Why did Lloyds’ profits drop so much in Q3?

The profit drop was primarily driven by the bank having to book around £800 million in extra provisions for redress linked to a historic motor-finance mis-selling scandal, which significantly weighed on results.

Is the core banking business of Lloyds still healthy?

Yes, Lloyds reported growth in net interest income, loan growth, and deposits. Its net interest margin increased, and its fee-based income strategies are promising, though the legacy issues obscure the full picture.

What should investors watch for next?

Key things to monitor include: updates to provisioning for the motor-finance issue, guidance changes to return on equity or margins, cost and efficiency progress, and how Lloyds positions itself against digital/fintech disruption in banking.

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