Lloyds Banking Group has delivered a strong start to 2026, with statutory pre-tax profit surging 33% to £2.0bn in the first quarter as rising net interest income and growing fee revenues more than offset a cautious economic backdrop.

The higher-interest-rate environment and relatively stable economic backdrop are playing into Lloyds’ hands, boosting its earnings.

Underlying net interest income climbed 8% year-on-year to £3.6bn, driven by a banking net interest margin of 3.17%, up 14 basis points on the prior year and 7 basis points on the fourth quarter.

The improvement reflects the growing contribution from the structural hedge, where income rose to £1.6bn from £1.2bn a year earlier as balances were reinvested at higher rates.

The notional hedge balance now stands at £246bn, and management expects hedge earnings to exceed £7.0bn this year and £8.0bn in 2027.

Lending growth was broad-based and played a big part in profit growth. Underlying loans and advances rose 4% year-on-year to £486.2bn, with UK mortgages adding £1.6bn in the quarter despite significant maturities, credit cards up 11%, unsecured loans up 15% and Corporate and Institutional Banking growing 10%. Average interest-earning banking assets reached £473.5bn, up 4%.

“Lloyds’ first-quarter update had a lot for investors to like, with the bank beating profit expectations while keeping its full-year targets firmly intact. Performance was helped by the structural hedge and steady lending momentum, while costs are being kept under control, and credit quality still looks resilient,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

Augmenting the impact of higher income, costs fell 3% to £2.5bn as savings programmes and lower severance expenses outweighed inflationary pressures and the addition of the wealth business.

Credit quality remained benign. The impairment charge of £295m equated to an asset quality ratio of 25 basis points, though within that sat a £151m hit from deteriorating economic scenarios linked to the Middle East conflict.

Return on tangible equity hit 17.0%, up from 12.6% a year ago, while tangible net assets per share rose to 57.9p. The CET1 ratio stood at 13.4% after the dividend accrual, with the group on track to pay down to its target of around 13.0% by year end.

Lloyds also reiterated its full 2026 guidance saying underlying net interest income now expected to be greater than £14.9bn, cost-to-income ratio below 50%, asset quality ratio of around 25 basis points, return on tangible equity above 16%, and capital generation exceeding 200 basis points.

Matt Britzman said: “The most important message is that guidance has been largely reiterated, with net interest income expectations nudged a touch higher. That suggests management still sees enough support from higher-for-longer rates to offset pressure elsewhere, including competitive mortgage pricing and a softer economic outlook.”

The share buyback announced in January is well underway, with roughly 600 million shares repurchased at a cost of £700m and an average price of 97.7p by the end of March.

The drop in Lloyds shares on Wednesday is likely a reflection of a broader market decline rather than any real disappointment with Lloyds’ update.

Treatt has agreed a recommended cash takeover by Germany’s Döhler Group SE, in a deal that values the natural extracts specialist at around £183 million.

Under the terms, Treatt shareholders will receive 305p in cash for each share, alongside the previously announced final dividend of 3p per share for the year ended 30 September 2025, payable on 13 May.

The offer represents a 48% premium to Treatt’s closing price of 206 pence on 28 April, the last business day before the announcement.

It also comes in 17% above Natara’s original September 2025 cash offer and 5% above Natara’s increased bid in October. Natara originally offered 260p in September, then bumped their bid to 290p.

But Natara’s final bid wasn’t quite enough and Treatt held out for today’s 305p approach.

Treatt shares have underperformed in recent years, and Döhler, already Treatt’s largest shareholder, argues that public markets are unlikely to support Treatt’s strategy, adding that private ownership would provide the company with the platform for growth.

The German group points to highly complementary portfolios, Treatt’s strategically attractive US production footprint, and immediate cross-selling opportunities across geographies and strategic accounts as the key prizes from a tie-up.

Sadly, Treatt is one in a long line of companies leaving London’s public markets, unable to support their valuations or growth ambitions.

Jet2 expects to report operating profit of between £435m and £440m for the year to March 2026, in line with market expectations and only slightly below last year’s £446.5m.

This can be seen as a solid result given £11m of startup costs associated with the launch of its new London Gatwick base.

The Gatwick operation commenced on 26 March, taking Jet2 to the UK’s largest holiday airport for the first time and putting over 90% of the British public within a 90-minute drive of one of its now 14 UK bases.

The balance sheet remains strong. Total cash stood at £3.3bn at the year end, with net cash of £2.0bn and a further £500m available through an undrawn revolving credit facility. The group returned £363m to shareholders during the year.

Turning attention to the rest of this year, on-sale capacity for summer 2026 is 7.7% higher at 19.9 million seats, with booked passengers up 6.2% across both package holidays and flight-only.

However, customers have been waiting to book until just before departure since the onset of the Middle East conflict, and management said geopolitical uncertainty is limiting visibility into the peak summer season and beyond. Q1 load factor is currently tracking in line with the prior year.

Investors should be pleased to hear that Jet2 has locked in a strong hedged position, with 87% of its summer fuel requirement covered at an average swap price of $707 per metric tonne, providing a high degree of cost certainty.

