Lloyds profits fall 36% in third quarter after bank flags higher car finance costs

Lloyds Banking Group's (LLOY.L) profits fell in the third quarter, due to the money the bank had set aside to cover costs relating to the car financing scandal.

Profit before tax fell 36% in the third quarter to £1.17bn, though this was better than expectations of £1.04bn, according to consensus figures provided by the bank.

This came as total costs swelled 37% to reach £3.18bn for the quarter, including £875m of remidiation costs, of which £800m was in relation to the impact of potential motor finance commission arrangements.

Lloyds (LLOY.L) said earlier in October that it had now set aside a total of £1.95bn of provisions to cover costs relating to the car finance scandal, following a recent consultation paper from the UK's financial regulator on compensation payouts to affected consumers.

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Profit after tax for the third quarter dropped 42% to £778m, but this was also still higher than an anticipated £726m.

Lloyds (LLOY.L) reported underlying net interest income – the difference between what the bank pays out to savers and receives from borrowers in interest – of £3.45bn for the third quarter, which was slightly above expectations of £3.43bn.

Charlie Nunn, group CEO of Lloyds, said: "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."

For the year, Lloyds (LLOY.L) said it now expected to report underlying net interest income of around £13.6bn.

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