Lloyds Banking Group (NYSE: LYG) chief executive Charlie Nunn says U.K. households and businesses have remained resilient despite a slower economic growth environment.
Speaking at a Bank of America event, Nunn described Lloyds’ consistent economic outlook as a “resilient but slower growth economy,” with real GDP growth expected between 1% and 2% over the next several years.
Nunn noted that households have benefited from three to four years of real wage growth, while businesses have maintained strong or stable cash flows, though some have pulled back on investment.
Lloyds has also observed resilient discretionary spending, demand for larger purchases and continued activity in the mortgage market, signaling underlying consumer confidence remains intact.
The bank’s previous strategic phase focused on de-risking legacy issues, restoring growth, gaining market share and improving cost efficiency, setting the foundation for the next chapter.
The new phase, called Accelerate 2030, centers on defending leadership positions in retail and small-business banking while expanding income streams and tightening operational costs.
Nunn reiterated targets for mid-single-digit revenue growth over the next four years, high-single-digit growth in other operating income and a cost-income ratio below 45% by 2030.
The bank’s planning assumptions include a 3.5% terminal interest rate and a weighted structural-hedge reinvestment return of approximately 3.7%, with Nunn noting that current market curves could produce a higher structural-hedge result.
Lloyds plans to invest roughly £13 billion annually over the next four years while pursuing an additional £2 billion in cost savings across the organization.
Nunn described the U.K. mortgage market as “remarkably resilient,” with volumes broadly stable year over year despite shifts in swap curves that influence mortgage pricing.
First-time buyers and remortgage activity have been key drivers, while Lloyds continues to expand its direct mortgage channel, with about 20% of applications and roughly 24% of completions coming through its own broker channels.
The direct channel allows Lloyds to offer customers a quicker process and connect them to related products, including home and life insurance, deepening overall customer relationships.
Lloyds grew assets by £22 billion last year, though Nunn cautioned that asset growth is expected to be slower this year as margins on both assets and liabilities have tightened.
Mortgages have generally been stress-tested at rates between 7% and 9%, while cards, loans and small-business portfolios also appear resilient based on current data and early indicators.
Nunn added that faster adoption of artificial intelligence by customers and regulators could create meaningful upside to the bank’s 2030 plan beyond current projections.
Lloyds Banking Group operates through principal brands including Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows, serving individuals, businesses and commercial customers across the United Kingdom.