Steve Heapy, Chief Executive Officer, said: “FY26 was another strong year for Jet2, topped off by the successful launch of operations at London Gatwick which is performing ahead of our initial expectations with over 0.4m passengers booked for the summer season. As ever, our focus on providing the very best Customer First service underpinned our performance in the year, and with that, I would like to thank every one of our Colleagues for their unwavering hard work and support.

“Our fully integrated, customer-focused and service-led business model enables growth and resilience, setting the business apart when it comes to earning customer loyalty and repeat bookings. This is supported by our growing fleet of more fuel efficient and quieter A321neo aircraft, with 31 in operation this summer.”

Technology Minerals says new separation equipment at its Recyclus battery recycling plant in Wolverhampton is now operational, enabling the recovery of copper and aluminium as standalone commercial outputs for the first time.

The upgrade allows black mass, the material produced when recycling lithium batteries containing battery metals such as cobalt, lithium, and nickel, to be separated from copper and aluminium in a single continuous process. The firm says this is a significant step up from previous operations, where copper and aluminium did not provide separate revenue streams.

Based on current LME pricing, the company expects net payable values of approximately £8,000 per tonne for copper and £1,300 per tonne for aluminium, which management said should make a material contribution to revenue per tonne of feedstock processed.

Reprocessing of roughly 180 tonnes of previously processed material held on site has already begun and is expected to be completed within 12 weeks.

The proceeds are expected to repay in full a £100,000 short-term bridge loan provided by Technology Minerals to fund the equipment’s deployment, with repayment due by 20 July.

Technology Minerals is one of the very few companies listed in London that provide exposure to the recycling of critical minerals.

More established players include Majestic Corporation, which focuses on e-waste and generated $49m in revenue in its most recently reported full-year period. Majestic plans to further boost output with the launch of a new facility in Wrexham this year.

Oracle Power (LON: ORCP) and its partner Riversgold have commenced geotechnical drilling at the Northern Zone gold project in Kalgoorlie. This will enable analysis of rock strength for mine planning. Progress continues towards gaining a mining lease. MEGA Resources will provide development and mining funding on a 50/50 profit share basis. The share price rose 6.06% to 0.0525p.

Scancell (LON: SCLP) has received FDA Fast Track designation for iSCIB1+ in advanced melanoma. Plans are being advanced for a phase 3 trial which could start in the second half of 2026. Progression free survival reached 77% at 20 months, which is 30 percentage points above standard care. Additional data is expected in the first half of 2027. The share price increased 5.77% to 13.75p.

Construction and maintenance software provider Eleco (LON: ELCO) increased recurring revenues by 26% to £31.3m. In 2025, revenues grew 20% to £38.8m. Pre-tax profit improved from £5.4m to £7.3m. Net cash was £16.3m at the end of 2025. The share price gained 5.69% to 130p.

AI technology consultancy GenIP (LON: GNIP) has announced a strategic alliance with US-based professional services provider Cardinal IP. The two companies will sell each others products. The AI-enabled IP market is expected to grow to more than $8bn by 2030. The share price is 4.88% higher at 10.75p.

FALLERS

Trellus Health (LON: TRLS) has issued 59.1 million shares on the conversion of a further £50,000 of convertible loan notes. That takes the number of shares in issue to 430.1 million. The share price fell 24.2% to 0.125p.

IQE (LON: IQE) has ended its strategic review and there is no bid for the semiconductor wafer manufacturer. A placing and offer has raised £13m at 19.8p/share, while a strategic investment of £30m by semiconductor manufacturer MACOM, the issue of £15m of convertible loan notes and reinvestment of £23m from existing convertible loan notes takes the total raised to £81m. This will repay debt and fund the growth of IQE. There will be investment in Indium Phosphide (InP) and Gallium Nitride (GaN) technologies. MACOM will nominate two directors to the board. The 2025 results will be published in late May, and revenues are expected to be £97m and this is expected to grow by one-fifth this year. The share price slipped 21.9% to 38.6p.

Premier African Minerals (LON: PREM) has raised a further £1m at 0.0136p/share. Construction and upgrades of the Zulu lithium processing plant. The crushing and milling circuit is being commissioned. Testing of newly installed bypass chutes was successful. The share price declined 8.57% to 0.016p.

Biopesticides developer Eden Research (LON: EDEN) says revenues should be £4.9m in the 15 months to March 2026. The loss was £2.9m, which was slightly higher than expected because more Capex was allotted to administrative expenses. Cash was £9m in the middle of April. A similar loss is expected this year. The share price lost 8.33% 3.3p.

The FTSE 100 was higher on Tuesday as oil prices rose and BP reported a doubling of profits, driven by higher oil prices stemming from the Middle East war. 

Although London’s leading index was higher on Tuesday, the gains were narrow and looked vulnerable to a weakening in sentiment. 

“A matter of weeks ago oil moving through $110 per barrel would be enough to give markets the willies but they seem to be in wait-and-see mode right now,” said Dan Coatsworth, head of markets at AJ Bell.

