𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Lloyds Banking Group has reported a 36% drop in its earnings for the third quarter as it felt the impact of an extra £800 million charge to compensate customers unfairly sold a car loan.

The bank reported a pre-tax profit of £1.2 billion between July and September.

This was more than a third lower than the £1.8 billion made over the same period last year, although it came in above the £1 billion profit that most analysts were expecting.

The group’s latest results take into account it setting aside more money to cover potential costs related to the UK regulator’s motor finance compensation scheme.

It took an additional £800 million charge over the third quarter, bringing its total compensation bill to an estimated £1.95 billion.

The Financial Conduct Authority (FCA) published proposals for a redress scheme after finding that payouts are due on around 14 million unfair car finance deals.

It calculated that each payout could average at about £700 per deal.

Lloyds’ finance chief William Chalmers said the bank was “concerned” about the watchdog’s proposed scheme which it thinks is “disproportionate” to the actual level of harm caused to consumers.

“We do think the proposals, as they stand right now, risk producing an anomalous outcome for customers, which is not a sensible place to be,” he said.

Mr Chalmers said the bank was hoping to have a “constructive dialogue” with the FCA and refused to say whether or not it could proceed with a potential legal challenge.

Lloyds said its lending has grown over 2025, including mortgages, credit cards and motor finance – with loans increasing by 4% across the first nine months of the year.

Current account and savings account balances also grew this year as its customers spent less and saved more.

Mr Chalmers said the trend reflected wage growth boosting its customers’ balances, as well as “patterns of probably slightly lower spend than previously”.

Chief executive Charlie Nunn said: “The group continues to perform well, demonstrating robust financial performance alongside strategic progress, including our recent acquisition of Schroders Personal Wealth.”

Mr Nunn said the bank benefited from income growth and cost savings “despite the impact of the additional motor finance charge in the third quarter”.