Britain’s Lloyds Banking Group today reported profit before tax for the July-September period of £2.3 billion, in line with analysts’ forecasts, up from £1 billion a year ago when it took £875m in remediation charges.
Lloyds shares fell 6% in early trading after the results, on investor disappointment at a lack of upgraded performance targets, in a similar pattern to HSBC’s results earlier in the week.
The share reaction and muted outlook showed signs British banks face tougher times ahead after a run of recent record profits, with Lloyds saying competition in the deposit market in particular is starting to squeeze margins.
Its CFO William Chalmers said “we are seeing a tighter and more competitive deposit market,” citing competition from non-UK banks, albeit third quarter deposits remained “broadly stable”.
The UK lender said its third quarter net interest income rose by 10%, despite that margin compression in deposit market, thanks to hedging actions and growth in lending volumes.
Lloyds’ third quarter profit doubles year-on-year as the bank avoided remediation costs linked to motor finance scandal that marred the third quarter of 2025.
The results come a day after UK finance minister John Healey announced higher taxes on the banking sector in his first budget.
Banks face doubling of profit surcharge from 3% to 6%, but only for 15 months, an overall smaller and shorter-duration hike than many lenders had feared.
