GROUP CHIEF EXECUTIVE'S STATEMENT

The first half of 2026 was a period of continued delivery for the Group, with successful strategic execution, ongoing investment in our franchise and sustained strength in financial performance. Continued income momentum, disciplined cost management and strong and stable credit performance have supported strong returns and capital generation in the period.

Given the Group's performance, robust capital position and confidence in our earnings outlook, the Board has recommended an interim ordinary dividend of 1.58 pence per share, up 30% year on year. Additionally, in line with our intention to review excess capital distributions every half-year we are today announcing our first interim share buyback of up to £1.0 billion. Given our positive progress and strong first half performance we are on track to meet our 2026 financial targets.

As the UK's largest financial services provider, serving 28 million customers and around 1 million businesses, we are ideally placed to drive opportunity for people and businesses by shaping finance as a force for good. During the first half of 2026, we continued to support households, businesses and communities across the UK, helping more people access quality homes, build financial confidence and grow their businesses. I am proud of the progress we have made and grateful to colleagues across the Group for their continued dedication, resilience and commitment to supporting our customers and delivering for all of our stakeholders.

Building on our strong foundations, distinctive competitive strengths and significant progress over the last five years, today we are launching Accelerate 2030. Our new promise to customers is to make finance simpler, smarter and more connected for every moment that matters. We will invest into the next phase of growth to deliver sustainable value creation through reimagined customer experiences, increased Group connectivity and a productivity step-change, all enabled by pioneering technology. I look forward to working with colleagues across the Group as we grow, innovate and simplify to deliver our new strategy and to drive better outcomes for our customers and shareholders.

Sustained strength in financial performance

In the first half of the year, statutory profit after tax was £3.1 billion, up 23% year-on-year, resulting in a return on tangible equity of 17.1%. Underlying profit of £4.2 billion was driven by higher net income and controlled costs, partially offset by a higher underlying impairment charge. Net income of £9.7 billion increased by 9%, supported by a higher banking net interest margin of 3.19% and growth in underlying other income of 11%, partially offset by higher operating lease depreciation. Operating costs of £4.9 billion were flat, with business growth costs, inflationary pressures and the full acquisition of Schroders Personal Wealth (now Lloyds Wealth) in the fourth quarter of 2025 offset by continued cost savings, a lower severance expense and plateauing investment as our strategic cycle culminates. The underlying impairment charge of £617 million, reflects strong and stable credit performance, albeit higher than the first half of 2025 which benefitted from improvements to the macroeconomic outlook.

The Group's franchise and balance sheet in the year-to-date continued to grow. Underlying loans and advances to customers of £491.5 billion were up 2%, or £10.4 billion, reflecting growth in both Retail and Commercial Banking. Customer deposits of £500.9 billion increased by 1%, or £4.4 billion, in the period, including growth in Commercial Banking of £7.5 billion, partially offset by a reduction in Retail of £3.4 billion (mainly in the first quarter), primarily due to disciplined pricing decisions throughout the tax year-end.

The Group delivered strong capital generation of 108 basis points in the first half of 2026, with a pro forma CET1 ratio of 13.1%. As mentioned the Board has recommended an increased interim ordinary dividend of 1.58 pence per share, equivalent to £918 million, representing an increase of 30% compared to the first half of 2025. This significant step-up reflects the actions taken to derisk the business, our strong capital position and confidence in the future earnings trajectory of the Group. We remain committed to our progressive and sustainable dividend policy. The Group is now reviewing excess capital distributions in addition to the ordinary dividend every half-year. As a result the Board has announced its intention to implement a further ordinary share buyback programme of up to £1.0 billion. 

GROUP CHIEF EXECUTIVE'S STATEMENT (continued)

Guiding purpose of Helping Britain Prosper

Helping Britain Prosper informs the role we play in the UK economy and the choices we make as we aim to shape finance for the better. This means using our scale, insight and innovation to help people access quality homes, build financial resilience, and grow their businesses, while creating sustainable, long-term value for shareholders.

Our purpose is reflected in the support we provide across the economy. Since the start of 2022, we have supported more than £10 billion of financing to the social housing sector, alongside providing more than £35 billion of new financing to small business customers. Over the same period we have supported customers with more than £80 billion of sustainable financing. We are also helping customers engage with their finances more actively, with more than 12 million customers registered to 'Your Credit Score' with 500,000 improving their score each quarter.

