

3Includes senior unsecured debt.

**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 £24,735 million (31 December 2024: £23,907 million).

**Lloyds Banking Group 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 | 31979 |
| Banking business profits<sup>1</sup> | **4891** |
| Movement in foreseeable dividend accrual<sup>2</sup> | **(153)** |
| Dividends paid on ordinary shares during the year | **(2000)** |
| Adjustment to reflect full impact of share buyback | **(1710)** |
| Dividends received from the Insurance business<sup>3</sup> | **300** |
| Movement in treasury shares and employee share schemes | **251** |
| Deferred tax asset | **212** |
| Goodwill and other intangible assets | **(317)** |
| Excess regulatory expected losses | **(361)** |
| Significant investments | **316** |
| Distributions on other equity instruments | **(463)** |
| Other movements | **(15)** |
| **At 31 December 2025** | **32930** |

---

1Under banking capital regulations, profits made by Insurance are removed from CET1 capital. However, when dividends are paid to the Group by Insurance these are recognised

through CET1 capital.

2Reflects the reversal of the brought forward accrual for the final 2024 ordinary dividend, net of the accrual for the final 2025 ordinary dividend.

3Received in February 2025, July 2025 and December 2025.

The Group's CET1 capital ratio was14.0% at 31 December 2025 (31 December 2024: 14.2%) with the increase in CET1 capital resources more

than offset by the increase in risk-weighted assets from year end 2024.

CET1 capital resources increased by £951 million, with banking business profits for the year and the receipt of dividends paid up by the

Insurance business largely offset by:

• The interim ordinary dividend paid in September 2025, the accrual for the recommended final 2025 ordinary dividend of 2.43 pence per

share and distributions on other equity instruments

• The recognition of the full capital impact of the ordinary share buyback programme announced as part of the Group's 2024 year end

results, which completed in December 2025

**Movements in total capital and MREL**

The Group's total capital ratio reduced to 18.9% at 31 December 2025 (31 December 2024: 19.0%). The increase in CET1 capital and the

issuance of new AT1 and tier 2 capital instruments during the year was more than offset by AT1 and tier 2 instrument calls, other tier 2

movements and the increase in risk-weighted assets.

The MREL ratio remained at 32.2% at 31 December 2025 (31 December 2024: 32.2%) with the increase in MREL resources, reflecting the

increase in other eligible liabilities and total capital resources after adjustments, broadly offset by the increase in risk-weighted assets.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**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 | **47782** | 43366 |
| Retail IRB Approach | **90354** | 90567 |
| Other IRB Approach<sup>1</sup> | **23292** | 21878 |
| **IRB Approach** | **161428** | 155811 |
| Standardised (STA) Approach<sup>1</sup> | **27166** | 22532 |
| **Credit risk** | **188594** | 178343 |
| Counterparty credit risk<sup>2</sup> | **6835** | 7046 |
| Securitisation | **8472** | 8346 |
| Market risk | **3844** | 3714 |
| Operational risk | **27768** | 27183 |
| **Risk-weighted assets** | **235513** | 224632 |
| of which: threshold risk-weighted assets<sup>3</sup> | **10672** | 10738 |

---

1Threshold risk-weighted assets are included within Other IRB Approach and Standardised (STA) Approach.

2Includes credit valuation adjustment risk.

3Threshold risk-weighted assets reflect the element of significant investments and deferred tax assets that are permitted to be risk-weighted instead of being deducted from CET1

capital. Significant investments primarily arise from the investment in the Group's Insurance business.

Risk-weighted assets increased by £10.9 billion to £235.5 billion at 31 December 2025 (31 December 2024: £224.6 billion). This reflects the

impact of strong customer lending growth, Retail secured CRD IV increases and other movements, partially offset by continued

optimisation activity.

**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** | **38053** | 37349 |
| **Exposure measure** |  |  |
| **Statutory balance sheet assets** |  |  |
| Derivative financial instruments | **19727** | 24065 |
| Securities financing transactions | **71967** | 69941 |
| Loans and advances and other assets | **852378** | 812691 |
| **Total statutory balance sheet assets** | **944072** | 906697 |
| Qualifying central bank claims | **(56231)** | (62396) |
| Deconsolidation adjustments<sup>1</sup> | **(210617)** | (190988) |
| Derivatives adjustments | **(283)** | (6254) |
| Securities financing transactions adjustments | **2489** | 3351 |
| Off-balance sheet items | **44410** | 40186 |
| Amounts already deducted from tier 1 capital | **(12622)** | (12395) |
| Other regulatory adjustments<sup>2</sup> | **(2879)** | (4127) |
| **Total exposure measure** | **708339** | 674074 |
| **Average exposure measure**<sup>3</sup> | **713268** |  |
| **UK leverage ratio** | **5.4%** | 5.5% |
| **Average UK leverage ratio**<sup>3</sup> | **5.3%** |  |
| **Leverage exposure measure (including central bank claims)** | **764570** | 736470 |
| **Leverage ratio (including central bank claims)** | **5.0%** | 5.1% |
| **Total MREL resources** | **75732** | 72223 |
| **MREL leverage ratio** | **10.7%** | 10.7% |

---

1Deconsolidation adjustments relate to the deconsolidation of certain Group entities that fall outside the scope of the Group's regulatory capital consolidation, primarily the Group's

Insurance business.

2Includes adjustments to exclude lending under the Government's Bounce Back Loan Scheme (BBLS).

3The 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 5.3%compares to 5.2% at the start and 5.4% at the end of the quarter.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

Analysis of leverage movements

The Group's UK leverage ratio reduced to 5.4% at 31 December

2025 (31 December 2024: 5.5%), with the increase in total tier 1

capital more than offset by the increase in the leverage exposure

measure. The latter primarily reflects increases across loans and

advances and other assets, due in part to strong customer lending

growth, in addition to an increase in off-balance sheet items.

The average leverage ratio reflected the issuance of a new AT1

capital instrument during the last quarter of 2025.

**Stress testing**

The Group undertakes a wide-ranging programme of stress testing,

providing a comprehensive view of the potential impacts arising

from the risks to which the Group and its key legal entities are

exposed. One of the most important uses of stress testing is to

assess the resilience of the operational and strategic plans of the

Group and its legal entities to adverse economic conditions and

other key risks. As part of this programme the Group participated in

the Bank of England 2025 Bank Capital Stress Test. The scenario

tests a severe negative global aggregate supply shock, leading to

deep recessions globally and in the UK. In the scenario, GDP falls 5%,

unemployment and inflation rise, and central banks increase

interest rates (peak of 8%). The results were published in December

2025 and the report concluded that the UK banking system remains

well capitalised. The Group passed the stress test, performing

strongly, and was not required to take any capital actions.

**G-SIB indicators**

Although the Group is not classified as a Global Systemically

Important Bank (G-SIB) at 31 December 2025, by virtue of the

Group's leverage exposure measure exceeding €200 billion the

Group is required to report G-SIB indicator metrics to the PRA.

The Group's indicator metrics used within the2025Basel G-SIBs

annual exercise will be disclosed at the end of April 2026 and the

results are expected to be made available by the Basel Committee

later this year.

**Insurance business**

The business transacted by the insurance companies within the

Group comprises both life insurance business and general insurance

business. Life insurance comprises unit-linked, non-profit and With-

Profits business.

Scottish Widows Limited (SW Ltd) holds the only With-Profits funds

managed by the Group. The UK insurance companies within the

Group are regulated by the PRA. SW Ltd's European insurance

subsidiary is regulated by the CAA.

![AuditedLozenge.gif](lyg-20251231_g336.gif)

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

The Solvency II regime for insurers and insurance groups came

into force from 1 January 2016 and was subsequently amended as

part of the Solvency UK reforms. Insurance is required to

calculate solvency capital requirements and available capital on

a risk-based approach. Insurance calculates regulatory capital on

the basis of an internal model, which has been approved by the

PRA.

The minimum required capital must be maintained at all times

throughout the year. These capital requirements and the capital

available to meet them are regularly estimated in order to ensure

that capital requirements are being met. The capital position of

the Group's insurance businesses is reviewed on a regular basis by

the Insurance, Pensions and Investments Executive Committee.

All minimum regulatory requirements of the insurance companies

have been met during the year.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Climate risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>The Group defines climate risk as the risk from the <br>impacts of climate change and the transition to net <br>zero ('inbound risk'), or a result of the Group's <br>response to tackling climate change and supporting <br>the transition to net zero ('outbound risk').<br>The Risk overview, on **page [25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67)**, contains a summary of climate risk <br>performance and key mitigating actions. |  |
|  | **Definition**<br>The Group defines climate risk as the risk from the <br>impacts of climate change and the transition to net <br>zero ('inbound risk'), or a result of the Group's <br>response to tackling climate change and supporting <br>the transition to net zero ('outbound risk').<br>The Risk overview, on **page [25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67)**, contains a summary of climate risk <br>performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**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 theGroup'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

theGroup'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 the Group's RMF. Further detail on the

Group's key sustainability related risks, including climate-related

risks, as well as opportunities, is provided on**pages [39](#i3eaa7a3e529a46b3b97a88e05ad474bc_118) to [41](#ia285bd6242564a929335c15ef92f710e_66-0-1-2-5233089)**.

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 lending

and investment to corporates, 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 EPC profile of mortgage properties and the power train for

motor finance are considered.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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 its

mortgage and insurance portfolios.

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, as covered in the

Assessing our Resilience section on **page[48](#i6f98d72fac684c3aaee07290c1adcb3b_560)**.

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.

The Group'ssustainability report provides further details on

![Icon_Weblink.gif](lyg-20251231_g14.gif)

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 onpage 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. The 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 the 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 the Group's sustainability report .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

Insurance underwriting

Provision of household insurance can be impacted by both physical

and transition risks, in particular, the potential for underwriting and

insurance risks arising from climate change, such as increased

frequency and severity of extreme weather events. Given the short-

term nature of home insurance policies, the Group is able to update

its view of risk regularly and change its approach as risks develop.

This helps mitigate the long-term exposure to climate risks. The

Group aims to support customers in improving the resilience of their

homes, including reaching out ahead of extreme weather events to

provide elements of advice and guidance on how to protect

themselves and their homes.

Market risk

For the Investments portfolio in Scottish Widows, the Group

manages potential impacts from physical and transition risks on the

value or availability of assets through a range of controls, including

due diligence on the selection and oversight of external fund

managers, with specific consideration of ESG factors. The

investments team has dedicated fund investment leads who are

responsible for all aspects of oversight, including review of climate-

related risks and ESG factors and related data supplied by external

fund managers. The Group also utilises the ESG Tool as part of its

credit risk assessment process.

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 Group's 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.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

**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 .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

**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 Group Risk Committee and Board Risk Committee,

providing visibility of potential exposure to physical and transition

risks across key areas of the Group.

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Compliance risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>The risk of financial penalties, regulatory censure, <br>criminal or civil enforcement action or customer <br>detriment as a result of failure to identify, assess, <br>correctly interpret, comply with, or manage <br>regulatory and/or legal requirements.<br>**Level two risks**<br>Legal; Regulatory <br>The Risk overview, on **page[25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67)**, contains a summary of compliance risk <br>performance and key mitigating actions. |  |
|  | **Definition**<br>The risk of financial penalties, regulatory censure, <br>criminal or civil enforcement action or customer <br>detriment as a result of failure to identify, assess, <br>correctly interpret, comply with, or manage <br>regulatory and/or legal requirements.<br>**Level two risks**<br>Legal; Regulatory <br>The Risk overview, on **page[25](#i3eaa7a3e529a46b3b97a88e05ad474bc_67)**, contains a summary of compliance risk <br>performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**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, licenses, 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 Groupcontinues 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 sub-groups.

Regulatory reporting is submitted to regulators as required.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Conduct risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>The risk of the Group's activities, behaviours, <br>strategy or business planning, having an adverse <br>impact on outcomes for customers, undermining the <br>integrity of the market or distort competition, which <br>could lead to regulatory censure, reputational <br>damage or financial loss.<br>**Level two risks**<br>Colleague; Customer; Market<br>The Risk overview, on **page [26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70)**, contains a summary of conduct risk <br>performance and key mitigating actions. |  |
|  | **Definition**<br>The risk of the Group's activities, behaviours, <br>strategy or business planning, having an adverse <br>impact on outcomes for customers, undermining the <br>integrity of the market or distort competition, which <br>could lead to regulatory censure, reputational <br>damage or financial loss.<br>**Level two risks**<br>Colleague; Customer; Market<br>The Risk overview, on **page [26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70)**, contains a summary of conduct risk <br>performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**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** **[284](#i8a4f77013fad493a9364f3edbc5016a5_9349)**.

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 its data strategy.

**Reporting**

Conduct risk is governed through divisional risk committees, with

significant issues escalated to the Group Risk Committee in

accordance with the 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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Credit risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>Credit risk is defined as the risk that parties with <br>whom the Group has contracted fail to meet their <br>financial obligations (on and off-balance sheet).<br>**Level two risks**<br>Retail credit (**page [169](#iecc5dc2854414ebfb46530f7e5092bc7_53842)**)**;** Commercial credit (**page [174](#iecc5dc2854414ebfb46530f7e5092bc7_53893)**)<br>The Risk overview, on **page [26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70)**, contains a summary of credit risk <br>performance and key mitigating actions. |  |
|  | **Definition**<br>Credit risk is defined as the risk that parties with <br>whom the Group has contracted fail to meet their <br>financial obligations (on and off-balance sheet).<br>**Level two risks**<br>Retail credit (**page [169](#iecc5dc2854414ebfb46530f7e5092bc7_53842)**)**;** Commercial credit (**page [174](#iecc5dc2854414ebfb46530f7e5092bc7_53893)**)<br>The Risk overview, on **page [26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70)**, contains a summary of credit risk <br>performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

---

| | | |
|:---|:---|:---|
| ![Green_top left7.gif](lyg-20251231_g154.gif) |  | ![Green_topright7.gif](lyg-20251231_g155.gif) |
| ![Green_top left7.gif](lyg-20251231_g154.gif) | **Financial risk indicators (underlying basis**<sup>A</sup>**)**<br>•Impairment charge: £795 million (2024: £433 million)<br>•Expected credit loss: £3,353 million (2024: £3,651 million)<br>•Loans and advances in Stage 2: 9.4% (2024: 10.4%) | ![Green_topright7.gif](lyg-20251231_g155.gif) |
|  | **Financial risk indicators (underlying basis**<sup>A</sup>**)**<br>•Impairment charge: £795 million (2024: £433 million)<br>•Expected credit loss: £3,353 million (2024: £3,651 million)<br>•Loans and advances in Stage 2: 9.4% (2024: 10.4%) |  |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |

---

---

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|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

**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.

Credit risk exposures in the Insurance, Pensions and Investments

division relate mostly to bond and loan assets which, together with

some related swaps, are used to fund annuity commitments within

shareholder funds; plus balances held in liquidity funds to manage

Insurance division's liquidity requirements, and exposure

to reinsurers.

---

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|:---|:---|
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| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

The investments held in the Group's defined benefit pension

schemes also expose the Group to credit risk. Note 12 to the

consolidated financial statements on **page[245](#i384682da283b4f9482faf6975d6c2a02_15586)**provides further

information on the defined benefit pension schemes' assets

and liabilities.

![AuditedLozenge.gif](lyg-20251231_g336.gif)

---

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|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.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 16 to the consolidated

financial statements on **page [255](#i9d1b66babd024f18a79223b5eef78766_1070)**and note 36 to the

consolidated financial statements on**page[291](#if435d7f4947644c88ccd1c1243c23be9_8180)**.

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. The Group's credit portfolios are subject to regular

stress testing, including Group-led PRA and other regulatory stress

tests focusing on individual divisions and portfolios. For further

information see**pages[142](#i077679723f76432faf2f84848a081557_6706) to [143](#i077679723f76432faf2f84848a081557_6693)**.

![AuditedLozenge.gif](lyg-20251231_g336.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](lyg-20251231_g336.gif)

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.

• 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

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

• 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

![AuditedLozenge.gif](lyg-20251231_g336.gif)

---

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|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.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

---

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|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

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](lyg-20251231_g336.gif)

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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

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.

![AuditedLozenge.gif](lyg-20251231_g336.gif)

---

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|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

The Group's credit risk disclosures for unimpaired other retail

lending show assets gross of collateral and therefore disclose the

maximum loss exposure.

During the year, £394 million of collateral was repossessed

(2024: £285million), consisting primarily of residential property.

**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.

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 note2(H) to the consolidated financial

statements on **page [221](#i028bdc6229b248d1a63c032ba1f9f84c_70992)**.

**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.

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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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.

**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.

**The 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 underlying impairment charge in 2025 was £795 million, up

from £433 million in 2024, and includes a net charge from updates

to the Group's macroeconomic outlook of £74 million compared to

a large release of £394 million in 2024. Excluding macroeconomic

updates, the Group's underlyingimpairment charge remains low

and similar to 2024. The total underlying probability-weighted ECL

allowance was lower in 2025 at£3,353million (31 December 2024:

£3,651 million) following strong credit performance and additional

benefits from model refinements.

Stage 2 underlying loans and advances to customers are lower at

£45,413million versus the prior year (31 December 2024:

£48,075 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 9.4% of total lending (31 December 2024: 10.4%) with Stage 2

coverage reducing slightly at2.6% (31 December 2024: 2.8%).

Stage 3underlying loans and advances to customers are lower at

£8,349million versus the prior year (31 December 2024:

£9,021million), and as a percentage of total lending at 1.7%

(31 December 2024: 2.0%). 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: 16.4%).

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

**Total Group assets**

**Impairment charge (credit) by division – statutory and underlying**<sup>A</sup> **basis**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Loans and**<br>**advances to**<br>**customers**<br>**£m**<br>| **Loans and**<br>**advances to**<br>**banks**<br>**£m**<br>| **Debt** <br>**securities**<br>**£m**<br>| **Financial**<br>**assets at**<br>**fair value**<br>**through other**<br>**comprehensive**<br>**income**<br>**£m** | **Other**<br>**£m**<br>| **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 <br>Banking<br>| **(53)** | **–** | **–** | **–** | **–** | **–** | **(53)** | 47 |
| Corporate and Institutional <br>Banking<br>| **166** | **–** | **–** | **–** | **–** | **(53)** | **113** | (61) |
| Commercial Banking | **113** | **–** | **–** | **–** | **–** | **(53)** | **60** | (14) |
| Insurance, Pensions and <br>Investments<br>| **–** | **–** | **–** | **–** | **2** | **–** | **2** | (9) |
| Equity Investments and<br>Central Items<br>| **–** | **–** | **–** | **(1)** | **–** | **–** | **(1)** | (3) |
| **Total impairment charge (credit)** | **867** | **–** | **–** | **(1)** | **2** | **(73)** | **795** | 431 |
| Insurance, Pensions and <br>Investments (underlying basis)<sup>A</sup><br>| **–** | **–** | **–** | **–** | **2** | **–** | **2** | (7) |
| Total impairment charge (credit) <br>(underlying basis)<sup>A</sup><br>| **867** | **–** | **–** | **(1)** | **2** | **(73)** | **795** | 433 |
| **Asset quality ratio**<sup>A</sup> |  |  |  |  |  |  | **0.17%** | 0.10% |

---

**Credit risk balance sheet basis of presentation**

The balance sheet analyses which follow have been presented on two bases; the statutory basis which is consistent with the presentation

in the Group's accounts and the underlying basis which is used for internal management purposes. A reconciliation between the two bases

has been provided.

In the following statutory basis tables, purchased or originated credit-impaired (POCI) assets include a fixed pool of mortgages that were

purchased as part of the HBOS acquisition at a deep discount to face value reflecting credit losses incurred from the point of origination to

the date of acquisition. The residual expected credit loss (ECL) allowance on POCI assets reflects further deterioration in the

creditworthiness from the date of acquisition. Over time, these POCI assets will run off as the loans redeem, pay down or as loans are

written off.

The Group uses the underlying basis to monitor the creditworthiness of the lending portfolio and related ECL allowances because it

provides a different perspective of the credit performance of the POCI assets purchased as part of the HBOS acquisition. The underlying

basis assumes that the lending assets acquired as part of a business combination were originated by the Group and are classified as either

Stage 1, 2 or 3 according to the change in credit risk over the period since origination. Underlying ECL allowances have been calculated

accordingly. Unless otherwise stated, the following credit risk commentary is provided on an underlying basis.

The statutory basis also includes an accounting adjustment within UK Motor Finance required under IFRS 9 to recognise a continuing

involvement asset following the partial derecognition of a component of the Group's finance lease book via a securitisation in the third

quarter of 2024.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Total expected credit loss allowance – statutory and underlying**<sup>A</sup> **basis**

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>**£m**<br>| At 31 Dec<br>2024<br>£m<br>|
| Customer related balances |  |  |
| Drawn | **3011** | 3191 |
| Undrawn | **197** | 270 |
|  | **3208** | 3461 |
| Loans and advances to banks | **1** | 1 |
| Debt securities | **5** | 4 |
| Other assets | **14** | 15 |
| **Total expected credit loss allowance** | **3228** | 3481 |
| Acquisition fair value adjustment | **125** | 170 |
| Total expected credit loss allowance (underlying basis)<sup>A</sup> | **3353** | 3651 |
| Of which: Customer related balances (underlying basis)<sup>A</sup> | **3333** | 3631 |
| Of which: Drawn (underlying basis)<sup>A</sup> | **3136** | 3361 |

---

**Movements in total expected credit loss allowance – statutory and underlying**<sup>A</sup> **basis**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | 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 | 504 | **(106)** | **113** | **7** | **511** |
| Commercial Banking | 989 | **(161)** | **60** | **(101)** | **888** |
| Insurance, Pensions and Investments | 15 | **(3)** | **2** | **(1)** | **14** |
| Equity Investments and Central Items | 1 | **1** | **(1)** | **–** | **1** |
| **Total**<sup>2</sup> | 3481 | **(1048)** | **795** | **(253)** | **3228** |
| UK mortgages (underlying basis)<sup>A</sup> | 1022 | **(106)** | **(60)** | **(166)** | **856** |
| Retail (underlying basis)<sup>A</sup> | 2646 | **(930)** | **734** | **(196)** | **2450** |
| Insurance, Pensions and Investments (underlying basis)<sup>A</sup> | 15 | **(3)** | **2** | **(1)** | **14** |
| Total (underlying basis)<sup>A</sup> | 3651 | **(1093)** | **795** | **(298)** | **3353** |

---

1Contains adjustments in respect of purchased or originated credit-impaired financial assets.

2Total ECL includes £20 million relating to other non-customer-related assets (31 December 2024: £20 million).

**Total expected credit loss allowance sensitivity to economic assumptions – statutory and underlying**<sup>A</sup> **basis**

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

by generating four economic scenarios to reflect the range of outcomes; the central scenario reflects the Group's base case assumptions

used for medium-term planning purposes, an upside and a downside scenario are also selected together with a severe downside scenario. If

the base case moves adversely, it generates a new, more adverse downside and severe downside which are then incorporated into the ECL.

Consistent with prior years, the base case, upside and downside scenarios carry a 30% weighting; the severe downside is weighted at 10%.

The following table shows the Group's ECL for the probability-weighted, upside, base case, downside and severe downside scenarios. 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 £366 million compared to £445 million at

31 December 2024.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **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** |
| Credit cards | **603** | **498** | **579** | **674** | **777** |
| Other Retail | **991** | **922** | **969** | **1036** | **1126** |
| Commercial Banking | **888** | **690** | **789** | **1010** | **1414** |
| Other | **15** | **15** | **15** | **15** | **15** |
| **At 31 December 2025** | **3228** | **2466** | **2862** | **3672** | **5275** |
| UK mortgages (underlying basis)<sup>A</sup> | **856** | **466** | **635** | **1062** | **2068** |
| **At 31 December 2025 (underlying basis)**<sup>A</sup> | **3353** | **2591** | **2987** | **3797** | **5400** |
| UK mortgages | 852 | 345 | 567 | 1064 | 2596 |
| Credit cards | 674 | 518 | 641 | 773 | 945 |
| Other Retail | 950 | 843 | 923 | 1010 | 1172 |
| Commercial Banking | 989 | 745 | 889 | 1125 | 1608 |
| Other | 16 | 16 | 16 | 16 | 17 |
| At 31 December 2024 | 3481 | 2467 | 3036 | 3988 | 6338 |
| UK mortgages (underlying basis)<sup>A</sup> | 1022 | 512 | 735 | 1235 | 2773 |
| At 31 December 2024 (underlying basis)<sup>A</sup> | 3651 | 2634 | 3204 | 4159 | 6515 |

---

**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

**Reconciliation between statutory and underlying**<sup>A</sup> **bases of gross loans and advances to customers and expected credit loss** 

**allowance on drawn balances**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Gross loans and advances to customers** | **Gross loans and advances to customers** | **Gross loans and advances to customers** | **Gross loans and advances to customers** | **Gross loans and advances to customers** | **Expected credit loss allowance on drawn balances** | **Expected credit loss allowance on drawn balances** | **Expected credit loss allowance on drawn balances** | **Expected credit loss allowance on drawn balances** | **Expected credit loss allowance on drawn balances** |
|  | **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** | **At 31 December 2025** |  |  |  |  |  |  |  |  |  |
| Underlying basis<sup>A</sup> | **430493** | **45413** | **8349** | **–** | **484255** | **737** | **1107** | **1292** | **–** | **3136** |
| POCI assets | **(644)** | **(2734)** | **(1823)** | **5201** | **–** | **–** | **(30)** | **(254)** | **284** | **–** |
| Acquisition fair<br>value adjustment<br>| **–** | **–** | **–** | **(125)** | **(125)** | **–** | **–** | **–** | **(125)** | **(125)** |
| Continuing involvement <br>asset<br>| **344** | **–** | **–** | **–** | **344** | **–** | **–** | **–** | **–** | **–** |
|  | **(300)** | **(2734)** | **(1823)** | **5076** | **219** | **–** | **(30)** | **(254)** | **159** | **(125)** |
| **Statutory basis** | **430193** | **42679** | **6526** | **5076** | **484474** | **737** | **1077** | **1038** | **159** | **3011** |
| At 31 December 2024 |  |  |  |  |  |  |  |  |  |  |
| Underlying basis<sup>A</sup> | 405324 | 48075 | 9021 | – | 462420 | 736 | 1199 | 1426 | – | 3361 |
| POCI assets | (762) | (3310) | (2305) | 6377 | – | – | (39) | (318) | 357 | – |
| Acquisition fair<br>value adjustment<br>| **–** | **–** | **–** | (170) | (170) | **–** | **–** | **–** | (170) | (170) |
| Continuing involvement <br>asset<br>| 798 | **–** | **–** | – | 798 | **–** | **–** | **–** | **–** | **–** |
|  | 36 | (3310) | (2305) | 6207 | 628 | – | (39) | (318) | 187 | (170) |
| Statutory basis | 405360 | 44765 | 6716 | 6207 | 463048 | 736 | 1160 | 1108 | 187 | 3191 |

---

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Loans and advances to customers and expected credit loss allowance – statutory and underlying**<sup>A</sup> **basis**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **At 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>| **Stage 2** <br>**as % of total**<br>| **Stage 3** <br>**as % of total**<br>|
| **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 | **59658** | **2035** | **778** | **–** | **62471** | **3.3** | **1.2** |
| Commercial Banking | **84020** | **5364** | **1757** | **–** | **91141** | **5.9** | **1.9** |
| Equity Investments and Central Items<sup>1</sup> | **540** | **–** | **–** | **–** | **540** | **–** | **–** |
| **Total gross lending** | **430193** | **42679** | **6526** | **5076** | **484474** | **8.8** | **1.3** |
| UK mortgages (underlying basis)<sup>A,2</sup> | **284951** | **33148** | **5839** |  | **323938** | **10.2** | **1.8** |
| UK Motor Finance (underlying basis)<sup>A,3</sup> | **13878** | **2786** | **141** |  | **16805** | **16.6** | **0.8** |
| Retail (underlying basis)<sup>A</sup> | **345933** | **40049** | **6592** |  | **392574** | **10.2** | **1.7** |
| Total gross lending (underlying basis)<sup>A</sup> | **430493** | **45413** | **8349** |  | **484255** | **9.4** | **1.7** |
| **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>4</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 | **107** | **136** | **263** | **–** | **506** |  |  |
| Commercial Banking | **199** | **301** | **383** | **–** | **883** |  |  |
| Equity Investments and Central Items | **–** | **–** | **–** | **–** | **–** |  |  |
| **Total** | **850** | **1160** | **1039** | **159** | **3208** |  |  |
| UK mortgages (underlying basis)<sup>A,2</sup> | **55** | **238** | **563** |  | **856** |  |  |
| UK Motor Finance (underlying basis)<sup>A,3</sup> | **202** | **149** | **79** |  | **430** |  |  |
| Retail (underlying basis)<sup>A</sup> | **651** | **889** | **910** |  | **2450** |  |  |
| Total (underlying basis)<sup>A</sup> | **850** | **1190** | **1293** |  | **3333** |  |  |
| **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>| **Adjusted** <br>**Stage 3**<sup>5</sup><br>**%**<br>| **Adjusted** <br>**Total**<sup>5</sup><br>**%**<br>|
| UK mortgages | **–** | **0.7** | **7.7** | **3.1** | **0.2** |  |  |
| Credit cards | **1.3** | **11.9** | **44.2** | **–** | **3.4** | **45.7** | **3.4** |
| UK unsecured loans and overdrafts | **1.6** | **15.3** | **58.0** | **–** | **4.1** | **60.5** | **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** | **13.8** | **0.6** |
| Business and Commercial Banking | **0.4** | **5.0** | **12.3** | **–** | **1.3** | **15.7** | **1.3** |
| Corporate and Institutional Banking | **0.2** | **6.7** | **33.8** | **–** | **0.8** | **33.8** | **0.8** |
| Commercial Banking | **0.2** | **5.6** | **21.8** | **–** | **1.0** | **24.9** | **1.0** |
| Equity Investments and Central Items | **–** | **–** | **–** | **–** | **–** |  |  |
| **Total** | **0.2** | **2.7** | **15.9** | **3.1** | **0.7** | **16.5** | **0.7** |
| UK mortgages (underlying basis)<sup>A,2</sup> | **–** | **0.7** | **9.6** |  | **0.3** |  |  |
| UK Motor Finance (underlying basis)<sup>A,3</sup> | **1.5** | **5.3** | **56.0** |  | **2.6** |  |  |
| Retail (underlying basis)<sup>A</sup> | **0.2** | **2.2** | **13.8** |  | **0.6** | **13.8** | **0.6** |
| Total (underlying basis)<sup>A</sup> | **0.2** | **2.6** | **15.5** |  | **0.7** | **15.9** | **0.7** |

---

1Contains central fair value hedge accounting adjustments.

2UK mortgages balances on an underlying basis<sup>A</sup> exclude the impact of the HBOS acquisition-related adjustments.

3UK Motor Finance balances on an underlying basis<sup>A</sup> exclude a finance lease gross up.

4UK Motor Finance includes £243 million relating to provisions against residual values of vehicles subject to finance leases.

5Stage 3 and Total exclude loans in recoveries in credit cards of £9 million, UK unsecured loans and overdrafts of £8 million, Business and Commercial Banking of £217 million and

Corporate and Institutional Banking of £1 million.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| At 31 December 2024 | Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| POCI<br>£m<br>| Total<br>£m<br>| Stage 2 <br>as % of total<br>| Stage 3 <br>as % of total<br>|
| Loans and advances to customers |  |  |  |  |  |  |  |
| UK mortgages | 269760 | 32995 | 4166 | 6207 | 313128 | 10.5 | 1.3 |
| Credit cards | 13534 | 2441 | 265 | – | 16240 | 15.0 | 1.6 |
| UK unsecured loans and overdrafts | 9314 | 1247 | 175 | – | 10736 | 11.6 | 1.6 |
| UK Motor Finance | 13897 | 2398 | 124 | – | 16419 | 14.6 | 0.8 |
| Other | 17373 | 516 | 147 | – | 18036 | 2.9 | 0.8 |
| Retail | 323878 | 39597 | 4877 | 6207 | 374559 | 10.6 | 1.3 |
| Business and Commercial Banking | 25785 | 3172 | 1197 | – | 30154 | 10.5 | 4.0 |
| Corporate and Institutional Banking | 55692 | 1996 | 642 | – | 58330 | 3.4 | 1.1 |
| Commercial Banking | 81477 | 5168 | 1839 | – | 88484 | 5.8 | 2.1 |
| Equity Investments and Central Items<sup>1</sup> | 5 | – | – | – | 5 | – | – |
| Total gross lending | 405360 | 44765 | 6716 | 6207 | 463048 | 9.7 | 1.5 |
| UK mortgages (underlying basis)<sup>A,2</sup> | 270522 | 36305 | 6471 |  | 313298 | 11.6 | 2.1 |
| UK Motor Finance (underlying basis)<sup>A,3</sup> | 13099 | 2398 | 124 |  | 15621 | 15.4 | 0.8 |
| Retail (underlying basis)<sup>A</sup> | 323842 | 42907 | 7182 |  | 373931 | 11.5 | 1.9 |
| Total gross lending (underlying basis)<sup>A</sup> | 405324 | 48075 | 9021 |  | 462420 | 10.4 | 2.0 |
| 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>4</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 | 122 | 129 | 249 | – | 500 |  |  |
| Commercial Banking | 254 | 316 | 415 | – | 985 |  |  |
| Equity Investments and Central Items | – | – | – | – | – |  |  |
| Total | 878 | 1286 | 1110 | 187 | 3461 |  |  |
| UK mortgages (underlying basis)<sup>A,2</sup> | 55 | 314 | 653 |  | 1022 |  |  |
| UK Motor Finance (underlying basis)<sup>A,3</sup> | 173 | 115 | 72 |  | 360 |  |  |
| Retail (underlying basis)<sup>A</sup> | 624 | 1009 | 1013 |  | 2646 |  |  |
| Total (underlying basis)<sup>A</sup> | 878 | 1325 | 1428 |  | 3631 |  |  |
| 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>| Adjusted <br>Stage 3<sup>5</sup>%<br>| Adjusted <br>Total<sup>5</sup>%<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 | 18.4 | 1.6 |
| Corporate and Institutional Banking | 0.2 | 6.5 | 38.8 | – | 0.9 | 38.8 | 0.9 |
| Commercial Banking | 0.3 | 6.1 | 22.6 | – | 1.1 | 26.9 | 1.1 |
| Equity Investments and Central Items | – | – | – | – | – |  |  |
| Total | 0.2 | 2.9 | 16.5 | 3.0 | 0.7 | 17.3 | 0.7 |
| UK mortgages (underlying basis)<sup>A,2</sup> | – | 0.9 | 10.1 |  | 0.3 |  |  |
| UK Motor Finance (underlying basis)<sup>A,3</sup> | 1.3 | 4.8 | 58.1 |  | 2.3 |  |  |
| Retail (underlying basis)<sup>A</sup> | 0.2 | 2.4 | 14.1 |  | 0.7 |  |  |
| Total (underlying basis)<sup>A</sup> | 0.2 | 2.8 | 15.8 |  | 0.8 | 16.4 | 0.8 |

---

1Contains central fair value hedge accounting adjustments.

2UK mortgages balances on an underlying basis<sup>A</sup> exclude the impact of the HBOS acquisition-related adjustments.

3UK Motor Finance balances on an underlying basis<sup>A</sup> exclude a finance lease gross up.

4UK Motor Finance includes £178 million relating to provisions against residual values of vehicles subject to finance leases.

5Stage 3 and Total exclude loans in recoveries in Business and Commercial Banking of £296 million and Corporate and Institutional Banking of £1 million.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Stage 2 loans and advances to customers and expected credit loss allowance – statutory and underlying**<sup>A</sup> **basis**

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **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>| **1888** | **135** | **7.2** | **21** | **–** | **–** | **7** | **1** | **14.3** | **119** | **–** | **0.0** |
| Commercial Banking | **4655** | **268** | **5.8** | **279** | **15** | **5.4** | **220** | **13** | **5.9** | **210** | **5** | **2.4** |
| **Total** | **35054** | **812** | **2.3** | **4612** | **163** | **3.5** | **1720** | **115** | **6.7** | **1293** | **70** | **5.4** |
| UK mortgages <br>(underlying basis)<sup>A</sup><br>| **28460** | **172** | **0.6** | **2163** | **19** | **0.9** | **1373** | **21** | **1.5** | **1152** | **26** | **2.3** |
| Retail <br>(underlying basis)<sup>A</sup><br>| **32561** | **561** | **1.7** | **4464** | **154** | **3.4** | **1743** | **105** | **6.0** | **1281** | **69** | **5.4** |
| Total <br>(underlying basis)<sup>A</sup><br>| **37216** | **829** | **2.2** | **4743** | **169** | **3.6** | **1963** | **118** | **6.0** | **1491** | **74** | **5.0** |
| 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>| 1903 | 125 | 6.6 | 45 | 1 | 2.2 | 6 | – | – | 42 | 3 | 7.1 |
| Commercial Banking | 4348 | 279 | 6.4 | 471 | 19 | 4.0 | 182 | 10 | 5.5 | 167 | 8 | 4.8 |
| Total | 37356 | 899 | 2.4 | 4278 | 189 | 4.4 | 1814 | 119 | 6.6 | 1317 | 79 | 6.0 |
| UK mortgages <br>(underlying basis)<sup>A</sup><br>| 31510 | 216 | 0.7 | 2000 | 41 | 2.1 | 1559 | 27 | 1.7 | 1236 | 30 | 2.4 |
| Retail <br>(underlying basis)<sup>A</sup><br>| 35609 | 645 | 1.8 | 3938 | 173 | 4.4 | 1951 | 114 | 5.8 | 1409 | 77 | 5.5 |
| Total <br>(underlying basis)<sup>A</sup><br>| 39957 | 924 | 2.3 | 4409 | 192 | 4.4 | 2133 | 124 | 5.8 | 1576 | 85 | 5.4 |

---

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.

**Lloyds Banking Group 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 | **405360** | **44765** | **6716** | **6207** | **463048** | **736** | **1160** | **1108** | **187** | **3191** |
| Exchange and other adjustments<sup>1</sup> | **1034** | **(17)** | **3** | **8** | **1028** | **(13)** | **(1)** | **18** | **45** | **49** |
| Transfers to Stage 1 | **7165** | **(7021)** | **(144)** |  | **–** | **240** | **(221)** | **(19)** |  | **–** |
| Transfers to Stage 2 | **(10427)** | **11211** | **(784)** |  | **–** | **(53)** | **114** | **(61)** |  | **–** |
| Transfers to Stage 3 | **(1557)** | **(1871)** | **3428** |  | **–** | **(35)** | **(157)** | **192** |  | **–** |
| Net change in ECL<br>due to transfers<br>|  |  |  |  |  | **(153)** | **257** | **350** |  | **454** |
| Impact of transfers between stages<sup>2</sup> | **(4819)** | **2319** | **2500** |  | **–** | **(1)** | **(7)** | **462** |  | **454** |
| Other changes in credit quality<sup>2</sup> |  |  |  |  |  | **27** | **(46)** | **677** | **11** | **669** |
| Additions and repayments | **28618** | **(4388)** | **(1606)** | **(1130)** | **21494** | **(12)** | **(29)** | **(140)** | **(75)** | **(256)** |
| Charge (credit) to the income <br>statement<br>|  |  |  |  |  | **14** | **(82)** | **999** | **(64)** | **867** |
| Disposals and derecognition | **–** | **–** | **–** | **–** | **–** | **–** | **–** | **–** | **–** | **–** |
| Advances written off |  |  | **(1296)** | **(9)** | **(1305)** |  |  | **(1296)** | **(9)** | **(1305)** |
| Recoveries of amounts previously <br>written off<br>|  |  | **209** | **–** | **209** |  |  | **209** | **–** | **209** |
| **At 31 December 2025** | **430193** | **42679** | **6526** | **5076** | **484474** | **737** | **1077** | **1038** | **159** | **3011** |
| **Allowance for**<br>**expected credit losses**<br>| **(737)** | **(1077)** | **(1038)** | **(159)** | **(3011)** |  |  |  |  |  |
| **Net carrying amount** | **429456** | **41602** | **5488** | **4917** | **481463** |  |  |  |  |  |
| 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

£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.

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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**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 | 385294 | 53167 | 7147 | 7854 | 453462 | 900 | 1467 | 1137 | 213 | 3717 |
| Exchange and other adjustments<sup>1</sup> | (910) | (23) | (74) | 12 | (995) | (12) | (6) | 21 | 53 | 56 |
| Transfers to Stage 1 | 25658 | (25607) | (51) |  | – | 413 | (404) | (9) |  | – |
| Transfers to Stage 2 | (25390) | 25967 | (577) |  | – | (66) | 126 | (60) |  | – |
| Transfers to Stage 3 | (1104) | (2119) | 3223 |  | – | (21) | (178) | 199 |  | – |
| Net change in ECL<br>due to transfers<br>|  |  |  |  |  | (293) | 340 | 303 |  | 350 |
| Impact of transfers between stages<sup>2</sup> | (836) | (1759) | 2595 |  | – | 33 | (116) | 433 |  | 350 |
| Other changes in credit quality<sup>2</sup> |  |  |  |  |  | (130) | (66) | 709 | 66 | 579 |
| Additions and repayments | 22529 | (6140) | (1612) | (910) | 13867 | (50) | (107) | (193) | (72) | (422) |
| Charge (credit) to the income <br>statement<br>|  |  |  |  |  | (147) | (289) | 949 | (6) | 507 |
| Disposals and derecognition<sup>3</sup> | (717) | (480) | (366) | (694) | (2257) | (5) | (12) | (25) | (18) | (60) |
| Advances written off |  |  | (1174) | (55) | (1229) |  |  | (1174) | (55) | (1229) |
| Recoveries of amounts previously <br>written off<br>|  |  | 200 | – | 200 |  |  | 200 | – | 200 |
| At 31 December 2024 | 405360 | 44765 | 6716 | 6207 | 463048 | 736 | 1160 | 1108 | 187 | 3191 |
| Allowance for<br>expected credit losses<br>| (736) | (1160) | (1108) | (187) | (3191) |  |  |  |  |  |
| Net carrying amount | 404624 | 43605 | 5608 | 6020 | 459857 |  |  |  |  |  |
| 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

Bankingfacilities.

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 | **6071** | 6424 |
| Construction<sup>1</sup> | **3175** | 3389 |
| Energy and water supply | **5571** | 4912 |
| Financial, business and other services | **40221** | 38034 |
| Manufacturing | **5326** | 4790 |
| Mining and Quarrying | **314** | 205 |
| Personal: |  |  |
| Mortgages<sup>1</sup> | **346033** | 330840 |
| Lease financing<sup>2</sup> | **13972** | 13249 |
| Other | **31145** | 28016 |
| Postal and telecommunications | **3177** | 3182 |
| Property companies | **19139** | 19271 |
| Transport, distribution and hotels | **10330** | 10736 |
| **Total loans and advances to customers before allowance for impairment losses** | **484474** | 463048 |
| Allowance for impairment losses (note 21 to the consolidated financial statements, page 272) | **(3011)** | (3191) |
| **Total loans and advances to customers** | **481463** | 459857 |

---

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.

**Lloyds Banking Group 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 £241 million to £2,460million in 2025 (2024: £2,219 million), of which

£1,852million were in Stage 3 (2024: £1,784 million).

For information on customer treatments, see**page [156](#iecc5dc2854414ebfb46530f7e5092bc7_54008)**.

**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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **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 <br>overdrafts<br>|  |  |  |  |  |  |  |  |  |  |
| 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 | **31945** | **123** | **–** | **–** | **32068** | **6** | **–** | **–** | **–** | **6** |
| CMS 6–10 | **17918** | **40** | **–** | **–** | **17958** | **18** | **–** | **–** | **–** | **18** |
| CMS 11–14 | **31833** | **2007** | **–** | **–** | **33840** | **110** | **41** | **–** | **–** | **151** |
| CMS 15–18 | **2324** | **2486** | **–** | **–** | **4810** | **39** | **144** | **–** | **–** | **183** |
| CMS 19 | **–** | **708** | **–** | **–** | **708** | **–** | **94** | **–** | **–** | **94** |
| CMS 20–23 | **–** | **–** | **1757** | **–** | **1757** | **–** | **–** | **382** | **–** | **382** |
|  | **84020** | **5364** | **1757** | **–** | **91141** | **173** | **279** | **382** | **–** | **834** |
| Other<sup>1</sup> | **540** | **–** | **–** | **–** | **540** | **–** | **–** | **–** | **–** | **–** |
| **Total loans and advances to** <br>**customers**<br>| **430193** | **42679** | **6526** | **5076** | **484474** | **737** | **1077** | **1038** | **159** | **3011** |

---

1Drawn exposures include centralised fair value hedge accounting adjustments.

**Lloyds Banking Group 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 loss <br>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 <br>overdrafts<br>|  |  |  |  |  |  |  |  |  |  |
| 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 | 26925 | 6 | – | – | 26931 | 3 | – | – | – | 3 |
| CMS 6–10 | 17126 | 56 | – | – | 17182 | 13 | – | – | – | 13 |
| CMS 11–14 | 32424 | 1128 | – | – | 33552 | 122 | 21 | – | – | 143 |
| CMS 15–18 | 5002 | 3253 | – | – | 8255 | 67 | 166 | – | – | 233 |
| CMS 19 | – | 725 | – | – | 725 | – | 77 | – | – | 77 |
| CMS 20–23 | – | – | 1839 | – | 1839 | – | – | 413 | – | 413 |
|  | 81477 | 5168 | 1839 | – | 88484 | 205 | 264 | 413 | – | 882 |
| Other<sup>1</sup> | 5 | – | – | – | 5 | – | – | – | – | – |
| Total loans and advances to <br>customers<br>| 405360 | 44765 | 6716 | 6207 | 463048 | 736 | 1160 | 1108 | 187 | 3191 |

---

1Drawn exposures include centralised fair value hedge accounting adjustments.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**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 of £332 million 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 10.2%of the Retail

portfolio (31 December 2024: 11.5%). Stage 2 ECL coverage

reduced to 2.2% (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 to1.7% of total loans and advances (31 December

2024: 1.9%)

• Stage 3 ECL coverage reduced to13.8% (31 December 2024:

14.1%), largely due to continued house price increases

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

UK mortgages

• The UK mortgages portfolio increased to £323.9 billion

(31 December 2024: £313.3 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 £194million 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 to10.2% of total UK

mortgages balances (31 December 2024: 11.6%) 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 to1.8% (31 December 2024: 2.1%), with continued

growth in house prices resulting in a reduction in Stage 3 ECL

coverage to 9.6% (31 December 2024:10.1%)

Credit cards

• Credit card balances increased to £17.9 billion

(2024: £16.2billion), 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 at3.4% (31 December 2024:4.2%)

• Stable credit performance and higher portfolio balances resulted

in a reduction in Stage 2 loans and advances to13.0% of total

credit card balances (31 December 2024: 15.0%), with lower

Stage 2 ECL coverage at11.9% (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 45.7%

(31 December 2024:50.2%)

UK unsecured loans and overdrafts

• UK unsecured loans and overdraft balances increased to

£12.2billion (2024: £10.7billion) 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 to11.5% of total balances (31 December 2024:

11.6%), with Stage 2 ECL coverage lower at 15.3% (31 December

![AuditedLozenge.gif](lyg-20251231_g336.gif)

2024: 18.8%)

• Similarly, Stage 3 loans and advances remained stable at1.6%

(31 December 2024: 1.6%), with model refinements also

contributing to reduce Stage 3 ECL coverage to 60.5%

(31 December 2024: 67.4%)

UK Motor Finance

• UK Motor Finance balances (which exclude operating leases)

increased to £16.8 billion(2024: £15.6 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: £178million)

• The impairment charge of £212 million for 2025 is higher than the

charge of £116million 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

16.6%(31 December 2024: 15.4%)

• Stage 3 loans and advances remained stable at0.8% (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 £21.8billion

(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 at0.7% 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

**Lloyds Banking Group 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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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.

4 Average 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 to11.4% (31 December 2024:

12.5%). The average loan to value remained low at37.5% (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.

**Lloyds Banking Group 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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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.

Retail credit card balance movements (audited)

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **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** |
|  | **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **Total**<br>**£m**<br>| **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **Retail – credit cards** |  |  |  |  |  |  |  |  |
| At 1 January 2025 | **13534** | **2441** | **265** | **16240** | **149** | **297** | **133** | **579** |
| Exchange and other adjustments | **–** | **–** | **–** | **–** | **–** | **–** | **(19)** | **(19)** |
| Transfers to Stage 1 | **956** | **(953)** | **(3)** | **–** | **92** | **(91)** | **(1)** | **–** |
| Transfers to Stage 2 | **(657)** | **694** | **(37)** | **–** | **(10)** | **27** | **(17)** | **–** |
| Transfers to Stage 3 | **(206)** | **(227)** | **433** | **–** | **(5)** | **(55)** | **60** | **–** |
| Net change in ECL due to transfers |  |  |  |  | **(52)** | **77** | **78** | **103** |
| Impact of transfers between stages<sup>1</sup> | **93** | **(486)** | **393** | **–** | **25** | **(42)** | **120** | **103** |
| Other changes in credit quality<sup>1</sup> |  |  |  |  | **(24)** | **(14)** | **272** | **234** |
| Additions and repayments | **1631** | **371** | **(11)** | **1991** | **(5)** | **7** | **(12)** | **(10)** |
| Charge to the income statement |  |  |  |  | **(4)** | **(49)** | **380** | **327** |
| Advances written off |  |  | **(496)** | **(496)** |  |  | **(496)** | **(496)** |
| Recoveries of amounts previously written off |  |  | **123** | **123** |  |  | **123** | **123** |
| **At 31 December 2025** | **15258** | **2326** | **274** | **17858** | **145** | **248** | **121** | **514** |
| **Allowance for expected credit losses** | **(145)** | **(248)** | **(121)** | **(514)** |  |  |  |  |
| **Net carrying amount** | **15113** | **2078** | **153** | **17344** |  |  |  |  |
| Drawn ECL coverage<sup>2</sup> (%) | **1.0** | **10.7** | **44.2** | **2.9** |  |  |  |  |

---

1Includes a credit for methodology and model changes of £53 million, split by stage as £18 million credit for Stage 1, £18 million credit for Stage 2 and £17 million credit for Stage 3.

2Allowance 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 | 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>| Total<br>£m<br>| Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| Total<br>£m<br>|
| **Retail – credit cards** |  |  |  |  |  |  |  |  |
| At 1 January 2024 | 12625 | 2908 | 284 | 15817 | 168 | 401 | 130 | 699 |
| Exchange and other adjustments | – | – | – | – | – | – | (18) | (18) |
| Transfers to Stage 1 | 1162 | (1162) | – | – | 128 | (128) | – | – |
| Transfers to Stage 2 | (642) | 683 | (41) | – | (13) | 31 | (18) | – |
| Transfers to Stage 3 | (184) | (241) | 425 | – | (5) | (65) | 70 | – |
| Net changes in ECL due to transfers |  |  |  |  | (71) | 84 | 84 | 97 |
| Impact of transfers between stages | 336 | (720) | 384 | – | 39 | (78) | 136 | 97 |
| Other changes in credit quality |  |  |  |  | (31) | (22) | 284 | 231 |
| Additions and repayments | 573 | 253 | (15) | 811 | (27) | (4) | (11) | (42) |
| Charge to the income statement |  |  |  |  | (19) | (104) | 409 | 286 |
| Advances written off |  |  | (506) | (506) |  |  | (506) | (506) |
| Recoveries of amounts previously written off |  |  | 118 | 118 |  |  | 118 | 118 |
| At 31 December 2024 | 13534 | 2441 | 265 | 16240 | 149 | 297 | 133 | 579 |
| Allowance for expected credit losses | (149) | (297) | (133) | (579) |  |  |  |  |
| Net carrying amount | 13385 | 2144 | 132 | 15661 |  |  |  |  |
| Drawn ECL coverage<sup>1</sup> (%) | 1.1 | 12.2 | 50.2 | 3.6 |  |  |  |  |

---

1Allowance for expected credit losses on loans and advances to customers as a percentage of gross loans and advances to customers.

**Lloyds Banking Group 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 £10.0 billion in 2025 (net of £2.6billion

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 £60million, versus a

credit of £14 million in 2024 and includes a £74 million 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 £883 million in 2025

(31 December 2024: £985 million), also as a result of favourable

model updates partially offset by single name cases

• Stage 2 loans and advances increased to £5,364 million

(31 December 2024: £5,168 million). Stage 2 as a proportion of

total loans and advances to customers is stable at 5.9%

(31 December 2024: 5.8%) with stable credit performance and

model updates resulting in lower Stage 2 ECL coverage at 5.6%

(31 December 2024: 6.1%)

• Stage 3 loans and advances decreased to £1,757 million

(31 December 2024: £1,839 million) and as a proportion of total

loans and advances to customers to 1.9% (31 December 2024:

2.1%), given movements in the first half of 2025. Stage 3 ECL

coverage is lower at 24.9%(31 December 2024: 26.9%)

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 15.7% (31 December 2024: 18.4%)

Corporate and Institutional Banking

• Corporate and Institutional lending grew to £62.5 billion

(31 December 2024: £58.3 billion), reflecting growth in

Institutional balances including securitised products, alongside

corporate infrastructure growth

• A net impairment charge of £113 million in 2025 compares to an

impairment credit of £61 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 increased to £2,035 million

(31 December 2024: £1,996 million). Stage 2 as a proportion of

total loans and advances to customers is stable at 3.3%

(31 December 2024: 3.4%), with Stage 2 ECL coverage at 6.7%

(31 December 2024: 6.5%)

• Stage 3 loans and advances increased to £778 million

(31 December 2024: £642 million) and as a proportion of total

loans and advances to customers to 1.2% (31 December 2024:

1.1%), 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 33.8% (31 December 2024: 38.8%) following the

write-off of a large longstanding case that was fully provided for

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Commercial Banking balance movements (audited)

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **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** |
|  | **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **Total**<br>**£m**<br>| **Stage 1**<br>**£m**<br>| **Stage 2**<br>**£m**<br>| **Stage 3**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **Commercial Banking** |  |  |  |  |  |  |  |  |
| At 1 January 2025 | **81477** | **5168** | **1839** | **88484** | **205** | **264** | **413** | **882** |
| Exchange and other adjustments | **(543)** | **(38)** | **–** | **(581)** | **(13)** | **(2)** | **6** | **(9)** |
| Transfers to Stage 1 | **1439** | **(1353)** | **(86)** | **–** | **62** | **(53)** | **(9)** | **–** |
| Transfers to Stage 2 | **(2502)** | **2633** | **(131)** | **–** | **(12)** | **12** | **–** | **–** |
| Transfers to Stage 3 | **(485)** | **(277)** | **762** | **–** | **(5)** | **(18)** | **23** | **–** |
| Net change in ECL due to transfers |  |  |  |  | **(45)** | **80** | **108** | **143** |
| Impact of transfers between stages<sup>1</sup> | **(1548)** | **1003** | **545** | **–** | **–** | **21** | **122** | **143** |
| Other changes in credit quality<sup>1</sup> |  |  |  |  | **(15)** | **(9)** | **45** | **21** |
| Additions and repayments | **4634** | **(769)** | **(475)** | **3390** | **(4)** | **5** | **(52)** | **(51)** |
| Charge to the income statement |  |  |  |  | **(19)** | **17** | **115** | **113** |
| Advances written off |  |  | **(153)** | **(153)** |  |  | **(153)** | **(153)** |
| Recoveries of amounts previously written off |  |  | **1** | **1** |  |  | **1** | **1** |
| **At 31 December 2025** | **84020** | **5364** | **1757** | **91141** | **173** | **279** | **382** | **834** |
| **Allowance for expected credit losses** | **(173)** | **(279)** | **(382)** | **(834)** |  |  |  |  |
| **Net carrying amount** | **83847** | **5085** | **1375** | **90307** |  |  |  |  |
| Drawn ECL coverage<sup>2</sup> (%) | **0.2** | **5.2** | **21.7** | **0.9** |  |  |  |  |

---

1Includes a credit for methodology and model changes of £19 million, split by stage as £18 million credit for Stage 1, £23 million charge for Stage 2 and £24 millioncredit for Stage 3.

2Allowance 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 | 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>| Total<br>£m<br>| Stage 1<br>£m<br>| Stage 2<br>£m<br>| Stage 3<br>£m<br>| Total<br>£m<br>|
| **Commercial Banking** |  |  |  |  |  |  |  |  |
| At 1 January 2024 | 79574 | 7987 | 2068 | 89629 | 232 | 372 | 418 | 1022 |
| Exchange and other adjustments | (103) | (5) | (64) | (172) | (13) | (5) | 1 | (17) |
| Transfers to Stage 1 | 2361 | (2347) | (14) | – | 86 | (85) | (1) | – |
| Transfers to Stage 2 | (1850) | 1951 | (101) | – | (12) | 13 | (1) | – |
| Transfers to Stage 3 | (301) | (258) | 559 | – | (4) | (19) | 23 | – |
| Net changes in ECL due to transfers |  |  |  |  | (63) | 70 | 62 | 69 |
| Impact of transfers between stages<sup>1</sup> | 210 | (654) | 444 | – | 7 | (21) | 83 | 69 |
| Other changes in credit quality<sup>1</sup> |  |  |  |  | (11) | (20) | 152 | 121 |
| Additions and repayments | 1796 | (2160) | (449) | (813) | (10) | (62) | (81) | (153) |
| Charge to the income statement |  |  |  |  | (14) | (103) | 154 | 37 |
| Advances written off |  |  | (163) | (163) |  |  | (163) | (163) |
| Recoveries of amounts previously written off |  |  | 3 | 3 |  |  | 3 | 3 |
| At 31 December 2024 | 81477 | 5168 | 1839 | 88484 | 205 | 264 | 413 | 882 |
| Allowance for expected credit losses | (205) | (264) | (413) | (882) |  |  |  |  |
| Net carrying amount | 81272 | 4904 | 1426 | 87602 |  |  |  |  |
| Drawn ECL coverage<sup>2</sup> (%) | 0.3 | 5.1 | 22.5 | 1.0 |  |  |  |  |

---

1Includes a credit for methodology and model changes of £25 million, split by stage as £17 million credit for Stage 1, £8 million credit for Stage 2, £nil for Stage 3.

