Lloyds Banking : 1.3MB "Report Results announcement PDF" (2026 lb hy results)

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Lloyds Bank plc 2026 half year results 30 July 2026 Member of the Lloyds Banking Group CONTENTS Forward-looking statements Condensed consolidated income statement (unaudited) 1 Condensed consolidated balance sheet (unaudited) 1 Financial review 2 Risk management Principal risks and uncertainties 4 Capital risk 5 Credit risk 8 Liquidity risk 14 Condensed consolidated half-year financial statements (unaudited) 15 Condensed consolidated income statement (unaudited) 16 Condensed consolidated statement of comprehensive income (unaudited) 17 Condensed consolidated balance sheet (unaudited) 18 Condensed consolidated statement of changes in equity (unaudited) 19 Condensed consolidated cash flow statement (unaudited) 22 Notes to the condensed consolidated half-year financial statements (unaudited) 23 Statement of directors' responsibilities 47 Independent review report to Lloyds Bank Plc 48 Contacts 49 ‌FORWARD-LOOKING STATEMENTS This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and section 27A of the US Securities Act of 1933, as amended, with respect to the business, strategy, plans and/or results of Lloyds Bank plc together with its subsidiaries (the Lloyds Bank Group) and its current goals and expectations. Statements that are not historical or current facts, including statements about the Lloyds Bank Group's or its directors' and/or management's beliefs and expectations, are forward-looking statements. Words such as, without limitation, 'believes', 'achieves', 'anticipates', 'estimates', 'expects', 'targets', 'should', 'intends', 'aims', 'projects', 'plans', 'potential', 'will', 'would', 'could', 'considered', 'likely', 'may', 'seek', 'estimate', 'probability', 'goal', 'objective', 'deliver', 'endeavour', 'prospects', 'optimistic' and similar expressions or variations on these expressions are intended to identify forward-looking statements. These statements concern or may affect future matters, including but not limited to: projections or expectations of the Lloyds Bank Group's future financial position, including profit attributable to shareholders, provisions, economic profit, dividends, capital structure, portfolios, net interest margin, capital ratios, liquidity, risk-weighted assets (RWAs), expenditures or any other financial items or ratios; litigation, regulatory and governmental investigations; the Lloyds Bank Group's future financial performance; the level and extent of future impairments and write-downs; the Lloyds Bank Group's ESG targets and/or commitments; statements of plans, objectives or goals of the Lloyds Bank Group or its management and other statements that are not historical fact and statements of assumptions underlying such statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. Factors that could cause actual business, strategy, targets, plans and/or results (including but not limited to the payment of dividends) to differ materially from forward-looking statements include, but are not limited to: general economic and business conditions in the UK and internationally (including in relation to tariffs); imposed and threatened tariffs and changes to global trade policies; acts of hostility or terrorism and responses to those acts, or other such events; geopolitical unpredictability; the war between Russia and Ukraine; the escalation of conflicts in the Middle East; the tensions between China and Taiwan; political instability including as a result of any UK general election; market related risks, trends and developments; changes in client and consumer behaviour and demand; exposure to counterparty risk; the ability to access sufficient sources of capital, liquidity and funding when required; changes to the Lloyds Bank Group's or Lloyds Banking Group plc's credit ratings; fluctuations in interest rates, inflation, exchange rates, stock markets and currencies; volatility in credit markets; volatility in the price of the Lloyds Bank Group's securities; natural pandemic and other disasters; risks concerning borrower and counterparty credit quality; risks affecting defined benefit pension schemes; changes in laws, regulations, practices and accounting standards or taxation; changes to regulatory capital or liquidity requirements and similar contingencies; the policies and actions of governmental or regulatory authorities or courts together with any resulting impact on the future structure of the Lloyds Bank Group; risks associated with the Lloyds Bank Group's compliance with a wide range of laws and regulations; assessment related to resolution planning requirements; risks related to regulatory actions which may be taken in the event of a bank or Lloyds Bank Group or Lloyds Banking Group failure; exposure to legal, regulatory or competition proceedings, investigations or complaints; failure to comply with anti-money laundering, counter terrorist financing, anti-bribery and sanctions regulations; failure to prevent or detect any illegal or improper activities; operational risks including risks as a result of the failure of third party suppliers; conduct risk; risks related to new and emerging technologies, including artificial intelligence; technological changes and risks to the security of IT and operational infrastructure, systems, data and information resulting from increased threat of cyber and other attacks; technological failure; inadequate or failed internal or external processes or systems; risks relating to ESG matters, such as climate change (and achieving climate change ambitions) and decarbonisation, including the Lloyds Bank Group's or the Lloyds Banking Group's ability along with the government and other stakeholders to measure, manage and mitigate the impacts of climate change effectively, and human rights issues; the impact of competitive conditions; failure to attract, retain and develop high calibre talent; the ability to achieve strategic objectives; the ability to derive cost savings and other benefits including, but without limitation, as a result of any acquisitions, disposals and other strategic transactions; inability to capture accurately the expected value from acquisitions; and assumptions and estimates that form the basis of the Lloyds Bank Group's financial statements. A number of these influences and factors are beyond the Lloyds Bank Group's control. Please refer to the latest Annual Report on Form 20-F filed by Lloyds Bank plc with the US Securities and Exchange Commission (the SEC), which is available on the SEC's website at https://www.sec.gov , for a discussion of certain factors and risks. Lloyds Bank plc may also make or disclose written and/or oral forward-looking statements in other written materials and in oral statements made by the directors, officers or employees of Lloyds Bank plc to third parties, including financial analysts. Except as required by any applicable law or regulation, the forward-looking statements contained in this document are made as of today's date, and the Lloyds Bank Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document whether as a result of new information, future events or otherwise. The information, statements and opinions contained in this document do not constitute a public offer under any applicable law or an offer to sell any securities or financial instruments or any advice or recommendation with respect to such securities or financial instruments. ‌CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED) Half-year to 30 Jun 2026 £m Half-year to 30 Jun 2025 £m Half-year to 31 Dec 2025 £m Net interest income 7,125 6,546 6,817 Other income 2,720 2,289 2,777 Total income 9,845 8,835 9,594 Operating expenses (5,677) (5,635) (6,530) Impairment (612) (442) (350) Profit before tax 3,556 2,758 2,714 Tax expense (905) (818) (798) Profit after tax 2,651 1,940 1,916 Profit attributable to ordinary shareholders 2,436 1,709 1,716 Profit attributable to other equity holders 213 215 189 Profit attributable to equity holders 2,649 1,924 1,905 Profit attributable to non-controlling interests 2 16 11 Profit after tax 2,651 1,940 1,916 ‌CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) At 30 Jun At 31 Dec 2026 £m 2025 £m Assets Cash and balances at central banks 42,034 37,720 Financial assets at fair value through profit or loss 1,761 2,279 Derivative financial instruments 3,088 3,260 Financial assets at amortised cost 540,777 524,467 Financial assets at fair value through other comprehensive income 40,365 36,257 Other assets 28,354 27,352 Total assets 656,379 631,335 Liabilities Deposits from banks 5,274 3,085 Customer deposits 466,996 465,207 Repurchase agreements at amortised cost 44,600 37,567 Due to fellow Lloyds Banking Group undertakings 5,522 3,852 Financial liabilities at fair value through profit or loss 4,238 4,243 Derivative financial instruments 4,392 4,286 Debt securities in issue at amortised cost 62,806 52,132 Other liabilities 12,071 10,963 Subordinated liabilities 7,582 8,020 Total liabilities 613,481 589,355 Total equity 42,898 41,980 Total equity and liabilities 656,379 631,335 ‌FINANCIAL REVIEW Principal activities Lloyds Bank plc (the Bank), together with its subsidiary undertakings (the Group), provide a wide range of banking and financial services. The Group's revenue is earned through interest and fees on a broad range of financial services products including current and savings accounts, mortgages, credit cards, motor finance and unsecured loans to retail customers and loans and other products to commercial clients. Income statement The Group's statutory profit before tax for the first half of 2026 was £3,556 million, 29% higher than in the first half of 2025, reflecting higher total income and broadly stable operating expenses, partly offset by a higher impairment charge. Profit after tax was £2,651 million (half-year to 30 June 2025: £1,940 million). Total income for the first half of 2026 was £9,845 million, an increase of 11% on the prior period (half-year to 30 June 2025: £8,835 million). Net interest income of £7,125 million was up 9% on the prior year (half-year to 30 June 2025: £6,546 million), driven by a higher margin, resulting from stronger structural hedge income as eligible balances were reinvested into a higher rate environment, partially offset by asset margin compression, in particular in the UK mortgages portfolio, alongside lending growth driving higher average interest-earning assets. Other income increased by 19% to £2,720 million (half-year to 30 June 2025: £2,289 million), as a result of higher net fee and commission income, net trading income and other operating income. Net fee and commission income increased as a result of strengthening customer activity, while other operating income increased as a result of vehicle fleet growth and higher average vehicle rental values in UK Motor Finance. The higher net trading income reflected market movements in the period. Operating expenses of £5,677 million were broadly stable, reflecting business growth costs and inflationary pressures, offset by continued cost savings, a lower severance expense and plateauing investment as this strategic cycle culminates. Within this, operating lease depreciation increased due to a charge in the second quarter for declines