Lloyds Banking Group reported a 7% drop in first-quarter pre-tax profits, totaling £1.52 billion, slightly below market expectations.

The decline was attributed to higher costs and impairment charges, including a £309 million impairment reflecting changes in the economic outlook.

Notably, Lloyds set aside £100 million to mitigate the potential impact of U.S. tariffs imposed by President Donald Trump, contributing to increased economic uncertainty.

Despite these challenges, Lloyds saw growth in UK mortgage lending, with a £4.8 billion increase compared to the same period last year.

The bank’s net interest income rose to £3.29 billion, up 3% from the previous year, while total net income increased 4% year-on-year to £4.39 billion.

Operating costs, however, increased by 6% year-on-year to £2.55 billion, reflecting inflationary pressures and planned higher severance costs.

Lloyds maintained its forecasts for 2025 and 2026, expressing confidence in its financial outlook despite the profit decline.