The ratings reflect Lloyds Banking Group plc’s leading domestic retail and commercial banking franchise, particularly in current accounts, retail deposits and mortgages. The group currently seeks to maintain market leadership in its core retail product lines while pursuing growth in areas where it is under-represented such as SME and mid-market clients and consumer finance.

Over the last several years, management has substantially reduced the risks (asset quality, funding) stemming from the acquisition of HBOS at the peak of the crisis. Lloyds is now a lower-risk UK-focused retail and commercial bank.

While the comparatively solid UK economy has supported the group’s recovery and transformation, Scope cautiously regards the still unknown consequences of the UK’s exit from the EU. At the same time, Scope expects the group’s robust franchise and earnings capabilities to stand it in good stead. The impact of legacy issues, primarily PPI and conduct matters, should decline further, allowing the group to generate higher and more stable bottom-line earnings.

Download the updated rating report on Lloyds.