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1. Company Snapshot

1.a. Company Description

Lloyds Banking Group plc, together with its subsidiaries, provides a range of banking and financial services in the United Kingdom.It operates through three segments: Retail; Commercial Banking; and Insurance and Wealth.The Retail segment offers a range of financial service products, including current accounts, savings, mortgages, motor finance, unsecured loans, leasing solutions, and credit cards to personal and small business customers.


The Commercial Banking segment provides lending, transactional banking, working capital management, risk management, debt financing, and debt capital market services to small and medium-sized entities, corporates, and financial institutions.The Insurance and Wealth segment offers insurance, investment and wealth management products and services.It also provides digital banking services.


The company offers its products and services under the Lloyds Bank, Halifax, Bank of Scotland, and Scottish Widows brands.Lloyds Banking Group plc was founded in 1695 and is based in London, the United Kingdom.

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1.b. Last Insights on LLOY

Lloyds Banking Group's recent performance was driven by improving fundamentals, including a 5% jump in profits and a 15% increase in interim dividend to 1.22 pence. The company's partnership with British AI startup UnlikelyAI and financial management application Lumio aims to enhance innovation and customer experience. Goldman Sachs upgraded the stock to 'Buy' citing subsiding headwinds. Additionally, the company's pre-tax profit rose to £3.5 billion for the first six months of 2025, driven by mortgage lending and savings balances growth.

1.c. Company Highlights

2. Lloyds Banking Group's Strong Q3 Performance

Lloyds Banking Group reported a robust financial performance for the first nine months of 2025, with statutory profit after tax of £3.3 billion and a return on tangible equity (RoTE) of 11.9%, or 14.6% excluding a £800 million motor finance provision. The group's net income was £13.6 billion, up 6% year-on-year, driven by growth in net interest income and a 9% rise in other operating income. The earnings per share (EPS) came in at 0.01248, below analyst estimates of 0.01985. The net interest margin was 3.06% in Q3, and the group expects net interest income to be around £13.6 billion for 2025.

Publication Date: Oct -25

📋 Highlights
  • Robust Profitability: Lloyds reported £3.3 billion statutory profit after tax (PBT) for H1 2025, with RoTE of 11.9% (14.6% excluding £800 million motor finance provision), reflecting strong operational performance.
  • Net Interest Income Growth: Net interest income is projected at £13.6 billion for 2025, supported by a 3.06% Q3 net interest margin (NIM) and structural hedge contributions expected to add £1.5 billion in Q4 2025 earnings.
  • Strategic Acquisitions and Digital Innovation: Acquisition of Schroders Personal Wealth added £17 billion in assets and 300 advisers, while tokenized asset partnerships (e.g., Aberdeen) and the GB Tokenized Deposits project aim to drive digital financial innovation.
  • Cost Efficiency and Guidance: Operating costs rose 3% YoY to £7.2 billion, but the group expects to meet its £9.7 billion full-year 2025 guidance, targeting a sub-50% cost-to-income ratio by 2026 through strategic cost management.
  • Motor Finance Exposure: Total motor commission remediation provision reached £1.95 billion, with expected RoTE of 12% (14% excluding motor) for 2025, highlighting ongoing regulatory risks and their financial impact.

Revenue Growth and Margin Expansion

The group's net interest income is expected to continue growing, with a similar absolute income growth in Q4 as in Q3, driven by a step-up in margin and AIA progress. The bank has upgraded its guidance to circa £13.6 billion, indicating confidence in its net interest income trajectory. The net interest margin is expected to expand further, driven by the structural hedge, which is expected to contribute significantly to NIM in Q4.

Valuation and Dividend Yield

With a Price-to-Tangible Book Value (P/TBV) ratio of approximately 1.1, and a Dividend Yield of 3.88%, Lloyds Banking Group's valuation appears reasonable, considering its strong financial performance. The bank's commitment to distributing excess capital is evident in its guidance of 145 basis points for 2025, post-motor finance charge.

Motor Finance Provision and Regulatory Environment

The group took an additional £800 million provision for motor commission remediation costs, taking its total provision to £1.95 billion, assuming a large part of the FCA's proposals will stay in place. The FCA's proposals are considered disproportionate due to broad unfairness determination, judgments not aligning with Supreme Court clarity, and tenuous redress calculation linkage to harm.

Digital Asset Strategy and Innovation

Lloyds has made progress on its digital asset strategy, partnering with Aberdeen to deliver an industry-first tokenized assets use case, using tokenized assets as collateral for a market-based trade. The bank sees potential in programmable currency and is working on a project called GB Tokenized Deposits (GTD), which aims to build a programmable and exchangeable currency in the UK.

Outlook and Guidance

The group remains committed to a sub-50% cost-to-income ratio for 2026, which will be achieved through a combination of income strength and cost management, with strategic investments engineered to reduce costs. The bank expects continued growth in net interest income and margin in 2026, driven by the structural hedge and offset by base rate decisions and deposit churn.

