Lloyds beats profit target as bank sets sights on more cost-cutting
Lloyds Banking Group beat its profit forecast for the first half of the year as the bank’s top boss laid out plans to make further cost savings in the years ahead.
The FTSE 100 lender – which owns the Bank of Scotland and Halifax – recorded a £4.3bn pre-tax profit in the first half of 2026, breezing past an internal analyst target of £4.1bn.
The figure was up 23 per cent from the £3.5bn scored in the same period last year.
The rise was supported by a nine per cent jump in net interest income to £7.3bn after the bank re-invested lower-yielding hedges at current higher market interest rates. This strategy alone – known as structural hedging – generated £3.4bn in total during the half-year.
Lloyds unveiled a new share buyback of £1bn for the period, which follows on from a £1.75bn programme announced at the start of the year. Its interim dividend was hiked 30 per cent to 1.58p per share marking around £920m in returns.
Costs remained broadly flat year-on-year at £4.9bn as the bank pointed to its near £2bn in cost savings and lower severance costs as helping offset business growth spending and inflation.
Nunn’s next set of plans for Lloyds
Charlie Nunn, the bank’s chief executive, revealed plans for the group’s new four-year strategy dubbed Accelerate 2030, that will see the bank aim to deliver another £2bn in cost savings by 2030 through leveraging AI to increase productivity.
When Nunn first joined the bank in 2021 – his first time running a listed company – he set out to spend £4bn on diversifying away from high street banking in a bid to become less reliant on interest income, which at the time were at a low of 0.1 per cent amidst the pandemic.
The plan was announced on 24 February 2022, the same day Russia invaded Ukraine – a move that sent global rates soaring.
Nunn also set his sights on wealth management, with a push to galvanise the mass affluent market. In the first half of 2026, the group’s Insurance, Pensions and Investments division posted a near 20 per cent rise in income to £818m. The bank specifically pointed to its move to acquire the remaining 49.9 per cent stake of its wealth tie-up with Schroders in October, which brought a total £17bn in assets under administration firmly under the bank’s umbrella.
But the new strategy comes amidst a stiff backdrop for UK banks with calls for new Prime Minister Andy Burnham to target the sector for a tax grab.
The Trades Union Congress (TUC) and left-wing members of Parliament renewed these demands this week after Barclays revealed a 30 per cent jump in profit to £3.3bn in the second quarter of the year. The bank also put £1.3bn towards its bonus pool for the first six months, up from £1bn the year prior.
Barclays boss’ CS Venkatakrishnan warned against the move, stating for every £1 off capital the bank has, around £8 to £10 is lent to business and households supporting growth.