in used car prices alongside fleet growth and the depreciation of higher value vehicles, partially offset by continued risk mitigation. As part of operating expenses, a remediation charge of £31 million was recognised by the Group in the first half of 2026 (half-year to 30 June 2025: £35 million) across a small number of programmes. There have been no further charges relating to motor finance commission arrangements. The FCA published policy statement PS26/3 in March 2026 with final rules for its motor finance redress schemes. Four challenges to the FCA's schemes have been raised, three by lenders and one from a consumer group and the implementation of the scheme has now been delayed, given the Upper Tribunal hearing is not expected before December 2026. The Group will closely monitor how these challenges develop and consider any potential impact to the existing provision. Despite these uncertainties, the current provision continues to represent the Group's current best estimate of the potential impact of the motor finance issue. The impairment charge was £612 million, up from £442 million in the half-year to 30 June 2025. The higher charge includes a net charge from updated multiple economic scenarios (MES) reflecting the impact of the deterioration in economic outlook in the first quarter due to the Middle East conflict, net of modest second quarter updates. The MES impact for the half year captures a higher unemployment rate peak and softer house price outlook compared to the year end view. This is partly offset by the release of the post model adjustment for global tariff and political disruption risks within Commercial Banking in the first quarter, now considered to be adequately captured within assumptions and resulting modelled provisions. Credit performance remains strong and stable across Retail and Commercial Banking with arrears low and stable in all portfolios. The Group recognised a tax expense of £905 million in the first half of 2026 (half-year to 30 June 2025: £818 million). An explanation of the relationship between the tax expense and the Group's accounting profit for the period is set out on page 27. FINANCIAL REVIEW (continued) Balance sheet As at 30 June 2026, total assets were £25,044 million higher at £656,379 million (31 December 2025: £631,335 million). Financial assets at amortised cost were £16,310 million higher at £540,777 million including increases in loans and advances to customers of £8,764 million, reverse repurchase agreements of £3,253 million, debt securities of £3,145 million and loans and advances to banks of £868 million. Amounts due from fellow Lloyds Banking Group undertakings increased by £280 million. Loans and advances to customers included growth of £1,773 million in UK mortgages, net of the impact of a securitisation of £1,841 million of primarily legacy Retail mortgages in the second quarter, alongside growth across credit cards, UK Retail unsecured loans, UK Motor Finance and the European retail business, totalling £2,923 million. Lending balances also increased in Commercial Banking by £4,458 million, reflecting growth across Corporate and Institutional Banking and Business and Commercial Banking, net of continued government-backed lending repayments. Reverse repurchase agreements and debt securities increased in response to market conditions. Cash and balances at central banks increased by £4,314 million to £42,034 million and financial assets at fair value through other comprehensive income of £40,365 million increased by £4,108 million, reflecting changes in liquidity holdings. Other assets were £1,002 million higher, largely reflecting increased settlement balances and vehicle fleet growth within UK Motor Finance. Total liabilities were £24,126 million higher at £613,481 million (31 December 2025: £589,355 million). Deposits from banks increased by £2,189 million to £5,274 million while customer deposits of £466,996 million increased by £1,789 million in the period. Retail deposits of £321,836 million were down by £3,333 million, primarily due to disciplined pricing decisions throughout the tax year-end. Retail UK current account balances were broadly stable, supported by the strength of the Group's franchise and proposition. Commercial Banking deposits increased by £4,949 million in the period, with growth in targeted sectors. Repurchase agreements at amortised cost increased by £7,033 million to £44,600 million. Amounts due to fellow Lloyds Banking Group undertakings increased by £1,670 million to £5,522 million. Debt securities in issue at amortised cost increased by £10,674 million, to £62,806 million due to new issuances in the period while subordinated liabilities decreased to £7,582 million as a result of redemptions in the period. Other liabilities increased by £1,108 million to £12,071 million, largely due to higher settlement balances. Total equity was £42,898 million at 30 June 2026 (31 December 2025: £41,980 million). Profit for the period was partially offset by dividends paid and movements in the cash flow hedge reserve. Capital The Group's common equity tier 1 (CET1) capital ratio remained at 13.6% at 30 June 2026 (31 December 2025: 13.6%). Profit for the first half of the year was broadly offset by the payment of ordinary dividends, the accrual for foreseeable ordinary dividends, distributions on other equity instruments and an increase in risk-weighted assets. Risk-weighted assets increased by £3,939 million to £198,239 million at 30 June 2026 (31 December 2025: £194,300 million), largely reflecting the impact of strong customer lending growth, partially offset by continued optimisation, including risk transfer and securitisation activity across Commercial Banking and Retail. The Group's total capital ratio reduced to 19.8% at 30 June 2026 (31 December 2025: 20.1%), with the increase in CET1 capital and an AT1 instrument issuance more than offset by AT1 instrument calls and the increase in risk-weighted assets. The Group's UK leverage ratio reduced to 5.1% at 30 June 2026 (31 December 2025: 5.2%). The increase in total tier 1 capital was more than offset by an increase in the leverage exposure measure. The latter primarily reflects strong customer lending growth, including off-balance sheet commitments, and an increase in holdings of securities within the liquidity portfolio. Reporting dates Going forwards, Lloyds Bank plc will announce its results at the half-year and the full year only, with the next results announcement for the Group being for the full year 2026. ‌RISK MANAGEMENT PRINCIPAL RISKS AND UNCERTAINTIES The most significant risks faced by the Group are detailed below. External risks may impact delivery against the Group's recently updated long-term strategic objectives. They include, but are not limited to, macroeconomic and geopolitical uncertainties and inflation trends which could have implications for both consumers and businesses. The Group's credit performance remains strong and stable; the portfolios are well positioned amid macroeconomic uncertainty and are proactively monitored to identify signs of stress. Ongoing oversight of operational resilience risks and continuous enhancements to controls remains critical, particularly in relation to cybersecurity, IT stability and supplier risk. The Group remains committed to ensuring lessons are learned from internal and external events of disruption, which may have an impact on the Group's ability to continue operations. The latest position on the motor finance commission redress scheme is detailed on page 41. The Group remains committed to modernising its technology and strengthening capabilities to ensure safe and responsible use of models and tools such as artificial intelligence. Risk management is fundamental to our business model and strategy, and enables the Group to embrace opportunities responsibly and deliver sustainable growth. Our strong risk management culture, underpinned by Lloyds Banking Group's risk management framework (RMF), is vital in safeguarding the Group, colleagues and customers against both existing and emerging risks. During 2026, the Group has continued to make progress in its risk transformation journey by standardising practices and streamlining processes, enabling simplification and efficiency. The RMF ensures processes are in place to facilitate robust risk management and effective decision making to deliver good outcomes for our customers. The Group has 10 principal risks, underpinned by a suite of level two risks which are reviewed and reported regularly to the Board. The principal risks consist of capital risk, climate risk, compliance risk, conduct risk, credit risk, economic crime risk, liquidity risk, market risk, model risk and operational risk. Further information regarding the Group's principal risks is available on pages 22 to 62 of the Group's 2025 annual report and accounts. ‌CAPITAL RISK Capital resources An analysis of the Group's capital position as at 30 June 2026 is presented in the following table. At 30 Jun 2026 £m At 31 Dec 2025 £m Common equity tier 1 Shareholders' equity per balance sheet 37,648 36,542 Adjustment to retained earnings for foreseeable dividends (1,150) (480) Cash flow hedging reserve 2,397 2,027 Other adjustments 75 74 less: deductions from common equity tier 1 38,970 38,163 Goodwill and other intangible assets (5,606) (5,433) Prudent valuation adjustment (79) (87) Excess of expected losses over impairment provisions and value adjustments (615) (421) Removal of defined benefit pension surplus (2,089) (1,968) Deferred tax assets (3,620) (3,786) Common equity tier 1 capital Additional tier 1 Additional tier 1 instruments 26,961 5,184 26,468 5,367 Total tier 1 capital 32,145 31,835 Tier 2 Tier 2 instruments 7,190 7,160 Total capital resources 39,335 38,995 Risk-weighted assets 198,239 194,300 Common equity tier 1 capital ratio 13.6% 13.6% Tier 1 capital ratio 16.2% 16.4% Total capital ratio 19.8% 20.1% CAPITAL RISK (continued) Movements in CET1 capital resources The key movements are set out in the table below. Common equity tier 1 £m At 31 December 2025 26,468 Profit for the period 2,651 Movement in foreseeable dividend accrual 1 (670) Dividends paid out on ordinary shares during the period (1,180) Goodwill and other intangible assets (173) Fair value through other comprehensive income reserve 103 Excess regulatory expected losses (194) Deferred tax asset 166 Distributions on other equity instruments (213) Other movements 3 At 30 June 2026 26,961 1 Reflects the reversal of the brought forward accrual for the interim ordinary dividend at 31 December 2025, net of the accrual recognised at 30 June 2026. CET1 capital resources increased by £493 million during the period, with profit for the first half of the year largely offset by the payment of ordinary dividends, the accrual for foreseeable ordinary dividends and distributions on other equity instruments. Movements in total capital The Group's total capital ratio reduced to 19.8% at 30 June 2026 (31 December 2025: 20.1%), with the increase in CET1 capital and an AT1 instrument issuance more than offset by AT1 instrument calls and the increase in risk-weighted assets. Risk-weighted assets At 30 Jun At 31 Dec 2026 £m 2025 £m Foundation Internal Ratings Based (IRB) Approach 37,589 38,027 Retail IRB Approach 93,802 90,339 Other IRB Approach 7,059 6,953 IRB Approach 138,450 135,319 Standardised (STA) Approach 1 23,717 23,603 Credit risk 162,167 158,922 Counterparty credit risk 1,363 1,386 Securitisation 8,601 7,777 Market risk 70 177 Operational risk 26,038 26,038 Risk-weighted assets 198,239 194,300 of which: threshold risk-weighted assets 2 505 747 1 Threshold risk-weighted assets are included within the Standardised (STA) Approach. 