Lloyds profit jumps to £2.3 billion despite new bank tax

Lloyds Banking Group reported a pre-tax profit of £2.3 billion, or $3.1 billion, for the July-September period. This figure more than doubled the £1 billion recorded in the same quarter last year, a period that included £875 million in remediation charges.

The results landed a day after finance minister John Healey unveiled a budget that raises taxes on Britain's financial sector. The bank said it remains on track to meet all its performance targets for the year, suggesting the industry's earnings power is holding firm despite the increased fiscal burden.

CEO Charlie Nunn described the bank's output as showing "sustained strength in financial performance." He noted that credit quality remained healthy while net interest income rose by 10 percent. This growth occurred despite margin compression in the deposit market, driven by hedging actions and increased lending volumes.

The profit surge primarily reflects the absence of costs tied to the motor finance scandal that affected the third quarter of 2025. Lloyds stated that retail deposits for the current quarter were "broadly stable." This stability stands in contrast to earlier warnings from rival HSBC, which flagged rising pricing competition and falling margins in the deposit market.

The new tax regime will see British banks face a doubled surcharge for a duration of 15 months. Lenders had feared a longer period of increased taxation, making the current timeline less severe than some market participants anticipated.