Lloyds Q3 profit nearly doubles to £2.3bn but shares fall on tax fears
Web StoryWatch this story in 15 seconds →Key takeaways
- Lloyds posted £2.33 billion in profit before tax for Q3 2026. That is up from £1.17 billion a year earlier.
- Shares fell as much as 6% to 97.44p. Jefferies pointed to small misses on revenue and capital.
- The results came one day after the UK budget doubled a bank tax surcharge for 15 months.
Lloyds Banking Group made £2.3 billion in profit before tax last quarter. That is nearly double the same quarter last year. But its share price fell sharply on the news.
What happened
Lloyds released its third-quarter results on Thursday, October 29, 2026. Profit before tax was £2.33 billion. A year ago it was £1.17 billion.
The figure beat the £2.28 billion analysts had expected, according to a consensus compiled by the bank. Profit before tax is simply the money a bank makes before paying tax. Beating expectations means doing better than the number most analysts had predicted.
The main reason for the jump is simple. Last year, Lloyds set aside £875 million for a probe into car-loan commissions. That charge hit the 2025 profit hard.
This year, the same charge was only £22 million. Net interest income rose 10% to £3.81 billion. This is the main way banks earn money.
A bank takes in deposits, then lends the money at a higher rate. The gap between the two rates is its net interest income. Learn more in our explainer on how banks earn money from loans.
Chief executive Charlie Nunn said the group was delivering "sustained strength in financial performance". He added that the bank is on track to meet its 2026 targets.
Why it matters
The headline number beat expectations. But the full picture is more mixed. Revenue was about 1% below what analysts expected.
Net interest income missed the target by £22 million. The net interest margin came in at 3.25%. That is one basis point below the forecast.
A basis point is one hundredth of a percent. Investors moved fast. The shares fell as much as 6% to 97.44p on Thursday, Proactive reported.
The broker Jefferies kept its "buy" rating with a 127p price target. That target still implies about 22% upside from the previous close.
Then there is the tax story. A day before the results, finance minister John Healey used his first budget to raise taxes on banks. The bank tax surcharge will double for 15 months.
Reuters noted the hit is smaller than some lenders had feared. Read how the UK doubled the bank tax surcharge.
Higher taxes eat into future profits. That is one reason the shares fell even as profit rose.
The wider market looks nervous too. Rival HSBC warned earlier in the week about tough competition for deposits and thinner margins. Lloyds said its own retail deposits were "broadly stable" in the quarter.
Customer deposits tell another story. Total deposits stood at £502.8 billion at the end of September. That is up £6.3 billion in the first nine months of 2026.
This article is for information only and is not financial advice.
What happens next
Lloyds says it is on track to meet all its 2026 targets. These include underlying net interest income of more than £14.9 billion. It also targets a return on tangible equity above 16%.
Over the first nine months of 2026, the bank made £6.6 billion in profit before tax. That is up from £4.7 billion in the same period last year. The return on tangible equity for the nine months was 17.9%.
But questions remain. Jefferies said the small misses could cloud 2027 forecasts, mainly for interest income. The higher bank tax will also weigh on earnings for the next 15 months.
The bank also keeps returning cash to shareholders. It announced a share buyback in July 2026, the results statement said. Its core capital ratio stood at 13.3% after the interim dividend.
Bank earnings season is still running across markets. See today's bank earnings roundup for how rivals are doing.
Lloyds is making far more money than a year ago. The next test is whether it can keep it up while paying higher taxes.
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