RE: Results27 Oct 2022 08:41
LONDON, Oct 27 - Lloyds Banking Group LLOY.L
reported a slide in quarterly profits on Thursday, as the lender
braced for a potential rise in loan defaults as inflation
squeezes borrowers.
Britain's biggest mortgage lender posted pre-tax profit of
1.5 billion pounds ($1.74 billion) for July-September, below the
1.8 billion pounds average of analyst forecasts compiled by the
bank and down on 2 billion pounds the prior year.
Lloyds' results were dented by a 668 million pound provision
taken in the quarter to cover potentially soured loans, which it
said reflected the deteriorating outlook.
"The current environment is concerning for many people and
we are committed to maintaining support for our customers," said
Lloyds CEO Charlie Nunn.
Britain's new prime minister Rishi Sunak has said the
country faces a "profound economic crisis" as he seeks to fix
the mistakes made by predecessor Liz Truss during her disastrous
tenure.
Market turmoil sparked by Truss' tax-cutting plans pushed up
the country's borrowing costs and led lenders to ratchet up
mortgage rates, piling further pressure on households.
Rivals including Barclays and HSBC have reported robust
results this week, but investors are wary the deepening cost of
living crisis will hurt consumers and businesses and damage bank
finances in the longer term.
Despite the slide in profit, Lloyds said the strength of its
underlying performance meant it could raise its forecast on
several performance metrics for the year.
Net interest margin, which measures how much the bank
makes on the spread between what it pays savers and charges
borrowers, will be 290 basis points rather than 280, it said,
and the bank will generate more capital.
However, it said Lloyds' asset quality - measuring potential
loan defaults - had slightly worsened.
($1 = 0.8604 pounds)
(Reporting by Iain Withers, Editing by Lawrence White)
((Iain.Withers@thomsonreuters.com;))
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