LONDON, Jan 30, 2026, 10:57 GMT
- Lloyds began a £1.75 billion share buyback on Friday, to run until the end of 2026
- The UK lender reported a 12% rise in 2025 profit and raised its 2026 profitability target
- Motor finance compensation remains the main swing factor for future payouts
Lloyds Banking Group (LLOY.L) began a share buyback of up to £1.75 billion on Friday, launching a programme it said will run until no later than Dec. 31, 2026 and be conducted independently by Goldman Sachs International. The bank said it intends to cancel the shares it repurchases. 1
The move lands as British lenders try to show they can keep returns coming even as interest rates ease and mortgage competition stays tight. Lloyds reported a better-than-expected 12% rise in 2025 profit and lifted its 2026 return on tangible equity — profit on shareholders’ funds excluding goodwill — to more than 16%. 2
Lloyds shares were up 2.2% at 107.85 pence by mid-morning in London, extending a run that has lifted the stock about 73% over the past year. 3
In its results statement, Lloyds said profit before tax rose to £6.66 billion in 2025 from £5.97 billion a year earlier. It raised its ordinary dividend 15% to 3.65 pence per share and said total capital returns for 2025, including the new buyback, would be up to £3.9 billion. 4
The bank’s fourth-quarter performance did much of the heavy lifting. Statutory profit before tax for the quarter came in at £1.98 billion, above the average analyst forecast of £1.72 billion, Proactive Investors reported. 5
Lloyds has been leaning harder on fee lines to soften its reliance on the lending spread. Revenue rose 7% to £18.3 billion, with interest income up 6% and fee-based income up 9%, the Financial Times reported. 6
Executives also used the earnings call to pitch technology and cost work as a bigger part of the story. Chief executive Charlie Nunn told analysts the bank is “successfully executing our strategy,” while finance chief William Chalmers said capital choices are aimed at “maximizing the long-term value generation.” 7
Guidance for 2026 points to higher income, tighter costs and a sharper profitability target. Lloyds said it expects underlying net interest income of about £14.9 billion, while aiming for a cost-to-income ratio below 50% and capital generation of more than 200 basis points — hundredths of a percentage point — excluding distributions.
The buyback mechanics are plain-vanilla, but regulators still matter. The programme needs the Prudential Regulation Authority’s ongoing approval, and Lloyds said it will not repurchase shares in the United States or in relation to its American depositary receipts.
But the biggest uncertainty remains motor finance compensation, where Lloyds has set aside £1.95 billion and is waiting for the outcome of a Financial Conduct Authority consultation due in March. Gary Greenwood, a banking analyst at Shore Capital, said “the key uncertainty remains the outcome of the FCA’s review into motor finance commission.” 8
Lloyds’ market value stands at about £63 billion, according to Hargreaves Lansdown data. The final dividend of 2.43 pence is due to be paid on May 19, with the shares set to go ex-dividend on April 9. 9