2 Threshold risk-weighted assets reflect the element of deferred tax assets that are permitted to be risk-weighted instead of being deducted from CET1 capital. Risk-weighted assets increased by £3.9 billion to £198.2 billion at 30 June 2026 (31 December 2025: £194.3 billion), largely reflecting the impact of strong customer lending growth, partially offset by continued optimisation, including risk transfer and securitisation activity across Commercial Banking and Retail. CAPITAL RISK (continued) Leverage ratio The table below summarises the component parts of the Group's leverage ratio. At 30 Jun At 31 Dec 2026 £m 2025 £m Total tier 1 capital 32,145 31,835 Exposure measure Statutory balance sheet assets Derivative financial instruments 3,088 3,260 Securities financing transactions 47,215 43,962 Loans and advances and other assets 606,076 584,113 Total assets 656,379 631,335 Qualifying central bank claims (41,829) (37,298) Derivatives adjustments (2,145) (2,063) Securities financing transactions adjustments 1,460 1,267 Off-balance sheet items 36,650 33,292 Amounts already deducted from tier 1 capital (11,959) (11,642) Other regulatory adjustments 1 (2,662) (2,161) Total exposure measure 635,894 612,730 UK leverage ratio 5.1% 5.2% Leverage exposure measure (including central bank claims) 677,723 650,028 Leverage ratio (including central bank claims) 4.7% 4.9% 1 Includes deconsolidation adjustments that relate to the deconsolidation of certain Group entities that fall outside the scope of the Group's regulatory capital consolidation and adjustments to exclude lending under the UK Government's Bounce Back Loan Scheme (BBLS). Analysis of leverage movements The Group's UK leverage ratio reduced to 5.1% at 30 June 2026 (31 December 2025: 5.2%). The increase in total tier 1 capital was more than offset by an increase in the leverage exposure measure. The latter primarily reflects strong customer lending growth, including off-balance sheet commitments, and an increase in holdings of securities within the liquidity portfolio. Pillar 3 disclosures The Group will publish a condensed set of half-year Pillar 3 disclosures in the first half of August. A copy of the disclosures will be available to view at: https://www.lloydsbankinggroup.com/investors/financial-downloads.html . ‌CREDIT RISK Overview Credit performance has remained strong and stable in the first half of 2026, despite continued macroeconomic uncertainty. The Group maintains a prudent approach to credit risk appetite and risk management, supported by strong credit origination criteria, including affordability tests and robust LTVs within secured portfolios. Across both the UK mortgages and unsecured portfolios, new to arrears and flows to default have remained low and stable. Credit performance in the Commercial Banking portfolio also remains strong and stable, with low levels of defaults. The Group continues to closely monitor the impacts of the economic and geopolitical environment through a comprehensive suite of early warning indicators and robust governance arrangements, alongside targeted risk mitigation action plans which are in place to support customers and protect the Group's position. The impairment charge in the first half of 2026 was £612 million, up from £442 million in the prior year, and includes a net charge from updates to the Group's macroeconomic outlook. This largely reflects the impact from the deterioration in economic outlook in the first quarter due to the Middle East conflict, net of modest second quarter updates. The MES impact for the half-year captures a higher unemployment peak and softer house price outlook compared to the position at 31 December 2025. This is partly offset by the release of the post model adjustment for global tariff and political disruption risks within Commercial Banking in the first quarter, now considered to be adequately captured within assumptions and resulting modelled provisions. Excluding macroeconomic updates, the Group's impairment charge has increased compared to the prior year driven by Retail, reflecting model updates, a more normalised level of impairment alongside balance sheet growth, and lower one-off provision releases in Commercial Banking. The total expected credit loss (ECL) allowance was lower in the first half of 2026 at £3,147 million (31 December 2025: £3,201 million), following the securitisation of primarily legacy Retail mortgages in the second quarter. Stage 2 loans and advances to customers are lower at £40,793 million compared to the end of 2025 (31 December 2025: £42,482 million) following securitisation activity and strong credit performance. Securitisation activity and an increase in new lending also resulted in the proportion of Stage 2 loans and advances being diluted to 8.6% of total lending (31 December 2025: 9.1%), with stable Stage 2 coverage at 2.7% (31 December 2025: 2.7%). Stage 3 loans and advances to customers are lower at £6,250 million versus the prior year (31 December 2025: £6,519 million), and as a percentage of total lending are lower at 1.3% (31 December 2025: 1.4%), following continued strong performance, securitisation and repayments in Commercial Banking. Stage 3 coverage increased to 17.0% (31 December 2025: 15.9%). Prudent risk appetite and risk management The Group continues to take a proactive approach to credit risk management. This is driven by prudent risk appetite and robust oversight, particularly in response to the ongoing challenges within the external environment. Risk appetite firmly aligns to the Group's strategy, supporting our customers through ongoing economic uncertainties in both global and domestic markets Sector, asset and product concentrations within the portfolios are closely monitored and controlled, with mitigating actions in place as appropriate. Sector and product risk parameters help to manage the Group's exposure to higher risk and cyclical sectors, segments and asset classes The Group's effective risk management seeks to enable early identification and active management of customers and counterparties who may be showing signs of distress The Group continues to support its customers to ensure they receive appropriate levels of assistance as required CREDIT RISK (continued) Impairment charge (credit) by division Half-year to 30 Jun 2026 Half-year to 30 Jun 2025 Change Half-year to 31 Dec 2025 Change £m £m % £m % UK mortgages 39 (133) 73 47 Credit cards 264 200 (32) 121 UK unsecured loans and overdrafts 149 163 9 94 (59) UK Motor Finance 106 111 5 101 (5) Other 7 1 3 Retail 565 342 (65) 392 (44) Commercial Banking 47 99 53 (40) Other - 1 (2) Total impairment charge 612 442 (38) 350 (75) Total expected credit loss allowance At 30 Jun At 31 Dec 2026 £m 2025 £m Customer related balances Drawn 2,937 3,001 Undrawn 202 195 3,139 3,196 Other assets 8 5 Total expected credit loss allowance 3,147 3,201 CREDIT RISK (continued) Total expected credit loss allowance sensitivity to economic assumptions The measurement of ECL reflects an unbiased probability-weighted range of possible future economic outcomes. The Group achieves this by generating four economic scenarios to reflect the range of outcomes; the central scenario reflects the Group's base case assumptions used for medium-term planning purposes, an upside and a downside scenario are also selected together with a severe downside scenario. If the base case moves adversely, it generates a new, more adverse downside and severe downside which are then incorporated into the ECL. Consistent with prior years, the base case, upside and downside scenarios carry a 30% weighting; the severe downside is weighted at 10%. The following table shows the Group's ECL for the probability-weighted, upside, base case, downside and severe downside scenarios. The stage allocation for an asset is based on the overall probability-weighted probability of default and hence the staging of assets is constant across all the scenarios. In each economic scenario the ECL for individual assessments is held constant reflecting the basis on which they are evaluated. Judgemental adjustments applied through changes to model inputs or parameters, or more qualitative post model adjustments, are apportioned across the scenarios in proportion to modelled ECL where this better reflects the sensitivity of these adjustments to each scenario. The probability-weighted view shows the extent to which a higher ECL allowance has been recognised to take account of multiple economic scenarios relative to the base case; the uplift being £339 million compared to £363 million at 31 December 2025. Total ECL allowance by scenario Probability-weighted Upside Base case Downside Severe downside £m £m £m £m £m UK mortgages 669 316 473 844 1,794 Credit cards 645 528 623 722 835 Other Retail 982 910 962 1,026 1,121 Commercial Banking 850 640 749 977 1,401 Other 1 1 1 1 1 At 30 June 2026 3,147 2,395 2,808 3,570 5,152 UK mortgages 731 341 510 937 1,943 Credit cards 603 498 579 674 777 Other Retail 991 922 969 1,036 1,126 Commercial Banking 875 681 779 995 1,389 Other 1 1 1 1 1 At 31 December 2025 3,201 2,443 2,838 3,643 5,236 CREDIT RISK (continued) Loans and advances to customers and expected credit loss allowance At 30 June 2026 Stage 1 £m Stage 2 £m Stage 3 £m POCI £m Total £m Stage 2 as % of total Stage 3 as % of total Loans and advances to customers UK mortgages 288,559 28,802 3,814 4,350 325,525 8.8 1.2 Credit cards 16,326 2,094 305 - 18,725 11.2 1.6 UK unsecured loans and overdrafts 11,153 1,403 209 - 12,765 11.0 1.6 UK Motor Finance 14,991 2,507 158 - 17,656 14.2 0.9 Other 22,396 411 123 - 22,930 1.8 0.5 Retail 353,425 35,217 4,609 4,350 397,601 8.9 1.2 Business and Commercial Banking 24,669 3,403 987 - 29,059 11.7 3.4 Corporate and Institutional Banking 44,007 2,171 654 - 46,832 4.6 1.4 Commercial Banking 68,676 5,574 1,641 - 75,891 7.3 2.2 Other 1 (290) 2 - - (288) (0.7) Total gross lending 421,811 40,793 6,250 4,350 473,204 8.6 1.3 Customer related ECL allowance (drawn and undrawn) UK mortgages 61 199 287 122 669 Credit cards 219 280 146 - 645 UK unsecured loans and overdrafts 158 200 117 - 475 UK Motor Finance 2 223 143 79 - 445 Other 21 9 32 - 62 Retail 682 831 661 122 2,296 Business and Commercial Banking 84 158 138 - 380 Corporate and Institutional Banking 84 117 262 - 463 Commercial Banking 168 275 400 - 843 Other - - - - - Total 850 1,106 1,061 122 3,139 Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers Stage 1 % Stage 2 % Stage 3 % POCI % Total % UK mortgages - 0.7 7.5 2.8 0.2 Credit cards 1.3 13.4 47.9 - 3.4 UK unsecured loans and overdrafts 1.4 14.3 56.0 - 3.7 UK Motor Finance 1.5 5.7 50.0 - 2.5 Other 0.1 2.2 26.0 - 0.3 Retail 0.2 2.4 14.3 2.8 0.6 Business and Commercial Banking 0.3 4.6 14.0 - 1.3 Corporate and Institutional Banking 0.2 5.4 40.1 - 1.0 Commercial Banking 0.2 4.9 24.4 - 1.1 Other - - - - - Total 0.2 2.7 17.0 2.8 0.7 1 Contains central fair value hedge accounting adjustments. 