Bank of Scotland owner Lloyds sees profit jump but arrears also on rise

Lloyds Banking Group, the financial giant that owns Bank of Scotland and Scottish Widows, has joined rivals in posting better-than-expected results for the first quarter as higher interest rates helped boost profits.

The group reported pre-tax profits of £2.3 billion for the three months to the end March, up from £1.5bn a year earlier - a hike of 46 per cent. Lloyds took an impairment charge of £243 million, up from £177m a year ago, despite a slightly improved economic outlook for the UK, where the bulk of the group’s business is focused.

The bank now expects the economy to shrink by 0.6 per cent in 2023 overall - against its prediction in February for a 1.2 per cent decline - but still slip into a mild recession over the first three quarters, before returning to growth. House prices are likely to fall by a more muted 5.3 per cent this year and 1.2 per cent in 2024, it added.

Hide Ad
Hide Ad

Halifax owner Lloyds said it was seeing “modest” increases in borrowers falling into arrears and defaulting on loans amid the cost-of-living crisis but said levels remain at or below those seen before the pandemic struck. Its figures come after HSBC on Tuesday revealed profits more than tripled in the first three months of the year to $12.9bn (£10.3bn) as the sector is buoyed by higher interest rates. Last week, Royal Bank of Scotland parent NatWest Group beat profit expectations in what one analyst described as “reassuringly dull” results.

Charlie Nunn, chief executive of Lloyds Banking Group, said: "The macroeconomic outlook remains uncertain. We know that this is challenging for many people. Our purpose-driven strategy, alongside our financial strength, means we can continue to support our customers across the country.”

John Moore, senior investment manager at wealth firm RBC Brewin Dolphin, said: “Lloyds has followed the other major UK banks with a strong set of results that have beaten expectations. A higher net interest margin - among other factors - has boosted profits for the quarter. While an increase to costs takes a little shine off the bank’s performance, there is still a lot to be positive about.”



Want to join the conversation? Please or to comment on this article.