RESULTS FOR THE FULL YEAR
“In 2024 we continued to Help Britain Prosper, delivering for our customers, shareholders and wider stakeholders. We successfully completed the first phase of our ambitious and purpose-driven strategy, exceeding our revenue target and transforming our propositions and capabilities as we returned the business to growth.
The Group delivered a robust financial performance in 2024. Pleasingly and as expected, income grew in the second half of the year, supported by a rising banking net interest margin and momentum in other income. We also maintained discipline in costs, whilst asset quality remained strong. This performance enabled total shareholder distributions of £3.6 billion.
Guided by our purpose, we continue to drive positive change in areas where we can have impact at scale and create value for all of our stakeholders. We are a leading supporter of social housing, with around £20 billion of funding since 2018. We have also exceeded the ambitious sustainable finance goals we set for 2024.
Looking forward, we are building momentum as we enhance our franchise and deliver differentiated outcomes for our customers. Our strategy is transforming our capabilities, enabling us to deepen relationships with our customers, grow in high value areas and drive cross-Group collaboration. We are confident of generating more than £1.5 billion of additional income from our strategic initiatives by 2026 as we build towards higher, more sustainable returns.”
Charlie Nunn, Group Chief Executive
Delivering on our purpose-driven strategy, confident of delivering 2026 strategic outcomes
- Clear purpose to Help Britain Prosper, built on a consistent vision of being a customer-focused digital leader and integrated financial services provider, able to capitalise on new opportunities at scale
- First phase of strategic transformation successfully completed, delivering growth, building the business and transforming capabilities
- Generated £0.8 billion of additional revenues from strategic initiatives, exceeding our target of c.£0.7 billion, and delivering £1.2 billion of gross cost savings, mitigating inflationary pressures
- Delivered around 80 per cent of 2024 strategic outcomes, a significant proportion materially ahead of targeted outcome
- Transformed engagement through our refreshed Mobile banking app and launched innovative new propositions, such as Your Credit Score and Ready-Made Investments
- Momentum building in second phase of strategy, increasingly confident in medium-term revenue outlook, including delivering more than £1.5 billion of additional revenues from strategic initiatives by 2026
- Continued commitment to generate higher, more sustainable returns and capital generation for shareholders
Robust financial performance1
- Statutory profit after tax of £4.5 billion (2023: £5.5 billion) with net income down 5 per cent on the prior year, operating costs up 3 per cent (including the Bank of England Levy) and higher remediation and impairment charges. Return on tangible equity of 12.3 per cent, 14.0 per cent before the provision charge for motor finance commission arrangements
- Underlying net interest income of £12.8 billion, down 7 per cent reflecting a lower banking net interest margin of 2.95 per cent and broadly stable average interest-earning banking assets of £451.2 billion. Underlying net interest income of £3.3 billion in the fourth quarter, up 1 per cent, with a higher banking net interest margin of 2.97 per cent
- Underlying other income of £5.6 billion, 9 per cent higher than the prior year, driven by strengthening customer and market activity and the benefit of strategic initiatives. Underlying other income in the fourth quarter was stable on the third quarter
- Operating lease depreciation of £1,325 million, up on 2023 as a result of fleet growth, the depreciation of higher value vehicles and declines in used electric car prices; £331 million in the fourth quarter, consistent with expectations
- Continued cost discipline; operating costs of £9.4 billion, up 3 per cent and in line with guidance, with cost efficiencies helping to partially offset inflationary pressures, business growth costs and ongoing strategic investment, alongside c.£0.1 billion relating to the sector-wide change in the charging approach for the Bank of England Levy
- Remediation costs of £899 million in the year (2023: £675 million), including £775 million in the fourth quarter, of which £700 million was in relation to the potential impact of motor finance commission arrangements
- Strong asset quality; underlying impairment charge of £433 million and an asset quality ratio of 10 basis points. Excluding the impact of improvements to the economic outlook, the asset quality ratio was 19 basis points. The portfolio remains well-positioned with improved credit performance in the year
1 See the basis of presentation on page 66.
RESULTS FOR THE FULL YEAR (continued)
Continued growth in customer franchise
- Underlying loans and advances to customers increased by £9.4 billion in the year, including £2.1 billion in the fourth quarter, to £459.1 billion. The increase in the year was led by UK mortgages growth of £6.1 billion
- Customer deposits of £482.7 billion increased significantly by £11.3 billion in the year, with growth in Retail deposits of £11.3 billion alongside stable Commercial Banking deposits. Customer deposits growth was particularly strong in the fourth quarter, with an increase of £7.0 billion
Strong capital generation driving increased capital return
- Strong pro forma capital generation1 of 148 basis points. Excluding the provision charge for motor finance commission arrangements, capital generation was 177 basis points. Pro forma CET1 ratio2 of 13.5 per cent, after increased ordinary dividend and announced share buyback
- Risk-weighted assets of £224.6 billion up £5.5 billion in the year, reflecting lending growth, Retail secured CRD IV increases and other movements, partly offset by efficient management of risk-weighted assets
- Tangible net assets per share of 52.4 pence, up by 1.6 pence in the year resulting from attributable profit, partly offset by capital distributions, a lower pension surplus from negative market impacts and other movements
- The Board has recommended a final ordinary dividend of 2.11 pence per share, resulting in a total ordinary dividend for 2024 of 3.17 pence per share, up 15 per cent on prior year and in line with the Group’s progressive and sustainable ordinary dividend policy
- Given the Group’s strong capital position, the Board has also announced its intention to implement an ordinary share buyback programme of up to £1.7 billion
- Total capital returns in respect of 2024 of up to £3.6 billion, are equivalent to c.9 per cent3 of the Group’s market capitalisation value
2025 guidance
Based on our current macroeconomic assumptions, for 2025 the Group expects:
- Underlying net interest income of c.£13.5 billion
- Operating costs of c.£9.7 billion
- Asset quality ratio of c.25 basis points
- Return on tangible equity of c.13.5 per cent
- Capital generation of c.175 basis points4
2026 guidance
Based on the expected macroeconomic environment and confidence in our strategy, the Group maintains its guidance for 2026:
- Cost:income ratio of less than 50 per cent
- Return on tangible equity of greater than 15 per cent
- Capital generation of greater than 200 basis points4
- To pay down to a CET1 ratio of c.13.0 per cent
1 Excluding capital distributions. Inclusive of the ordinary dividend received from the Insurance business in February 2025.
2 Includes both the full impact of the intended share buyback announced in respect of 2024 and the ordinary dividend received from the Insurance business in February 2025.
3 Market capitalisation as at 14 February 2025.
4 Excluding capital distributions. Inclusive of ordinary dividends received from the Insurance business in February of the following year.