Lloyds Shares Slip Despite Profit Beat, Higher Dividend and New £1bn Buyback

Lloyds Banking Group (LON: LLOY), the UK’s largest retail and commercial bank, reported first-half statutory pre-tax profit of £4.3bn, up from £3.5bn a year earlier, beating forecasts. Shares fell despite a higher dividend and a new £1bn buyback.

LLOY was down 1.42% at 111.45p in early trade today, against yesterday’s close of 113.05p, having slipped from 114.7p over the past two sessions. The stock remains near the top of its 52-week range of 72.63p to 115.95p.

Lloyds published its half-year results this morning, reporting Q2 statutory profit of £2.3bn against a consensus estimate of £2.1bn. The interim ordinary dividend rises 30% to 1.58p per share, worth £918m, and the bank added a £1bn buyback on top of the £1.75bn programme launched with its full-year results. Alongside the update, Lloyds unveiled “Accelerate 2030”, a four-year strategic plan targeting a return on tangible equity, profit generated relative to shareholders’ capital, of around 20%, and a cost:income ratio below 45% by 2030.

The profit gain was driven by underlying net interest income rising 9% to £7.3bn, as the banking net interest margin, the gap between what Lloyds earns on loans and pays on deposits, improved 15 basis points to 3.19%. Its core capital buffer, the CET1 ratio, stood at 13.6%, or 13.1% after accounting for the buyback and dividend accrual. Full-year guidance was reiterated, including a cost:income ratio below 50% and return on tangible equity above 16%.

Group chief executive Charlie Nunn said: “In the first half of 2026, we delivered sustained strength in financial performance, with continued income growth, improving operating leverage, strong credit performance, growing capital generation and increasing shareholder returns.”

The share fall suggests markets had already priced in much of the good news after Lloyds’ strong run, leaving the beat, dividend rise and buyback insufficient to trigger a re-rating on the day.