2 UK Motor Finance includes £250 million relating to provisions against residual values of vehicles subject to finance leases. CREDIT RISK (continued) Loans and advances to customers and expected credit loss allowance (continued) At 31 December 2025 Stage 1 £m Stage 2 £m Stage 3 £m POCI £m Total £m Stage 2 as % of total Stage 3 as % of total Loans and advances to customers UK mortgages 284,307 30,414 4,016 5,076 323,813 9.4 1.2 Credit cards 15,258 2,326 274 - 17,858 13.0 1.5 UK unsecured loans and overdrafts 10,601 1,397 193 - 12,191 11.5 1.6 UK Motor Finance 14,222 2,786 141 - 17,149 16.2 0.8 Other 21,245 392 145 - 21,782 1.8 0.7 Retail 345,633 37,315 4,769 5,076 392,793 9.5 1.2 Business and Commercial Banking 24,362 3,329 979 - 28,670 11.6 3.4 Corporate and Institutional Banking 40,188 1,838 771 - 42,797 4.3 1.8 Commercial Banking 64,550 5,167 1,750 - 71,467 7.2 2.4 Other 1 245 - - - 245 - - Total gross lending 410,428 42,482 6,519 5,076 464,505 9.1 1.4 Customer related ECL allowance (drawn and undrawn) UK mortgages 55 208 309 159 731 Credit cards 205 277 121 - 603 UK unsecured loans and overdrafts 172 214 112 - 498 UK Motor Finance 2 202 149 79 - 430 Other 17 11 35 - 63 Retail 651 859 656 159 2,325 Business and Commercial Banking 92 165 120 - 377 Corporate and Institutional Banking 98 134 262 - 494 Commercial Banking 190 299 382 - 871 Other - - - - - Total 841 1,158 1,038 159 3,196 Customer related ECL allowance (drawn and undrawn) as a percentage of loans and advances to customers Stage 1 % Stage 2 % Stage 3 % POCI % Total % UK mortgages - 0.7 7.7 3.1 0.2 Credit cards 1.3 11.9 44.2 - 3.4 UK unsecured loans and overdrafts 1.6 15.3 58.0 - 4.1 UK Motor Finance 1.4 5.3 56.0 - 2.5 Other 0.1 2.8 24.1 - 0.3 Retail 0.2 2.3 13.8 3.1 0.6 Business and Commercial Banking 0.4 5.0 12.3 - 1.3 Corporate and Institutional Banking 0.2 7.3 34.0 - 1.2 Commercial Banking 0.3 5.8 21.8 - 1.2 Other - - - - - Total 0.2 2.7 15.9 3.1 0.7 1 Contains central fair value hedge accounting adjustments. 2 UK Motor Finance includes £243 million relating to provisions against residual values of vehicles subject to finance leases. CREDIT RISK (continued) UK mortgages product analysis At 30 June 2026 At 31 December 2025 Mainstream Buy-to-let Specialist Total Mainstream Buy-to-let Specialist Total 275,760 48,114 1,651 325,525 273,106 47,858 2,849 323,813 15,727 2,591 1,463 19,781 17,070 3,351 2,208 22,629 1.0 0.7 10.2 1.0 1.0 1.0 8.6 1.1 2,298 413 258 2,969 2,518 486 397 3,401 0.8 0.9 15.6 0.9 0.9 1.0 13.9 1.1 50.1 61.1 93.2 51.9 52.0 64.1 90.0 54.2 15.0 21.7 4.5 15.9 15.4 21.4 6.4 16.2 16.3 17.1 1.6 16.4 15.5 14.4 2.0 15.2 15.8 0.1 0.5 13.4 14.4 0.1 0.9 12.2 2.8 - 0.1 2.4 2.7 - 0.4 2.2 - - 0.1 - - - 0.3 - 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 45.4 48.9 31.4 45.7 44.7 48.2 32.0 45.0 66.9 61.8 n/a 66.2 64.7 58.8 n/a 64.1 UK mortgages loans and advances to customers (£m) UK mortgages greater than 3 months in arrears 1 Number of cases Total mortgages accounts (%) Value of loans 2 (£m) Total mortgages balances (%) Loan to value Less than 60% (%) 60% to 70% (%) 70% to 80% (%) 80% to 90% (%) 90% to 100% (%) Greater than 100% (%) Total (%) Average loan to value 3 Stock of residential mortgages (%) New residential lending in the period (%) 1 Excluding repossessions. 2 Value of loans represents gross book value of mortgages more than three months in arrears. These accounts are a subset of total Stage 3 given the exclusion of accounts in possession and those meeting other Stage 3 criteria. 3 Average loan to value is calculated as total loans and advances as a percentage of the total indexed collateral of these loans and advances. ‌LIQUIDITY RISK Overview The Group's funding and liquidity position remains strong, with a loan to deposit ratio of 101% as at 30 June 2026 (31 December 2025: 99%). Total wholesale funding 1 increased to £77.3 billion as at 30 June 2026 (31 December 2025: £66.9 billion). The Group maintains access to diverse sources and tenors of funding. The Group's liquid assets continue to exceed the regulatory minimum and internal risk appetite, with a liquidity coverage ratio (LCR) 2 of 134% as at 30 June 2026 (31 December 2025: 135%). The net stable funding ratio 3 is robust at 118% (31 December 2025: 119%). At 30 June 2026, the Group had £103.8 billion of highly liquid unencumbered LCR eligible assets, based on a monthly rolling average over the last 12 months post any liquidity haircuts (31 December 2025: £104.5 billion). These assets are available to meet cash and collateral outflows and regulatory requirements. The banking business also has a significant amount of non-LCR eligible liquid assets which are eligible for use in a range of central bank or similar facilities. Future use of such facilities will be guided by prudent liquidity management and economic considerations, with external market conditions factored in. The Group's credit ratings remain well positioned and continue to reflect the strength of the Group's management and franchise, along with its robust financial performance and capital and funding position. In May 2026, Fitch upgraded senior unsecured ratings for Lloyds Bank plc following a methodology update. Reconciliation of Group funding to the balance sheet Included Cash Fair value and other At 30 June 2026 in funding analysis £bn collateral received £bn accounting methods £bn Balance sheet £bn Deposits from banks 4.8 0.5 - 5.3 Customer deposits 467.0 - - 467.0 Debt securities in issue at amortised cost 68.5 - (5.7) 62.8 Subordinated liabilities 8.8 - (1.2) 7.6 Wholesale funding 1 77.3 - Funding sources 549.1 0.5 At 31 December 2025 Deposits from banks 2.7 0.4 - 3.1 Customer deposits 465.2 - - 465.2 Debt securities in issue at amortised cost 57.7 - (5.6) 52.1 Subordinated liabilities 9.2 - (1.2) 8.0 Wholesale funding 1 66.9 - Funding sources 534.8 0.4 1 The Group has revised its definition of wholesale funding to comprise debt securities in issue and subordinated liabilities only. Deposits from banks are no longer included, reflecting the behavioural liquidity characteristics of bank depositors. Comparatives have been represented on a consistent basis. 2 Based on an average of month-end observations over the last 12 months. 3 Based on an average of the last four quarter-end observations. Analysis of term issuance in the half-year to 30 June 2026 Sterling £bn US dollar £bn Euro £bn Other currencies 1 £bn Total £bn Securitisation 2 0.4 - 0.7 - 1.1 Covered bonds 1.5 - 1.7 3.2 Senior unsecured notes - 0.8 1.3 0.7 2.8 Subordinated liabilities - - - - - Additional tier 1 0.5 - - - 0.5 Total issuance 2.4 0.8 3.7 0.7 7.6 1 Primarily Australian dollar and Japanese Yen. 2 Securitisation includes externally issued notes from significant risk transfer transactions. ‌CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) Condensed consolidated income statement (unaudited) 16 Condensed consolidated statement of comprehensive income (unaudited) 17 Condensed consolidated balance sheet (unaudited) 18 Condensed consolidated statement of changes in equity (unaudited) 19 Condensed consolidated cash flow statement (unaudited) 22 Notes to the condensed consolidated half-year financial statements (unaudited) Basis of preparation and accounting policies 23 Critical accounting judgements and key sources of estimation uncertainty 24 Segmental analysis 24 Net fee and commission income 25 Operating expenses 25 Retirement benefit obligations 26 Impairment 27 Tax 27 Fair values of financial assets and liabilities 27 Allowance for expected credit losses 33 Debt securities in issue 40 Provisions 40 Subordinated liabilities 43 Dividends on ordinary shares 43 Related party transactions 44 Contingent liabilities, commitments and guarantees 44 ‌CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED) Note Half-year to 30 Jun 2026 £m Half-year to 30 Jun 2025 £m Interest income 14,069 14,094 Interest expense (6,944) (7,548) Net interest income 7,125 6,546 Fee and commission income 1,316 1,202 Fee and commission expense (688) (597) Net fee and commission income 4 628 605 Net trading income 265 150 Other operating income 1,827 1,534 Other income 2,720 2,289 Total income 9,845 8,835 Operating expenses 5 (5,677) (5,635) Impairment 7 (612) (442) Profit before tax 3,556 2,758 Tax expense 8 (905) (818) Profit after tax 2,651 1,940 Profit attributable to ordinary shareholders 2,436 1,709 Profit attributable to other equity holders 213 215 Profit attributable to equity holders 2,649 1,924 Profit attributable to non-controlling interests 2 16 Profit after tax 2,651 1,940 The accompanying notes are an integral part of the condensed consolidated half-year financial statements. ‌CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) Half-year Half-year to 30 Jun to 30 Jun 2026 2025 £m £m Profit for the period Other comprehensive income Items that will not subsequently be reclassified to profit or loss: Post-retirement defined benefit scheme remeasurements: 2,651 1,940 Remeasurements before tax 91 (168) Current tax 17 25 Deferred tax (42) 18 Gains and losses attributable to own credit risk: 66 (125) (Losses) gains before tax (4) 62 Deferred tax 1 (17) Items that may subsequently be reclassified to profit or loss: (3) 45 Movements in revaluation reserve in respect of debt securities held at FVOCI: Change in fair value 142 81 Deferred tax (40) (18) 102 63 Income statement transfers in respect of disposals - 111 Deferred tax - (31) Income statement transfers in respect of impairment - 1 80 - 103 143 Movements in cash flow hedging reserve: Effective portion of changes in fair value taken to other comprehensive income (1,243) 396 Deferred tax 348 (111) (895) 285 Net income statement transfers 729 835 Deferred tax (204) (234) 525 601 (370) 886 Movements in foreign currency translation reserve (tax £nil) (30) 42 (297) 1,071 Total other comprehensive (loss) income for the period, net of tax (234) 991 Total comprehensive income for the period 2,417 2,931 Total comprehensive income attributable to ordinary shareholders 2,202 2,700 Total comprehensive income attributable to other equity holders 213 215 Total comprehensive income attributable to equity holders 2,415 2,915 Total comprehensive income attributable to non-controlling interests 2 16 Total comprehensive income for the period 2,417 2,931 The accompanying notes are an integral part of the condensed consolidated half-year financial statements. ‌CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) Note At 30 Jun 2026 £m At 31 Dec 2025 £m Assets Cash and balances at central banks 42,034 37,720 Financial assets at fair value through profit or loss 9 1,761 2,279 Derivative financial instruments 3,088 3,260 Loans and advances to banks 6,704 5,836 Loans and advances to customers 470,268 461,504 Reverse repurchase agreements 47,215 43,962 Debt securities 15,128 11,983 Due from fellow Lloyds Banking Group undertakings 1,462 1,182 Financial assets at amortised cost 540,777 524,467 Financial assets at fair value through other comprehensive income 9 40,365 36,257 Goodwill and other intangible assets 5,866 5,692 Current tax recoverable 1,260 1,263 Deferred tax assets 3,758 3,917 Retirement benefit assets 6 2,860 2,695 Other assets 14,610 13,785 Total assets 656,379 631,335 Liabilities Deposits from banks 5,274 3,085 Customer deposits 