2Allowance for expected credit losses on loans and advances to customers as a percentage of gross loans and advances to customers.

**Lloyds Banking Group 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 £448 million, net of an impairment allowance of £121 million

(2024: £450 million, net of an impairment allowance of £150 million). The fair value of the collateral held in respect of impaired secured

commercial lending was £468 million (2024: £575 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 £10.0billion at 31 December 2025 (net of £2.6billion exposures

subject to protection through Significant Risk Transfer (SRT) securitisations). This compares to £9.3 billion at 31 December 2024 (net of

£3.1billion subject to SRT securitisations). In addition there are undrawn lending facilities of £3.2billion (31 December 2024: £2.8billion)

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 £6.9billion to social housing providers are also excluded

(31 December 2024: £7.2 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.94%) rather than development. Of these investment

exposures c.92% have an LTV of less than 70%, with an average LTV of45%. The average gross interest cover ratio was 3.1times, 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.13% 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% | **8894** | **65** | **8959** | **84.6** | 8621 | 34 | 8655 | 84.5 |
| 60% to 70% | **712** | **21** | **733** | **6.9** | 815 | 49 | 864 | 8.4 |
| 70% to 80% | **53** | **16** | **69** | **0.7** | 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** | **6.0** | 303 |  | 303 | 3.0 |
| **Subtotal**  | **10339** | **246** | **10585** | **100.0** | 9968 | 270 | 10238 | 100.0 |
| Other<sup>3</sup> | **721** | **45** | **766** |  | 525 | 67 | 592 |  |
| **Total investment**  | **11060** | **291** | **11351** |  | 10493 | 337 | 10830 |  |
| 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**  | **12251** | **319** | **12570** |  | 12015 | 356 | 12371 |  |
| Significant Risk Transfer  |  |  | **(2585)** |  |  |  | (3109) |  |
| **Total net**  |  |  | **9985** |  |  |  | 9262 |  |

---

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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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, the Federal Reserve Bank of New

York or the Deutsche Bundesbank.

**Debt securities, treasury and other bills, and contracts held with reinsurers at fair value through profit or loss**

Substantially all of the Group's trading assets and other loans and advances to customers, loans and advances to banks and reverse

repurchase agreements held at fair value through profit or loss have an investment grade rating. The credit quality of the Group's other

debt securities, treasury and other bills, and contracts held with reinsurers held at fair value through profit or loss is set out below:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **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>|
| Other financial assets mandatorily at fair value through profit or <br>loss:<br>|  |  |  |  |  |  |
| Debt securities: |  |  |  |  |  |  |
| Government securities | **16593** | **–** | **16593** | 7093 | – | 7093 |
| Other public sector securities | **1898** | **7** | **1905** | 2286 | 2 | 2288 |
| Bank and building society certificates of deposit | **7036** | **–** | **7036** | 8667 | – | 8667 |
| Asset-backed securities | **909** | **14** | **923** | 641 | 11 | 652 |
| Corporate and other debt securities | **20476** | **2934** | **23410** | 13984 | 2899 | 16883 |
|  | **46912** | **2955** | **49867** | 32671 | 2912 | 35583 |
| Treasury and other bills | **11** | **–** | **11** | 32 | – | 32 |
| Contracts held with reinsurers | **8168** | **–** | **8168** | 10527 | – | 10527 |
| **Total other financial assets mandatorily held at fair value** <br>**through profit or loss (excluding loans and advances and equity** <br>**shares)**<br>| **55091** | **2955** | **58046** | 43230 | 2912 | 46142 |

---

1Credit ratings equal to or better than 'BBB'.

Credit risk in respect of trading and other financial assets at fair value through profit or loss held within the Group's unit-linked funds is

borne by the policyholders and credit risk in respect of With-Profits funds is largely borne by the policyholders. Consequently, the Group

has no significant exposure to credit risk for such assets which back those contract liabilities.

**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 cos**t

At 31 December 2025significantly 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 securitiesat 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 | **18361** | **1341** | **19702** | 22684 | 1333 | 24017 |
| Hedging | **24** | **1** | **25** | 39 | 9 | 48 |
| **Total derivative financial instruments** | **18385** | **1342** | **19727** | 22723 | 1342 | 24065 |

---

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, £153,410 million were Stage 1 (2024: £143,914 million), £4,083 million were Stage 2 (2024: £4,565 million), £61 million

were Stage 3 (2024: £101 million) and £20 million was POCI (2024: £39 million). Against these exposures the Group held an allowance for

expected credit losses of £197 million (2024: £270 million).

Further details can be seen in note 21 to the consolidated financial statements on **page[272](#i3eaa7a3e529a46b3b97a88e05ad474bc_721)**.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

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 16 to the consolidated

financial statements on **page [255](#i9d1b66babd024f18a79223b5eef78766_1070)**).

**Financial assets at fair value through profit or loss (excluding equity shares)**

Included in financial assets at fair value through profit or loss are reverse repurchase agreements, against which the Group holds collateral,

all of which the Group is able to repledge (see note 16 to the consolidated financial statements on **page [255](#i9d1b66babd024f18a79223b5eef78766_1070)**). At 31 December 2025,

£12,257million had been repledged (2024: £10,676 million).

These transactions were generally conducted under terms that are usual and customary for standard secured lending activities.

**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 16 to the consolidated financial statements on **page [255](#i9d1b66babd024f18a79223b5eef78766_1070)**).

**Irrevocable loan commitments and other credit-related contingencies**

The Group holds irrevocable loan commitments and other credit-related contingencies (see note 36 to the consolidated financial

statements on **page [291](#if435d7f4947644c88ccd1c1243c23be9_8180)**). 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 16 to the consolidated financial statements on **page [255](#i9d1b66babd024f18a79223b5eef78766_1070)**).

**Financial liabilities at fair value through profit or loss**

Included in financial liabilities at fair value through profit or loss are repurchase agreements, against which the Group pledges collateral

(see note 16 to the consolidated financial statements on **page [255](#i9d1b66babd024f18a79223b5eef78766_1070)**). The secured party is permitted by contract or custom to repledge

this collateral.

**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 profit or loss | **1088** | 889 |
| Financial assets at fair value through other comprehensive income | **5034** | 6124 |
| **Total** | **6122** | 7013 |

---

In addition, securities held as collateral in the form of stock borrowed amounted to £12,763 million (2024: £20,887 million). Of this amount,

£7,542 million (2024: £11,781 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 26 to the consolidated financial

statements on**page [283](#i75cfcc65fdf24092aeaeeefe3884f23e_3097)**.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Economic crime risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>Economic crime risk is defined as the risk that the <br>Group implements ineffective policies, systems, <br>processes and controls to prevent, detect and <br>respond to the risk of fraud and/or financial crime <br>resulting in increased losses, regulatory censure, fines <br>and/or adverse publicity in the UK or other <br>jurisdictions in which the Group operates.<br>**Level two risks**<br>Anti-bribery; Anti-money laundering; Fraud; Sanctions<br>The Risk overview, on **page[26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70)**, contains a summary of economic crime <br>risk performance and key mitigating actions. |  |
|  | **Definition**<br>Economic crime risk is defined as the risk that the <br>Group implements ineffective policies, systems, <br>processes and controls to prevent, detect and <br>respond to the risk of fraud and/or financial crime <br>resulting in increased losses, regulatory censure, fines <br>and/or adverse publicity in the UK or other <br>jurisdictions in which the Group operates.<br>**Level two risks**<br>Anti-bribery; Anti-money laundering; Fraud; Sanctions<br>The Risk overview, on **page[26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70)**, contains a summary of economic crime <br>risk performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**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.

Group-wide economic crime prevention policies and standards are

maintained to ensure compliance with legal and regulatory

requirements. The completion of a 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.

The 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 legal entity and Group-level risk

committees.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Insurance underwriting risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>Insurance underwriting risk is defined as the risk of <br>adverse developments in liabilities due to timing, <br>frequency and severity of claims for insured/<br>underwritten events, customer behaviour and <br>expense costs.<br>The Risk overview, on **page [26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70)**, contains a summary of insurance <br>underwriting risk performance and key mitigating actions. |  |
|  | **Definition**<br>Insurance underwriting risk is defined as the risk of <br>adverse developments in liabilities due to timing, <br>frequency and severity of claims for insured/<br>underwritten events, customer behaviour and <br>expense costs.<br>The Risk overview, on **page [26](#i3eaa7a3e529a46b3b97a88e05ad474bc_70)**, contains a summary of insurance <br>underwriting risk performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

---

| | | |
|:---|:---|:---|
| ![Green_top left7.gif](lyg-20251231_g154.gif) |  | ![Green_topright7.gif](lyg-20251231_g155.gif) |
| ![Green_top left7.gif](lyg-20251231_g154.gif) | **Financial risk indicators**<br>•Life and Pensions sales (present value of new business premiums)<sup>A</sup>: <br>£21,047 million (2024: £18,249 million)<br>•General insurance underwritten total gross written premiums<sup>A</sup>: <br>£762 million (2024: £737 million) | ![Green_topright7.gif](lyg-20251231_g155.gif) |
|  | **Financial risk indicators**<br>•Life and Pensions sales (present value of new business premiums)<sup>A</sup>: <br>£21,047 million (2024: £18,249 million)<br>•General insurance underwritten total gross written premiums<sup>A</sup>: <br>£762 million (2024: £737 million) |  |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |

---

**Risk appetite**

The Group is commercially required to take some forms of insurance

underwriting risk. For example, longevity and general insurance

underwriting risks to support customer demands and generate

operating income. Other underwriting risks, particularly persistency

and expense risk, need to be managed to avoid significant

fluctuations in the value of business written.

**Identification and assessment**

The primary source of insurance underwriting risk within the Group

arises from the Insurance business.

Poor persistency is a major risk in the life and pensions business,

stemming from customer behaviour that leads to increased

cancellations or stopped contributions. Longevity risk has reduced

following the sale of the bulk annuity business but still exists in the

individual annuity business and the Group's defined benefit pension

scheme.**Page [246](#i384682da283b4f9482faf6975d6c2a02_15635)** provides further information on the defined

benefit scheme.

Property insurance risk is a key risk within the general insurance

business, arising from home insurance. Exposures can arise, for

example, from weather-related risks such as major floods or

windstorms when property damage claims are higher than

expected.

Expenses are incurred in writing and administering all insurance

business, with the risk of costs being higher than expected managed

through regular cost initiatives and operating model reviews.

The Own Risk and Solvency Assessment (ORSA) is used to identify,

assess, manage and report the short- to medium-term risks

associated with the Insurance sub-group and assess the overall

solvency needs related to the risk profile.

Emerging and horizon risk assessments and horizon scanning are

regularly conducted to identify emerging insurance underwriting

risks arising from economic and market conditions, regulatory

changes and reputational issues.

Scenario analysis and stress testing are used to identify and quantify

sources of potential insurance underwriting 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.

Models provide a way of objectively assessing insurance

underwriting risk and a range of approaches are used to ensure a

clear understanding of the risk profile.

An annual review and setting of demographic and expense best

estimate assumptions is carried out, enabling risk exposures to be

quantified and appropriate levels of capital, reserves and customer

premiums to be set.

![AuditedLozenge.gif](lyg-20251231_g336.gif)

The Group's critical accounting judgements and key sources of

estimation uncertainty for its Insurance business are set out in

note 8 to the consolidated financial statements on **page[235](#i6c40b583bc9f40868441b92cfc002052_7)**.

**Management and mitigation**

Underwriting is the primary mechanism used to manage insurance

risk and appropriate underwriting procedures are in place to

support the effective underwriting of insurance products.

A limit framework is in place to manage insurance underwriting risk.

Limits are set on underwriting capacity and authority is delegated to

individuals based on their specific expertise.

Product pricing uses data from risk assessments, reinsurance

arrangements, actuarial analysis, market dynamics, regulatory

compliance, and customer characteristics and aims to balance

adequately covering risks, remaining competitive, and satisfying

regulatory requirements.

Product terms and policy wording are drafted to ensure they do not

expose the business to a greater number of claims than anticipated,

whilst maintaining fair customer outcomes.

A robust reserving process is in place to evaluate, review and

estimate unpaid claims and ensure appropriate resources are

available to settle claims as they arise. This is supported by an

effective claims management process which ensures that any claims

are reviewed and handled efficiently, effectively and in line with

relevant policy wording.

Reinsurance and diversification are also used to mitigate risk

exposure.

**Monitoring**

Insurance underwriting risk is reviewed monthly relative to the

established risk appetite.

Exposure is monitored regularly to ensure that the risks

underwritten are diversified in order to manage risk concentration,

and to verify adequacy of reinsurance.

Projected and current exposure to insurance underwriting risk

relative to the overall risk profile is considered in the ORSA and the

operating plan.

The appropriateness of assumptions is tracked through the

monitoring of relevant experience against expectations. Persistency,

claims and expenses are analysed monthly; mortality, morbidity and

longevity are analysed annually.

**Reporting**

Insurance underwriting risk appetite metrics and management

measures are reported to relevant risk committees, boards and

forums as required.

Operational limits are reported to the relevant committee, forum or

individual as required. Underwriting and claims issues are reported

to the relevant committees within the Insurance business.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Liquidity risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>Liquidity risk is the risk that the Group <br>has insufficient financial resources to meet <br>its commitments as they fall due or can only <br>secure them at excessive cost.<br>**Level two risks**<br>Funding; Liquidity<br>The Risk overview, on **page [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73)**, contains a summary of liquidity risk <br>performance and key mitigating actions. |  |
|  | **Definition**<br>Liquidity risk is the risk that the Group <br>has insufficient financial resources to meet <br>its commitments as they fall due or can only <br>secure them at excessive cost.<br>**Level two risks**<br>Funding; Liquidity<br>The Risk overview, on **page [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73)**, contains a summary of liquidity risk <br>performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

---

| | | |
|:---|:---|:---|
| ![Green_top left7.gif](lyg-20251231_g154.gif) |  | ![Green_topright7.gif](lyg-20251231_g155.gif) |
| ![Green_top left7.gif](lyg-20251231_g154.gif) | **Financial risk indicators**<br>•Liquidity coverage ratio: 145% (2024: 146%) <br>•Net stable funding ratio: 124% (2024: 129%)<br>•Loan to deposit ratio: 97% (2024: 95%) | ![Green_topright7.gif](lyg-20251231_g155.gif) |
|  | **Financial risk indicators**<br>•Liquidity coverage ratio: 145% (2024: 146%) <br>•Net stable funding ratio: 124% (2024: 129%)<br>•Loan to deposit ratio: 97% (2024: 95%) |  |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |

---

**Risk appetite**

The Group is commercially required to take liquidity risk to meet its

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

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. Scottish Widows Group Limited's appetite is to maintain a

prudent liquidity profile to meet all commitments, in stressed

conditions, as they fall due.

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). For Scottish Widows Group

Limited, risk appetite is expressed primarily through holding

sufficient liquid assets to meet entity-specific requirements in

stressed conditions.

**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.

The Internal Liquidity Adequacy Assessment Process (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**

![AuditedLozenge.gif](lyg-20251231_g336.gif)

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.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](lyg-20251231_g336.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. Liquidity risk of the Insurance business is actively

managed and monitored within the Insurance legal entities. 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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

**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.

**Liquidity and funding management in 2025**

The Group has maintained its strong funding and liquidity position

with a loan to deposit ratio of 97% as at 31 December 2025 (31

December 2024: 95%). Total wholesale funding has increased to

£99.4 billion as at 31 December 2025 (31 December 2024: £92.5

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 145% as at 31 December 2025 (31 December 2024: 146%)

calculated on a Group consolidated basis based on the PRA

rulebook. The decrease in the LCR resulted from a reduction in

liquid assets, from an increase in lending and repayments of Bank of

England Term Funding Scheme with additional incentives for SMEs

(TFSME) partially offset by an increase in customer deposits, and a

decrease in net cash outflows, primarily from a reduction in

outflows related to derivative exposures arising from historic market

volatility. All assets within the liquid asset portfolio are hedged for

interest rate risk. Following the implementation of structural reform,

liquidity risk is managed at a legal entity level with the Group

consolidated LCR representing the composite of the Ring-Fenced

Bank and Non-Ring-Fenced Bank entities.

LCR eligible assets<sup>1</sup> have reduced to £131.4 billion (31 December

2024: £134.4 billion), primarily driven by an increase in lending and

TFSME repayments, partially offset by an increase in customer

deposits. In addition to the Group's reported LCR eligible assets, the

Group maintains borrowing capacity at central banks which

averaged £87 billion in the year to 31 December 2025 (31 December

2024: £72 billion). The net stable funding ratio remains strong at

124% (calculated as a quarterly simple average over the previous

four quarters) as at 31 December 2025 (31 December 2024: 129%).

LCR eligible assets comprise £125.8 billion LCR level 1 eligible assets

(31 December 2024: £128.5 billion) and £5.6billion LCR level 2

eligible assets (31 December 2024: £5.9 billion). These assets are

available to meet cash and collateral outflows and regulatory

requirements. The Insurance business manages a separate liquidity

portfolio to mitigate insurance liquidity risk.

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.

During 2025, the Group accessed wholesale funding across a range

of currencies and markets with term issuance volumes totalling

£13.8 billion. The total outstanding amount of drawings from the

TFSME has reduced to £8.8 billion as at 31 December 2025

(31 December 2024: £21.9 billion), with further maturities in 2027

and beyond. The repayment of TFSME maturities has been factored

into the Group's funding plans.

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.

**Group funding requirements and sources**

---

| | | | |
|:---|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>**£bn**<br>| At 31 Dec<br>2024<br>£bn<br>| Change%<br>|
| **Group funding position** |  |  |  |
| Total Group assets | **944.1** | 906.7 | 4 |
| Less other liabilities<sup>1</sup> | **(261.7)** | (247.8) | (6) |
| **Funding requirements** | **682.4** | 658.9 | 4 |
| Customer deposits | **496.5** | 482.7 | 3 |
| Wholesale funding<sup>2</sup> | **99.4** | 92.5 | 7 |
| Repurchase agreements at amortised cost: |  |  |  |
| Repurchase agreements – non-trading | **29.8** | 15.9 | 87 |
| Term Funding Scheme with additional incentives for SMEs (TFSME) | **8.8** | 21.9 | (60) |
|  | **38.6** | 37.8 | 2 |
| Total equity | **47.9** | 45.9 | 4 |
| **Funding sources** | **682.4** | 658.9 | 4 |

---

1Other liabilities primarily include balances in the Group's Insurance business and the fair value of derivative liabilities.

2The 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 £1.5 billion (31 December 2024: £2.8 billion).

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Reconciliation of Group funding to the balance sheet (audited)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **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 |
|  | **Included in**<br>**funding**<br>**analysis**<br>**£bn**<br>| **Cash**<br>**collateral**<br>**received**<sup>1</sup><br>**£bn**<br>| **Fair value**<br>**and other**<br>**accounting**<br>**methods**<br>**£bn**<br>| **Balance**<br>**sheet**<br>**£bn**<br>| Included in<br>funding<br>analysis<br>£bn<br>| Cash<br>collateral<br>received<sup>1</sup><br>£bn<br>| Fair value<br>and other<br>accounting<br>methods<br>£bn<br>| Balance<br>sheet<br>£bn<br>|
| Deposits from banks | **3.8** | **2.0** | **–** | **5.8** | 3.1 | 3.2 | (0.1) | 6.2 |
| Debt securities in issue | **83.9** | **–** | **(5.6)** | **78.3** | 77.2 | – | (6.4) | 70.8 |
| Subordinated liabilities | **11.7** | **–** | **(1.8)** | **9.9** | 12.2 | – | (2.1) | 10.1 |
| **Total wholesale funding** | **99.4** | **2.0** |  |  | 92.5 | 3.2 |  |  |
| Customer deposits | **496.5** | **–** | **–** | **496.5** | 482.7 | – | – | 482.7 |
| Repurchase agreements at <br>amortised cost<br>| **38.6** | **–** | **–** | **38.6** | 37.8 | – | – | 37.8 |
| Total equity | **47.9** | **–** | **–** | **47.9** | 45.9 | – | – | 45.9 |
| **Funding Sources** | **682.4** | **2.0** |  |  | 658.9 | 3.2 |  |  |

---

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. At 31 December 2025, £2.0 billion (31 December 2024: £3.2 billion) was with bank counterparties,

of which £1.5 billion (31 December 2024: £2.8 billion) relates primarily to the Global Markets business of Lloyds Bank Corporate Markets plc, whilst £0.5 billion (31 December 2024:

£0.4 billion) relates to the Insurance business.

**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 | **1.6** | **0.4** | **0.8** | **0.9** | **0.1** | **–** | **–** | **–** | **3.8** | 3.1 |
| Debt securities in issue: |  |  |  |  |  |  |  |  |  |  |
| Certificates of deposit <br>issued<br>| **0.2** | **1.3** | **2.3** | **1.9** | **1.1** | **0.5** | **–** | **–** | **7.3** | 5.5 |
| Commercial paper | **–** | **7.0** | **6.3** | **2.3** | **0.3** | **–** | **–** | **–** | **15.9** | 8.3 |
| Senior unsecured notes <br>issued<br>| **–** | **0.8** | **2.2** | **1.6** | **0.8** | **9.6** | **15.9** | **12.1** | **43.0** | 46.5 |
| Covered bonds | **–** | **0.9** | **0.8** | **0.1** | **1.0** | **3.0** | **4.6** | **0.8** | **11.2** | 11.6 |
| Securitisation notes | **–** | **–** | **–** | **0.2** | **0.5** | **1.7** | **3.5** | **0.6** | **6.5** | 5.3 |
|  | **0.2** | **10.0** | **11.6** | **6.1** | **3.7** | **14.8** | **24.0** | **13.5** | **83.9** | 77.2 |
| Subordinated liabilities | **–** | **1.1** | **–** | **0.5** | **–** | **–** | **4.4** | **5.7** | **11.7** | 12.2 |
| **Total wholesale funding** | **1.8** | **11.5** | **12.4** | **7.5** | **3.8** | **14.8** | **28.4** | **19.2** | **99.4** | 92.5 |

---

**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** | **21.6** | **46.4** | **25.1** | **6.3** | **99.4** |
| At 31 December 2024 | 21.0 | 41.5 | 22.6 | 7.4 | 92.5 |

---

**Analysis of 2025 term issuance (audited)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Sterling**<br>**£bn**<br>| **US dollar**<br>**£bn**<br>| **Euro**<br>**£bn**<br>| **Other**<br>**currencies**<br>**£bn**<sup>1</sup><br>| **Total**<br>**£bn**<br>|
| Securitisation<sup>2</sup> | **0.8** | **–** | **0.6** | **–** | **1.4** |
| Covered bonds | **1.0** | **–** | **0.4** | **–** | **1.4** |
| Senior unsecured notes | **0.8** | **3.7** | **2.5** | **0.7** | **7.7** |
| Subordinated liabilities | **–** | **0.9** | **0.9** | **–** | **1.8** |
| Additional tier 1 | **0.7** | **0.8** | **–** | **–** | **1.5** |
| **Total issuance** | **3.3** | **5.4** | **4.4** | **0.7** | **13.8** |

---

1Includes Australian dollar, Swiss franc, Hong Kong dollar and Japanese yen.

2Securitisation includes externally issued notes from significant risk transfer transactions.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

**Liquidity portfolio**

At 31 December 2025, the Group had £131.4 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: £134.4 billion), of which £125.8 billion was LCR level 1 eligible

(31 December 2024: £128.5 billion) and £5.6 billion was LCR level 2 eligible (31 December 2024: £5.9 billion). These assets are available to

meet cash and collateral outflows and regulatory requirements.

Liquidity risk is managed in line with the Group Liquidity Risk Policy, with the Insurance Group managing liquidity risk on a standalone basis.

Assets held for annuities are specifically chosen to correspond to the expectation of timing of annuity payments. For With Profits and unit-

linked business, portfolios are managed through mandates which ensure that they are run within defined tolerances, maintaining sufficient

liquidity to carry out operations of the portfolio without material disruption. For non-linked products other than annuity contracts, backing

investments are mostly held in gilts with minimal liquidity risk. Investments are arranged to minimise the possibility of being a distressed

seller whilst at the same time investing to meet policyholder obligations. This is achieved by anticipating policyholder behaviour and sales of

underlying assets within funds.

**LCR eligible assets**

---

| | | | |
|:---|:---|:---|:---|
|  | **Average**<sup>1</sup> | **Average**<sup>1</sup> | Change% |
|  | **2025**<br>**£bn**<br>| 2024<br>£bn<br>| Change% |
| Cash and central bank reserves | **59.3** | 62.0 | (4) |
| High quality government/MDB/agency bonds<sup>2</sup> | **64.0** | 63.6 | 1 |
| High quality covered bonds | **2.5** | 2.9 | (14) |
| Level 1 | **125.8** | 128.5 | (2) |
| Level 2<sup>3</sup> | **5.6** | 5.9 | (5) |
| **Total LCR eligible assets** | **131.4** | 134.4 | (2) |

---

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 | **87.5** | **21.9** | **16.4** | **–** | **125.8** |
| Level 2 | **2.6** | **1.0** | **1.1** | **0.9** | **5.6** |
| **Total**<sup>1</sup> | **90.1** | **22.9** | **17.5** | **0.9** | **131.4** |
| At 31 December 2024 |  |  |  |  |  |
| Level 1 | 89.8 | 21.0 | 17.7 | – | 128.5 |
| Level 2 | 2.6 | 1.7 | 1.1 | 0.5 | 5.9 |
| Total<sup>1</sup> | 92.4 | 22.7 | 18.8 | 0.5 | 134.4 |

---

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 144% of modelled outflows under the Group's most severe liquidity stress scenario

(31 December 2024: 136%). 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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Maturities of financial instrument liabilities (audited)**

The table below analyses financial instrument liabilities of the Group, excluding those arising from insurance and participating investment

contracts, 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 | **1872** | **421** | **1930** | **1579** | **10** | **5812** |
| Customer deposits | **428915** | **23351** | **35640** | **9722** | **503** | **498131** |
| Repurchase agreements at amortised cost | **11966** | **9750** | **7866** | **6773** | **3147** | **39502** |
| Financial liabilities at fair value through profit or loss | **13140** | **6062** | **2953** | **2044** | **5657** | **29856** |
| Notes in circulation | **2118** | **–** | **–** | **–** | **–** | **2118** |
| Debt securities in issue at amortised cost | **408** | **9959** | **22797** | **40064** | **13427** | **86655** |
| Liabilities arising from non-participating investment contracts | **61640** | **–** | **–** | **–** | **–** | **61640** |
| Lease liabilities | **35** | **59** | **200** | **446** | **392** | **1132** |
| Subordinated liabilities | **24** | **1170** | **990** | **6247** | **8328** | **16759** |
| **Total non-derivative financial liabilities** | **520118** | **50772** | **72376** | **66875** | **31464** | **741605** |
| Derivative financial liabilities |  |  |  |  |  |  |
| Gross settled derivatives – outflows | **89450** | **66862** | **43379** | **40311** | **21260** | **261262** |
| Gross settled derivatives – inflows | **(88088)** | **(65410)** | **(42508)** | **(38949)** | **(18853)** | **(253808)** |
| Gross settled derivatives – net flows | **1362** | **1452** | **871** | **1362** | **2407** | **7454** |
| Net settled derivative liabilities | **8258** | **35** | **62** | **291** | **1784** | **10430** |
| **Total derivative financial liabilities** | **9620** | **1487** | **933** | **1653** | **4191** | **17884** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 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 2024 |  |  |  |  |  |  |
| Deposits from banks | 1809 | 673 | 904 | 2775 | 105 | 6266 |
| Customer deposits | 437693 | 14873 | 24811 | 6127 | 256 | 483760 |
| Repurchase agreements at amortised cost | 8974 | 5169 | 15300 | 9416 | – | 38859 |
| Financial liabilities at fair value through profit or loss | 15208 | 3965 | 1803 | 2102 | 7078 | 30156 |
| Notes in circulation | 2121 | – | – | – | – | 2121 |
| Debt securities in issue at amortised cost | 3704 | 10367 | 13624 | 38973 | 8519 | 75187 |
| Liabilities arising from non-participating investment contracts | 51228 | – | – | – | – | 51228 |
| Lease liabilities | 28 | 65 | 241 | 574 | 461 | 1369 |
| Subordinated liabilities | 26 | 698 | 1676 | 4207 | 6705 | 13312 |
| **Total non-derivative financial liabilities** | 520791 | 35810 | 58359 | 64174 | 23124 | 702258 |
| Derivative financial liabilities |  |  |  |  |  |  |
| Gross settled derivatives – outflows | 100432 | 61356 | 43231 | 34795 | 22505 | 262319 |
| Gross settled derivatives – inflows | (97653) | (59238) | (41319) | (32333) | (18950) | (249493) |
| Gross settled derivatives – net flows | 2779 | 2118 | 1912 | 2462 | 3555 | 12826 |
| Net settled derivative liabilities | 10432 | 92 | 109 | 404 | 1557 | 12594 |
| **Total derivative financial liabilities** | 13211 | 2210 | 2021 | 2866 | 5112 | 25420 |

---

The majority of the Group's non-participating investment contract liabilities are unit-linked. These unit-linked products are invested in

accordance with unit fund mandates. Clauses are included in policyholder contracts to permit the deferral of sales, where necessary, so

that linked assets can be realised without being a forced seller.

The principal amount for undated subordinated liabilities and preference shares with no redemption option is included within the over 5

years column; interest of £16 million (2024: £16 million) in respect of the undated subordinated liabilities and £28 million (2024: £28 million)

in respect of the preference shares, 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 [183](#i60edd65bad6d4aebb7b62f5dd34077bf_13279)**.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

**Cash flows arising from insurance liabilities (audited)**

The following table presents the estimated amount and timing of the remaining contractual discounted cash flows arising from insurance

liabilities. The amounts presented do not include those relating to the liability for remaining coverage of contracts that are measured under

the premium allocation approach.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Less than 1**<br> **year**<br>**£m**<br>| **1 to 2**<br>**years**<br>**£m**<br>| **2 to 3**<br>**years**<br>**£m**<br>| **3 to 4**<br>**years**<br>**£m**<br>| **4 to 5**<br>**years**<br>**£m**<br>| **Over 5**<br>**years**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |  |  |  |
| Liabilities arising from insurance and participating <br>investment contracts<br>| **(1823)** | **(1941)** | **(2316)** | **(2775)** | **(3147)** | **(117710)** | **(129712)** |
| Reinsurance contract liabilities | **3** | **3** | **3** | **2** | **2** | **12** | **25** |
| **Total** | **(1820)** | **(1938)** | **(2313)** | **(2773)** | **(3145)** | **(117698)** | **(129687)** |
| At 31 December 2024 |  |  |  |  |  |  |  |
| Liabilities arising from insurance and participating <br>investment contracts<br>| (1038) | (1292) | (1951) | (2453) | (2992) | (112055) | (121781) |
| Reinsurance contract liabilities | 3 | 3 | 3 | 3 | 2 | 13 | 27 |
| **Total** | (1035) | (1289) | (1948) | (2450) | (2990) | (112042) | (121754) |

---

For insurance contracts which are neither unit-linked nor in the Group's with-profit funds, in particular annuity liabilities, the aim is to invest

in assets such that the cash flows on investments match those on the projected future liabilities.

**Insurance and participating investment contract liabilities payable on demand (audited)**

Some of the Group's insurance and participating investment contract liabilities are payable on demand as shown in the table below:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 |
|  | **Amounts**<br>**payable on**<br>**demand**<br>**£m**<br>| **Carrying**<br>**amount**<br>**£m**<br>| Amounts<br>payable on<br>demand<br>£m<br>| Carrying<br>amount<br>£m<br>|
| Life | **122691** | **118931** | 110402 | 107909 |
| Non-life | **–** | **–** | – | – |
| **Total** | **122691** | **118931** | 110402 | 107909 |

---

The amounts payable on demand represent contract surrender values and incurred claims.

**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.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Up to 1**<br>**month**<br>**£m**<br>| **1 to 3**<br>**months**<br>**£m**<br>| **3 to 6**<br>**months**<br>**£m**<br>| **6 to 9**<br>**months**<br>**£m**<br>| **9 to 12**<br>**months**<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 | **97** | **6** | **2** | **–** | **–** | **–** | **–** | **–** | **105** |
| Other contingent liabilities | **215** | **555** | **366** | **86** | **290** | **691** | **364** | **337** | **2904** |
| **Total contingent liabilities** | **312** | **561** | **368** | **86** | **290** | **691** | **364** | **337** | **3009** |
| Lending commitments and financial guarantees | **143506** | **1553** | **1057** | **2061** | **2341** | **3468** | **3058** | **435** | **157479** |
| Other commitments | **95** | **–** | **–** | **–** | **–** | **–** | **–** | **–** | **95** |
| **Total commitments and financial guarantees** | **143601** | **1553** | **1057** | **2061** | **2341** | **3468** | **3058** | **435** | **157574** |
| **Total contingents, commitments and financial** <br>**guarantees**<br>| **143913** | **2114** | **1425** | **2147** | **2631** | **4159** | **3422** | **772** | **160583** |
| At 31 December 2024 |  |  |  |  |  |  |  |  |  |
| Acceptances and endorsements | 24 | 11 | 3 | 1 | – | – | – | – | 39 |
| Other contingent liabilities | 208 | 357 | 225 | 115 | 370 | 547 | 211 | 533 | 2566 |
| **Total contingent liabilities** | 232 | 368 | 228 | 116 | 370 | 547 | 211 | 533 | 2605 |
| **Lending commitments and financial guarantees** | 134283 | 1416 | 1729 | 1562 | 3367 | 2755 | 3140 | 256 | 148508 |
| Other commitments | 94 | 6 | 11 | – | – | – | – | – | 111 |
| **Total commitments and financial guarantees** | 134377 | 1422 | 1740 | 1562 | 3367 | 2755 | 3140 | 256 | 148619 |
| **Total contingents, commitments and financial** <br>**guarantees**<br>| 134609 | 1790 | 1968 | 1678 | 3737 | 3302 | 3351 | 789 | 151224 |

---

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Market risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>Market risk is defined as the risk that the Group's <br>capital or earnings profile are adversely affected by <br>changes in market rates or prices, including, but not <br>limited to, interest rates, foreign exchange, equity <br>prices and credit spreads.<br>**Level two risks**<br>Banking book (**page [189](#i488be3d12dce44a7b64b0310701877ca_29975)**); Pension (**page [192](#i488be3d12dce44a7b64b0310701877ca_29947)**); Insurance (**page [192](#i488be3d12dce44a7b64b0310701877ca_29924)**); <br>Trading book (**page [193](#i488be3d12dce44a7b64b0310701877ca_30008)**)<br>The Risk overview, on **page [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73)**, contains a summary of market risk <br>performance and key mitigating actions. |  |
|  | **Definition**<br>Market risk is defined as the risk that the Group's <br>capital or earnings profile are adversely affected by <br>changes in market rates or prices, including, but not <br>limited to, interest rates, foreign exchange, equity <br>prices and credit spreads.<br>**Level two risks**<br>Banking book (**page [189](#i488be3d12dce44a7b64b0310701877ca_29975)**); Pension (**page [192](#i488be3d12dce44a7b64b0310701877ca_29947)**); Insurance (**page [192](#i488be3d12dce44a7b64b0310701877ca_29924)**); <br>Trading book (**page [193](#i488be3d12dce44a7b64b0310701877ca_30008)**)<br>The Risk overview, on **page [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73)**, contains a summary of market risk <br>performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

---

| | | |
|:---|:---|:---|
| ![Green_top left7.gif](lyg-20251231_g154.gif) |  | ![Green_topright7.gif](lyg-20251231_g155.gif) |
| ![Green_top left7.gif](lyg-20251231_g154.gif) | **Financial risk indicators**<br>•Structural hedge: £244 billion (2024: £242 billion) <br>•Average 95% 1-day trading VaR: £2.2 million (2024: £2.4 million) | ![Green_topright7.gif](lyg-20251231_g155.gif) |
|  | **Financial risk indicators**<br>•Structural hedge: £244 billion (2024: £242 billion) <br>•Average 95% 1-day trading VaR: £2.2 million (2024: £2.4 million) |  |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |
| ![Green_bottom_left9.gif](lyg-20251231_g156.gif) |  | ![Green_bottom_right9.gif](lyg-20251231_g157.gif) |

---

**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.

**Balance sheet linkages**

The information provided in the table below aims to facilitate the

understanding of linkages between banking, trading and insurance

balance sheet items and the positions disclosed in the Group's

market risk disclosures.

**Market risk linkage to the balance sheet**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Banking** | **Banking** |  |  |
| **2025** | **Total**<br>**£m**<br>| **Trading book**<sup>1</sup><br>**£m**<br>| **Non-**<br>**trading**<br>**£m**<br>| **Insurance**<br>**£m**<br>| **Primary market risk factor** |
| **Assets** |  |  |  |  |  |
| Cash and balances at central banks | **56661** | **–** | **56661** | **–** | Interest rate |
| Financial assets at fair value through profit <br>or loss<br>| **240413** | **25537** | **5331** | **209545** | Interest rate, foreign exchange, credit spread, <br>equity<br>|
| Derivative financial instruments | **19727** | **16278** | **2329** | **1120** | Interest rate, foreign exchange, credit spread |
| Financial assets at amortised cost |  |  |  |  |  |
| Loans and advances to banks | **7236** | **–** | **7145** | **91** | Interest rate |
| Loans and advances to customers | **481463** | **–** | **481463** | **–** | Interest rate |
| Reverse repurchase agreements | **50986** | **–** | **50986** | **–** | Interest rate |
| Debt securities | **13987** | **–** | **13987** | **–** | Interest rate, credit spread |
| Financial assets at amortised cost | **553672** | **–** | **553581** | **91** |  |
| Financial assets at fair value through other <br>comprehensive income<br>| **36320** | **–** | **36320** | **–** | Interest rate, foreign exchange, credit spread |
| Other assets | **37279** | **–** | **30880** | **6399** | Interest rate, credit spread |
| **Total assets** | **944072** | **41815** | **685102** | **217155** |  |
| **Liabilities** |  |  |  |  |  |
| Deposit from banks | **5779** | **–** | **5779** | **–** | Interest rate |
| Customer deposits | **496457** | **–** | **496457** | **–** | Interest rate |
| Repurchase agreements at amortised cost | **38570** | **–** | **38570** | **–** | Interest rate |
| Financial liabilities at fair value through <br>profit or loss<br>| **27909** | **23666** | **4243** | **–** | Interest rate, foreign exchange |
| Derivative financial instruments | **16132** | **11196** | **3772** | **1164** | Interest rate, foreign exchange, credit spread |
| Debt securities in issue at amortised cost | **78271** | **–** | **77383** | **888** | Interest rate, credit spread |
| Liabilities arising from insurance and <br>investment contracts<br>| **196924** | **–** | **–** | **196924** | Interest rate, credit spread, equity |
| Subordinated liabilities | **9894** | **–** | **9382** | **512** | Interest rate, foreign exchange |
| Other liabilities | **26269** | **–** | **12084** | **14185** | Interest rate, credit spread |
| **Total liabilities** | **896205** | **34862** | **647670** | **213673** |  |

---

1Assets and liabilities are classified as trading book if they meet the requirements as set out in the Capital Requirements Regulation, article 104.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

The defined benefit pension schemes' assets and liabilities are

included under other assets and other liabilities in this table and

note 12 to the consolidated financial statements on **page [245](#i384682da283b4f9482faf6975d6c2a02_15586)**

provides further information.

The Group's trading book assets and liabilities are originated

within the Commercial Banking business units.

Within the Group's balance sheet these fall under the trading assets

and liabilities and derivative financial instruments.

The assets and liabilities are classified as trading book if they meet

the requirements as set out in the Capital Requirements Regulation,

article 104. Further information on these activities can be found

under the Trading portfolios section on**page [193](#i488be3d12dce44a7b64b0310701877ca_29899)**.

Derivative assets and liabilities are held by the Group for three main

purposes: to provide risk management solutions for clients, to

manage portfolio risks arising from client business and to manage

and hedge the Group's own risks.

Insurance business assets and liabilities relate to policyholder funds,

as well as shareholder invested assets, including annuity funds.

The Group ensures that it has adequate cash and balances at

central banks and stocks of high quality liquid assets (for example,

gilts or US Treasury securities) that can be converted easily into cash

to meet liquidity requirements. The majority of these assets are

asset swapped and held at fair value through other comprehensive

income. For further information see Liquidity risk **page** **[181](#ib8bb384d26e1435f823cf6ca02bbd2f4_2-1-2-1-5233089)**.

The majority of debt issuance originates from the Group's capital

and funding activities and the interest rate risk of the debt issued is

hedged by swapping them into a floating rate.

The non-trading book primarily consists of customer on-balance

sheet activities and the Group's capital and funding activities, which

expose it to the risk of adverse movements in market rates or prices,

predominantly interest rates, credit spreads, exchange rates and

equity prices, as described in further detail within the Banking

activities section.

**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 sub-groups, legal entities

or business units 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**

Group Asset and Liability Committee (GALCO) 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 sub-groups,

legal entities and 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.

Within Insurance, market risk is managed by considering business

strategy and risk appetite, which typically state (or limit) the

amount and type of risk the Group is willing to take in pursuit of the

strategy.

**Monitoring**

GALCO 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.

In Insurance, monitoring of (Solvency II capital) market risk

exposures against risk appetite, or other internal limits, is carried out

monthly.

**Reporting**

Market risk appetite metrics and a set of management measures are

reported to the relevant Asset and Liability Committees (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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**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 two different sources:

• The Group's direct equity exposure within the Equity sub-group

including private equity exposure from investments held by LDC,

Housing Growth Partnership and its stake in BGF, in addition to

other equity exposure from a small number of legacy strategic

equity holdings and recently acquired minority fintech stakes

• A small 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.

The 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 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

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

**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 | **22.8** | **(23.0)** | **89.6** | **(93.7)** | 4.7 | (4.7) | 17.9 | (19.5) |
| US dollar | **(3.6)** | **3.6** | **(14.1)** | **14.6** | (1.4) | 1.4 | (5.4) | 5.7 |
| Euro | **(3.7)** | **(0.4)** | **(14.5)** | **(1.6)** | (1.4) | (2.3) | (5.1) | (9.4) |
| Other | **(1.6)** | **1.6** | **(6.3)** | **6.4** | (1.0) | 1.0 | (3.6) | 4.3 |
| **Total** | **13.9** | **(18.2)** | **54.7** | **(74.3)** | 0.9 | (4.6) | 3.8 | (18.9) |

---

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.

**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 | **2.7** | **(3.2)** | (1.4) | 0.3 |
| US dollar | **1.8** | **(1.8)** | (0.6) | 0.5 |
| Euro | **(9.1)** | **(1.3)** | (12.8) | 3.2 |
| Other | **3.3** | **(3.3)** | (2.4) | 3.1 |
| **Total** | **(1.3)** | **(9.6)** | (17.2) | 7.1 |

---

**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 | **216** | **376** | **660** | 234 | 357 | 591 |
| Up 25 bps | **109** | **189** | **331** | 117 | 179 | 296 |
| Down 25bps | **(131)** | **(192)** | **(336)** | (150) | (181) | (297) |
| Down 50bps | **(261)** | **(386)** | **(673)** | (302) | (364) | (595) |

---

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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Management and mitigation**

![AuditedLozenge.gif](lyg-20251231_g336.gif)

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

The Group's policy is to optimise reward while managing its

market risk exposures within the risk appetite defined by the

Board. The Group market risk policy and procedures outlines the

hedging process, and the centralisation of risk from divisions 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 GALCO 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,

GALCO 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 GALCO.

The Group's 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](lyg-20251231_g336.gif)

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.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](lyg-20251231_g336.gif)

---

| | |
|:---|:---|
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_top left7.gif](lyg-20251231_g65.gif) | ![LightGrey_topright7.gif](lyg-20251231_g66.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |
| ![LightGrey_bottom_left9.gif](lyg-20251231_g69.gif) | ![LightGrey_bottom_right9.gif](lyg-20251231_g70.gif) |

---

The Group manages foreign currency accounting exposure via

cash flow hedge accounting, utilising currency swaps and

forward foreign exchange trades. All non-structural foreign

exchange exposures in the non-trading book are managed

centrally within allocated exposure limits.

**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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

**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 12 to the consolidated financial

statements on **page [245](#i384682da283b4f9482faf6975d6c2a02_15586)**.

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.

**Insurance business**

**Identification and assessment**

The main elements of market risk to which the Group is exposed

through the Insurance business are equity, credit default spread,

interest rate and inflation.

Equity risk arises indirectly through the value of future management

charges on policyholder funds.

Credit default spread risk mainly arises from annuities where

policyholders' future cash flows are guaranteed at retirement.

Exposure arises if the market value of the assets moves differently

to the liabilities they back. This exposure arises from credit

downgrades and defaults.

Interest rate risk arises through credit and interest assets which are

mainly held to cover the annuity and general insurance liabilities.

Inflation exposure arises from inflation-linked policyholder benefits

and future expenses.

Current and potential future market risk exposures within Insurance

are assessed using a range of techniques including stress, reverse

stress and scenario testing, as well as stochastic modelling.

Risk measures include 1-in-200 year stresses for the Insurance

business' regulatory capital assessments and other supporting

measures where appropriate, including those set out in note8(I) of

the consolidated financial statements on **page [240](#i09cf44b32f4542c9b01fe1f2ae3bb3f3_6262)**.

**Management and mitigation**

Equity and credit spread risks are closely monitored. Asset liability

matching, hedging and unit matching are all used to reduce the

sensitivity of equity movements.

Interest rate risk in the annuity book is monitored and mitigated by

investing in assets whose cash flows closely match those on the

projected future liabilities. It is not possible to eliminate the risk

completely as the timing of insured events is uncertain and bonds

are not available for all required maturities. Other market risks

(e.g. interest rate exposure outside the annuity book and inflation)

are also closely monitored and where considered appropriate,

hedges are put in place to reduce exposure.

The costs and benefits of market risk mitigation are considered in

strategy and business planning decisions, with consideration given

to the impacts to various metrics.

**Monitoring**

Market risks in the Insurance business are monitored by Insurance

senior executive committees and ultimately the Insurance Board.

Monitoring includes the progression of market risk against limits, as

well as the sensitivity of profit before tax to combined market risk

stress scenarios and in-year market movements. Asset and liability

matching positions and hedges in place are actively monitored and

if necessary rebalanced to be within agreed tolerances. In addition,

market risk is controlled via approved investment policies and

mandates.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**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, credit, interest rate and inflation products. These

activities support customer flow and market making activities.

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 relatively stable in 2025 at

£2.2 million(31 December 2024: £2.4 million).

Trading market risk measures are applied to all of the Group's

regulatory trading books and they include daily VaR (see trading

portfolios: VaR table), 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 trading

portfolios: VaR table shows some relevant statistics for the Group's

1-day 95% confidence level VaR, based on 300 historical

consecutive business days to year end 2025 and year end 2024.

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, but do not reflect any diversification between

Lloyds Bank Corporate Markets plc and any other entities. 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 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.

Trading book VaR (1-day 99%) is compared daily against both

hypothetical and actual profit and loss. The 1-day 99% VaR chart

can be found in the Group's Pillar 3 disclosures .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

**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.

**Trading portfolios: VaR (1-day 95% confidence level) (audited)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **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 |
|  | **Close**<br>**£m**<br>| **Average**<br>**£m**<br>| **Maximum**<br>**£m**<br>| **Minimum**<br>**£m**<br>| Close<br>£m<br>| Average<br>£m<br>| Maximum<br>£m<br>| Minimum<br>£m<br>|
| Interest rate risk | **1.1** | **2.2** | **4.2** | **0.9** | 4.0 | 2.4 | 5.5 | 1.2 |
| Foreign exchange risk | **0.1** | **0.2** | **0.7** | **0.1** | 0.1 | 0.2 | 0.7 | 0.1 |
| Equity risk | **–** | **–** | **–** | **–** | – | – | – | – |
| Credit spread risk | **0.2** | **0.3** | **0.5** | **0.1** | 0.2 | 0.3 | 0.4 | 0.2 |
| Inflation risk | **0.1** | **0.2** | **1.7** | **0.1** | 0.1 | 0.3 | 0.7 | 0.1 |
| All risk factors before diversification | **1.5** | **2.9** | **4.8** | **1.5** | 4.4 | 3.2 | 6.2 | 2.0 |
| Portfolio diversification | **(0.4)** | **(0.7)** | **–** | **–** | (0.6) | (0.8) | **–** | **–** |
| **Total VaR** | **1.1** | **2.2** | **4.3** | **1.0** | 3.8 | 2.4 | 5.1 | 1.3 |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Model risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>Model Risk is defined as the potential for adverse <br>consequences from model errors or the <br>inappropriate use of modelled outputs to inform <br>business decisions. Adverse consequences could lead <br>to a deterioration in the prudential position, non-<br>compliance with applicable laws and/or regulations, <br>or damage to the Group's reputation. Model risk can <br>also lead to financial loss, as well as qualitative <br>limitations such as the imposition of restrictions on <br>business activities.<br>The Risk overview, on **page [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73)**, contains a summary of model risk <br>performance and key mitigating actions. |  |
|  | **Definition**<br>Model Risk is defined as the potential for adverse <br>consequences from model errors or the <br>inappropriate use of modelled outputs to inform <br>business decisions. Adverse consequences could lead <br>to a deterioration in the prudential position, non-<br>compliance with applicable laws and/or regulations, <br>or damage to the Group's reputation. Model risk can <br>also lead to financial loss, as well as qualitative <br>limitations such as the imposition of restrictions on <br>business activities.<br>The Risk overview, on **page [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73)**, contains a summary of model risk <br>performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**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.

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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | |
|:---|:---|:---|
| ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) | **Operational risk** | ![HeritageGreen_Single row_15pt_new_end_flat.gif](lyg-20251231_g17.gif) |
|  | **Definition**<br>Operational risk is defined as the risk of actual or <br>potential impact to the Group (financial and/or non-<br>financial) resulting from inadequate or failed internal <br>processes, people and systems or from external events. <br>Resilience is core to the management of operational <br>risk within Lloyds Banking Group to ensure that <br>business processes (including those that are <br>outsourced) can withstand operational risks and can <br>respond to and meet customer and stakeholder needs <br>when continuity of operations is compromised.<br>**Level two risks**<br>Business continuity; Change execution; Data and privacy; Financial <br>reporting and tax; Health, safety and premises; Information, cyber and <br>physical security; Internal and external supplier; IT systems; Payments <br>and transaction execution; People<br>The Risk overview, on **page [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73)**, contains a summary of operational risk <br>performance and key mitigating actions. |  |
|  | **Definition**<br>Operational risk is defined as the risk of actual or <br>potential impact to the Group (financial and/or non-<br>financial) resulting from inadequate or failed internal <br>processes, people and systems or from external events. <br>Resilience is core to the management of operational <br>risk within Lloyds Banking Group to ensure that <br>business processes (including those that are <br>outsourced) can withstand operational risks and can <br>respond to and meet customer and stakeholder needs <br>when continuity of operations is compromised.<br>**Level two risks**<br>Business continuity; Change execution; Data and privacy; Financial <br>reporting and tax; Health, safety and premises; Information, cyber and <br>physical security; Internal and external supplier; IT systems; Payments <br>and transaction execution; People<br>The Risk overview, on **page [27](#i3eaa7a3e529a46b3b97a88e05ad474bc_73)**, contains a summary of operational risk <br>performance and key mitigating actions. |  |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |
| ![Calm_bottom_left9.gif](lyg-20251231_g18.gif) |  | ![Calm_bottom_right9.gif](lyg-20251231_g19.gif) |

---

**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.

**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 below 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 91% 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 [153](#i1ad1302d1df2474c921a834662d79c11_0-1-1-1-5233089)**.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.

**Operational risk events by risk category (losses greater than or equal to £10,000)**<sup>1</sup>

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **% of total volume** | **% of total volume** | **% of total losses** | **% of total losses** |
|  | **2025** | 2024<sup>2</sup> | **2025** | 2024<sup>2</sup> |
| Business disruption and system failures | **0.54** | 1.24 | **0.09** | 0.92 |
| Clients, products and business practices<sup>3</sup> | **2.00** | 1.87 | **81.10** | 83.50 |
| Damage to physical assets | **0.03** | 0.16 | **–** | 0.02 |
| Employee practices and workplace safety | **0.28** | 0.59 | **0.04** | 0.24 |
| Execution, delivery and process management | **5.94** | 12.51 | **9.72** | 6.30 |
| External fraud<sup>4</sup> | **91.08** | 83.37 | **9.05** | 9.01 |
| Internal fraud<sup>4</sup> | **0.13** | 0.26 | **–** | 0.01 |
| **Total** | **100.00** | 100.00 | **100.00** | 100.00 |

---

1Excludes losses related to Insurance; only losses from investment firm entities within the Scottish Widows Group Limited are included.

22024 figures have been restated to reflect any losses that occurred during the year and were captured after the 2024 financial year-end.

3The risk management of clients, products and business practices is outlined within conduct risk, on **page [153](#i3eaa7a3e529a46b3b97a88e05ad474bc_535)**.

4Fraud level two risk is explained in further detail under economic crime risk on **page[179](#i3eaa7a3e529a46b3b97a88e05ad474bc_547)**.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Risk management continued

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 entities and sub-groups

**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.

Group 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.

![SectionTabRiskMan.gif](lyg-20251231_g324.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**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.

Sub-group, legal entity, business unit and Group function

operational risk profile, event, and issue data is reported to the

relevant risk committee(s).

