Lloyds Banking Group reported a strong rise in third-quarter profits a day after the Budget raised the banking-sector corporation tax surcharge.

Pre-tax profit rose to £2.3bn in the three months to September, from £1.2bn a year earlier, broadly matching analysts’ forecasts of £2.28bn. The previous year’s results had been hit by £800m set aside for motor finance mis-selling claims. Remediation charges fell to £22m in the latest quarter.

Net income increased to £5.1bn from £4.6bn a year earlier, while net interest income rose 10% to £3.8bn. For the first nine months of 2026, net income increased 9% to £14.8bn, supported by growth in underlying net interest income and other income.

Statutory pre-tax profit for the nine months reached £6.6bn, up from £4.7bn a year earlier, while return on tangible equity stood at 17.9%.

Lloyds said it remained on track to meet its 2026 targets, including underlying net interest income of more than £14.9bn, a cost:income ratio below 50% and return on tangible equity above 16%. However, the absence of upgraded guidance disappointed investors, who were also concerned about pressure on lending margins.

Shares fell about 6% in early trading on Thursday.

Underlying other income rose 10% to £5bn, reflecting stronger customer activity, investment in strategic initiatives and the addition of Lloyds Wealth. Customer lending grew by £14.4bn, or 3%, during the first nine months to £495.5bn. Customer deposits increased by £6.3bn to £502.8bn, although retail deposits declined by £3.7bn amid disciplined pricing in a competitive market.

CEO Charlie Nunn said: "The Group is delivering sustained strength in financial performance, with continued income growth, improving operating leverage and strong and stable credit performance. Our differentiated business model is performing well and we are on track to meet our 2026 guidance.

"We are maintaining strategic delivery as we continue to focus on supporting UK households and businesses. As we near completion of our current strategic chapter, we are excited to begin executing on our new strategy, Accelerate 2030. This will ensure we can deliver continued, sustainable value for our customers and shareholders."

The results followed the Autumn Budget, which raised the banking-sector corporation tax surcharge from 3% to 6% on UK profits above £100m for 15 months from January 2027. The increase was less severe than some lenders had feared but added to investor concerns over the sector’s profitability.

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