Lloyds Banking Group reported a 36% decline in its third-quarter profit, primarily driven by a previously announced £800 million charge to compensate customers for the motor finance mis-selling scandal. Statutory profit before tax for the first nine months of 2025 was £3,781 million, a 4% decrease from the same period in 2024. This significant charge directly impacted the bank's bottom line.
Despite the profit decline, total income for the first nine months of 2025 increased by 8% to £13,650 million, with net interest income up 6% to £9,924 million and other income rising by 15%. However, operating expenses also increased by 10% to £9,252 million, including the higher remediation charge and strategic investment costs. The impairment charge rose to £617 million from £294 million in the prior year.
The substantial motor finance provision, which now totals £1,950 million, overshadowed underlying income growth and led to a reduction in the CET1 capital ratio to 13.6% from 13.7% at the end of 2024. This earnings report is a material update for investors, highlighting the significant financial impact of the ongoing scandal on the bank's profitability and capital position.
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