Lloyds Banking Group experienced a significant 28% decline in first-quarter profits due to intense competition in the mortgage and savings sectors. Despite this, company executives are optimistic that these challenges will soon diminish, thanks to a strengthening UK economy.
As the largest mortgage lender in the country, Lloyds reported a pre-tax profit of £1.6bn in the first quarter of the year, down from £2.3bn in the previous year. Factors such as competitive mortgage pricing and a shift towards higher-rate savings accounts contributed to this decline.
The bank’s CFO, William Chalmers, attributed the drop in profits to tough competition in the mortgage market and a decrease in the total outstanding loan book. This led to a 10% decrease in net interest income to £3.2bn.
Pressure from regulators to align interest rates for savers and borrowers has further impacted the bank’s income. To counter this, Lloyds and other banks have had to offer more attractive returns on customer deposits, particularly on fixed savings products.
Despite these challenges, Chalmers remains optimistic that economic conditions will improve, easing the pressure on savings and mortgages. The bank anticipates a rise in house prices and a steady economic growth rate throughout the year.
Lloyds expects the Bank of England to reduce interest rates in 2024, which could stimulate mortgage applications and boost lending. Chalmers emphasized the bank’s commitment to offering competitive rates to attract customers.
Looking ahead, Lloyds is confident in its ability to contribute to a 5% growth in the UK mortgage market by the end of 2024. The bank remains focused on meeting customer needs and maintaining a strong market share.
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The improved economic outlook meant the bank was more confident that customers could repay their…
2024-04-24 04:43:52
Link from www.theguardian.com
