Update: Lloyds Banking Group PLC

The group's disciplined cost control and solid organic growth have generated strong returns, representing core capital generation of about 140 basis points (bps) of S&P Global Ratings-adjusted risk-weighted assets between 2019 and 2023. This level comfortably exceeds that of most European peers and is ahead of, or in line with, leading international universal service banks (see chart 4). We also expect the bank will deliver material non-interest income growth, which is in line with management's financial targets. Key engines of non-interest income growth--including the corporate and institutional bank, and the insurance, pensions, and investments divisions--expanded consistently in the past 18 months, and we expect this trend will continue through the end of 2026. Even as Lloyds generates significant excess capital,

...Lloyds Banking Group PLC's (Lloyds') deep and broad U.K. financial services franchise underpins the rating. Lloyds' solid strategic position stems from its market-leading franchise in U.K. banking. Lloyds has a dominant U.K. mortgage business and high market shares across credit cards, unsecured lending, and commercial banking. The absence of meaningful international diversification remains a constraining factor in our view of the group's competitive position, particularly versus higher-rated international peers (see charts 1 and 2)....

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