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.
PRINCIPAL RISKS AND UNCERTAINTIES
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.
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
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
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.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
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.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
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.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
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
-
-
(6)
(6)
-
-
(6)
Movements in cash flow hedging reserve, net of tax
-
(16)
-
(16)
-
-
(16)
Movements in foreign currency translation reserve, net of tax
-
1
-
1
-
-
1
Total other comprehensive loss
-
(15)
(6)
(21)
-
-
(21)
Total comprehensive (loss) income1
-
(15)
398
383
120
-
503
Transactions with owners
Dividends
-
-
(250)
(250)
-
-
(250)
Distributions on other equity instruments
-
-
-
-
(120)
-
(120)
Changes in non-controlling interests
-
-
8
8
-
(8)
-
Capital contributions received
-
-
10
10
-
-
10
Total transactions with owners
-
-
(232)
(232)
(120)
(8)
(360)
At 30 June 20252
5,847
3,048
4,878
13,773
2,600
-
16,373
1 Total comprehensive income attributable to owners of the parent was £503 million. 2 Total equity attributable to owners of the parent was £16,373 million. The accompanying notes are an integral part of the condensed consolidated half-year financial statements. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (continued)
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 2024
5,847
3,061
5,133
14,041
2,550
8
16,599
Comprehensive income
Profit for the period
-
-
212
212
99
-
311
Other comprehensive income
Post-retirement defined benefit scheme remeasurements, net of tax
-
-
(2)
(2)
-
-
(2)
Movements in cash flow hedging reserve, net of tax