![Divider_FinStat.gif](lyg-20251231_g337.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Financial

statements

---

| | | |
|:---|:---|:---|
| **Independent auditors' report** | **Independent auditors' report** | [199](#i3eaa7a3e529a46b3b97a88e05ad474bc_580) |
| **Consolidated financial statements**  | **Consolidated financial statements**  |  |
| Consolidated income statement | Consolidated income statement | [211](#i3eaa7a3e529a46b3b97a88e05ad474bc_583) |
| Consolidated statement of comprehensive income | Consolidated statement of comprehensive income | [212](#i3eaa7a3e529a46b3b97a88e05ad474bc_586) |
| Consolidated balance sheet | Consolidated balance sheet | [213](#i3eaa7a3e529a46b3b97a88e05ad474bc_589) |
| Consolidated statement of changes in equity | Consolidated statement of changes in equity | [214](#i3eaa7a3e529a46b3b97a88e05ad474bc_592) |
| Consolidated cash flow statement | Consolidated cash flow statement | [217](#i3eaa7a3e529a46b3b97a88e05ad474bc_595) |
| Notes to the consolidated financial statements  | Notes to the consolidated financial statements  |  |
| 1. | Basis of preparation | [218](#i3eaa7a3e529a46b3b97a88e05ad474bc_601) |
| 2. | Accounting policies | [218](#i3eaa7a3e529a46b3b97a88e05ad474bc_604) |
| 3. | Critical accounting judgements and key sources of estimation <br>uncertainty<br>| [228](#i3eaa7a3e529a46b3b97a88e05ad474bc_610) |
| 4. | Segmental analysis | [228](#i3eaa7a3e529a46b3b97a88e05ad474bc_613) |
| 5. | Net interest income | [233](#i3eaa7a3e529a46b3b97a88e05ad474bc_625) |
| 6. | Net fee and commission income | [233](#i3eaa7a3e529a46b3b97a88e05ad474bc_628) |
| 7. | Net trading income | [234](#i3eaa7a3e529a46b3b97a88e05ad474bc_631) |
| 8. | Insurance business | [235](#i3eaa7a3e529a46b3b97a88e05ad474bc_640) |
| 9. | Other operating income | [242](#i3eaa7a3e529a46b3b97a88e05ad474bc_670) |
| 10. | Operating expenses | [242](#i3eaa7a3e529a46b3b97a88e05ad474bc_676) |
| 11. | Share-based payments | [243](#i3eaa7a3e529a46b3b97a88e05ad474bc_679) |
| 12. | Retirement benefit obligations | [245](#i3eaa7a3e529a46b3b97a88e05ad474bc_685) |
| 13. | Auditors' remuneration | [251](#i3eaa7a3e529a46b3b97a88e05ad474bc_688) |
| 14. | Impairment | [251](#i3eaa7a3e529a46b3b97a88e05ad474bc_691) |
| 15. | Tax | [252](#i3eaa7a3e529a46b3b97a88e05ad474bc_694) |
| 16. | Measurement basis of financial assets and liabilities | [255](#i3eaa7a3e529a46b3b97a88e05ad474bc_697) |
| 17. | Fair values of financial assets and liabilities | [257](#i3eaa7a3e529a46b3b97a88e05ad474bc_703) |
| 18. | Maturities of assets and liabilities | [267](#i3eaa7a3e529a46b3b97a88e05ad474bc_706) |
| 19. | Derivative financial instruments | [269](#i3eaa7a3e529a46b3b97a88e05ad474bc_709) |
| 20. | Loans and advances to customers | [272](#i3eaa7a3e529a46b3b97a88e05ad474bc_715) |
| 21. | Allowance for expected credit losses | [272](#i3eaa7a3e529a46b3b97a88e05ad474bc_721) |
| 22. | Finance lease receivables | [280](#i3eaa7a3e529a46b3b97a88e05ad474bc_724) |
| 23. | Goodwill and other intangible assets | [280](#i3eaa7a3e529a46b3b97a88e05ad474bc_730) |
| 24. | Other assets | [281](#i3eaa7a3e529a46b3b97a88e05ad474bc_736) |
| 25. | Lessee disclosures | [282](#i3eaa7a3e529a46b3b97a88e05ad474bc_739) |
| 26. | Debt securities in issue | [283](#i3eaa7a3e529a46b3b97a88e05ad474bc_742) |
| 27. | Other liabilities | [283](#i3eaa7a3e529a46b3b97a88e05ad474bc_766) |
| 28. | Provisions | [283](#i3eaa7a3e529a46b3b97a88e05ad474bc_769) |
| 29. | Subordinated liabilities | [285](#i3eaa7a3e529a46b3b97a88e05ad474bc_775) |
| 30. | Share capital | [287](#i3eaa7a3e529a46b3b97a88e05ad474bc_778) |
| 31. | Earnings per share | [287](#i3eaa7a3e529a46b3b97a88e05ad474bc_781) |
| 32. | Other reserves | [288](#i3eaa7a3e529a46b3b97a88e05ad474bc_790) |
| 33. | Other equity instruments | [289](#i3eaa7a3e529a46b3b97a88e05ad474bc_796) |
| 34. | Dividends on ordinary shares | [289](#i3eaa7a3e529a46b3b97a88e05ad474bc_799) |
| 35. | Related party transactions | [290](#i3eaa7a3e529a46b3b97a88e05ad474bc_802) |
| 36. | Contingent liabilities, commitments and financial guarantees | [291](#i3eaa7a3e529a46b3b97a88e05ad474bc_805) |
| 37. | Structured entities | [292](#i3eaa7a3e529a46b3b97a88e05ad474bc_808) |
| 38. | Transfers of financial assets | [293](#i3eaa7a3e529a46b3b97a88e05ad474bc_811) |
| 39. | Financial risk management | [294](#i3eaa7a3e529a46b3b97a88e05ad474bc_814) |
| 40. | Cash flow statement | [295](#i3eaa7a3e529a46b3b97a88e05ad474bc_835) |
| 41. | Events since the balance sheet date | [296](#i3eaa7a3e529a46b3b97a88e05ad474bc_838) |

---

---

| | | |
|:---|:---|:---|
| **Parent company financial statements** | **Parent company financial statements** |  |
| Parent company income statement | Parent company income statement | [297](#i3eaa7a3e529a46b3b97a88e05ad474bc_841) |
| Parent company balance sheet  | Parent company balance sheet  | [298](#i3eaa7a3e529a46b3b97a88e05ad474bc_844) |
| Parent company statement of changes in equity  | Parent company statement of changes in equity  | [299](#i3eaa7a3e529a46b3b97a88e05ad474bc_847) |
| Parent company cash flow statement  | Parent company cash flow statement  | [300](#i3eaa7a3e529a46b3b97a88e05ad474bc_850) |
| Notes to the parent company financial statements | Notes to the parent company financial statements |  |
| 1. | Basis of preparation and accounting policies | [301](#i3eaa7a3e529a46b3b97a88e05ad474bc_856) |
| 2. | Measurement basis of financial assets and liabilities | [301](#i3eaa7a3e529a46b3b97a88e05ad474bc_859) |
| 3. | Fair values of financial assets and liabilities | [302](#i3eaa7a3e529a46b3b97a88e05ad474bc_862) |
| 4. | Derivative financial instruments | [302](#i3eaa7a3e529a46b3b97a88e05ad474bc_865) |
| 5. | Deferred tax | [302](#i3eaa7a3e529a46b3b97a88e05ad474bc_874) |
| 6. | Debt securities in issue at amortised cost | [302](#i3eaa7a3e529a46b3b97a88e05ad474bc_877) |
| 7. | Subordinated liabilities | [303](#i3eaa7a3e529a46b3b97a88e05ad474bc_880) |
| 8. | Share capital and other equity instruments | [303](#i3eaa7a3e529a46b3b97a88e05ad474bc_883) |
| 9. | Related party transactions | [303](#i3eaa7a3e529a46b3b97a88e05ad474bc_886) |
| 10. | Financial risk management | [304](#i3eaa7a3e529a46b3b97a88e05ad474bc_892) |
| The Group has adopted the UK Finance Code for Financial Reporting <br>Disclosure and these 2025 financial statements have been prepared in <br>compliance with its principles. | The Group has adopted the UK Finance Code for Financial Reporting <br>Disclosure and these 2025 financial statements have been prepared in <br>compliance with its principles. | The Group has adopted the UK Finance Code for Financial Reporting <br>Disclosure and these 2025 financial statements have been prepared in <br>compliance with its principles. |

---

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**Lloyds Banking Group plc** Annual Report and Accounts 2025

Consolidated income statement

for the year ended 31 December

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Note | **2025**<br>**£m**<br>| 2024<sup>1</sup><br>£m<br>| 2023<sup>1</sup><br>£m<br>|
| Interest income |  | **30749** | 31288 | 28051 |
| Interest expense |  | **(17519)** | (19011) | (14753) |
| **Net interest income** | 5 | **13230** | 12277 | 13298 |
| Fee and commission income |  | **3118** | 2943 | 2926 |
| Fee and commission expense |  | **(1334)** | (1184) | (1095) |
| Net fee and commission income | 6 | **1784** | 1759 | 1831 |
| Net trading income | 7 | **1485** | 1812 | 1307 |
| Insurance revenue |  | **3438** | 3291 | 3008 |
| Insurance service expense |  | **(2543)** | (2733) | (2414) |
| Net expense from reinsurance contracts held |  | **(139)** | (72) | 2 |
| Insurance service result | 8 | **756** | 486 | 596 |
| Net investment return on assets held to back insurance and investment contracts |  | **23844** | 16013 | 16742 |
| Net finance expense in respect of insurance and investment contracts |  | **(24044)** | (16278) | (16776) |
| Net investment return and finance result in respect of insurance and investment contracts |  | **(200)** | (265) | (34) |
| Other operating income | 9 | **2367** | 1934 | 1631 |
| **Other income** |  | **6192** | 5726 | 5331 |
| **Total income** |  | **19422** | 18003 | 18629 |
| Operating expenses | 10 | **(11966)** | (11601) | (10823) |
| Impairment | 14 | **(795)** | (431) | (303) |
| **Profit before tax** |  | **6661** | 5971 | 7503 |
| Tax expense | 15 | **(1904)** | (1494) | (1985) |
| **Profit for the year** |  | **4757** | 4477 | 5518 |
| Profit attributable to ordinary shareholders |  | **4196** | 3923 | 4933 |
| Profit attributable to other equity holders |  | **463** | 498 | 527 |
| Profit attributable to equity holders |  | **4659** | 4421 | 5460 |
| Profit attributable to non-controlling interests |  | **98** | 56 | 58 |
| **Profit for the year** |  | **4757** | 4477 | 5518 |
| Basic earnings per share | 31 | **7.0p** | 6.3p | 7.6p |
| Diluted earnings per share | 31 | **6.9p** | 6.2p | 7.5p |

---

<sup>1</sup>Comparative periods have been represented for presentational changes. See note 1.

The accompanying notes are an integral part of the consolidated financial statements.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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** | **4757** | 4477 | 5518 |
| **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) |
| Movements in revaluation reserve in respect of equity shares held at FVOCI: |  |  |  |
| Change in fair value | **34** | 93 | (54) |
| Deferred tax | **–** | – | (3) |
|  | **34** | 93 | (57) |
| Gains and losses attributable to own credit risk: |  |  |  |
| Losses before tax | **(126)** | (78) | (234) |
| Deferred tax | **35** | 22 | 66 |
|  | **(91)** | (56) | (168) |
|  | **(442)** | (527) | (1430) |
| **Items that may subsequently be reclassified to profit or loss:** |  |  |  |
| Movements in revaluation reserve in respect of debt securities held at FVOCI: |  |  |  |
| Change in fair value | **34** | (53) | (40) |
| Current tax | **1** | 1 | 1 |
| Deferred tax | **(8)** | 14 | 11 |
|  | **27** | (38) | (28) |
| Income statement transfers in respect of disposals | **(3)** | (7) | (122) |
| Deferred tax | **1** | 2 | 35 |
|  | **(2)** | (5) | (87) |
| Income statement transfers in respect of impairment | **(1)** | (3) | (2) |
|  | **24** | (46) | (117) |
| Movements in cash flow hedge reserve: |  |  |  |
| Effective portion of changes in fair value taken to other comprehensive income | **482** | (2577) | 545 |
| Deferred tax | **(136)** | 719 | (160) |
|  | **346** | (1858) | 385 |
| Net income statement transfers | **1869** | 2597 | 1838 |
| Deferred tax | **(523)** | (728) | (513) |
|  | **1346** | 1869 | 1325 |
|  | **1692** | 11 | 1710 |
| Movements in foreign currency translation reserve: Currency translation differences (tax: £nil) | **54** | (73) | (53) |
|  | **1770** | (108) | 1540 |
| **Total other comprehensive income (loss) for the year, net of tax** | **1328** | (635) | 110 |
| **Total comprehensive income for the year** | **6085** | 3842 | 5628 |
| Total comprehensive income attributable to ordinary shareholders | **5524** | 3288 | 5043 |
| Total comprehensive income attributable to other equity holders | **463** | 498 | 527 |
| Total comprehensive income attributable to equity holders | **5987** | 3786 | 5570 |
| Total comprehensive income attributable to non-controlling interests | **98** | 56 | 58 |
| **Total comprehensive income for the year** | **6085** | 3842 | 5628 |

---

<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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group 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 |  | **56661** | 62705 |
| Financial assets at fair value through profit or loss | 17 | **240413** | 215925 |
| Derivative financial instruments | 19 | **19727** | 24065 |
| Loans and advances to banks |  | **7236** | 7900 |
| Loans and advances to customers | 20 | **481463** | 459857 |
| Reverse repurchase agreements |  | **50986** | 49476 |
| Debt securities |  | **13987** | 14544 |
| Financial assets at amortised cost |  | **553672** | 531777 |
| Financial assets at fair value through other comprehensive income | 17 | **36320** | 30690 |
| Goodwill and other intangible assets | 23 | **8593** | 8188 |
| Current tax recoverable |  | **1346** | 526 |
| Deferred tax assets | 15 | **3990** | 5005 |
| Retirement benefit assets | 12 | **2695** | 3028 |
| Other assets | 24 | **20655** | 24788 |
| **Total assets** |  | **944072** | 906697 |
| **Liabilities** |  |  |  |
| Deposits from banks |  | **5779** | 6158 |
| Customer deposits |  | **496457** | 482745 |
| Repurchase agreements at amortised cost |  | **38570** | 37760 |
| Financial liabilities at fair value through profit or loss | 17 | **27909** | 27611 |
| Derivative financial instruments | 19 | **16132** | 21676 |
| Notes in circulation |  | **2118** | 2121 |
| Debt securities in issue at amortised cost | 26 | **78271** | 70834 |
| Liabilities arising from insurance and participating investment contracts | 8 | **135284** | 122064 |
| Liabilities arising from non-participating investment contracts |  | **61640** | 51228 |
| Other liabilities | 27 | **20945** | 25918 |
| Retirement benefit obligations | 12 | **120** | 122 |
| Current tax liabilities |  | **52** | 45 |
| Deferred tax liabilities | 15 | **146** | 125 |
| Provisions | 28 | **2888** | 2313 |
| Subordinated liabilities | 29 | **9894** | 10089 |
| **Total liabilities** |  | **896205** | 860809 |
| **Equity** |  |  |  |
| Share capital | 30 | **5889** | 6062 |
| Share premium account |  | **18797** | 18720 |
| Other reserves | 32 | **10744** | 8827 |
| Retained profits |  | **6291** | 5912 |
| **Ordinary shareholders' equity** |  | **41721** | 39521 |
| Other equity instruments | 33 | **5947** | 6195 |
| **Total equity excluding non-controlling interests** |  | **47668** | 45716 |
| Non-controlling interests |  | **199** | 172 |
| **Total equity** |  | **47867** | 45888 |
| **Total equity and liabilities** |  | **944072** | 906697 |

---

The accompanying notes are an integral part of the consolidated financial statements.

The directors approved the consolidated financial statements on 13 February 2026.

---

| | | |
|:---|:---|:---|
| ![Signature_RobinBudenberg.gif](lyg-20251231_g9.gif) | ![Signature_CharlieNunn_Black.gif](lyg-20251231_g21.gif) | ![Signature_WilliamChalmers.gif](lyg-20251231_g339.gif) |
| **Sir Robin Budenberg**<br>Chair<br>| **Charlie Nunn**<br>Group Chief Executive<br>| **William Chalmers**<br>Chief Financial Officer<br>|

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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** | **Other**<br>**equity**<br>**instruments**<br>**£m** | **Non-**<br>**controlling**<br>**interests**<br>**£m** | **Total**<br>**£m** |
|  | **Share**<br> **capital**<sup>3</sup><br>**£m**<br>| **Share** <br>**premium**<sup>3</sup><br>**£m**<br>| **Other**<br>**reserves**<br>**£m**<br>| Retained<br>profits<sup>4</sup><br>£m<br>| **Total**<br>**£m**<br>| **Other**<br>**equity**<br>**instruments**<br>**£m** | **Non-**<br>**controlling**<br>**interests**<br>**£m** | **Total**<br>**£m** |
| At 1 January 2025 | **6062** | **18720** | **8827** | **5912** | **39521** | **6195** | **172** | **45888** |
| **Comprehensive income** |  |  |  |  |  |  |  |  |
| Profit for the year | **–** | **–** | **–** | **4196** | **4196** | **463** | **98** | **4757** |
| 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 | **–** | **–** | **24** | **–** | **24** | **–** | **–** | **24** |
| Equity shares | **–** | **–** | **34** | **–** | **34** | **–** | **–** | **34** |
| Gains and losses attributable to <br>own credit risk, net of tax<br>| **–** | **–** | **–** | **(91)** | **(91)** | **–** | **–** | **(91)** |
| Movements in cash flow hedge <br>reserve, net of tax<br>| **–** | **–** | **1692** | **–** | **1692** | **–** | **–** | **1692** |
| Movements in foreign currency <br>translation reserve, net of tax<br>| **–** | **–** | **54** | **–** | **54** | **–** | **–** | **54** |
| Total other comprehensive <br>income (loss)<br>| **–** | **–** | **1804** | **(476)** | **1328** | **–** | **–** | **1328** |
| **Total comprehensive income**<sup>1</sup> | **–** | **–** | **1804** | **3720** | **5524** | **463** | **98** | **6085** |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends (note 34) | **–** | **–** | **–** | **(2000)** | **(2000)** | **–** | **(51)** | **(2051)** |
| Distributions on other equity <br>instruments<br>| **–** | **–** | **–** | **–** | **–** | **(463)** | **–** | **(463)** |
| Issue of ordinary shares | **47** | **77** | **–** | **–** | **124** | **–** | **–** | **124** |
| Share buyback (note 32) | **(220)** | **–** | **220** | **(1710)** | **(1710)** | **–** | **–** | **(1710)** |
| Issue of other equity <br>instruments (note 33)<br>| **–** | **–** | **–** | **(7)** | **(7)** | **1511** | **–** | **1504** |
| Repurchases and redemptions <br>of other equity instruments <br>(note 33)<br>| **–** | **–** | **–** | **–** | **–** | **(1759)** | **–** | **(1759)** |
| Movement in treasury shares | **–** | **–** | **–** | **38** | **38** | **–** | **–** | **38** |
| Value of employee services |  | **–** | **–** | **211** | **211** | **–** | **–** | **211** |
| Changes in non-controlling <br>interests<br>| **–** | **–** | **–** | **20** | **20** | **–** | **(20)** | **–** |
| **Total transactions with owners** | **(173)** | **77** | **220** | **(3448)** | **(3324)** | **(711)** | **(71)** | **(4106)** |
| Realised gains and losses on <br>FVOCI equity shares<br>| **–** | **–** | **(107)** | **107** | **–** | **–** | **–** | **–** |
| **At 31 December 2025**<sup>2</sup> | **5889** | **18797** | **10744** | **6291** | **41721** | **5947** | **199** | **47867** |

---

1Total comprehensive income attributable to owners of the parent was a surplus of £5,987 million (2024: surplus of £3,786 million; 2023: surplus of £5,570 million).

2Total equity attributable to owners of the parent was £47,668 million (2024: £45,716 million; 2023: £47,164 million).

3Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been represented on a consistent basis.

4Retained profits are stated after deducting £17 million representing 87 million treasury shares held.

Further details of movements in the Group's share capital, reserves and other equity instruments are provided in notes 30 and 32 to 33.

The accompanying notes are an integral part of the consolidated financial statements.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Attributable to ordinary shareholders | Other<br>equity<br>instruments<br>£m | Non-<br>controlling<br>interests<br>£m | Total<br>£m |
|  | 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<sup>2</sup><br>£m<br>| Total<br>£m<br>| Other<br>equity<br>instruments<br>£m | Non-<br>controlling<br>interests<br>£m | Total<br>£m |
| At 1 January 2024 | 6358 | 18568 | 8508 | 6790 | 40224 | 6940 | 201 | 47365 |
| **Comprehensive income** |  |  |  |  |  |  |  |  |
| Profit for the year | – | – | – | 3923 | 3923 | 498 | 56 | 4477 |
| Other comprehensive income |  |  |  |  |  |  |  |  |
| Post-retirement defined benefit <br>scheme remeasurements, net of <br>tax<br>| – | – | – | (564) | (564) | – | – | (564) |
| Movements in revaluation reserve <br>in respect of FVOCI assets, net of <br>tax:<br>|  |  |  |  |  |  |  |  |
| Debt securities | – | – | (46) | – | (46) | – | – | (46) |
| Equity shares | – | – | 93 | – | 93 | – | – | 93 |
| Gains and losses attributable to <br>own credit risk, net of tax<br>| – | – | – | (56) | (56) | – | – | (56) |
| Movements in cash flow hedge <br>reserve, net of tax<br>| – | – | 11 | – | 11 | – | – | 11 |
| Movements in foreign currency <br>translation reserve, net of tax<br>| – | – | (73) | – | (73) | – | – | (73) |
| Total other comprehensive loss | – | – | (15) | (620) | (635) | – | – | (635) |
| **Total comprehensive (loss)** <br>**income**<br>| – | – | (15) | 3303 | 3288 | 498 | 56 | 3842 |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends (note 34) | – | – | – | (1828) | (1828) | – | (83) | (1911) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | – | (498) | – | (498) |
| Issue of ordinary shares | 73 | 117 | – | – | 190 | – | – | 190 |
| Share buyback | (369) | – | 369 | (2011) | (2011) | – | – | (2011) |
| Redemption of preference shares | – | 35 | (35) | – | – | – | – | – |
| Issue of other equity instruments <br>(note 33)<br>| – | – | – | (6) | (6) | 763 | – | 757 |
| Repurchases and redemptions of <br>other equity instruments (note 33)<br>| – | – | – | (316) | (316) | (1508) | – | (1824) |
| Movement in treasury shares | – | – | – | (173) | (173) | – | – | (173) |
| Value of employee services | – | – | – | 153 | 153 | – | – | 153 |
| Changes in non-controlling <br>interests<br>| – | – | – | – | – | – | (2) | (2) |
| **Total transactions with owners** | (296) | 152 | 334 | (4181) | (3991) | (1243) | (85) | (5319) |
| Realised gains and losses on equity <br>shares held at FVOCI<br>| – | – | – | – | – | – | – | – |
| At 31 December 2024 | 6062 | 18720 | 8827 | 5912 | 39521 | 6195 | 172 | 45888 |

---

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

2Retained profits are stated after deducting £47 million representing 126 million treasury shares held.

The accompanying notes are an integral part of the consolidated financial statements.

**Lloyds Banking Group 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 | Other<br>equity<br>instruments<br>£m | Non-<br>controlling<br>interests<br>£m | Total<br>£m |
|  | 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<sup>2</sup><br>£m<br>| Total<br>£m<br>| Other<br>equity<br>instruments<br>£m | Non-<br>controlling<br>interests<br>£m | Total<br>£m |
| At 1 January 2023 | 6729 | 18504 | 6587 | 6550 | 38370 | 5297 | 244 | 43911 |
| **Comprehensive income** |  |  |  |  |  |  |  |  |
| Profit for the year | – | – | – | 4933 | 4933 | 527 | 58 | 5518 |
| Other comprehensive income |  |  |  |  |  |  |  |  |
| Post-retirement defined benefit <br>scheme remeasurements, net of <br>tax<br>| – | – | – | (1205) | (1205) | – | – | (1205) |
| Movements in revaluation reserve <br>in respect of FVOCI assets, net of <br>tax:<br>|  |  |  |  |  |  |  |  |
| Debt securities | – | – | (117) | – | (117) | – | – | (117) |
| Equity shares | – | – | (57) | – | (57) | – | – | (57) |
| Gains and losses attributable to <br>own credit risk, net of tax<br>| – | – | – | (168) | (168) | – | – | (168) |
| Movements in cash flow hedge <br>reserve, net of tax<br>| – | – | 1710 | – | 1710 | – | – | 1710 |
| Movements in foreign currency <br>translation reserve, net of tax<br>| – | – | (53) | – | (53) | – | – | (53) |
| Total other comprehensive income <br>(loss)<br>| – | – | 1483 | (1373) | 110 | – | – | 110 |
| **Total comprehensive income** | – | – | 1483 | 3560 | 5043 | 527 | 58 | 5628 |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends (note 34) | – | – | – | (1651) | (1651) | – | (101) | (1752) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | – | (527) | – | (527) |
| Issue of ordinary shares | 67 | 64 | – | – | 131 | – | – | 131 |
| Share buyback | (438) | – | 438 | (1993) | (1993) | – | – | (1993) |
| Issue of other equity instruments <br>(note 33)<br>| – | – | – | (6) | (6) | 1778 | – | 1772 |
| Repurchases and redemptions of <br>other equity instruments (note 33)<br>| – | – | – | – | – | (135) | – | (135) |
| Movement in treasury shares | – | – | – | 103 | 103 | – | – | 103 |
| Value of employee services | – | – | – | 227 | 227 | – | – | 227 |
| Changes in non-controlling <br>interests<br>| – | – | – | – | – | – | – | – |
| **Total transactions with owners** | (371) | 64 | 438 | (3320) | (3189) | 1116 | (101) | (2174) |
| Realised gains and losses on equity <br>shares held at FVOCI<br>| – | – | – | – | – | – | – | – |
| At 31 December 2023 | 6358 | 18568 | 8508 | 6790 | 40224 | 6940 | 201 | 47365 |

---

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

2Retained profits are stated after deducting £10 million representing 61 million treasury shares held.

The accompanying notes are an integral part of the consolidated financial statements.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group 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 (used in) provided by operating activities** |  |  |  |  |
| Profit before tax |  | **6661** | 5971 | 7503 |
| Adjustments for: |  |  |  |  |
| Change in operating assets | 40(A) | **(40689)** | (39622) | (9110) |
| Change in operating liabilities | 40(B) | **35403** | 23603 | 4232 |
| Non-cash and other items | 40(C) | **6431** | 5990 | 5622 |
| Tax paid | 15 | **(2305)** | (1305) | (1437) |
| Tax refunded | 15 | **200** | 970 | – |
| **Net cash provided by (used in) operating activities** |  | **5701** | (4393) | 6810 |
| **Cash flows used in investing activities** |  |  |  |  |
| Purchase of financial assets |  | **(19762)** | (10518) | (10311) |
| Proceeds from sale and maturity of financial assets |  | **14309** | 7062 | 5298 |
| Purchase of property, plant and equipment |  | **(5071)** | (4364) | (3961) |
| Purchase of other intangible assets |  | **(1252)** | (1259) | (1494) |
| Proceeds from sale of property, plant and equipment |  | **1560** | 1505 | 1027 |
| Proceeds from sale of goodwill and other intangible assets |  | **–** | 62 | – |
| Acquisition of businesses and joint ventures, net of cash acquired | 40(D) | **27** | (179) | (380) |
| **Net cash used in investing activities** |  | **(10189)** | (7691) | (9821) |
| **Cash flows used in financing activities** |  |  |  |  |
| Dividends paid to ordinary shareholders | 34 | **(2000)** | (1828) | (1651) |
| Distributions in respect of other equity instruments |  | **(463)** | (498) | (527) |
| Distributions in respect of non-controlling interests |  | **(51)** | (83) | (101) |
| Interest paid on subordinated liabilities |  | **(806)** | (622) | (623) |
| Proceeds from issue of subordinated liabilities |  | **1757** | 812 | 1417 |
| Proceeds from issue of other equity instruments |  | **1504** | 757 | 1772 |
| Proceeds from issue of ordinary shares |  | **99** | 187 | 86 |
| Share buyback |  | **(1710)** | (2011) | (1993) |
| Repayment of subordinated liabilities |  | **(1928)** | (819) | (1745) |
| Repurchases and redemptions of other equity instruments |  | **(1759)** | (1824) | (135) |
| Change in stake of non-controlling interests |  | **–** | (2) | – |
| **Net cash used in financing activities** |  | **(5357)** | (5931) | (3500) |
| Effects of exchange rate changes on cash and cash equivalents |  | **(378)** | (7) | (480) |
| Change in cash and cash equivalents |  | **(10223)** | (18022) | (6991) |
| Cash and cash equivalents at beginning of year |  | **70816** | 88838 | 95829 |
| **Cash and cash equivalents at end of year** | 40(E) | **60593** | 70816 | 88838 |

---

Interest received was £29,843 million (2024: £29,721 million; 2023: £26,461 million) and interest paid was £16,589 million (2024: £17,840 million;

2023: £11,100 million).

The accompanying notes are an integral part of the consolidated financial statements.

**Lloyds Banking Group 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 Banking Group 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,

insurance and reinsurance contract assets and liabilities measured at their fulfilment values in accordance with IFRS 17, 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.

Net investment return on assets held to back insurance and investment contracts, previously shown within net trading income, is presented

separately on the face of the income statement. Net finance expense in respect of insurance and investment contracts, previously shown

outside total income in the income statement, is included within other income as part of total income. This change has been made to

represent more clearly the impact of the Group's insurance business on the results. Comparative periods are represented on a consistent

basis.

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, including IFRS 18

Presentation and Disclosure in Financial Statements which 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.

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 [313](#i3eaa7a3e529a46b3b97a88e05ad474bc_916) to [323](#i4ab22b85c6014c18a6e3e63627259d24_6556).**

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.

The Group consolidates collective investment vehicles if its beneficial ownership interests give it substantive rights to remove the external

fund manager of the investment activities of the fund. Where a subsidiary of the Group is the fund manager of a collective investment

vehicle, the Group considers a number of factors in determining whether it acts as principal, and therefore controls the collective

investment vehicle, including: an assessment of the scope of the Group's decision-making authority over the investment vehicle; the rights

held by other parties including substantive removal rights without cause over the Group acting as fund manager; the remuneration to

which the Group is entitled in its capacity as decision-maker; and the Group's exposure to variable returns from the beneficial interest that

it holds in the investment vehicle. Consolidation may be appropriate in circumstances where the Group has less than a majority beneficial

interest. Where a collective investment vehicle is consolidated, the interests of parties other than the Group are reported in other liabilities

and the movement in those interests is reported within net finance expense arising from insurance and investment contracts.

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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 2: Accounting policies** continued

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 (P) below).

Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair value at the

acquisition date.

**(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 and Insurance businesses 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 seven 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, those relating to leases are set out in (J)(1) below and

those relating to life insurance and general insurance business are set out in (M) below.

**(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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 2: Accounting policies** continued

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 17 (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 and insurance contracts

(unless the embedded derivative is itself an insurance contract) 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.

The assets backing the insurance and investment contracts issued by the Group do not meet the criteria to be measured at amortised cost

or fair value through other comprehensive income as they are managed on a fair value basis and accordingly are measured at fair value

through profit or loss. Similarly, 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.

**(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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 2: Accounting policies** continued

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 19 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.

**(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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 2: Accounting policies** continued

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.

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.

**(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 to20 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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 2: Accounting policies** continued

**(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.

**(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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 2: Accounting policies** continued

**(2)Share-based compensation**

The 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.

For the Group's long-term insurance businesses, the tax expense is analysed between tax that is payable in respect of policyholders' returns

and tax that is payable on the shareholders' returns. This allocation is based on an assessment of the rates of tax which will be applied to

the returns under the current UK tax rules.

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.

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)Insurance**

The Group undertakes both life insurance and general insurance business. Insurance and participating investment contracts, and

reinsurance contracts issued and held, are accounted for under IFRS 17 Insurance Contracts.

Products sold by the life insurance business are classified into three categories:

• Insurance contracts are contracts that transfer significant insurance risk and may also transfer financial risk. The Group defines

significant insurance risk as the possibility of having to pay benefits on the occurrence of an insured event which are significantly higher

than the benefits payable if the insured event were not to occur. Once a contract has been classified as an insurance contract, it remains

an insurance contract until all obligations are extinguished unless that contract is derecognised due to a contract modification. These

contracts are classified as either direct participating contracts or contracts without direct participation features. Contracts without

direct participation features are accounted for using the general measurement model (GMM) for life contracts or the premium

allocation approach (PAA) for general insurance contracts. Direct participating contracts are contracts for which, at inception, the

contractual terms specify the policyholders participate in a clearly identified pool of underlying items. Under the terms of these

contracts the policyholders are entitled to a substantial share of the returns and change in fair value of the underlying items. These

contracts are accounted for under the variable fee approach (VFA)

• Participating investment contracts are investment contracts that contain a discretionary participation feature (DPF). They do not

transfer significant insurance risk, but contain a contractual right to receive, as a supplement to an amount not subject to the discretion

of the Group, additional amounts that are expected to be a significant portion of the total contractual benefits. The timing or amount

of these additional amounts are at the discretion of the Group and are contractually based on the returns on a specified pool of

contracts or type of contract, returns on a specified pool of assets held by the Group or profit or loss of a fund

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 2: Accounting policies** continued

• For certain insurance and investment contracts, the contract can be partly invested in units which contain a DPF and partly in units

without. In these circumstances, where the contract also contains features that transfer significant insurance risk, they are classified as

insurance contracts. Where this is not the case, and the discretionary cash flows are expected to be a significant portion of the total

contractual benefits, they are classified as participating investment contracts. Where the discretionary cash flows are not expected to

be a significant portion of the total contractual benefits, they are classified as financial instruments. An investment component is

defined as the amount that an insurance contract requires the entity to repay to a policyholder in all circumstances, regardless of

whether an insured event occurs. The investment component of the insurance and participating investment contract is non-distinct and

is not separated. The Group applies judgement to determine the investment component for each contract considering the extent to

which insurance and investment components are highly interrelated or not applying factors such as: whether the policyholder is able to

benefit from one component unless the other component is present; and whether the value of the investment component is dependent

on the timing of the insured event. The value of the non-distinct investment component is determined on the following bases: for

immediate annuities, full claim amount when within the guaranteed period; for unit-linked and With-Profits contracts, policyholder's

account value

The general insurance business issues only insurance contracts.

**(1)Life insurance business**

**Recognition**

The Group aggregates insurance and participating investment contracts into portfolios of contracts subject to similar risks and managed

together. Each portfolio of insurance contracts is divided into annual cohorts (by year of issue). Annual cohorts are divided into groups of

insurance and participating investment contracts based on profitability expectations at initial recognition. The directly attributable costs of

selling, underwriting and starting a group of insurance and participating investment contracts are allocated to the group of insurance and

participating investment contracts using a systematic and rational method.

On initial recognition, a group of insurance and participating investment contracts is measured as the total of the fulfilment cash flows and

the contractual service margin (CSM). The measurement includes all future cash flows that are within the contract boundary of each

contract in the group. The fulfilment cash flows comprise unbiased and probability-weighted estimates of future cash flows, discounted to

present value to reflect the time value of money and financial risks, plus an explicit risk adjustment for non-financial risk. The discount rate

applied reflects the time value of money, the characteristics of the cash flows, the liquidity characteristics of the insurance and

participating investment contracts and, where appropriate, is consistent with observable current market prices. The risk adjustment for

non-financial risk for a group of insurance and participating investment contracts is the compensation required for bearing the uncertainty

about the amount and timing of the cash flows that arises from non-financial risk. Diversification benefit is calculated based on Group level

diversification of risks. To determine the risk adjustments for non-financial risk for reinsurance contracts, the Group applies these

techniques both gross and net of excess of loss reinsurance and derives the amount of risk being transferred to the reinsurer as the

difference between the two results. The CSM of a group of insurance and participating investment contracts represents the unearned profit

that the Group expects to recognise as it provides insurance contract services under those contracts in the future. The Group's policy is to

include all insurance finance income and expenses in profit or loss.

**Contract boundaries**

The measurement of a group of contracts includes all future cash flows within the boundary of each contract in the group.

Cash flows are within the contract boundary:

• For an insurance contract, if arising from substantive rights and obligations that exist during the reporting period in which the Group can

compel the policyholder to pay premiums or has a substantive obligation to provide insurance contract services

• For a participating investment contract, if resulting from a substantive obligation of the Group to deliver cash at a present or future date

A substantive obligation to provide insurance contract services ends when the Group has the practical ability to reassess the risks of the

particular policyholder, and can set a price or level of benefits that fully reflects those reassessed risks; or the Group has the practical ability

to reassess the risks of the portfolio that contains the contract and can set a price or level of benefits that fully reflects the risks of that

portfolio, and the pricing of the premiums up to the reassessment date does not take into account risks that relate to periods after the

reassessment date.

For certain unitised With-Profits and unit-linked policies, a guaranteed minimum pension is payable at a vesting date. For certain

conventional With-Profits pensions, policyholders have the option to convert to an annuity on guaranteed terms. There is no contract

boundary at the vesting date of these policies; the pre and post vesting date phases are treated as a single insurance contract.

The contract boundary of each group is reassessed at the end of each reporting period.

**Measurement**

The carrying amount of a group of insurance and participating investment contracts at each reporting date is the sum of the liability for

remaining coverage (LRC) and the liability for incurred claims (LIC). The LRC comprises the fulfilment cash flows that relate to services that

will be provided under the contracts in future periods and any remaining CSM at that date. The LIC includes the fulfilment cash flows for

incurred claims and expenses that have not yet been paid, including claims that have been incurred but not yet reported. The fulfilment

cash flows of groups of insurance and participating investment contracts are measured at the reporting date using current estimates of

future cash flows, current discount rates and current estimates of the risk adjustment for non-financial risk. Changes in fulfilment cash flows

are recognised as follows:

• Changes related to future service are adjusted against the CSM unless the group is onerous in which case such changes are recognised in

the insurance service result in profit or loss

• Changes related to past or current service are recognised in the insurance service result in profit or loss

• The effects of the time value of money and financial risk are recognised as net finance income or expense from insurance, participating

investment and reinsurance contracts in profit or loss

The carrying amount of the CSM is remeasured at the end of each reporting period. For contracts measured under the GMM, interest is

accreted on the carrying amount of the CSM using the discount rate curve determined at the date of initial recognition of the group of

contracts. The CSM is also adjusted for the changes in fulfilment cash flows relating to future service at the locked-in discount rates

determined at initial recognition, unless the increases in fulfilment cash flows cause a group of contracts to become onerous or decreases in

fulfilment cash flows are allocated to the loss component of the liability for remaining coverage.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 2: Accounting policies** continued

The majority of the Group's With-Profits and unit-linked insurance and participating investment contracts are direct participating contracts

under which the Group's obligation to the policyholder is the payment of an amount equal to the fair value of the underlying items, less a

variable fee. On subsequent remeasurement of a group of direct participating contracts (measured under VFA), changes to the fulfilment

cash flows, discounted at current rates, reflecting changes in the obligation to pay the policyholder an amount equal to the fair value of the

underlying items are recognised in the income statement, within net finance income or expense from insurance, participating investment

and reinsurance contracts. The CSM is adjusted for changes in the amount of the Group's share of the fair value of the underlying items,

which relate to future services, except where such changes result in recognition or reversal of the loss component for onerous groups, or

where the Group applies the risk mitigation option. For certain contracts with direct participation features, the Group mitigates financial

risks using equity and currency hedges. The Group does not adjust the CSM for changes in the fulfilment cash flows and/or entity's share of

the underlying items that reflect some of the changes in the effect of time value of money and financial risk. These amounts are instead

reflected in profit or loss. The CSM is also adjusted for those fulfilment cash flows that do not vary based on the returns on underlying items

that relate to future service (including the effect of time value of money and financial risks not arising from underlying items, such as the

impact of minimum return guarantees), except where such changes result in recognition or reversal of the loss component for onerous

groups. Changes in fulfilment cash flows relating to future service adjust the CSM using current discount rates.

For contracts measured under the GMM or VFA at the end of each reporting period the appropriate proportion of the CSM is recognised in

the income statement to reflect the amount of profit related to the insurance contract services provided in the period. This is calculated

using coverage units, a measure used to determine the allocation of the CSM over the remaining coverage periods. The number of coverage

units in a group is the quantity of insurance contract services provided by the contracts in the group, determined by considering for each

contract the quantity of the benefits provided and its expected coverage period.

**Derecognition**

The Group derecognises an insurance and participating investment contract when it is extinguished (that is, when the obligation specified

in the contract expires or is discharged or cancelled) or if its terms are modified in a way that would have changed the accounting for the

contract significantly had the new terms always existed.

If a contract is derecognised, then the fulfilment cash flows of the group are adjusted to eliminate the present value of the future cash flows

and risk adjustment of the contract derecognised from the group, and the CSM of the group is adjusted for the change in fulfilment cash

flows, except where such changes are allocated to the loss component.

If a contract is derecognised because its terms are modified, then the CSM of the existing group is also adjusted for the premium that

would have been charged had the Group entered into a contract with the new contract's terms at the date of modification, less any

additional premium charged for the modification. A new modified contract is recognised assuming the Group received the premium that

would have been charged had the Group entered into a contract with the new contract's terms at the date of the modification.

Where the adjustments to CSM result in the CSM being reduced to nil, any further adjustments are recognised in the income statement in

insurance service expense.

**(2)General insurance contracts**

General insurance contracts issued by the Group are presented on the balance sheet within liabilities arising from insurance and

participating investment contracts. The Group applies the PAA to the measurement of general insurance contracts, which either have a

coverage period of each contract in the group of one year or less or have an annual re-pricing option.

For a group of general insurance contracts that is not onerous at initial recognition, the Group measures the LRC as any premium received

at initial recognition, less any insurance acquisition cash flows at that date, plus any other asset or liability previously recognised for cash

flows related to the group of contracts that the Group pays or receives before the group of insurance contracts is recognised.

The Group estimates the LIC using the methodology described in the Measurement section for life insurance contracts above.

Where, during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, the Group recognises a

loss in the income statement for the net outflow, resulting in the carrying amount of the liability for the group being equal to the fulfilment

cash flows. A loss component is established by the Group within the LRC for such onerous group.

On subsequent measurement, the Group measures the carrying amount of the LRC at the end of each reporting period as the LRC at the

beginning of the period plus premiums received in the period, less insurance acquisition cash flows, plus any amounts relating to the

amortisation of the insurance acquisition cash flows recognised as an expense in the reporting period for the group, less the amount

recognised as insurance revenue for the services provided in the period. For onerous groups, the LRC is also adjusted for the remeasurement

of the loss component.

**(3)Reinsurance**

(i)Reinsurance contracts issued

Reinsurance contracts issued by the Group (where insurance risk is transferred to the Group) are accounted for under the GMM

as insurance contracts. These contracts are presented within other assets or liabilities arising from insurance and participating

investment contracts.

(ii)Reinsurance contracts held

The classification of contracts entered into by the Group with reinsurers under which the Group is compensated for amounts payable on

one or more other contracts issued by the Group is dependent on whether the contract with the reinsurer transfers significant insurance

risk to the reinsurer. Where the reinsurance contract transfers significant insurance risk (reinsurance contracts held), it is accounted for

under the GMM, as modified for reinsurance contracts held. The Group adjusts the CSM of the group to which a reinsurance contract held

belongs and as a result recognises income, when it recognises a loss on initial recognition of onerous underlying contracts.

Contracts that do not transfer significant insurance risk to the reinsurer are recognised within financial assets at fair value through profit or

loss as they are within a portfolio of financial assets that is managed, and whose performance is evaluated, on a fair value basis. These

contracts, while legally reinsurance contracts, do not meet the definition of a reinsurance contract under IFRS Accounting Standards.

Investment returns (including movements in fair value and investment income) allocated to these contracts are recognised on the face of

the income statement within net trading income.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 2: Accounting policies** continued

**(4)Non-participating investment contracts**

The Group's non-participating investment contracts are primarily unit-linked. These contracts are accounted for under IFRS 9 as financial

liabilities whose value is contractually linked to the fair values of financial assets within the Group's unitised investment funds. The value of

the unit-linked financial liabilities is determined using current unit prices multiplied by the number of units attributed to the contract

holders at the balance sheet date. Their value is never less than the amount payable on surrender, discounted for the required notice period

where applicable. Investment returns (including movements in fair value and investment income) allocated to those contracts are

recognised in the income statement through change in non-participating investment contracts.

Deposits and withdrawals are not accounted for through the income statement but are accounted for directly in the balance sheet as

adjustments to the non-participating investment contract liability.

The Group receives investment management fees in the form of an initial adjustment or charge to the amount invested. These fees are in

respect of services rendered in conjunction with the issue and management of investment contracts where the Group actively manages the

consideration received from its customers to fund a return that is based on the investment profile that the customer selected on

origination of the contract. These services comprise an indeterminate number of acts over the lives of the individual contracts and,

therefore, the Group defers these fees and recognises them over the estimated lives of the contracts, in line with the provision of

investment management services.

Costs which are directly attributable and incremental to securing new non-participating investment contracts are deferred. This asset is

subsequently amortised over the period of the provision of investment management services and its recoverability is reviewed in

circumstances where its carrying amount may not be recoverable. If the asset is greater than its recoverable amount it is written down

immediately through fee and commission expense in the income statement. All other costs are recognised as expenses when incurred.

**(N)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.

**(O)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).

**(P)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.

Where the Company or any member of the Group purchases the Company's share capital, the consideration paid is deducted from

shareholders' equity as treasury shares until they are cancelled; if these shares are subsequently sold or reissued, any consideration received

is included in shareholders' equity.

**(Q)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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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:

• Insurance business (note 8(I))

• Retirement benefit obligations (note 12)

• Tax (note 15)

• Fair value of financial assets and liabilities (note 17(D))

• Allowance for expected credit losses (note 21)

• Provisions (note 28)

**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 [150](#i3eaa7a3e529a46b3b97a88e05ad474bc_529) to [152](#i3eaa7a3e529a46b3b97a88e05ad474bc_532).**

**Note 4: Segmental analysis**

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

The Group Executive Committee (GEC) 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. It considers 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 segmental results and comparatives are presented on an underlying basis (pre-tax), the basis reviewed by the chief operating decision-

maker. The underlying basis is derived from the recognition and measurement principles of the IFRS Accounting Standards with the effects

of the following excluded in arriving at underlying profit:

• Restructuring costs relating to merger, acquisition, integration and disposal activities

• Volatility and other items, which includes the effects of certain asset sales, the volatility relating to the Group's hedging arrangements

and that arising in the insurance businesses, the unwind of acquisition-related fair value adjustments and the amortisation of purchased

intangible assets

Management believes that excluding volatility from underlying profit before tax provides useful information for investors on the

performance of the business because it allows for a comparable representation of the Group's performance by removing the impact of

items caused by market movements outside the control of management.

For the purposes of the underlying income statement, operating lease depreciation (net of gains on disposal of operating lease assets) is

shown as an adjustment to total income.

The Group has three operating and reportable segments: Retail; Commercial Banking; and Insurance, Pensions and Investments:

• 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

• Insurance, Pensions and Investments offers insurance, investment and pension management products and services

Other comprises income and expenditure not attributed to the Group's operating segments. These amounts include those arising from the

Group's equity investment businesses and residual underlying net interest income after transfer pricing.

In 2025, the Group revised its treatment of certain divisional variable payment related costs. Previously reported within divisional operating

costs, these are now included within divisional underlying other income. Comparative figures have been represented on a consistent basis,

with no net impact on segmental profit or loss. Total Group comparatives are unchanged.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 4: Segmental analysis** continued

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 the segmental results.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year ended 31 December 2025** | **Retail**<br>**£m**<br>| **Commercial**<br>**Banking**<br>**£m** | **Insurance,** <br>**Pensions and** <br>**Investments**<br>**£m** | **Other**<br>**£m**<br>| **Total**<br>**£m**<br>|
| Underlying net interest income | **9637** | **3670** | **(151)** | **479** | **13635** |
| Underlying other income | **2636** | **1825** | **1431** | **228** | **6120** |
| **Total underlying income** | **12273** | **5495** | **1280** | **707** | **19755** |
| Operating lease depreciation<sup>1</sup> | **(1445)** | **(9)** | **–** | **–** | **(1454)** |
| **Net income** | **10828** | **5486** | **1280** | **707** | **18301** |
| Operating costs | **(5807)** | **(2853)** | **(933)** | **(168)** | **(9761)** |
| Remediation | **(931)** | **(27)** | **(15)** | **5** | **(968)** |
| **Total costs** | **(6738)** | **(2880)** | **(948)** | **(163)** | **(10729)** |
| Underlying impairment (charge) credit | **(734)** | **(60)** | **(2)** | **1** | **(795)** |
| **Underlying profit before tax** | **3356** | **2546** | **330** | **545** | **6777** |
| External income | **15383** | **3499** | **1436** | **(563)** | **19755** |
| External operating lease depreciation<sup>1</sup> | **(1445)** | **(9)** | **–** | **–** | **(1454)** |
| Inter-segment (expense) income | **(3110)** | **1996** | **(156)** | **1270** | **–** |
| **Net income** | **10828** | **5486** | **1280** | **707** | **18301** |
| **Loans and advances to customers**<sup>2</sup> | **390616** | **90307** | **–** | **540** | **481463** |
| External assets | **404882** | **147186** | **218137** | **173867** | **944072** |
| Customer deposits | **325169** | **171063** | **–** | **225** | **496457** |
| External liabilities | **331244** | **211175** | **213520** | **140266** | **896205** |
| **Analysis of underlying other income:** |  |  |  |  |  |
| Consumer lending | **2075** |  |  |  | **2075** |
| Consumer relationships | **561** |  |  |  | **561** |
| Business and Commercial Banking |  | **543** |  |  | **543** |
| Corporate and Institutional Banking |  | **1282** |  |  | **1282** |
| Life, Pensions and Investments |  |  | **1018** |  | **1018** |
| General insurance |  |  | **277** |  | **277** |
| Venture capital |  |  |  | **462** | **462** |
| Other |  |  | **136** | **(234)** | **(98)** |
| **Underlying other income** | **2636** | **1825** | **1431** | **228** | **6120** |
| **Other items reflected in income statement above:** |  |  |  |  |  |
| Depreciation and amortisation | **2352** | **345** | **193** | **587** | **3477** |
| Defined benefit scheme credit | **–** | **–** | **–** | **(37)** | **(37)** |
| **Non-income statement items:** |  |  |  |  |  |
| Additions to fixed assets | **4173** | **242** | **57** | **1851** | **6323** |
| Investments in joint ventures and associates at end of year | **–** | **–** | **–** | **445** | **445** |

---

1Net of losses on disposal of operating lease assets of £10 million.

2Other includes centralised fair value hedge accounting adjustments.

**Lloyds Banking Group 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>| Insurance, <br>Pensions and <br>Investments<br>£m | Other<br>£m<br>| Total<br>£m<br>|
| Underlying net interest income | 8930 | 3434 | (136) | 617 | 12845 |
| Underlying other income<sup>1</sup> | 2354 | 1815 | 1292 | 136 | 5597 |
| **Total underlying income** | 11284 | 5249 | 1156 | 753 | 18442 |
| Operating lease depreciation<sup>2</sup> | (1319) | (6) | – | – | (1325) |
| **Net income** | 9965 | 5243 | 1156 | 753 | 17117 |
| Operating costs<sup>1</sup> | (5566) | (2752) | (924) | (200) | (9442) |
| Remediation | (750) | (104) | (19) | (26) | (899) |
| **Total costs** | (6316) | (2856) | (943) | (226) | (10341) |
| Underlying impairment (charge) credit | (457) | 14 | 7 | 3 | (433) |
| **Underlying profit before tax** | 3192 | 2401 | 220 | 530 | 6343 |
| External income | 13566 | 3981 | 1292 | (397) | 18442 |
| External operating lease depreciation<sup>2</sup> | (1319) | (6) | – | – | (1325) |
| Inter-segment (expense) income | (2282) | 1268 | (136) | 1150 | – |
| **Net income** | 9965 | 5243 | 1156 | 753 | 17117 |
| Loans and advances to customers<sup>3</sup> | 372250 | 87602 | – | 5 | 459857 |
| External assets<sup>4</sup> | 387322 | 148548 | 197309 | 173518 | 906697 |
| Customer deposits | 319726 | 162645 | – | 374 | 482745 |
| External liabilities<sup>4</sup> | 324730 | 207066 | 193519 | 135494 | 860809 |
| **Analysis of underlying other income:** |  |  |  |  |  |
| Consumer lending | 1810 |  |  |  | 1810 |
| Consumer relationships | 544 |  |  |  | 544 |
| Business and Commercial Banking |  | 533 |  |  | 533 |
| Corporate and Institutional Banking |  | 1282 |  |  | 1282 |
| Life, Pensions and Investments |  |  | 979 |  | 979 |
| General insurance |  |  | 229 |  | 229 |
| Venture capital |  |  |  | 457 | 457 |
| Other |  |  | 84 | (321) | (237) |
| **Underlying other income** | 2354 | 1815 | 1292 | 136 | 5597 |
| **Other items reflected in income statement above:** |  |  |  |  |  |
| Depreciation and amortisation | 2303 | 338 | 229 | 556 | 3426 |
| Defined benefit scheme charge (credit) | 7 | 2 | 3 | (23) | (11) |
| **Non-income statement items:** |  |  |  |  |  |
| Additions to fixed assets | 3485 | 107 | 75 | 1956 | 5623 |
| Investments in joint ventures and associates at end of year | – | – | – | 542 | 542 |

---

1In 2025, the Group revised its treatment of certain divisional variable payment related costs. Previously reported within divisional operating costs, these are now included within

divisional underlying other income. Comparative figures have been represented on a consistent basis, with no net impact on segmental profit or loss. Total Group comparatives are

unchanged.

2Net of profits on disposal of operating lease assets of £59 million.

3Other includes centralised fair value hedge accounting adjustments.

4The Insurance, Pensions and Investments operating segment external assets included £5,122 million of disposal group assets and external liabilities included £5,268 million of disposal

group liabilities. Further details are provided in note24 and note 27.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 4: Segmental analysis** continued

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Year ended 31 December 2023 | Retail<br>£m<br>| Commercial<br>Banking<br>£m<br>| Insurance, <br>Pensions and <br>Investments<br>£m | Other<br>£m<br>| Total<br>£m<br>|
| Underlying net interest income | 9647 | 3799 | (132) | 451 | 13765 |
| Underlying other income | 2159 | 1691 | 1209 | 64 | 5123 |
| **Total underlying income** | 11806 | 5490 | 1077 | 515 | 18888 |
| Operating lease depreciation<sup>1</sup> | (948) | (8) | – | – | (956) |
| **Net income** | 10858 | 5482 | 1077 | 515 | 17932 |
| Operating costs | (5469) | (2647) | (880) | (144) | (9140) |
| Remediation | (515) | (127) | (14) | (19) | (675) |
| **Total costs** | (5984) | (2774) | (894) | (163) | (9815) |
| Underlying impairment (charge) credit | (831) | 511 | 7 | 5 | (308) |
| **Underlying profit before tax** | 4043 | 3219 | 190 | 357 | 7809 |
| External income | 12803 | 4570 | 1221 | 294 | 18888 |
| External operating lease depreciation<sup>1</sup> | (948) | (8) | – | – | (956) |
| Inter-segment (expense) income | (997) | 920 | (144) | 221 | – |
| **Net income** | 10858 | 5482 | 1077 | 515 | 17932 |
| Loans and advances to customers<sup>2</sup> | 361181 | 88606 | – | (42) | 449745 |
| External assets | 376789 | 150834 | 184267 | 169563 | 881453 |
| Customer deposits | 308441 | 162752 | – | 203 | 471396 |
| External liabilities | 313244 | 204815 | 179962 | 136067 | 834088 |
| **Analysis of underlying other income:** |  |  |  |  |  |
| Consumer lending | 1553 |  |  |  | 1553 |
| Consumer relationships | 606 |  |  |  | 606 |
| Business and Commercial Banking |  | 514 |  |  | 514 |
| Corporate and Institutional Banking |  | 1177 |  |  | 1177 |
| Life, Pensions and Investments |  |  | 966 |  | 966 |
| General insurance |  |  | 171 |  | 171 |
| Venture capital |  |  |  | 448 | 448 |
| Other |  |  | 72 | (384) | (312) |
| **Underlying other income** | 2159 | 1691 | 1209 | 64 | 5123 |
| **Other items reflected in income statement above:** |  |  |  |  |  |
| Depreciation and amortisation | 1927 | 410 | 201 | 367 | 2905 |
| Defined benefit scheme charge (credit) | 53 | 21 | 6 | (159) | (79) |
| **Non-income statement items:** |  |  |  |  |  |
| Additions to fixed assets | 3294 | 88 | 80 | 1993 | 5455 |
| Investments in joint ventures and associates at end of year | – | – | – | 401 | 401 |

---

1Net of profits on disposal of operating lease assets of £93 million.

2Other includes centralised fair value hedge accounting adjustments.

**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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 4: Segmental analysis** continued

**Reconciliation of underlying basis to statutory basis**

The underlying basis is the basis on which financial information is presented to the chief operating decision-maker which excludes certain

items included in the statutory results. The table below reconciles the statutory results to the underlying basis.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Removal of:** | **Removal of:** |  |  |
| **Year ended 31 December 2025** | **Lloyds**<br>**Banking Group**<br>**statutory basis**<br>**£m**<br>| **Volatility,**<br>**and other**<br>**items**<sup>1</sup><br>**£m**<br>| **Insurance**<br>**gross up**<sup>2</sup><br>**£m**<br>| **Underlying**<br>**basis**<br>**£m**<br>|  |
| Net interest income | **13230** | **403** | **2** | **13635** | Underlying net interest income |
| Other income | **6192** | **(326)** | **254** | **6120** | Underlying other income |
|  |  | **(1454)** | **–** | **(1454)** | Operating lease depreciation<sup>3</sup> |
| **Total income** | **19422** | **(1377)** | **256** | **18301** | **Net income** |
| Operating expenses<sup>3</sup> | **(11966)** | **1493** | **(256)** | **(10729)** | Total costs |
| Impairment charge | **(795)** | **–** | **–** | **(795)** | Underlying impairment charge |
| **Profit before tax** | **6661** | **116** | **–** | **6777** | **Underlying profit** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Removal of: | Removal of: |  |  |
| Year ended 31 December 2024 | Lloyds<br>Banking Group<br>statutory basis<br>£m | Volatility,<br>and other<br>items<sup>1</sup><br>£m<br>| Insurance<br>gross up<sup>2</sup><br>£m<br>| Underlying<br>basis<br>£m<br>|  |
| Net interest income | 12277 | 578 | (10) | 12845 | Underlying net interest income |
| Other income | 5726 | (375) | 246 | 5597 | Underlying other income |
|  |  | (1325) | – | (1325) | Operating lease depreciation<sup>3</sup> |
| **Total income** | 18003 | (1122) | 236 | 17117 | **Net income** |
| Operating expenses<sup>3</sup> | (11601) | 1496 | (236) | (10341) | Total costs |
| Impairment charge | (431) | (2) | – | (433) | Underlying impairment charge |
| **Profit before tax** | 5971 | 372 | – | 6343 | **Underlying profit** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Removal of: | Removal of: |  |  |
| Year ended 31 December 2023 | Lloyds<br>Banking Group<br>statutory basis<br>£m | Volatility,<br>and other<br>items<sup>1</sup><br>£m<br>| Insurance<br>gross up<sup>2</sup><br>£m<br>| Underlying<br>basis<br>£m<br>|  |
| Net interest income | 13298 | 479 | (12) | 13765 | Underlying net interest income |
| Other income | 5331 | (447) | 239 | 5123 | Underlying other income |
|  |  | (956) | – | (956) | Operating lease depreciation<sup>3</sup> |
| **Total income** | 18629 | (924) | 227 | 17932 | **Net income** |
| Operating expenses<sup>3</sup> | (10823) | 1235 | (227) | (9815) | Total costs |
| Impairment charge | (303) | (5) | – | (308) | Underlying impairment charge |
| **Profit before tax** | 7503 | 306 | – | 7809 | **Underlying profit** |

---

1In the year ended 31 December 2025 this comprises the effects of market and other volatility (gain of £72 million, 2024: losses of £144 million, 2023: gain of £35 million); the

amortisation of purchased intangibles (£86 million, 2024: £81 million, 2023: £80 million); restructuring (£46 million of merger, acquisition and integration costs, 2024: £40 million, 2023:

£154 million); and the fair value unwind (losses of £56 million, 2024: losses of £107 million, 2023: losses of £107 million).

