Lloyds earnings preview: strong performance offset by motor finance charge
The UK bank reports Q3 with 10% revenue growth expected, though £800m additional motor finance provision and strategic transformation create complex investor considerations.
Exceptional share price performance year-to-date
Lloyds Banking Group is expected to report its third quarter (Q3) 2025 earnings on Thursday 23rd of October 2025.
Year-to-date the Lloyds share price has risen by 51% but over the past five years it gained 209% on a total annualised return basis and 289% on a total return (by re-investing dividends) basis.
Lloyds 5-year total return graph
This exceptional performance demonstrates the wealth-building potential of UK banking shares when held over meaningful time periods and with dividends reinvested.
Q3 financial expectations
Lloyds is expected to see a substantial rise in its net interest income and revenue but a marginal increase in its pre-tax profit and earnings per share (EPS).
Lloyds Q3 financial expectations:
Net interest income: £3.43 billion, representing a 6% year-over-year (YoY) increase
Revenue: £4.79 billion, a 10% YoY rise
Pre-tax profit: £1.90 billion, up 2.6% YoY
EPS: 1.97p, up 1.6% from 1.94p last year
Strong H1 foundation supports Q3 expectations
Lloyds enters its next reporting period having delivered a solid first half in 2025, during which it recorded £8.9 billion in net income, lifted its net interest margin to 3.04%, and posted underlying profit of £3.6 billion.
This performance occurred despite some pressure from operating costs and impairments that affected the overall profitability picture.
The board responded by increasing the interim dividend by 15% to 1.22 pence per share, reflecting confidence in the bank's capital generation and balance sheet strength.
Underlying loans and advances grew by £11.9 billion (3%), while customer deposits rose by £11.2 billion (2%), underlining ongoing momentum across its retail and commercial franchises.
Key focus areas for Q3 results
Looking ahead, key areas of focus will include net interest margin management in a shifting rate environment, credit impairment trends (especially in consumer and commercial portfolios), and the contribution of non-interest income.
Analysts will also watch closely for guidance on full-year capital generation and shareholder returns (dividends, buybacks), especially given the strength shown in the first half.
According to LSEG Data & Analytics, fundamental analysts rate Lloyds as a ‘buy’ with a long-term mean price target at 93.07 pence, around 12% above the current Lloyds share price (as of 14/10/2025).
Lloyds LSEG Data & Analytics chart
Lloyds has a TipRanks Smart Score of ’9 Outperform’ and a ‘buy’ rating.
Lloyds TipRanks Smart Score chart
Balance sheet growth, assets under management, and efficiency ratios will all come under scrutiny, as Lloyds balances the need to support credit growth with maintaining solid credit quality.
The bank's strategic narrative - emphasising digital transformation, simplification, customer outcomes, and cost leverage - will be tested against the operational realities of UK banking.
Motor finance provision creates headline drag
Lloyds recently announced it will incur an additional provision of £800 million in relation to the UK motor finance mis-selling scandal, bringing its total reserve for this liability to approximately £1.95 billion.
The expansion of this charge reflects emerging exposure tied to undisclosed commission practices in car loans and compensation demands under the FCA's redress framework.
This substantial charge introduces a material risk and headline drag that could offset some of the positive momentum from underlying operational performance.
The ultimate scale of motor finance liabilities remains uncertain, creating ongoing overhang for investor sentiment despite improved operational metrics.
Strategic portfolio moves reshape business
Meanwhile, in a significant portfolio move, Lloyds has acquired full control of the wealth joint venture: Schroders has sold its 49.9% stake in Schroders Personal Wealth (SPW) to Lloyds.
In return, Schroders reclaimed Lloyds' 19.1% interest in Cazenove Capital, marking Lloyds' intention to take a more direct role in wealth management operations.
On the branch network front, Lloyds continues paring its physical footprint. Just in the past month, it announced closures of 49 additional branches across Lloyds, Halifax, and Bank of Scotland brands.
This will bring the total number of closures between 2025 and the end of 2026 to nearly 350, aligning with its broader push toward digital banking.
Digital transformation accelerates
Lloyds has also advanced its digital and fintech ambitions. Earlier in 2025, it unveiled Athena, a generative AI-powered knowledge hub designed to support customer service colleagues.
The bank has also engaged in partnerships around digital assets and tokenised real-world asset (RWA) collateral frameworks, in collaboration with Aberdeen Investments and Archax.
These moves signal Lloyds' intention to lean into technology and innovation as key differentiators going forward in an increasingly digital banking landscape.
On the mortgage front, Lloyds pledged £4 billion in additional lending capacity to support first-time buyers, in the wake of recent regulatory and policy changes.
Lloyds share price technical analysis
On the monthly candlestick chart the Lloyds share price’s advance has so far been thwarted by the 86.88p-to-89.34p resistance area, made up of the 2014-to-2015 peaks.
Lloyds Banking Group monthly candlestick chart
While these highs cap, the Lloyds share price may well revisit its 2025 uptrend line at 81.38p and the 81.04p late September low. Failure there may push the area between the May peak and the early September low at 79.20p-to-77.38p to the fore.
While the early September low at 77.38p underpins on a weekly chart closing basis, the medium-term uptrend is deemed to be intact.
For the longer-term uptrend to be damaged a weekly chart close below the early July low at 72.86p would need to be seen.
Lloyds Banking Group daily candlestick chart
Investment implications for UK banking leader
Taken together, these developments create a complex backdrop for the upcoming results. The additional motor finance charge introduces material risk, while increased control of the wealth business indicates strategic transformation.
- Research Lloyds' strategic transformation, digital initiatives, and motor finance exposure to understand both opportunities and risks.
- Consider how interest rate (https://www.ig.com/uk/glossary-trading-terms/interest-rates-definition) trends, economic conditions, and regulatory developments might affect UK banking performance.
- Open an account with IG by visiting our website and completing the application process.
- Search for 'Lloyds Banking Group' or its ticker 'LLOY' on our trading platform or app.
- Consider appropriate position sizing given both the strong operational momentum and material regulatory charges.
Share dealing provides direct exposure to Lloyds' dividend growth and digital transformation story.
Spread betting and CFD trading offer flexible approaches for trading around earnings.
How well the bank can maintain margin resilience, manage credit risk, and deliver promised returns against these headwinds will shape investor sentiment.
Important to know
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