466,996 465,207 Repurchase agreements at amortised cost 44,600 37,567 Due to fellow Lloyds Banking Group undertakings 5,522 3,852 Financial liabilities at fair value through profit or loss 9 4,238 4,243 Derivative financial instruments 4,392 4,286 Notes in circulation 2,177 2,118 Debt securities in issue at amortised cost 11 62,806 52,132 Other liabilities 6,945 5,772 Retirement benefit obligations 6 116 120 Current tax liabilities 15 35 Deferred tax liabilities 131 146 Provisions 12 2,687 2,772 Subordinated liabilities 13 7,582 8,020 Total liabilities 613,481 589,355 Equity Share capital 1,574 1,574 Share premium account 600 600 Other reserves 3,863 4,160 Retained profits 31,611 30,208 Ordinary shareholders' equity 37,648 36,542 Other equity instruments 5,184 5,367 Total equity excluding non-controlling interests 42,832 41,909 Non-controlling interests 66 71 Total equity 42,898 41,980 Total equity and liabilities 656,379 631,335 The accompanying notes are an integral part of the condensed consolidated half-year financial statements. ‌CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) Attributable to ordinary shareholders Share capital 3 £m Share premium 3 £m Other reserves £m Retained profits £m Total £m Other equity instruments £m Non-controlling interests £m Total £m At 1 January 2026 1,574 600 4,160 30,208 36,542 5,367 71 41,980 Comprehensive income Profit for the period - - - 2,436 2,436 213 2 2,651 Other comprehensive income Post-retirement defined benefit scheme remeasurements, net of tax - - - 66 66 - - 66 Movements in revaluation reserve in respect of FVOCI assets, net of tax: Debt securities - - 103 - 103 - - 103 Gains and losses attributable to own credit risk, net of tax - - - (3) (3) - - (3) Movements in cash flow hedge reserve, net of tax - - (370) - (370) - - (370) Movements in foreign currency translation reserve, net of tax - - (30) - (30) - - (30) Total other comprehensive (loss) income - - (297) 63 (234) - - (234) Total comprehensive (loss) income 1 - - (297) 2,499 2,202 213 2 2,417 Transactions with owners Dividends (note 14) - - - (1,180) (1,180) - (7) (1,187) Distributions on other equity instruments - - - - - (213) - (213) Issue of other equity instruments - - - (2) (2) 500 - 498 Redemptions of other equity instruments - - - 5 5 (683) - (678) Capital contributions received - - - 81 81 - - 81 Total transactions with owners - - - (1,096) (1,096) (396) (7) (1,499) At 30 June 2026 2 1,574 600 3,863 31,611 37,648 5,184 66 42,898 1 Total comprehensive income attributable to owners of the parent was £2,415 million. 2 Total equity attributable to owners of the parent was £42,832 million. 3 Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been represented on a consistent basis. The accompanying notes are an integral part of the condensed consolidated half-year financial statements. Share capital 3 £m Share premium 3 £m Other reserves £m Retained profits £m Total £m Other equity instruments £m Non- controlling interests £m Total £m At 1 January 2025 1,574 600 2,389 29,412 33,975 5,692 80 39,747 Comprehensive income Profit for the period - - - 1,709 1,709 215 16 1,940 Other comprehensive income Post-retirement defined benefit scheme remeasurements, net of tax - - - (125) (125) - - (125) Movements in revaluation reserve in respect of financial assets held at FVOCI, net of tax: Debt securities - - 143 - 143 - - 143 Gains and losses attributable to own credit risk, net of tax - - - 45 45 - - 45 Movements in cash flow hedge reserve, net of tax - - 886 - 886 - - 886 Movements in foreign currency translation reserve, net of tax - - 42 - 42 - - 42 Total other comprehensive income (loss) - - 1,071 (80) 991 - - 991 Total comprehensive income 1 - - 1,071 1,629 2,700 215 16 2,931 Transactions with owners Dividends (note 14) - - - (640) (640) - - (640) Distributions on other equity instruments - - - - - (215) - (215) Issue of other equity - - - (9) (9) 753 - 744 Repurchases and redemptions of other equity - - - 47 47 (687) - (640) Capital contributions received - - - 83 83 - - 83 Return of capital contributions - - - (1) (1) - - (1) Changes in non-controlling interests - - - 20 20 - (20) - Total transactions with owners - - - (500) (500) (149) (20) (669) At 30 June 2025 2 1,574 600 3,460 30,541 36,175 5,758 76 42,009 1 Total comprehensive income attributable to owners of the parent was £2,915 million. 2 Total equity attributable to owners of the parent was £41,933 million. 3 Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been represented on a consistent basis. The accompanying notes are an integral part of the condensed consolidated half-year financial statements. Share capital 3 £m Share premium 3 £m Other reserves £m Retained profits £m Total £m Other equity instruments £m Non- controlling interests £m Total £m At 1 July 2025 1,574 600 3,460 30,541 36,175 5,758 76 42,009 Comprehensive income Profit for the period - - - 1,716 1,716 189 11 1,916 Other comprehensive Post-retirement defined benefit scheme remeasurements, net of tax - - - (260) (260) - - (260) Movements in revaluation reserve in respect of financial assets held at FVOCI, net of tax: Debt securities - - 17 - 17 - - 17 Gains and losses attributable to own credit risk, net of tax - - - (136) (136) - - (136) Movements in cash flow hedge reserve, net of tax - - 655 - 655 - - 655 Movements in foreign currency translation reserve, net of tax - - 28 - 28 - - 28 Total other comprehensive income (loss) - - 700 (396) 304 - - 304 Total comprehensive income 1 - - 700 1,320 2,020 189 11 2,220 Transactions with owners Dividends - - - (1,750) (1,750) - (16) (1,766) Distributions on other equity instruments - - - - - (189) - (189) Issue of other equity instruments - - - (5) (5) 761 - 756 Repurchases and redemptions of other equity instruments - - - 34 34 (1,152) - (1,118) Capital contributions - - - 68 68 - - 68 Total transactions with owners - - - (1,653) (1,653) (580) (16) (2,249) At 31 December 2025 2 1,574 600 4,160 30,208 36,542 5,367 71 41,980 1 Total comprehensive income attributable to owners of the parent was £2,209 million. 2 Total equity attributable to owners of the parent was £41,909 million. 3 Share capital and share premium, previously presented in aggregate, are shown separately. Comparatives have been represented on a consistent basis. The accompanying notes are an integral part of the condensed consolidated half-year financial statements. ‌CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) Half-year Half-year to 30 Jun to 30 Jun 2026 2025 £m £m Cash flows (used in) provided by operating activities Profit before tax 3,556 2,758 Adjustments for: Change in operating assets (15,905) (6,786) Change in operating liabilities 23,945 7,543 Non-cash and other items 2,796 2,282 Tax paid (869) (1,495) Tax refunded 150 200 Net cash provided by operating activities 13,673 4,502 Cash flows (used in) provided by investing activities Purchase of financial assets (13,611) (7,379) Proceeds from sale and maturity of financial assets 9,415 4,739 Purchase of property, plant and equipment (2,352) (1,970) Purchase of other intangible assets (822) (556) Proceeds from sale of property, plant and equipment 801 650 Proceeds from sale of goodwill and other intangible assets - 2 Net cash used in investing activities (6,569) (4,514) Cash flows used in financing activities Dividends paid to ordinary shareholders (1,180) (640) Distributions on other equity instruments (213) (215) Dividends paid to non-controlling interests (7) - Return of capital contributions - (1) Interest paid on subordinated liabilities (254) (297) Proceeds from issue of subordinated liabilities - 1,761 Proceeds from issue of other equity instruments 498 744 Repurchases and redemptions of subordinated liabilities (486) (904) Repurchases and redemptions of other equity instruments (678) (640) Borrowings from parent company 2,808 3,557 Repayments of borrowings to parent company (1,634) (2,124) Interest paid on borrowings from parent company (278) (210) Net cash (used in) provided by financing activities (1,424) 1,031 Effects of exchange rate changes on cash and cash equivalents (43) 92 Change in cash and cash equivalents 5,637 1,111 Cash and cash equivalents at beginning of period 40,599 49,712 Cash and cash equivalents at end of period 46,236 50,823 Interest received was £13,850 million (half-year to 30 June 2025: £13,758 million) and interest paid was £7,348 million (half-year to 30 June 2025: £7,585 million). Cash and cash equivalents comprise cash and non-mandatory balances with central banks and amounts due from banks with an original maturity of less than three months. The accompanying notes are an integral part of the condensed consolidated half-year financial statements. ‌NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) ‌Note 1: Basis of preparation and accounting policies These condensed consolidated half-year financial statements as at and for the period to 30 June 2026 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority (FCA) and with International Accounting Standard 34 (IAS 34), Interim Financial Reporting as adopted by the United Kingdom and issued by the International Accounting Standards Board (IASB) and comprise the results of Lloyds Bank plc (the Bank) together with its subsidiaries (the Group). They do not include all of the information required for full annual financial statements and should be read in conjunction with the Group's consolidated financial statements as at and for the year ended 31 December 2025 which complied with international accounting standards in conformity with the requirements of the Companies Act 2006 and were prepared in accordance with IFRS® Accounting Standards as issued by the IASB. Copies of the 2025 annual report and accounts are available on the Lloyds Banking Group's website and are also available upon request from Investor Relations, Lloyds Banking Group plc, 33 Old Broad Street, London, EC2N 1HZ. Terminology used in these condensed consolidated half-year financial statements is consistent with that used in the Group's 2025 annual report on Form 20-F. The directors consider that it is appropriate to continue to adopt the going concern basis in preparing these condensed consolidated half-year financial statements. In reaching this assessment, the directors have taken into account the uncertainties affecting the UK economy and their potential effects upon the Group's performance and projected funding and capital position; the impact of further stress scenarios has also been considered. On this basis, the directors are satisfied that the Group will maintain adequate levels of funding and capital for the foreseeable future. The Group's accounting policies are consistent with those applied by the Group in its financial statements for the year ended 31 December 2025 and there have been no changes in the Group's methods of computation. The IASB has issued its annual improvements and a number of amendments to the IFRS Accounting Standards effective 1 January 2026, including Amendments to IFRS 9 Financial Instruments and Amendments to IFRS 7 Financial Instruments Disclosure. These improvements and amendments have not had a significant impact on the Group. Future accounting developments There are a number of new accounting pronouncements issued by the IASB with an effective date of 1 