Lloyds Banking Group has seen its profit after tax fall by 42% year-on-year in the third quarter to £778m, following an £800m charge for motor finance compensation arrangements.

In the three months to 30 September, the banking group recorded a 36% drop in its profit before tax to £1.17bn, while its mortgage loan book increased by 1% to £321bn.

In the year to 30 September, Lloyds’ net interest income jumped by 6% to £10.1bn, while its restructuring costs improved by 24% to a loss of £16m.

Customer deposits in this period rose by 3% to £496.7bn, with £4bn growth in retail and £10bn in commercial banking.

The banking group’s Q3 update comes after it announced the full acquisition of Schroders Personal Wealth, previously operated as a joint venture with Schroders Group.

The acquired business supports £17bn in assets under administration and is set to accelerate delivery of the group’s wealth strategy.

Group chief executive at Lloyds Banking Group, Charlie Nunn, said that the group has continued to perform well, "demonstrating robust financial performance alongside strategic progress".

He added: “Strong capital generation was supported by income growth, cost discipline and strong asset quality in the first nine months of 2025, despite the impact of the additional motor finance charge in the third quarter. Our strategic progress combined with this financial performance gives us confidence in our performance for the year and our 2026 guidance."

Lloyds Banking Group now expects its underlying net interest income to total £13.6bn in the full financial year, with operating costs set to reach £9.7bn, excluding the acquisition of Schroders Personal Wealth.

Following the announcement, shares in Lloyds Banking Group increased by almost 1.5%.

Investment director at AJ Bell, Russ Mould, said that investors have managed to see past the profit loss.

He concluded: "The car finance scandal may have sent profit into reverse but there was enough underlying good news from Lloyds to keep the share price ticking over.

"In the background, the business is making progress with the plan instituted by CEO Charlie Nunn in 2022 to generate a greater proportion of income which is not closely linked to interest rates. The goal is to make earnings more reliable and less cyclical.

"Among the key tenets of this strategy is an expanding presence in wealth management. To this end, Lloyds recently assumed full control of its Schroders Personal Wealth joint venture which is set to be rebranded as Lloyds Wealth. With Barclays and Lloyds both offering fairly robust third-quarter updates, the UK banks’ reporting season so far seems to have helped salve concern about the US private credit situation which rocked the industry earlier this month."

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