Successfully delivered against the 2022 to 2026 strategy

Over 2022 to 2026 we transformed the Group by building on our leading scale, breadth and connectivity. We maintained leadership and grew market shares in key products and segments, while unlocking the potential of digital and AI, and driving cost and capital efficiency.

The Group returned to growth across its leading and diversified franchises. In Retail, we are the largest UK digital bank, with around 22 million mobile app users and around 7 billion digital logons a year. Within Commercial Banking we are a leading player in key UK markets such as Debt Capital Markets (DCM), Cash Management, and Infrastructure and Project finance, helping grow Corporate and Institutional Banking income by around 70% since 2021 on an annualised basis. Insurance, Pensions and Investments (IP&I) has grown Workplace assets under administration (AuA) by more than 70% in the period. In Lloyds Living, within the Group's equity investments business, by the end of 2026 we are targeting to have exchanged on more than 10,000 homes since the business started five years ago.

These areas of progress have driven a 4% revenue compound annual growth rate (CAGR) for the Group during the period 2022 to 2026, with strategic initiative revenues in particular expected to reach c.£2 billion for 2026 and OOI growing at an 8% CAGR which has further diversified our revenue and increased the sustainability of our shareholder returns.

The Group has also maintained a clear focus on cost and capital discipline. With the benefits of investments, we have generated over £2 billion of gross cost savings between 2022 to 2026 by improving productivity and efficiency, modernising the technology estate, digitising more interactions and rationalising our office footprint. This is demonstrated by the more than 45% improvement in the number of Retail customers served per FTE and the c.35% reduction in Group run and change technology costs. We have improved capital efficiency and taken steps to derisk the Group, including achieving around £28 billion of cumulative risk-weighted asset (RWA) optimisation alongside elimination of the c.£7 billion pension deficit. This has helped support around £17 billion of shareholder distributions since 2021, with the ordinary dividend per share more than doubling since the first half of 2021.

Our progress is underpinned by a transformation in how the Group operates, radically enhancing our infrastructure, reducing data centres by more than 50% and migrating more than 60% of applications to the cloud. We have hired around 11,000 technology and data specialists to drive digital and AI leadership and recently announced that GenAI is expected to deliver over £100 million of benefit in 2026. Together, these changes create the platform to serve customers more personally, connect more of the Group's capabilities and continue improving productivity.

GROUP CHIEF EXECUTIVE'S STATEMENT (continued)

Accelerate 2030

Our new strategy, Accelerate 2030, builds on the foundations created over 2022 to 2026. In the context of a stable UK outlook, with strong consumer and business balance sheets and a constructive regulatory environment, we are uniquely placed to address the structural growth opportunities in the UK, including housing, the digital economy, infrastructure, the energy transition, wealth and pensions.

The strategy remains rooted in our purpose of Helping Britain Prosper, the participation choices that make our current strategy successful, and our driving ambition to 'make finance simpler, smarter and more connected for every moment that matters' to our customers. The strategy is to accelerate through reimagined customer experiences, increased Group connectivity, and a productivity step-change, all enabled by pioneering technology.

We have three pillars in support of Accelerate 2030. Firstly, we will 'Grow the core' by scaling our market leading businesses, accelerating in faster growing areas within our core and reimagining the customer experience including leveraging AI. This will drive growth across core markets and will deepen relationships with our customers. Key focus areas include a new, unique Group rewards offering for retail customers, a broader, transformed Homes experience, digitally enabled, full-service Business and Commercial Banking (BCB) and a focused, modern, client centric Corporate and Institutional business (CIB), as we look to reinforce and grow core market shares.

Our second pillar is 'Innovate to deepen and diversify', by extending propositions to unlock connected, diversified, and differentiated growth. This includes increasing cross-Group connectivity, such as our integrated bancassurance and wealth model, extending into higher-value, fee generating adjacencies, such as through our integrated digital Transport ecosystem and broadening our reach across third party and AI channels through data-led connected propositions and new wallet and payment products for our retail and commercial customers.

Our third pillar is 'Simplify to outperform' by building future ready skills and infrastructure, delivering a digital and AI-enabled productivity step-change and maximising capital efficiency. This will include key initiatives such as extending our next-generation Retail core banking engine, accelerating speed to market of new propositions and scaling agentic AI adoption. We expect to deliver around £2 billion of gross cost savings over the plan.

Business priorities

Our Accelerate 2030 divisional strategic priorities align with these pillars and incorporate ambitious revenue and cost targets.