January 2027, including IFRS 18 Presentation and Disclosure in Financial Statements which replaces IAS 1 Presentation of Financial Statements. While many of the existing requirements of IAS 1 Presentation of Financial Statements are retained, IFRS 18 Presentation and Disclosure in Financial Statements introduces additional disclosure obligations in relation to the structure of the income statement, management-defined performance measures, and the aggregation and disaggregation of financial information. IFRS 18 will have no impact on the Group's net profit as it impacts neither recognition nor measurement. The new standard will impact the presentation of the Group's results as it requires that operating, investing and financing activities are presented separately. There will also be a change in the Group's cash flow statement as IFRS 18 requires that the first line of the cash flow statement is operating profit rather than profit before tax. IFRS 19 Subsidiaries without Public Accountability: Disclosures is being assessed and is not expected to have a significant impact on the Group. Other information The Bank's ultimate parent undertaking and controlling party is Lloyds Banking Group plc which is incorporated in Scotland. Lloyds Banking Group plc has published consolidated accounts for the year to 31 December 2025 and copies may be obtained from Investor Relations, Lloyds Banking Group plc, 33 Old Broad Street, London, EC2N 1HZ and are available for download from https://www.lloydsbankinggroup.com . The financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 (the Act). The statutory accounts for the year ended 31 December 2025 were approved by the directors on 26 February 2026 and were delivered to the Registrar of Companies on 19 March 2026. The independent auditors' report on those accounts was unqualified and did not include a statement under sections 498(2) (accounting records or returns inadequate or accounts not agreeing with records and returns) or 498(3) (failure to obtain necessary information and explanations) of the Act. ‌NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 2: Critical accounting judgements and key sources of estimation uncertainty The preparation of the Group's financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions in applying the accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Due to the inherent uncertainty in making estimates, actual results reported in future periods may be based upon amounts which differ from these estimates. Estimates, judgements and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In preparing the financial statements, the Group has considered the impact of climate-related risks on its financial position and performance. While the effects of climate change represent a source of uncertainty, the Group does not consider there to be a material impact on its judgements and estimates from the physical, transition and other climate-related risks in the short-term. The Group's significant judgements, estimates and assumptions are unchanged compared to those disclosed in note 3 of the Group's 2025 financial statements. Further information on the critical accounting judgements and key sources of estimation uncertainty for the allowance for expected credit losses is set out in note 10. ‌Note 3: Segmental analysis The Group provides a wide range of banking and financial services in the UK and in certain locations overseas. The Group Executive Committee (GEC) of the Lloyds Banking Group remains the chief operating decision maker, as defined by IFRS 8 Operating Segments, for the Group. There has been no change to the descriptions of the segments as provided in note 4 to the Group's financial statements for the year ended 31 December 2025. Half-year to 30 June 2026 Retail £m Commercial Banking £m Other £m Total £m Net interest income 5,138 1,838 149 7,125 Other income 1,408 530 782 2,720 Total income 6,546 2,368 931 9,845 Operating expenses (3,762) (1,139) (776) (5,677) Impairment charge (565) (47) - (612) Profit before tax 2,219 1,182 155 3,556 External income (expense) 8,337 1,653 (145) 9,845 Inter-segment (expense) income (1,791) 715 1,076 - Segment income 6,546 2,368 931 9,845 Retail Commercial Banking Other Total Half-year to 30 June 2025 £m £m £m £m Net interest income 4,710 1,623 213 6,546 Other income 1,251 544 494 2,289 Total income 5,961 2,167 707 8,835 Operating expenses (3,715) (1,156) (764) (5,635) Impairment charge (342) (99) (1) (442) Profit before tax 1,904 912 (58) 2,758 External income 7,348 1,431 56 8,835 Inter-segment (expense) income (1,387) 736 651 - Segment income 5,961 2,167 707 8,835 NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 3: Segmental analysis (continued) Retail Commercial Banking Other Total £m £m £m £m At 30 June 2026 External assets 409,956 89,608 156,815 656,379 External liabilities 328,916 149,389 135,176 613,481 At 31 December 2025 External assets 404,828 83,410 143,097 631,335 External liabilities 331,241 143,244 114,870 589,355 ‌Note 4: Net fee and commission income Half-year to 30 Jun 2026 £m Half-year to 30 Jun 2025 £m Fee and commission income: Current accounts 352 340 Credit and debit card fees 688 634 Commercial banking and treasury fees 151 94 Factoring 27 34 Other fees and commissions 98 100 Total fee and commission income 1,316 1,202 Fee and commission expense (688) (597) Net fee and commission income 628 605 Current account and credit and debit card fees principally arise in Retail; commercial banking and treasury fees and factoring arise in Commercial Banking. ‌Note 5: Operating expenses Half-year to 30 Jun 2026 £m Half-year to 30 Jun 2025 £m Staff costs 2,233 2,362 Premises and equipment costs 265 236 Depreciation and amortisation 1,741 1,722 Other 1,438 1,315 Total operating expenses 5,677 5,635 Note 6: Retirement benefit obligations The Group's post-retirement defined benefit scheme obligations are comprised as follows At 30 Jun At 31 Dec 2026 £m 2025 £m Defined benefit pension schemes: Present value of funded obligations (25,483) (26,571) Fair value of scheme assets 28,262 29,183 Net pension scheme asset 2,779 2,612 Other post-retirement schemes (35) (37) Total amounts recognised in the balance sheet 2,744 2,575 Recognised on the balance sheet as: Retirement benefit assets 2,860 2,695 Retirement benefit obligations (116) (120) Total amounts recognised in the balance sheet 2,744 2,575 ‌NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) : Movements in the Group's net post-retirement defined benefit scheme asset during the period were as follows: £m Asset at 1 January 2026 2,575 Income statement credit 15 Employer contributions 63 Remeasurement 91 Asset at 30 June 2026 2,744 The principal assumptions used in the valuations of the defined benefit pension schemes were as follows: At 30 Jun At 31 Dec 2026 % 2025 % Discount rate 6.03 5.57 Rate of inflation: Retail Price Index (RPI) 2.77 2.65 Consumer Price Index (CPI) 2.33 2.13 Rate of salary increases 0.00 0.00 Weighted-average rate of increase for pensions in payment 2.61 2.52 In July 2024, the Court of Appeal handed down a judgment (Virgin Media Limited v NTL Pension Trustees Limited) which potentially has implications for the validity of amendments made by pension schemes that were contracted out on a salary-related basis between 6 April 1997 and the abolition of contracting-out in 2016. The Pension Schemes Act 2026 gives affected pension schemes the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards. The Group has not made any allowance for the possible impact of the ruling as it is currently unclear whether any additional liabilities might arise, and if they were to arise, how they would be reliably measured. The Group is continuing to review scheme amendments to decide whether any subsequent actions are required and will continue to monitor developments. ‌NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 7: Impairment Half-year to 30 Jun 2026 £m Half-year to 30 Jun 2025 £m Loans and advances to banks - - Loans and advances to customers 601 490 Debt securities 3 - Financial assets held at amortised cost 604 490 Financial assets at fair value through other comprehensive income 1 - Loan commitments and financial guarantees 7 (48) Total impairment charge 612 442 There was a £78 million charge in respect of residual value impairment and voluntary terminations within the Group's UK Motor Finance business in the current period (half-year to 30 June 2025: £70 million). ‌Note 8: Tax In accordance with IAS 34, the Group's income tax expense for the half-year to 30 June 2026 is based on the best estimate of the weighted-average annual income tax rate expected for the full financial year. The tax effects of one-off items are not included in the weighted-average annual income tax rate, but are recognised in the relevant period. An explanation of the relationship between tax expense and accounting profit is set out below: Half-year Half-year to 30 Jun to 30 Jun 2026 2025 £m £m Profit before tax 3,556 2,758 UK corporation tax thereon at 25.0% (2025: 25.0%) (889) (689) Impact of surcharge on banking profits (90) (81) Non-deductible costs: conduct charges - 1 Other non-deductible costs 1 (30) (49) Non-taxable income 1 36 12 Tax relief on coupons on other equity instruments 54 54 Non-taxable (non-deductible) foreign exchange gains (losses) 1 16 (71) Tax-exempt gains on disposals - 2 Differences in overseas tax rates (5) 5 Adjustments in respect of prior years 3 (2) Tax expense (905) (818) 1 Non-taxable (non-deductible) foreign exchange gains (losses) on non-sterling denominated other equity instruments and on net investment hedging of subsidiaries, previously shown in aggregate within other non-deductible costs and non-taxable income, are now presented as an individual line item. Comparatives are represented on a consistent basis. ‌Note 9: Fair values of financial assets and liabilities The valuations of financial instruments have been classified into three levels according to the quality and reliability of information used to determine those fair values. Note 16 to the Group's financial statements for the year ended 31 December 2025 details the definitions of the three levels in the fair value hierarchy. Financial instruments classified as financial assets at fair value through profit or loss, derivative financial instruments, financial assets at fair value through other comprehensive income and financial liabilities at fair value through profit or loss are recognised at fair value. The Group manages valuation adjustments for its derivative exposures on a net basis; the Group determines their fair values on the basis of their net exposures. In all other cases, fair values of financial assets and liabilities measured at fair value are determined on the basis of their gross exposures. NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 9: Fair values of financial assets and liabilities (continued) The following tables provide an analysis of the financial assets and liabilities of the Group that are carried at fair value in the Group's consolidated balance sheet, grouped into levels 1 to 3 based on the degree to which the fair value is observable. There were no significant transfers between level 1 and level 2 during the period. Financial assets Level 1 £m Level 2 £m Level 3 £m Total £m