Lloyds and NatWest Beat Estimates, Boost Payouts in UK Bank Earnings

Lloyds Banking Group reported a 17% year-on-year rise in second-quarter statutory pretax profit to £1.99 billion, comfortably ahead of analysts’ £1.75 billion consensus. The lender’s net interest margin slipped slightly to 3.04%, broadly in line with expectations, while operating costs were held at £2.32 billion, marginally below forecasts. Lloyds lifted its interim dividend 15% to 1.22 pence a share, reaffirmed its 2025–26 financial targets and said it would continue returning close to $1 billion to investors after ruling out any fresh provisions related to its motor finance review. A day later, NatWest Group posted an 18% increase in first-half operating pretax profit to £3.6 billion, topping the £3.46 billion average analyst estimate. Buoyed by loan and deposit growth, the bank announced a £750 million ($1.01 billion) share buyback and lifted its return-on-tangible-equity ambition for 2025 to 16.5% from up to 16% previously. The twin beats extend a strong UK bank earnings season, with both lenders using surplus capital to reward shareholders even as lower interest rates compress lending margins. Investors will look next to results from HSBC and Standard Chartered for further evidence on how the sector is navigating a mixed economic backdrop and potential changes to the UK’s banking tax regime.