Lloyds swings to profit as bad debts cut on UK economic recovery
The banking giant posted half-year pre-tax profits of £3.9 billion against losses of £602 million a year ago.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Lloyds Banking Group has revealed it swung to a £3.9 billion half-year profit from losses a year ago as it cut bad debt provisions thanks to the UK’s economic recovery.
The bank’s figures showed a boost to its bottom line from a further £333 million fall in bad debt provisions over its second quarter, as well as a booming housing market.
A total release of £837 million of cash put aside for loans expected to turn sour in the pandemic saw it return to statutory profit for the first half of 2021, from losses of £602 million a year ago.
Lloyds announced a 0.67p interim dividend on the back of the results – up from 0.57p at the full year stage – in the wake of the Bank of England’s recent move to remove remaining pandemic curbs on shareholder payouts in the sector.
Alongside the results, Lloyds also unveiled a deal worth around £390 million to buy savings and pensions firm Embark.
The lending giant said the deal – its biggest since it returned to private ownership four years ago – will see it add about 410,000 customers and £5 billion of assets under administration.
Embark will become a subsidiary of its Scottish Widows arm, complementing its existing wealth offering, according to Lloyds.
Interim chief executive William Chalmers, who is leading the bank until new boss Charlie Nunn arrives next month, said: “During the first six months of 2021, the group has delivered a solid financial performance with continued business momentum, bolstered by an improved macroeconomic outlook for the UK.
“While we are seeing clear progress in the vaccine rollout and emergence from lockdown restrictions, the coronavirus pandemic continues to have a significant impact on the people, businesses and communities of the UK.”
Lloyds upped its outlook for the UK economy, forecasting growth of 5.5% this year and for unemployment to peak at a lower-than-first-feared 6.5% later this year once the furlough support scheme unwinds.
But Mr Chalmers said the so-called self-isolation pingdemic was having an impact on businesses across the UK, including Lloyds.
Mr Chalmers said despite the disruption, “well over” 90% of its branches remain open with an “extremely small” number forced to close due to staff shortages.
The group’s results showed £12.6 billion growth in mortgage lending over the first half, with £6.6 billion in the second quarter alone, as buyers raced to move ahead of the stamp duty holiday deadline.
They also revealed higher costs as Lloyds put aside more for bonuses for staff, given the better performance.
Costs for fines and charges stood at £425 million, including the recent £91 million fine from the Financial Conduct Authority for past general insurance renewals and £150 million relating to the HBOS Reading scandal.