At 30 June 2026 Financial assets at fair value through profit or loss: Loans and advances to customers - 1,216 237 1,453 Debt securities - - 7 7 Equity shares 296 - 5 301 Total financial assets at fair value through profit or loss 296 1,216 249 1,761 Debt securities at fair value through other comprehensive income 25,351 14,965 49 40,365 Derivative financial instruments - 3,088 - 3,088 Total financial assets carried at fair value 25,647 19,269 298 45,214 At 31 December 2025 Financial assets at fair value through profit or loss: Loans and advances to customers - 1,711 282 1,993 Debt securities - - - - Equity shares 281 - 5 286 Total financial assets at fair value through profit or loss 281 1,711 287 2,279 Debt securities at fair value through other comprehensive income 24,140 12,067 50 36,257 Derivative financial instruments - 3,260 - 3,260 Total financial assets carried at fair value 24,421 17,038 337 41,796 Financial liabilities Level 1 £m Level 2 £m Level 3 £m Total £m At 30 June 2026 Debt securities in issue designated at fair value through profit or loss - 4,221 17 4,238 Derivative financial instruments - 4,285 107 4,392 Total financial liabilities carried at fair value - 8,506 124 8,630 At 31 December 2025 Debt securities in issue designated at fair value through profit or loss - 4,226 17 4,243 Derivative financial instruments - 4,168 118 4,286 Total financial liabilities carried at fair value - 8,394 135 8,529 Valuation control framework Key elements of the valuation control framework include model validation (incorporating pre-trade and post-trade testing), product implementation review and independent price verification. The framework covers processes for all 3 levels in the fair value hierarchy. Formal committees meet quarterly to discuss and approve valuations in more judgemental areas. Transfers into and out of level 3 portfolios Transfers out of level 3 portfolios arise when inputs that could have a significant impact on the instrument's valuation become market observable; conversely, transfers into the portfolios arise when sources of data cease to be observable. Valuation methodology For level 2 and level 3 portfolios, there is no significant change to the valuation methodology (techniques and inputs) disclosed in the Group's financial statements for the year ended 31 December 2025 applied to these portfolios. NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 9: Fair values of financial assets and liabilities (continued) Movements in level 3 portfolio The tables below analyse movements in the level 3 financial assets portfolio. Financial Financial assets at Total assets at fair value through profit or loss £m fair value through other comprehensive income £m financial assets carried at fair value £m At 1 January 2026 287 50 337 Exchange and other adjustments - (1) (1) (Losses) gains recognised in the income statement within other income (6) 1 (5) Purchases/increases 9 - 9 Sales/repayments (41) (1) (42) At 30 June 2026 249 49 298 (Losses) gains recognised in the income statement, within other income, relating to the change in fair value of those assets held at 30 June 2026 (4) 1 (3) At 1 January 2025 280 48 328 Exchange and other adjustments - 2 2 (Losses) gains recognised in the income statement within other income (16) 2 (14) Losses recognised in other comprehensive income within the revaluation reserve in respect of financial assets at FVOCI - (1) (1) Purchases/increases 14 - 14 Sales/repayments (18) (2) (20) At 30 June 2025 260 49 309 (Losses) gains recognised in the income statement, within other income, relating to the change in fair value of those assets held at 30 June 2025 (16) 3 (13) The tables below analyse movements in the level 3 financial liabilities portfolio. Financial Total liabilities financial at fair value through Derivative liabilities carried at profit or loss £m liabilities £m fair value £m At 1 January 2026 17 118 135 Losses (gains) recognised in the income statement within other income 1 (3) (2) Redemptions (1) (8) (9) At 30 June 2026 17 107 124 Losses (gains) recognised in the income statement, within other income, relating to the change in fair value of those liabilities held at 30 June 2026 1 (2) (1) At 1 January 2025 22 143 165 Gains recognised in the income statement within other income (2) (4) (6) Redemptions (2) (12) (14) At 30 June 2025 18 127 145 Gains recognised in the income statement, within other income, relating to the change in fair value of those liabilities held at 30 June 2025 (2) (3) (5) NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 9: Fair values of financial assets and liabilities (continued) Significant unobservable inputs in level 3 valuations The following tables disclose the valuation techniques and key unobservable inputs for instruments recognised at fair value and classified as level 3 and provides the range of those inputs at the balance sheet date. For each portfolio, the minimum and maximum significant unobservable inputs that are used in the balance sheet valuation are shown. Significant unobservable inputs affecting the valuations are unchanged from those described in the Lloyds Bank plc's financial statements for the year ended 31 December 2025. At 30 June 2026 Valuation technique Significant unobservable inputs Minimum Maximum Carrying value £m Financial assets at fair value through profit or loss Loans and advances to customers Discounted cash flows Market values - property valuation Credit spreads HPI growth 138bps 3% 349bps 4% 114 123 237 Debt securities Discounted cash flows Price 12% 86% 7 Equity shares Net asset value Price n/a n/a 5 12 249 Financial assets at fair value through other comprehensive income Debt securities Discounted cash flows Credit spreads 287bps 308bps 49 298 Financial liabilities at fair value through profit or loss Securitisation notes and other Discounted cash flows Credit spreads 349bps 349bps 17 Interest rate derivatives Option pricing model Interest rate ATM volatility 56bps 93bps 6 Shared appreciation rights Market values - property HPI growth valuation 3% 4% 101 107 124 Valuation Significant unobservable Carrying value At 31 December 2025 technique inputs Minimum Maximum £m Financial assets at fair value through profit or loss 147 135 Loans and advances to customers Discounted cash flows Credit spreads 138bps 349bps Market values - property valuation HPI growth 3% 4% 282 Equity shares Net asset value Price n/a n/a 5 Financial assets at fair value through other comprehensive income Debt securities Discounted cash flows Credit spreads 287bps 308bps 50 337 Financial liabilities at fair value through profit or loss Securitisation notes and other Discounted cash flows Credit spreads 349bps 349bps 17 Interest rate derivatives Option pricing model Interest rate ATM volatility 38bps 82bps 7 Shared appreciation rights Market values - property valuation HPI growth 3% 4% 111 118 135 NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 9: Fair values of financial assets and liabilities (continued) Reasonably possible alternative assumptions Valuation techniques applied to the Group's level 3 instruments involve the use of unobservable inputs. The calculation of the effect of reasonably possible alternative assumptions for those inputs are included in the tables from that described in note 16 to the Lloyds Bank plc's financial statements for the year ended 31 December 2025. For each portfolio, the maximum and minimum changes presented reflect the difference between the significant unobservable inputs used in the balance sheet valuation and those used when applying reasonably possible alternative assumptions. Sensitivity of level 3 valuations The tables below set out the effects of reasonably possible alternative assumptions for categories of level 3 financial assets and financial liabilities. At 30 June 2026 Significant unobservable inputs Max up Max down Favourable changes 1 £m Unfavourable changes 1 £m Financial assets at fair value through profit or loss Loans and advances to customers Credit spreads 115bps (115)bps 5 (5) HPI growth 1% (1)% 11 (6) Debt securities Price 10% (10)% - - Equity shares Price 46% (46)% 1 (1) Financial assets at fair value through other comprehensive income Debt securities Credit spreads 75bps (75)bps 1 (1) Financial liabilities at fair value through profit or loss Securitisation notes and other Credit spreads 50bps (50)bps 1 (1) Derivative financial liabilities Interest rate derivatives Interest rate ATM volatility 4bps (4)bps - - Shared appreciation rights HPI growth 1% (1)% 9 (8) Significant Favourable changes 1 Unfavourable changes 1 At 31 December 2025 unobservable inputs Max up Max down £m £m Financial assets at fair value through profit or loss Loans and advances to customers Credit spreads 115bps (115)bps 5 (5) HPI growth 1% (1)% 14 (12) Equity shares Price 31% (31)% 1 (1) Financial assets at fair value through other comprehensive income Debt securities Credit spreads 75bps (75)bps 2 (2) Financial liabilities at fair value through profit or loss Securitisation notes and other Credit spreads 50bps (50)bps 2 (2) Derivative financial liabilities Interest rate derivatives Interest rate ATM volatility 4bps (4)bps - - Shared appreciation rights HPI growth 1% (1)% 11 (10) 1 Where the exposure to a significant unobservable input is managed on a net basis, only the net impact is shown in the table. NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 9: Fair values of financial assets and liabilities (continued) The table below summarises the carrying values of financial assets and liabilities measured at amortised cost in the Group's consolidated balance sheet. The fair values presented in the table are at a specific date and may be significantly different from the amounts which will actually be paid or received on the maturity or settlement date. At 30 June 2026 At 31 December 2025 Carrying value £m Fair value £m Carrying value £m Fair value £m Financial assets Loans and advances to banks 6,704 6,704 5,836 5,836 Loans and advances to customers 470,268 465,620 461,504 460,820 Reverse repurchase agreements 47,215 47,215 43,962 43,962 Debt securities 15,128 15,090 11,983 12,112 Due from fellow Lloyds Banking Group undertakings 1,462 1,462 1,182 1,182 Financial liabilities Deposits from banks 5,274 5,274 3,085 3,085 Customer deposits 466,996 467,431 465,207 466,567 Repurchase agreements at amortised cost 44,600 44,600 37,567 37,567 Due to fellow Lloyds Banking Group undertakings 5,522 5,522 3,852 3,852 Debt securities in issue 62,806 62,854 52,132 52,202 Subordinated liabilities 7,582 8,658 8,020 9,058 The carrying amounts of cash and balances at central banks and notes in circulation are a reasonable approximation of their fair values. ‌NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 10: Allowance for expected credit losses The calculation of the Group's allowance for expected credit losses requires the Group to make a number of judgements, assumptions and estimates. These are set out in full in note 19 to the Group's financial statements for the year ended 31 December 2025, with the most significant set out below. The table below analyses total ECL allowance by portfolio, separately identifying the amounts that have been modelled, those that have been individually assessed and those arising through the application of