Bank of Scotland Plc: 2025 Half-Year Results

 
 
Bank of Scotland plc

2025 Half-Year Results

24 July 2025
 
 
 
 
 
 
 
 
 
 
 
 
 
Member of the Lloyds Banking Group
 

Financial review	1
Principal risks and uncertainties	3
Statutory information
Condensed consolidated half-year financial statements (unaudited)	4
Condensed consolidated income statement (unaudited)	5
Condensed consolidated statement of comprehensive income (unaudited)	6
Condensed consolidated balance sheet (unaudited)	7
Condensed consolidated statement of changes in equity (unaudited)	8
Condensed consolidated cash flow statement (unaudited)	10
Notes to the condensed consolidated half-year financial statements (unaudited)	11
Statement of directors' responsibilities	29
Forward-looking statements	30
Contacts	31

 
Principal activities
Bank of Scotland plc (the Bank) and its subsidiaries (together, the Group) provide a wide range of banking and financial services. The Group's revenue is earned through interest and fees on a broad range of financial services products including current and savings accounts, personal loans, credit cards and mortgages within the retail market and loans and other products to commercial and corporate customers.

Income statement
The Group's profit before tax for the first half of 2025 was £680 million, compared to a profit before tax of £427 million for the same period in 2024. This was driven by higher total income, partially offset by higher operating expenses and a higher impairment charge. Profit after tax was £524 million (half-year to 30 June 2024: profit after tax of £311 million).
Total income for the half-year was £2,634 million, an increase of 29% on the first half of 2024. Net interest income was £2,281 million, compared to £1,833 million for the same period in 2024, driven by higher average interest-earning assets and a higher margin. Other income of £353 million was £147 million higher than the first half of 2024. The increase reflected higher net trading income of £114 million which was £62 million higher than the first half of 2024, reflecting rate movements. This was alongside higher net fee and commission income of £177 million which was £79 million higher than the same period in 2024 which was impacted by changes to commission arrangements with Scottish Widows.
Operating expenses of £1,894 million were 18% higher than in the first half of 2024, reflecting inflationary pressures, strategic investment including planned higher severance front-loaded into the first quarter of 2025 and business growth costs, partly offset by cost savings and continued cost discipline. The Group recognised remediation costs of £2 million (half-year to 30 June 2024: £41 million), across a small number of rectification programmes.
Asset quality remained robust in the first half of 2025. The impairment charge of £60 million compared to a charge of £4 million in the half-year to 30 June 2024, which benefitted from a credit from improvements in the Group's economic outlook.
The Group recognised a tax expense of £156 million in the first half of 2025 (half-year to 30 June 2024: £116 million).

Balance sheet
Total assets of £338,088 million were £7,004 million higher, or 2%, compared to £331,084 million at 31 December 2024. Financial assets at amortised cost were £9,344 million higher at £328,550 million compared to £319,206 million at 31 December 2024, with increases in loans and advances to customers of £6,726 million to £307,515 million. The increase in loans advances to customers was primarily due to growth in UK mortgages. There were also increases in balances due from fellow Lloyds Banking Group undertakings of £2,729 million in the period.
Total liabilities of £321,715 million increased £6,861 million compared to £314,854 million at 31 December 2024. This was driven by an increase in customer deposits of £2,580 million in the period, driven by a strong performance throughout the ISA season, as well as increases in balances due to fellow Lloyds Banking Group undertakings of £3,233 million.
Total equity increased by £143 million from £16,230 million at 31 December 2024 to £16,373 million at 30 June 2025. The movement reflected attributable profit for the period, partially offset by an interim dividend of £250 million. 


FINANCIAL REVIEW (continued)
Capital
The capital position of Bank of Scotland plc is presented on an unconsolidated basis. The Bank's capital position as at 30 June 2025 is set out in the below table.
Capital resources of the Bank

