Lloyds Banking Group plc Q3 FY2025 earnings call

• Completed the full acquisition of Schroders Personal Wealth, renamed Lloyd 12, with GBP 17 billion of assets under administration, over 300 advisers, and 60,000 clients.
• Made progress in digital asset strategy, including partnering with Aberdeen for a U.K.-first FX derivatives trade collateralized with tokenized digital assets and co-chairing a U.K. finance project for GB tokenized deposits.
• Demonstrated robust financial performance in the first 9 months of 2025, with net income momentum, cost discipline, and strong asset quality.
• Took an additional GBP 800 million charge related to the FCA consultation process on motor commissions, revised 2025 guidance to reflect this, but the underlying business continues to drive strong capital generation.

Net Interest Income: Year-to-date, net interest income was GBP 10.1 billion, up 6% year-on-year. In Q3, net interest income was GBP 3.5 billion, up 3% quarter-on-quarter. The Q3 net interest margin was 3.06%, up 2 basis points from Q2. Other Operating Income: Year-to-date, other operating income (OOI) was GBP 4.5 billion, up 9% year-on-year. In Q3, OOI was GBP 1.6 billion, up 3% quarter-on-quarter. Operating Costs: Year-to-date operating costs were GBP 7.2 billion, up 3% year-on-year. In Q3, costs were GBP 2.3 billion, down 1% compared to Q2. Asset Quality: Year-to-date impairment charge was GBP 68 million, equating to an asset quality ratio of 18 basis points, with full year guidance upgraded to circa 20 basis points. Return on Tangible Equity (RoTE): Year-to-date RoTE was 11.9%, excluding the motor provision, it was 14.6%.

• Revised 2025 guidance to reflect the motor provision, with excluding the charge, beating prior targets. Confident in 2026 guidance.
• Expect net interest income for the full year 2025 to be circa GBP 13.6 billion, slightly ahead of previous guidance.
• Upgraded full year asset quality ratio guidance to circa 20 basis points. Expect return on tangible equity excluding motor to be around 14% and upgraded versus prior guidance.

• Uncertainty regarding the motor finance provision due to FCA consultation outcomes, with the current provision at GBP 1.95 billion and sensitivity to FCA responses.
• Potential impact of mortgage margin compression and deposit mix shift on net interest margin (NIM).
• Regulatory uncertainties around digital asset and tokenized deposit initiatives, including timing and compliance with regulatory frameworks.

Q: About net interest income growth and SPW acquisition impact.

A: Explained that net interest income guidance of circa GBP 13.6 billion reflects confidence, with growth expected in Q4. On SPW, the acquisition will support OOI growth with an expected circa GBP 175 million incremental revenue, with costs involved but contributing to RoTE positively.

Q: On deposits and budget impact.

A: Talked about deposit performance, including PCA growth and churn reduction, and minimal impact of budget on the business. Also, discussed tax regime stability and competitiveness as important for the financial services sector