2Under IFRS 17, expenses which are directly associated with the fulfilment of insurance contracts are reported as part of the insurance service result within statutory other income. On

an underlying basis these expenses remain within costs.

3Net of losses on disposal of operating lease assets of £10 million (2024: profit of £59 million; 2023: profit of £93million). Statutory operating expenses includes operating lease

depreciation. On an underlying basis operating lease depreciation is included in net income.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 5: Net interest income**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Interest income: |  |  |  |
| Loans and advances to banks | **2657** | 3508 | 4172 |
| Loans and advances to customers | **23756** | 23242 | 20419 |
| Reverse repurchase agreements | **2336** | 2685 | 2044 |
| Debt securities | **658** | 779 | 559 |
| Financial assets held at amortised cost | **29407** | 30214 | 27194 |
| Financial assets at fair value through other comprehensive income | **1342** | 1074 | 857 |
| **Total interest income**<sup>1</sup> | **30749** | 31288 | 28051 |
| Interest expense: |  |  |  |
| Deposits from banks | **(244)** | (225) | (213) |
| Customer deposits | **(9257)** | (10132) | (7148) |
| Repurchase agreements at amortised cost | **(1984)** | (2392) | (2397) |
| Debt securities in issue at amortised cost<sup>2</sup> | **(5299)** | (5493) | (4253) |
| Lease liabilities | **(28)** | (31) | (30) |
| Subordinated liabilities | **(707)** | (738) | (712) |
| **Total interest expense** | **(17519)** | (19011) | (14753) |
| **Net interest income** | **13230** | 12277 | 13298 |

---

1Includes £1,213 million (2024: £1,104 million; 2023: £923 million) in respect of finance lease receivables.

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

Net interest income includes a debit of £1,869 million (2024: debit of £2,597 million; 2023: debit of £1,838 million) transferred from the

cash flow hedge reserve (see statement of comprehensive income).

**Note 6: Net fee and commission income**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year ended 31 December 2025** | **Retail**<br>**£m**<br>| **Commercial**<br>**Banking**<br>**£m** | **Insurance,** <br>**Pensions and** <br>**Investments**<br>**£m** | **Other**<br>**£m**<br>| **Total**<br>**£m**<br>|
| Fee and commission income: |  |  |  |  |  |
| Current accounts | **430** | **243** | **–** | **–** | **673** |
| Credit and debit card fees | **845** | **479** | **–** | **–** | **1324** |
| Commercial banking and treasury fees | **–** | **434** | **–** | **–** | **434** |
| Unit trust and insurance broking | **–** | **–** | **65** | **–** | **65** |
| Factoring | **–** | **66** | **–** | **–** | **66** |
| Other fees and commissions | **80** | **130** | **332** | **14** | **556** |
| Total fee and commission income | **1355** | **1352** | **397** | **14** | **3118** |
| Fee and commission expense | **(811)** | **(363)** | **(144)** | **(16)** | **(1334)** |
| **Net fee and commission income** | **544** | **989** | **253** | **(2)** | **1784** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Year ended 31 December 2024 | Retail<br>£m<br>| Commercial<br>Banking<br>£m | Insurance, <br>Pensions and <br>Investments<br>£m | Other<br>£m<br>| Total<br>£m<br>|
| Fee and commission income: |  |  |  |  |  |
| Current accounts | 423 | 221 | – | – | 644 |
| Credit and debit card fees | 829 | 457 | – | – | 1286 |
| Commercial banking and treasury fees | – | 372 | – | 1 | 373 |
| Unit trust and insurance broking | – | – | 71 | – | 71 |
| Factoring | – | 69 | – | – | 69 |
| Other fees and commissions | 74 | 148 | 261 | 17 | 500 |
| Total fee and commission income | 1326 | 1267 | 332 | 18 | 2943 |
| Fee and commission expense | (745) | (334) | (89) | (16) | (1184) |
| **Net fee and commission income** | 581 | 933 | 243 | 2 | 1759 |

---

**Lloyds Banking Group 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** continued

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Year ended 31 December 2023 | Retail<br>£m<br>| Commercial<br>Banking<br>£m | Insurance, <br>Pensions and <br>Investments<br>£m | Other<br>£m<br>| Total<br>£m<br>|
| Fee and commission income: |  |  |  |  |  |
| Current accounts | 406 | 218 | – | – | 624 |
| Credit and debit card fees | 800 | 464 | – | – | 1264 |
| Commercial banking and treasury fees | – | 334 | – | – | 334 |
| Unit trust and insurance broking | – | – | 69 | – | 69 |
| Factoring | – | 75 | – | – | 75 |
| Other fees and commissions | 85 | 186 | 264 | 25 | 560 |
| Total fee and commission income | 1291 | 1277 | 333 | 25 | 2926 |
| Fee and commission expense | (673) | (322) | (84) | (16) | (1095) |
| **Net fee and commission income** | 618 | 955 | 249 | 9 | 1831 |

---

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

note7.

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 £174 million (31 December 2024: £163 million) in respect of services provided to

customers and £92 million (31 December 2024: £75 million) in respect of amounts received from customers for services to be provided after

the balance sheet date. Current unsatisfied performance obligations amount to £207 million (31 December 2024: £195 million); the Group

expects to receive substantially all of this revenue by the end of 2027.

Income recognised during the year included £30 million (2024: £28 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.

**Note 7: Net trading income**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<sup>1</sup><br>£m<br>| 2023<sup>1</sup><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>2</sup> | **716** | 778 | 518 |
| Net gains on other financial instruments mandatorily held at fair value through profit or loss | **555** | 662 | 561 |
| Net losses on financial liabilities designated at fair value through profit or loss | **(252)** | (336) | (341) |
|  | **1019** | 1104 | 738 |
| Foreign exchange | **411** | 687 | 585 |
| Investment property gains (losses) | **55** | 21 | (16) |
| **Net trading income** | **1485** | 1812 | 1307 |

---

1Comparative periods have been represented for presentational changes. See note 1.

2Includes hedge ineffectiveness in respect of fair value hedges (2025: loss of £54 million; 2024: loss of £81 million; 2023: loss of £267 million) and cash flow hedges (2025: gain of

£54 million; 2024: loss of £60 million; 2023: gain of £19 million).

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 8: Insurance business**

**(A)Insurance service result**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| **Insurance revenue** |  |  |  |
| Amounts relating to the changes in liabilities for remaining coverage: |  |  |  |
| CSM recognised for services provided | **590** | 449 | 329 |
| Change in risk adjustments for non-financial risk for risk expired | **49** | 58 | 84 |
| Expected claims and other insurance service expenses | **1730** | 1916 | 1907 |
| Charges to funds in respect of policyholder tax and other | **200** | 108 | 87 |
|  | **2569** | 2531 | 2407 |
| Recovery of insurance acquisition cash flows | **117** | 105 | 87 |
| Total life | **2686** | 2636 | 2494 |
| Total non-life | **752** | 655 | 514 |
| **Total insurance revenue** | **3438** | 3291 | 3008 |
| **Insurance service expense** |  |  |  |
| Incurred claims and other insurance service expenses | **(1749)** | (1978) | (1897) |
| Changes that relate to past service: adjustment to liabilities for incurred claims | **–** | (4) | – |
| Changes that relate to future service: (losses) reversal of losses on onerous contracts | **(84)** | (72) | 58 |
| Amortisation of insurance acquisition cash flows | **(117)** | (105) | (88) |
| Total life excluding net impairment loss on insurance acquisition assets | **(1950)** | (2159) | (1927) |
| Net impairment loss on insurance acquisition assets | **–** | (9) | (7) |
| Total life | **(1950)** | (2168) | (1934) |
| Total non-life<sup>1</sup> | **(593)** | (565) | (480) |
| **Total insurance service expense** | **(2543)** | (2733) | (2414) |
| **Net (expense) income from reinsurance contracts held** | **(139)** | (72) | 2 |
| **Insurance service result** | **756** | 486 | 596 |

---

1Includes weather-related claims of £111 million (2024: £82 million; 2023: £57 million), of which £97million (2024: £64 million; 2023: £51 million) was related to severe weather events.

**(B)Net investment return on assets held to back insurance and investment contracts and net insurance finance (expense)** 

**income arising from insurance and investment contracts**

The following table shows the net investment return on assets held to back insurance and participating investment contracts and the net

finance expense arising from insurance, participating investment and reinsurance contracts, as required by IFRS 17. For completeness, the

net investment return on assets held to back third party interests in consolidated funds and non-participating investment contracts and

the related finance expense is also shown. These contracts are accounted for under IFRS 9.

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** |
|  | **Life**<br>**£m**<br>| **Non-life**<br>**£m**<br>| **Total**<br>**£m**<br>|
| Net gains on financial assets and liabilities at fair value through profit or loss | **15408** | **34** | **15442** |
| Foreign exchange | **(42)** | **–** | **(42)** |
| Investment property losses | **(4)** | **–** | **(4)** |
| **Net investment return on assets held to back insurance and participating investment contracts** | **15362** | **34** | **15396** |
| Net investment return on assets held to back third party interests in consolidated funds |  |  | **2054** |
| Net investment return on assets held to back non-participating investment contracts |  |  | **6394** |
| **Investment return on assets held to back insurance and investment contracts**<sup>1</sup> |  |  | **23844** |
| Changes in fair value of underlying items of direct participating contracts | **(14943)** | **–** | **(14943)** |
| Effects of risk mitigation option | **174** | **–** | **174** |
| Interest accreted | **(701)** | **(14)** | **(715)** |
| Effect of changes in interest rates and other financial assumptions | **64** | **–** | **64** |
| Effect of changes in fulfilment cash flows at current rates when CSM is unlocked at locked-in rates | **69** | **–** | **69** |
| Net finance expense from insurance and participating investment contracts | **(15337)** | **(14)** | **(15351)** |
| Net finance income from reinsurance contracts held | **54** | **–** | **54** |
| **Net finance expense from insurance, participating investment and reinsurance contracts** | **(15283)** | **(14)** | **(15297)** |
| Movement in third party interests in consolidated funds |  |  | **(1954)** |
| Change in non-participating investment contracts |  |  | **(6793)** |
| **Net finance expense arising from insurance and investment contracts** |  |  | **(24044)** |
| **Net investment return and finance result in respect of insurance and investment contracts** |  |  | **(200)** |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 8: Insurance business** continued

---

| | | | |
|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 |
|  | Life<br>£m<br>| Non-life<br>£m<br>| Total<br>£m<br>|
| Net gains on financial assets and liabilities at fair value through profit or loss | 10247 | 38 | 10285 |
| Foreign exchange | 196 | – | 196 |
| Investment property losses | (4) | – | (4) |
| **Net investment return on assets held to back insurance and participating investment contracts** | 10439 | 38 | 10477 |
| Net investment return on assets held to back third party interests in consolidated funds |  |  | 1105 |
| Net investment return on assets held to back non-participating investment contracts |  |  | 4431 |
| **Net investment return on assets held to back insurance and investment contracts**<sup>1</sup> |  |  | 16013 |
| Changes in fair value of underlying items of direct participating contracts | (10844) | – | (10844) |
| Effects of risk mitigation option | 161 | – | 161 |
| Interest accreted | (839) | (7) | (846) |
| Effect of changes in interest rates and other financial assumptions | 1001 | – | 1001 |
| Effect of changes in fulfilment cash flows at current rates when CSM is unlocked at locked-in rates | 140 | – | 140 |
| Net finance expense from insurance and participating investment contracts | (10381) | (7) | (10388) |
| Net finance income from reinsurance contracts held | 47 | – | 47 |
| **Net finance expense from insurance, participating investment and reinsurance contracts** | (10334) | (7) | (10341) |
| Movement in third party interests in consolidated funds |  |  | (1059) |
| Change in non-participating investment contracts |  |  | (4878) |
| **Net finance expense arising from insurance and investment contracts** |  |  | (16278) |
| **Net investment return and finance result in respect of insurance and investment contracts** |  |  | (265) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | 2023 | 2023 | 2023 |
|  | Life<br>£m<br>| Non-life<br>£m<br>| Total<br>£m<br>|
| Net gains on financial assets and liabilities at fair value through profit or loss | 11218 | 35 | 11253 |
| Foreign exchange | 542 | – | 542 |
| Investment property losses | (4) | – | (4) |
| **Net investment return on assets held to back insurance and participating investment contracts** | 11756 | 35 | 11791 |
| Net investment return on assets held to back third party interests in consolidated funds |  |  | 1179 |
| Net investment return on assets held to back non-participating investment contracts |  |  | 3772 |
| **Net investment return on assets held to back insurance and investment contracts**<sup>1</sup> |  |  | 16742 |
| Changes in fair value of underlying items of direct participating contracts | (10293) | – | (10293) |
| Effects of risk mitigation option | 172 | – | 172 |
| Interest accreted | (874) | (6) | (880) |
| Effect of changes in interest rates and other financial assumptions | (654) | – | (654) |
| Effect of changes in fulfilment cash flows at current rates when CSM is unlocked at locked-in rates | (80) | – | (80) |
| Net finance expense from insurance and participating investment contracts | (11729) | (6) | (11735) |
| Net finance expense from reinsurance contracts held | 51 | – | 51 |
| **Net finance expense from insurance, participating investment and reinsurance contracts** | (11678) | (6) | (11684) |
| Movement in third party interests in consolidated funds |  |  | (1109) |
| Change in non-participating investment contracts |  |  | (3983) |
| **Net finance income arising from insurance and investment contracts** |  |  | (16776) |
| **Net investment return and finance result in respect of insurance and investment contracts** |  |  | (34) |

---

1Includes income of £15,009 million (2024: income of £10,688 million; 2023: income of £10,200 million) in respect of unit-linked and with-profit contracts measured applying the

variable fee approach. The assets generating the investment return held to back insurance and investment contracts are carried at fair value on the Group's balance sheet.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 8: Insurance business** continued

**(C)Insurance and participating investment contracts assets and liabilities**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Life**<br>**£m**<br>| **Non-life**<br>**£m**<br>| **Total**<br>**£m**<br>| Life<br>£m<br>| Non-life<br>£m<br>| Total<br>£m<br>|
| Insurance contract assets | **113** | **–** | **113** | – | – | – |
| Liabilities arising from insurance and participating investment <br>contracts<sup>1</sup><br>| **(134906)** | **(412)** | **(135318)** | (121700) | (387) | (122087) |
| Other liabilities<sup>2</sup> | **–** | **–** | **–** | (5268) | – | (5268) |
| Net liability | **(134793)** | **(412)** | **(135205)** | (126968) | (387) | (127355) |
| Insurance acquisition assets | **–** | **34** | **34** | – | 23 | 23 |
| **Insurance and participating investment contacts net liability** | **(134793)** | **(378)** | **(135171)** | (126968) | (364) | (127332) |

---

1Excluding insurance acquisition assets.

2Liabilities arising from insurance contracts relating to the disposal of the Group's bulk annuity business were classified as disposal group liabilities in 2024 and presented in Other

liabilities in note 27.

On 13 March 2024, the Group entered into a business transfer agreement with Rothesay Life plc for the sale of the Group's bulk annuity

business and to pursue the transfer of associated business assets and assumed liabilities under Part VII of the Financial Services and Markets

Act 2000. A reinsurance agreement between the Group and Rothesay Life plc was signed on 30 April 2024 to materially de-risk the Group's

bulk annuity portfolio. The Part VII transfer was completed in June 2025 and associated reinsurance agreements were concluded.

At 31 December 2024, the Group presented the assets and liabilities relating to the bulk annuity business, including the reinsurance

contract assets arising from the agreement between the Group and Rothesay Life plc, as a disposal group. At the Part VII transfer date, the

Group derecognised the assets and liabilities of the disposal group, comprising £4.9 billion of reinsurance contract assets, £5.1 billion of

insurance contract liabilities, £50 million of goodwill and a £9 million deferred tax asset. Following the derecognition requirements in IFRS

17 for transfers of contracts to a third party, the Group recognised £179 million in insurance revenue, representing the release of CSM for

future service at the transfer date. The derecognition of the goodwill and deferred tax asset was charged to other operating income. The

overall pre-tax gain on derecognition of the disposal group was £120 million.

Of the fair value of underlying items in respect of direct participating contracts of £121,347 million (2024: £110,045 million), £122,685 million

(2024: £111,435 million) were financial assets at fair value through profit or loss and £902 million (2024: £1,125 million) were derivative

financial liabilities.

**(D)Reconciliation of insurance balances for liability for remaining coverage and liability for incurred claims**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
|  | **Liabilities for**<br>**remaining coverage** | **Liabilities for**<br>**remaining coverage** | **Liability for**<br>**incurred**<br>**claims**<br>**£m** |  | Liabilities for<br>remaining coverage | Liabilities for<br>remaining coverage | Liability for<br>incurred<br>claims<br>£m |  |
| **Life** | **Excluding loss**<br>**component**<br>**£m**<br>| **Loss**<br>**component**<br>**£m**<br>| **Liability for**<br>**incurred**<br>**claims**<br>**£m** | **Total**<br>**£m**<br>| Excluding loss<br>component<br>£m<br>| Loss<br>component<br>£m<br>| Liability for<br>incurred<br>claims<br>£m | Total<br>£m<br>|
| **Net liability at 1 January**<sup>1</sup> | **(125854)** | **(515)** | **(599)** | **(126968)** | (118724) | (466) | (593) | (119783) |
| Contracts under the fair value <br>transition approach<br>| **1651** | **–** | **–** | **1651** | 1498 | – | – | 1498 |
| Other contracts | **1035** | **–** | **–** | **1035** | 1138 | – | – | 1138 |
| Insurance revenue | **2686** | **–** | **–** | **2686** | 2636 | – | – | 2636 |
| Insurance service expenses<sup>2</sup> | **(120)** | **(40)** | **(1790)** | **(1950)** | (105) | (44) | (2010) | (2159) |
| Insurance service result | **2566** | **(40)** | **(1790)** | **736** | 2531 | (44) | (2010) | 477 |
| Net finance expense from <br>insurance and participating <br>investment contracts<br>| **(15313)** | **(19)** | **(5)** | **(15337)** | (10371) | (5) | (5) | (10381) |
| Exchange differences | **(84)** | **–** | **–** | **(84)** | 80 | – | – | 80 |
| **Total change in profit or loss** | **(12831)** | **(59)** | **(1795)** | **(14685)** | (7760) | (49) | (2015) | (9824) |
| **Investment components** | **10411** | **–** | **(10411)** | **–** | 10205 | – | (10205) | – |
| Premiums received | **(10618)** | **–** | **–** | **(10618)** | (10679) | – | – | (10679) |
| Claims and other insurance <br>service expenses paid<br>| **–** | **–** | **12240** | **12240** | 849 | – | 12214 | 13063 |
| Insurance acquisition cash flows | **306** | **–** | **–** | **306** | 265 | – | – | 265 |
| **Cash flows** | **(10312)** | **–** | **12240** | **1928** | (9565) | – | 12214 | 2649 |
| **Derecognition Consideration**<sup>3</sup> | **4932** | **–** | **–** | **4932** | – | – | – | – |
| **Transfer to other items in the** <br>**balance sheet**<br>| **–** | **–** | **–** | **–** | (10) | – | – | (10) |
| **Net liability at 31 December**<sup>1</sup> | **(133654)** | **(574)** | **(565)** | **(134793)** | (125854) | (515) | (599) | (126968) |

---

1Excluding insurance acquisition assets.

2Losses and reversal of losses on onerous contracts amounted to a net loss of £84 million (2024: net losses of £72 million). Amortisation of insurance acquisition cash flows amounted to

£117 million (2024: £105million).

3Derecognition consideration recognised due to transfer of bulk annuity business to Rothesay, as set out in section (C).

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 8: Insurance business** continued

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
|  |  | **Liabilities for**<br>**remaining coverage** | **Liabilities for**<br>**remaining coverage** | **Liability for**<br>**incurred**<br>**claims**<br>**£m** |  | Liabilities for<br>remaining coverage | Liabilities for<br>remaining coverage | Liability for<br>incurred<br>claims<br>£m |  |
| **Non-life** | **Excluding loss**<br>**component**<br>**£m** | **Excluding loss**<br>**component**<br>**£m** | **Loss**<br>**component**<br>**£m**<br>| **Liability for**<br>**incurred**<br>**claims**<br>**£m** | **Total**<br>**£m**<br>| Excluding loss<br>component<br>£m<br>| Loss<br>component<br>£m<br>| Liability for<br>incurred<br>claims<br>£m | Total<br>£m<br>|
| **Net liability at 1 January**<sup>1</sup> |  | **(32)** | **–** | **(355)** | **(387)** | (25) | – | (339) | (364) |
| Contracts under the fair value <br>transition approach<br>|  | **–** | **–** | **–** | **–** | – | – | – | – |
| Other contracts |  | **752** | **–** | **–** | **752** | 655 | – | – | 655 |
| Insurance revenue |  | **752** | **–** | **–** | **752** | 655 | – | – | 655 |
| Insurance service expenses<sup>2</sup> |  | **(31)** | **–** | **(562)** | **(593)** | (32) | – | (533) | (565) |
| Insurance service result |  | **721** | **–** | **(562)** | **159** | 623 | – | (533) | 90 |
| Net finance income (expense) <br>from insurance and participating <br>investment contracts<br>|  | **–** | **–** | **(14)** | **(14)** | – | – | (7) | (7) |
| **Total change in profit or loss** |  | **721** | **–** | **(576)** | **145** | 623 | – | (540) | 83 |
| Premiums received |  | **(744)** | **–** | **–** | **(744)** | (659) | – | – | (659) |
| Claims and other insurance <br>service expenses paid<br>|  | **–** | **–** | **540** | **540** | – | – | 524 | 524 |
| Insurance acquisition cash flows | Insurance acquisition cash flows | **34** | **–** | **–** | **34** | 29 | – | – | 29 |
| **Cash flows** |  | **(710)** | **–** | **540** | **(170)** | (630) | – | 524 | (106) |
| **Net liability at 31 December**<sup>1</sup> |  | **(21)** | **–** | **(391)** | **(412)** | (32) | – | (355) | (387) |

---

1Excluding insurance acquisition assets.

2Losses and reversal of losses on onerous contracts amounted to £nil (2024: £nil). Amortisation of insurance acquisition cash flows amounted to £31 million (2024: £32 million).

**(E)Summary of contractual service margin and risk adjustment**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
|  | **Life**<br>**£m**<br>| **Non-life**<br>**£m**<br>| **Total**<br>**£m**<br>| Life<br>£m<br>| Non-life<br>£m<br>| Total<br>£m<br>|
| CSM on insurance and participating investment contracts<sup>1</sup> | **4385** | **–** | **4385** | 4646 | – | 4646 |
| CSM on reinsurance contracts<sup>2</sup> | **(90)** | **–** | **(90)** | (467) | – | (467) |
| **Total CSM** | **4295** | **–** | **4295** | 4179 | – | 4179 |
| Risk adjustment on insurance and participating investment contracts<sup>1</sup> | **946** | **23** | **969** | 891 | 19 | 910 |
| Risk adjustment on reinsurance contracts<sup>2</sup> | **(39)** | **–** | **(39)** | (68) | (1) | (69) |
| **Total risk adjustment** | **907** | **23** | **930** | 823 | 18 | 841 |
| **Total** | **5202** | **23** | **5225** | 5002 | 18 | 5020 |

---

1Includes CSM of £nil (2024: £544 million) and risk adjustment of £nil (2024: £36 million) arising from insurance contracts classified as disposal group liabilities and presented in other

liabilities. Further information on the disposal group is provided in section (C).

2Includes CSM of £nil (2024: £(426) million) and risk adjustment of £nil (2024: £(36) million) on reinsurance contracts classified as disposal group assets and presented in other assets.

Further information on the disposal group is provided in section (C).

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 8: Insurance business** continued

**(F)Reconciliation of measurement components of insurance contract balances**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  |  |  | **Contractual service margin (CSM)** | | | |  |
| **Life** | **Present**<br>**value of**<br>**future**<br>**cash**<br>**flows**<br>**£m**<br>| **Risk**<br>**adjustment**<br>**for non-**<br>**financial**<br>**risk**<br>**£m** |  | **Contracts**<br>**measured**<br>**under the**<br>**fair value**<br>**approach**<br>**£m**<br>| **Other**<br>**contracts**<br>**£m**<br>| **Total CSM**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **Net liability at 1 January**<sup>1</sup> | **(121431)** | **(891)** |  | **(1415)** | **(3231)** | **(4646)** | **(126968)** |
| Relating to current services | **179** | **51** |  | **190** | **400** | **590** | **820** |
| Contracts initially recognised in the year | **(14)** | **(60)** |  | **–** | **(18)** | **(18)** | **(92)** |
| Changes in estimates that adjust the CSM | **319** | **(49)** |  | **65** | **(335)** | **(270)** | **–** |
| Changes in estimates that result in losses and reversal <br>of losses on onerous contracts<br>| **10** | **(2)** |  | **–** | **–** | **–** | **8** |
| Relating to future services | **315** | **(111)** |  | **65** | **(353)** | **(288)** | **(84)** |
| Relating to past services | **(6)** | **6** |  | **–** | **–** | **–** | **–** |
| Insurance service result | **488** | **(54)** |  | **255** | **47** | **302** | **736** |
| Net finance expense from insurance and participating <br>investment contracts<br>| **(15302)** | **–** |  | **5** | **(40)** | **(35)** | **(15337)** |
| Exchange differences | **(77)** | **(1)** |  | **(6)** | **–** | **(6)** | **(84)** |
| **Total change in profit or loss** | **(14891)** | **(55)** |  | **254** | **7** | **261** | **(14685)** |
| Premiums received | **(10618)** | **–** |  | **–** | **–** | **–** | **(10618)** |
| Claims and other insurance service expenses paid | **12240** | **–** |  | **–** | **–** | **–** | **12240** |
| Insurance acquisition cash flows | **306** | **–** |  | **–** | **–** | **–** | **306** |
| **Cash flows** | **1928** | **–** |  | **–** | **–** | **–** | **1928** |
| **Derecognition Consideration**<sup>2</sup> | **4932** | **–** |  | **–** | **–** | **–** | **4932** |
| **Transfer to other items in the balance sheet** | **–** | **–** |  | **–** | **–** | **–** | **–** |
| **Net liability at 31 December**<sup>1</sup> | **(129462)** | **(946)** |  | **(1161)** | **(3224)** | **(4385)** | **(134793)** |

---

1Excluding insurance acquisition assets.

2Derecognition consideration recognised due to transfer of bulk annuity business to Rothesay, as set out in section (C).

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
|  |  |  | Contractual service margin (CSM) | | | |  |
| Life | Present<br>value of<br>future<br>cash<br>flows<br>£m<br>| Risk<br>adjustment<br>for non-<br>financial<br>risk<br>£m |  | Contracts<br>measured<br>under the<br>fair value<br>approach<br>£m<br>| Other<br>contracts<br>£m<br>| Total CSM<br>£m<br>| Total<br>£m<br>|
| **Net liability at 1 January**<sup>1</sup> | (114209) | (1159) |  | (1473) | (2942) | (4415) | (119783) |
| Relating to current services | 46 | 58 |  | 155 | 294 | 449 | 553 |
| Contracts initially recognised in the year | 33 | (65) |  | – | (61) | (61) | (93) |
| Changes in estimates that adjust the CSM | 334 | 252 |  | (95) | (491) | (586) | – |
| Changes in estimates that result in losses and reversal <br>of losses on onerous contracts<br>| (2) | 23 |  | – | – | – | 21 |
| Relating to future services | 365 | 210 |  | (95) | (552) | (647) | (72) |
| **Relating to past services** | (3) | (1) |  | – | – | – | (4) |
| **Insurance service result** | 408 | 267 |  | 60 | (258) | (198) | 477 |
| **Net finance (expense) income from insurance and** <br>**participating investment contracts**<br>| (10341) | – |  | (9) | (31) | (40) | (10381) |
| Exchange differences | 72 | 1 |  | 7 | – | 7 | 80 |
| **Total change in profit or loss** | (9861) | 268 |  | 58 | (289) | (231) | (9824) |
| Premiums received | (10679) | – |  | – | – | – | (10679) |
| Claims and other insurance service expenses paid | 13063 | – |  | – | – | – | 13063 |
| Insurance acquisition cash flows | 265 | – |  | – | – | – | 265 |
| **Cash flows** | 2649 | – |  | – | – | – | 2649 |
| **Derecognition Consideration** | – | – |  | – | – | – | – |
| **Transfer to other items in the balance sheet** | (10) | – |  | – | – | – | (10) |
| **Net liability at 31 December**<sup>1</sup> | (121431) | (891) |  | (1415) | (3231) | (4646) | (126968) |

---

1Excluding insurance acquisition assets.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 8: Insurance business** continued

The Group estimates the Risk adjustment separately from other components of the fulfilment cashflows using an explicit margins

approach. A confidence level scenario, allowing for diversification of risks across the insurance business, is used to determine the margins to

be applied to the best estimate assumptions which are then used to calculate the risk adjustment at a policy level. The risk adjustment

represents the difference in the value of the best estimate cash flows with and without these margins.

The confidence level corresponding to the risk adjustment is 85% (2024: 85%). The risk adjustment is calibrated to the value at risk over a

one-year time horizon at this confidence level for non-financial risks. This is translated, using statistical approximations, into an equivalent

confidence level on a value at risk basis over the expected lifetime of in-force policies of approximately 68% (2024: 68%) at end of the

reporting period.

**(G)Impacts of insurance and participating investment contracts recognised in the year**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
| **Life** | **Profitable**<br>**contracts**<br>**issued**<br>**£m**<br>| **Onerous**<br>**contracts**<br>**issued**<br>**£m**<br>| **Total**<br>**£m**<br>| Profitable<br>contracts<br>issued<br>£m<br>| Onerous<br>contracts<br>issued<br>£m<br>| Total<br>£m<br>|
| **Insurance and participating investment contracts** |  |  |  |  |  |  |
| Insurance acquisition cash flows | **123** | **185** | **308** | 56 | 203 | 259 |
| Claims and other directly attributable expenses | **5573** | **524** | **6097** | 1446 | 4498 | 5944 |
| Estimates of the present value of future cash outflows | **5696** | **709** | **6405** | 1502 | 4701 | 6203 |
| Estimates of the present value of future cash inflows | **(5761)** | **(630)** | **(6391)** | (1577) | (4659) | (6236) |
| Risk adjustment for non-financial risk | **47** | **13** | **60** | 14 | 51 | 65 |
| Contractual service margin | **18** | **–** | **18** | 61 | – | 61 |
| **Losses recognised on initial recognition** | **–** | **92** | **92** | – | 93 | 93 |

---

**(H)Life business contractual service margin run-off**

The following table analyses the expected recognition of the contractual service margin (CSM) in profit or loss.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **At 31 December 2025** | **Less than 1**<br> **year**<br>**£m**<br>| **1 to 2**<br>**years**<br>**£m**<br>| **2 to 3**<br>**years**<br>**£m**<br>| **3 to 4**<br>**years**<br>**£m**<br>| **4 to 5**<br>**years**<br>**£m**<br>| **5 to 10**<br>**years**<br>**£m**<br>| **Over 10**<br>**years**<br>**£m**<br>| **Total**<br>**£m**<br>|
| Pensions and investments | **(277)** | **(251)** | **(207)** | **(189)** | **(172)** | **(663)** | **(1358)** | **(3117)** |
| Annuities, protection and other | **(106)** | **(98)** | **(90)** | **(83)** | **(78)** | **(306)** | **(507)** | **(1268)** |
| Insurance and participating <br>investment contracts<br>| **(383)** | **(349)** | **(297)** | **(272)** | **(250)** | **(969)** | **(1865)** | **(4385)** |
| Reinsurance contracts held | **12** | **10** | **8** | **7** | **6** | **18** | **29** | **90** |
| **Total** | **(371)** | **(339)** | **(289)** | **(265)** | **(244)** | **(951)** | **(1836)** | **(4295)** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| At 31 December 2024 | Less than 1<br> year<br>£m<br>| 1 to 2<br>years<br>£m<br>| 2 to 3<br>years<br>£m<br>| 3 to 4<br>years<br>£m<br>| 4 to 5<br>years<br>£m<br>| 5 to 10<br>years<br>£m<br>| Over 10<br>years<br>£m<br>| Total<br>£m<br>|
| Pensions and investments | (240) | (218) | (199) | (164) | (152) | (591) | (1169) | (2733) |
| Annuities, protection and other<sup>1</sup> | (660) | (106) | (98) | (90) | (83) | (331) | (545) | (1913) |
| Insurance and participating <br>investment contracts<br>| (900) | (324) | (297) | (254) | (235) | (922) | (1714) | (4646) |
| Reinsurance contracts held<sup>2</sup> | 433 | 5 | 4 | 3 | 3 | 8 | 11 | 467 |
| **Total** | (467) | (319) | (293) | (251) | (232) | (914) | (1703) | (4179) |

---

1CSM of £(544) million arising from insurance contracts classified as disposal group liabilities was included in less than one year.

2CSM of £426 million arising from reinsurance contracts held classified as disposal group assets was included in less than one year.

**(I)Life insurance sensitivity analysis**

**Critical accounting judgements and key sources of estimation uncertainty**

---

| | |
|:---|:---|
| **Critical judgements:** | Determining the characteristics which make a product illiquid, the level of illiquidity premium to apply to <br>the discount rate of different products and how the illiquidity premium is determined<br>|
| **Key sources of estimation uncertainty:** | Increase in illiquidity premia and widening of credit default spreads |

---

The following table demonstrates the effect of reasonably possible changes in key assumptions on profit before tax and equity disclosed in

these financial statements assuming that the other assumptions remain unchanged. In practice this is unlikely to occur, and changes in

some assumptions may be correlated. The sensitivities below are on a net of reinsurance basis. These amounts include movements in

liabilities relating to insurance and participating investment contracts and related assets in order to demonstrate the impacts on

shareholder profit and equity. Therefore, these sensitivities have not been applied to the proportion of assets and liabilities where the risks

are borne by the policyholder and where assets and liabilities are well matched so as not to have a significant impact on shareholder profit.

In 2025, the Group utilised all its remaining brought forward life assurance expenses to reduce the cost of policyholder tax charged on its

investment gains. Future investment gains cannot therefore be sheltered by expenses, and as a result the equity impacts in sensitivity table

below for 2025 includes the cost of policyholder tax whereas the 2024 comparatives do not.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 8: Insurance business** continued

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **2025** | **2025** | 2024 | 2024 |
|  | **Change in variable** | **Increase**<br>**(reduction)**<br>**in profit**<br>**before tax**<br>**£m**<br>| **Increase**<br>**(reduction)**<br>**in equity**<br>**£m**<br>| Increase<br>(reduction)<br>in profit<br>before tax<br>£m<br>| Increase<br>(reduction)<br>in equity<br>£m<br>|
| **Key sources of estimation uncertainty** |  |  |  |  |  |
| Risk free rate, including illiquidity premia  | 1% reduction | **271** | **157** | 272 | 204 |
|  | 1% increase | **(237)** | **(136)** | (227) | (171) |
| Widening of credit default spreads on corporate bonds <br>and other credit risky assets<br>| 0.25% addition | **(186)** | **(140)** | (174) | (131) |
| **Other market exposure** |  |  |  |  |  |
| Equity | 10% reduction | **64** | **145** | 137 | 103 |
|  | 10% increase | **(58)** | **(144)** | (127) | (95) |
| Inflation  | 50bps reduction | **(77)** | **(58)** | (88) | (66) |
|  | 50bps increase | **84** | **63** | 98 | 73 |
| **Other accounting estimates** |  |  |  |  |  |
| Annuitant mortality | 5% reduction | **33** | **25** | 48 | 36 |
|  | 5% increase | **(37)** | **(28)** | (45) | (33) |
| Future maintenance and investment expenses | 10% reduction | **29** | **22** | 30 | 23 |
|  | 10% increase | **(31)** | **(23)** | (30) | (23) |
| Non-annuitant mortality and morbidity | 5% reduction | **31** | **24** | 17 | 13 |
|  | 5% increase | **(26)** | **(20)** | (10) | (8) |
| Lapse rates | 10% reduction | **8** | **6** | 5 | 4 |
|  | 10% increase | **(9)** | **(6)** | (4) | (3) |

---

At each measurement date, the Group estimates, based on information about past events, current conditions and forecasts of future

conditions, the expected value of future cash flows. The calculation uses a range of scenarios that reflect the full range of possible

outcomes. The assumptions used to develop the estimates of future cash flows are reassessed at each reported date to reflect conditions

existing at the measurement date.

**Risk free rate, including illiquidity premia**

The Group has applied judgement in determining the characteristics which make a product illiquid, the level of illiquidity premium to apply

to the discount rate of different products and how the illiquidity premium is determined, where material.

Due to the illiquid nature of their cash flows, an illiquidity premium has been applied to the discount rate of the Group's annuity contracts.

At initial recognition, the illiquidity premium is calculated with reference to a strategic portfolio of assets, and subsequently measured to

reflect the mix of actual assets backing annuity contracts. To reflect differences between the characteristics of insurance contracts and a

reference portfolio, adjustments for credit risk are required when determining appropriate discount rates. The Group uses the fundamental

spread to maintain consistency with its Solvency II approach. For protection contracts, the illiquidity premium is based on the spread on a

covered bond index.

The average sterling yield curves that were used to discount the estimates of future cash flows that do not vary based on the returns of the

underlying items are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **1 year** | **5 year** | **10 year** | **20 year** | **30 year** |
| **2025** | **4.74** | **5.25** | **6.00** | **6.24** | **5.57** |
| 2024 | 5.58 | 5.17 | 5.66 | 5.71 | 5.06 |

---

The Group determines the quantity of benefits provided under each contract using different bases, depending on the product. For with-

profits and unit linked products, the policyholder account value (or the guaranteed benefits, if higher) is used. For annuities, pre-vesting

date the defined amount payable is used (immediate annuities have no pre-vesting date period) and post-vesting date the annuity payout

is used.

**Widening of credit default spreads on corporate bonds and other credit risky assets**

The Group applies a sensitivity showing the impact of an increase in credit default spreads on corporate bonds and other credit risky assets

and the corresponding reduction in market values. Swap curves, the risk-free rate and illiquidity premia are all assumed to be unchanged

and therefore this sensitivity impacts the related assets.

**Equity**

The Group applies a sensitivity showing the impact of an instantaneous increase (decrease) in the value of equity markets. This impacts the

value of unit linked and with-profits business as the assets backing the policyholder liabilities rise (fall) leading to an increase (reduction) the

value of future annual management charges received. The overall impact is affected by the Group's unit-matching policy which mitigates

the impact of equity market movements on the value of these future charges. The Group also implements an equity market hedge along

with utilising the Risk Mitigation Option under IFRS17 to further mitigate equity market movement impacts.

**Inflation**

The Group applies a sensitivity showing the impact of an increase (decrease) in inflation. This impacts the level of expenses incurred across

all lines of business as well as any inflation linked premiums or benefits.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 8: Insurance business** continued

**Mortality**

The mortality assumptions for the main classes of business are set with regard to recent Group experience and general industry trends,

which are adjusted for smoker status and age/gender specific factors. The base mortality tables used for the annuities business for the year

ended 31 December 2025 and the prior period were selected from the bespoke mortality tables. The mortality improvements adopt the

100% Bespoke tables and CMI2024_{M/F}_Q3(7.25) HL-1_{2.0/1.8}%_{0.5/0.5}A_2013 for the year ended 31 December 2025; and the 100%

Bespoke tables and CMI 2023_{M/F}_(7.25)_{2.0/1.8}%_{0.5/0.5}A_2013 for the prior period.

**Lapse rates**

Lapse rates refer to the rate of policy termination or the rate at which policyholders stop paying regular premiums due under the contract.

Historical persistency experience is analysed using statistical techniques. As experience can vary considerably between different product

types and for contracts that have been in force for different periods, the data is broken down into broadly homogeneous groups for the

purposes of determining the Group's lapse rate in determining the assumptions, which are set on a best estimates basis, based on

investigations of historical experience with some expert judgement overlays reflecting expectations of future trends and other external

data. The lapse rates for workplace pensions range from 1.3% to 16.9% (2024: 0.8% to 13.8%) and for longstanding business range from

0.5% to 74.1% (2024: 0.5% to 74.1%), the wide range being a result of the age and variety of products.

**Note 9: Other operating income**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Operating lease rental income | **1979** | 1681 | 1383 |
| Rental income from investment properties (note 24) | **190** | 172 | 146 |
| Other<sup>1</sup> | **198** | 81 | 102 |
| **Total other operating income** | **2367** | 1934 | 1631 |

---

1 Net gains on disposal of financial assets at fair value through other comprehensive income, previously reported separately, are presented within other.

**Note 10: Operating expenses**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Staff costs: |  |  |  |
| Salaries and social security costs<sup>1</sup> | **3846** | 3819 | 3651 |
| Pensions and other retirement benefit schemes (note 12) | **527** | 526 | 355 |
| Restructuring and other staff costs | **334** | 327 | 487 |
|  | **4707** | 4672 | 4493 |
| Premises and equipment costs<sup>2</sup> | **503** | 454 | 449 |
| Depreciation and amortisation<sup>3</sup> | **3477** | 3426 | 2905 |
| UK bank levy | **130** | 147 | 150 |
| Regulatory and legal provisions (note 28) | **968** | 899 | 675 |
| Other | **2786** | 2594 | 2720 |
| **Operating expenses before adjustment for:** | **12571** | 12192 | 11392 |
| Amounts attributable to the acquisition of insurance and participating investment contracts | **(191)** | (182) | (183) |
| Amounts reported within insurance service expenses | **(414)** | (409) | (386) |
| **Total operating expenses** | **11966** | 11601 | 10823 |

---

1Including social security costs of £454 million (2024: £428 million; 2023: £371 million).

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 £101 million (2024: £96 million; 2023: £110 million), equipment £349 million (2024: £400 million; 2023: £388 million), operating lease

assets £1,470 million (2024: £1,410 million; 2023: £1,070 million) and right-of-use assets £182 million (2024: £198 million; 2023: £209 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 | **60331** | 64334 | 65390 |
| Overseas | **3707** | 1895 | 807 |
| **Total** | **64038** | 66229 | 66197 |

---

**Performance-based compensation**

The tables below analyse the Group's performance-based compensation costs between those relating to the current performance year and

those relating to earlier years.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Performance-based**<br>**compensation expense** | **Performance-based**<br>**compensation expense** | **Performance-based**<br>**compensation expense** | **Performance-based compensation expense**<br>**deferred until later years** | **Performance-based compensation expense**<br>**deferred until later years** | **Performance-based compensation expense**<br>**deferred until later years** |
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>| **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Awards made in respect of the year ended 31 December | **343** | 300 | 316 | **83** | 90 | 108 |
| Awards made in respect of earlier years | **92** | 96 | 124 | **37** | 34 | 22 |
|  | **435** | 396 | 440 | **120** | 124 | 130 |

---

Performance-based awards expensed in 2025 include cash awards amounting to £225 million (2024: £162 million; 2023: £169 million).

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 11: Share-based payments**

**Charge to the income statement**

The charge to the income statement is set out below:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Deferred bonus plan | **186** | 206 | 241 |
| Options and shares granted in the year | **12** | 15 | 20 |
| Options and shares granted in prior years | **51** | 60 | 67 |
|  | **63** | 75 | 87 |
| **Total charge to the income statement** | **249** | 281 | 328 |

---

During the year ended 31 December 2025 the Group operated the following share-based payment schemes, which are mainly

equity settled.

**Group Performance Share plan**

The 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 was1.88 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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 11: 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 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 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 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%. Details in relation to the plan are provided in the

directors' remuneration report.

---

| | | |
|:---|:---|:---|
|  | **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. Details in relation to the plan are provided in the directors' remuneration report.

---

| | | |
|:---|:---|:---|
|  | **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).

**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).

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 11: Share-based payments** continued

**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 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 Group's shares to assess the reasonableness of the historical volatility and adjustments made where appropriate.

**Share Incentive Plans**

**Matching shares**

The 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

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.

**Note 12: 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 | **564** | 537 | 434 |
| **Total charge to the income statement (note 10)** | **527** | 526 | 355 |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 12: Retirement benefit obligations** continued

---

| | | |
|:---|:---|:---|
|  | **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.

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 |

---

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 12: Retirement benefit obligations** continued

---

| | | |
|:---|:---|:---|
|  | **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) |

---

---

| | | |
|:---|:---|:---|
|  | **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) |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 12: Retirement benefit obligations** continued

(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.

(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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 12: Retirement benefit obligations** continued

(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.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **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 income** <br>**statement charge** | **Increase (decrease) in the income** <br>**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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 12: Retirement benefit obligations** continued

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 |

---

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 £564 million

(2024: £537 million; 2023: £434 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) |

---

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 13: Auditors' remuneration**

Fees payable to the Company's auditorsby the Group 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 Company's current year annual report | **2.0** | 2.0 | 2.0 |
| – audits of the Company's subsidiaries | **33.9** | 31.9 | 32.3 |
| – total audit fees in respect of the statutory audit of Group entities<sup>1</sup> | **35.9** | 33.9 | 34.3 |
| – services normally provided in connection with statutory and regulatory filings or engagements | **6.5** | 6.7 | 6.6 |
| Total audit fees<sup>2</sup> | **42.4** | 40.6 | 40.9 |
| Other audit-related fees<sup>2</sup> | **1.5** | 1.5 | 1.3 |
| All other fees<sup>2</sup> | **1.1** | 1.0 | 1.2 |
| Total non-audit services<sup>3</sup> | **2.6** | 2.5 | 2.5 |
| **Total fees payable to the Company's auditors by the Group** | **45.0** | 43.1 | 43.4 |

---

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 £9.1

million in 2025 (2024: £9.2 million; 2023: £9.1 million).

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 (including work related to the

adoption of new accounting standards) 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 Group's financial statements 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.

The Group has procedures that are designed to ensure auditor independence, including prohibiting certain non-audit services. All audit and

non-audit assignments must be pre-approved by 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 Banking Group in respect of:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Audits of Group pension schemes | **0.5** | 0.5 | 0.5 |
| Audits of the unconsolidated Open-Ended Investment Companies managed by the Group | **0.2** | 0.2 | 0.2 |

---

**Note 14: 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>|
| Loans and advances to banks | **–** | **–** | **–** | **–** | **–** |
| Loans and advances to customers | **14** | **(82)** | **999** | **(64)** | **867** |
| Debt securities | **–** | **–** | **–** | **–** | **–** |
| Financial assets at amortised cost | **14** | **(82)** | **999** | **(64)** | **867** |
| Financial assets at fair value through other comprehensive income | **(1)** | **–** | **–** | **–** | **(1)** |
| Other assets | **2** | **–** | **–** | **–** | **2** |
| Loan commitments and financial guarantees | **(30)** | **(43)** | **–** | **–** | **(73)** |
| **Total impairment (credit) charge** | **(15)** | **(125)** | **999** | **(64)** | **795** |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 14: Impairment**continued

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| 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>|
| Loans and advances to banks | (7) | – | – | – | (7) |
| Loans and advances to customers | (147) | (289) | 949 | (6) | 507 |
| Debt securities | (4) | (2) | – | – | (6) |
| Financial assets at amortised cost | (158) | (291) | 949 | (6) | 494 |
| Financial assets at fair value through other comprehensive income | (3) | – | – | – | (3) |
| Other assets | (9) | – | – | – | (9) |
| Loan commitments and financial guarantees | (18) | (33) | – | – | (51) |
| **Total impairment (credit) charge** | (188) | (324) | 949 | (6) | 431 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| 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>|
| Loans and advances to banks | (5) | (2) | – | – | (7) |
| Loans and advances to customers | 261 | (281) | 414 | (73) | 321 |
| Debt securities | – | 1 | – | – | 1 |
| Financial assets at amortised cost | 256 | (282) | 414 | (73) | 315 |
| Financial assets at fair value through other comprehensive income | (2) | – | – | – | (2) |
| Other assets | – | – | (10) | – | (10) |
| Loan commitments and financial guarantees | 27 | (25) | (2) | – | – |
| **Total impairment charge (credit)** | 281 | (307) | 402 | (73) | 303 |

---

The impairment charge includes a £137 million charge (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.

**Note 15: 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 | **(1367)** | (1159) | (1301) |
| Adjustments in respect of prior years | **86** | 89 | 51 |
|  | **(1281)** | (1070) | (1250) |
| Foreign tax: |  |  |  |
| Current tax on profit for the year | **(139)** | (122) | (101) |
| Adjustments in respect of prior years | **(9)** | 3 | 3 |
|  | **(148)** | (119) | (98) |
| Current tax expense | **(1429)** | (1189) | (1348) |
| Deferred tax: |  |  |  |
| Current year | **(504)** | (307) | (583) |
| Adjustments in respect of prior years | **29** | 2 | (54) |
| Deferred tax (expense) credit | **(475)** | (305) | (637) |
| **Tax expense** | **(1904)** | (1494) | (1985) |

---

The tax expense is made up as follows:

---

| | | | |
|:---|:---|:---|:---|
| Tax (expense) credit attributable to policyholders | **(219)** | (137) | 30 |
| Shareholder tax expense | **(1685)** | (1357) | (2015) |
| **Tax expense** | **(1904)** | (1494) | (1985) |

---

**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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 15: Tax** continued

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Profit before tax | **6661** | 5971 | 7503 |
| UK corporation tax thereon | **(1665)** | (1493) | (1763) |
| Impact of surcharge on banking profits | **(167)** | (157) | (305) |
| Non-deductible costs: conduct charges | **(70)** | (27) | (29) |
| Non-deductible costs: bank levy | **(33)** | (37) | (35) |
| Other non-deductible costs<sup>1</sup> | **(72)** | (73) | (52) |
| Non-taxable income<sup>1</sup> | **99** | 51 | 76 |
| Tax relief on coupons on other equity instruments | **116** | 125 | 124 |
| (Non-deductible) non-taxable foreign exchange (losses) gains<sup>1</sup> | **(75)** | 27 | (50) |
| Tax-exempt gains on disposals | **62** | 98 | 35 |
| Tax losses where no deferred tax recognised | **(7)** | (7) | (2) |
| Remeasurement of deferred tax due to rate changes | **–** | – | (14) |
| Differences in overseas tax rates | **(5)** | (9) | 6 |
| Policyholder tax in respect of the life assurance business | **(71)** | (75) | (61) |
| Deferred tax in respect of life assurance policyholder tax | **(119)** | (5) | 84 |
| Adjustments in respect of prior years | **106** | 94 | – |
| Tax effect of share of results of joint ventures | **(3)** | (1) | 1 |
| Provision for Pillar 2 current income taxes | **–** | (5) | – |
| **Tax expense** | **(1904)** | (1494) | (1985) |

---

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. As a result, tax expense for 2024 included a current

tax charge of £5 million in respect of the Group's Channel Islands businesses. In 2025, following changes to tax rates in the Channel Islands,

we do not expect any additional Pillar 2 charge to arise.

The Group paid UK and overseas corporation taxes of £1,575 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 36).

**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 | **3990** | 5005 | Deferred tax assets | **5734** | 6900 |
| Deferred tax liabilities | **(146)** | (125) | Deferred tax liabilities | **(1890)** | (2020) |
| **Net deferred tax asset at 31 December** | **3844** | 4880 | **Net deferred tax asset at 31 December** | **3844** | 4880 |

---

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.

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>| **Long-term**<br>**assurance**<br>**business**<br>**£m**<br>| **Share-**<br>**based**<br>**payments**<br>**£m**<br>| **Pension**<br>**liabilities**<br>**£m**<br>| **Derivatives**<br>**£m**<br>| **Asset**<br>**revaluations**<sup>1</sup><br>**£m**<br>| **Other**<br>**temporary**<br>**differences**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2024 | 4783 | 248 | 221 | 233 | 58 | 47 | 1667 | 50 | 102 | 7409 |
| Charge to the income statement | (133) | (75) | (22) | (167) | (1) | (9) | (63) | – | (10) | (480) |
| (Charge) credit to other comprehensive <br>income<br>| – | – | – | – | – | – | (9) | 16 | – | 7 |
| Transfer to disposal group | – | – | – | (13) | – | – | – | – | – | (13) |
| Other charge to equity | – | – | – | – | (23) | – | – | – | – | (23) |
| At 31 December 2024 | 4650 | 173 | 199 | 53 | 34 | 38 | 1595 | 66 | 92 | 6900 |
| (Charge) credit to the income statement | **(401)** | **(81)** | **(58)** | **(53)** | **2** | **(5)** | **37** | **(29)** | **(1)** | **(589)** |
| Credit (charge) to other comprehensive <br>income<br>| **–** | **–** | **35** | **–** | **–** | **–** | **(659)** | **(7)** | **–** | **(631)** |
| Other credit to equity | **–** | **–** | **–** | **–** | **54** | **–** | **–** | **–** | **–** | **54** |
| **At 31 December 2025** | **4249** | **92** | **176** | **–** | **90** | **33** | **973** | **30** | **91** | **5734** |

---

In 2024, deferred tax assets of £13 million were reclassified as disposal group assets and presented within other assets (see note 24).

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 15: Tax** continued

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Deferred tax liabilities** | **Property,**<br>**plant and**<br>**equipment**<br>**£m**<br>| **Capitalised**<br>**software**<br>**enhancements**<br>**£m**<br>| **Long-term**<br>**assurance**<br>**business**<br>**£m**<br>| **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 | – | (92) | – | (352) | (971) | (708) | (258) | (2381) |
| (Charge) credit to the income statement | – | (31) | – | 124 | 3 | 164 | (85) | 175 |
| Credit to other comprehensive income | – | – | – | – | 154 | – | 22 | 176 |
| Exchange and other adjustments | – | – | – | – | – | – | 10 | 10 |
| At 31 December 2024 | – | (123) | – | (228) | (814) | (544) | (311) | (2020) |
| (Charge) credit to the income statement | **(45)** | **33** | **(73)** | **32** | **2** | **154** | **11** | **114** |
| Credit to other comprehensive income | **–** | **–** | **–** | **–** | **85** | **–** | **–** | **85** |
| Acquisitions | **–** | **–** | **–** | **(72)** | **–** | **–** | **–** | **(72)** |
| Exchange and other adjustments | **–** | **–** | **5** | **–** | **–** | **–** | **(2)** | **3** |
| **At 31 December 2025** | **(45)** | **(90)** | **(68)** | **(268)** | **(727)** | **(390)** | **(302)** | **(1890)** |

---

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 £4,249 million (2024: £4,650 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.

Strong life business investment returns in the year mean that its brought forward expenses have now been fully utilised in the calculation of

policyholder tax liabilities. As a result, there is no net deferred tax asset to recognise in respect of them(2024: £104 million).

**Deferred tax not recognised**

Deferred tax assets of £132 million (2024: £143 million) have not been recognised in respect of £526 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, £52 million (2024: £58 million) relates to losses that will expire if not used within

20 years, and £2 million (2024: £8 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.

