Lloyds has "capped off a strong year", analysts have stated, as the bank’s net income reached £4.4bn in the final quarter, beating expectations by £100m.

In this time, its underlying profit in the final quarter reached £1bn, which is below expectations of £1.3bn.

However, the bank’s profit after tax fell by 47% quarter-on-quarter to £700m, after Lloyds was hit by £775m in remediation costs, with £700m being set aside in relation to the potential impact of motor finance commission arrangements.

In the full year, profit before tax at Lloyds fell by 20% to £6bn, while its total income fell by 3% to just under £34.3bn.

Group chief executive at Lloyds, Charlie Nunn, said: "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 £3.6bn.

"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 £20bn of funding since 2018. We have also exceeded the ambitious sustainable finance goals we set for 2024."

Looking ahead, Lloyds said that under current macroeconomic assumptions, it expects underlying interest income of £13.5bn, while it has operating costs of £9.7bn.

Looking further ahead to 2026, the bank has maintained its guidance, with a cost:income ratio of less than 50%, while expecting a return on tangible equity of more than 15%.

Senior equity analyst at Hargreaves Lansdown, Matt Britzman, concluded: "Lloyds has capped off a strong year with a clouded fourth-quarter result, setting aside a hefty £700m provision for potential charges related to the ongoing motor finance saga.

"While you could argue the provision is overly cautious, Lloyds holds the largest exposure of any major UK bank, and the outcome remains uncertain. Despite this, the stock is up over 40% in the past year, reflecting a solid banking outlook and robust performance."

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