3. NewsRoom

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FTSE 100 Live: Global stocks find support, Lloyds thrown Curve ball over deal

Nov -19

Source: proactiveinvestors.com

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FTSE 100 Live: Blue-chips search for direction as inflation eases, Lloyds buys digital wallet

Nov -19

Source: proactiveinvestors.com

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Lloyds customers have claimed £2m in chargebacks this year

Nov -18

Source:

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Cruise operator Iglu to set sail in £100m deal

Nov -18

Source:

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Has Lloyds Run Too Far After Surging 66% in 2025?

Nov -17

Source:

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Octopus EV secures £500m funding from lenders – report

Nov -14

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Lloyds clinches £120m deal for digital wallet provider Curve

Nov -14

Source:

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FTSE 100 LIVE: London slides and UK gilts up as Reeves spooks market with tax U-turn

Nov -14

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.40%)

6. Segments

Retail (Incl. Wealth)

Expected Growth: 9.0%

The segment is poised for higher growth due to the shift towards digital services and increasing wealth management demand, slightly outpacing the global average growth hypothesis.

Commercial Banking (Excl. Credit Cards)

Expected Growth: 8.0%

Growth is linked to economic activity, with a slightly lower rate due to the competitive landscape of commercial banking, making it somewhat defensive.

Insurance, Pensions and Investments

Expected Growth: 5.0%

The increasing demand for protection and retirement planning, combined with the growing need for investment services, will contribute to the segment's expansion.

Other

Expected Growth: 8.0%

The diverse nature of activities means growth will be varied, with an overall rate close to the global average due to the lack of a dominant growth driver.

Unallocated Volatility and Other Items

Expected Growth: None%

None

Unallocated Insurance Grossing Adjustment

Expected Growth: None%

None

7. Detailed Products

Current Accounts

Personal and business current accounts for everyday banking needs

Savings Accounts

Fixed-rate and easy-access savings accounts for short-term and long-term savings goals

Credit Cards

Range of credit cards with rewards, cashback, and low-interest rates

Personal Loans

Unsecured personal loans for various purposes, such as debt consolidation or home improvements

Mortgages

Residential and buy-to-let mortgages for purchasing or refinancing a property

Insurance

Life insurance, home insurance, and travel insurance products

Investments

Range of investment products, including ISAs, pensions, and investment bonds

Business Banking

Business current accounts, loans, and credit cards for small to medium-sized enterprises

Commercial Banking

Specialized banking services for large corporations and institutions

8. Lloyds Banking Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Lloyds Banking Group plc operates in a highly competitive market, with many substitutes available to customers. However, the bank's strong brand and customer loyalty mitigate the threat of substitutes.

Bargaining Power Of Customers

Lloyds Banking Group plc has a large customer base, but customers have significant bargaining power due to the ease of switching banks and the availability of alternative financial services.

Bargaining Power Of Suppliers

Lloyds Banking Group plc has a diverse supplier base, and suppliers have limited bargaining power due to the bank's large scale and negotiating power.

Threat Of New Entrants

The banking industry has high barriers to entry, including regulatory hurdles and significant capital requirements, making it difficult for new entrants to compete with Lloyds Banking Group plc.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. Lloyds Banking Group plc faces intense rivalry from other major banks and fintech companies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 73.79%
Debt Cost 10.09%
Equity Weight 26.21%
Equity Cost 10.09%
WACC 10.09%
Leverage 281.49%

11. Quality Control: Lloyds Banking Group plc passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
SEB

A-Score: 7.0/10

Value: 5.6

Growth: 5.4

Quality: 5.6

Yield: 8.1

Momentum: 8.0

Volatility: 9.3

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Danske Bank

A-Score: 6.8/10

Value: 5.5

Growth: 4.4

Quality: 5.6

Yield: 8.1

Momentum: 9.0

Volatility: 8.0

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UniCredit

A-Score: 6.7/10

Value: 6.2

Growth: 5.9

Quality: 6.8

Yield: 6.9

Momentum: 9.0

Volatility: 5.3

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Lloyds Banking

A-Score: 6.3/10

Value: 6.6

Growth: 2.8

Quality: 5.6

Yield: 6.9

Momentum: 8.5

Volatility: 7.3

1-Year Total Return ->

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Société Générale

A-Score: 6.3/10

Value: 9.2

Growth: 4.2

Quality: 5.5

Yield: 4.4

Momentum: 10.0

Volatility: 4.3

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Deutsche Bank

A-Score: 5.8/10

Value: 8.3

Growth: 3.4

Quality: 5.9

Yield: 3.1

Momentum: 9.5

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.96$

Current Price

0.96$

Potential

-0.00%

Expected Cash-Flows