	At 30 Jun  2025 £m		At 31 Dec 2024 £m
Common equity tier 1
Shareholders' equity per unconsolidated balance sheet	14,064		14,087
Adjustment to retained earnings for foreseeable dividends	(400)		(250)
Cash flow hedging reserve	89		78
Other adjustments	(1)		(1)
	13,752		13,914
less: deductions from common equity tier 1
Goodwill and other intangible assets	(675)		(709)
Prudent valuation adjustment	(40)		(39)
Excess of expected losses over impairment provisions and value adjustments	(293)		(238)
Removal of defined benefit pension surplus	(32)		(38)
Significant investments	(66)		(50)
Deferred tax assets	(1,791)		(1,812)
Common equity tier 1 capital	10,855		11,028
Additional tier 1
Additional tier 1 instruments	2,600		2,600
Total tier 1 capital	13,455		13,628
Tier 2
Tier 2 instruments	1,500		1,500
Eligible provisions and other adjustments	166		274
Total tier 2 capital	1,666		1,774
Total capital resources	15,121		15,402
Risk-weighted assets	81,830		81,493
Capital and leverage ratios
Common equity tier 1 capital ratio	13.3 %		13.5  %
Tier 1 capital ratio	16.4 %		16.7  %
Total capital ratio	18.5 %		18.9  %
UK leverage ratio	4.3 %		4.4  %

The Bank's common equity tier 1 (CET1) capital ratio reduced from 13.5% at 31 December 2024 to 13.3% at 30 June 2025. The profits for the period were more than offset by the accrual for the foreseeable ordinary dividend and an increase in risk-weighted assets. The total capital ratio decreased to 18.5% (31 December 2024: 18.9%) reflecting the increase in risk-weighted assets and the reduction in total capital, including the reduction in eligible provisions recognised through tier 2.

Risk-weighted assets increased by £337 million from £81,493 million at 31 December 2024 to £81,830 million at 30 June 2025, largely reflecting impact of lending growth.
The Bank's UK leverage ratio of 4.3% at 30 June 2025 has decreased from 4.4% at 31 December 2024, reflecting the reduction in total tier 1 capital and an increase in the exposure measure. The increase in the leverage exposure measure reflects lending growth in the balance sheet.

Pillar 3 Disclosures
The Bank will publish a condensed set of half-year Pillar 3 disclosures in the second half of August. A copy of the disclosures will be available to view at: www.lloydsbankinggroup.com/investors/financial-downloads.html.
 The important risks faced by the Group are detailed below. External risks may impact the success of delivering against the Group's long-term strategic objectives. They include, but are not limited to, macroeconomic and geopolitical uncertainties and inflation trends which could contribute to the cost of living and associated implications for consumers and businesses.
Asset quality remains robust with stable credit performance throughout the period. The Group continues to monitor the impacts of the economic environment closely through a suite of early warning indicators and governance arrangements that ensure risk mitigating action plans are in place to support customers and protect the Group's positions.
The Group continues to invest in technology to strengthen its capabilities, ensuring the appropriate use of models and artificial intelligence. Operational resilience remains a high priority area for the Group to ensure that it can continue to effectively prevent, withstand and respond to potential cybersecurity threats and incidents such as IT system outages, using threat intelligence and learnings from recent industry events where relevant.
The Group is transforming its approach to risk management to support its strategic ambition and purpose of Helping Britain Prosper. Following changes to the three lines of defence model in 2024 to ensure more clearly defined responsibilities and accountabilities across the business, further enhancements to the way the Group delivers risk management have been made by standardising practices and streamlining processes. The Group Risk Management Framework was enhanced during the first half of 2025, along with the approach to risk appetite and risk governance, enabling simplification and efficiency.
The Group has 10 principal risks, which are unchanged in 2025 and are underpinned by a suite of level two risks. These risks are reviewed and reported regularly to the Board in alignment with the enhanced Group Risk Management Framework, and consist of capital risk, climate risk, compliance risk, conduct risk, credit risk, economic crime risk, liquidity risk, market risk, model risk and operational risk. Further information regarding the Group's principal risks is available on page 5 in the Group's 2024 annual report and accounts.

