Diversifying beyond lending
Lloyds is also becoming less dependent on net interest income.
Underlying other income rose 10% to £5 billion during the first nine months, helped by stronger customer activity, investment in strategic initiatives and the addition of Lloyds Wealth.
This diversification is central to Accelerate 2030. Lloyds expects high-single-digit compound annual growth in underlying other operating income between 2027 and 2030, while targeting mid-single-digit annual growth in net income.
The bank plans to achieve this through three broad pillars: growing its core businesses, innovating to deepen and diversify customer relationships, and simplifying the organisation to improve productivity.
That could prove particularly important if UK interest rates were to decline from 2027 onwards as the recently sharply falling oil price eventually is reflected in the inflation data. Lower rates can put pressure on banks’ net interest margins, making growth in fees, wealth management, insurance and other sources of income increasingly valuable.
For income-focused investors, the combination of diversifying revenues and a track record of growing dividends makes Lloyds an increasingly interesting case. You can find out more about the advantages of buying shares and how to build a dividend-focused portfolio through our educational resources.