# Lloyds’ net interest margin – a key indicator of its profitability from lending – swelled to 3.17 per cent in the first quarter of 2026.

*business · news · 2026-04-30 · City A.M.*

## Key points

- UBS upgraded Lloyds Banking Group to a 'Buy' rating citing strong profit momentum from rate hedges.
- Lloyds' net interest margin rose to 3.17% in Q1 2026 due to income from structural hedges.
- Lloyds now expects hedge income to exceed £7bn and net interest income to surpass £14.9bn in 2026.
- Lloyds predicts the Bank of England won't make its first rate cut until Q3 2027.
- Speculation is mounting about a potential bank tax rise as major UK banks anticipate record 2026 profits.

**Companies:** Lloyds Banking Group
**Countries:** United Kingdom

[Read the full story on City A.M.](https://www.cityam.com/lloyds-shares-upgraded-to-buy-after-interest-rates-tailwind/)

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