judgemental adjustments. Modelled ECL Individually assessed Judgemental adjustments Total ECL At 30 June 2026 £m £m £m £m UK mortgages 602 - 67 669 Credit cards 589 - 56 645 Other Retail 909 - 73 982 Commercial Banking 535 369 (54) 850 Other 1 - - 1 Total 2,636 369 142 3,147 At 31 December 2025 UK mortgages 623 - 108 731 Credit cards 540 - 63 603 Other Retail 916 - 75 991 Commercial Banking 542 354 (21) 875 Other 1 - - 1 Total 2,622 354 225 3,201 Adjustments to modelled ECL UK mortgages: £67 million (31 December 2025: £108 million) These adjustments principally comprise: Repossession risk: £67 million (31 December 2025: £85 million) Additional ECL continues to be held judgementally to capture the potential repossession and recovery risk from specific subsets of largely long-term defaulted cases. The reduction in the adjustment comes from the reclassification of one part previously needed to set an anticipated longer duration between default and repossession than was observable at the time. Having now seen that elongation emerge and subsequently normalise there is now sufficient observable behaviour to return to a data driven approach. Adjustment for specific segments: £nil (31 December 2025: £13 million) An adjustment was previously required to address fire safety and cladding uncertainty as not fully captured through collective models. This adjustment has been fully released as the risk is now deemed immaterial following reduction in exposure to these properties. Credit cards: £56 million (31 December 2025: £63 million) and Other Retail: £73 million (31 December 2025: £75 million) These adjustments principally comprise: Lifetime extension: Credit cards: £49 million (31 December 2025: £49 million) and Other Retail: £9 million (31 December 2025: £9 million) An adjustment is required to extend the lifetime used for Stage 2 exposures on Retail revolving products from a three-year modelled lifetime, which reflected the outcome data available when the ECL models were developed, to a more representative lifetime. Incremental defaults beyond year three are calculated through the extrapolation of the default trajectory observed throughout the three years and beyond. NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 10: Allowance for expected credit losses (continued) Adjustments to loss rates: Other Retail: £37 million (31 December 2025: £25 million) An adjustment is made to the loss given default (LGD) assumptions within the motor credit model to capture observed loss rates and the latest outlook on used car prices. The increase in the period reflects both the further adjustment required as the model now captures distorted historical loss-data from the Covid-period, as well as a small expected deterioration in loss rates. Commercial Banking: £(54) million (31 December 2025: £(21) million) These adjustments principally comprise: Corporate insolvency rates: £(104) million (31 December 2025: £(119) million) The volume of UK corporate insolvencies continues to exhibit an elevated trend beyond December 2019 levels, revealing a marked misalignment between observed UK corporate insolvencies and the Group's equivalent credit performance. This dislocation gives rise to uncertainty over the drivers of the observed trends in the metric and the appropriateness of the Group's Commercial Banking model response which uses observed UK corporate insolvencies data to anchor future loss estimates to. Given the Group's stable credit performance, a negative adjustment is applied by reverting judgementally to the long-term average of the insolvency rate. The scale of the negative adjustment reduced in the period reflecting the reduction in observed actual UK corporate insolvency rates, narrowing the gap of the misalignment. Adjustments for loss given defaults (LGDs): £50 million (31 December 2025: £50 million) An adjustment is required for a specific segment of the SME portfolio which judgementally applies a more appropriate blended LGD rate from credit risk profile segments more aligned to experience. Global tariff and political disruption risks: £nil (31 December 2025: £48 million) An adjustment was previously held to recognise the potential risks to specific drivers across various corporate sectors not reflected in broad macroeconomic model drivers. These were in relation to potential nuanced risks to businesses inherent in the base case which could also worsen in the downside scenarios. This adjustment has been fully released as these risks are considered to be adequately captured within assumptions and resulting modelled provisions. NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 10: Allowance for expected credit losses (continued) Base case and MES economic assumptions The Group's base case economic scenario has been updated to reflect ongoing geopolitical developments and conditions in financial and commodity markets through to the balance sheet date. The Group's updated base case scenario has four conditioning assumptions. First, developments in global conflicts, technology or financial sector issues do not cause a significant degree of financial market volatility. Second, a drift towards further deglobalisation and financial market fragmentation continues as part of a reordering of global economic relations, adding to economic frictions. Third, the UK's existing macroeconomic framework for monetary and fiscal policy remains in place, alongside broader continuity on other areas of government policy. Fourth, advancements in AI begin to boost UK productivity growth but worsen the employment outlook in a 'transitional' phase around the turn of the decade. Based on these assumptions and incorporating the economic data published in the second quarter of 2026, the Group's base case scenario is for a slow expansion in gross domestic product (GDP) and a further rise in the unemployment rate alongside small gains in residential and commercial property prices. Although inflationary pressures attributable to the conflict in the Middle East are yet to peak, UK Bank Rate is expected to remain on hold during 2026, before reaching a 'neutral' policy stance in 2027. Risks around this base case economic view lie in both directions and are largely captured by the generation of alternative economic scenarios. The Group's approach to generating alternative economic scenarios is set out in detail in note 19 to the financial statements for the year ended 31 December 2025. The Group has taken into account the latest available information at the reporting date in defining its base case scenario and generating alternative economic scenarios. The scenarios include forecasts for key variables as at the second quarter of 2026. Actuals for this period, or restatements of past data, may have since emerged prior to publication and have not been included. Scenarios by year The key UK economic assumptions made by the Group are shown in the following tables across a number of measures explained below. Annual assumptions Gross domestic product (GDP) growth and Consumer Price Index (CPI) inflation are presented as an annual change, house price growth and commercial real estate price growth are presented as the growth in the respective indices over each year. Unemployment rate and UK Bank Rate are averages over the year. Five-year average The five-year average reflects the average annual growth rate, or level, over the five-year period. It includes movements within the current reporting year, such that the position as of 30 June 2026 covers the five years 2026 to 2030. The inclusion of the reporting year within the five-year period reflects the need to predict variables which remain unpublished at the reporting date and recognises that credit models utilise both level and annual changes. The use of calendar years maintains a comparability between the annual assumptions presented. NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 10: Allowance for expected credit losses (continued) At 30 June 2026 2026 % 2027 % 2028 % 2029 % 2030 % 2026 to 2030 average % Upside Gross domestic product growth 1.4 2.4 1.9 1.6 1.6 1.8 Unemployment rate 4.8 3.7 3.1 3.1 3.3 3.6 House price growth 1.8 4.5 7.7 7.5 6.0 5.5 Commercial real estate price growth 3.3 6.6 3.1 2.0 0.7 3.1 UK Bank Rate 3.85 4.79 5.19 5.46 5.65 4.99 CPI inflation 3.1 2.5 2.2 2.7 3.0 2.7 Base case Gross domestic product growth 1.0 1.0 1.5 1.6 1.6 1.4 Unemployment rate 5.2 5.4 5.0 4.7 4.7 5.0 House price growth 0.9 1.2 2.0 3.4 3.4 2.2 Commercial real estate price growth (0.3) 0.0 0.9 0.8 0.0 0.3 UK Bank Rate 3.75 3.63 3.50 3.50 3.50 3.58 CPI inflation 3.1 2.4 1.8 1.8 2.0 2.2 Downside Gross domestic product growth 0.6 (1.2) 0.5 1.4 1.7 0.6 Unemployment rate 5.6 7.5 7.7 7.3 7.0 7.0 House price growth 0.0 (2.4) (5.4) (3.2) (1.3) (2.5) Commercial real estate price growth (3.5) (8.7) (3.2) (2.1) (2.7) (4.0) UK Bank Rate 3.65 2.04 1.04 0.71 0.49 1.59 CPI inflation 3.1 2.3 1.2 0.7 0.6 1.6 Severe downside Gross domestic product growth 0.1 (3.3) (0.1) 1.2 1.5 (0.1) Unemployment rate 6.2 10.1 10.4 9.8 9.3 9.2 House price growth (1.0) (5.1) (12.4) (9.2) (6.0) (6.8) Commercial real estate price growth (8.6) (17.8) (8.7) (6.5) (6.1) (9.6) UK Bank Rate 3.49 0.64 0.07 0.02 0.01 0.85 CPI inflation 3.1 2.2 0.6 (0.5) (1.0) 0.9 Probability-weighted Gross domestic product growth 0.9 0.4 1.1 1.5 1.6 1.1 Unemployment rate 5.3 6.0 5.8 5.5 5.4 5.6 House price growth 0.7 0.5 0.0 1.4 1.8 0.9 Commercial real estate price growth (1.0) (2.4) (0.6) (0.4) (1.2) (1.1) UK Bank Rate 3.72 3.20 2.93 2.90 2.89 3.13 CPI inflation 3.1 2.3 1.6 1.5 1.6 2.0 NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued) Note 10: Allowance for expected credit losses (continued) At 31 December 2025 2025 % 2026 % 2027 % 2028 % 2029 % 2025 to 2029 average % Upside Gross domestic product growth 1.4 2.0 2.3 1.6 1.6 1.8 Unemployment rate 4.8 4.2 3.2 3.1 3.2 3.7 House price growth 0.8 3.5 7.1 6.9 6.0 4.8 Commercial real estate price growth 1.2 7.9 4.9 1.7 0.8 3.2 UK Bank Rate 4.13 3.94 4.59 5.07 5.33 4.61 CPI inflation 3.4 2.6 2.4 2.8 3.1 2.9 Base case Gross domestic product growth 1.4 1.2 1.4 1.5 1.6 1.4 Unemployment rate 4.8 5.2 4.8 4.6 4.5 4.8 House price growth 0.8 1.6 1.9 2.2 3.1 1.9 Commercial real estate price growth 1.2 0.6 1.7 0.5 0.2 0.9 UK Bank Rate 4.13 3.44 3.25 3.44 3.50 3.55 CPI inflation 3.4 2.6 2.2 2.2 2.3 2.6 Downside Gross domestic product growth 1.4 (0.3) (0.5) 1.1 1.6 0.7 Unemployment rate 4.8 6.6 7.5 7.4 7.0 6.7 House price growth 0.8 (0.2) (4.7) (5.7) (2.8) (2.6) Commercial real estate price growth 1.2 (7.1) (4.2) (2.7) (2.3) (3.1) UK Bank Rate 4.13 2.74 1.09 0.75 0.52 1.85 CPI inflation 3.4 2.6 2.0 1.4 1.0 2.1 Severe downside Gross domestic product growth 1.4 (1.9) (1.8) 0.7 1.4 0.0 Unemployment rate 4.8 8.3 10.2 9.9 9.4 8.5 House price growth 0.8 (1.2) (11.1) (12.2) (7.8) (6.5) Commercial real estate price growth 1.2 (17.4) (9.8) (7.4) (5.4) (8.0) UK Bank Rate 4.13 1.91 0.10 0.03 0.01 1.24 CPI inflation 3.4 2.6 1.7 0.5 (0.4) 1.6 Probability-weighted Gross domestic product growth 1.4 0.7 0.8 1.3 1.6 1.2 Unemployment rate 4.8 5.6 5.7 5.5 5.4 5.4 House price growth 0.8 1.3 0.2 (0.2) 1.1 0.6 Commercial real estate price growth 1.2 (1.3) (0.3) (0.9) (0.9) (0.4) UK Bank Rate 4.13 3.23 2.69 2.78 2.81 3.13 CPI inflation 3.4 2.6 2.2 2.0 1.9 2.4

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