You are here: Home - Saving & Banking - News -

Lloyds returns to profit despite granting 1.2 million payment holidays

Written by: Lana Clements
The banking group returned to profitability, helped by a pick up in mortgage activity, despite granting 1.2 million payment holidays.

Lloyds posted profit before tax of £1bn in the third quarter (£700m profit after tax) and now expects money set aside for bad loans this year to be at the lower end of forecasts.

The impairment charge in the third quarter was booked at £0.3bn, in line with pre-crisis levels, with the group taking an overall £4.1bn hit for the nine months to the end of September reflecting the impact of coronavirus earlier in the year.

In total, it granted 1.2 million payment holidays and c.£11bn of lending through government schemes, with an 18% market share of support scheme lending, including a 21% share of Bounce Back Loans.

Of the payment holidays, around 477,000 related to mortgages. But as of 24 October 2020, most have matured with 83% of these, or 384,000, having resumed repayments, while 13% extended and 4% missed payment.

Mortgage activity picked up strongly over the three months to the end of September, accounting for 22% of all mortgage approvals the lender said, adding it had a strong pipeline going into the fourth quarter.

However, income has been hit by lower interest rates, and lower levels of customer activity, Lloyds said.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Lloyds wins a rosette for a surge in applications for home loans and a huge increase in mortgage lending, led by the mini boom in the housing market.

“It doesn’t end here, as Lloyds has also nabbed a large share of approvals for the next quarter as well. This is encouraging news, but once the stamp duty holiday ends and given the fragile economic recovery, there are concerns the mini housing boom could turn into a bust, which would lead to a reversal of fortunes for this part of Lloyds business.”

António Horta-Osório, group chief executive of Lloyds Banking Group, said: “The impact of the coronavirus pandemic on the global economy and on people and businesses within the UK has been unprecedented.

“We remain focused on working together with the government and our regulators to ensure that we continue to support our customers in this challenging time.

“Although our performance has clearly been impacted by the pandemic and the associated challenging economic environment, I am pleased that we are now seeing an encouraging business recovery and, with impairments significantly lower, a return to profitability in the third quarter.”

Race Action plan

The bank also announced it has put in place a ‘Race Action plan’ to drive cultural change within the company, as well as aiming to reduce the carbon emissions financed by the lender to over 50% by 2030.

Horta-Osório said: “Societal expectations of companies, particularly regarding sustainability, continue to increase and we are taking action to build an inclusive and more sustainable future.

“We have announced a Race Action plan to drive cultural change, including a clear target to increase black representation in senior roles.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Unfamiliar banks woo savers with top rates…is your money safe?

If you’ve been keeping an eye on the savings best buy tables, you’ll have noticed some unfamiliar names lu...

What the base rate rise means for you

The Bank of England has raised the base rate by 0.25% to 0.5% – following on from the increase from 0.1% to ...

How to get help with your energy bills

The rise in the energy price cap from April will mean millions of households will pay hundreds of pounds a yea...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week