**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

approximately £980 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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 16: 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** | **Insurance-**<br>**related**<br>**contracts**<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** | **Insurance-**<br>**related**<br>**contracts**<br>**£m** | **Total**<br>**£m**<br>|
| **Financial assets** |  |  |  |  |  |  |  |  |
| Cash and balances at central banks | **–** | **–** | **–** | **–** | **–** | **56661** | **–** | **56661** |
| Financial assets at fair value through <br>profit or loss<br>| **–** | **25537** | **214876** | **–** | **–** | **–** | **–** | **240413** |
| Derivative financial instruments | **25** | **19702** | **–** | **–** | **–** | **–** | **–** | **19727** |
| Loans and advances to banks | **–** | **–** | **–** | **–** | **–** | **7236** | **–** | **7236** |
| Loans and advances to customers | **–** | **–** | **–** | **–** | **–** | **481463** | **–** | **481463** |
| Reverse repurchase agreements | **–** | **–** | **–** | **–** | **–** | **50986** | **–** | **50986** |
| Debt securities | **–** | **–** | **–** | **–** | **–** | **13987** | **–** | **13987** |
| Financial assets at amortised cost | **–** | **–** | **–** | **–** | **–** | **553672** | **–** | **553672** |
| Financial assets at fair value through other <br>comprehensive income<br>| **–** | **–** | **–** | **–** | **36320** | **–** | **–** | **36320** |
| Other | **–** | **–** | **–** | **–** | **–** | **–** | **514** | **514** |
| **Total financial assets** | **25** | **45239** | **214876** | **–** | **36320** | **610333** | **514** | **907307** |
| **Financial liabilities** |  |  |  |  |  |  |  |  |
| Deposits from banks | **–** | **–** | **–** | **–** | **–** | **5779** | **–** | **5779** |
| Customer deposits | **–** | **–** | **–** | **–** | **–** | **496457** | **–** | **496457** |
| Repurchase agreements at amortised cost | **–** | **–** | **–** | **–** | **–** | **38570** | **–** | **38570** |
| Financial liabilities at fair value through <br>profit or loss<br>| **–** | **23666** | **–** | **4243** | **–** | **–** | **–** | **27909** |
| Derivative financial instruments | **290** | **15842** | **–** | **–** | **–** | **–** | **–** | **16132** |
| Notes in circulation | **–** | **–** | **–** | **–** | **–** | **2118** | **–** | **2118** |
| Debt securities in issue at amortised cost | **–** | **–** | **–** | **–** | **–** | **78271** | **–** | **78271** |
| Liabilities arising from insurance and <br>participating investment contracts<br>| **–** | **–** | **–** | **–** | **–** | **–** | **135284** | **135284** |
| Liabilities arising from non-participating <br>investment contracts<br>| **–** | **–** | **–** | **61640** | **–** | **–** | **–** | **61640** |
| Other | **–** | **–** | **–** | **–** | **–** | **1026** | **–** | **1026** |
| Subordinated liabilities | **–** | **–** | **–** | **–** | **–** | **9894** | **–** | **9894** |
| **Total financial liabilities** | **290** | **39508** | **–** | **65883** | **–** | **632115** | **135284** | **873080** |

---

**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**<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 | **52332** | **(32605)** | **19727** | **(2815)** | **(2962)** | **(8339)** | **5611** |
| Derivative liabilities | **(50775)** | **34643** | **(16132)** | **3006** | **882** | **8339** | **(3905)** |
| **Net position** | **1557** | **2038** | **3595** | **191** | **(2080)** | **–** | **1706** |
| Reverse repurchase agreements held at fair value | **42475** | **(21494)** | **20981** | **(32)** | **(20832)** | **–** | **117** |
| Repurchase agreements held at fair value | **(43304)** | **21594** | **(21710)** | **(14)** | **21621** | **–** | **(103)** |
| **Net position** | **(829)** | **100** | **(729)** | **(46)** | **789** | **–** | **14** |
| Reverse repurchase agreements held at amortised cost | **63862** | **(12876)** | **50986** | **75** | **(50843)** | **–** | **218** |
| Repurchase agreements held at amortised cost | **(51345)** | **12775** | **(38570)** | **2** | **38424** | **–** | **(144)** |
| **Net position** | **12517** | **(101)** | **12416** | **77** | **(12419)** | **–** | **74** |

---

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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 16: Measurement basis of financial assets and liabilities**continued

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | 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 | Insurance-<br>related<br>contracts<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 | Insurance-<br>related<br>contracts<br>£m | Total<br>£m<br>|
| **Financial assets** |  |  |  |  |  |  |  |  |
| Cash and balances at central banks | – | – | – | – | – | 62705 | – | 62705 |
| Financial assets at fair value through <br>profit or loss<br>| – | 25450 | 190475 | – | – | – | – | 215925 |
| Derivative financial instruments | 48 | 24017 | – | – | – | – | – | 24065 |
| Loans and advances to banks | – | – | – | – | – | 7900 | – | 7900 |
| Loans and advances to customers | – | – | – | – | – | 459857 | – | 459857 |
| Reverse repurchase agreements | – | – | – | – | – | 49476 | – | 49476 |
| Debt securities | – | – | – | – | – | 14544 | – | 14544 |
| Financial assets at amortised cost | – | – | – | – | – | 531777 | – | 531777 |
| Financial assets at fair value through other <br>comprehensive income<br>| – | – | – | – | 30690 | – | – | 30690 |
| Other | – | – | – | – | – | 173 | 5481 | 5654 |
| **Total financial assets** | 48 | 49467 | 190475 | – | 30690 | 594655 | 5481 | 870816 |
| **Financial liabilities** |  |  |  |  |  |  |  |  |
| Deposits from banks | – | – | – | – | – | 6158 | – | 6158 |
| Customer deposits | – | – | – | – | – | 482745 | – | 482745 |
| Repurchase agreements at amortised cost | – | – | – | – | – | 37760 | – | 37760 |
| Financial liabilities at fair value through <br>profit or loss<br>| – | 22981 | – | 4630 | – | – | – | 27611 |
| Derivative financial instruments | 355 | 21321 | – | – | – | – | – | 21676 |
| Notes in circulation | – | – | – | – | – | 2121 | – | 2121 |
| Debt securities in issue at amortised cost | – | – | – | – | – | 70834 | – | 70834 |
| Liabilities arising from insurance and <br>participating investment contracts<br>| – | – | – | – | – | – | 122064 | 122064 |
| Liabilities arising from non-participating <br>investment contracts<br>| – | – | – | 51228 | – | – | – | 51228 |
| Other | – | – | – | – | – | 1708 | 5278 | 6986 |
| Subordinated liabilities | – | – | – | – | – | 10089 | – | 10089 |
| **Total financial liabilities** | 355 | 44302 | – | 55858 | – | 611415 | 127342 | 839272 |

---

**Offsetting of financial assets and liabilities**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Amount <br>offset in the<br>balance<br>sheet<sup>2</sup><br>£m |  | 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 the<br>balance<br>sheet<sup>2</sup><br>£m | 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 netting <br>and similar <br>agreements<br>£m | Potential<br>net amounts<br>if offset<br>of related<br>amounts<br>permitted<br>£m |
| Derivative assets | 60118 | (36053) | 24065 | (4071) | (4139) | (10522) | 5333 |
| Derivative liabilities | (60150) | 38474 | (21676) | 3853 | 1514 | 10522 | (5787) |
| **Net position** | (32) | 2421 | 2389 | (218) | (2625) | – | (454) |
| Reverse repurchase agreements held at fair value | 35463 | (14997) | 20466 | 362 | (20389) | – | 439 |
| Repurchase agreements held at fair value | (35561) | 14997 | (20564) | 31 | 19991 | – | (542) |
| **Net position** | (98) | – | (98) | 393 | (398) | – | (103) |
| Reverse repurchase agreements held at amortised cost | 60282 | (10806) | 49476 | 257 | (49341) | – | 392 |
| Repurchase agreements held at amortised cost | (48566) | 10806 | (37760) | 8 | 37427 | – | (325) |
| **Net position** | 11716 | – | 11716 | 265 | (11914) | – | 67 |

---

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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 17: 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 £296,460 million

(2024:£270,680 million), and its financial instrument liabilities held at fair value was £105,681 million (2024: £100,515 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. Liabilities arising from non-

participating investment contracts are carried at fair value.

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.

**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, treasury bills and other 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 venture capital and 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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 17: Fair values of financial assets and liabilities** continued

**(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 £276,733 million (2024:

£246,615 million). The table below analyses these financial assets by balance sheet classification, asset type and valuation methodology

(level 1, 2 or 3, as described on **page** **[257](#ia6991a38aec34efe80687e63213ac971_25402)**). 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** |  |  |  |  |
| Trading assets |  |  |  |  |
| Loans and advances to customers | **–** | **621** | **–** | **621** |
| Reverse repurchase agreements | **–** | **20981** | **–** | **20981** |
| Debt securities: |  |  |  |  |
| Government securities | **2908** | **–** | **–** | **2908** |
| Asset-backed securities | **–** | **182** | **–** | **182** |
| Corporate and other debt securities | **–** | **845** | **–** | **845** |
|  | **2908** | **1027** | **–** | **3935** |
| Total trading assets | **2908** | **22629** | **–** | **25537** |
| Other financial assets mandatorily held at fair value through profit or loss |  |  |  |  |
| Loans and advances to banks | **–** | **2851** | **–** | **2851** |
| Loans and advances to customers | **–** | **2322** | **6058** | **8380** |
| Debt securities: |  |  |  |  |
| Government securities | **16588** | **5** | **–** | **16593** |
| Other public sector securities | **–** | **1905** | **–** | **1905** |
| Bank and building society certificates of deposit | **–** | **7036** | **–** | **7036** |
| Asset-backed securities | **–** | **272** | **651** | **923** |
| Corporate and other debt securities | **–** | **21303** | **2107** | **23410** |
|  | **16588** | **30521** | **2758** | **49867** |
| Treasury and other bills | **11** | **–** | **–** | **11** |
| Equity shares | **144164** | **–** | **1435** | **145599** |
| Contracts held with reinsurers | **–** | **8168** | **–** | **8168** |
| Total other financial assets mandatorily held at fair value through profit or loss<sup>1</sup> | **160763** | **43862** | **10251** | **214876** |
| **Total financial assets at fair value through profit or loss** | **163671** | **66491** | **10251** | **240413** |
| Financial assets at fair value through other comprehensive income |  |  |  |  |
| Debt securities: |  |  |  |  |
| Government securities | **22875** | **308** | **–** | **23183** |
| Asset-backed securities | **–** | **167** | **50** | **217** |
| Corporate and other debt securities | **1276** | **11593** | **–** | **12869** |
|  | **24151** | **12068** | **50** | **36269** |
| Equity shares | **–** | **–** | **51** | **51** |
| **Total financial assets at fair value through other comprehensive income** | **24151** | **12068** | **101** | **36320** |
| **Total financial assets (excluding derivatives) at fair value** | **187822** | **78559** | **10352** | **276733** |

---

1Other financial assets mandatorily at fair value through profit or loss include assets backing insurance contracts and investment contracts of £209,545 million. Included within these

assets are investments in unconsolidated structured entities of £45,991 million; see note 37.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 17: Fair values of financial assets and liabilities** continued

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Level 1<br>£m<br>| Level 2<br>£m<br>| Level 3<br>£m<br>| Total<br>£m<br>|
| At 31 December 2024 |  |  |  |  |
| Trading assets |  |  |  |  |
| Loans and advances to customers | – | 621 | – | 621 |
| Reverse repurchase agreements | – | 20466 | – | 20466 |
| Debt securities: |  |  |  |  |
| Government securities | 3473 | – | – | 3473 |
| Asset-backed securities | – | 149 | – | 149 |
| Corporate and other debt securities | – | 741 | – | 741 |
|  | 3473 | 890 | – | 4363 |
| Total trading assets | 3473 | 21977 | – | 25450 |
| Other financial assets mandatorily held at fair value through profit or loss |  |  |  |  |
| Loans and advances to banks | – | 2787 | – | 2787 |
| Loans and advances to customers | – | 2418 | 6010 | 8428 |
| Debt securities: |  |  |  |  |
| Government securities | 7091 | 2 | – | 7093 |
| Other public sector securities | – | 2288 | – | 2288 |
| Bank and building society certificates of deposit | – | 8667 | – | 8667 |
| Asset-backed securities | – | 285 | 367 | 652 |
| Corporate and other debt securities | – | 14722 | 2161 | 16883 |
|  | 7091 | 25964 | 2528 | 35583 |
| Treasury and other bills | 32 | – | – | 32 |
| Equity shares | 131767 | – | 1351 | 133118 |
| Contracts held with reinsurers | – | 10527 | – | 10527 |
| Total other financial assets mandatorily held at fair value through profit or loss<sup>1</sup> | 138890 | 41696 | 9889 | 190475 |
| **Total financial assets at fair value through profit or loss** | 142363 | 63673 | 9889 | 215925 |
| Financial assets at fair value through other comprehensive income |  |  |  |  |
| Debt securities: |  |  |  |  |
| Government securities | 15146 | 115 | – | 15261 |
| Asset-backed securities | – | 149 | 48 | 197 |
| Corporate and other debt securities | 1152 | 13755 | – | 14907 |
|  | 16298 | 14019 | 48 | 30365 |
| Equity shares | – | – | 325 | 325 |
| **Total financial assets at fair value through other comprehensive income** | 16298 | 14019 | 373 | 30690 |
| **Total financial assets (excluding derivatives) at fair value** | 158661 | 77692 | 10262 | 246615 |

---

1Other financial assets mandatorily at fair value through profit or loss include assets backing insurance contracts and investment contracts of £185,201 million. Included within these

assets are investments in unconsolidated structured entities of £86,630 million; see note 37.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 17: 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 | **9889** | **373** | **10262** | 11681 | 284 | 11965 |
| Exchange and other adjustments | **(1)** | **3** | **2** | 1 | (3) | (2) |
| Gains recognised in the income statement within <br>other income<br>| **529** | **2** | **531** | 352 | 3 | 355 |
| (Losses) gains recognised in other comprehensive <br>income within the revaluation reserve in respect of <br>financial assets at fair value through other <br>comprehensive income<br>| **–** | **(71)** | **(71)** | – | 92 | 92 |
| Purchases/increases to customer loans | **1251** | **–** | **1251** | 1080 | – | 1080 |
| Sales/repayments of customer loans | **(1365)** | **(206)** | **(1571)** | (3266) | (3) | (3269) |
| Transfers into the level 3 portfolio | **32** | **–** | **32** | 84 | – | 84 |
| Transfers out of the level 3 portfolio | **(84)** | **–** | **(84)** | (43) | – | (43) |
| **At 31 December** | **10251** | **101** | **10352** | 9889 | 373 | 10262 |
| Gains (losses) 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>| **273** | **5** | **278** | 186 | (1) | 185 |

---

Valuation methodology for financial assets (excluding derivatives)

**Loans and advances to banks and 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 venture capital investments.

**Equity investments**

Unlisted equity and fund investments are valued using different techniques in accordance with the Group's valuation policy and

International Private Equity and Venture Capital Guidelines.

Depending on the business sector and the circumstances of the investment, unlisted equity valuations are based on earnings multiples, net

asset values or discounted cash flows.

• A number of earnings multiples are used in valuing the portfolio including price earnings, earnings before interest and tax and earnings

before interest, tax, depreciation and amortisation. The particular multiple selected is appropriate for the size and type of business

being valued and is derived by reference to the current market-based multiple. Consideration is given to the risk attributes, growth

prospects and financial gearing of comparable businesses when selecting the appropriate multiple

• Discounted cash flow valuations use estimated future cash flows, usually based on management forecasts, with the application of

appropriate exit yields or terminal multiples and discounted using rates appropriate to the specific investment, business sector or recent

economic rates of return. Recent transactions involving the sale of similar businesses may sometimes be used as a frame of reference in

deriving an appropriate multiple

• For fund investments the most recent capital account value calculated by the fund manager is used as the basis for the valuation and

adjusted, if necessary, to align valuation techniques with the Group's valuation policy

Unlisted equity investments and investments in property partnerships held in the life assurance funds are valued using third party

valuations. Management take account of any pertinent information, such as recent transactions and information received on particular

investments, to adjust the third party valuations where necessary.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 17: Fair values of financial assets and liabilities** continued

**(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 £27,909 million (2024: £27,611 million).

The table below analyses these financial liabilities by balance sheet classification and valuation methodology (level 1, 2 or 3, as described on

**page[257](#ia6991a38aec34efe80687e63213ac971_25568)**). 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** |  |  |  |  |
| Trading liabilities |  |  |  |  |
| Liabilities in respect of securities sold under repurchase agreements | **–** | **21710** | **–** | **21710** |
| Short positions in securities | **1722** | **234** | **–** | **1956** |
| Total trading liabilities | **1722** | **21944** | **–** | **23666** |
| Debt securities in issue designated at fair value through profit or loss | **–** | **4226** | **17** | **4243** |
| **Total financial liabilities (excluding derivatives) at fair value** | **1722** | **26170** | **17** | **27909** |
| At 31 December 2024 |  |  |  |  |
| Trading liabilities |  |  |  |  |
| Liabilities in respect of securities sold under repurchase agreements | – | 20564 | – | 20564 |
| Short positions in securities | 2400 | 17 | – | 2417 |
| Total trading liabilities | 2400 | 20581 | – | 22981 |
| Debt securities in issue designated at fair value through profit or loss | – | 4608 | 22 | 4630 |
| **Total financial liabilities (excluding derivatives) at fair value** | 2400 | 25189 | 22 | 27611 |

---

Liabilities designated at fair value through profit or loss primarily represent debt securities in issue which either contain substantive

embedded derivatives which would otherwise need to be recognised and measured at fair value separately from the related debt

securities, or which are accounted for at fair value to significantly reduce an accounting mismatch.

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 £5,233 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

in2024.

For the fair value of collateral pledged in respect of repurchase agreements see **page** **[255](#i9d1b66babd024f18a79223b5eef78766_1070)**.

In addition to the liabilities above, the Group's non-participating investment contracts are held at fair value through profit or loss and were

all categorised as level 2.

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** | 42 |
| (Gains) losses recognised in the income statement within other income | **(2)** | 2 |
| Redemptions | **(3)** | (3) |
| Transfers out of the level 3 portfolio | **–** | (19) |
| **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.

**Trading liabilities in respect of securities sold under repurchase agreements**

The fair value of these liabilities 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 repurchase agreement.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 17: Fair values of financial assets and liabilities** continued

**(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 £19,727 million

(2024:£24,065 million) and liabilities totalled £16,132 million (2024: £21,676 million).

The table below analyses these derivative balances by valuation methodology (level 1, 2 or 3, as described on **page[257](#ia6991a38aec34efe80687e63213ac971_25568)**). 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 | **57** | **19206** | **464** | **19727** | 103 | 23221 | 741 | 24065 |
| Derivative liabilities | **(29)** | **(15879)** | **(224)** | **(16132)** | (79) | (21175) | (422) | (21676) |

---

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 | **741** | **(422)** | 422 | (444) |
| Exchange and other adjustments | **19** | **(9)** | (15) | 7 |
| (Losses) gains recognised in the income statement within other income | **(216)** | **189** | 11 | (7) |
| Purchases (additions) | **7** | **(7)** | 5 | (4) |
| (Sales) redemptions | **(22)** | **25** | (29) | 53 |
| Transfers into the level 3 portfolio | **–** | **–** | 347 | (27) |
| Transfers out of the level 3 portfolio | **(65)** | **–** | – | – |
| **At 31 December** | **464** | **(224)** | 741 | (422) |
| (Losses) gains 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>| **(43)** | **31** | 12 | (7) |

---

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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 17: Fair values of financial assets and liabilities** continued

Derivative valuation adjustments

Derivative financial instruments which are carried in the balance sheet at fair value are adjusted where appropriate to reflect credit risk,

funding risk and liquidity.

---

| | | |
|:---|:---|:---|
| **Adjustment** | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Credit Valuation Adjustment | **98** | 122 |
| Debit Valuation Adjustment | **(43)** | (42) |
| Funding Valuation Adjustment | **29** | 47 |
| Liquidity Adjustment | **57** | 60 |
| Other | **3** | 3 |
| **Total** | **144** | 190 |

---

Credit, Debit and Funding Valuation Adjustments (CVA, DVA and FVA) are applied to the Group's over-the-counter derivative exposures

with counterparties that are not subject to strong interbank collateral arrangements. These exposures largely relate to the provision of risk

management solutions for corporate customers within the Corporate and Institutional Banking division.

**Credit valuation adjustment**

A CVA is taken where the Group has a positive future uncollateralised exposure on derivative transactions. This adjustment reflects future

expectations of counterparty creditworthiness.

**Debit valuation adjustment**

A DVA is taken where the Group has a negative future uncollateralised exposure on derivative transactions. This adjustment reflects future

expectations of our own creditworthiness.

**Funding valuation adjustment**

An FVA is taken where the Group has a future uncollateralised exposure on derivative transactions. This adjustment reflects expected

future funding costs observed in the market.

**Liquidity adjustment**

A liquidity reserve is taken where the Group has an exposure valued at mid-market and requires an adjustment to value at bid or offer. This

adjustment reflects the cost of neutralising market risk through offsetting transactions in standard market conditions.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 17: 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. A quantitative analysis of the sensitivities to market risk arising from

the Group's trading portfolios is set out in the tables marked audited on **page [193](#i488be3d12dce44a7b64b0310701877ca_30000)**.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | **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 |
| **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 flows | Interest rate <br>spreads<br>(+/- 16%)<sup>3</sup><br>| **6058** | **168** | **(159)** | 6022 | 245 | (231) |
| Debt securities | Discounted cash flows | Credit spreads<br>(+/- 27%)<sup>4</sup><br>| **860** | **36** | **(56)** | 621 | 35 | (55) |
| Equity and <br>venture capital <br>investments | Market approach | Earnings multiple<br>(+/- 10%)<sup>5</sup><br>| **2275** | **101** | **(101)** | 2267 | 150 | (150) |
| Equity and <br>venture capital <br>investments | Underlying asset/net <br>asset fair value (incl. <br>property prices)<br>| n/a | **811** | **85** | **(87)** | 773 | 80 | (84) |
| Unlisted equities, <br>debt securities <br>and property <br>partnerships in <br>the life funds<br>| Underlying asset/net <br>asset fair value (incl. <br>property prices), <br>broker quotes or <br>discounted cash flows<br>| n/a | **247** | **1** | **(2)** | 206 | – | (7) |
|  |  |  | **10251** |  |  | 9889 |  |  |
| **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) |
| Equity and <br>venture capital <br>investments<br>| Underlying asset/net <br>asset fair value (incl. <br>property prices)<br>| n/a | **51** | **3** | **(3)** | 325 | 33 | (33) |
|  |  |  | **101** |  |  | 373 |  |  |
| **Derivative financial assets** | **Derivative financial assets** | **Derivative financial assets** | **Derivative financial assets** | **Derivative financial assets** | **Derivative financial assets** | **Derivative financial assets** | **Derivative financial assets** | **Derivative financial assets** |
| Interest rate <br>options<br>| Option pricing <br>model<br>| Interest rate <br>volatility<br>(12%/195%)<sup>6</sup><br>| **202** | **4** | **(4)** | 394 | 4 | (6) |
| Interest rate <br>derivatives<br>| Discounted cash flows | (+/- 8%) <br>uncertainty of <br>recovery rates<sup>7</sup><br>| **262** | **21** | **(21)** | 347 | 21 | (21) |
|  |  |  | **464** |  |  | 741 |  |  |
| **Level 3 financial assets carried at fair value** | **Level 3 financial assets carried at fair value** | **Level 3 financial assets carried at fair value** | **10816** |  |  | 11003 |  |  |
| **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 flows | Interest rate <br>spreads<br>(+/– 50bps)<sup>8</sup><br>| **17** | **1** | **(1)** | 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 model | Interest rate <br>volatility<br>(12%/195%)<sup>6</sup><br>| **224** | **15** | **(13)** | 422 | 17 | (15) |
| **Level 3 financial liabilities carried at fair value** | **Level 3 financial liabilities carried at fair value** | **Level 3 financial liabilities carried at fair value** | **241** |  |  | 444 |  |  |

---

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: -241bps/+131bps.

42024: +/- 17%.

52024: 3.5/15.0.

62024: 11%/183%.

72024: +/- 8%.

82024: +/- 50bps.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 17: Fair values of financial assets and liabilities** continued

Unobservable inputs

Significant unobservable inputs affecting the valuation of debt securities, unlisted equity investments and derivatives are as follows:

• Credit spreads represent the premium above the benchmark reference instrument required to compensate for lower credit quality;

higher spreads lead to a lower fair value

• Volatility parameters represent key attributes of option behaviour; higher volatilities typically denote a wider range of

possible outcomes

• Earnings multiples are used to value certain unlisted equity investments. The earnings multiples used are derived from those of listed

entities operating in the same sector with adjustments made for factors such as the size of the company and the quality of its earnings.

The majority of the Group's venture capital investments are valued using an estimate of the company's maintainable earnings before

interest, tax, depreciation and amortisation and in accordance with the International Private Equity and Venture Capital Valuation

Guidelines. A higher earnings multiple will result in a higher fair value

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 of 12% to 195%

(2024: 11% to 183%).

Further reasonably possible alternative assumptions have been determined in respect of the recovery rate on distressed derivatives, with

recovery rates flexed by 8% in order to determine possible alternative valuations.

**Unlisted equity, venture capital investments and investments in property partnerships**

The valuation techniques used for unlisted equity and venture capital investments vary depending on the nature of the investment.

Reasonably possible alternative valuations for these investments have been calculated by reference to the approach taken, as appropriate

to the business sector and investment circumstances and as such the following inputs have been considered:

• For valuations derived from earnings multiples, consideration is given to the risk attributes, growth prospects and financial gearing of

comparable businesses when selecting an appropriate multiple

• The discount rates used in discounted cash flow valuations

• In line with International Private Equity and Venture Capital Guidelines, the values of underlying investments in fund investment portfolios

**(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 [257](#ia6991a38aec34efe80687e63213ac971_25568)**). 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 | **7236** | **7235** | **–** | **–** | **7235** |
| Loans and advances to customers | **481463** | **480703** | **–** | **–** | **480703** |
| Reverse repurchase agreements | **50986** | **50986** | **–** | **50986** | **–** |
| Debt securities | **13987** | **14082** | **–** | **12908** | **1174** |
| At 31 December 2024 |  |  |  |  |  |
| Loans and advances to banks | 7900 | 7892 | – | – | 7892 |
| Loans and advances to customers | 459857 | 455846 | – | – | 455846 |
| Reverse repurchase agreements | 49476 | 49476 | – | 49476 | – |
| Debt securities | 14544 | 14380 | – | 11980 | 2400 |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 17: Fair values of financial assets and liabilities** continued

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.

**(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 [257](#ia6991a38aec34efe80687e63213ac971_25568)**).

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **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 | **5779** | **5779** | **–** | **5779** | **–** |
| Customer deposits | **496457** | **497849** | **–** | **497849** | **–** |
| Repurchase agreements at amortised cost | **38570** | **38570** | **–** | **38570** | **–** |
| Debt securities in issue at amortised cost | **78271** | **78900** | **–** | **78900** | **–** |
| Subordinated liabilities | **9894** | **11475** | **–** | **11475** | **–** |
| At 31 December 2024 |  |  |  |  |  |
| Deposits from banks | 6158 | 6158 | – | 6158 | – |
| Customer deposits | 482745 | 483568 | – | 483568 | – |
| Repurchase agreements at amortised cost | 37760 | 37760 | – | 37760 | – |
| Debt securities in issue at amortised cost | 70834 | 70894 | – | 70894 | – |
| Subordinated liabilities | 10089 | 10419 | – | 10419 | – |

---

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 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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 18: Maturities of assets and liabilities**

The table below analyses assets and liabilities of the Group, other than liabilities arising from insurance and investment contracts (including

those classified as disposal group liabilities), into relevant maturity groupings based on the remaining contractual period at the balance

sheet date; balances with no fixed maturity such as goodwill, other intangible assets and property, plant and equipment are included in the

over 5 years category. Liabilities arising from insurance and investment contracts are analysed on a behavioural basis. Certain deposit

balances, included in the table below on the basis of their residual maturity, are repayable on demand upon payment of a penalty.

The table is provided on a contractual basis. The Group's assets and liabilities may be repaid or otherwise mature earlier or later than

implied by their contractual terms and readers are, therefore, advised to use caution when using this data to evaluate the Group's liquidity

position. In particular, amounts in respect of customer deposits are usually contractually payable on demand or at short notice. However, in

practice, these deposits are not usually withdrawn on their contractual maturity.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Up to 1**<br>**month**<br>**£m**<br>| **1 to 3**<br>**months**<br>**£m**<br>| **3 to 6**<br>**months**<br>**£m**<br>| **6 to 9**<br>**months**<br>**£m**<br>| **9 to 12**<br>**months**<br>**£m**<br>| **1 to 2**<br>**years**<br>**£m**<br>| **2 to 5**<br>**years**<br>**£m**<br>| **Over 5**<br>**years**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |  |  |  |  |  |
| **Assets** |  |  |  |  |  |  |  |  |  |
| Cash and balances at central banks | **56661** | **–** | **–** | **–** | **–** | **–** | **–** | **–** | **56661** |
| Financial assets at fair value through profit or loss | **12449** | **8163** | **5217** | **3636** | **1880** | **7267** | **14941** | **186860** | **240413** |
| Derivative financial instruments | **1626** | **1759** | **759** | **583** | **418** | **1179** | **2814** | **10589** | **19727** |
| Loans and advances to banks | **1890** | **1576** | **1249** | **575** | **231** | **473** | **1235** | **7** | **7236** |
| Loans and advances to customers | **18991** | **13984** | **15869** | **13550** | **11358** | **37418** | **69454** | **300839** | **481463** |
| Reverse repurchase agreements | **9911** | **14193** | **11114** | **3901** | **1489** | **6875** | **3503** | **–** | **50986** |
| Debt securities | **88** | **459** | **1597** | **370** | **446** | **1152** | **2804** | **7071** | **13987** |
| Financial assets at amortised cost | **30880** | **30212** | **29829** | **18396** | **13524** | **45918** | **76996** | **307917** | **553672** |
| Financial assets at fair value through other <br>comprehensive income<br>| **205** | **934** | **276** | **415** | **451** | **4163** | **12821** | **17055** | **36320** |
| Other assets | **2668** | **841** | **153** | **1083** | **90** | **222** | **276** | **31946** | **37279** |
| **Total assets** | **104489** | **41909** | **36234** | **24113** | **16363** | **58749** | **107848** | **554367** | **944072** |
| **Liabilities** |  |  |  |  |  |  |  |  |  |
| Deposits from banks | **1921** | **386** | **813** | **951** | **115** | **449** | **1134** | **10** | **5779** |
| Customer deposits | **423727** | **25731** | **17233** | **10711** | **9055** | **6413** | **3170** | **417** | **496457** |
| Repurchase agreements at amortised cost | **11865** | **9699** | **6511** | **876** | **232** | **6269** | **1** | **3117** | **38570** |
| Financial liabilities at fair value through profit or <br>loss<br>| **13100** | **6021** | **2103** | **342** | **419** | **362** | **1484** | **4078** | **27909** |
| Derivative financial instruments | **1254** | **1361** | **677** | **388** | **318** | **1119** | **2497** | **8518** | **16132** |
| Debt securities in issue at amortised cost | **243** | **9345** | **11459** | **6594** | **3193** | **13787** | **21566** | **12084** | **78271** |
| Liabilities arising from insurance and participating <br>investment contracts<br>| **476** | **675** | **393** | **465** | **501** | **2383** | **9215** | **121176** | **135284** |
| Liabilities arising from non-participating <br>investment contracts<br>| **481** | **718** | **1063** | **1050** | **1038** | **4018** | **10984** | **42288** | **61640** |
| Other liabilities | **6754** | **1783** | **276** | **912** | **734** | **1646** | **469** | **13695** | **26269** |
| Subordinated liabilities | **–** | **1130** | **–** | **–** | **500** | **–** | **4081** | **4183** | **9894** |
| **Total liabilities** | **459821** | **56849** | **40528** | **22289** | **16105** | **36446** | **54601** | **209566** | **896205** |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 18: Maturities of assets and liabilities**continued

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Up to 1<br>month<br>£m<br>| 1 to 3<br>months<br>£m<br>| 3 to 6<br>months<br>£m<br>| 6 to 9<br>months<br>£m<br>| 9 to 12<br>months<br>£m<br>| 1 to 2<br>years<br>£m<br>| 2 to 5<br>years<br>£m<br>| Over 5<br>years<br>£m<br>| Total<br>£m<br>|
| At 31 December 2024 |  |  |  |  |  |  |  |  |  |
| **Assets** |  |  |  |  |  |  |  |  |  |
| Cash and balances at central banks | 62705 | – | – | – | – | – | – | – | 62705 |
| Financial assets at fair value through profit or loss | 13096 | 6843 | 6680 | 3675 | 2837 | 4244 | 11030 | 167520 | 215925 |
| Derivative financial instruments | 2405 | 2302 | 1079 | 774 | 659 | 1237 | 3062 | 12547 | 24065 |
| Loans and advances to banks | 2842 | 1350 | 903 | 452 | 187 | 583 | 1579 | 4 | 7900 |
| Loans and advances to customers | 18748 | 12747 | 15375 | 12271 | 11010 | 34790 | 67901 | 287015 | 459857 |
| Reverse repurchase agreements | 22793 | 13356 | 6945 | 2764 | 1524 | 1355 | 739 | – | 49476 |
| Debt securities | 40 | 1439 | 232 | 358 | 273 | 4128 | 2183 | 5891 | 14544 |
| Financial assets at amortised cost | 44423 | 28892 | 23455 | 15845 | 12994 | 40856 | 72402 | 292910 | 531777 |
| Financial assets at fair value through other <br>comprehensive income<br>| 8 | 178 | 39 | 140 | 728 | 3908 | 11746 | 13943 | 30690 |
| Other assets | 3231 | 1015 | 157 | 1030 | 106 | 295 | 643 | 35058 | 41535 |
| **Total assets** | 125868 | 39230 | 31410 | 21464 | 17324 | 50540 | 98883 | 521978 | 906697 |
| **Liabilities** |  |  |  |  |  |  |  |  |  |
| Deposits from banks | 1783 | 669 | 540 | 171 | 171 | 350 | 2413 | 61 | 6158 |
| Customer deposits | 392403 | 27489 | 18009 | 18650 | 18327 | 4153 | 3456 | 258 | 482745 |
| Repurchase agreements at amortised cost | 8698 | 5140 | 1660 | – | 13227 | 93 | 8942 | – | 37760 |
| Financial liabilities at fair value through profit or <br>loss<br>| 15443 | 3677 | 774 | 131 | 1048 | 402 | 1466 | 4670 | 27611 |
| Derivative financial instruments | 2409 | 2218 | 1054 | 781 | 588 | 1207 | 3407 | 10012 | 21676 |
| Debt securities in issue at amortised cost | 3222 | 10190 | 6074 | 4265 | 2089 | 8190 | 26525 | 10279 | 70834 |
| Liabilities arising from insurance and participating <br>investment contracts<br>| 478 | 436 | 51 | 102 | 224 | 1510 | 7992 | 111271 | 122064 |
| Liabilities arising from non-participating <br>investment contracts<br>| 419 | 646 | 1058 | 1211 | 1165 | 4362 | 9807 | 32560 | 51228 |
| Other liabilities | 7519 | 1711 | 351 | 684 | 446 | 1548 | 2237 | 16148 | 30644 |
| Subordinated liabilities | – | 638 | 277 | – | 1070 | 1706 | 2219 | 4179 | 10089 |
| **Total liabilities** | 432374 | 52814 | 29848 | 25995 | 38355 | 23521 | 68464 | 189438 | 860809 |

---

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 19: 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 | **689215** | **7594** | **6454** | 707329 | 10247 | 9172 |
| Interest rate contracts | **15086291** | **11797** | **8924** | 12864265 | 13436 | 11644 |
| Credit derivatives | **5566** | **75** | **170** | 6103 | 87 | 172 |
| Equity, commodity and other contracts | **8914** | **236** | **294** | 8678 | 247 | 333 |
| **Total derivative assets/liabilities – trading and other** | **15789986** | **19702** | **15842** | 13586375 | 24017 | 21321 |
| **Hedging** |  |  |  |  |  |  |
| Interest rate |  |  |  |  |  |  |
| Currency swaps | **35** | **4** | **–** | 43 | 2 | – |
| Interest rate swaps | **211737** | **8** | **253** | 231064 | 6 | 337 |
| Designated as fair value hedges | **211772** | **12** | **253** | 231107 | 8 | 337 |
| Foreign exchange |  |  |  |  |  |  |
| Currency swaps | **1554** | **6** | **33** | 1963 | 30 | 14 |
| Interest rate |  |  |  |  |  |  |
| Interest rate swaps | **571126** | **7** | **4** | 484996 | 10 | 4 |
| Designated as cash flow hedges | **572680** | **13** | **37** | 486959 | 40 | 18 |
| **Total derivative assets/liabilities – hedging** | **784452** | **25** | **290** | 718066 | 48 | 355 |
| **Total recognised derivative assets/liabilities** | **16574438** | **19727** | **16132** | 14304441 | 24065 | 21676 |

---

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

• Derivatives held in policyholder funds as permitted by the investment strategies of those funds

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

• Equity, commodity and other contracts including commodity swaps and options

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 19: 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><br>**£m** |
|  | **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><br>**£m** |
| **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><br>**£m** |
| **At 31 December 2025** |  |  |  |  |  |  |
| **Interest rate** |  |  |  |  |  |  |
| Fixed rate mortgages<sup>1</sup> | **121732** | **–** | **(178)** | **–** | **725** | **(68)** |
| Fixed rate issuance<sup>2</sup> | **–** | **45053** | **–** | **829** | **(530)** | **10** |
| Fixed rate bonds<sup>3</sup> | **35058** | **–** | **(1053)** | **–** | **(138)** | **4** |
| **Total** | **156790** | **45053** | **(1231)** | **829** | **57** | **(54)** |
| At 31 December 2024 |  |  |  |  |  |  |
| **Interest rate** |  |  |  |  |  |  |
| Fixed rate mortgages<sup>1</sup> | 124013 | – | (890) | – | (184) | (52) |
| Fixed rate issuance<sup>2</sup> | – | 51499 | – | 1340 | (75) | (11) |
| Fixed rate bonds<sup>3</sup> | 29264 | – | (1070) | – | (1158) | (18) |
| Total | 153277 | 51499 | (1960) | 1340 | (1417) | (81) |

---

1Included within loans and advances to customers.

2Included within debt securities in issue at amortised cost and subordinated liabilities.

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**<br>**in other**<br>**comprehensive**<br>**income**<br>**£m** | **Amounts reclassified from**<br>**reserves to net interest income as:** | **Amounts reclassified from**<br>**reserves to net interest income as:** | **Cash flow hedge reserve** | **Cash flow hedge reserve** | **Change in fair**<br>**value of 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**<br>**in other**<br>**comprehensive**<br>**income**<br>**£m** | **Hedged cash**<br>**flows that** <br>**will no**<br>**longer occur**<br>**£m**<br>| **Hedged item**<br>**affected income**<br>**statement**<br>**£m** | **Continuing**<br>**hedges**<br>**£m**<br>| **Discontinued**<br>**hedges**<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**<br>**the income**<br>**statement**<sup>1</sup><br>**£m** |
| **At 31 December 2025** |  |  |  |  |  |  |  |
| **Foreign exchange** |  |  |  |  |  |  |  |
| Foreign currency issuance<sup>2</sup> | **(3)** | **–** | **(4)** | **(11)** | **138** | **7** | **–** |
| Customer deposits<sup>3</sup> | **–** | **–** | **4** | **–** | **9** | **–** | **–** |
| **Interest rate** |  |  |  |  |  |  |  |
| Customer loans<sup>4</sup> | **294** | **–** | **1131** | **(2159)** | **(1475)** | **(802)** | **63** |
| Central bank balances<sup>5</sup> | **205** | **–** | **793** | **(100)** | **(831)** | **(487)** | **3** |
| Customer deposits<sup>3</sup> | **(14)** | **–** | **(55)** | **1527** | **38** | **72** | **(12)** |
| **Total** | **482** | **–** | **1869** | **(743)** | **(2121)** | **(1210)** | **54** |
| At 31 December 2024 |  |  |  |  |  |  |  |
| **Foreign exchange** |  |  |  |  |  |  |  |
| Foreign currency issuance<sup>2</sup> | 61 | – | (4) | 75 | 59 | (60) | – |
| Customer deposits<sup>3</sup> | – | – | – | – | 5 | – | – |
| **Interest rate** |  |  |  |  |  |  |  |
| Customer loans<sup>4</sup> | (2700) | – | 2458 | (3470) | (1590) | 982 | (61) |
| Central bank balances<sup>5</sup> | (780) | – | 937 | (1012) | (917) | 384 | (7) |
| Customer deposits<sup>3</sup> | 842 | – | (794) | 1592 | 42 | (51) | 8 |
| Total | (2577) | – | 2597 | (2815) | (2401) | 1255 | (60) |

---

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 and subordinated liabilities.

3Included within customer deposits.

4Included within loans and advances to customers.

5Included within cash and balances at central banks.

There wasno gain or loss in either 2025 or 2024 reclassified from the cash flow hedge reserve for which hedge accounting had previously

been used but for which the hedged future cash flows are no longer expected to occur.

The accumulated amount of fair value hedge adjustments remaining on the balance sheet for hedged items that have ceased to be

adjusted for hedging gains and losses is a liability of £524 million relating to fixed rate issuances of £498 million and mortgages of

£26 million (2024: liability of £980 million relating to fixed rate issuances of £582 million and mortgages of £398 million).

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 19: 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 | **395** | **5503** | **31294** | **132417** | **42128** | **211737** | **(113)** |
| Average fixed interest rate | **3.00%** | **3.24%** | **3.70%** | **3.33%** | **1.96%** |  |  |
|  |  |  |  |  |  | **211772** | **(111)** |
| **Cash flow hedges** |  |  |  |  |  |  |  |
| **At 31 December 2025** |  |  |  |  |  |  |  |
| **Foreign exchange** |  |  |  |  |  |  |  |
| Currency swap |  |  |  |  |  |  |  |
| Notional | **152** | **162** | **157** | **884** | **199** | **1554** | **(7)** |
| Average EUR/GBP exchange rate | **1.13** | **1.16** | **1.14** | **0.98** | **0.95** |  |  |
| Average USD/GBP exchange rate | **1.33** | **1.31** | **1.30** | **1.29** | **–** |  |  |
| Interest rate |  |  |  |  |  |  |  |
| Interest rate swap |  |  |  |  |  |  |  |
| Notional | **12636** | **31911** | **114577** | **321862** | **90140** | **571126** | **1771** |
| Average fixed interest rate | **4.03%** | **3.43%** | **3.65%** | **3.59%** | **3.56%** |  |  |
|  |  |  |  |  |  | **572680** | **1764** |
| **Total**  |  |  |  |  |  | **784452** | **1653** |
| **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 | 5236 | 13781 | 55607 | 111300 | 45140 | 231064 | 1336 |
| Average fixed interest rate | 3.04% | 3.68% | 4.04% | 3.36% | 2.27% |  |  |
|  |  |  |  |  |  | 231107 | 1336 |
| **Cash flow hedges** |  |  |  |  |  |  |  |
| At 31 December 2024 |  |  |  |  |  |  |  |
| **Foreign exchange** |  |  |  |  |  |  |  |
| Currency swap |  |  |  |  |  |  |  |
| Notional | 107 | 441 | 646 | 763 | 6 | 1963 | 61 |
| Average EUR/GBP exchange rate | 1.17 | 1.16 | 1.15 | 1.10 | 1.06 |  |  |
| Average USD/GBP exchange rate | 1.30 | 1.27 | 1.27 | 1.27 | 1.30 |  |  |
| Interest rate |  |  |  |  |  |  |  |
| Interest rate swap |  |  |  |  |  |  |  |
| Notional | 9195 | 21010 | 129436 | 262387 | 62968 | 484996 | (600) |
| Average fixed interest rate | 4.32% | 4.36% | 3.84% | 3.34% | 3.01% |  |  |
|  |  |  |  |  |  | 486959 | (539) |
| Total |  |  |  |  |  | 718066 | 797 |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the consolidated financial statements continued

for the year ended 31 December

**Note 20: Loans and advances to customers**

Tables showing the movement of loans advances to customers, compiled by comparing the position at the end of the year to that at the

beginning of the year, are shown in the Credit Risk section.

**Note 21: 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

£3,228 million (2024:£3,481 million), of which £3,031 million (2024: £3,211 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 |
| UK mortgages | **51** | **207** | **309** | **159** | **726** | 53 | 273 | 335 | 187 | 848 |
| Credit cards | **145** | **248** | **121** | **–** | **514** | 149 | 297 | 133 | – | 579 |
| Other | **368** | **343** | **226** | **–** | **937** | 329 | 326 | 227 | – | 882 |
| Retail | **564** | **798** | **656** | **159** | **2177** | 531 | 896 | 695 | 187 | 2309 |
| Commercial Banking | **173** | **279** | **382** | **–** | **834** | 205 | 264 | 413 | – | 882 |
| Other | **–** | **–** | **–** | **–** | **–** | – | – | – | – | – |
| Loans and advances to customers | **737** | **1077** | **1038** | **159** | **3011** | 736 | 1160 | 1108 | 187 | 3191 |
| Debt securities | **4** | **–** | **1** | **–** | **5** | 3 | – | 1 | – | 4 |
| Financial assets at amortised cost | **742** | **1077** | **1039** | **159** | **3017** | 740 | 1160 | 1109 | 187 | 3196 |
| Other assets | **6** | **–** | **8** | **–** | **14** | 7 | – | 8 | – | 15 |
| Provisions in relation to loan <br>commitments and financial guarantees | **113** | **83** | **1** | **–** | **197** | 142 | 126 | 2 | – | 270 |
| **Total** | **861** | **1160** | **1048** | **159** | **3228** | 889 | 1286 | 1119 | 187 | 3481 |
| Expected credit loss in respect of <br>financial assets at fair value through <br>other comprehensive income <br>(memorandum 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 <br>and loss given 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 <br>modelling processes 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 <br>rate of change of 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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 21: Allowance for expected credit losses** continued

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.

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 2024 | At 31 December 2024 | At 31 December 2024 | At 31 December 2024 |
|  | **Modelled**<br>**ECL**<br>**£m**<br>| **Individually** <br>**assessed**<br>**£m** | **Judgemental** <br>**adjustments**<br>**£m**<br>| **Total**<br>**£m**<br>| Modelled<br>ECL<br>£m<br>| Individually <br>assessed<br>£m<br>| Judgemental <br>adjustments<br>£m<br>| Total<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 | **555** | **355** | **(22)** | **888** | 894 | 354 | (259) | 989 |
| Other | **15** | **–** | **–** | **15** | 16 | – | – | 16 |
| **Total** | **2649** | **355** | **224** | **3228** | 3171 | 354 | (44) | 3481 |

---

**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 £355 million (2024: £354 million) which reflected a range of £276 million to £440 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.

**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: £13million)

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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 21: Allowance for expected credit losses** continued

**Commercial Banking: £(22) million (2024: £(259) million)**

These adjustments principally comprise:

Corporate insolvency rates: £(122) million (2024: £(253) 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.

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: £37 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: £50 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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 21: Allowance for expected credit losses** continued

**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.

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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 21: Allowance for expected credit losses** continued

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **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** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 21: 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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 21: 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 £366 million compared to £445 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 | **888** | **690** | **789** | **1010** | **1414** | 989 | 745 | 889 | 1125 | 1608 |
| Other | **15** | **15** | **15** | **15** | **15** | 16 | 16 | 16 | 16 | 17 |
| **ECL allowance** | **3228** | **2466** | **2862** | **3672** | **5275** | 3481 | 2467 | 3036 | 3988 | 6338 |

---

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)** | 113 | (82) |
| ECL impact | **148** | **(137)** | 203 | (171) |

---

<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.

**Assessment of climate risk impacts on ECL**

The Group continues to develop capabilities to quantify the potential impact of climate risks on ECL. This includes identifying the climate-

related risk drivers that could influence future credit losses for loan portfolios that have the highest sensitivity to climate risks and

commencing the use of more quantitative analysis on the impact of these risk drivers on ECL. The approach leverages the Group's climate

scenario analysis, to identify the potential physical and transition risk impacts on credit quality. UK mortgages and Commercial Banking

portfolios are judged to have the highest sensitivity to climate risk, with both physical and transition risk drivers assessed.

UK mortgages physical and transition risks – additional costs arising from regulatory obligations of increased energy efficiency standards to

reduce carbon emissions and increased flood risk and coastal erosion, through property repair or rebuild and/or increased insurance premia.

This can result in affordability pressure, as well as decrease in property valuation, for borrowers owning low EPC rated properties or those in

areas prone to flooding or coastal erosion.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 21: Allowance for expected credit losses**continued

Commercial Banking physical and transition risks – increased costs or revenue disruption, or both, arising from chronic and acute physical

hazards from rising temperatures. Companies adapting to a sudden transition scenario could potentially lead to increased transition costs

in operations, direct carbon costs, and deteriorating financial performance due to changing consumer perspectives.

**Macroeconomic and sector scenario risk assessments** 

Assessments were performed on the Group's internally generated economic scenarios used in the measurement of expected credit losses

against external scenarios published by the Network for Greening the Financial System (NGFS).

The potential incremental impact of climate factors on key economic drivers was isolated from the Phase V NGFS Delayed Transition

scenario, which management judged the most plausible. The incremental risk to ECL was then quantified by overlaying the specific climate

impact of this scenario onto macroeconomic drivers within the Group's base case and MES scenarios. The results from the most material

Retail portfolios, UK mortgages and Credit cards allowed management to conclude on an immaterial ECL impact for Retail below

£10 million (31 December 2024: below £5 million), and in Commercial Banking a separate climate assessment performed at sector level,

resulted in an ECL impact of below £15 million (31 December 2024: below £15 million).

The Group's MES downside and severe downside scenarios, together comprising a 40% weighting in ECL calculations, are generally more

severe than the most adverse NGFS scenario ('Net Zero 2050'). The assessment suggests that no material changes are required to the

Group's existing suite of economic scenarios used within the ECL calculation.

In Commercial Banking, a top-down analysis using sectoral modelling was repeated to estimate the specific ECL impact of climate risk on

commercial credit conditions. This assessment specifically targets agriculture, automotive, transport, oil and gas, real estate and utilities

sectors where climate impacts were judged to be more significant. Resulting sector-specific, climate-adjusted credit cycle indices (CCI)

were used to calculate probability of default and resulting ECL. These adjusted CCI model inputs combined external NGFS Phase V

scenarios with client level valuation impacts where available, alongside historic impairment data. The Phase V scenarios introduced a

physical risk approach, requiring adjustments to ensure appropriate timing of impacts. Considering methodological limitations, the

additional ECL required was shown to be immaterial.

The Group recognises the ongoing uncertainty and limitations of climate scenario modelling, including external concerns reported in late

2025 for physical risk approaches. While NGFS scenarios continue to provide a consistent benchmark for assessing climate-related risks in

ECL, they are used with prudent adjustments.

**Physical and transition risk assessments**

The Group has enhanced its assessment of transition risk on the UK mortgage portfolio. Scope has been extended from Probability of

Default (PD) impacts only to also include Loss Given Default (LGD) considerations.

The affordability stress resulting from home retrofitting costs associated with higher EPC regulatory rating requirements, under multiple

scenarios was re-calculated. The provision impact was assessed by transforming the account level assessment of affordability and valuation

impacts to adjust inputs used in existing PD and LGD parameters. As at 31 December 2025, the impact on ECL has been estimated to be

less than £10 million (31 December 2024: less than £10 million) across buy-to-let (BTL), mainstream and legacy portfolios.

The physical risk assessment on the UK mortgage portfolio in 2025 continued to include both flooding and coastal erosion risk. The impacts

were based on an internally defined delayed transition outlook, out to 2050, aligned with the Group's transition methodology. The

assessment showed that over 80% of the book was not exposed to flood risk damage. Over 99% had no risk to coastal erosion damage.

The impact on ECL to customers exposed to the affordability risk from flood and coastal erosion damage has been estimated to be

immaterial.

Whilst this supports no judgemental adjustment to ECL being required, the narrow scope does not capture the wider impact on loss rates

emanating from being located in a high-risk area. Similarly the current assessment excludes the potential affordability shocks or reduced

insurance coverage that could occur due to possible changes to insurance policy initiatives in this area.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Assessment** | **Nature of risk assessed** | **Portfolios assessed** | **ECL impact** <br>**At 31 December 2025**<br>| **ECL impact**<br>**At 31 December 2024**<br>|
| Macroeconomic impact from climate scenario | Scenario risk – macro level | Retail | < £10 million | < £5 million |
| Sector level impacts from climate scenario | Scenario risk – sector level | Commercial Banking <br>(excluding Business Banking)<br>| < £15 million | < £15 million |
| Retrofitting cost to meet EPC regulation | Transition risk | UK mortgages | < £10 million | < £10 million |
| Flood risk  | Physical risk | UK mortgages | < £5 million | < £5 million |

---

The climate risk assessments above remain limited due to the degree of uncertainty underpinning key assumptions used, as well as the

continuing developmental nature of the data, approach and models used in the quantification. These include, but are not limited to, the

analyses being restricted to PD impacts only for Commercial Banking; considering only the most material hazards for UK mortgages (flood

and coastal erosion); client valuation impacts not incorporating climate transition plans; the physical risk modelling for corporates currently

excluding broader components such as supply chain impacts, and more broadly the political landscape; future climate data enhancements

and further model development.

The ECL impacts resulting from these climate risk assessments remain immaterial. This continues to support management's view that there

is a low residual risk of material error or omission in the Group's financial statements due to climate-related risks and as a result no

adjustments have been made to ECL measured as at 31 December 2025. The current behavioural lives of the Group's lending dilute the

potential exposure to the later emergence of potential physical climate impacts, with the incorporation of climate risk, in credit policy, as a

qualitative underwriting assessment within the Commercial Banking credit process and the origination process for mortgages providing

further mitigation on more recent originations.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 22: Finance lease receivables**

The Group's finance lease receivables are classified as loans and advances to customers and accounted for at amortised cost. The

contractual maturity of these balances are analysed as follows:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Not later than 1 year | **7835** | 6202 |
| Later than 1 year and not later than 2 years | **5176** | 5251 |
| Later than 2 years and not later than 3 years | **4142** | 4297 |
| Later than 3 years and not later than 4 years | **2731** | 2868 |
| Later than 4 years and not later than 5 years | **418** | 516 |
| Later than 5 years | **357** | 475 |
| **Gross investment** | **20659** | 19609 |
| Unearned future finance income | **(2503)** | (2447) |
| Rentals received in advance | **(22)** | (18) |
| **Net investment** | **18134** | 17144 |

---

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 £441 million (2024: £368 million).

The Group's finance lease assets are comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Electric vehicles | **1506** | 1001 |
| Internal combustion engine vehicles | **12740** | 11557 |
| Self-charging hybrid vehicles | **575** | 347 |
| Plug-in hybrid vehicles | **1604** | 1306 |
| Other | **1709** | 2933 |
| **Net investment** | **18134** | 17144 |

---

**Note 23: 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>| **Acquired**<br>**value of**<br>**in-force**<br>**business**<br>**£m**<br>| **Capitalised**<br>**software**<br>**enhancements**<br>**£m**<br>| **Total**<br>**£m**<br>|
| Cost<sup>1</sup>: |  |  |  |  |  |  |  |
| At 1 January 2024 | 3142 | 591 | 1002 | 682 | 834 | 8918 | 15169 |
| Exchange and other adjustments | – | – | – | 3 | – | (5) | (2) |
| Additions and acquisitions | – | – | – | – | – | 1259 | 1259 |
| Disposals and write-offs<sup>2</sup> | (50) | – | – | (423) | – | (216) | (689) |
| At 31 December 2024 | 3092 | 591 | 1002 | 262 | 834 | 9956 | 15737 |
| Exchange and other adjustments | **–** | **–** | **–** | **3** | **–** | **(47)** | **(44)** |
| Additions and acquisitions | **262** | **–** | **–** | **296** | **–** | **1252** | **1810** |
| Disposals and write-offs | **–** | **–** | **–** | **–** | **–** | **(269)** | **(269)** |
| **At 31 December 2025** | **3354** | **591** | **1002** | **561** | **834** | **10892** | **17234** |
| Accumulated amortisation: |  |  |  |  |  |  |  |
| At 1 January 2024 | 344 | 205 | 762 | 483 | 680 | 4389 | 6863 |
| Exchange and other adjustments | – | – | – | 3 | – | (12) | (9) |
| Charge for the year<sup>3</sup> | – | 1 | 70 | 13 | 17 | 1221 | 1322 |
| Disposals and write-offs | – | – | – | (422) | – | (205) | (627) |
| At 31 December 2024 | 344 | 206 | 832 | 77 | 697 | 5393 | 7549 |
| Exchange and other adjustments | **–** | **–** | **–** | **5** | **–** | **(19)** | **(14)** |
| Charge for the year<sup>3</sup> | **–** | **1** | **71** | **18** | **15** | **1270** | **1375** |
| Disposals and write-offs | **–** | **–** | **–** | **–** | **–** | **(269)** | **(269)** |
| **At 31 December 2025** | **344** | **207** | **903** | **100** | **712** | **6375** | **8641** |
| **Balance sheet amount at 31 December 2025** | **3010** | **384** | **99** | **461** | **122** | **4517** | **8593** |
| Balance sheet amount at 31 December 2024 | 2748 | 385 | 170 | 185 | 137 | 4563 | 8188 |

---

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.

2Disposals and write-offs includes goodwill of £50 million in 2024 that was classified as disposal group assets and presented within other assets in note 24.

3The charge for the year is recognised in operating expenses (note 10).

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 23: Goodwill and other intangible assets** continued

**Goodwill**

On 9 October 2025, LBG Equity Investments Limited, a wholly owned subsidiary of the Group, acquired 49.9% of the ordinary share capital

of Schroders Personal Wealth Limited (SPW) in exchange for its stake in Cazenove Capital, bringing the Group's ownership of SPW to 100%.

Goodwill of £262 million was recognised on the transaction. None of the goodwill is deductible for tax purposes.

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£3,010 million(2024:£2,748 million), £2,383 million, or

79% (2024:£2,121 million,77%) has been allocated to the Life and pensions cash-generating unit; £302 million, or10% (2024:£302 million,

11%) has been allocated to the Credit card cash-generating unit in the Group's Retail division; and £310 million, or10% (2024:£310 million,

11%) 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 Life and pensions business, is based on a value-in-use calculation. The calculation

uses pre-tax projections of future cash flows based upon budgets and plans approved by management covering a three-year period, the

related run-off of existing business in-force and a discount rate (pre-tax) of 11.0%. The budgets and plans are based upon past experience

adjusted to take into account anticipated changes in sales volumes, product mix and margins having regard to expected market conditions

and competitor activity. The discount rate is determined with reference to internal measures and available industry information. New

business cash flows beyond the plan period have been extrapolated using a reducing balance growth rate that falls from 3.5% to 2.0% after

20 years, which does not exceed the long-term average growth rate for the life assurance market.

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 24: Other assets**

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Insurance contract assets | **113** | – |
| Reinsurance contract assets<sup>2</sup> | **401** | 422 |
| Investment in joint ventures and associates | **445** | 542 |
| Property, plant and equipment: |  |  |
| Investment properties (see below) | **3917** | 3281 |
| Premises | **1126** | 1100 |
| Equipment | **901** | 879 |
| Operating lease assets (see below) | **8213** | 7265 |
| Right-of-use assets (note 25) | **759** | 872 |
|  | **14916** | 13397 |
| Prepayments | **1792** | 1634 |
| Disposal group assets<sup>1</sup>: |  |  |
| Deferred tax assets | **–** | 13 |
| Goodwill | **–** | 50 |
| Reinsurance contract assets<sup>2</sup> | **–** | 5059 |
|  | **–** | 5122 |
| Other assets | **2988** | 3671 |
| **Total other assets** | **20655** | 24788 |

---

1See Note 8 (C) for further detail.

