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Lloyds Banking Group PLC on Thursday reported better-than-expected profit, announced a buyback, teased the prospect of more frequent returns and lifted its 2026 guidance. Shares were 0.6% higher at 105.13 pence each in London on Thursday morning. The lender’s annual profit hike came despite £968 million worth of remediation costs, with a £800 million chunk of that amount stemming from motor finance commission arrangements taken in the third quarter. The Edinburgh-based firm said fourth quarter pretax profit jumped to £1.98 billion from £824 million a year prior. Net income grew 8.4% to £4.74 billion from £4.38 billion, aided by underlying net interest income growing to £3.53 billion from £3.28 billion. Pretax profit beat company-compiled consensus of £1.70 billion and net income beat a £4.73 billion forecast. For the full-year, pretax profit jumped 12% to £6.66 billion from £5.97 billion, beating consensus of £6.38 billion. Net income advanced 6.9% to £18.30 billion from £17.12 billion, edging above an £18.28 billion forecast. Underlying net interest income alone amounted to £13.64 billion, up 6.2%. ‘In 2025, we entered the second phase of our five-year strategy and continued to deliver for customers, shareholders and wider stakeholders. As our strategic transformation accelerates into 2026, we remain guided by our purpose of helping Britain prosper in driving positive change in areas where we can have impact at scale and create value,’ Chief Executive Charlie Nunn said. ‘The group demonstrated sustained strength in financial performance in 2025, including in the final quarter, with continued balance sheet and income growth, as well as strong cost discipline and credit performance.’ Lloyds lifted its final dividend by 15% to 2.43 pence per share, from 2.11p. The total dividend was 15% higher at 3.65p. The final dividend was ahead of the company-compiled consensus of 2.41p, with the full-year amount topping a 3.63p forecast. Lloyds announced a new £1.75 billion share buyback, set to run until the end of the year. Also on the shareholder returns front, it said it will now ‘review excess capital distributions in addition to the ordinary dividend every half year’, hinting at more frequent buyback announcements. The move reflects ‘increasing confidence in our capital generation’, it explained. It noted distributions in respect to 2025 amounted to £3.9 billion. The company is in the last year of a 2022-2026 strategic plan, and is expected to unveil new growth goals later this year. For now, however, it lifted its 2026 return on tangible equity outlook. It now expects an outcome of ‘greater than 16%’, raised from a prior view of above 15%. Its 2025 RoTE was 12.9%, improved from 12.3% in 2024. Excluding motor finance commissions, it was 14.8%. ‘Remediation costs [totalled] £968 million, of which £800 million related to the potential impact of motor finance commission arrangements taken in the third quarter,’ Lloyds said. The company expects 2026 underlying net interest income of around £14.9 billion, up around 9.3% from 2025. Nunn said: ‘Looking ahead to 2026 and the culmination of the five year strategy we set out in 2022, our continued business momentum and strategic delivery enable us to upgrade guidance. The sustained strength in performance means we are well positioned for 2026 and beyond. Having entered this year on a positive trajectory, I look forward to sharing more detail on the next stage of the group’s strategy, beyond the current plan, in July.’ Lloyds announces its first-quarter results on April 29, before its half-year results on July 30. It holds an annual general meeting on May 14. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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