Lloyds Banking Group PLC (LSE:LLOY) reported a rise in second-quarter profits, beating analyst expectations and rewarding shareholders with a 15% increase in the interim dividend.
Underlying profit before impairments came in at £2.16 billion for the second quarter, beating the £2 billion consensus forecast and up 17% from the first quarter.
Statutory pre-tax profit rose to £1.99 billion, up from £1.52 billion in the previous quarter and above the £1.69 billion estimate.
This was driven by an increase in net interest margin, the difference between interest rates on lending and saving, to 3.04% from 2.94% in Q1, though just under the 3.05% expected.
Return on tangible equity (ROTE) also increased more than expected, to 14.1% from 12.6%.
Chief executive Charlie Nunn said the results reflected "income growth, cost discipline and robust asset quality, driving strong capital generation and increased shareholder distributions".
Operating costs were £2.32 billion, slightly below the estimated £2.34 billion.
The strong capital generation led to the CET1 capital ratio improving to 13.8%, from 13.5% in the first quarter, and an increased interim dividend of 1.22p per share, beating the forecast 1.17p.
There were no new charges related to motor finance commission arrangements, with a Supreme Court ruling still awaited.
Lloyds reaffirmed its full-year guidance, including underlying net interest income of around £13.5 billion and ROTE of circa 13.5%, and expressed confidence in 2026 guidance, which includes ROTE rising to above 15%.