Retail starts from a position of market leadership, with 28 million customers, leading positions across our own and third-party channels, and number one positions in mortgages, current accounts, cards, loans and transport. Retail's priorities are to deepen primary relationships, such as our leading PCA share, through a differentiated, personalised Group wide rewards offering, whilst scaling leadership positions (e.g. Homes and Unsecured) with broader, transformed experiences. We are also building the UK's first integrated transport ecosystem, creating a more empowering customer experience. These priorities will be enabled by scaling the next-generation core banking engine and rolling out agentic servicing solutions to improve experience and cost-to-serve. The Retail bank is targeting mid-single-digit net income CAGR and a mid-single-digit cost:income ratio reduction in 2030.

Commercial Banking starts from a position of strength, with around one million business relationships in BCB, c.21% small business deposit market share¹, around 3,000 CIB clients, including leading UK market positions such as DCM, Cash Management, and Infrastructure and Project finance. Commercial Banking priorities are to deepen BCB relationships with an enhanced, digital and AI-enabled offering. In CIB, we will enhance the cash, debt, risk offering, with focused capability enhancement and focused international expansion to support key clients. Across Commercial Banking we will embed solutions in third party customer workflows and ecosystems (e.g. the Stripe partnership in merchant acquiring announced June 2026) and connect the Group to high-growth companies, launching a comprehensive Innovation Banking proposition. We will underpin this growth with cost and capital efficiency, including AI augmented relationship manager productivity and expanded originate to distribute capabilities. Together, these actions will target a mid-single-digit net income CAGR and a low-single-digit cost:income ratio reduction in 2030.

¹    Source: UK Finance. Deposit market share for the first quarter of 2026, versus high street banks.

GROUP CHIEF EXECUTIVE'S STATEMENT (continued)

Insurance, Pensions and Investments (IP&I) is a differentiated and unique business for the Group, with 10 million IP&I customers and top-three positions in Workplace, home insurance and annuities. IP&I priorities in Accelerate 2030 are to drive further growth by empowering customers, introducing ready-made, self-directed and advised propositions to Workplace customers through a Retirement ecosystem, and extending reach across businesses and employees realising cross-Group synergies. Through our distinctive, integrated bancassurance offering we will utilise tailored, accessible, AI-enabled products to meet more customer needs, building further on improvements in protection and home insurance in our Retail banking relationships. Through Lloyds Wealth we will also deliver a connected end-to-end wealth offering, helping all customers build, manage and transfer wealth with an integrated lifetime proposition from execution only D2C investments to, Invest AI (a new AI enabled service to bring simple advice to all), and full-advice financial planning. IP&I will continue to improve experience and cost to serve by automation and scaled agentic servicing solutions. Capital efficiency and returns will strengthen from the run-down of the longstanding closed book alongside growth in capital-lite areas as described above. IP&I is targeting a high-single-digit net income CAGR and a high-teens cost:income ratio reduction in 2030.

Equity Investments brings together distinctive, growth businesses including our award-winning mid-market private equity business LDC and our growing housing rental platform Lloyds Living. LDC will consolidate its mid-market leadership position, supporting high growth businesses through the life cycle whilst building on our relationships within BCB. Lloyds Living will build value in the homes portfolio through scale, growing to more than 20,000 properties by 2030, and increasing connectivity to broader-Group solutions including in the Insurance business and shared ownership mortgages. In Lloyds Living we will improve cost-to-serve and reduce risk by scaling our high quality in-house property management operations. Equity Investments will target high-single-digit net income CAGR while maintaining a low cost:income ratio in 2030.

Accelerate 2030 aims to increase Group connectivity, bringing together our broad offering, scale, data, and digital capabilities to create more connected propositions for customers and hence new, diversified sources of growth. In this respect our investment in innovation will include the distinctive bancassurance proposition, rent-to-buy 'Pathways' in Lloyds Living, and building new revenue streams such as Connected Commerce; an innovative proposition that will connect our 28 million Retail customers with our c.1 million business clients, providing targeted merchant campaigns and cashback offers.

Alongside, we are developing digital wallet and point-of-sale financing capabilities to give customers and merchants more flexible and value added ways to pay and transact. Digital asset solutions will support tokenised deposits to enable more integrated, faster and lower-cost payments journeys and transactions across our Retail and Commercial Banking franchises, adding value to our customers' lives. Together, these propositions will deepen customer relationships, support our ambition to make finance simpler, smarter and more connected, and create value in ways that only an integrated Lloyds Banking Group can.

