Lloyds Bank PLC

We think LB's net interest margin will rise steadily from here, as both deposit migration and the rate of higher-margin mortgages refinancing slow, and the gross yield rises on the bank's structural hedge. This will raise net interest income in the next 12-24 months. Operating expense was 13% higher due to ongoing strategic investments, new business costs, a higher operating lease depreciation charge, and inflationary pressure. LB booked a low impairment charge of £294 million (0.07% of average customer loans) for the period, combining benign asset quality with the group's improved economic outlook. This somewhat reduces the effects of lower NII and higher operating expense on the group's pretax earnings. LB's net interest margin for first-half 2024 was 2.37%, having

...S&P Global Ratings views Lloyds Bank PLC (LB) as a core subsidiary of Lloyds Banking Group PLC (LBG). LB has an integral role in its parent's strategy, and a dominant share of the group's consolidated earnings and capital. Its brand and reputation are intertwined with the group's. We align our long-term issuer credit rating on LB, which includes a two-notch uplift for additional loss-absorbing capacity (ALAC), with LBG's 'a+' group credit profile. We do not assess LB's stand-alone credit profile. LB is LBG's largest subsidiary. It is the main entity in the ring-fenced bank subgroup, and its consolidated regulatory risk-weighted assets (RWAs) represented 83% of LBG's RWAs at Sept. 30, 2024. It is the market leader in U.K. retail banking and one of the main competitors in U.K. commercial banking alongside ring-fenced bank peers Barclays Bank UK PLC, HSBC UK Bank PLC, and National Westminster Bank PLC. LB's main subsidiary is Bank of Scotland PLC (A+/Stable/A-1), which operates primarily in...

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