The banking group said it made a pre-tax profit of £7.5 billion over 2023, surging by 57% compared with the £4.8 billion made in 2022, and coming in ahead of analysts’ expectations.

It was achieved as its underlying net interest income, the difference between what it makes from loans and pays out for deposits, jumped by 5% to £13.8 billion.

But the bank said it set aside a remediation charge of £450 million to cover potential costs related to the financial regulator’s probe into historic car finance selling practices.

The Financial Conduct Authority (FCA) last month opened a review into whether people could be owed compensation for being charged too much for car loans.

Charlie Nunn, Lloyds’ chief executive, said: “In 2023 the group remained focused on proactively supporting people and businesses through persistent cost-of-living pressures, whilst financing their ambitions and growth.

“This has come alongside strong progress on our strategy and delivering increased shareholder returns, guided as always by our core purpose of Helping Britain Prosper.”