Lloyds Banking Group has revealed its profits tumbled by 72 per cent to £1.2billion last year as it battled with the economic fallout of the coronavirus pandemic.
Britain’s biggest domestic lender laid bare the extent of the financial devastation caused by Covid-19 as its statutory pre-tax profit fell from £4.4billion in 2019.
However the 2020 figure was better than the £905million analysts had expected, according to a consensus compiled by the company, which is based in London.
It comes after three lockdowns in England during the pandemic which began last March shrank household spending and drove up provisions for bad loans.
Lloyds booked impairment charges – money it sets aside for loans that could sour – of £4.2billion last year, compared with £1.3billion a year earlier.
Lloyds Banking Group said its pre-tax profit fell by 72 per cent to £1.2billion in 2020 (file image)
It was lower than the £4.7billion analysts were expecting, after the bank notched up impairments of just £128million in the fourth quarter.
This was compared with the £586million that had been expected. Net income dropped 16 per cent to £14.4 billion across the financial year.
Meanwhile outgoing chief executive António Horta-Osório set out fresh targets to expand the bank’s insurance and wealth business and further cut costs.
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.
Outgoing chief executive António Horta-Osório (pictured) set out fresh targets to expand the bank’s insurance and wealth business and further cut costs
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.
Mr Horta-Osorio said: “Looking forward, significant uncertainties remain, specifically relating to the coronavirus pandemic and the speed and efficacy of the vaccination programme in the UK and around the world.”