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Lloyds sees profits fall 95%, as impairment losses surge £1bn

Lloyds Banking Group has suffered a 95 percent fall in statutory pre-tax profits for Q1, year on year, after impairment losses hiked following the lockdown.

The group’s statutory profit fell to £74m for Q1, in major part due to a £1bn rise in impairment charges. Group revenues fell by 11 per cent to £3.9bn, partly because of intense competition across the mortgage market.

 

But the results also reveal that Lloyds has put nearly 900,000 customers on payment holidays.

As at 24 April 2020, around 400,000 mortgage payment holidays had been granted and the average LTV of balances on these mortgages was 50 per cent, compared to the total book average LTV of 44 percent.

Payment holidays have also been granted across all consumer finance and unsecured products including around 85,000 in motor finance, about 175,000 in personal loans and around 220,000 on credit cards.

Within the corporate sector, the group has provided £410m in coronavirus business interruption loans (CBIL) loans to SMEs and increased support for business clients through its £2bn COVID-19 fund, offering about 37,000 fee-free overdrafts, capital repayment holidays and working capital increases to clients.

The group has also introduced payment holidays and simplified claims processing for insurance customers.

 

Lloyds said that given the significant change in the operating environment and economic expectations, its previous guidance “is no longer appropriate.”

Its statement added: “The impact of lower rates, lower levels of activity and higher impairment on the group’s business will continue into the second quarter, but remains difficult to quantify given the significant uncertainty. The group will update the market once there is greater clarity.”

 

Premium Credit Strategy members can see a more granular analysis of the credit risk impact on LBG’s consumer and commercial loans, of the pandemic, on our Features section

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