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Lloyds impairment charge

ended 27. October 2022

Lloyds Banking Group has reported a decline in its profits after revealing a £668 million impairment charge as it gears up for heavier loan losses amid soaring mortgage rates.

The UK’s biggest lender said its statutory pre-tax profits were £1.5 billion in the third quarter, a substantial drop from the £2 billion reported last year and falling short of the market consensus of £1.88 billion.

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3 responses from the Newspage community

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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
The fact that a lender the size of Lloyds is readying itself for a rise in mortgage losses and defaults suggests we are in for a turbulent 12-18 months ahead.
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Graham Cox
Director at Bridging Hub
The higher impairment charges and reduced profits Lloyd's are seeing are likely to be replicated across the banking sector. After having pandemic life-support switched off, many businesses are now struggling with much higher input costs and reduced demand. And with property prices inflated by Rishi Sunak's stamp duty holiday and ultra-cheap credit, the chickens are now coming home to roost in the mortgage market. It's quite conceivable house prices could fall 20-30% over the next couple of years, meaning impairment charges could start to get a whole lot bigger.
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Malcolm Davidson
Director at UK Moneyman
There's little doubt that cases of mortgage arrears will increase to some extent due to the recent spike in interest rates, which was caused by our previous Prime Minister’s unfunded, un-voted for fiscal experiment, which has now been thrown out like a disused lettuce. Interest rates have started to drop this week and we can only hope that the upcoming rise in the Bank of England base rate was already factored into the mortgage increases we saw and the worst of this is now behind us.