Lloyds Bank annual profits plunge by 72% to £1.2billion

Lloyds Bank’s annual profits plunge by 72% to £1.2billion amid fall in household spending during Covid pandemic

Lloyds Banking Group said its pre-tax profit fell by 72 per cent to £1.2billion in 2020 after it booked big charges for loans that could sour because of the economic fallout of Covid-19.

The company reported the sharp fall in profits but resumed paying a dividend, as outgoing chief executive António Horta-Osório set out fresh targets to expand the bank’s insurance and wealth business and further cut costs.

Britain’s biggest domestic lender reported its pre-tax profits were well down on £4.4billion the previous year, after pandemic lockdowns shrank household spending and drove up provisions for bad loans.

Lloyds Banking Group said its pre-tax profit fell by 72 per cent to £1.2billion in 2020 (file image)

The profit figure nonetheless beat an average of analyst forecasts of £905million.

Among the targets set out, Lloyds said it would increase funds from customers in insurance and wealth by £25billion by 2023 and cut office space by 20 per cent within three years.

Costs overall would be cut below £7.5billion this year, the lender said.

Lloyds set aside £4.2billion to cover loans expected to sour, below a £4.5billion to £5.5billion range previously given.

The bank said it would pay a 0.57p dividend per share, the maximum allowed by the Bank of England and above a forecast of 0.53p.

Mr Horta-Osório is leaving Lloyds after a decade running the bank to stand for election as chairman of Credit Suisse in April, with HSBC executive Charlie Nunn set to replace him on August 16.

Similar to rivals HSBC, NatWest and Barclays in recent days, Lloyds’ profits were dented by a dip in customer spending and wafer thin central bank interest rates.

Lloyds was forced like other banks to suspend payouts last year at the behest of the Bank of England to shore up its finances in the pandemic.

The bank’s core capital ratio – a key measure of financial resilience – increased to 16.2 per cent, compared to 15.2 per cent in September.