2The Group's reinsurance contract assets have decreased by £5,080 million from £5,481 million to £401 million predominantly as a result of the completion of the part VII transfer of

insurance contract liabilities to Rothesay Life plc in relation to the Group's bulk annuity business and the conclusion of the associated reinsurance agreement.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 24: Other assets**continued

**Investment properties**

The Group's investment properties are primarily held by Lloyds Living and by the Insurance, Pensions and Investments business, where they

back policyholder liabilities. They are valued by external Chartered Surveyors using industry standard techniques based on guidance from

the Royal Institute of Chartered Surveyors. The valuation methodology includes an assessment of general market conditions and sector

level transactions and takes account of expectations of occupancy rates, rental income and growth. Property valuations undergo individual

scrutiny using cash flow analysis to factor in the timing of rental reviews, capital expenditure, lease incentives, dilapidation and operating

expenses; these reviews utilise both observable and unobservable inputs. Within the fair value hierarchy, all of the Group's investment

properties are categorised as level 3 (see note 17 for details of levels in the fair value hierarchy).The table below analyses movements in

level 3 investment properties, which are carried at fair value.

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| At 1 January | **3281** | 2862 |
| Acquisition of new properties | **606** | 640 |
| Additional expenditure on existing properties | **10** | 26 |
| Change in fair value  | **99** | 67 |
| Disposals and other movements | **(79)** | (314) |
| **At 31 December** | **3917** | 3281 |

---

Rental income of £190 million (2024: £172 million) and direct operating expenses of £27 million (2024: £44 million) arising from investment

properties that generate rental income have been recognised in the income statement.

Details of capital expenditure in respect of investment properties which had been contracted for but not recognised in the financial

statements is given in note 36.

**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.

**Note 25: 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 24).

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| At 1 January | **872** | 1055 |
| Exchange and other adjustments | **(1)** | 2 |
| Additions | **83** | 128 |
| Disposals | **(13)** | (115) |
| Depreciation charge for the year | **(182)** | (198) |
| **At 31 December** | **759** | 872 |

---

The Group's lease liabilities are recognised within other liabilities (note 27). 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 £183 million (2024: £202 million). The amount recognised within

interest expense in respect of lease liabilities is disclosed in note 5.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 26: 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** | **37532** | **41758** | 4608 | 40019 | 44627 |
| Covered bonds | **–** | **11260** | **11260** | – | 11764 | 11764 |
| Certificates of deposit issued | **–** | **7333** | **7333** | – | 5776 | 5776 |
| Securitisation notes | **17** | **6325** | **6342** | 22 | 5185 | 5207 |
| Commercial paper | **–** | **15821** | **15821** | – | 8090 | 8090 |
| **Total debt securities in issue** | **4243** | **78271** | **82514** | 4630 | 70834 | 75464 |

---

**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 £27,766 millionat 31 December 2025(2024: £27,657 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 £3,359 million (2024: £3,256 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 £11 million (2024: £11 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).

**Note 27: Other liabilities**

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Third party interests in consolidated funds<sup>1</sup> | **12781** | 10706 |
| Lease liabilities | **1026** | 1261 |
| Disposal group liabilities: |  |  |
| Liabilities arising from insurance contracts | **–** | 5268 |
| Other creditors and accruals<sup>2</sup> | **7138** | 8683 |
| **Total other liabilities** | **20945** | 25918 |

---

1Where a collective investment vehicle is consolidated, the interests of parties other than the Group are reported at fair value in other liabilities.

2Includes settlement balances, accruals and deferred income and reinsurance contract liabilities

The maturity analysis of the Group's lease liabilities on an undiscounted basis is set out in the liquidity risk section on **page[185](#i60edd65bad6d4aebb7b62f5dd34077bf_13297)**.

**Note 28: 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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 28: Provisions**continued

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Provisions**<br>**for financial**<br>**commitments**<br>**and guarantees**<br>**£m** | **Provisions**<br>**for financial**<br>**commitments**<br>**and guarantees**<br>**£m** | **Regulatory**<br>**and legal**<br>**provisions**<br>**£m**<br>| **Other**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2025 | **270** | **1600** | **443** | **2313** |
| Exchange and other adjustments | **–** | **3** | **(1)** | **2** |
| Provisions applied | **–** | **(295)** | **(479)** | **(774)** |
| (Release) charge for the year | **(73)** | **968** | **452** | **1347** |
| **At 31 December 2025** | **197** | **2276** | **415** | **2888** |

---

**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 £968 million in respect of legal actions and other regulatory matters and the unutilised

balance at 31 December 2025 was £2,276 million (31 December 2024: £1,600 million). The most significant items are outlined below.

**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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 28: Provisions**continued

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.

**Customer claims in relation to insurance branch business in Germany**

The Group continues to receive claims from customers in Germany relating to policies issued by Clerical Medical Investment Group Limited

(subsequently renamed Scottish Widows Limited), with smaller numbers of claims received from customers in Austria and Italy.

Operational costs, redress and legal fees associated with the claims are recognised within regulatory and legal provisions.

**Other**

The Group carries provisions of £119 million (31 December 2024: £154 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 £170 million (31 December 2024: £135 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.

**Note 29: Subordinated liabilities**

The movement in subordinated liabilities during the year was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Preference**<br>**shares**<br>**£m**<br>| **Undated**<br>**£m**<br>| **Dated**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2024 | 466 | 144 | 9643 | 10253 |
| **Issued during the year**<sup>1</sup>**:** |  |  |  |  |
| 4.375% Fixed Rate Reset Dated Subordinated Notes 2034 (€500 million) | – | – | 427 | 427 |
| 5.788% Fixed-to-Floating Rate Dated Subordinated Notes 2034 (A$250 million) | – | – | 128 | 128 |
| Floating Rate Dated Subordinated Notes 2034 (A$500 million) | – | – | 257 | 257 |
|  | – | – | 812 | 812 |
| **Repurchases and redemptions during the year**<sup>1</sup>**:** |  |  |  |  |
| 6.475% Non-cumulative Preference Shares callable 2024 (£186 million) | (47) | – | – | (47) |
| 4.5% Dated Subordinated Notes 2024 ($1,000 million) | – | – | (772) | (772) |
|  | (47) | – | (772) | (819) |
| Foreign exchange movements | (1) | – | (24) | (25) |
| Other movements (cash and non-cash)<sup>2</sup> | (5) | 1 | (128) | (132) |
| At 31 December 2024 | 413 | 145 | 9531 | 10089 |
| **Issued during the year**<sup>1</sup>**:** |  |  |  |  |
| 4.00% Fixed Rate Reset Dated Subordinated Notes 2035 (€1,000 million) | **–** | **–** | **842** | **842** |
| 6.068% Fixed-to-Floating Rate Dated Subordinated Notes 2036 ($1,250 million) | **–** | **–** | **918** | **918** |
|  | **–** | **–** | **1760** | **1760** |
| **Repurchases and redemptions during the year**<sup>1</sup>**:** |  |  |  |  |
| 4.50% Fixed Rate Step-up Subordinated Notes 2030 (€441 million) | **–** | **–** | **(371)** | **(371)** |
| 4.50% Fixed Rate Step-up Subordinated Notes 2030 (€309 million) | **–** | **–** | **(260)** | **(260)** |
| 7.625% Dated Subordinated Notes 2025 (£273 million) | **–** | **–** | **(273)** | **(273)** |
| 4.582% Fixed Rate Dated Subordinated Notes 2025 ($1,328 million) | **–** | **–** | **(996)** | **(996)** |
| 4.582% Fixed Rate Dated Subordinated Notes 2025 ($25.6 million) | **–** | **–** | **(19)** | **(19)** |
| 5.75% Undated Step-up Subordinated Notes callable 2025 (£9 million) | **–** | **(9)** | **–** | **(9)** |
|  | **–** | **(9)** | **(1919)** | **(1928)** |
| Foreign exchange movements | **(3)** | **–** | **(277)** | **(280)** |
| Other movements (cash and non-cash)<sup>2</sup> | **(3)** | **–** | **256** | **253** |
| **At 31 December 2025** | **407** | **136** | **9351** | **9894** |

---

1Issuances in the year generated cash inflows of £1,757 million (2024: £812 million); the repurchases and redemptions resulted in cash outflows of £1,928 million (2024: £819 million).

2Other movements include hedge accounting movements and cash payments in respect of interest on subordinated liabilities in the year amounting to £618 million (2024: £622 million)

offset by the interest expense in respect of subordinated liabilities of £707 million (2024: £738 million).

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 29: Subordinated liabilities**continued

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 Company has in issue various classes of preference shares, with a nominal value of £74 million (296,227,449 shares), which are all

classified as liabilities under IFRS accounting standards and are shown below. This represents 0.50% of the total issued share capital

(59,181,971,051 shares) of the Group.

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of shares** | **Number of shares** | **Number of shares** |
|  | **2025** | 2024 | 2023 |
| 6% Non-cumulative Redeemable Preference shares of GBP0.25 | **400** | 400 | 400 |
| 6.475% Non-cumulative Preference shares of GBP0.25 | **–** | – | 47273816 |
| 9.25% Non-cumulative Irredeemable Preference shares of GBP0.25 | **252510147** | 252510147 | 252510147 |
| 9.75% Non-cumulative Irredeemable Preference shares of GBP0.25 | **43630285** | 43630285 | 43630285 |
| 6.413% Non-cumulative Fixed/Floating Rate Callable Preference shares of USD0.25 | **48990** | 48990 | 48990 |
| 6.657% Non-cumulative Fixed/Floating Rate Callable Preference shares of USD0.25 | **37627** | 37627 | 37627 |
| Total | **296227449** | 296227449 | 343501265 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 | 2023 | 2023 |
|  | **£m** | **% of**<br>**share**<br>**capital**<br>| £m | % of<br>share<br>capital<br>| £m | % of<br>share<br>capital<br>|
| 6% Non-cumulative Redeemable Preference shares of GBP0.25 | **–** | **–** | – | – | – | – |
| 6.475% Non-cumulative Preference shares of GBP0.25 | **–** | **–** | – | – | 12 | 0.07 |
| 9.25% Non-cumulative Irredeemable Preference shares of <br>GBP0.25<br>| **63** | **0.43** | 63 | 0.42 | 63 | 0.40 |
| 9.75% Non-cumulative Irredeemable Preference shares of <br>GBP0.25<br>| **11** | **0.07** | 11 | 0.07 | 11 | 0.07 |
| 6.413% Non-cumulative Fixed/Floating Rate Callable Preference <br>shares of USD0.25<br>| **–** | **–** | – | – | – | – |
| 6.657% Non-cumulative Fixed/Floating Rate Callable Preference <br>shares of USD0.25<br>| **–** | **–** | – | – | – | – |
| Total | **74** | **0.50** | 74 | 0.49 | 86 | 0.54 |

---

In any general meeting of the Company which is held as a physical general meeting, a resolution put to the vote of the meeting shall be

decided by a poll unless the chair of the meeting determines that such resolution shall be decided on a show of hands, although in certain

circumstances such decision may be overridden by a sufficient number of shareholders demanding a poll. At a general meeting of the

Company, every holder of shares (whether ordinary or preference shares) who is present in person or by proxy and entitled to vote, shall

have one vote per share in relation to the resolutions on which they are entitled, respectively, to vote, whether such vote is held on a poll or

a show of hands.

100% of preference shares have voting rights. The preference shares represent 0.50% of the total voting rights of the Company, the

remainder being represented by the ordinary shares.

The rights and obligations attaching to the preference shares are set out in:

i.the Company's articles of association, a copy of which can be obtained from Companies House or from our website

(www.lloydsbankinggroup.com/who-we-are/group-overview/corporate-governance.html);

![Icon_Weblink.gif](lyg-20251231_g14.gif)

ii.in respect of the 6% Non-cumulative Redeemable Preference shares, in Companies House form 128(1) filed at Companies House on

12 January 2005, a copy of which is available from Companies House (www.companieshouse.gov.uk); and

![Icon_Weblink.gif](lyg-20251231_g14.gif)

iii.in respect of the other classes of preference shares, in the prospectus dated 20 November 2008 and published on the

National Storage Mechanism on that date, a copy of which prospectus is available on the National Storage Mechanism

(https://data.fca.org.uk/#/nsm/nationalstoragemechanism).

![Icon_Weblink.gif](lyg-20251231_g14.gif)

None of the preference shares have any multiple or unequal voting rights.

As at 31 December 2025, the free float percentage of all of the Company's ordinary and preference listed shares in issue was over 99.99%,

by both number of shares and nominal value. The balance was comprised of the 400 unlisted 6% Non-cumulative Redeemable Preference

shares of GBP0.25 each referred to above (£100 in total).

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 30: Share capital**

**Issued and fully paid ordinary share capital**

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of shares** | **Number of shares** | **Number of shares** |
| **Ordinary shares of 10p (formerly 25p) each** | **2025** | 2024 | 2023 |
| At 1 January | **60617012971** | 63569225662 | 67287852204 |
| Issued under employee share schemes | **472840371** | 734265017 | 667636165 |
| Share buyback programme (note 32) | **(2204109740)** | (3686477708) | (4386262707) |
| **At 31 December** | **58885743602** | 60617012971 | 63569225662 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 | 2023 | 2023 |
| **Ordinary shares of 10p (formerly 25p) each** | **£m** | **% of**<br>**share**<br>**capital**<br>| £m | % of<br>share<br>capital<br>| £m | % of<br>share<br>capital<br>|
| **At 31 December** | **5889** | **99.50** | 6062 | 99.52 | 6358 | 99.46 |

---

**Ordinary shares**

As permitted by the Companies Act 2006, the Company removed references to authorised share capital from its articles of association at

the annual general meeting on 5 June 2009. This change took effect from 1 October 2009. There are no restrictions on the transfer of shares

in the Company 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 (for example, insider trading laws)

• Where directors and certain employees of the Company require the approval of the Company to deal in the Company's shares

• Pursuant to the rules of some of the Company's employee share plans where certain restrictions may apply while the shares are subject

to the plans

Where, under an employee share plan operated by the Company, participants are the beneficial owners of shares but not the registered

owners, the voting rights are normally exercised by the registered owner at the direction of the participant. Outstanding awards and

options would normally vest and become exercisable on a change of control, subject to the satisfaction of any performance conditions at

that time.

All of the Company's issued ordinary share capital is listed (i.e. the free float percentage of the ordinary shares is 100%) and none of the

shares have any multiple or unequal voting rights; each share carries one vote. In addition, the Company is not aware of any agreements

between shareholders that may result in restrictions on the transfer of securities and/or voting rights.

The directors have authority to allot and issue ordinary and preference shares and to make market purchases of ordinary and preference

shares as granted at the annual general meeting on 15 May 2025. The authority to issue shares and the authority to make market

purchases of shares will expire at the next annual general meeting. Shareholders will be asked, at the annual general meeting, to give

similar authorities.

Subject to any rights or restrictions attached to any shares, on a show of hands at a general meeting of the Company every holder of shares

present in person or by proxy and entitled to vote has one vote and on a poll every member present and entitled to vote has one vote for

every share held. The special rights attached to any class of shares (including preference shares) in the Company may, subject to the

statutory provisions, be varied or abrogated either with the consent in writing of the holders of three-quarters in nominal value of the

issued shares of the class or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of the class

(but not otherwise).

The holders of ordinary shares, who held 100% of the total ordinary share capital at 31 December 2025, are entitled to receive the

Company'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 Company's articles of association) and in the event of a

winding-up, may share in the assets of the Company.

The rights and obligations attached to the Company's ordinary shares are set out in the Company's articles of association, a copy of which

can be found at <u>www.lloydsbankinggroup.com/who-we-are/group-overview/corporate-governance.html</u> →.

**Preference shares**

The Company has in issue various classes of preference shares which are all classified as liabilities under IFRS accounting standards and

which are included in note 29. The statement above (under the heading 'Ordinary shares') in relation to the variation of special rights

attaching to any shares is also applicable to preference shares.

**Note 31: Earnings per share**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Profit attributable to ordinary shareholders – basic and diluted | **4196** | 3923 | 4933 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**million**<br>| 2024<br>million<br>| 2023<br>million<br>|
| Weighted average number of ordinary shares in issue – basic | **59790** | 62413 | 64953 |
| Adjustment for share options and awards | **723** | 661 | 807 |
| Weighted average number of ordinary shares in issue – diluted | **60513** | 63074 | 65760 |
| Basic earnings per share | **7.0p** | 6.3p | 7.6p |
| Diluted earnings per share | **6.9p** | 6.2p | 7.5p |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 31: Earnings per share**continued

Basic earnings per share are calculated by dividing the net profit attributable to equity shareholders by the weighted average number of

ordinary shares in issue during the year, which has been calculated after deducting 105 million (2024: 71 million; 2023: 180 million) ordinary

shares representing the Group's holdings of own shares in respect of employee share schemes.

For the calculation of diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion

of all dilutive potential ordinary shares that arise in respect of share options and awards granted to employees. The number of shares that

could have been acquired at the annual average price of the Company's shares based on the monetary value of the subscription rights

attached to outstanding share options and awards is determined. This is deducted from the number of shares issuable under such options

and awards to leave a residual bonus amount of shares which are added to the weighted average number of ordinary shares in issue, but no

adjustment is made to the profit attributable to equity shareholders.

There were 1 million anti-dilutive share options and awards excluded from the calculation of diluted earnings per share (2024: 16 million;

2023: 41 million).

**Note 32: Other reserves**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| **Merger reserve** |  |  |  |
| At 1 January | **7102** | 7149 | 7149 |
| Redemption of preference shares (note 29)<sup>1</sup> | **–** | (47) | – |
| At 31 December | **7102** | 7102 | 7149 |
| **Capital redemption reserve** |  |  |  |
| At 1 January | **5751** | 5370 | 4932 |
| Redemption of preference shares (note 29)<sup>1</sup> | **–** | 12 | – |
| Shares cancelled under share buyback programme (see below) | **220** | 369 | 438 |
| At 31 December | **5971** | 5751 | 5370 |
| **Revaluation reserve in respect of debt securities held at fair value through other comprehensive income** |  |  |  |
| At 1 January | **(113)** | (67) | 50 |
| Movements recognised in other comprehensive income | **24** | (46) | (117) |
| At 31 December | **(89)** | (113) | (67) |
| **Revaluation reserve in respect of equity shares held at fair value through other comprehensive income** |  |  |  |
| At 1 January | **93** | – | 57 |
| Movements recognised in other comprehensive income | **34** | 93 | (57) |
| Realised gains and losses transferred to retained profits | **(107)** | – | – |
| At 31 December | **20** | 93 | – |
| **Cash flow hedge reserve** |  |  |  |
| At 1 January | **(3755)** | (3766) | (5476) |
| Movements recognised in other comprehensive income | **1692** | 11 | 1710 |
| At 31 December | **(2063)** | (3755) | (3766) |
| **Foreign currency translation reserve** |  |  |  |
| At 1 January | **(251)** | (178) | (125) |
| Movements recognised in other comprehensive income | **54** | (73) | (53) |
| At 31 December | **(197)** | (251) | (178) |
| **Total other reserves at 31 December** | **10744** | 8827 | 8508 |

---

1During the year ended 31 December 2024, the Group redeemed all of its outstanding 6.475% Non-cumulative Preference Shares at their combined sterling value of £47 million. These

preference shares had been accounted for as subordinated liabilities. On redemption an amount of £35 million was transferred from the distributable merger reserve to the share

premium account.

The merger reserve primarily comprises the premium on shares issued in January 2009 as part of the recapitalisation of the Group and the

acquisition of HBOS plc.

The capital redemption reserve represents transfers from distributable reserves in accordance with companies' legislation upon the

redemption of ordinary and preference share capital.

The revaluation reserve 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.

In 2025, 2024 and 2023 the Group commenced and completed share buyback programmes to repurchase outstanding ordinary shares. In

2025 the Group bought back and cancelled 2,204 million shares under the programme (2024: 3,686 million shares; 2023: 4,386 million

shares), for a total consideration, including expenses, of £1,710 million (2024: £2,011 million; 2023: £1,993 million). Upon cancellation,

£220 million (2024: £369 million; 2023: £438 million), being the nominal value of the shares repurchased, was transferred to the capital

redemption reserve.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 33: Other equity instruments**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| At 1 January | **6195** | 6940 | 5297 |
| **Issued during the year:** |  |  |  |
| £750 million 7.5% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible <br>Securities callable 2030<br>| **750** | – | – |
| $1,000 million 6.625% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible <br>Securities callable 2035<br>| **761** |  |  |
| $1,000 million 6.75% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible <br>Securities Callable 2031<br>| **–** | 763 | – |
| $1,250 million 8% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible<br>Securities Callable 2029<br>| **–** | – | 1028 |
| £750 million 8.5% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible <br>Securities Callable 2028<br>| **–** | – | 750 |
|  | **1511** | 763 | 1778 |
| **Repurchases and redemptions during the year:** |  |  |  |
| €750 million 6.375% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible <br>Securities Callable 2020<br>| **(622)** | – | – |
| $1,500 million 7.5% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible <br>Securities Callable 2025<br>| **(1137)** | – | – |
| $1,675 million 7.5% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible <br>Securities<br>| **–** | (1008) | – |
| £500 million 5.125% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible <br>Securities Callable 2024<br>| **–** | (500) | – |
| £1,494 million 7.625% Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible <br>Securities Callable 2023<br>| **–** | – | (135) |
|  | **(1759)** | (1508) | (135) |
| Profit for the year attributable to other equity holders | **463** | 498 | 527 |
| Distributions on other equity instruments | **(463)** | (498) | (527) |
| **At 31 December** | **5947** | 6195 | 6940 |

---

The AT1 securities are Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities with no fixed maturity or

redemption date. The principal terms of the AT1 securities are described below:

• The securities rank behind the claims against Lloyds Banking Group plc of (a) unsubordinated creditors, (b) claims which are, or are

expressed to be, subordinated to the claims of unsubordinated creditors of Lloyds Banking Group plc but not further or otherwise, or (c)

whose claims are, or are expressed to be, junior to the claims of other creditors of Lloyds Banking Group, whether subordinated or

unsubordinated, other than those whose claims rank, or are expressed to rank, pari passu with, or junior to, the claims of the holders of

the AT1 securities in a winding-up occurring prior to a conversion event being triggered

• The securities bear a fixed rate of interest until the first reset date. After the first reset date or any reset date thereafter, in the event

that they are not redeemed, the AT1 securities will bear interest at rates fixed periodically in advance for five year periods based on

market rates

• Interest on the securities will be due and payable only at the sole discretion of Lloyds Banking Group plc, and Lloyds Banking Group plc

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 Lloyds Banking Group plc, in whole at the first call date or period, or on

any fifth anniversary after the first call date or period. In addition, the AT1 securities are repayable, at the option of Lloyds Banking

Group plc, in whole for certain regulatory or tax reasons. Any repayments require the prior consent of the PRA

• The securities convert into ordinary shares of Lloyds Banking Group plc, at a pre-determined price, should the CET1 ratio of the Group

fall below 7.0%

**Note 34: Dividends on ordinary shares**

The directors have recommended a final dividend, which is subject to approval by the shareholders at the annual general meeting on

14 May 2026, of 2.43 pence per ordinary share (2024: 2.11 pence per ordinary share). This is equivalent to £1,429 million, before the impact

of any cancellations of shares under the Company's buyback programme (2024: £1,271 million, following cancellations of shares under the

Company's 2025 buyback programme up to the record date), and will be paid on 19 May 2026. These financial statements do not reflect

the recommended final dividend.Shareholders who have already joined the dividend reinvestment plan will automatically receive shares

instead of the cash dividend. Key dates for the payment of the recommended dividend are outlined on **page** **[306](#i3eaa7a3e529a46b3b97a88e05ad474bc_907)**.

Dividends paid during the year were as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025**<br>**pence per**<br>**share**<br>| 2024<br>pence per<br>share<br>| 2023<br>pence per<br>share<br>| **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Final dividend recommended by directors at previous year end | **2.11** | 1.84 | 1.60 | **1271** | 1169 | 1059 |
| Interim dividend paid in the year | **1.22** | 1.06 | 0.92 | **729** | 659 | 592 |
|  | **3.33** | 2.90 | 2.52 | **2000** | 1828 | 1651 |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 34: Dividends on ordinary shares**continued

The trustees of the following holdings of Lloyds Banking Group plc shares in relation to employee share schemes retain the right to receive

dividends but have chosen to waive their entitlement to the dividends on those shares as indicated: the Lloyds Banking Group Share

Incentive Plan (holding at 31 December 2025: 2,805,932 shares, 31 December 2024: 590,670 shares, waived rights to all dividends) and the

Lloyds Banking Group Employee Share Ownership Trust (holding at 31 December 2025: 84,427,788 shares, 31 December 2024:

125,361,633 shares, waived rights to all dividends).

The payment of dividends by subsidiaries and the ability of members of the Group to lend money to other members of the Group may be

subject to regulatory or legal restrictions, the availability of reserves and the financial and operating performance of the entity. A number of

Group subsidiaries, principally those with banking and insurance activities, are subject to regulatory capital requirements which require

minimum amounts of capital to be maintained relative to their size and risk. The Group actively manages the capital of its subsidiaries,

which includes monitoring the regulatory capital ratios for its banking and insurance subsidiaries and, on a consolidated basis, the Ring-

Fenced Bank sub-group, against approved risk appetite levels.

**Note 35: 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 | 16 |
| Share-based payments | **24** | 20 | 22 |
| **Total compensation** | **39** | 34 | 38 |

---

There were no contributions in respect of key management personnel to defined contribution pension schemes (2024 and 2023: none).

---

| | | | |
|:---|:---|:---|:---|
|  | **Share plans** | **Share plans** | **Share plans** |
|  | **2025**<br>**million**<br>| 2024<br>million<br>| 2023<br>million<br>|
| At 1 January | **123** | 55 | 72 |
| Granted, including certain adjustments (includes entitlements of appointed key management personnel) | **44** | 78 | 27 |
| Exercised/lapsed (includes entitlements of former key management personnel) | **(9)** | (10) | (44) |
| **At 31 December** | **158** | 123 | 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 31.75% 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) | **42** | 31 | 44 |
| Withdrawn (includes deposits of former key management personnel) | **(43)** | (37) | (40) |
| **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).

At 31 December 2025, transactions, arrangements and agreements entered into by the Group's banking subsidiaries with directors and

connected persons included amounts outstanding in respect of loans and credit card transactions of £36.1 thousand with three directors

and one connected person (2024: £29.0 thousand with five directors and one connected person; 2023: £23.4 thousand with five directors

and no connected persons).

**Subsidiaries**

Details of the Group's subsidiaries and related undertakings are given on **pages [313](#i3eaa7a3e529a46b3b97a88e05ad474bc_916) to [323](#i4ab22b85c6014c18a6e3e63627259d24_6556)**. In accordance with IFRS 10 Consolidated

Financial Statements, transactions and balances with subsidiaries have been eliminated on consolidation.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 35: Related party transactions**continued

**Pension funds**

The Group provides banking and some investment management services to a number of its pension funds. At 31 December 2025, customer

deposits of £128 million (2024: £113 million) related to the Group's pension funds.

**Collective investment vehicles**

The Group manages 91 (2024: 88) collective investment vehicles, such as Open-Ended Investment Companies (OEICs) and of these

49 (2024: 50) are consolidated. The Group invested £45 million (2024: £142 million) and redeemed £525 million (2024: £513 million) in the

unconsolidated collective investment vehicles during the year and had investments, at fair value, of £744 million (2024: £1,461 million) at

31 December. The Group earned fees of £130 million from the unconsolidated collective investment vehicles during 2025 (2024:

£82 million).

**Joint ventures and associates**

At 31 December 2025 there were loans and advances to customers of £34 million (2024: £45 million) outstanding and balances within

customer deposits of £13 million (2024: £13 million) relating to joint ventures and associates.

During the year the Group paid fees of £3 million (2024: £4 million) to its Schroders Personal Wealth joint venture, which then became a

fully consolidated subsidiary on 9 October 2025 when the Group acquired the remaining 49.9% of the ordinary share capital of Schroders

Personal Wealth in exchange for its stake in Cazenove Capital.

In addition to the above balances, the Group has a number of other associates held by its venture capital business that it accounts for at

fair value through profit or loss. These investments are reported within financial assets at fair value through profit or loss on the face of the

balance sheet. At 31 December 2025, companies that are joint ventures and associates of the Group had total assets of £7,728 million

(2024: £7,635 million), total liabilities of £6,275 million (2024: £6,436 million) and for the year ended 31 December 2025 had turnover of

£3,072 million (2024: £3,630 million) and made a net loss of £221 million (2024: net loss of £328 million). In addition, the Group has

provided £1,646 million (2024:£1,651 million) of financing to these companies on which it received £135 million (2024: £116 million) of

interest income in the year.

**Note 36: Contingent liabilities, commitments and financial 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

£3,009 million (31 December 2024: £2,605 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 £157,574 million (31 December 2024: £148,619 million), of which in

respect of undrawn formal standby facilities, credit lines and other commitments to lend, £88,135 million (31 December 2024:

£79,518 million) was irrevocable.

**Capital commitments**

Excluding commitments in respect of investment property, 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.Capital expenditure

in respect of investment properties which had been contracted for but not recognised in the financial statements was £312 million (31

December 2024: £236 million).The Group's management is confident that future net revenues and funding will be sufficient to cover these

commitments.

**Interchange fees**

With respect to multi-lateral interchange fees (MIFs), the 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 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

Group may be subject and this cap is set at the cash consideration received by the Group for the sale of its stake in Visa Europe to Visa Inc

in 2016. In 2016, the 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 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 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 Group of any private lawsuits. As such, it is not practicable to

provide an estimate of any potential financial effect.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 36: Contingent liabilities, commitments and financial guarantees**continued

**Tax authorities**

The Group has an open matter in relation to a claim for group relief of losses incurred in its former Irish banking subsidiary, which ceased

trading on 31 December 2010. In 2020, HMRC concluded its enquiry into the matter and issued a closure notice denying the group relief

claim. The Group appealed to the First Tier Tax Tribunal. The hearing took place in May 2023. In January 2025, the First Tier Tribunal

concluded in favour of HMRC. The Group believes it has applied the rules correctly and that the claim for group relief is correct. Having

reviewed the Tribunal's conclusions and having taken appropriate advice the Group has appealed to the Upper Tier Tax Tribunal, and does

not consider this to be a case where an additional tax liability will ultimately fall due. If the final determination of the matter by the judicial

process is that HMRC's position is correct, management believes that this would result in an increase in current tax liabilities of

approximately £980 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 28.

**Note 37: 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 26 for securitisations and covered bond vehicles, note 12 for structured entities associated with the

Group's pension schemes, and below in part (A) and (B). Details of the Group's interests in unconsolidated structured entities are included

below in part (C).

**(A)Asset-backed conduits**

In addition to the structured entities discussed in note 26, 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.

**(B)Consolidated collective investment vehicles and limited partnerships**

The assets of the Insurance business held in consolidated collective investment vehicles, such as Open-Ended Investment Companies and

limited partnerships, are not directly available for use by the Group. However, the Group's investment in the majority of these collective

investment vehicles is readily realisable. As at 31 December 2025, the total carrying value of these consolidated collective investment

vehicle assets and liabilities held by the Group was £50,239 million (2024: £59,999 million).

The Group has no contractual arrangements (such as liquidity facilities) that would require it to provide financial or other support to the

consolidated collective investment vehicles; the Group has not previously provided such support and has no current intentions to provide

such support.

**(C)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.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 37: Structured entities**continued

The Group sponsors a range of diverse investment funds and limited partnerships where it acts as the fund manager or equivalent decision-

maker and markets the funds under one of the Group's brands. 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>|
| Collective investment <br>vehicles and limited <br>partnerships<br>| These vehicles are primarily financed by <br>investments from investors in the vehicles and <br>are matched by policyholder liabilities in the <br>Insurance division.<br>| •Interests in units issued by the vehicles<br>•Fees from management of vehicles<br>| **2627** | 2434 |
| Securitisation vehicles | These vehicles issue asset-backed notes to <br>investors and facilitate the management of <br>the 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>|
| Collective investment vehicles and limited partnerships | Financial assets at fair value through profit or loss | **45991** | 86630 |
| Notes held in securitisation vehicles | Financial assets at fair value through profit or loss; and<br>Financial assets at amortised cost<br>| **1186** | 2403 |
| Interest rate derivatives provided to securitisation vehicles | Derivative financial instruments assets; and <br>Derivative financial instruments (liabilities)<br>| **5** | 22 |

---

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 fee income earned from unconsolidated structured entities that the Group sponsors but does not have an interest in was £130 million

(2024: £82 million) for collective investment vehicles and £1 million (2024: £1 million) for securitisation vehicles. The carrying amount of

assets transferred to securitisation vehicles at the time of transfer was £nil (2024: £2,004million) and the Group recognised £nilgain or loss

on transfer (2024: gain of £11million).

**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. The remaining notes held by the Group, together with interest rate

derivatives transacted with the vehicles, are 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 £1,181 million (2024:

£2,401million). The income from the Group's interest in these structures for the year ended 31 December 2025 was £55 million (2024:£226

million) and cumulatively for the lifetime was £414 million (2024:£359 million).

**Note 38: 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 37.

**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 26, 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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 38: Transfers of financial assets**continued

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 26). 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** |  |  |  |  |
| Financial assets at fair value through profit or loss | **5255** | **4151** | 2340 | 1089 |
| Debt securities held at amortised cost | **697** | **–** | 1210 | – |
| Financial assets at fair value through other comprehensive income | **15768** | **10674** | 12483 | 4465 |
| **Securitisation programmes** |  |  |  |  |
| Financial assets at amortised cost: |  |  |  |  |
| Loans and advances to customers<sup>1</sup> | **27766** | **6342** | 27657 | 5207 |

---

1The carrying value of associated liabilities excludes securitisation notes held by the Group of £16,264 million (31 December 2024: £17,079 million).

**Note 39: 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, capital risk and insurance underwriting risk.

**Market risk**

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 Group Asset and Liability Committee. More information is set out on **pages [187](#i488be3d12dce44a7b64b0310701877ca_29954) to [193](#i488be3d12dce44a7b64b0310701877ca_30000)**.

**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

**pages [154](#iecc5dc2854414ebfb46530f7e5092bc7_54171) to [178](#iecc5dc2854414ebfb46530f7e5092bc7_54126)**.

**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**pages [181](#ib8bb384d26e1435f823cf6ca02bbd2f4_2-1-2-1-5233089) to [186](#i60edd65bad6d4aebb7b62f5dd34077bf_13299)**.

**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 £32,930 million (31 December 2024: £31,979 million). Further details of the

Group's capital resources are provided in the table marked audited on **page [147](#i8acf0bddbc7d4617a6419c15266da538_18689).**

The insurance business (the Scottish Widows Group) and each of the constituent UK insurance companies within it are regulated by the

PRA. The insurance businesses are required to calculate solvency capital requirements and available capital in accordance with Solvency II.

The Group complied with these requirements in 2025 and 2024. The Insurance business of the Group calculates regulatory capital on the

basis of an internal model, which was approved by the PRA on 5 December 2015, with the latest major change to the model approved in

November 2024. The capital position of the Group's insurance businesses is reviewed on a regular basis by the Insurance, Pensions and

Investments Executive Committee. More information is set out on **page[150](#i8acf0bddbc7d4617a6419c15266da538_18610).**

**Insurance underwriting risk**

Insurance underwriting risk is the risk of adverse developments in the timing, frequency and severity of claims for insured/underwritten

events and in customer behaviour, leading to reductions in earnings and/or value and arises within the Group's Insurance business.

Insurance underwriting risk is measured using a variety of techniques including stress, reverse stress and scenario testing, as well as

stochastic modelling. Current and potential future insurance underwriting risk exposures are assessed and aggregated on a range of stresses

including risk measures based on 1-in-200 year stresses for the Insurance business's regulatory capital assessments and other supporting

measures where appropriate. The Group also mitigates insurance underwriting risk via the use of reinsurance arrangements.

More information is set out on **page [180](#i3eaa7a3e529a46b3b97a88e05ad474bc_550).** The Group's critical accounting judgements and key sources of estimation uncertainty for its

Insurance business are set out in note 8.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 40: Cash flow statement**

**(A)Change in operating assets**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Change in financial assets held at amortised cost | **(26316)** | (21106) | 12311 |
| Change in financial assets at fair value through profit or loss | **(24505)** | (9872) | (22539) |
| Change in derivative financial instruments | **4446** | (4082) | 1805 |
| Change in other operating assets | **5686** | (4562) | (687) |
| **Change in operating assets** | **(40689)** | (39622) | (9110) |

---

**(B)Change in operating liabilities**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Change in deposits from banks | **(376)** | 4 | (1110) |
| Change in customer deposits | **13858** | 11324 | (3850) |
| Change in repurchase agreements | **810** | 57 | (10893) |
| Change in financial liabilities at fair value through profit or loss | **172** | 2619 | 6925 |
| Change in derivative financial instruments | **(5216)** | 1524 | (3893) |
| Change in debt securities in issue at amortised cost | **7725** | (4824) | 2094 |
| Change in insurance contracts<sup>1</sup> | **13220** | 1941 | 9845 |
| Change in investment contract liabilities | **10412** | 6250 | 5502 |
| Change in other operating liabilities<sup>2</sup> | **(5202)** | 4708 | (388) |
| **Change in operating liabilities** | **35403** | 23603 | 4232 |

---

1Includes insurance contracts presented within disposal group liabilities.

2Includes a decrease of £235 million (2024: decrease of £371 million; 2023: increase of £315 million) in respect of lease liabilities.

**(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> | **715** | 471 | 861 |
| Accretion of discounts and amortisation of premiums and issue costs | **(488)** | 195 | 1259 |
| Revaluation of investment properties | **(99)** | (67) | 87 |
| Net gain on sale of financial assets at fair value through other comprehensive income | **(3)** | (7) | (122) |
| Share of post-tax results of associates and joint ventures | **(1)** | 13 | 16 |
| Profit on derecognition of joint ventures and associates | **(121)** | – | – |
| Loss/(profit) on disposal of tangible fixed assets | **65** | (36) | (61) |
| Net credit in respect of defined benefit schemes | **(37)** | (11) | (79) |
| Depreciation and amortisation | **3477** | 3426 | 2905 |
| Regulatory and legal provisions | **968** | 899 | 675 |
| Other provision movements | **(29)** | (206) | (30) |
| Allowance for loan losses | **867** | 494 | 315 |
| Write-off of allowance for loan losses, net of recoveries | **(1097)** | (1029) | (1115) |
| Impairment credit on undrawn balances | **(73)** | (51) | – |
| Impairment credit on financial assets at fair value through other comprehensive income | **(1)** | (3) | (2) |
| Transactions in own shares | **38** | (173) | 103 |
| Transfers to income statement from reserves | **1869** | 2597 | 1838 |
| Foreign exchange impact on balance sheet<sup>2</sup> | **709** | 1 | 502 |
| Other non-cash items | **91** | 42 | 176 |
| **Total non-cash items** | **6850** | 6555 | 7328 |
| Contributions to defined benefit schemes | **(152)** | (175) | (1345) |
| Payments in respect of regulatory and legal provisions | **(295)** | (401) | (378) |
| Other | **28** | 11 | 17 |
| **Total other items** | **(419)** | (565) | (1706) |
| **Non-cash and other items** | **6431** | 5990 | 5622 |

---

1Interest expense on subordinated liabilities and hedging valuation adjustments on subordinated debt, previously presented separately, are reported in aggregate.

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.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 40: Cash flow statement**continued

**(D)Acquisition of Group undertakings, businesses and joint ventures**

On 9 October 2025, LBG Equity Investments Limited, a wholly owned subsidiary of the Group, acquired 49.9% of the ordinary share capital

of Schroders Personal Wealth Limited (SPW) in exchange for its stake in Cazenove Capital, bringing the Group's ownership of SPW to 100%.

Goodwill of £262 million was recognised on the transaction. None of the goodwill was deductible for tax purposes.

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Net assets acquired: |  |  |  |
| Cash and cash equivalents | **144** | – | 38 |
| Tangible fixed assets | **2** | – | – |
| Intangible assets (excluding goodwill) | **296** | – | 182 |
| Other assets | **152** | – | 672 |
| Deferred tax | **(74)** | – | (58) |
| Other liabilities | **(166)** | – | (646) |
| Goodwill arising on acquisition | **262** | – | 143 |
| Non cash consideration | **(616)** | – | – |
| **Cash consideration** | **–** | – | 331 |
| Less cash and cash equivalents acquired | **(144)** | – | (38) |
| **Net cash (inflow)/outflow arising from acquisition of subsidiaries and businesses** | **(144)** | – | 293 |
| Acquisition of and additional investment in joint ventures | **117** | 179 | 87 |
| **Net cash (inflow)/outflow from acquisitions in the year** | **(27)** | 179 | 380 |

---

**(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 | **56661** | 62705 | 78110 |
| Less mandatory reserve deposits<sup>1</sup> | **(37)** | (21) | (1930) |
|  | **56624** | 62684 | 76180 |
| Loans and advances to banks and reverse repurchase agreements with banks | **17006** | 15175 | 19048 |
| Less amounts with a maturity of three months or more | **(13037)** | (7043) | (6390) |
|  | **3969** | 8132 | 12658 |
| **Total cash and cash equivalents**<sup>2</sup> | **60593** | 70816 | 88838 |

---

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.

2Included within cash and cash equivalents at 31 December 2025 is £16 million (2024: £23 million; 2023: £31 million) of restricted cash and cash equivalents held within the Group's

long-term insurance and investments operations, which is not immediately available for use in the business.

**Note 41: Events since the balance sheet date**

**Share buyback**

On 30 January 2026, the Group announced the launch of an ordinary share buyback of up to £1.75 billion. This represents the return to

shareholders of capital, surplus to that required to provide capacity to grow the business, meet current and future regulatory requirements

and cover uncertainties. The share buyback programme is expected to be completed, subject to continued authority from the PRA, by

31 December 2026.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Parent company income statement

for the year ended 31 December

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| Interest income | **804** | 800 | 632 |
| Interest expense | **(1031)** | (1096) | (1129) |
| **Net interest expense** | **(227)** | (296) | (497) |
| Net trading (losses) income | **(129)** | 61 | 71 |
| Dividends from subsidiaries | **2990** | 5187 | 5024 |
| Other operating income | **893** | 701 | 672 |
| **Other income** | **3754** | 5949 | 5767 |
| **Total income** | **3527** | 5653 | 5270 |
| Operating expenses | **(164)** | (216) | (225) |
| Impairment credit | **3** | 3 | 10 |
| **Profit before tax** | **3366** | 5440 | 5055 |
| Tax credit | **23** | 48 | 84 |
| **Profit for the year** | **3389** | 5488 | 5139 |
| Profit attributable to ordinary shareholders | **2926** | 4990 | 4612 |
| Profit attributable to other equity holders | **463** | 498 | 527 |
| **Profit for the year** | **3389** | 5488 | 5139 |

---

Total comprehensive income comprises only profit for the year.

The accompanying notes are an integral part of the parent company financial statements.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Parent company balance sheet

at 31 December

---

| | | | |
|:---|:---|:---|:---|
|  | Note | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Assets** |  |  |  |
| Cash and cash equivalents |  | **8** | 22 |
| Financial assets at fair value through profit or loss | 3 | **19703** | 23370 |
| Derivative financial instruments | 3 | **298** | 519 |
| Debt securities |  | **1623** | 2354 |
| Loans to subsidiaries | 9 | **16949** | 17068 |
| Investment in subsidiaries | 9 | **54567** | 51334 |
| Current tax recoverable |  | **6** | 75 |
| Deferred tax assets | 5 | **85** | 23 |
| Other assets |  | **7** | 14 |
| **Total assets** |  | **93246** | 94779 |
| **Liabilities** |  |  |  |
| Due to subsidiaries |  | **150** | 3 |
| Financial liabilities at fair value through profit or loss | 3 | **22433** | 24896 |
| Derivative financial instruments | 3 | **579** | 939 |
| Debt securities in issue at amortised cost | 6 | **9941** | 8310 |
| Other liabilities |  | **80** | 142 |
| Subordinated liabilities | 7 | **9970** | 9720 |
| **Total liabilities** |  | **43153** | 44010 |
| **Equity** |  |  |  |
| Share capital | 8 | **5889** | 6062 |
| Share premium account |  | **18797** | 18720 |
| Merger reserve |  | **6759** | 6759 |
| Capital redemption reserve |  | **5971** | 5751 |
| Retained profits |  | **6730** | 7282 |
| **Shareholders' equity** |  | **44146** | 44574 |
| Other equity instruments | 8 | **5947** | 6195 |
| **Total equity** |  | **50093** | 50769 |
| **Total equity and liabilities** |  | **93246** | 94779 |

---

The accompanying notes are an integral part of the parent company financial statements.

The directors approved the parent company financial statements on 13 February 2026.

---

| | | |
|:---|:---|:---|
| ![Signature_RobinBudenberg.gif](lyg-20251231_g9.gif) | ![Signature_CharlieNunn_Black.gif](lyg-20251231_g21.gif) | ![Signature_WilliamChalmers.gif](lyg-20251231_g339.gif) |
| **Sir Robin Budenberg**<br>Chair<br>| **Charlie Nunn**<br>Group Chief Executive<br>| **William Chalmers**<br>Chief Financial Officer<br>|

---

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Parent company 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** | **Attributable to ordinary shareholders** |  |  |
|  | **Share capital**<sup>1</sup><br>**£m**<br>| **Share**<br>**premium**<sup>1</sup><br>**£m**<br>| Merger<br>reserve<sup>2</sup><br>£m<br>| redemption<br>reserve<sup>3</sup><br>£m<br>| **Retained**<br>**profits**<br>**£m**<br>| **Total**<br>**£m**<br>| **Other**<br>**equity**<br>**instruments**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2023 | 6729 | 18504 | 6806 | 4932 | 5222 | 42193 | 5297 | 47490 |
| **Total comprehensive income** | – | – | – | – | 4612 | 4612 | 527 | 5139 |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends<sup>4</sup> | – | – | – | – | (1651) | (1651) | – | (1651) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | – | – | (527) | (527) |
| Issue of ordinary shares | 67 | 64 | – | – | – | 131 | – | 131 |
| Share buyback | (438) | – | – | 438 | (1993) | (1993) | – | (1993) |
| Issue of other equity instruments | – | – | – | – | (13) | (13) | 1778 | 1765 |
| Repurchase and redemptions of <br>other equity instruments<br>| – | – | – | – | – | – | (135) | (135) |
| Movement in treasury shares | – | – | – | – | 103 | 103 | – | 103 |
| Value of employee services | – | – | – | – | 227 | 227 | – | 227 |
| **Total transactions with owners** | (371) | 64 | – | 438 | (3327) | (3196) | 1116 | (2080) |
| At 31 December 2023 | 6358 | 18568 | 6806 | 5370 | 6507 | 43609 | 6940 | 50549 |
| **Total comprehensive income** | – | – | – | – | 4990 | 4990 | 498 | 5488 |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends<sup>4</sup> | – | – | – | – | (1828) | (1828) | – | (1828) |
| Distributions on other equity <br>instruments<br>| – | – | – | – | – | – | (498) | (498) |
| Issue of ordinary shares | 73 | 117 | – | – | – | 190 | – | 190 |
| Share buyback | (369) | – | – | 369 | (2011) | (2011) | – | (2011) |
| Redemption of preference shares | – | 35 | (47) | 12 | – | – | – | – |
| Issue of other equity instruments | – | – | – | – | (6) | (6) | 763 | 757 |
| Repurchase and redemptions of <br>other equity instruments<br>| – | – | – | – | (316) | (316) | (1508) | (1824) |
| Movement in treasury shares | – | – | – | – | (173) | (173) | – | (173) |
| Value of employee services | – | – | – | – | 119 | 119 | – | 119 |
| **Total transactions with owners** | (296) | 152 | (47) | 381 | (4215) | (4025) | (1243) | (5268) |
| At 31 December 2024 | 6062 | 18720 | 6759 | 5751 | 7282 | 44574 | 6195 | 50769 |
| **Total comprehensive income** | **–** | **–** | **–** | **–** | **2926** | **2926** | **463** | **3389** |
| **Transactions with owners** |  |  |  |  |  |  |  |  |
| Dividends<sup>4</sup> | **–** | **–** | **–** | **–** | **(2000)** | **(2000)** | **–** | **(2000)** |
| Distributions on other equity <br>instruments<br>| **–** | **–** | **–** | **–** | **–** | **–** | **(463)** | **(463)** |
| Issue of ordinary shares | **47** | **77** | **–** | **–** | **–** | **124** | **–** | **124** |
| Share buyback | **(220)** | **–** | **–** | **220** | **(1710)** | **(1710)** | **–** | **(1710)** |
| Issue of other equity instruments | **–** | **–** | **–** | **–** | **(10)** | **(10)** | **1511** | **1501** |
| Repurchase and redemptions of <br>other equity instruments<br>| **–** | **–** | **–** | **–** | **–** | **–** | **(1759)** | **(1759)** |
| Movement in treasury shares | **–** | **–** | **–** | **–** | **38** | **38** | **–** | **38** |
| Value of employee services | **–** | **–** | **–** | **–** | **204** | **204** | **–** | **204** |
| **Total transactions with owners** | **(173)** | **77** | **–** | **220** | **(3478)** | **(3354)** | **(711)** | **(4065)** |
| **At 31 December 2025** | **5889** | **18797** | **6759** | **5971** | **6730** | **44146** | **5947** | **50093** |

---

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

2The merger reserve comprises the premium on shares issued on 13 January 2009 under the placing and open offer and shares issued on 16 January 2009 on the acquisition of HBOS plc,

offset by adjustments on the redemption of preference shares. Substantially all of the Company's merger reserve is available for distribution.

3The capital redemption reserve represents transfers from the merger reserve in accordance with companies' legislation and amounts transferred from share capital following the

cancellation of shares. For shares cancelled under share buyback programme, see note 32 to the consolidated financial statements.

4Details of the Company's dividends are as set out in note 34 to the consolidated financial statements.

The accompanying notes are an integral part of the parent company financial statements.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Parent company cash flow statement

for the year ended 31 December

---

| | | | |
|:---|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>| 2023<br>£m<br>|
| **Cash flows from operating activities** |  |  |  |
| Profit before tax | **3366** | 5440 | 5055 |
| Adjustments for: |  |  |  |
| Fair value and exchange adjustments and other non-cash items | **311** | (83) | 744 |
| Change in other assets | **4405** | (1850) | (1317) |
| Change in other liabilities and other items | **(747)** | 4523 | (555) |
| Dividends received | **(2990)** | (5187) | (5024) |
| Distributions on other equity instruments received | **(680)** | (541) | (505) |
| Tax refunded | **84** | 115 | 4 |
| **Net cash provided by (used in) operating activities** | **3749** | 2417 | (1598) |
| **Cash flows from investing activities** |  |  |  |
| Return of capital contribution | **1** | 1 | 1 |
| Dividends received | **2990** | 5187 | 5024 |
| Distributions on other equity instruments received | **680** | 541 | 505 |
| Acquisitions of and capital injections to subsidiaries | **(5288)** | (1309) | (1496) |
| Return of capital by subsidiaries | **2054** | 800 | 278 |
| Amounts advanced to subsidiaries | **(6118)** | (4340) | (4563) |
| Repayment of loans to subsidiaries | **5796** | 2055 | 3556 |
| Interest received on loans to subsidiaries | **610** | 386 | 410 |
| **Net cash provided by investing activities** | **725** | 3321 | 3715 |
| **Cash flows from financing activities** |  |  |  |
| Dividends paid to ordinary shareholders | **(2000)** | (1828) | (1651) |
| Distributions on other equity instruments | **(463)** | (498) | (527) |
| Interest paid on subordinated liabilities | **(638)** | (509) | (466) |
| Proceeds from issue of subordinated liabilities | **1757** | 812 | 1416 |
| Proceeds from issue of other equity instruments | **1501** | 757 | 1765 |
| Proceeds from issue of ordinary shares | **99** | 187 | 86 |
| Share buyback | **(1710)** | (2011) | (1993) |
| Repayment of subordinated liabilities | **(1275)** | (819) | (643) |
| Repurchase and redemptions of other equity instruments | **(1759)** | (1824) | (135) |
| **Net cash used in financing activities** | **(4488)** | (5733) | (2148) |
| Change in cash and cash equivalents | **(14)** | 5 | (31) |
| Cash and cash equivalents at beginning of year | **22** | 17 | 48 |
| **Cash and cash equivalents at end of year** | **8** | 22 | 17 |

---

Interest received was £763 million (2024: £746 million; 2023: £604 million) and interest paid was £992 million (2024: £1,134 million;

2023: £1,086 million).

The accompanying notes are an integral part of the parent company financial statements.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the parent company financial statements

for the year ended 31 December

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

The financial statements of Lloyds Banking Group plc 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 certain financial assets

and liabilities at fair value through profit or loss and all derivative contracts. The accounting policies of the Company are the same as those

of the Group, which are set out in note 2 to the consolidated financial statements. Investments in subsidiaries are carried at historical cost,

less any provisions for impairment. Fees payable to the Company's auditors by the Group are set out in note 13 to the consolidated

financial statements.

Lloyds Banking Group plc was incorporated as a public limited company and registered in Scotland under the UK Companies Act 1985 on

21 October 1985 with the registered number SC095000. Lloyds Banking Group plc's registered office is Lloyds Banking Group plc, The

Mound, Edinburgh EH1 1YZ, Scotland, and its principal executive offices in the UK are located at Lloyds Banking Group plc, 33 Old Broad

Street, London EC2N 1HZ.

**Note 2: Measurement basis of financial assets and liabilities**

The accounting policies in note 2 to the consolidated financial statements 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 Company's financial assets and liabilities by category and by balance sheet heading.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Derivatives** <br>**designated**<br>**as hedging**<br>**instruments**<br>**£m** | **Mandatorily held at fair value** <br>**through profit or loss** | **Mandatorily held at fair value** <br>**through profit or loss** | **Designated**<br>**at fair value** <br>**through profit** <br>**or loss**<br>**£m** | **Held at**<br>**amortised**<br>**cost**<br>**£m** |  |
|  | **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 profit** <br>**or loss**<br>**£m** | **Held at**<br>**amortised**<br>**cost**<br>**£m** | **Total**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |  |  |
| **Financial assets** |  |  |  |  |  |  |
| Cash and cash equivalents | **–** | **–** | **–** | **–** | **8** | **8** |
| Financial assets at fair value through profit or loss | **–** | **–** | **19703** | **–** | **–** | **19703** |
| Derivative financial instruments | **29** | **269** | **–** | **–** | **–** | **298** |
| Debt securities | **–** | **–** | **–** | **–** | **1623** | **1623** |
| Loans to subsidiaries | **–** | **–** | **–** | **–** | **16949** | **16949** |
| **Total financial assets** | **29** | **269** | **19703** | **–** | **18580** | **38581** |
| **Financial liabilities** |  |  |  |  |  |  |
| Due to subsidiaries | **–** | **–** | **–** | **–** | **150** | **150** |
| Financial liabilities at fair value through profit or loss | **–** | **–** | **–** | **22433** | **–** | **22433** |
| Derivative financial instruments | **322** | **257** | **–** | **–** | **–** | **579** |
| Debt securities in issue at amortised cost | **–** | **–** | **–** | **–** | **9941** | **9941** |
| Subordinated liabilities | **–** | **–** | **–** | **–** | **9970** | **9970** |
| **Total financial liabilities** | **322** | **257** | **–** | **22433** | **20061** | **43073** |
| At 31 December 2024 |  |  |  |  |  |  |
| **Financial assets** |  |  |  |  |  |  |
| Cash and cash equivalents | – | – | – | – | 22 | 22 |
| Financial assets at fair value through profit or loss | – | – | 23370 | – | – | 23370 |
| Derivative financial instruments | 38 | 481 | – | – | – | 519 |
| Debt securities | – | – | – | – | 2354 | 2354 |
| Loans to subsidiaries | – | – | – | – | 17068 | 17068 |
| **Total financial assets** | 38 | 481 | 23370 | – | 19444 | 43333 |
| **Financial liabilities** |  |  |  |  |  |  |
| Due to subsidiaries | – | – | – | – | 3 | 3 |
| Financial liabilities at fair value through profit or loss | – | – | – | 24896 | – | 24896 |
| Derivative financial instruments | 442 | 497 | – | – | – | 939 |
| Debt securities in issue at amortised cost | – | – | – | – | 8310 | 8310 |
| Subordinated liabilities | – | – | – | – | 9720 | 9720 |
| **Total financial liabilities** | 442 | 497 | – | 24896 | 18033 | 43868 |

---

Note 17 to the consolidated financial statements outlines the valuation hierarchy into which financial instruments measured at fair value

are categorised.

The assets held at fair value through profit or loss represent holdings of debt securities issued by subsidiaries. The contractual terms of such

instruments contain certain write-down and conversion features and so are not considered to satisfy the solely payments of principal and

interest test.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the parent company financial statements continued

for the year ended 31 December

**Note 2: Measurement basis of financial assets and liabilities** continued

Financial liabilities designated at fair value through profit or loss represent debt securities in issue which are accounted for at fair value to

significantly reduce an accounting mismatch. The changes in the credit risk of these liabilities are linked to the changes in credit risk on

corresponding assets that the Company holds at fair value through profit or loss, representing debt securities issued by subsidiaries. Given

the economic relationship between these assets and liabilities, the Company presents changes in the credit risk of its liabilities in profit or

loss in order to avoid creating or enlarging an accounting mismatch.