“Energy prices are reacting to stalled talks between the US and Iran and a blockage of the Strait of Hormuz which has now extended to the best part of two months – with just a few fleeting moments of the key shipping route being open. 

“Equity markets remain resilient. The FTSE 100 was higher thanks to its oil and gas heavyweights BP and Shell.”

BP and Shell were the best performers at the time of writing on Tuesday as Brent oil prices rose above $110, with little progress in talks between the US and Iran raising fears of a prolonged closure of the Strait of Hormuz. 

BP was the FTSE 100’s top gainer at the time of writing as a mix of higher oil prices and strong Q1 results boosted shares.

Mark Crouch, market analyst for eToro, says: “BP’s first-quarter earnings offer a timely reminder of just how abruptly the pendulum can swing in the energy sector. Underlying profits jumped to $3.2 billion, boosted by a powerful mix of elevated prices and exceptional trading conditions, even as disruptions in the Middle East weighed modestly on operations.

“In many respects, BP has both absorbed and benefited from the same geopolitical tensions, with volatility once again proving a tailwind for an integrated major.”

We’ll learn more about higher oil prices and their potential impact on interest rates this week with an update from the Bank of England due on Thursday.

Nowhere has been hit harder by concerns about what the war in Iran could mean for interest rates than the FTSE 100 housebuilders, who have been crushed since the war began. 

Providing insight into the real-world effect of the war, FTSE 250 company Taylor Wimpey released a trading statement on Tuesday showing sales rates falling and the order book shrinking. Warning of cost inflation will also be a concern for investors.

The drop in Taylor Wimpey shares on Tuesday weighed on FTSE 100 housebuilders Persimmon and Barratt Developments, which were down around 1%.

Compass Group shares were 1.7% lower and the FTSE 100’s biggest decliner.

BP shares rose on Tuesday after the oil major reported higher profits driven by rising oil prices towards the end of the first quarter.

BP’s Underlying replacement cost profit more than doubled to $3.2bn from $1.4bn in the same period last year, as the new CEO took the reins during a period punctuated by soaring oil prices.

“The highest quarterly profit in the best part of three years is not a bad way for new BP CEO Meg O’Neill to begin her tenure. Circumstances have helped but, as Napoleon famously attested, there’s no harm in being a lucky general,” said Dan Coatsworth, head of markets at AJ Bell.

BP had been struggling with lower profits going into 2026, and the tick higher in profits will be welcomed by the market, which was quick to price in better performance as the Middle East war started. BP shares were 3% higher on Tuesday, taking the year-to-date performance to 36%.

BP’s trading division was the big winner from the higher oil price, helping lift group earnings as the oil firm contended with disruptions to Middle East oil activities.

Mark Crouch, market analyst for eToro, said: “BP’s first-quarter earnings offer a timely reminder of just how abruptly the pendulum can swing in the energy sector.”

“Underlying profits jumped to $3.2 billion, boosted by a powerful mix of elevated prices and exceptional trading conditions, even as disruptions in the Middle East weighed modestly on operations. In many respects, BP has both absorbed and benefited from the same geopolitical tensions, with volatility once again proving a tailwind for an integrated major.”

Income investors may be a little disappointed to see the quarterly dividend held at 8.32 cents, but this may reflect the possible transitory nature of the profit improvement. Should oil prices fall back, it’s likely that profits would follow suit.

GenIP shares ticked higher on Tuesday after announcing it has signed a strategic alliance with Cardinal Intellectual Property, one of the largest IP services firms in the United States, giving the AIM-listed technology consultancy a direct route into the US corporate market for its AI-driven analytics tools.

The deal establishes a reciprocal resale relationship, with both companies selling each other’s products and services into their respective client bases.

GenIP points to clear benefits for both companies. For GenIP, that means accelerated access to Cardinal IP’s roster of Fortune 500 corporations, government agencies and leading law firms.

In return, Cardinal IP gains access to GenIP’s international network spanning more than 25 countries, extending its reach beyond the US market at no capital cost.

Cardinal IP carries significant weight in the sector and will bolster GenIP’s offering to both corporates and universities.

Underscoring its industry prowess, Cardinal was selected by the US Patent and Trademark Office to perform Patent Cooperation Treaty search services and offers a broad suite of professional services, including patent searching, managed docketing, AI patent drafting, and IP annuity payments.

Melissa Cruz, CEO of GenIP, said: “This Alliance with Cardinal IP gives GenIP a credible distribution route into the corporate enterprise segment, the largest and most recurring part of the global IP services market.

“The fee structure is commercially grounded, with fees reaching up to 30% on AI-enabled drafting services, and the performance incentive built into the agreement ensures both parties are motivated to convert introductions into revenue. We have designated commercial teams on both sides and a clear go-to-market approach, and we look forward to adding value to both organisations and positioning GenIP at the forefront of the global IP services industry.”

There is no indication yet of what the deal could mean for GenIP’s revenue. But the global IP services market exceeds $25bn annually, with the AI-enabled segment projected to surpass $8bn by 2030. Even a small proportion of this market could be a step change in revenue generation for the company.