AI in all its forms will be a key enabler in driving this acceleration. We are starting from a position of leadership, evidenced by our position as the top UK domestic bank in the Evident AI index ranking, and we see clear opportunities to transform customer engagement including increased personalisation and conversational interactions, to further improve customer experience, unlock colleague productivity through agentic assistants and reinventing servicing and operations with always-on and voice enabled agents.

Financial outlook

Accelerate 2030 is built upon a robust financial framework that will generate long-term, sustainable value for our shareholders. It is built on the financial foundations of investment discipline, efficiency focus and risk management which enable continued income growth, improved operating leverage and stronger returns and capital generation. These financial outcomes build further capacity for investment and growing, sustainable shareholder distributions.

Taking these themes in turn. Our financial foundations remain critical to create the conditions necessary for long-term value creation. We will continue to invest with discipline, with a focus on business priorities and consistent execution underpinned by disciplined returns hurdles and continuous tracking and reprioritisation as required. Higher investment will increasingly be financed by the capacity created by the gross cost saves generated by our continued focus on efficiency. We are targeting around £2 billion of gross cost savings by 2030 based on extending existing levers, such as our digital transformation and tech modernisation, and leveraging new areas, in particular realising AI value to drive a productivity step-change as we deliver our strategy. Effective risk management will continue to be at the core of our new strategy. This is built on a prudent risk appetite, a low risk, diversified balance sheet, consistent, low risk participation choices and comprehensive data and robust underwriting.

GROUP CHIEF EXECUTIVE'S STATEMENT (continued)

These foundations support further business transformation including new propositions, cross-Group connectivity, productivity improvements and the resilience of the Group. Higher investment supports mid-single-digit net income CAGR over the plan, with 2027 expected to exceed that level. This is driven by a combination of growing our core franchise based on measured participation choices, particularly in areas where lending growth outpaces nominal GDP, the growing structural hedge tailwind and other operating income from growth opportunities across the business.

Within this, we expect to see healthy net interest income growth during the plan period, supported by over £2 billion of additional structural hedge income and strong balance sheet expansion, which in turn will drive risk-weighted asset growth. Although Basel 3.1 implementation will result in a reduction of between £6 billion and £8 billion on 1 January 2027, from that point, risk-weighted assets will rise largely in line with lending. Alongside, business growth will modestly increase RWAs in operational risk and equity investments driving a limited increase in RWA density. The focus on OOI will drive further diversification of revenue from existing and new initiatives, which is expected to deliver high-single-digit CAGR over the plan. Income growth and continued efficiency also drives improved operating leverage. We are committed to improving our cost:income ratio every year over the plan to less than 45% in 2030.

Accelerate 2030 will drive stronger sustainable returns, with substantial earnings growth on top of a significant increase in our tangible equity base as we grow the balance sheet. We are targeting a return on tangible equity of around 20% in 2030, including a return on tangible equity of greater than 18% in 2028. Strengthening returns over the strategy will result in sustainable and growing capital generation. We will deploy this capital in a targeted way ensuring that we appropriately invest into the business alongside delivering significant, growing and sustainable capital returns for shareholders.

2026 guidance

Based on the sustained strength in our financial performance and our current macroeconomic assumptions, for 2026 the Group reiterates its guidance:

•  Underlying net interest income of greater than £14.9 billion

•  Cost:income ratio of less than 50% (including operating costs of less than £9.9 billion)

•  Asset quality ratio of c.25 basis points

•  Return on tangible equity of greater than 16%

•  Capital generation of greater than 200 basis points¹

•  To pay down to a CET1 ratio of c.13.0%

2027 to 2030 guidance

Based on our current macroeconomic assumptions, from 2027 to 2030 the Group expects:

•  Mid-single-digit net income CAGR and high-single-digit underlying other operating income CAGR

•  Cost:income ratio of less than 45% in 2030, with year-on-year reductions

•  Asset quality ratio of between 25 basis points and 30 basis points through the plan period

•  Return on tangible equity of c.20% in 2030 and greater than 18% in 2028

•  Capital generation of greater than 225 basis points in 2030¹

•  Pro forma CET1 ratio of c.13.0%²

¹    Excludes capital distributions.

²    Includes capital distributions announced in respect of the reporting period.