 

Condensed consolidated half-year financial statements (unaudited)
Condensed consolidated income statement (unaudited)		5
Condensed consolidated statement of comprehensive income (unaudited)		6
Condensed consolidated balance sheet (unaudited)		7
Condensed consolidated statement of changes in equity (unaudited)		8
Condensed consolidated cash flow statement (unaudited)		10
Notes to the condensed consolidated half-year financial statements (unaudited)
1	Basis of preparation and accounting policies	11
2	Critical accounting judgements and key sources of estimation uncertainty	12
3	Net fee and commission income	12
4	Operating expenses	12
5	Impairment	13
6	Tax	13
7	Fair values of financial assets and liabilities	13
8	Allowance for expected credit losses	18
9	Debt securities in issue	24
10	Provisions	25
11	Dividends on ordinary shares	26
12	Related party transactions	26
13	Contingent liabilities, commitments and guarantees	27

 
 

	Note		Half-year to 30 Jun 2025 £m			Half-year to 30 Jun 2024 £m
Interest income			7,382			6,929
Interest expense			(5,101)			(5,096)
Net interest income			2,281			1,833
Fee and commission income			342			334
Fee and commission expense			(165)			(236)
Net fee and commission income	3		177			98
Net trading income			114			52
Other operating income			62			56
Other income			353			206
Total income			2,634			2,039
Operating expenses	4		(1,894)			(1,608)
Impairment	5		(60)			(4)
Profit before tax			680			427
Tax expense	6		(156)			(116)
Profit for the period			524			311
Profit attributable to ordinary shareholders			404			212
Profit attributable to other equity holders			120			99
Profit for the period			524			311

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

 

	Half-year to 30 Jun 2025 £m			Half-year to 30 Jun 2024 £m
Profit for the period	524			311
Other comprehensive income
Items that will not subsequently be reclassified to profit or loss:
Post-retirement defined benefit scheme remeasurements
Remeasurements before tax	(9)			(3)
Deferred tax	3			1
	(6)			(2)
Items that may subsequently be reclassified to profit or loss:
Movements in cash flow hedging reserve:
Effective portion of changes in fair value taken to other comprehensive income	(16)			3
Net income statement transfers	(4)			(3)
Deferred tax	4			-
	(16)			-
Movements in foreign currency translation reserve:
Currency translation differences (tax: £nil)	1			-
Transfers to income statement (tax: £nil)	-			-
Currency translation differences (tax: £nil)	1			-
Total other comprehensive loss for the period, net of tax	(21)			(2)
Total comprehensive income for the period	503			309
Total comprehensive income attributable to ordinary shareholders	383			210
Total comprehensive income attributable to other equity holders	120			99
Total comprehensive income for the period	503			309

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

 

	Note	At 30 Jun 2025 £m				At 31 Dec 2024 £m
Assets
Cash and balances at central banks			2,689			2,853
Financial assets at fair value through profit or loss	7		259			278
Derivative financial instruments			2,338			3,337
Loans and advances to banks			138			103
Loans and advances to customers			307,515			300,789
Debt securities			1,204			1,350
Due from fellow Lloyds Banking Group undertakings			19,693			16,964
Financial assets at amortised cost			328,550			319,206
Goodwill			452			452
Current tax recoverable			174			1,273
Deferred tax assets			1,828			1,875
Retirement benefit assets			45			52
Other assets			1,753			1,758
Total assets			338,088			331,084
Liabilities
Deposits from banks			103			179
Customer deposits			167,633			165,053
Repurchase agreements at amortised cost			23,157			22,168
Due to fellow Lloyds Banking Group undertakings			113,140			109,907
Financial liabilities at fair value through profit or loss	7		18			22
Derivative financial instruments			3,655			3,503
Notes in circulation			2,119			2,121
Debt securities in issue at amortised cost	9		8,461			8,654
Other liabilities			1,441			1,203
Provisions	10		456			511
Subordinated liabilities			1,532			1,533
Total liabilities			321,715			314,854
Equity
Share capital			5,847			5,847
Other reserves			3,048			3,063
Retained profits			4,878			4,712
Ordinary shareholders' equity			13,773			13,622
Other equity instruments			2,600			2,600
Total equity excluding non-controlling interests			16,373			16,222
Non-controlling interests			-			8
Total equity			16,373			16,230
Total equity and liabilities			338,088			331,084

The accompanying notes are an integral part of the condensed consolidated half-year financial statements.

 

		Attributable to ordinary shareholders											Other equity instruments £m			Non- controlling interests £m
		Share capital £m			Other reserves £m			Retained profits £m			Total £m									Total £m
At 1 January 2025		5,847			3,063			4,712			13,622			2,600			8			16,230
Comprehensive income
Profit for the period		-			-			404			404			120			-			524
Other comprehensive income
Post-retirement defined benefit scheme remeasurements, net of tax		-