Lloyds Banking Group on alert as mortgage arrears rise
Lloyds Banking Group (LBG) has put “heightened monitoring” in place to spot signs of affordability stress as arrears rose in the first half of the year.
In its report for H1 2023, the group said that as of 31 June, 1.3% of its mortgage book was more than three months in arrears, against 1.2% of its book in the half year to 30 December. This represented 28,575 mortgages.
Broken down, 1.2% of its mainstream mortgage book was in arrears, as was 1% of its buy-to-let accounts and 8.6% of its specialist mortgage portfolio.
Lloyds said it had only seen a “modest deterioration” in its credit performance, which was mostly evident in its mortgage portfolio where new to arrears and flow to default increased on legacy variable rate loans.
Its half-year report also revealed that, within its UK mortgage business, the total value of loans and advances fell from £312.7bn in the six months to December to £308.1bn in the six months to June this year. The average loan to value (LTV) rose from 41.6% to 42.3%, while the share of mortgages at 90% LTV or higher increased from 1.4% to 1.7%.
LBG financial performance
Its statutory profit after tax came to £2.9bn in the first half of 2023, which was 17% higher year-on-year. In Q2, the group’s profit after tax declined by 25% to £1.2bn.
Charlie Nunn, group chief executive of LBG, said: “We know that rising interest rates, cost-of-living pressures and an uncertain economic outlook are proving challenging for many people and businesses. Guided by our purpose of Helping Britain Prosper, we remain fully focused on proactively supporting our customers and helping them navigate the current environment.
“The group delivered a robust financial performance in the first half of 2023 with strong net income and capital generation alongside resilient asset quality. We continue to make good progress on delivering our strategic initiatives. Combined with our franchise resilience, this better positions us to support our customers, both today and in the future.”