The amount contractually payable on maturity of the debt securities held at fair value through profit or loss at 31 December 2025 was

£21,722 million, which was £711 million lower than the balance sheet carrying value (2024: £24,488 million, which was £408 millionlower

than the balance sheet carrying value). At 31 December 2025 there was a cumulative £984 million increase in the fair value of these

liabilities attributable to changes in credit risk (2024: increase of £845 million), of which a £139 million increase arose in 2025 and a

£89 millionincrease arose in 2024; this is determined by reference to the quoted credit spreads of the Company.

**Note 3: Fair values of financial assets and liabilities**

The valuation techniques for the Company's financial instruments are as discussed in note 17 to the consolidated financial statements.

**Valuation hierarchy**

The table below analyses the assets and liabilities of the Company. With the exception of derivatives and those financial assets and

liabilities carried at fair value through profit or loss, all assets and liabilities are held at amortised cost. They are categorised into levels 1 to 3

based on the degree to which their fair value is observable. No assets or liabilities were categorised as level 1 (2024: none).

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
|  | **Carrying**<br>**value**<br>**£m** | **Fair**<br>**value**<br>**£m** | **Valuation hierarchy** | **Valuation hierarchy** | Carrying<br>value<br>£m | Fair<br>value<br>£m | Valuation hierarchy | Valuation hierarchy |
|  | **Carrying**<br>**value**<br>**£m** | **Fair**<br>**value**<br>**£m** | **Level 2**<br>**£m**<br>| **Level 3**<br>**£m**<br>| Carrying<br>value<br>£m | Fair<br>value<br>£m | Level 2<br>£m<br>| Level 3<br>£m<br>|
| Financial assets at fair value through profit or loss | **19703** | **19703** | **19703** | **–** | 23370 | 23370 | 23370 | – |
| Derivative financial instruments | **298** | **298** | **298** | **–** | 519 | 519 | 519 | – |
| Debt securities | **1623** | **1593** | **1593** | **–** | 2354 | 2240 | 2240 | – |
| Loans to subsidiaries | **16949** | **16949** | **16949** | **–** | 17068 | 17068 | 17068 | – |
| **Total financial assets** | **38573** | **38543** | **38543** | **–** | 43311 | 43197 | 43197 | – |
| Due to subsidiaries | **150** | **150** | **150** | **–** | 3 | 3 | 3 | – |
| Financial liabilities at fair value through profit or loss | **22433** | **22433** | **22433** | **–** | 24896 | 24896 | 24896 | – |
| Derivative financial instruments | **579** | **579** | **579** | **–** | 939 | 939 | 939 | – |
| Debt securities in issue at amortised cost | **9941** | **9976** | **9976** | **–** | 8310 | 8140 | 8140 | – |
| Subordinated liabilities | **9970** | **10505** | **10505** | **–** | 9720 | 10038 | 10038 | – |
| **Total financial liabilities** | **43073** | **43643** | **43643** | **–** | 43868 | 44016 | 44016 | – |

---

The carrying amount of cash and cash equivalents (2025: £8 million; 2024: £22 million) is a reasonable approximation of fair value.

At 31 December 2025£16,484 million of financial assets at fair value through profit or loss, £220 million of derivative financial assets,

£776 million of debt securities and £12,014 million of loans to subsidiaries included in total financial assets had maturities greater than one

year (2024: £18,195 million, £287 million, £1,736 million and £11,876 million). Of the balances included in total financial liabilities,

£19,031 million of financial liabilities at fair value through profit or loss, £504 million of derivative financial liabilities, £9,842 million of debt

securities in issue at amortised cost and £8,341 million of subordinated liabilities had maturities greater than one year at 31 December 2025

(2024: £20,237 million, £633 million, £6,082 million and £8,371 million).

**Note 4: Derivative financial instruments**

The Company holds derivatives to manage and hedge the Group's interest rate and foreign exchange risk arising from issuance.

The principal derivatives used by the Company are as follows:

• Interest rate related contracts including interest rate swaps. 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.

• Exchange rate related contracts include currency swaps. Currency swaps generally involve the exchange of interest payment obligations

denominated in different currencies.

**Note 5: Deferred tax**

As at 31 December 2025 the Company carried a deferred tax asset of £85 million (2024: £23 million). There was no deferred tax liability at

31 December 2025 or 31 December 2024. The movement in the deferred tax asset during 2025 primarily related to financial liabilities at fair

value through profit and loss (giving rise to a £8 million credit to the income statement) and shared-based payments (giving rise to a

£54 million credit in equity).

**Note 6: Debt securities in issue at amortised cost**

These comprise notes issued by the Company in a number of currencies, although predominantly US dollars and Euros, with maturity dates

ranging up to 2038.

![SectionTabFinStat.gif](lyg-20251231_g338.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Note 7: Subordinated liabilities**

These liabilities 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. Any repayments of subordinated liabilities require the consent of the Prudential Regulation Authority.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Preference**<br>**shares**<br>**£m**<br>| **Undated**<br>**£m**<br>| **Dated**<br>**£m**<br>| **Total**<br>**£m**<br>|
| At 1 January 2024 | 329 | 10 | 9368 | 9707 |
| **Issued in the year**<sup>1</sup>**:** |  |  |  |  |
| 4.375% Fixed Rate Reset Dated Subordinated Notes 2034 (€500 million) | – | – | 427 | 427 |
| 5.788% Fixed-to-Floating Rate Dated Subordinated Notes 2034 (A$250 million) | – | – | 128 | 128 |
| Floating Rate Dated Subordinated Notes 2034 (A$500 million) | – | – | 257 | 257 |
|  | – | – | 812 | 812 |
| **Repurchases and redemptions during the year**<sup>1</sup>**:** |  |  |  |  |
| 6.475% Non-cumulative Preference Shares callable 2024 (£186 million) | (47) | – | – | (47) |
| 4.5% Dated Subordinated Notes 2024 ($1,000 million) | – | – | (772) | (772) |
|  | (47) | – | (772) | (819) |
| Foreign exchange and other movements (cash and non-cash) | 1 | – | 19 | 20 |
| At 31 December 2024 | 283 | 10 | 9427 | 9720 |
| **Issued in the year**<sup>1</sup>**:** |  |  |  |  |
| 4.00% Fixed Rate Reset Dated Subordinated Notes 2035 (€1,000 million) | **–** | **–** | **840** | **840** |
| 6.068% Fixed-to-Floating Rate Dated Subordinated Notes 2036 ($1,250 million) | **–** | **–** | **917** | **917** |
|  | **–** | **–** | **1757** | **1757** |
| **Repurchases and redemptions during the year**<sup>1</sup>**:** |  |  |  |  |
| 4.50% Fixed Rate Step-up Subordinated Notes 2030 (€309 million) | **–** | **–** | **(260)** | **(260)** |
| 4.582% Fixed Rate Dated Subordinated Notes 2025 ($1,328 million) | **–** | **–** | **(996)** | **(996)** |
| 4.582% Fixed Rate Dated Subordinated Notes 2025 ($25.6 million) |  |  | **(19)** | **(19)** |
|  | **–** | **–** | **(1275)** | **(1275)** |
| Foreign exchange and other movements (cash and non-cash) | **3** | **–** | **(235)** | **(232)** |
| **At 31 December 2025** | **286** | **10** | **9674** | **9970** |

---

1Issuances in the year generated cash inflows of £1,757 million (2024: £812 million); the repurchases and redemptions resulted in cash outflows of £1,275 million (2024: £819 million). Cash

payments in respect of interest on subordinated liabilities in the year amounted to £522 million (2024: £509 million).

**Note 8: Share capital and other equity instruments**

Details of the Company's share capital and other equity instruments are as set out in notes 30 and 33 to the consolidated financial

statements.

**Note 9: Related party transactions**

**Key management personnel**

The key management personnel of the Group and the Company are the same. The relevant disclosures are given in note 35 to the

consolidated financial statements.

The Company has no employees (2024: nil).

As discussed in note 11 to the consolidated financial statements, the Group provides share-based compensation to employees through a

number of schemes; these are all in relation to shares in the Company and the costs of providing those benefits are treated as capital

contributions to the employing companies in the Group.

**Investment in subsidiaries**

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| At 1 January | **51334** | 50826 |
| Additions and capital injections | **5137** | 1167 |
| Capital contributions | **151** | 142 |
| Return of capital contributions | **(1)** | (1) |
| Capital repayments and redemptions | **(2054)** | (800) |
| **At 31 December** | **54567** | 51334 |

---

Details of the subsidiaries and related undertakings are given on **pages [313](#i3eaa7a3e529a46b3b97a88e05ad474bc_916) to [323](#i4ab22b85c6014c18a6e3e63627259d24_6556)** and are incorporated by reference.

Certain subsidiary companies currently have insufficient distributable reserves to make dividend payments; however, there were no further

significant restrictions on any of the Company's subsidiaries in paying dividends or repaying loans and advances. All regulated banking and

insurance subsidiaries are required to maintain capital at levels agreed with the regulators; this may impact the ability of those subsidiaries

to make distributions.

During the year ended 31 December 2025, the Company received dividends of £2,990 million (2024: £5,187 million; 2023: £5,024 million)

from subsidiaries.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Notes to the parent company financial statements continued

for the year ended 31 December

**Note 9: Related party transactions**continued

**Amounts due to and from subsidiaries**

At 31 December 2025 the Company had £19,703 million (2024: £23,370 million) of debt securities at fair value through profit or loss which

had been purchased from subsidiaries, £16,771 million (2024: £17,033 million) of net lending to subsidiaries and had £33 million

(2024: £66 million) of subordinated liabilities in issue to subsidiaries. During the year ended 31 December 2025, the Company advanced

£6,118 million (2024: £4,340 million) to subsidiaries and received £5,796 million (2024: £2,055 million) in loan repayments from subsidiaries.

In addition, at 31 December 2025 the Company had interest rate and currency swaps, predominantly with Lloyds Bank Corporate Markets

plc, with an aggregate notional principal amount of £45,685 million and a net negative fair value of £281 million (2024: notional principal

amount of £47,895 million and a net negative fair value of £420 million). Of this amount an aggregate notional principal amount of

£13,484 million and a net negative fair value of £293 million (2024: notional principal amount of £12,862 million and a net negative fair

value of £404 million) were designated as fair value hedges. Transactions with subsidiary undertakings arose in the ordinary course of

business and on substantially the same terms as those with third-parties.

**Guarantees and other related party transactions**

As part of the Group's participation in the Bank of England's Sterling Monetary Framework, the Company guarantees certain of its

subsidiaries' liabilities to the Bank of England. These guarantees have no fixed term.

Information in respect of other related party transactions is given in note 35 to the consolidated financial statements.

**Note 10: Financial risk management**

**Market risk**

The Company is exposed to interest rate and currency risk on its debt securities in issue and its subordinated debt. As discussed in note 9,

the Company has entered into interest rate and currency swaps with Lloyds Bank Corporate Markets plc, to manage these risks.

**Credit risk**

The majority of the Company's credit risk arises from amounts due from its wholly owned subsidiaries, principally Lloyds Bank plc.

**Liquidity risk**

The table below analyses financial instrument liabilities of the Company 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. The

principal amount for undated subordinated liabilities and preference shares with no redemption option is included within the over 5 years

column; interest of £1 million (2024: £1 million) in respect of the undated subordinated liabilities and £28 million (2024: £28 million) in

respect of the preference shares, per annum is not included beyond 5 years.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **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** <br>**5 years**<br>**£m**<br>| **Total**<br>**£m**<br>|
| **At 31 December 2025** |  |  |  |  |  |  |
| Financial liabilities at fair value through profit or loss | **105** | **806** | **3373** | **14721** | **6811** | **25816** |
| Debt securities in issue at amortised cost | **20** | **57** | **396** | **10498** | **80** | **11051** |
| Subordinated liabilities | **24** | **1169** | **919** | **5991** | **6698** | **14801** |
| **Total non-derivative financial liabilities** | **149** | **2032** | **4688** | **31210** | **13589** | **51668** |
| Derivative financial liabilities |  |  |  |  |  |  |
| Gross settled derivatives – outflows | **2091** | **2475** | **4260** | **3587** | **–** | **12413** |
| Gross settled derivatives – inflows | **(2073)** | **(2462)** | **(4219)** | **(3586)** | **–** | **(12340)** |
| Gross settled derivatives – net flows | **18** | **13** | **41** | **1** | **–** | **73** |
| Net settled derivative liabilities | **381** | **–** | **–** | **–** | **–** | **381** |
| **Total derivative financial liabilities** | **399** | **13** | **41** | **1** | **–** | **454** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 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 <br>5 years<br>£m<br>| Total<br>£m<br>|
| At 31 December 2024 |  |  |  |  |  |  |
| Financial liabilities at fair value through profit or loss | 874 | 1786 | 2958 | 17090 | 6149 | 28857 |
| Debt securities in issue at amortised cost | 22 | 1076 | 1369 | 6375 | 75 | 8917 |
| Subordinated liabilities | 25 | 324 | 1344 | 3990 | 6070 | 11753 |
| **Total non-derivative financial liabilities** | 921 | 3186 | 5671 | 27455 | 12294 | 49527 |
| Derivative financial liabilities |  |  |  |  |  |  |
| Gross settled derivatives – outflows | 2213 | 2675 | 5543 | 2194 | 267 | 12892 |
| Gross settled derivatives – inflows | (2164) | (2530) | (5302) | (1950) | – | (11946) |
| Gross settled derivatives – net flows | 49 | 145 | 241 | 244 | 267 | 946 |
| Net settled derivative liabilities | 175 | – | – | – | – | 175 |
| **Total derivative financial liabilities** | 224 | 145 | 241 | 244 | 267 | 1121 |

---

![Divider_OthInfo.gif](lyg-20251231_g340.gif)

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Other

information

---

| | |
|:---|:---|
| Shareholder information | [306](#i3eaa7a3e529a46b3b97a88e05ad474bc_907) |
| Alternative performance measures | [308](#i3eaa7a3e529a46b3b97a88e05ad474bc_913) |
| Subsidiaries and related undertakings | [313](#i3eaa7a3e529a46b3b97a88e05ad474bc_916) |
| Forward-looking statements  | [324](#i3eaa7a3e529a46b3b97a88e05ad474bc_922) |

---

Driven by

our purpose

**Our purpose is what drives us, what makes us different** 

**and defines how we profitably grow for all our stakeholders**

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Shareholder information

**Annual general meeting (AGM)**

The annual general meeting will be held at the Edinburgh International Conference Centre, The Exchange, Edinburgh EH3 8EE on

Thursday 14 May 2026 at 11am. Further details about the meeting, including the proposed resolutions and where shareholders can

stream the meeting live, can be found in our Notice of AGM which will be available shortly on our website.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

**Reports and communications**

The Group issues regulatory announcements through the Regulatory News Service (RNS). Shareholders can subscribe for free via the

Investors section of our website, where our statutory reports and shareholder communications are available. A summary of the

![Icon_Weblink.gif](lyg-20251231_g14.gif)

scheduled reports and communications to be issued in 2026 is set out below:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Available format** | **Available format** | **Available format** | **Available format** | **Available format** |
| **Report/Communication** | **Month** | **Online** | **Email** | **RNS** | **Paper** |
| Preliminary results  | Jan | ✔ | ✔ | ✔ |  |
| Publication of annual report | Feb | ✔ | ✔ | ✔ |  |
| Pillar 3 report | Feb/Aug | ✔ |  |  |  |
| Mailing of annual report and annual review | Mar | ✔ | ✔ |  | ✔ |
| Notice of AGM and voting materials | Mar | ✔ | ✔ |  | ✔ |
| Q1 interim management statement | Apr | ✔ | ✔ | ✔ |  |
| Country analysis<sup>1</sup> | May | ✔ |  |  |  |
| Half-year results | Jul | ✔ | ✔ | ✔ |  |
| Q3 interim management statement | Oct | ✔ | ✔ | ✔ |  |

---

1To be published on the Group's website by 31 May 2026 in accordance with the Capital Requirements (Country-by-Country Reporting) Regulations 2013.

**Share dealing facilities**

We offer a choice of four share dealing services for our UK shareholders and customers. Please search for 'share dealing' within the website links

provided below, where you can also view the full range of services available. Alternatively, please use the additional contact details below.

---

| | | |
|:---|:---|:---|
| **Service Provider** | **Telephone Dealing** | **Internet Dealing** |
| Bank of Scotland Share Dealing | 0345 606 1188 | https://www.bankofscotland.co.uk/investing.html ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>|
| Halifax Share Dealing | 0345 722 5525 | https://www.halifax.co.uk/investing.html ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>|
| Lloyds Bank Direct Investments | 0345 606 0560 | https://www.lloydsbank.com/investing.html ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>|
| Scottish Widows Share Dealing | 0345 070 7129 | https://www.scottishwidows.co.uk/investing.html ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>|

---

Note:

All internet services are available 24/7. Telephone dealing services are available between 8am and 9pm, Monday to Friday, excluding English and Welsh public holidays. To open a share

dealing account with any of these services, you must be 18 years of age or over and be resident in the UK, Jersey, Guernsey or the Isle of Man.

**Share dealing for the Lloyds Banking Group shareholder account**

Share dealing services for the Lloyds Banking Group shareholder account are provided by Equiniti Shareview Dealing, operated by

Equiniti Financial Services Limited. Details of the services provided can be found either on the shareholder information page of our

website or by contacting Equiniti using the contact details provided on the next page.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

**Share price information**

Shareholders can access both the latest and historical share prices via our websiteas well as listings in most national newspapers.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

For a real-time buying or selling price, you will need to contact a stockbroker, or you can contact the share dealing providers detailed above.

**Individual Saving Accounts (ISAs)**

There are a number of options for investing in Lloyds Banking Group shares through an ISA. For details of services and products provided by

the Group please contact Bank of Scotland Share Dealing, Halifax Share Dealing, Lloyds Bank Direct Investments or Scottish Widows Share

Dealing using the contact details above.

**Key dates**

---

| | |
|:---|:---|
| 9 April 2026 | Shares quoted ex-dividend |
| 10 April 2026 | Record date |
| 27 April 2026 | Final date for joining or leaving the dividend reinvestment plan |
| 29 April 2026 | Q1 interim management statement |
| 14 May 2026 | Annual general meeting |
| 19 May 2026 | Dividend paid |
| 30 July 2026 | Half-year results |
| 29 October 2026 | Q3 interim management statement |

---

![OtherInformation_ImportantShareholderInfo.gif](lyg-20251231_g342.gif)

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Analysis of shareholders**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Balance ranges** | **Total number** <br>**of holdings**<br>| **Percentage** <br>**of holders**<br>| **Total number** <br>**of shares**<br>| **Percentage** <br>**issued capital**<br>|
| 1–999 | 1679803 | 81.9% | 487563992 | 0.8% |
| 1000–9999 | 318898 | 15.6% | 846637657 | 1.4% |
| 10000–99999 | 48824 | 2.4% | 1250595306 | 2.1% |
| 100000–999999 | 2228 | 0.1% | 519003450 | 0.9% |
| 1000000–4999999 | 473 | 0.0% | 1170340552 | 2.0% |
| 5000000–9999999 | 146 | 0.0% | 1044624243 | 1.8% |
| 10000000–49999999 | 234 | 0.0% | 5609956584 | 9.5% |
| 50000000–99999999 | 80 | 0.0% | 5744461475 | 9.8% |
| 100000000–499999999 | 68 | 0.0% | 14903704082 | 25.3% |
| 500000000–999999999 | 14 | 0.0% | 9774960052 | 16.6% |
| 1000000000–99999999999 | 7 | 0.0% | 17533896209 | 29.8% |
| Totals | 2050775 | 100.0% | 58885743602 | 100.0% |

---

**American Depositary Receipts (ADRs)**

Our shares are traded in the USA through a New York Stock Exchange-listed sponsored ADR facility with The Bank of New York Mellon as

the depositary. The ADRs are traded on the New York Stock Exchange under the symbol LYG. The CUSIP number is 539439109 and the

ratio of ADRs to ordinary shares is 1:4.

For details contact:

BNY Shareowner Services, 150 Royall St., Suite 101 Canton, MA 02021. Telephone: 1-866-259-0336 (US toll free),

international callers: +1 201-680-6825. Alternatively visit www.adrbny.com or email shrrelations@cpushareownerservices.com.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

**Security – share fraud and scams**

Shareholders should exercise caution when unsolicited callers offer the chance to buy or sell shares with promises of huge returns. If it

sounds too good to be true, it usually is and we would ask that shareholders take steps to protect themselves. We strongly recommend

seeking advice from an independent financial adviser authorised by the Financial Conduct Authority (FCA). Shareholders can verify

whether a firm is authorised via the Financial Services Register which is available at www.fca.org.uk .

![Icon_Weblink.gif](lyg-20251231_g14.gif)

If a shareholder is concerned that they may have been targeted by such a scheme, please contact the FCA Consumer Helpline on

0800 111 6768 or use the online 'Share Fraud Reporting Form' available from their website (see above). We would also recommend

contacting the Police through Action Fraud on 0300 123 2040 or visiting www.actionfraud.org.uk for further information.

![Icon_Weblink.gif](lyg-20251231_g14.gif)

**Important shareholder and registrar information** <br>

---

| |
|:---|
| **Company website**<br>www.lloydsbankinggroup.com![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>|
| **Shareholder information**<br>help.shareview.co.uk ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>(from here you will be able to email your query securely)<br>|
| **Registrar**<br>Equiniti Limited, Aspect House, Spencer Road, Lancing, <br>West Sussex BN99 6DA<br>|
| **Shareholder helpline**<br>+44 (0) 371 384 2990\* (please use the country code when <br>contacting Equiniti Limited from outside the UK)<br>\*Lines are open 8:30am to 5:30pm (UK time), Monday to <br>Friday (excluding public holidays in England and Wales).<br>For deaf and speech impaired customers, we welcome calls <br>via Relay UK. See www.relayuk.bt.com for more ![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>information.<br>The company registrar is Equiniti Limited. They provide a <br>shareholder service, including a telephone helpline and <br>shareview, which is a free secure portfolio service.<br>|

---

---

| |
|:---|
| **Your communications,** <br>**your choice – go digital!**<br>•Receive company communications <br>like this by email<br>•Buy and sell shares<br>•Manage your shareholding online |
| **Step 1**<br>Register at <br>www.shareview.co.uk/info/register![Icon_Weblink.gif](lyg-20251231_g14.gif)<br>or by scanning the QR code |
| **Step 2**<br>Follow the on-screen instructions <br>to complete your registration |
| **Step 3**<br>Log on and update your <br>communications choice |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Alternative performance measures

The statutory results are supplemented with those presented on an underlying basis and also with other alternative performance measures.

This is to enable a comprehensive understanding of the Group and facilitate comparison with peers. The Group Executive Committee,

which is the 'chief operating decision maker' (as defined by IFRS 8 Operating Segments) for the Group, reviews the Group's results on an

underlying basis in order to assess performance and allocate resources. Management uses underlying profit before tax, an alternative

performance measure, as a measure of performance and believes that it provides important information for investors. This is because it

allows for a comparable representation of the Group's performance by removing the impact of items such as volatility caused by market

movements outside the control of management.

In arriving at underlying profit, statutory profit before tax is adjusted for the items below, to allow a comparison of the Group's

underlying performance:

• Restructuring costs relating to merger, acquisition, integration and disposal activities

• Volatility and other items, which includes the effects of certain asset sales, the volatility relating to the Group's hedging arrangements

and that arising in the Insurance business, the unwind of acquisition-related fair value adjustments and the amortisation of purchased

intangible assets

The analysis of lending and expected credit loss (ECL) allowances is presented on both a statutory and an underlying basis and a

reconciliation between the two is shown on **page [160](#iecc5dc2854414ebfb46530f7e5092bc7_53857)**. On a statutory basis, purchased or originated credit-impaired (POCI) assets include a

fixed pool of mortgages that were purchased as part of the HBOS acquisition at a deep discount to face value reflecting credit losses

incurred from the point of origination to the date of acquisition. Over time, these POCI assets will run off as the loans redeem, pay down or

losses crystallise. The underlying basis assumes that the lending assets acquired as part of a business combination were originated by the

Group and are classified as either Stage 1, 2 or 3 according to the change in credit risk over the period since origination. Underlying ECL

allowances have been calculated accordingly. The Group uses the underlying basis to monitor the creditworthiness of the lending portfolio

and related ECL allowances. The statutory basis also includes an accounting adjustment within UK Motor Finance required under IFRS 9 to

recognise a continuing involvement asset following the partial derecognition of a component of the Group's finance lease book via a

securitisation in the third quarter of 2024.

The Group's alternative performance measures may not be comparable with similarly titled measures used by other organisations and

should not be viewed in isolation, but instead should be regarded as supplementary information alongside the statutory results. The

exclusion of certain adjustments from underlying profit may result in it being materially higher or lower than statutory profit before tax, for

example in the event of a large restructuring, underlying profit would be higher than statutory profit before tax.

The Group calculates a number of metrics that are used throughout the banking and insurance industries on an underlying basis. These

metrics are not necessarily comparable to similarly titled measures presented by other companies and are not any more authoritative than

measures presented in the financial statements, however management believes that they are useful in assessing the performance of the

Group and in drawing comparisons between years. A description of these measures and their calculation, is given below. Alternative

performance measures are used internally in the Group's Monthly Management Report.

---

| | |
|:---|:---|
| Asset quality ratio | The underlying impairment charge or credit for the period in respect of loans and advances to customers, both drawn and <br>undrawn, expressed as a percentage of average gross loans and advances to customers for the period. This measure is useful in <br>assessing the credit quality of the loan book.<br>|
| Assets under <br>administration (AuA)<br>| AuA represents all assets managed or administered by or on behalf of the Group's subsidiaries. It includes assets that are <br>reported within the Group statutory balance sheet and those that are reported independently. It is a useful measure as it <br>impacts potential earnings arising from Asset Management Charges and the relative size of the business.<br>|
| Assets under <br>administration (net <br>flows)<br>| AuA (net flows) measures the net position of inflows and outflows to AuAs and is a useful measure of growth in AuA. Inflows <br>include net premiums and deposits and other funds received from customers included in AuA. Outflows include net claims, <br>redemptions and surrenders under other funds withdrawn by customers from AuA. Net flows exclude market movements.<br>|
| Banking net interest <br>margin<br>| Banking net interest income on customer and product balances in the banking businesses as a percentage of average gross <br>interest-earning banking assets for the period. This measure is useful in assessing the banking profitability.<br>|
| Cost:income ratio | Total costs as a percentage of net income calculated on an underlying basis. This measure is useful in assessing the profitability <br>of the Group's operations before the effects of the underlying impairment credit or charge.<br>|
| General insurance <br>combined ratio<br>| General insurance combined ratio is a key metric used in the insurance industry to assess an insurer's profitability and <br>operational efficiency, with a ratio below 100% indicating profitability. It is calculated as incurred claims, and earned <br>commission or earned expenses, expressed as a percentage of net insurance revenue.<br>|
| Gross written premiums | Gross written premiums is a measure of the volume of General Insurance business written during the period. This measure is <br>useful for assessing the growth of the General Insurance business.<br>|
| Life and pensions sales <br>(present value of new <br>business premiums)<br>| Present value of regular premiums plus single premiums from new business written in the current period. This measure is <br>useful for assessing sales in the Group's life, pensions and investments insurance business.<br>|
| Loan to deposit ratio | Underlying loans and advances to customers divided by customer deposits. |
| Operating costs | Operating expenses adjusted to remove the impact of operating lease depreciation, remediation, restructuring costs, the <br>amortisation of purchased intangibles, the insurance gross up and other statutory items.<br>|
| New business value | This represents the value added to the contractual service margin and risk adjustment at the initial recognition of new <br>contracts, net of acquisition expenses (derived from the statutory balance sheet movements) and any loss component on <br>onerous contracts (which is recognised directly in the income statement) but does not include existing business increments.<br>|
| Pro forma CET1 ratio | CET1 ratio adjusted for the effect of the full impact of the announced ordinary share buyback programme. Where disclosed, <br>the ratio is further adjusted for the effect of any dividend paid up by the Insurance business in the subsequent quarter prior to <br>the publication of the financial results.<br>|
| Return on tangible <br>equity<br>| Profit attributable to ordinary shareholders, annualised and divided by average tangible net assets. This measure is useful in <br>providing a consistent basis with which to measure the Group's performance.<br>|

---

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | |
|:---|:---|
| Tangible net assets per <br>share<br>| Net assets excluding intangible assets such as goodwill and acquisition-related intangibles divided by the number of ordinary <br>shares in issue. This measure is useful in assessing shareholder value.<br>|
| Underlying profit before <br>impairment<br>| Underlying profit adjusted to remove the underlying impairment credit or charge. This measure is useful in allowing for a <br>comparable representation of the Group's performance before the effects of the forward-looking underlying impairment <br>credit or charge.<br>|
| Underlying profit | Statutory profit before tax adjusted for certain items as detailed above. This measure allows for a comparable representation <br>of the Group's performance by removing the impact of certain items including volatility caused by market movements outside <br>the control of management.<br>|

---

**Reconciliation between statutory and underlying basis financial information**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Statutory basis** | **Statutory basis** | **Removal of:** | **Removal of:** | **Underlying basis**<sup>A</sup> | **Underlying basis**<sup>A</sup> |
| **2025** | **£m** | **Volatility and** <br>**other items**<sup>1,2</sup><br>**£m**<br>| **Insurance** <br>**gross up**<sup>3</sup><br>**£m**<br>| **£m** |  |
| Net interest income | **13230** | **403** | **2** | **13635** | Underlying net interest income |
| Other income | **6192** | **(326)** | **254** | **6120** | Underlying other income |
|  |  | **(1454)** | **–** | **(1454)** | Operating lease depreciation<sup>4</sup> |
| **Total income** | **19422** | **(1377)** | **256** | **18301** | **Net income** |
| Operating expenses<sup>4</sup> | **(11966)** | **1493** | **(256)** | **(10729)** | Total costs |
| Impairment charge | **(795)** | **–** | **–** | **(795)** | Underlying impairment charge |
| **Profit before tax** | **6661** | **116** | **–** | **6777** | **Underlying profit** |
| 2024 |  |  |  |  |  |
| Net interest income | 12277 | 578 | (10) | 12845 | Underlying net interest income |
| Other income | 5726 | (375) | 246 | 5597 | Underlying other income |
|  |  | (1325) | – | (1325) | Operating lease depreciation<sup>4</sup> |
| **Total income** | 18003 | (1122) | 236 | 17117 | **Net income** |
| Operating expenses<sup>4</sup> | (11601) | 1496 | (236) | (10341) | Total costs |
| Impairment charge | (431) | (2) | – | (433) | Underlying impairment charge |
| **Profit before tax** | 5971 | 372 | – | 6343 | **Underlying profit** |

---

1In the year ended 31 December 2025 this comprised the effects of market and other volatility (gains of £72 million); the amortisation of purchased intangibles (£86 million);

restructuring costs (£46 million); and fair value unwind (losses of £56million).

2In the year ended 31 December 2024 this comprised the effects of market and other volatility (losses of £144 million); the amortisation of purchased intangibles (£81 million);

restructuring costs (£40 million); and fair value unwind (losses of £107 million).

3Under IFRS 17, expenses which are directly associated with the fulfilment of insurance contracts are reported as part of the insurance service result within statutory other income. On

an underlying basis these expenses remain within costs.

4Net of losses on disposal of operating lease assets of £10 million (2024: profit of £59 million). Statutory operating expenses includes operating lease depreciation. On an underlying basis

operating lease depreciation is included in net income.

**Asset quality ratio**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| **Underlying impairment charge (£m)** | **(795)** | (433) |
| Remove non-customer underlying impairment charge (credit) (£m) | **1** | (23) |
| **Underlying customer related impairment charge (£m) (a)** | **(794)** | (456) |
| **Loans and advances to customers (£bn)** | **481.5** | 459.9 |
| Remove finance lease gross-up<sup>1</sup> (£bn) | **(0.4)** | (0.8) |
| **Underlying loans and advances to customers**<sup>A</sup> **(£bn)** | **481.1** | 459.1 |
| Expected credit loss allowance (drawn, statutory basis) (£bn) | **3.0** | 3.2 |
| Acquisition related fair value adjustments (£bn) | **0.1** | 0.1 |
| **Underlying gross loans and advances to customers (£bn)** | **484.2** | 462.4 |
| Averaging (£bn) | **(9.8)** | (3.5) |
| **Average underlying gross loans and advances to customers (£bn) (b)** | **474.4** | 458.9 |
| **Asset quality ratio**<sup>A</sup> **= (a) / (b)** | **0.17%** | 0.10% |

---

1The finance lease gross up represents a statutory accounting adjustment required under IFRS 9 to recognise a continuing involvement asset following the partial derecognition of a

component of the Group's finance lease book via a securitisation in the third quarter of 2024.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Alternative performance measurescontinued

**Assets under administration**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Total Insurance assets (£m)** | **217155** | 197135 |
| Adjustment for: |  |  |
| Assets not backing customer products within AuA | **(5483)** | (10423) |
| Structured entities consolidated under IFRS 10 | **(12756)** | (11309) |
| Assets backing Insurance and annuity products not considered AuA | **(15446)** | (14849) |
| Investment products and share dealing business managed by Insurance, Pensions and Investments, but not on IFRS <br>balance sheet<br>| **99087** | 89858 |
| Other | **(2934)** | (3281) |
| **Total customer assets under administration**<sup>A</sup> **(£m)** | **279623** | 247131 |

---

**Banking net interest margin**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| Underlying net interest income<sup>A</sup> (£m) | **13635** | 12845 |
| Remove non-banking underlying net interest expense (£m) | **515** | 469 |
| **Banking underlying net interest income**<sup>A</sup> **(£m) (a)** | **14150** | 13314 |
| Underlying gross loans and advances to customers (£bn) | **484.2** | 462.4 |
| Adjustment for non-banking and other items: |  |  |
| Fee-based loans and advances (£bn) | **(11.3)** | (10.0) |
| Other (£bn) | **(0.1)** | 2.0 |
| Interest-earning banking assets (£bn) | **472.8** | 454.4 |
| Averaging (£bn) | **(9.9)** | (3.2) |
| **Average interest-earning banking assets**<sup>A</sup> **(£bn) (b)** | **462.9** | 451.2 |
| **Banking net interest margin**<sup>A</sup> **(%) = (a) / (b)** | **3.06%** | 2.95% |

---

**Cost:income ratio**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Operating costs<sup>A</sup> | **9761** | 9442 |
| Remediation | **968** | 899 |
| **Total costs (a)** | **10729** | 10341 |
| **Net income (b)** | **18301** | 17117 |
| **Cost:income ratio**<sup>A</sup> **= (a) / (b)** | **58.6%** | 60.4% |

---

**Loan to deposit ratio**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>| At 31 Dec<br>2024<br>|
| **Underlying loans and advances to customers**<sup>A</sup> **(a)** | **481.1** | 459.1 |
| **Customer deposits (b)** | **496.5** | 482.7 |
| **Loan to deposit ratio**<sup>A</sup> **= (a) / (b)** | **97%** | 95% |

---

**Life and pensions sales (present value of new business premiums)**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Premiums received | **10620** | 10679 |
| Investment sales | **13715** | 10986 |
| Effect of capitalisation factor | **4047** | 3609 |
| Effect of annualisation | **526** | 401 |
| Gross premiums from existing long-term business | **(7861)** | (7426) |
| **Life and pensions sales (present value of new business premiums)**<sup>A</sup> | **21047** | 18249 |

---

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**New business value of insurance and participating investment contracts recognised in the year**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Contractual service margin | **18** | 61 |
| Risk adjustment for non-financial risk | **60** | 65 |
| Losses recognised on initial recognition | **(92)** | (93) |
|  | **(14)** | 33 |
| Impacts of reinsurance contracts recognised in the year | **46** | 39 |
| Roll forward of new business to end of period including increments, single premiums and transfers, of contracts initially <br>recognised in the year<br>| **48** | 35 |
| Amounts relating to contracts modified to add a drawdown feature and recognised as new contracts | **–** | 4 |
| **New business value of insurance and participating investment contracts recognised in the year**<sup>A</sup> | **80** | 111 |

---

**General insurance combined ratio**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| **Insurance revenue** | **752** | 655 |
| Adjustment for: |  |  |
| Allocation of reinsurance premiums | **(49)** | (47) |
| **Net insurance revenue (b)** | **703** | 608 |
| **Total incurred claims** | **376** | 344 |
| **Total expenses** | **217** | 221 |
| **Insurance service expense** | **593** | 565 |
| Adjustment for: |  |  |
| Amounts recoverable from reinsurers for incurred claims | **(4)** | (6) |
| Other operating expenses | **38** | 33 |
| **Total commission and expenses (a)** | **627** | 592 |
| **General insurance combined ratio (%)**<sup>A</sup> **– (a) / (b)** | **89%** | 97% |

---

**Operating costs**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Operating expenses | **11966** | 11601 |
| Adjustment for: |  |  |
| Operating lease depreciation | **(1454)** | (1325) |
| Remediation | **(968)** | (899) |
| Restructuring | **(46)** | (40) |
| Amortisation of purchased intangibles | **(86)** | (81) |
| Insurance gross up | **256** | 236 |
| Other | **93** | (50) |
| **Operating costs**<sup>A</sup> | **9761** | 9442 |

---

**Pro forma CET1 ratio**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025%**<br>| At 31 Dec<br>2024%<br>|
| CET1 ratio | **14.0%** | 14.2% |
| Insurance dividend and share buyback accrual<sup>1</sup> | **(0.8)%** | (0.7)% |
| **Pro forma CET1 ratio**<sup>A</sup> | **13.2%** | 13.5% |

---

1Reflects a reduction for the impact of the announced ordinary share buyback programme. 31 December 2024 also reflects an increase for the dividend paid up by the Insurance

business in February 2025. The CET1 and pro forma CET1 ratios at 31 December 2025 both reflect an ordinary dividend received from the Insurance business in December 2025, that

would previously have been received in February of the following year.

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Alternative performance measurescontinued

**Return on tangible equity**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025** | 2024 |
| **Profit attributable to ordinary shareholders (£m) (a)** | **4196** | 3923 |
| Average shareholders' equity (£bn) | **40.5** | 40.0 |
| Average goodwill and other intangible assets (£bn) | **(7.8)** | (8.0) |
| **Average tangible equity (£bn) (b)** | **32.7** | 32.0 |
| **Return on tangible equity (%)**<sup>A</sup> **= (a) / (b)** | **12.9%** | **12.3%** |

---

**Tangible net assets per share**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **At 31 Dec**<br>**2025**<br>**£m**<br>| At 31 Dec<br>2024<br>£m<br>|
| Ordinary shareholders' equity | **41721** | 39521 |
| Remove goodwill and other intangible assets | **(8593)** | (8188) |
| Deferred tax and other adjustments | **366** | 350 |
| **Tangible net assets (a)** | **33494** | 31683 |
| **Ordinary shares in issue, excluding own shares (b)** | **58,799m** | 60,491m |
| **Tangible net assets per share**<sup>A</sup> **= (a) / (b)** | **57.0p** | 52.4p |

---

**Underlying profit before impairment**<sup>A</sup>

---

| | | |
|:---|:---|:---|
|  | **2025**<br>**£m**<br>| 2024<br>£m<br>|
| Statutory profit before tax | **6661** | 5971 |
| Remove impairment charge | **795** | 431 |
| Remove volatility and other items including restructuring | **116** | 374 |
| **Underlying profit before impairment**<sup>A</sup> | **7572** | 6776 |

---

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

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 |
| Alpha Trustees Ltd | 20 i |
| Amberdate Ltd | 1 i v |
| Anglo Scottish Utilities Partnership 1 | + \*  |
| Aquilus Ltd | 13 i ‡ |
| Automobile Association Personal Finance Ltd | 4 i |
| Avalon Investment Services (Nominees) Ltd | 20 i |
| Avalon SIPP Trustees Ltd | 20 i |
| Bank of Scotland (B G S) Nominees Ltd | 5 \* |
| Bank of Scotland Branch Nominees Ltd | 5 i |
| Bank of Scotland Central 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 xiii |
| 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 |
| Black Horse Offshore Ltd | 7 i |
| Boltro Nominees Ltd | 1 i |
| BOS (Shared Appreciation Mortgages <br>(Scotland)) Ltd<br>| 4 i |
| BOS (Shared Appreciation Mortgages (Scotland) <br>No. 2) Ltd<br>| 4 i |
| BOS (Shared Appreciation Mortgages (Scotland) <br>No. 3) Ltd<br>| 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 (USA) Fund Investments Inc. | 11 xiv |
| BOS (USA) Inc. | 11 i |
| BOS Personal Lending Ltd | 4 ii iii |

---

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| 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 | 47 i |
| Capital Bank Property Investments (3) Ltd | 47 i ‡ |
| Capital Personal Finance Ltd | 4 i |
| Cardnet Merchant Services Ltd | 1 # ^ iii iv |
| Cashfriday Ltd | 9 i |
| Cavendish Online Ltd  | 21 i |
| Cawley (Chester) Ltd | 47 ii iii <br>viii<br>|
| CF Asset Finance Ltd | 13 i ‡ |
| Charterhall Nominees Ltd | 20 i |
| Cheltenham & Gloucester plc | 12 i |
| Citra Development Company (No. 1) Ltd | 1 i |
| Citra Development Company (No. 2) Ltd | 1 i |
| Citra Living British Waterways Ltd | 1 i |
| Citra Living Broadside Limited | 30 i |
| Citra Living Investments Ltd | 1 i |
| Citra Living Lease Company (No. 1) Ltd | 1 i |
| Citra Living Ltd | 1 i |
| Citra Living Nexus Ltd | 1 i |
| Citra Living Oldham Road Ltd | 30 i |
| Citra Living Operating Company (No. 1) Ltd | 1 i |
| Citra Living Properties (No. 1) Ltd | 1 i |
| Citra Living Properties (No. 2) Ltd | 1 i |
| Citra Living Properties (No. 3) Ltd | 1 i |
| Citra Living Properties (No. 4) Ltd | 1 i |
| Citra Living Properties (No. 5) Ltd | 1 i |
| Citra Living The Rise Cardiff Ltd | 1 i |
| Citra Living Unit Holder (No. 1) Ltd | 1 i |
| Citra Living Unit Holder (No. 2) Ltd | 1 i |
| Citra Living Wharf Street Ltd | 1 i |
| Citra Pathways Ltd | 1 i |
| Clerical Medical Finance Ltd | 20 i |
| Clerical Medical Investment Fund Managers Ltd | 4 i |
| Clerical Medical Non Sterling Property <br>Company Sàrl<br>| 22 i |
| Cloak Lane Funding Sàrl | 23 i |
| Cloak Lane Investments Sàrl | 23 i |
| Conquest Securities Ltd | 1 v xiii |
| Corbiere Asset Investments Ltd | 1 ii iii |
| Dalkeith Corporation | 24 i ‡ |
| Dunstan Investments (UK) Ltd | 1 i |
| E.B.S. Pensioneer Trustees Ltd | 20 i |
| EBS Pensions Ltd | 20 i |
| EBS Self-Administered Personal Pension Plan <br>Trustees Ltd<br>| 20 i |
| Embark Corporate Services Ltd | 20 ii |
| Embark Group Ltd | 20 i |
| Embark Investment Services Ltd | 20 i |
| Embark Investment Services Nominees Ltd | 20 i |
| Embark Investments Ltd | 20 i |
| Embark Pensions Trustees Ltd | 20 i |
| Embark Services Ltd | 20 i |
| Embark Trustees Ltd | 20 i |
| Eurolead Services Holdings Ltd | 9 i |

---

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| First Retail Finance (Chester) Ltd | 4 i |
| Forthright Finance Ltd | 47 i |
| France Industrial Premises Holding Company | 28 i |
| General Reversionary and Investment Company | 20 i # |
| Gresham Nominee 1 Ltd | 1 i |
| Gresham Nominee 2 Ltd | 1 i |
| Halifax Financial Brokers Ltd | 4 i |
| Halifax Financial Services (Holdings) Ltd | 4 i |
| Halifax Financial Services Ltd | 4 i |
| Halifax General Insurance Services Ltd | 4 i |
| Halifax Leasing (March No.2) Ltd | 1 i |
| Halifax Leasing (September) Ltd | 1 i |
| Halifax Life Ltd | 4 i |
| Halifax Loans Ltd | 4 i |
| Halifax Pension Nominees Ltd | 1 i |
| Halifax Share Dealing Ltd | 4 i |
| Halifax Vehicle Leasing (1998) Ltd | 4 i |
| Hamsard 3352 Ltd | 14 i |
| Hamsard 3353 Ltd | 14 i |
| HBOS Financial Services Ltd | 20 i |
| HBOS Investment Fund Managers Ltd | 4 i |
| HBOS plc | 5 i v vi  |
| HBOS Social Housing Covered Bonds LLP | 47 \* |
| HBOS UK Ltd  | 5 i |
| Heidi Finance Holdings (UK) Ltd | 1 i |
| HGP III Ltd | 1 i |
| Hill Samuel Finance Ltd | 1 v xix |
| Hill Samuel Leasing Co. Ltd | 1 i |
| Home Shopping Personal Finance Ltd | 4 i |
| Horizon Capital 2000 Ltd | 5 i |
| Hornbuckle Mitchell Trustees Ltd | 20 i |
| Housing Growth Partnership GP LLP | 1 \* |
| Housing Growth Partnership II GP LLP | 1 \* |
| Housing Growth Partnership III GP LLP | 1 \* |
| Housing Growth Partnership III LP | 1 \* |
| Housing Growth Partnership Manager Ltd | 1 i |
| HSDL Nominees Ltd | 4 i |
| HVF Ltd | 1 i |
| Hyundai Car Finance Ltd | 20 i |
| International Motors Finance Ltd | 20 ii # |
| Katrine Leasing Ltd | 39 i ‡ |
| Landau Finance Ltd | 44 i |
| LB Healthcare Trustee Ltd | 1 i |
| LBCF Ltd | 9 i |
| LBG Brasil Administração LTDA | 38 i  |
| LBG Equity Investments Ltd | 1 i ^ |
| LBI Leasing Ltd | 1 i |
| LDC (General Partner) Ltd | 40 i |
| LDC (Managers) Ltd | 40 i |
| LDC (Nominees) Ltd | 40 i |
| LDC GP LLP | 41 \* |
| LDC I LP | 41 \* |
| LDC II LP | 41 \* |
| LDC IV LP | 41 \* |
| LDC V LP | 41 \* |
| LDC VI LP | 41 \* |
| LDC VII LP | 41 \* |
| LDC VIII LP | 40 \* |
| LDC IX LP | 40 \* |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Subsidiaries and related undertakings continued

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| LDC Parallel (Nominees) Ltd | 40 i |
| LDC Parallel XV LP | 41 \* |
| LDC X LP | 40 \* |
| LDC XI LP | 40 \* |
| LDC XII LP | 40 \* |
| LDC XIII LP | 41 \* |
| LDC XIV LP | 41 \* |
| LDC XV LP | 41 \* |
| Legacy Renewal Company Ltd  | 5 i |
| LEIL Virgo Holdco 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 xi <br>‡<br>|
| Lex Vehicle Leasing Ltd | 13 i ‡ |
| Lime Street (Funding) Ltd | 13 i ‡ |
| Lloyds (Gresham) Ltd | 13 i xi ‡ |
| Lloyds (Nimrod) Specialist Finance Ltd  | 1 i |
| Lloyds America Securities Corporation | 11 xiv |
| 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 | 43 i |
| Lloyds Bank Corporate Asset Finance (HP) Ltd | 1 i |
| Lloyds Bank Corporate Asset Finance (No.1) 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 Corporate Markets plc | 1 i ^ |
| Lloyds Bank Corporate Markets <br>Wertpapierhandelsbank GmbH<br>| 17 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 Insurance Holdings Ltd | 1 i |
| Lloyds Bank General Insurance Ltd | 1 i |
| 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 Insurance Services Ltd | 1 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 MTCH Ltd | 1 i |
| Lloyds Bank Nominees Ltd | 1 i |
| Lloyds Bank Offshore Pension Trust Ltd | 33 i  |
| Lloyds Bank Pension ABCS (No. 1) LLP | 1 \* |
| Lloyds Bank Pension ABCS (No. 2) LLP | 1 \* |
| Lloyds Bank Pensions Property (Guernsey) Ltd | 34 ii iii |
| Lloyds Bank plc | 1 ^ i vii |
| Lloyds Bank Property Company Ltd | 1 i |
| Lloyds Bank S.F. Nominees Ltd | 1 i |
| Lloyds Bank Subsidiaries Ltd | 1 i |

---

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| Lloyds Bank Trustee Services Ltd | 1 i |
| Lloyds Banking Group Pensions Trustees Ltd | 1 i |
| Lloyds Development Capital (Holdings) Ltd | 40 i |
| Lloyds Far East Sàrl | 23 i |
| Lloyds General Leasing Ltd | 1 i |
| Lloyds Hypotheken B.V. | 37 i |
| Lloyds Industrial Leasing Ltd | 1 i |
| Lloyds International Management Services <br>(Jersey) Ltd<br>| 7 i |
| Lloyds International Pty Ltd | 8 i |
| Lloyds Leasing (North Sea Transport) Ltd | 1 i |
| Lloyds Leasing Developments Ltd | 13 i ‡ |
| Lloyds Offshore Global Services Private Ltd | 48 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 Securities Inc. | 11 xiv |
| 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 | 47 i |
| London Taxi Finance Ltd | 1 ii iii |
| Lotus Finance Ltd | 20 ii iii |
| LTGP Limited Partnership Incorporated | 34 \* |
| Maritime Leasing (No. 19) Ltd | 13 i ‡ |
| MBNA Europe Finance Ltd | 46 i |
| MBNA Europe Holdings Ltd | 47 i |
| MBNA Ltd | 47 i |
| MBNA R & L Sàrl | 49 i |
| MBNA Receivables Ltd | 32 i |
| Membership Services Finance Ltd | 4 i |
| Mitre Street Funding Sàrl | 23 i |
| NWS Trust Ltd | 5 i |
| Pacific Leasing Ltd | 13 i ‡ |
| Pensions Management (S.W.F.) Ltd | 5 \* |
| Perry Nominees Ltd | 1 i |
| PIPS Asset Investments Ltd | 1 ii iii |
| Prestonfield Investments Ltd | 5 i |
| Proton Finance Ltd | 20 ii iii |
| R.F. Spencer and Company Ltd | 9 i |
| Raleigh Street (Walsall) Management Company <br>Ltd<br>| 1 \* |
| Ranelagh Nominees Ltd | 1 i |
| Retail Revival (Burgess Hill) Investments Ltd | 1 i |
| Saint Michel Holding Company No1 | 28 i |
| Saint Michel Investment Property | 28 i |
| Saint Witz 2 Holding Company No1 | 28 i |
| Saint Witz 2 Investment Property | 28 i |
| Savban Leasing Ltd | 1 i |
| Scotland International Finance B.V. | 35 i |
| Scottish Widows Administration Services <br>(Nominees) Ltd<br>| 5 i |
| Scottish Widows Administration Services Ltd | 1 i |
| Scottish Widows Auto Enrolment Services Ltd | 1 i |
| Scottish Widows Europe | 27 i |
| Scottish Widows Financial Services Holdings | 5 i |

---

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| Scottish Widows' Fund and Life Assurance <br>Society<br>| 5 \* |
| Scottish Widows Group Ltd | 5 ii ^ |
| Scottish Widows Industrial Properties Europe <br>B.V.<br>| 18 i |
| Scottish Widows Ltd | 1 i |
| Scottish Widows Schroder Personal Wealth <br>(ACD) Ltd<br>| 1 i |
| Scottish Widows Schroder Personal Wealth Ltd | 1 i |
| Scottish Widows Schroder Wealth Holdings Ltd | 1 i |
| Scottish Widows Services Ltd | 5 i |
| Scottish Widows Trustees Ltd | 5 i |
| Scottish Widows Unit Funds Ltd | 5 i |
| Scottish Widows Unit Trust Managers Ltd | 1 i |
| Seaspirit Leasing Ltd | 1 i |
| Share Dealing Nominees Ltd | 4 i |
| Shogun Finance Ltd | 20 i |
| St Andrew's Group Ltd | 20 i ‡ |
| St Andrew's Insurance plc | 20 i |
| St Andrew's Life Assurance Ltd | 20 i |
| Standard Property Investment (1987) Ltd | 5 ii # |
| Sterling ISA Managers (Nominees) Ltd | 20 i |
| Sterling ISA Managers Ltd | 20 i |
| Sussex County Homes Ltd | 4 i |
| Suzuki Financial Services Ltd | 20 ii # |
| SW Funding plc | 5 i # |
| The Adviser Centre Ltd | 20 i |
| The Agricultural Mortgage Corporation plc | 45 i |
| The British Linen Company Ltd | 5 i |
| The Mortgage Business plc | 4 i |
| Thistle Leasing | + \* |
| Tranquility Leasing Ltd | 1 i |
| TuskerDirect Ltd | 14 i |
| Uberior (Glasgow) Limited | 5 ii iii |
| Uberior (Moorfield) Ltd | 5 i |
| Uberior (West) Limited | 5 ii iii |
| Uberior ENA Ltd | 5 i |
| Uberior Equity Ltd | 5 i |
| Uberior Europe Ltd | 5 i |
| Uberior Fund Investments Ltd | 5 i |
| Uberior Infrastructure Investments Ltd | 31 i ‡ |
| Uberior Infrastructure Investments (No 2) Ltd | 1 i |
| Uberior Investments Ltd | 5 i |
| Uberior Trading Ltd | 5 i |
| Uberior Ventures Ltd | 31 i ‡ |
| UDT Budget Leasing Ltd | 13 i ‡ |
| UK PRS (Jersey) Properties I Ltd | 36 i |
| UK PRS 2 Limited Partnership | 1 \* |
| UK PRS GP 2 Ltd | 1 i |
| UK PRS GP Ltd | 1 i |
| UK PRS Lettings I LLP | 1 \* |
| UK PRS Limited Partnership | 1 \* |
| UK PRS Member Limited | 1 i |
| UK PRS Nominee 2 Limited | 1 i |
| UK PRS Nominee Limited | 1 i |
| United Dominions Leasing Ltd | 1 i |
| United Dominions Trust Ltd | 1 i |
| Vine Street XV LP | 41 \* |
| Ward Nominees (Abingdon) Ltd | 1 i |
| Waymark Asset Investments Ltd | 1 ii iii |

---

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| West Craigs Ltd | 5 i |
| Wood Street Leasing Ltd | 1 i |

---

**Subsidiary undertakings** continued

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 | 36 |
| Cancara Asset Securitisation Ltd  | 32 |
| 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 <br>plc<br>| 16 ‡ |
| Cardiff Auto Receivables Securitisation 2024-1 <br>plc<br>| 6 |
| Cardiff Auto Receivables Securitisation Holdings <br>Ltd<br>| 6 |
| Cardiff Auto Receivables Securitisation Holdings <br>No. 2 Ltd<br>| 6 |
| Elland RMBS 2018 plc | 6 |
| Elland RMBS Holdings Ltd | 6 |
| Fontwell II Securities 2020 DAC | 42 |
| Fontwell Securities 2016 Ltd | 36 |
| Gresham Receivables (No. 10) Ltd | 32 |
| Gresham Receivables (No. 13) UK Ltd | 25 |
| Gresham Receivables (No. 20) Ltd | 32 |
| Gresham Receivables (No. 24) Ltd | 32 |
| 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 | 32 |
| 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 <br>Ltd <br>| 25 |
| Housing Association Risk Transfer 2019 DAC | 42 |
| Lloyds Bank Covered Bonds (Holdings) Ltd | 6 |
| Molineux RMBS 2016-1 plc | 16 ‡ |
| Molineux RMBS Holdings Ltd | 6 |
| Otium Lifetime Funding (No. 1) 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 |

---

---

| | |
|:---|:---|
| **Name of undertaking** | **Notes** |
| 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 | 36 |
| Salisbury II Securities 2016 Ltd | 36 |
| Salisbury II-A Securities 2017 Ltd | 36 |
| Salisbury III Securities 2019 DAC | 42 |
| Syon Securities 2019 DAC | 42 |
| Syon Securities 2020 DAC | 42 |
| Syon Securities 2020-2 DAC | 42 |
| Thistle Investments (AMC) Ltd | 6 |
| Wetherby II Securities 2018 DAC | 3 ‡ |
| Wetherby III Securities 2019 DAC | 42 |
| Wilmington Cards 2021-1 plc | 6 |
| Wilmington Cards Holdings Ltd | 6 |
| Wilmington Receivables Trustee Ltd | 6 |
| Yakima Funding No. 1 Ltd | 6 |
| Bank of Scotland Foundation •  | 5 |
| Lloyds Bank Foundation for England & Wales •  | 2 |
| Lloyds Bank Foundation for the Channel Islands •  | 2 |
| MBNA General Foundation •  | 47 |
| The Halifax Foundation for Northern Ireland •  | 15 |

---

• A charitable foundation funded but not owned or

controlled by Lloyds Banking Group

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Subsidiaries and related undertakings continued

**Associated undertakings**

The Group has a participating interest in the following undertakings.

