Lloyds Banking Group Maps Accelerate 2030 Plan With AI, Growth and Buyback Focus

Key Points

• Accelerate 2030 targets mid-single-digit income growth, a cost-income ratio below 45% and roughly 20% return on tangible equity by 2030, supported by about £13 billion of planned investment in technology, AI, products and operational simplification.
• Lloyds expects revenue support from structural hedge income, lending and deposits, with other operating income targeted to approach 40% of group revenue by 2030. The bank also anticipates more than £1.5 billion of structural hedge growth this year and a further £1 billion in 2027.
• Capital returns remain a priority alongside investment: Lloyds plans continued dividend growth and buybacks, while targeting more than 200 basis points of capital generation this year and over 225 basis points by 2030. AI initiatives are expected to deliver £100 million in benefits during 2026.

William Chalmers, chief financial officer of Lloyds Banking Group NYSE: LYG, said the lender’s Accelerate 2030 strategy is designed to build on progress under its prior plan through customer-experience improvements, greater business-line connectivity, productivity gains and broader technology deployment.

Speaking at the Barclays Global Financial Services Conference, Chalmers said the group’s 2022-2026 strategy focused on restoring growth, improving efficiency and reducing risk. He said Lloyds increased market share in targeted areas by about 3% on average, delivered more than £2 billion in gross cost savings, eliminated a £7 billion pension deficit and completed roughly £28 billion of risk-weighted asset optimization.

Accelerate 2030 targets growth, diversification and simplification

The new strategy rests on three pillars: growing the core franchise, innovating and diversifying more deeply across the group, and simplifying operations to improve performance. The simplification effort includes an AI-enabled data set, modernized technology platforms, operational efficiencies and continued capital optimization, Chalmers said.

Lloyds is targeting mid-single-digit income growth, high-single-digit growth in other operating income, a cost-income ratio below 45%, return on tangible equity of around 20% by 2030, and capital generation exceeding 225 basis points by that period. The bank has previously set a target for return on tangible equity above 18% by 2028.

Chalmers said the company expects to invest about £13 billion over the four-year Accelerate 2030 cycle, or slightly more than £3 billion annually. Investment is expected to be somewhat front-loaded, stabilize and then taper later in the plan. Retail operations may receive greater investment in product development, while corporate and institutional banking is likely to be more operating-expense intensive, he said.

Across the group, spending will also support technology, data and artificial intelligence capabilities. Chalmers said investment decisions will be governed by return expectations, ongoing performance monitoring and potential reprioritization.

U.K. environment remains “pretty constructive”

Chalmers described the U.K. operating environment as “pretty constructive,” despite maintaining what he characterized as prudent economic assumptions. Lloyds expects GDP growth of slightly more than 1%, house-price growth at roughly the same rate and unemployment peaking around 5.5% in the first or second quarter of next year.

Actual economic performance has so far exceeded the bank’s expectations, he said, though Lloyds remains cautious because of potential data revisions and the delayed effects of energy prices. Customer positioning remains positive, according to Chalmers, citing private-sector debt-to-GDP levels, savings balances and confidence indicators.

Lloyds reported £11 billion of lending growth in the first half, or about 2.5%, alongside approximately £4.5 billion in deposit growth. Chalmers said asset quality and early-warning indicators across retail and corporate customers remained benign, although lending growth may slow somewhat in the second half.

Addressing speculation about U.K. bank taxes, Chalmers said the bank has no privileged insight and that an increase in the bank levy is not Lloyds’ base case. He said each 1% increase in the levy would represent about £75 million for Lloyds and would not alter its equity story or return targets if the rise were modest. He added that the tax discussion should be viewed alongside regulatory reforms that he said are moving in a positive direction.

Structural hedge and fees expected to support revenue

Chalmers said net interest income growth is expected to be supported by the structural hedge, easing mortgage refinancing pressure and lending and deposit growth. Lloyds expects structural hedge income to rise by more than £1.5 billion this year to £7 billion, followed by a further £1 billion increase in 2027 to more than £8 billion.

He said the second-quarter yield on the group’s approximately £246 billion structural hedge was 2.8%, while current refinancing yields are around 4.6% to 4.7%. Lloyds also expects the mortgage refinancing headwind—where new mortgages are being written at lower pricing than maturing loans—to subside during the first or second quarter of next year, based on current spreads.

Other operating income is intended to become a larger share of revenue, reaching toward 40% by 2030. Chalmers said growth would be driven by individual business-unit initiatives, greater cross-group collaboration and new offerings such as connected commerce and digital payments. Commercial banking and insurance, pensions and investments may grow somewhat faster than retail from smaller bases, he added.

AI deployment spans revenue, cost and risk initiatives

Lloyds has more than 40,000 Copilot licenses across a workforce of roughly 60,000 to 65,000 colleagues, Chalmers said. The bank is targeting £100 million in benefits from generative and agentic AI in 2026 through both revenue and cost improvements.

Examples include Spend AI, which Chalmers said has 11 million retail customers using it to examine spending patterns, and Invest AI. On the cost side, he said AI-supported fraud detection has a 90% success rate and that AI has reduced legacy code-conversion time by 50%.

Chalmers declined to provide a long-term standalone AI target, saying the technology is embedded throughout the business and developing too quickly for a figure set today to remain meaningful. He said Lloyds sees data, scale, innovation and customer trust as potential sources of AI-enabled competitive advantage.

Capital priorities include investment, dividends and buybacks

Lloyds expects capital generation to exceed 200 basis points this year and to increase as returns improve and the business grows. Chalmers said the first capital priority is investment in infrastructure, talent, capabilities and value-adding customer growth. Beyond that, he said free cash flow is shareholder money and should generally be returned to shareholders.

He described the dividend as a “bedrock” of the investment case and said Lloyds increased its dividend by 30% at the half-year stage. He expects that pattern for 2026, while suggesting dividend growth after that could look more like the 2022-2025 period rather than repeating the 30% increase.

The group has used buybacks because it sees value in its shares, Chalmers said. While acknowledging there could be a share-price level where buybacks no longer make sense, he said Lloyds appears “a long way” from that point in the context of its current strategy. He added that acquisitions remain an option, but only where they meet strategic, value, speed and risk criteria compared with organic investment.

About Lloyds Banking Group (NYSE:LYG)

Lloyds Banking Group plc is a major United Kingdom financial services provider whose shares trade on the New York Stock Exchange under the symbol LYG. The group serves individuals, families, small businesses and larger commercial customers through a range of banking, lending, insurance, investment and wealth-management services.

Its principal brands include Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows. Products and services include current and savings accounts, mortgages, personal loans, credit cards, business banking, commercial lending, investment products, pensions and life insurance.

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