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LONDON - Lloyds Banking Group has passed the Bank of England’s 2025 Bank Capital Stress Test with significant headroom above minimum requirements, according to a press release statement issued Tuesday.
The bank reported a stressed Common Equity Tier 1 (CET1) ratio of 10.9% and a stressed leverage ratio of 4.6% after applying management actions, comfortably exceeding the minimum requirements of 5.9% and 3.3% respectively.
The stress test, which included six other UK financial institutions, was designed to assess the resilience of the UK banking system under a hypothetical severe global supply shock scenario. The Bank of England described the test as more severe than the last global financial crisis, combining rapidly rising interest rates and unemployment with significant falls in property prices and GDP.
Lloyds attributed its performance to "prudent balance sheet management and strong capital position," noting it had a pro-forma CET1 ratio of 13.5% and a UK leverage ratio of 5.5% as of December 31, 2024.
The bank acknowledged that since the stress test was conducted, it has taken "a significant further provision for the potential impact of Motor Finance," though no specific figures were provided regarding this provision.
The Bank of England’s test results were published as part of its Financial Stability Report. According to the central bank, the test aimed to ensure banks could absorb rather than amplify economic shocks while continuing to lend to UK households and businesses.
Lloyds Banking Group also noted the Financial Policy Committee’s capital review and stated it will assess implications for the group.
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