---

| | | | |
|:---|:---|:---|:---|
| **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** |
| 00SC Ltd | 50% | 2 Pemberton Street, Nottingham, NG1 1GS | ii |
| 239 Kingsway Hove Ltd | 50% | 168 Church Road, Hove, BN3 2DL | ii  |
| 4755AS Ltd | 50% | Kingsnorth House, Blenheim Way, Birmingham, West Midlands, England, B44 8LS | ii |
| Addison Social Housing Ltd | 20% | 18a Capricorn Centre, Cranes Farm Road, Basildon, Essex, SS14 3JJ | i ‡ |
| Agentis Health Group Ltd | 99% | Unit 4, 74 Dyke Road Mews, Brighton, BN1 3JD | ii & |
| Airline Services And Components Group Ltd | 94.45% | Squire Patton Boggs (UK) LLP (Ref: Csu), Rutland House, 148 Edmund Street, Birmingham, B3 2JR | ii & |
| Albany Bidco Ltd | 75.32% | Acora House, Albert Drive, Burgess Hill, West Sussex, United Kingdom, RH15 9TN | ii & |
| Aldreth Developments Ltd | 50% | No 1 Railshead Road, St Margarets, Isleworth, Middlesex, United Kingdom, TW7 7EP | ii ∞ |
| Alfred Homes Properties LLP | n/a | The New Barn, Church Farm Woodman Lane, Sparsholt, Winchester, Hampshire, United <br>Kingdom, SO21 2FR<br>| \*  |
| Alfred Investment Properties Ltd | 50% | The New Barn, Church Farm Woodman Lane, Sparsholt, Winchester, Hampshire, United <br>Kingdom, SO21 2FR<br>| i |
| Alfred Investments LLP | n/a | The New Barn, Church Farm Woodman Lane, Sparsholt, Winchester, Hampshire, United <br>Kingdom, SO21 2FR<br>| \* |
| Alfreton Road JV Ltd | 100% | 85 Buckingham Gate, London, England, SW1E 6PD | ii |
| Allan Water Homes (Chryston) Ltd | 50% | 24B Kenilworth Road, Bridge Of Allan, Stirling, Scotland, FK9 4DU | ii  |
| Alphabet Bidco Ltd | 99.25% | Phoenix House, Smeaton Close, Rabans Lane Industrial Area, Aylesbury, Buckinghamshire, <br>United Kingdom, HP19 8UW<br>| ii & |
| Angus International Safety Group Ltd  | 88.93%<br>88.93%<br>| Station Road, High Bentham, Near Lancaster, LA2 7NA | xvii & <br>xviii<br>|
| Artisan Blythswood Quarter Ltd  | 100% | 61 Bridge Street, Kington, HR5 3DJ | ii |
| Avantis Education Group Ltd | 99.25% | Unit 2 And 3, Jessop Court, Waterwells Business Park, Quedgeley, Gloucester, United <br>Kingdom, GL2 2AP<br>| xviii & |
| Azul Holdco Ltd | 99.25% | 3rd Floor, One New Change, London, England, EC4M 9AF | xviii & |
| Backhouse (Castle Cary) JV Ltd | 50% | Number One Welcome Building, Avon Street, Bristol, BS2 0PS | ii |
| Backhouse (Westbury) JV Ltd | 50% | Number One Welcome Building, Avon Street, Bristol, BS2 0PS | ii |
| Balia Ltd | 50% | 85 Buckingham Gate, London, England, SW1E 6PD | i |
| Bar Bidco Ltd | 99.25% | Equity House, Blackbrook Park Avenue, Taunton, England, TA1 2PX | ii & |
| BCIS Holdings Ltd | 99.25% | Royal House 110 Station Parade, Harrogate, HG1 1EP  | ii & |
| Beckstones (Rheda Park) Ltd | 50% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, CA11 9BN | ii |
| Bergamot Ventures Ltd | 100% | C/O Milsted Langdon Llp Winchester House, Deane Gate Avenue, Taunton, United Kingdom, <br>TA1 2UH<br>| iii ~ |
| BH Stoke Golding Property LLP | n/a | Grovelands Business Park, West Haddon Road, East Haddon, Northampton, NN6 8FB | \* |
| BH Sutton Ltd | 50% | Grovelands Business Park, West Haddon Road, East Haddon, Northampton, NN6 8FB | ii |
| BH Woodville Ltd | 50% | Grovelands Business Park, West Haddon Road, East Haddon, Northampton, NN6 8FB | ii |
| Biozone Scientific Group Ltd | 99.25% | Unit 5a, Compass Business Park, Pacific Road, Cardiff, CF24 5HL  | ii & |
| Blue Bay Travel Group Ltd | 99.17% | A4 Bellringer Road, Trentham Business Quarter, Stoke-On-Trent, ST4 8GB | xviii & |
| BoS Mezzanine Partners Fund LP | n/a | Fourth Floor, 7 Castle Street, Edinburgh, EH2 3AH | \* |
| Bowbridge Homes (Frisby) Ltd | 50% | Unit 4, Shieling Court, Corby, England, NN18 9QD | ii  |
| Bowland Fold (Halton) Ltd | 25% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, England, CA11 9BN  | i |
| Bramble Foods Group Ltd | 99.25%<br>99.25%<br>| Crosby Road, Market Harborough, Leicestershire, England, LE16 9EE | ii &<br>xvi<br>|
| Briar Homes (Barrhead) Ltd | 50% | Radleigh House, 1 Golf Road, Clarkston, Glasgow, G76 7HU | i |
| Briar Homes (Gladsmuir) Ltd | 50% | Radleigh House, 1 Golf Road, Clarkston, Glasgow, G76 7HU | i |
| Briar Homes (Howwood) Ltd | 50% | Radleigh House, 1 Golf Road, Clarkston, Glasgow, G76 7HU | ii |
| Briar Homes (Investments) Ltd | 100% | Radleigh House, 1 Golf Road, Clarkston, Glasgow, G76 7HU | ii |
| Briar Homes (Kennoway) Ltd | 50% | Radleigh House, 1 Golf Road, Clarkston, Glasgow, G76 7HU | i |
| Briar Homes (Newmains) Ltd | 50% | Radleigh House, 1 Golf Road, Clarkston, Glasgow, G76 7HU | ii |
| Briar Homes (Tillycairn) Ltd | 50% | Radleigh House, 1 Golf Road, Clarkston, Glasgow, G76 7HU | i |
| Bunnyhomes Church Lane at Cheriton Bishop Ltd | 25% | 22 Chancery Lane, London, England, WC2A 1LS | i |
| Bunnyhomes Primrose Fields At Appledore Ltd | 25% | 22 Chancery Lane, London, England, WC2A 1LS | i |
| BRICS (Earnley) LLP | n/a | 3rd Floor 22 Old Bond Street, London, W1S 4PY | \* |
| Cayuga 013 LLP | n/a | Cayuga House, 2a Addison Road, Hove, England, BN3 1TN | \* |
| Cayuga 018 LLP | n/a | 168 Church Road, Hove, BN3 2DL | \* |
| Cheriton Bishop Holding Ltd | 50% | 22 Chancery Lane, London, England, WC2A 1LS | ii |
| City & General Securities Ltd | 100% | 10 Upper Berkeley Street, London, W1H 7PE | iii & |

---

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | |
|:---|:---|:---|:---|
| **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** |
| Coba Technology Ltd | 27.95% | 78 Cannon Street, London, EC4N 6HL | ii |
| Columbus UK Holdings Ltd | 99% | 1 Fore Street Avenue, Moorgate, London, United Kingdom, EC2Y 9DT | ii & |
| Connect Health Group Ltd | 99%<br>99%<br>| The Light Box, Quorum Business Park, Benton Lane, Newcastle Upon Tyne, United Kingdom, <br>NE12 8EU<br>| ii &<br>xvii <br>|
| Cora Health Group Ltd | 99.25% | The Light Box, Quorum Business Park, Benton Lane, Newcastle Upon Tyne, United Kingdom, <br>NE12 8EU<br>| ii & |
| Crossco (1462) Ltd | 99.25%<br>99.25%<br>| 23a Falcon Court, Preston Farm Industrial Estate, Stockton-On-Tees, United Kingdom, <br>TS18 3TX<br>| ii <br>xviii &<br>|
| Crossco (1473) Ltd | 99.25% | Pipewell Quay, Pipewellgate, Gateshead, NE8 2BJ | xviii & |
| Cruden Homes (Aberlady) Ltd | 50% | 16 Walker Street, Edinburgh, EH3 7LP | ii |
| Cruden Homes (Barnton Avenue) Ltd | 50% | 16 Walker Street, Edinburgh, EH3 7LP | i |
| Cruden Homes (Longniddry South) Ltd | 50% | 16 Walker Street, Edinburgh, EH3 7LP | i |
| Cruden Homes (West Craigs) Ltd | 50% | 16 Walker Street, Edinburgh, EH3 7LP | i |
| Cruden Ventures Ltd | 100% | 16 Walker Street, Edinburgh, EH3 7LP | ii |
| D.U.K.E. Real Estate Ltd | 100% | Cromwell Property Group Spaces, Lochrin Square, 1 Lochrin Square, 92-98 Fountainbridge, <br>Edinburgh, United Kingdom, EH3 9QA<br>| iii ~ ‡ |
| Derwent Rise (Seaton) Ltd | 25% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, England, CA11 9BN | i |
| Devonshire Homes (Halwill) Ltd | 25% | Gotham House, Hammett Square, Phoenix Lane, Tiverton, Devon, EX16 6LT | ii |
| Devonshire Homes (Ilfracombe) Ltd | 100% | Gotham House, Hammett Square, Phoenix Lane, Tiverton, Devon, EX16 6LT | ii |
| Devonshire Homes (RGI) Ltd | 50% | Gotham House, Hammett Square, Phoenix Lane, Tiverton, Devon, EX16 6LT | ii |
| Devonshire Homes (St Austell) Ltd | 50% | Gotham House, Hammett Square, Phoenix Lane, Tiverton, Devon, EX16 6LT | ii |
| Devonshire Homes (Wincanton) Ltd | 25% | Gotham House, Hammett Square, Phoenix Lane, Tiverton, Devon, EX16 6LT | ii |
| Downtown Manchester BTR Ltd | 100% | 1 St. Georges Court, Altrincham Business Park, Altrincham, England, WA14 5UA | ii |
| Downtown Manchester Opco Ltd | 50% | 1 St. Georges Court, Altrincham Business Park, Altrincham, England, WA14 5UA | i |
| Downtown Manchester Propco Ltd | 50% | 1 St. Georges Court, Altrincham Business Park, Altrincham, England, WA14 5UA | i |
| Duchy Homes (Chapelgarth) Ltd | 50% | 3125 Century Way, Thorpe Park, Leeds, LS15 8ZB | ii |
| Duchy Homes (Elwick) Ltd | 50% | Middleton House, Westland Road, Leeds, United Kingdom, LS11 5UH | ii |
| Duncan and Todd Holdings Ltd | 89.25% | Unit 4 Kirkhill Commercial Park, Dyce Avenue, Dyce, Aberdeen, AB21 0LQ | ii & |
| Dundashill 4A Ltd | 50% | 305 Gray's Inn Road, London, United Kingdom, WC1X 8QR | i |
| Durkan (Onslow) Ltd | 25% | Unit 4, Elstree Way, Borehamwood, England, WD6 1JD | i |
| Durkan Growth Ltd | 50% | Unit 4, Elstree Way, Borehamwood, England, WD6 1JD | ii |
| Eamont Chase (Penrith) Ltd | 25% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, England, CA11 9BN | i |
| Eden Gardens (Etterby) Ltd | 25% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, England, CA11 9BN | i |
| Edwards Homes (Hollybrook Park) Ltd | 50% | Edwards House Lakeside Business Village, St. Davids Park, Ewloe, United Kingdom, CH5 3XA | ii |
| EFG Holdco (CW) Ltd | 100% | 9th Floor, 80 Mosley Street, Manchester, M2 3FX | ii |
| Eiger Bidco Ltd | 99.25% | 4 Webster Court, Carina Park, Westbrook, Warrington, United Kingdom, WA5 8WD | ii & |
| Elovate Group Ltd | 100% | York House, Wetherby Road, Long Marston, YO26 7NH | xviii & |
| Ensco 1322 Ltd | 99% | Newbury House, 20 Kings Road West, Newbury, Berkshire, RG14 5XR | ii & |
| Ensco 1327 Ltd | 99% | 131 Finsbury Pavement, London, EC2A 1NT | ii & |
| Ensco 1337 Ltd | 99% | 41 Churchill Way, Lomeshaye Industrial Estate, Nelson, Lancashire, BB9 6RT | ii & |
| Ensco 1506 Ltd | 73.08% | Broadfield Law UK LLP, One Bartholomew Close, London, EC1A 7BL | ii & |
| Ettrickhaugh Development Company Ltd | 100% | Priorwood House, High Road, Melrose, Scottish Borders, Scotland, TD6 9EF | ii |
| Eudoros Bidco Ltd | 99.25% | 5 Soho Street, London, England, W1D 3DG | xviii & |
| Europa Property Company (Northern) Ltd | 100% | Europa House, 20 Esplanade, Scarborough, North Yorkshire, YO11 2AQ | viii |
| Eutopia Exeter 4 Ltd | 50% | The Stables, Little Coldharbour Farm, Tong Lane, Lamberhurst, Tunbridge Wells, Kent, <br>England, TN3 8AD<br>| ii |
| Eutopia Exeter Gateway Ltd | 50% | The Stables, Little Coldharbour Farm, Tong Lane, Lamberhurst, Tunbridge Wells, Kent, <br>England, TN3 8AD<br>| ii |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Subsidiaries and related undertakings continued

**Associated undertakings** continued

---

| | | | |
|:---|:---|:---|:---|
| **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** |
| Express Engineering Group Holdings Ltd | 99% | Kingsway North, Team Valley Trading Estate, Gateshead, NE11 0EG | ii & |
| Farries Field (Stainburn) Ltd | 50% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, Cumbria, CA11 9BN | ii |
| FDL Salterns Ltd | 50% | 2 Poole Road, Bournemouth, BH2 5QY | ii |
| Fitz&Knox Ltd | 100% | 33-35 Southernhay East, Exeter, EX1 1NX | ii |
| Generate Topco Ltd | 99.25% | Boxpark Unit 37-41 Boxpark Shoreditch, 2-10 Bethnal Green Road, London, E1 6GY | xviii & |
| Global Autocare Holding Ltd | 99% | The Hub, Gelderd Lane, Leeds, England, LS12 6AL | ii & |
| GPSEC LLP | n/a | 2a Addison Road, Hove, England, BN3 1TN | \* |
| Grove Crescent Stratford Ltd | 50% | 3 Llys Y Bont, Parc Menai, Bangor, United Kingdom, LL57 4BN | i |
| Hamsard 3667 Ltd | 99.25% | Park House, Clifton Park, York, North Yorkshire, YO30 5PB | ii & |
| Hamsard 3731 Ltd | 85.21% | 55 Whitefriargate, Hull, HU1 2HU | ii & |
| Hamsard 3751 Ltd | 99.25% | Unit 17-20 Glacier Buildings, Harrington Road, Brunswick Business Park, Liverpool, England, <br>L3 4BH<br>| ii & |
| Hamsard 3796 Ltd | 99.25% | The Harley Building, 77-79 New Cavendish Street, London, England, W1W 6XB | ii & |
| Hartfell Developments (Harker) Ltd | 100% | Langlands, Pallet Hill, Penrith, CA11 0BY | ii |
| Hazel Newco Ltd | 99.25% | Bradwood Court, St Crispin Way, Haslingden, Rossendale, Lancashire, United Kingdom, <br>BB4 4PW<br>| xviii & |
| HB Developments (NW) Ltd | 50% | 116 Duke Street, Liverpool, Merseyside, England, L1 5JW | ii  |
| Hercules Topco Ltd | 99.25% | 5th Floor, The Grange, 100 High Street, Southgate, London, N14 6BN | ii & |
| HG Developments (NW) Ltd | 45% | 116 Duke Street, Liverpool, Merseyside, England, L1 5JW | ii & |
| HGP II Ltd  | 50% | 25 Gresham Street, London, EC2V 7HN | i |
| HGP Torsion Holdco Ltd | 50% | 1280 Century Way, Thorpe Park, Leeds, West Yorkshire, United Kingdom, LS15 8ZB | ii |
| HH (AG) Ltd | 100% | 17 Mann Island, Liverpool, England, L3 1BP | ii |
| Highcross Street Holdings Ltd | 50% | 18 St Christopher's Way, Pride Park, Derby, Derbyshire, DE24 8JY | ii |
| Highlands Bidco Ltd | 99% | Commsworld House, Queen Anne Drive, Newbridge, EH28 8LH  | ii & |
| HJ Topco Ltd | 99.25% | Cavendish House, 39-41 Waterloo Street, Birmingham, B2 5PP | ii & |
| Hollins Homes (Bartle) Ltd | 25% | 22 Regent Street, Nottingham, NG1 5BQ | i ‡ |
| Hollins Homes (Galgates) Ltd | 25% | Riverside House, Irwell Street, Manchester, M3 5EN | i Δ |
| Hollins Homes (Loveclough) Ltd | 50% | C/O Grant Thornton Uk Llp 11th Floor, Landmark St Peter's Square, 1 Oxford Street, <br>Manchester, M1 4PB <br>| ii ‡ |
| Hollins Homes (Utopia) Ltd | 50% | Riverside House, Irwell Street, Manchester, M3 5EN | ii Δ |
| Horse Health Wessex Holdings Ltd | 99.25% | Copied Hall Farm Winsor Road, Winsor, Southampton, Hampshire, United Kingdom, SO40 2HE | ii & |
| Housing Growth Partnership II LP | n/a | 25 Gresham Street, London, EC2V 7HN | \* |
| Housing Growth Partnership Ltd | 50%<br>50%<br>| 25 Gresham Street, London, EC2V 7HN | ii<br>iii<br>|
| Housing Growth Partnership LP  | n/a | 25 Gresham Street, London, EC2V 7HN | \* |
| HPD (Conwy) Ltd | 100% | 20 George Street, Alderley Edge, England, SK9 7EJ | ii |
| Hylyfe Leicester Ltd | 50% | 2 Pemberton Street, Nottingham, England, NG1 1GS | i |
| IDSL Group Holdings Ltd | 99.25% | Magma House, 16 Davy Court Castle Mound Way, Rugby, Warwickshire, United Kingdom, <br>CV23 0UZ<br>| ii & |
| IEG Group Ltd | 99.25% | Christian Douglass Accountants Limited, 2 Jordan Street, Knott Mill, Manchester, M15 4PY | ii & |
| IPE Roundway Ltd | 100% | 22 Gilbert Street, London, England, W1K 5HD | ii |
| Indigo 123 Ltd | 99.25% | 1 Caspian Way, Cardiff, Wales, CF10 4DQ | ii & |
| JRL Property (Castle Street) Holdings Ltd | 100% | 4 Elstree Way, Borehamwood, Hertfordshire, England, WD6 1RN | ii |
| JRL Property (Castle Street) Ltd | 50% | 4 Elstree Way, Borehamwood, Hertfordshire, England, WD6 1RN | i |
| JRL Property (Castle Street) Opco Ltd | 50% | 4 Elstree Way, Borehamwood, Hertfordshire, England, WD6 1RN | i |
| James Taylor Homes (Brighton) Ltd | 25% | James Taylor House, St. Albans Road East, Hatfield, United Kingdom, AL10 0HE | i |
| James Taylor Homes (Investment) Ltd | 50% | James Taylor House, St. Albans Road East, Hatfield, United Kingdom, AL10 0HE | ii  |
| James Taylor Homes (Newton Longville) Ltd | 50% | James Taylor House, St. Albans Road East, Hatfield, United Kingdom, AL10 0HE | ii |
| James Taylor Homes (Verulamium) Ltd | 25% | James Taylor House, St. Albans Road East, Hatfield, United Kingdom, AL10 0HE | i |
| Kenmore Capital 3 Ltd | 100% | Grant Thornton UK LLP, 110 Queen Street, Glasgow, G1 3BX | iii ~ |
| Kier HGP Devco 2 LLP | n/a | 2nd Floor, Optimum House, Clippers Quay, Salford, England, M50 3XP | \* |
| Kier HGP Holdings LLP  | n/a | 2nd Floor, Optimum House, Clippers Quay, Salford, England, M50 3XP | \* |
| Kier HGP Holdings 2 Ltd | 50% | 2nd Floor, Optimum House, Clippers Quay, Salford, England, M50 3XP | i |
| Kier HGP Tunbridge Wells LLP | n/a | 2nd Floor, Optimum House, Clippers Quay, Salford, England, M50 3XP | \* |

---

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | |
|:---|:---|:---|:---|
| **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** |
| Kingmead Homes (Warwick) Ltd | 50%<br>50%<br>50%<br>50%<br>| 168 Church Road, Hove, East Sussex, United Kingdom, BN3 2DL | ii <br>iii <br>viii <br>xvi<br>|
| Kingmead Homes Housing Growth LLP | n/a | 168 Church Road, Hove, East Sussex, United Kingdom, BN3 2DL | \* |
| Kingswood Mobility Group Ltd | 99.25% | Browne Jacobson Llp (Cs) Mowbray House, Castle Meadow Road, Nottingham, England, <br>NG2 1BJ<br>| xviii & |
| Kite Topco Ltd | 89.25%<br>22.13%<br>| Floor 7, The Future Works, Brunel Way, Slough, Berkshire, England, SL1 1FQ | xvii &<br>xvi<br>|
| Kruger Topco Ltd | 99.25% | Rhino House, Deans Road, Ellesmere Port, United Kingdom, CH65 4DR | ii & |
| L-L-O Orpington Ltd | 50% | 1st Floor, Arthur Stanley House, 40-50 Tottenham Street, London, W1T 4RN | ii |
| LMX Holdco Ltd | 99.25% | 1650 Parkway, Whiteley, Fareham, England, PO15 7AH | xviii & |
| Lucida Broking Holdings Ltd | 89.25%<br>89.25%<br>| St James House, 27-43 Eastern Road, Romford, Essex, United Kingdom, RM1 3NH | ii &<br>ix<br>|
| Lunesdale Rise (Kirkby Lonsdale) Ltd | 25% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, England, CA11 9BN | i |
| M&GP (No. 2) Ltd | 50% | 10 Old Houghton Road, Hartford, Huntingdon, PE29 1YB | ii |
| MADE Partnership LLP | n/a | Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire, <br>United Kingdom, LE67 1UF<br>| \* |
| Meadow Rigg (Burneside Road) Ltd | 25% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, Cumbria CA11 9BN | i |
| Measured Identity Hub Ltd | 97.92% | 3 Long Acre Willow Farm Business Park, Castle Donington, Derbyshire, England, DE74 2UG | ii & |
| Montague Centre (GPSEC) Ltd | 50% | 168 Church Road, Hove, BN3 2DL | i |
| Mortgage Brain Holdings Ltd | 16.67%<br>20%<br>| 6 The Courtyard, Buntsford Gate, Buntsford Drive, Bromsgrove, Worcestershire, B60 3DJ | ii<br>iii<br>|
| Motability Operations Group plc | 39.98% | 22 Bishopsgate, Level 6, 22 Bishopsgate, London, EC2N 4BQ | i |
| Neilson Active Holidays Group Ltd | 89.25% | Locksview, Brighton Marina, Brighton, BN2 5HA | ii & |
| Newday JVCO Ltd | 100% | 27 Esplanade, St. Helier, Jersey, JE1 1SG | x |
| North Kensington Gate HGP Ltd | 100% | Regina House, 124 Finchley Road, London, United Kingdom, NW3 5JS | ii |
| North Kensington Gate Ltd | 50% | Regina House, 124 Finchley Road, London, United Kingdom, NW3 5JS | i |
| Omniplex Learning Topco Ltd | 99.25% | Omniplex Learning, 45 Grosvenor Road, St Albans, Hertfordshire, United Kingdom, AL1 3AW | ii & |
| Onapp (Topco) Ltd | 82.5%<br>82.5%<br>| 3MC Middlemarch Business Park, Siskin Drive, Coventry, United Kingdom, CV3 4FJ | xvii &<br>xviii<br>|
| Origin (Topco) Ltd | 50% | Agricola House, 5 Cowper Road, Gilwilly Industrial Estate, Penrith, Cumbria, CA11 9BN | ii |
| Orwell (Basildon) JV Ltd | 50% | 1st Floor, 73-81 Southwark Bridge Road, London, SE1 0NQ | ii |
| Orwell (Basildon) Ltd | 25% | 1st Floor, 73-81 Southwark Bridge Road, London, SE1 0NQ | i |
| Osprey Aviation Services (UK) Ltd | 89.25%<br>89.25%<br>| Blackwood House, Union Grove Lane, Aberdeen, AB10 6XU | xvii &<br>xviii &<br>|
| PACE Group Holding Ltd | 97.19% | Building 29 Pensnett Trading Estate, Dandy Bank Road, Kingswinford, United Kingdom, <br>DY6 7TU<br>| ii & |
| PAM Healthcare Ltd | 99.25% | 9 Lakeside Drive, (Also Known as 820 Mandarin Court) Centre Park, Warrington WA1 1GG | ii & |
| Pennine View (Calthwaite) Ltd | 25% | 5 Cowper Road, Gilwilly Industrial Estate, Penrith, Cumbria, CA11 9BN | i |
| PFP-Igloo Developments Ltd | 100% | 305 Gray's Inn Road, London, United Kingdom, WC1X 8QR | ii |
| PFP-Igloo Fruitmarket Ltd | 50% | C/O Igloo Regeneration Limited Huckletree Ancoats, The Express Building, 9 Great Ancoats <br>Street, Manchester, Greater Manchester, United Kingdom, M4 5AD<br>| i |
| PL & HGP Ltd | 50% | 3rd Floor, Tower House, 10 Southampton Street, London, United Kingdom, WC2E 7HA | ii |
| Plaistow Development Partners Ltd | 100% | 4th Floor 95 Gresham Street, London, EC2V 7AB | ii |
| Platform Leeds BTR1 OPCO Ltd | 50% | Marble Arch House, 66 Seymour Street, London, United Kingdom, W1H 5BT | i |
| Platform Leeds BTR1 PROPCO Ltd | 50% | Marble Arch House, 66 Seymour Street, London, United Kingdom, W1H 5BT | i |
| Platform Leeds Commercial Inn PROPCO Ltd | 50% | Marble Arch House, 66 Seymour Street, London, United Kingdom, W1H 5BT | i |
| Platform Leeds P1 DEVCO Ltd | 50% | Marble Arch House, 66 Seymour Street, London, United Kingdom, W1H 5BT | i |
| Platform Leeds P1 JVCO Ltd | 100% | Marble Arch House, 66 Seymour Street, London, United Kingdom, W1H 5BT | ii |
| Primrose Fields Holding Ltd | 50% | 22 Chancery Lane, London, England, WC2A 1LS | ii |
| Project Acorn Topco Ltd | 99.25% | Bridgford House, Heyes Lane, Alderley Edge, SK9 7JP | ii & |
| Project Airscope Bidco Ltd | 99.25% | CTI Digital, Suite 2A and 2B, South Central, 11 Peter Street, Manchester, M2 5QR | xviii & |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Subsidiaries and related undertakings continued

**Associated undertakings** continued

---

| | | | |
|:---|:---|:---|:---|
| **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** |
| Project Atlantic Topco Ltd | 99.25% | Linhay House Linhay Business Park, Ashburton, Devon, TQ13 7UP | ii & |
| Project Bridgerton Bidco Ltd | 99.25% | 54 Charlotte Street, London, England, W1T 2NS | ii & |
| Project Bridgetown Ltd | 99.25% | Xyz Building, 3 Hardman Boulevard, Spinningfields, Manchester, United Kingdom, M3 3AQ | ii & |
| Project Drive Topco Ltd | 99.25% | Unit 1, Chalfont House Boundary Way, Hemel Hempstead Industrial Estate, Hemel <br>Hempstead, Hertfordshire, United Kingdom, HP2 7SJ<br>| xviii & |
| Project Galaxy UK Topco Ltd | 99.25% | 3rd Floor, Q5 Quorum Business Park, Benton Lane, Newcastle Upon Tyne, United Kingdom, <br>NE12 8BS<br>| ii & |
| Project Juno Topco Ltd | 99.25% | C/O Panthera Biopartners Limited, 228 Garstang Road, Fulwood, Preston, PR2 9QB | xviii & |
| Project Penny Ltd | 99.25% | 115 Victoria Road, Ferndown, United Kingdom, BH22 9HU | ii & |
| Project Sharp Topco Ltd | 99.25% | 1 Atlas Road, Hermitage Industrial Estate, Coalville, Leicestershire, LE67 3FQ | ii & |
| Project Sketch Ltd | 88.3% | 11 Vantage Way, Erdington, Birmingham, B24 9GZ | ii & |
| Project Stratos Topco Ltd | 99.25% | Birchin Court, 20 Birchin Lane, London, United Kingdom, EC3V 9DU | xviii & |
| Project Sutton Bidco Ltd | 99.25% | Chawston House, Chawston Lane, Chawston, Bedford, Bedfordshire, United Kingdom, <br>MK44 3BH<br>| ii & |
| Project Venus Ltd | 99.25% | Lyndean House, 43-46 Queens Road, Brighton, East Sussex, BN1 3XB | ii & |
| Project Volta Topco Ltd | 99.25% <br>99.25%<br>| Units 1 – 7 Dukeries Court, Medenside, Meden Vale, Mansfield, Nottinghamshire, <br>United Kingdom, NG20 9QU<br>| xviii &<br>xii<br>|
| Ramco Pipetech Holdings Ltd | 99.35% | Kingshill View, Prime Four Business Park, Kingswells, Aberdeen, AB15 8PU | ii & ‡ |
| RDIL 2021 Ltd | 99.25% | Old Printers Yard, 156 South Street, Dorking, Surrey, United Kingdom, RH4 2HF | xviii & |
| ROK Group (Exeter) Ltd | 100% | 26a Old Elvet, Durham, DH1 3HN | ii |
| Rocket Science Holdings Ltd | 99.17% | 20 St. Andrew Street, London, EC4A 3AG | xviii & ‡ |
| Safari Bidco Ltd | 99.25% | Upper Floor, The Granary, Stanley Grange, Ormskirk Road, Knowsley, Prescot, Merseyside, <br>England, L34 4AT<br>| ii & |
| Sandsfield Way (Carlisle) Ltd | 25% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, CA11 9BN | i & |
| ScarlettAbbott (Topco) Ltd | 99.25% | The Bonding Warehouse, Terry Avenue, York, YO1 6FA | ii & |
| Scenic Topco Ltd | 89.25% | Unit 1B, Pentwyn Business Centre, Wharfedale Road, Cardiff, Wales, CF23 7HB | ii & |
| Scotia (Brechin) Ltd | 100% | Ca'D'Oro Building, 45 Gordon Street, Glasgow, Scotland, G1 3PE | ii |
| Seahawk Bidco Ltd | 89.25% | Unit 2, Springfield Court, Summerfield Road, Bolton, United Kingdom, BL3 2NT | xviii & |
| Seahouses Topco Ltd | 99.25% | Unit J, Gildersome Spur, Leeds, United Kingdom , LS27 7JZ | xviii & |
| Sedex Information Exchange Ltd | 99.25%<br>99.25%<br>| 18 St. Swithin's Lane, London, EC4N 8AD | iii &<br>xv<br>|
| Shore Station (Edinburgh) JV LLP | n/a | 6 Duke Street, St James's, London, United Kingdom, SW1Y 6BN | \* |
| Shore Station (Edinburgh) Company Ltd | 50% | 6 Duke Street, St James's, London, United Kingdom, SW1Y 6BN | i |
| Shore Station (Edinburgh) Development LLP | n/a | 6 Duke Street, St James's, London, United Kingdom, SW1Y 6BN | \* |
| Solais Topco Ltd | 99.25% | Solais House, 19 Phoenix Crescent, Strathclyde Business Park, Bellshill, United Kingdom, <br>ML4 3NJ<br>| ii & |
| SOLO Topco Ltd | 99% | Onecom House, 4400 Parkway, Whiteley, Fareham, Hampshire, PO15 7FJ | ii & |
| Southwark Estates (One) Ltd | 100% | Brock House, 19 Langham Street, London, W1W 6BP | ii |
| Stancliffe Homes (Bentley) Ltd | 50% | Office 3, Markham Lane, Markham Vale, Chesterfield, England, S44 5HY | ii |
| Star Live TopCo Ltd | 99.25% | 7 Fitzhamon Court, Wolverton Mill, Milton Keynes, England MK12 6LB | xviii & |
| Stratus (Holdings) Ltd | 82.5%<br>82.5%<br>| 3MC Middlemarch Business Park, Siskin Drive, Coventry, West Midlands, England, CV3 4FJ | xvii<br>xviii &<br>|
| The EMS Group Ltd | 99.25% | The Refinery, South Road, Ellesmere Port, United Kingdom, CH65 4LE | xviii & |
| The Exceed Partnership LP | n/a | C/O DWF Company Secretarial Services Limited, 1 Scott Place, 2 Hardman Street, <br>Manchester, United Kingdom, M3 3AA<br>| \* |
| The Woodlands (Carlisle) Ltd | 25% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, Cumbria, CA11 9BN | i |
| Timec 1863 Ltd | 99.25% | Floor 2 Equinox House, 3.2 Silver Fox Way, Cobalt Business Park, Newcastle upon Tyne, <br>England, NE27 0QJ<br>| ii & |
| Tolia Bidco Ltd | 99.25% | First Floor, 6 Dowgate Hill, London, England, EC4R 2SU | ii & |
| Topco Coffee Ltd | 99.25% | Lodge Farm Barn, Elvetham Park Estate, Hartley Wintney, Hampshire, United Kingdom, <br>RG27 8AS<br>| xviii & |
| Torsion Developments Ltd | 50% | 1280 Century Way Thorpe Park, Leeds, West Yorkshire, United Kingdom, LS15 8ZB | ii |
| Two (PBSA) Holding LLP | n/a | 22b Court Street, Haddington, EH41 3JA | \* |
| United House Group Holdings Ltd | 81.5% | C/O Interpath Ltd, 4th Floor, Tailors Corner, Thirsk Row, Leeds, LS1 4DP | ii & ‡ |
| Urban Centric (KC) Ltd | 50% | 33-35 Southernhay East, Exeter, EX1 1NX | i |
| Urban Centric (Trafalgar) Holdings Ltd | 100% | 33-35 Southernhay East, Exeter, EX1 1NX | ii |
| Urban Centric (Trafalgar) Ltd | 50% | 33-35 Southernhay East, Exeter, EX1 1NX | i |

---

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

---

| | | | |
|:---|:---|:---|:---|
| Villafont (The Barns) Ltd | 25% | 1 St. George's Court, Altrincham Business Park, Altrincham, United Kingdom, WA14 5UA | i |
| Villafont (Garstang) Ltd | 25% | 1 St. George's Court, Altrincham Business Park, Altrincham, United Kingdom, WA14 5UA | i |
| Villafont (Galgate) Ltd | 25% | 1 St. George's Court, Altrincham Business Park, Altrincham, United Kingdom, WA14 5UA | i |
| Villafont (Herne Bay) Ltd | 100% | 1 St. Georges Court, Altrincham Business Park, Altrincham, United Kingdom, WA14 5UA | ii |
| Villafont (Lancashire) JVCO Ltd | 50% | 1 St. George's Court, Altrincham Business Park, Altrincham, United Kingdom, WA14 5UA | ii |
| Villas for Travel Ltd | 27.95% | 14 Hemmells, Laindon, Essex, SS15 6ED | ii |
| Wakefield Gardens (Lazonby) Ltd | 25% | Agricola House, Cowper Road, Gilwilly Industrial Estate, Penrith, Cumbria, CA11 9BN | i |
| Walker Warwick Land Ltd | 50% | 168 Church Road, Hove, England, BN3 2DL | i |
| Walker Warwick Ltd | 50% | 168 Church Road, Hove, England, BN3 2DL | i |
| Walnut Newco Ltd | 99.25% | c/o Roxburgh Milkins Limited, Merchants House North, Wapping Road, Bristol, <br>United Kingdom, BS1 4RW<br>| ii & |
| Water Sustainability Ltd | 99.25% | Dominican House, St John's Street, Chichester, United Kingdom, PO19 1TU | ii & |
| Watford Way Developments Ltd | 100% | 4th Floor, 95 Gresham Street, London, EC2V 7AB | ii |
| Watkin Jones (Grove Crescent) Holdings Ltd | 100% | 3 Llys Y Bont, Parc Menai, Bangor, Wales, LL57 4BN | ii |
| WCCTV Group Ltd | 99.25% | James Watt House, James Watt Drive, Kingsway Business Park, Rochdale, England, OL16 4UG  | ii & |
| Whiteburn Allanbank Ltd | 50% | 1 Jackson's Entry, Edinburgh, Scotland, EH8 8PJ | i |
| Whiteburn March Street Ltd | 50% | 1 Jackson's Entry, Edinburgh, Scotland, EH8 8PJ | i |
| Whiteburn Residential (March Street) Ltd | 50% | 1 Jackson's Entry, Edinburgh, Scotland, EH8 8PJ | i |
| Whiteburn Residential Ltd | 100% | 1 Jackson's Entry, Edinburgh, Scotland, EH8 8PJ | ii |
| Whiteburn Viewforth Development Ltd | 100% | 1 Jackson's Entry, Edinburgh, Scotland, EH8 8PJ | ii |
| Whittington Facilities Ltd | 100% | c/o Teneo Financial Advisory Limited, The Colmore Building, 20 Colmore Circus Queensway, <br>Birmingham, B4 6AT<br>| xv Δ |
| Wind Bidco Ltd | 99.25% | Westcott House, Hesslewood Office Park, Ferriby Road, Hessle East, Yorkshire, HU13 0LH | ii & |

---

**Collective investment vehicles**

The following comprises a list of the Group's and other external

collective investment vehicles (CIV's), where the shareholding is

greater than or equal to 20% of the nominal value of any class of

shares, or a book value greater than 20% of the CIV's assets.

---

| | | |
|:---|:---|:---|
| **Name of undertaking** | **% of fund held by** <br>**immediate parent** <br>**(or by the Group** <br>**where this varies)**<br>| **Notes** |
| ABRDN OEIC I |  | 1 |
| abrdn European Real Estate Share Fund | 50.07% |  |
| ABRDN OEIC VI |  | 1 |
| abrdn Emerging Markets Equity Enhanced Index Fund | 71.82% |  |
| ABSOLUTE INSIGHT FUNDS P.L.C. |  | 2 |
| Insight Broad Opportunities Fund | 36.52% |  |
| ACS POOLED PROPERTY |  | 3 |
| Scottish Widows Pooled Property ACS Fund 1 | 100% |  |
| Scottish Widows Pooled Property ACS Fund 2 | 100% |  |
| BAILLIE GIFFORD INVESTMENT FUNDS ICVC |  | 4 |
| Baillie Gifford Diversified Growth Fund | 56.42% |  |
| BLACKROCK AUTHORISED CONTRACTUAL <br>SCHEME I<br>|  | 5 |
| ACS 30:70 Global Equity Tracker Fund | 33.84% |  |
| ACS Climate Transition World Equity Fund | 93.32% |  |
| ACS World Multifactor Equity Tracker Fund | 73.23% |  |
| BLACKROCK COLLECTIVE INVESTMENT FUNDS |  | 5 |
| BlackRock Global Corporate ESG Insights Bond Fund | 24.99% |  |
| BLACKROCK FIXED INCOME DUBLIN FUNDS |  | 5 |
| iShares Emerging Markets Local Government Bond <br>Index Fund (IE)<br>| 82.26% |  |
| BLACKROCK FIXED INCOME DUBLIN FUNDS PLC |  | 6 |
| iShares Emerging Markets Government Bond Index <br>Fund (IE)<br>| 73.32% |  |
| BNY MELLON GLOBAL FUNDS PLC |  | 7 |
| BNY Mellon Global Leaders Fund | 80.77% |  |
| BNY MELLON INVESTMENT FUNDS |  | 8 |
| BNY Mellon Global Absolute Return Fund | 76.1% |  |
| BNY Mellon Global Dynamic Bond Fund | 26.7% |  |

---

---

| | | |
|:---|:---|:---|
| **Name of undertaking** | **% of fund held by** <br>**immediate parent** <br>**(or by the Group** <br>**where this varies)**<br>| **Notes** |
| BNY Mellon Global Equity Fund | 27.28% |  |
| BNY Mellon Global Multi-Strategy Fund | 42.31% |  |
| BNY Mellon UK Opportunities Fund (Responsible) | 69.39% |  |
| BNY Mellon UK Income Fund | 20.84% |  |
| CG SCOTTISH WIDOWS LTAF |  | 9 |
| CG Scottish Widows Diversified Credit LTAF | 100% |  |
| CG Scottish Widows Growth LTAF | 100% |  |
| FRANKLIN TEMPLETON GLOBAL FUNDS PLC |  | 10 |
| FTGF Western Asset Multi-Asset Credit Fund | 55.36% |  |
| HBOS INTERNATIONAL INVESTMENT FUNDS ICVC |  | 11 |
| International Growth Fund | 62.89% |  |
| HBOS PROPERTY INVESTMENT FUNDS ICVC |  | 11 |
| UK Property Fund | 54.27% |  |
| HBOS SPECIALISED INVESTMENT FUNDS ICVC |  | 11 |
| Cautious Managed Fund | 48.02% |  |
| HBOS UK INVESTMENT FUNDS ICVC |  | 11 |
| UK Equity Tracker Fund | 54.14% |  |
| HLE ACTIVE MANAGED PORTFOLIO AUSGEWOGEN |  | 12 |
| HLE Active Managed Portfolio Ausgewogen | 48.93% |  |
| HLE ACTIVE MANAGED PORTFOLIO DYNAMISCH |  | 12 |
| HLE Active Managed Portfolio Dynamisch | 37.85% |  |
| HLE ACTIVE MANAGED PORTFOLIO KONSERVATIV |  | 12 |
| HLE Active Managed Portfolio Konservativ | 37.2% |  |
| INVESCO AMERICAN INVESTMENT SERIES |  | 13 |
| Invesco US Equity Fund | 35.7% |  |
| INVESCO FIXED INTEREST INVESTMENT SERIES |  | 13 |
| Invesco Global Bond Fund | 31.97% |  |
| LAZARD INVESTMENT FUNDS |  | 14 |
| Lazard Developing Markets Fund | 97.81% |  |
| MGI FUNDS PLC |  | 15 |
| Mercer Diversified Retirement Fund | 71.23% |  |
| Mercer Long Term Growth Fund | 54.23% |  |
| Mercer Multi Asset Defensive Fund | 39.25% |  |
| Mercer Multi Asset Growth Fund | 55.27% |  |

---

**Lloyds Banking Group plc** Annual Report and Accounts 2025

Subsidiaries and related undertakings continued

---

| | | |
|:---|:---|:---|
| **Name of undertaking** | **% of fund held by** <br>**immediate parent** <br>**(or by the Group** <br>**where this varies)**<br>| **Notes** |
| Mercer Multi Asset High Growth Fund | 48.82% |  |
| Mercer Multi Asset Moderate Growth Fund | 58.05% |  |
| Mercer Passive Sustainable Global Equity Feeder Fund | 59.83% |  |
| MORGAN STANLEY INVESTMENT FUNDS |  | 16 |
| Global Credit Fund | 46.72% |  |
| NORDEA 1, SICAV |  | 17 |
| Nordea 1 – GBP Diversified Return Fund | 29.02% |  |
| RETAIL AUTHORISED UNIT TRUSTS |  | 5 |
| BlackRock Balanced Growth Portfolio Fund | 37.6% |  |
| ROYAL LONDON EQUITY FUNDS ICVC |  | 18 |
| Royal London UK Equity Income Fund | 20.62% |  |
| SCHRODER FUNDS ICAV |  | 19 |
| Schroder Sterling Liquidity Fund | 93% |  |
| Schroder Sterling Short Duration Bond Fund | 97.83% |  |
| SCHRODER INTERNATIONAL SELECTION FUND |  | 20 |
| Emerging Market Bond | 65.41% |  |
| Sustainable Emerging Market Synergy | 28.36% |  |
| SCHRODER UNIT TRUSTS LIMITED |  | 21 |
| Schroder Global ex UK Equity Tracker Component <br>Fund<br>| 27.34% |  |
| SCOTTISH WIDOWS INCOME AND GROWTH FUNDS <br>ICVC<br>|  | 3 |
| Balanced Growth Fund | 29.16% |  |
| Corporate Bond 1 Fund | 82.56% |  |
| Corporate Bond PPF Fund | 100% |  |
| ESG-Tilted Sterling Corporate Bond Fund | 81.87% |  |
| Global Tactical Asset Allocation 1 Fund | 84.67% |  |
| Progressive Growth Fund | 41.79% |  |
| UK Index Linked Gilt Fund | 100% |  |
| SCOTTISH WIDOWS INVESTMENT SOLUTIONS <br>FUNDS ICVC<br>|  | 3 |
| Corporate Bond Fund | 69.2% |  |
| Developed Asia Pacific (ex Japan ex Korea) Equity <br>Tracker Fund<br>| 100% |  |
| Developed Europe (ex UK) Equity Tracker Fund | 95.96% |  |
| Developed Government Bond Tracker Fund | 73.96% |  |
| Developed Markets Tilted Equity Tracker Fund | 72.69% |  |
| Emerging Markets Tilted Equity Tracker Fund | 94.56% |  |
| Fundamental Index Emerging Markets Equity Fund | 94.57% |  |
| Fundamental Index Global Equity Fund | 92.5% |  |
| Gilt Fund | 94.93% |  |
| Global Environmental Solutions Fund | 93.64% |  |
| High Income Bond Fund | 65.99% |  |
| Japan Equity Fund | 99.19% |  |
| Strategic Income Fund | 67.04% |  |
| US Equity Fund | 97.09% |  |
| SCOTTISH WIDOWS MANAGED INVESTMENT <br>FUNDS ICVC<br>|  | 3 |
| Balanced Growth Portfolio | 26.8% |  |
| Cash Fund | 99.59% |  |
| International Equity Tracker Fund | 78.14% |  |
| Progressive Growth Portfolio 1 | 45.07% |  |
| SCOTTISH WIDOWS OVERSEAS GROWTH <br>INVESTMENT FUNDS ICVC<br>|  | 3 |
| Global Growth Fund | 76.22% |  |
| Global Select Growth Fund | 50.69% |  |

---

---

| | | |
|:---|:---|:---|
| **Name of undertaking** | **% of fund held by** <br>**immediate parent** <br>**(or by the Group** <br>**where this varies)**<br>| **Notes** |
| SCOTTISH WIDOWS TRACKER AND SPECIALIST <br>INVESTMENT FUNDS ICVC<br>|  | 3 |
| Emerging Markets Fund | 77.55% |  |
| UK Equity Tracker Fund | 66.64% |  |
| UK Fixed Interest Tracker Fund | 62.05% |  |
| UK Index-Linked Tracker Fund | 52.05% |  |
| UK Tracker Fund | 42.11% |  |
| SCOTTISH WIDOWS UK AND INCOME INVESTMENT <br>FUNDS ICVC<br>|  | 3 |
| Environmental Investor Fund | 75.41% |  |
| SEI GLOBAL ASSETS FUND PLC |  | 22 |
| The SEI Core Fund | 71.48% |  |
| The SEI Defensive Fund | 60.66% |  |
| The SEI Moderate Fund | 83.28% |  |
| SEI GLOBAL MASTER FUND PLC |  | 23 |
| The SEI Factor Allocation Global Equity Fund | 92.7% |  |
| SPW INVESTMENT PORTFOLIO ICVC |  | 24 |
| Schroders Personal Wealth IPS Growth Portfolio | 49.86% |  |
| Schroders Personal Wealth IPS Income Portfolio | 55.61% |  |
| SSGA |  | 25 |
| State Street AUT Emerging Market Screened Index <br>Equity Fund<br>| 99.63% |  |
| THE SVS LEVITAS FUNDS |  | 26 |
| SVS Levitas A Fund | 88.84% |  |
| SVS Levitas B Fund | 85.74% |  |
| UNIVERSE, THE CMI GLOBAL NETWORK FUND |  | 27 |
| CMI Continental European Equity | 97.68% |  |
| CMI Pacific Basin Enhanced Equity | 79.29% |  |
| CMI UK Equity | 73.03% |  |
| CMI US Enhanced Equity | 91.87% |  |
| CMI US Equity Index Tracking | 44.95% |  |
| CMIG Access 70% Flexible | 100% |  |
| CMIG Access 80% | 100% |  |
| CMIG Access 80% Flexible | 100% |  |
| CMIG Access 90% Flexible | 100% |  |
| CMIG Focus Euro Bond | 100% |  |
| WS RUFFER MANAGED FUNDS |  | 28 |
| WS Ruffer Diversified Return Fund | 23.17% |  |

---

![SectionTabOthInfo.gif](lyg-20251231_g341.gif)

**Lloyds Banking Group plc** Annual Report and Accounts 2025

**Principal place of business for Collective Investment Vehicles**

**(1)**abrdn Fund Managers Limited, 280 Bishopsgate, London, EC2M 4AG

**(2)**Absolute Insight Funds Plc, Riverside Two, Sir John Rogerson's Quay, Dublin 2,

D02 KV60, Ireland

**(3)**69 Morrison Street, Edinburgh, United Kingdom, EH3 8BW

**(4)**Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN

**(5)**BlackRock Fund Managers Limited, 12 Throgmorton Avenue, London, EC2N 2DL

**(6)**200 Capital Dock, 79 Sir John Rogerson's Quay, Dublin 2, D02 RK57, Ireland

**(7)**One Dockland Central, Guild Street, IFSC, Dublin 1, Ireland

**(8)**BNY Mellon Investment Funds, BNY Mellon Centre, 160 Queen Victoria Street,

London, EC4V 4LA

**(9)**CG Scottish Widows LTAF, 2nd Floor, 29-30 Cornhill, London, EC3V 3NF

**(10)**20-26 Sir John Rogerson's Quay, Grand Canal Dock, Dublin 2, Ireland

**(11)**Trinity Road, Halifax, West Yorkshire, HX1 2RG

**(12)**Oppenheim Asset Management Services Sàrl. 2, Boulevard Konrad Adenauer,

L-1115 Luxembourg

**(13)**Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire, RG9 1HH

**(14)**Lazard Investment Funds, 20 Manchester Square, London, W1U 3PZ

**(15)**MGI Funds plc, 6th Floor, 2 Grand Canal Square, Dublin 2, Ireland

**(16)**MSIM Fund Management (Ireland) Limited, The Observatory,

7-11 Sir John Rogerson's Quay, Dublin 2, D02 VC42, Ireland

**(17)**Nordea 1, SICAV, 562, Rue de Neudorf, L-2220 Luxembourg

**(18)**80 Fenchurch Street, London, EC3M 4BY

**(19)**Schroder Investment Management (Ireland) Limited, Georges Court,

54-62 Townsend Street, Dublin 2, D02 R156

**(20)**5, Rue Höhenhof, L-1736, Senningerberg, Luxembourg

**(21)**1 London Wall Place, London, EC2Y 5AU

**(22)**SEI Global Assets Fund plc, One Charlemont Square, Dublin 2, Ireland

**(23)**SEI Global Master Fund plc, One Charlemont Square, Dublin 2, Ireland

(24)Schroders Personal Wealth (ACD), 25 Gresham Street, London, EC2V 7HN

**(25)**20 Churchill Place, Canary Wharf, London, E14 5HJ

**(26)**St Vincent St Fund Administration, 45 Gresham Street, London, EC2V 7BG

**(27)**Lemanik Asset Management S.A. 106, route d'Arlon, L-8210 Mamer,

Grand Duchy of Luxembourg

(**28**)3rd Floor Central Square, 29 Wellington Street, Leeds, LS1 4DL

**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 Group holds voting rights of between 20% and 49.9%

**~**The Group holds voting rights of 50%

**‡**The undertaking is in Liquidation

**∞**The undertaking is in Administrative Receivership

**Δ**The undertaking is in Administration

**(i)**Ordinary Shares

**(ii)**A Ordinary Shares

**(iii)**B Ordinary Shares

**(iv)**Deferred Shares

**(v)**Preference Shares

**(vi)**Non-Voting Deferred Shares

**(vii)**6% Non-Cumulative Redeemable Preference Shares

**(viii)**C Ordinary Shares

**(ix)**Growth 2 Shares

**(x)**L Ordinary Shares

**(xi)**Redeemable Preference Shares

**(xii)**A1 Preferred Ordinary Shares

**(xiii)**Ordinary Non-Voting Shares

**(xiv)**Common Stock

**(xv)**Preferred B Ordinary Shares

**(xvi)**D Ordinary Shares

**(xvii)**A2 Ordinary Shares

**(xviii)**A1 Ordinary Shares

**(xix)**Ordinary Limited Voting Shares

**Registered office addresses**

**(1)**25 Gresham Street, London, EC2V 7HN

**(2)**Society Building, 8 All Saints Street, London, England, N1 9RL

**(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, United Kingdom, E14 5HU

**(7)**9 Broad Street, St Helier, Jersey, JE2 3RR

**(8)**Minter Ellison, Governor Macquarie Tower, Level 40, 1 Farrer Place, Sydney,

NSW 2000, Australia

**(9)**1 Brookhill Way, Banbury, Oxon, OX16 3EL

**(10)**7th Floor, 21 Lombard Street, London, EC3V 9AH

**(11)**The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,

Wilmington, Delaware 19801, USA

**(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)**2 North Queen Street, Belfast, Northern Ireland, BT15 1ES

**(16)**18a Capricorn Centre, Cranes Farm Road, Basildon, Essex, SS14 3JJ

**(17)**Thurn-Und-Taxis-Platz 6, 60313, Frankfurt am Main, Germany

**(18)**Hoogoorddreef, 151101BA, Amsterdam, Netherlands

**(19)**Basisweg 10, Amsterdam, 1043AP, Netherlands

**(20)**33 Old Broad Street, London, EC2N 1HZ

**(21)**234 High Street, Exeter, EX4 3NL

**(22)**Citco REIF Services (Luxembourg) S.A., Carré Bonn, 20 Rue de la Poste,

L-2346 Luxembourg

**(23)**17 Boulevard F.W. Raiffeisen, L-2411 Luxembourg

**(24)**Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808, USA

**(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)**1, Avenue du Bois, L-1251 Luxembourg

**(28)**SAB Formalities, 23 Rue de Roule 75001, Paris, France

**(29)**Karl-Liebknecht-STR. 5, D-10178 Berlin, Germany

**(30)**28 Esplande, St. Helier, Jersey, JE2 3QA

**(31)**Atria One, 144 Morrison Street, Edinburgh, EH3 8EX

**(32)**26 New Street, St. Helier, Jersey, JE2 3RA

**(33)**3rd Floor, IFC5, Castle Street, St Helier, JE2 3BY, Jersey

**(34)**P O Box 186, Royal Chambers, St Julian's Avenue, St. Peter Port, GY1 4HP, Guernsey

**(35)**De Entrée 254, 1101 EE, Amsterdam, Netherlands

**(36)**44 Esplanade, St. Helier, Jersey, JE4 9WG

**(37)**Fascinatio Boulevard 1302, 2909VA Capelle aan den IJssel, Netherlands

**(38)**Avenida Dr. Chucri Zaidan, n° 296, cj 231, Bairro Vila Cordeiro, Cidade de São Paulo,

Estado de São Paulo, Cep 04583-110 Brazil

**(39)**2nd Floor, Liberation House, Castle Street, St. Helier, JE1 1EY, Jersey

**(40)**One Vine Street, London, W1J 0AH

**(41)**50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ

**(42)**5th Floor, The Exchange, George's Dock, IFSC, Dublin 1, Ireland

**(43)**110 St. Vincent Street, Glasgow, G2 4QR

**(44)**Building 4 Hatters Lane, Croxley Green Business Park, Watford, Hertfordshire,

WS18 8YF

**(45)** Keens House, Anton Mill Road, Andover, Hampshire, SP10 2NQ

**(46)**Glategny Court, Glategny Esplanade, St. Peter Port, GY1 1WR, Guernsey

**(47)**Cawley House, Chester Business Park, Chester, CH4 9FB, United Kingdom

**(48)**6/12, Primrose Road, Bangalore, 560025, India

**(49)**1A Heienhaff, Senningerberg, L-1736 Luxembourg

**Lloyds Banking Group plc** Annual Report and Accounts 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 Banking Group plc together with its subsidiaries

(the Group) and its current goals and expectations. Statements that

are not historical or current facts, including statements about the

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 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 Group's future financial performance; the level

and extent of future impairments and write-downs; the Group's

ESG targets and/or commitments; statements of plans, objectives

or goals of the 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 Group's credit ratings; fluctuations in

interest rates, inflation, exchange rates, stock markets and

currencies; volatility in credit markets; volatility in the price of the

Group's securities; natural pandemic and other disasters; risks

concerning borrower and counterparty credit quality; risks affecting

insurance business and 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 Group; risks associated with the

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 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

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;

assumptions and estimates that form the basis of the Group's

financial statements; and potential changes in dividend policy. A

number of these influences and factors are beyond the Group's

control. Please refer to the latest Annual Report on Form 20-F filed

by Lloyds Banking Group 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

Banking Group 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

Banking Group 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 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.

**Cover image:** Image created using AI software.

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This report is printed on Amadeus Silk paper and board, Forest Stewardship Council® (FSC®) certified and sourced from well managed

forests and other controlled sources. The paper is Elemental Chlorine Free (ECF). The manufacturing mill holds ISO14001 (EMAS) and

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conservation charity, who offset carbon emissions through the preservation of high conservation land. The inks used are vegetable

oil based and 100% of the dry waste created during manufacturing is diverted from landfill.

Printed in the UK by Pureprint Group, CarbonNeutral®, ISO 14001 and FSC® certified.

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**Head office**

33 Old Broad Street, London EC2N 1HZ

+44 (0)20 7626 1500

www.lloydsbankinggroup.com

**Registered office**

The Mound, Edinburgh EH1 1YZ

Registered in Scotland no. SC095000

LEI 549300PPXHEU2JF0AM85