Lloyds Banking Group reported a stronger-than-expected 12% increase in annual profit on Thursday, upgraded a key performance target and announced a £1.75bn share buyback, signalling growing confidence across Britain’s banking sector.
The lender posted profit before tax of £6.7bn for 2025, up from £6bn a year earlier and ahead of the £6.4bn analyst consensus.
Lloyds also raised its profitability ambitions, saying it now expects to achieve a return on tangible equity above 16% in 2026, compared with a previous forecast of around 12% for 2025.
“Looking ahead to 2026 and the conclusion of the five-year strategy we set out in 2022, our continued business momentum and strong execution allow us to upgrade our guidance,” said chief executive Charlie Nunn.
The better-than-expected results from the first major UK lender to report full-year earnings this season highlight how banks have continued to perform well despite easing interest rates, supported by higher fee income and a more favourable political backdrop.
Britain’s Labour government has so far refrained from raising bank taxes, contrary to some expectations, and has instead encouraged financial regulators to reduce red tape to help stimulate economic growth.
Shares in Lloyds edged up 0.5%, broadly in line with the wider market, as analysts noted that much of the bank’s solid performance had already been factored into its valuation.
