Bank profits slump

Lloyds takes further PPI hit as corporate activity slows

Lloyds Banking Group

Lower corporate activity hit figures at the bank (pic: Terry Murden)

Lloyds Banking Group has seen full-year profits plunge 27% from £5.9bn to £4.4bn as it took a hit from the late surge in PPI claims and lower activity in corporate markets.

Underlying profit of £7.5bn was down 7% “in a challenging external market.”

Nearly £2.5bn of previously announced provisions for compensating customers mis-sold payment protection insurance (PPI) weighed on the figures.

The bank, which owns Bank of Scotland and Scottish Widows, reported “subdued levels of client activity given challenging external conditions particularly in large corporate markets ” in its commercial banking division.

Delivering year-end results, group chief executive Antonio Horta-Osorio, said: “In 2019 the group has continued to make significant strategic progress while delivering solid financial results in a challenging external market.

“The group’s statutory performance was impacted by a substantial PPI charge related to the deadline for claims submission. Underlying performance was resilient, reflecting the health of our customer franchise and the strength of the business model.

“Given our clear UK focus, our performance is inextricably linked to the health of the UK economy.

“Throughout 2019, UK economic performance has remained resilient in the face of significant political and economic uncertainty, supported by record employment, low interest rates and rising real wages.

“Although uncertainty remains given the ongoing negotiation of international trade agreements, there is now a clearer sense of direction and some signs of an improving outlook. We remain well placed to Help Britain Prosper, support our customers and deliver strong and sustainable returns for shareholders.”

Lloyds announced a dividend of 3.37 pence but no share buyback.

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