Lloyds nine-month profit rises 42% to £6.63bn, with a November rate rise in its base case
The banking group kept its 2026 targets, and its base-case economic scenario assumes Bank Rate goes up to 4% before the end of the year.
By Daily Oracles News Team2 min read
Lloyds Banking Group's base-case economic scenario assumes a 25 basis point rise in Bank Rate in November, according to its third-quarter update published on Thursday.
The group made a statutory profit before tax of £6.63bn in the nine months to 30 September, 42% more than the £4.68bn it made a year earlier. Third-quarter profit was £2.33bn, up from £1.17bn.
Where the money came from
Underlying net interest income rose 10% to £11.08bn over the nine months, and underlying other income was also up 10%, at £4,996m. Over the same period the banking net interest margin, the gap between what the bank earns on loans and pays on deposits, widened to 3.21% from 3.04%. In the third quarter alone it reached 3.25%.
Loans to customers grew by £14.4bn in the year to date, to £495.5bn. UK mortgage balances were £325.2bn, up £2.1bn. Customer deposits reached £502.8bn, with growth in commercial banking more than offsetting a £3.7bn fall in retail deposits, which the bank put down to its pricing in a competitive savings market.
Return on tangible equity was 17.9% for the nine months, against 11.9% a year earlier.
Lloyds' economic assumptions
The base case, set at 30 September, has Bank Rate at 3.75% through the third quarter and at 4% by the end of 2026. The bank said recent increases in energy prices implied greater inflationary pressure, warranting the 25 basis point rise in November. It left its assumption for where rates settle unchanged at 3.5%, reached in the second half of 2028.
The same scenario assumes:
- house prices up 0.7% in 2026, 1.7% in 2027 and 2.2% in 2028
- unemployment at 5.0% this year and 5.3% next year
- CPI inflation of 3.1% in 2026 and 3.3% in 2027, falling to 1.6% in 2028
Updating its economic scenarios for a weaker outlook, which the bank linked to the conflict in the Middle East, added an £88m charge. The total underlying impairment charge for the nine months was £930m.
Lloyds kept all of its 2026 guidance, including underlying net interest income above £14.9bn, a cost-to-income ratio below 50% and return on tangible equity above 16%. Its common equity tier one capital ratio was 13.3% at the end of September, and it plans to pay down to around 13% by the year end. The bank had bought back £0.2bn of shares by 30 September under a programme of up to £1bn launched on 31 July.
